Wednesday I dropped the first five predictions; today we’ll finish up.

6.  The workers’ comp insurance market will stay soft.

Here’s a few reasons why.

• There’s hundreds of billions of capital floating around out there, looking for a home. Workers’ comp insurance has been a) quite profitable and b) is a great place to park dollars.
• Claim counts continue to decline – while COVID is accelerating the decline, the structural drop is embedded in the business and is here for the long term. Next year there will be fewer claims, and the following year even fewer.
• Medical inflation remains pretty low (while there are troubling indicators that costs will bump up, overall trend remains low historically)
• There are lots of insurers fighting for a shrinking market, and it only takes a couple cutting prices to force others to join in.

7. More layoffs and staff reductions will hit insurers and TPAs
See #6 above.  Fewer premium dollars = fewer administrative dollars; fewer claims = less need for staff. Layoffs hit several insurers last year and we can expect more to come.

8. Other than presumption and tele-services, there will be very few significant moves in WC regulation or legislation.

Between drastic reductions in state revenues due to sales and other tax receipts affecting staffing and state legislatures and governors all-consumed by COVID responses and budgetary issues there’s little oxygen left to fuel any material changes to work comp regs. While it would be great to see Florida’s legislature stop facilities raiding workers comp to make up revenue shortfalls, that’s highly unlikely.

9. OneCall will be sold and/or broken up

While the current debt load is a LOT less than it was under the previous owners and the current CEO is an improvement, the decline in claims hit One Call hard in 2020.   The first half of 2021 won’t be any better with employment numbers and claims counts likely reduced due to the pandemic.  On the plus side, there’s still lots of investor money looking for deals.

Net – I expect the company to change hands this year. Whether it is sold as one entity or broken up is TBD.

10. Opioids and other dangerous drugs will get a lot more attention.

With COVID dominating everyone’s calendar, workload, thinking and energy, we all dropped the ball on managing opioids. That will change.

chart below is from The Economist.

With prescription volumes, MEDs, and duration likely up during 2020, expect payers to re-engage with prescribers, PBMs, and employers to get things moving in the right direction.

What does this mean for you?

This is going to be a very busy year, with more change than any we’ve seen in a long while.

Never has the crystal ball been cloudier.

A lack of visibility does not mean one shouldn’t think through what might be hidden within the clouds. To quote Dwight Eisenhower, “plans are useless, but planning is indispensable.” While what we think may happen may not, the process of working thru the implications is hugely valuable.

So, here we go.

1.  Total premiums will stay low.
   As employment, payroll, and injury rates all remain under pressure, total premiums will remain significantly lower than we’d expect in a non-COVID, non-recession environment. We are also on the tail end of the opioid cost bubble, with actuarial projections still over-compensating for what was rampant overuse of opioids.
   Unemployment will persist at least thru the first half of 2021 – and likely the first three-quarters – helping to keep premiums lower. There are some predictions that employment will ramp up towards the end of the year; let’s hope so.
   Implications abound.
2. Facility costs will spike.
   
   Hospitals are in dire financial straits, with 2021 bringing no respite from the cash crunch experienced by the entire industry when people avoided facilities, put off elective procedures, or weren’t able to get care due to facility restrictions.
   As desperate financial managers look high and low for any and all revenue sources, you can bet your house they’ll be focused on workers’ comp. Payers have:
   • few effective price or utilization controls;
   • an often-lackadaisical approach to cost management;
   • bill review programs and processes hopelessly outclassed by sophisticated revenue maximization technology; and
   • management that doesn’t know that it doesn’t know;

thus payers are going to see facility costs – already the largest part of medical spend – jump.

3. Consolidation
Seems I’ve been forecasting increased industry consolidation for years…it’s not a prediction but more acknowledgment of reality. Workers’ comp is a declining industry with shrinking claim counts and flat expenses – and that isn’t going to change.

COVID has accelerated the process dramatically; with claim counts down 15-20%, there are fewer claims to adjust, fewer services to medically manage, fewer bills to pay, fewer dollars to compete for.
Because there will be fewer revenue and premium dollars next year than this, more consolidation is inevitable.
I expect this to be most pronounced among medical management firms and TPAs, and the big to get bigger. Genex/Mitchell/Coventry, Sedgwick, Concentra are all likely consolidators. Not sure about Paradigm.

4.  Drugs will re-emerge as a significant problem
After several years of declines in opioid prescription volumes, it looks like things headed in the wrong direction last year.
Prior Auth requirements were relaxed, refills extended, and states loosened restrictions on prescribing. Add to that patients weren’t able to get to their PT visits and surgeries were postponed. The result – I expect we’ll see drug costs in 2020 flattened out, and opioid usage actually increased (We will know a lot more in mid-late March when I complete my Survey of Drug Management in WC).
That was last year; as COVID is returning with a vengeance, expect to see continued increases in 2021.

5. COVID claims aren’t going to be costly.

Despite all the caterwauling we heard back in 2020, COVID costs have been minimal. That will not change. Yes there will be long-haulers, but those will be very few indeed. Yes there will be more claims, but most will cost just a few thousand dollars.

Tomorrow – the next 5.

As tempting as it is to just ignore my predictions for workers’ comp in 2020 and blame mis-calls on COVID, that wouldn’t be right.

So, here’s how I did.

 1. The work comp insurance market will stay soft.

Yep. And it would’ve stayed marshmallow-y soft even if the damn virus hadn’t spawned.

2. Work comp medical trend will remain flat.

As the kids say, that’s a hard yes...in large part because lots of injured workers didn’t get all the care they should/could have. However, I’m basing this on spotty information…we will know a lot more later this spring. But, so far, medical costs are looking flat to lower.

3.  Facility costs will gain a lot more attention.

Well, not enough. While there was a kerfuffle about Florida’s abject failure to correct it’s blatant giveaway to facilities, this got lost in the shuffle.

4.  Consolidation in the work comp services industry will continue, with more of the big players merging/acquiring each other.

Yup. Concentra went on an acquisition tear, and Mitchell bought Coventry.  Expect more to come in 2021.

5. OneCall will be sold.

Nope. While discussions were held at various times with various parties, the gap between what potential buyers would pay and what owners KKR and GSO would accept was too broad.

6. California’s crooked docs will be outed.

No dammit.

With SB 537 signed into law, I thought we would know which docs were the bad actors  in 2020 – like the  PM&R doc in northern California who filed IMR requests resulting in 2,800 IMR letters and 4,441 Medical Decisions.

(while the law doesn’t require this outing to happen before 2024, I’d expected we’d know the names of the worst offenders in 2020.)

7.  More effective approaches to chronic pain and opioid abuse disorder are here – and will gain a lot of traction in 2020.

That’s a yes – despite COVID sucking all the air out of every room, more and more payers launched smarter/better/more patient centric approaches to OAD and chronic pain.  Carisk’s Pathways 2 Recovery gained significant traction… (Carisk is an HSA consulting client).

8.  Don’t expect any meaningful state legislation/regulatory changes.

Well, outside of doing everything possible to expand access to and use of tele-everything, and all that stuff about presumption, nothing happened. Now that I read that…it’s clear that a lot happened. So, that’s a no.

9. Benefit adequacy will gain some traction.

I admitted this was much more of a hope than an actual prediction…and it didn’t happen. I’ll blame this in part on COVID…but Double Dammit.

10. Conferences will continue to struggle.

Uh, a  huge yes. I know, the demise of the conference was largely driven by COVID, but hey – I took the hit on leg/reg changes and adequacy, so will take a yes where I can get it.

Oh, and one more.

Back in 2019 I wrote this…

A very big external event/issue/mess will affect the economy – and thus workers’ comp

So, I hereby invoke the “better late than never” scoring rule and take a half-a-yes for this prescient – but 60 days too late – prediction.

The net – I got 5 1/2 points.

Tomorrow – predictions for 2021.

Here in central New Hampshire the snow is piling up..so far we have somewhere around 2 1/2 feet with more to come.

The weather reminded me of a vendor assessment project I did a while back for a workers’ comp client concerned with ever-increasing medical management fees. The program featured a medical management program integrated with TPA services, with the marketing pitch touting the efficiencies gained from one-stop shopping, electronic interfaces, close coordination and the like.

I won’t get into the specifics or identify the vendor – for reasons that will become obvious in the following.

Here’s some of what we learned.

• Medical management fees – bill review, case management, UR, PPO, “enhanced” bill review and the like accounted for more than 13% of medical costs – a percentage way over industry standards.
• Fee schedule reductions were way lower than those delivered by other BR vendors, but “savings” from “enhanced BR” solutions such as nurse review, bill negotiation and the like were really really outstanding. Notably the vendor didn’t get paid extra for FS reductions, but made 26% of savings for “enhanced BR” reductions. 
• The TPA/vendor LOVED assigning case managers to claims; pretty much every lost time claim had a nurse engaged, and more than a handful of med onlies. A deep dive revealed that the CMs were doing a lot of what claim adjuster was supposed to do – discussing and documenting return to work discussions, talking with the patient and providers, even handling tasks which seemed more like claim intake and investigation. Of course this freed up the adjuster to do other stuff, and increased revenues for the vendor because the claim fees were a flat rate, but CMs were billed hourly… 
• Nickel-and-diming was rampant; extra charges for worksite posters and provider directories, fees for accessing the claims portal, charges for processing duplicate bills, billing for windshield time for field case managers, % of savings for their PBM program plus add on fees for pharmacist reviews and drug alerts, mandatory annual increases due to “inflation”…pretty much any way the vendor could tack on a service charge, they did.
• TPA claim fees were very competitive, but med management fees were way out of whack – PPO and “enhance BR” fees were north of 26% of savings, CM fees above $120 an hour (and no this wasn’t a California/Alaska/Hawaii client)

While the pitch made sense, once you dug just a bit deeper it became obvious it was a complete snow job; the vendor’s complete and total focus was on driving revenues, at the expense of a trusting client.

What does this mean for you?

Brush that snow away so you can really see what’s underneath.