A few years back an acquaintance called me to ask for help finding a job; s/he’d been let go after a merger.

While we had known each other for some time professionally I’d always found him/her to be hard to reach, not responsive, and somewhat arrogant. When s/he needed something, the expectation was I – and no doubt others – would respond fully and immediately.

Now s/he was reaching out for help. And again the expectation was a full and immediate response.

I attempted to gently inform the person that they were in a different position now, and would make a lot more progress – and get a lot more help – if they handled things a little more diplomatically.  I won’t characterize the response, as I may have misinterpreted it.

I sort of understand this; as a buyer, the person was used to being accommodated – if not outright fawned over – by vendors eager to curry favor. The golden rule applied – S/he who has the gold rules.

As I think back on this, I recall being in meetings with this person where vendors were told to improve results. When those vendors attempted to meet his/her needs by suggesting program changes, IT connection improvements, or different communications procedures, the answer was always the same – we don’t have the resources to do that, that’s your responsibility, you figure it out.

The net is this.  Buyers do not help themselves by bossing potential vendors around, being unnecessarily difficult, demanding, unrealistic and dictatorial. And, often vendors can’t meet certain objectives unless the client pitches in as well. Sure, every payer has limits, resource restrictions, and budget constraints, but expecting a vendor to deliver data to your system seamlessly, consistently, and accurately while refusing to upgrade your technology to allow that is not only unrealistic, it is certain to fail.

That’s on the business side.

On the personal side, individuals who conduct themselves this way may well find things change when they no longer “have the gold”. Their calls go unanswered, references aren’t provided, job leads not shared.

What does this mean for you?

Many vendors have excellent ideas they’ve learned from working with other payers, ideas that can make your program more effective, efficient, impactful. Ask them what you can do to better work together.

And remember the real golden rule –

In a move that caught all Capitol Hill – and me – by surprise, President Trump and key Senators finalized the outline of the GOP’s new healthcare plan over the weekend.

Set to be announced later today, the plan builds off the faith-based “sharing” programs already in place in the ACA, greatly expands their reach, incentivizes employers to adopt faith-based coverage, and enables these programs to compete in the senior market. There are a half-dozen or so ministry/faith-based programs now in operation with total membership around the million mark.

Unlike regular insurance, members “share” the cost of care by paying into a central fund that then reimburses individuals for needed medical services.

Currently faith-based coverage is provided by entities including Liberty Healthshare, Christian Medi-Share, Samaritan Ministries, and Altrua Healthshare. As of today, these entities don’t have to provide the same level of benefits, coverage, or financial protection insurers do under the ACA. And, they are pretty much exempt from regulation as they aren’t “insurance” per se.

Faith-based sharing programs will compete with the big healthplans for members in the federal – and perhaps states’ – healthcare exchanges. The plans, which are much less expensive than “regular” health insurance, may well see huge gains in membership.

On ABC’s thisweek Sunday talkshow, Whitehouse Chief of Staff Mick Mulvaney  asserted the plan would deliver on the President’s promise to protect Americans with pre-existing conditions. “We’ve heard it over and over again, Americans trust their churches and ministers to do the right thing [which includes addressing pre-existing condition coverage]. So, we’re going to build off the amazingly successful faith-based programs now in place, expanding their reach and helping them compete in the free market.”

When asked how the new plan would maintain or expand the number of Americans covered by health insurance, Mulvaney didn’t get into any details other than claiming “faith-based programs will have much lower administrative costs as they don’t have all the overhead the big insurers do…this will make insurance much less expensive, which means more people can afford it.”

It appears Vice President Mike Pence has been strongly advocating for the faith-based approach for some months.  Evidently Pence, a self-described evangelical Christian, was prepared when the President publicly called for Republicans to be “the party of great healthcare” last week. The VP met with Trump, Mulvaney, and key Senators over the weekend and finalized the outline of the plan.

Mulvaney, who is one of the members of Trump’s team leading the charge on repealing Obamacare, said Sunday “There’s absolutely zero daylight between the president and vice president on this issue.”

Interviewed on CNN’s State of the Union yesterday, Mulvaney went further, describing the plan as fulfilling Senate Republicans’ request that the Administration provide them with “principles” that they could build a healthcare plan around.

Here’s the issue. Faith-based programs don’t have to keep a certain level of financial reserves, can deny payment for any reason, exclude any condition, and cancel coverage. And, in most states no regulator is watching over the programs.

Sure, this will make “coverage” cheaper, but there’s no guarantee it will be there when the buyers need it.

I’d expect this approach to face tough sledding in the Senate, and likely won’t be considered at all in the Democratic – controlled House. However, it’s likely Trump will try to do much of the heavy lifting via regulatory means and Executive Orders. However, these efforts will undoubtedly be challenged in court, where Trump has had a pretty poor record. I’d also expect the big healthplans will roll out their lobbying big guns.

But…the move further cements Trump’s standing with evangelical. As he’s clearly playing to his base to prep for the next election, it will serve him well.

What does this mean for you?

Just when you think you’ve heard it all…

Facility costs are the fastest growing cost in workers’ comp.

Rural hospitals are in deep financial trouble – many are shutting floors, wings, or are closing entirely.

Medicaid is all that is keeping many rural hospitals afloat – Mercy Hospital’s days are done…And work requirements will cost hospitals billions.

Arkansas has already kicked 18,000 people off Medicaid – mostly because the state’s Medicaid work requirement program is unbelievably poorly run, its leaders don’t know a damn thing about challenges faced by poor people, and no one at the state or federal level is demanding they get their stuff together.

(A federal judge just blocked the state’s work requirement.)

So, what does this mean for work comp payers in Arkansas?

• 18,000 more Arkansans are now uninsured
• Rural and urban hospitals are looking for pennies in the couch cushions.
• Work comp has lots of pennies.

The 9 reasons I love CWCI’s annual conference.

1. Consistently great content– timely, up-to-the minute data is analyzed and presented by experts who really understand the California work comp system, have deep experience in that system, and use that experience to draw inferences and conclusions that are highly relevant. No one does it better.
2. Topics are different than you find most anywhere else – this is a huge challenge for conference organizers, yet every year Swedlow & Co. focus our attention on key issues.
3. Example – Dr Kathryn Mueller’s discussion of what’s needed to obtain the best possible care and outcomes for work comp patients. Dr Mueller described what good “evidence” is, how it should be used in developing guidelines, and the integration of guidelines with utilization review. She also walked thru different approaches to best practices for RTW, the critical importance of functional outcome measures, and ended with a discussion of the latest thinking on pain management.

   That’s about 4 sessions’ worth of education in an hour, delivered by one of the nation’s leading experts. Damn she’s good.
   

4. It’s not just about California. While the focus is on the Golden State, we learn a lot that is just as useful wherever you work. CWCI was one of the first to come out with definitive proof that physician dispensing is a costly scam, focused our attention on compounds before most of us had heard of them, researched spinal fusion claims, and examined the impact of the new ICD-10 coding scheme on work comp.
5. They do all this in less than a day, yet…
6. There’s plenty of time built into the agenda to meet and catch up with colleagues built.
7. You get to hear Alex Swedlow, who may be the best presenter in the business. I’m biased as Alex is a good friend, but his dry-as-Death Valley wit, the way he weaves in lessons learned decades ago, and ability to pick out the one most important takeaway and ensure you understand it is unmatched.
8. There’s a bar. I don’t mean a bunch of lawyers, altho there’s plenty of them, but an actual place to get cocktails. At lunch.
9. It’s in Oakland, which means I have to travel to the west coast, where two of our kids are living, so I get to see them!
   Molly says hello from Santa Monica

There seemed to be a bit of nervous tension as CWCI’s annual meeting kicked off. After years of relative stability, and dare I say it steady improvement in many areas, it’s no wonder stakeholders are a bit trepidatious.

With a new Governor in office, new appointments in the offing, and some seemingly intractable problems still challenging stakeholders, the nervous tension is certainly understandable.

Fortunately, the first speakers addressed this head on.

General Counsel Ellen Langille led off with a summary of legal activity in the Golden State. My big takeaway was the King case.  CWCI filed an amicus brief in King v CompPartners which big win for all employers, taxpayers and yes patients. The Supreme Court upheld the exclusive remedy protection for utilization review organizations. Briefly, UR physicians were not deemed to be “treating physicians”, a sensible ruling indeed.

Ms Langille turned things over to Jeremy Merz and Jason Schmelzer for a summary of what’s coming. Both gave kudos to CWCI for providing much-needed data to help legislators understand what is really going on.

Schmelzer made a key point – politicians do not want to talk about workers compensation – they think it should just work. He also noted former Democratic Gov Brown vetoed more work comp bills viewed as problematic by employers than his Republican predecessor – Arnold Schwarznegger.  Point being, just because one is in this party or that does not mean they will hew to what you’d think is the party line.

While Gov Newsom is moving quickly on key issues, he has yet to show his hand on workers’ comp issues. The two experts opined that:

• Significant reform in work comp is unlikely as the system is seen as generally working well
• While it is expensive – it’s better than it was
• Key stakeholders, e.g. labor and employers – have bigger priorities.

One potential big issue is the independent contractor issue. While several bills are under consideration, it’s not clear any will get traction over the near term.

I would just add that there are lots of other issues that are way more important to important people than work comp; climate change’s impact on the state, water projects, battles with the federal administration on any number of issues, taxes, education, and many more. So, unless work comp is about to implode or explode, it is not going to get any traction.

What does this mean for you?

In California’s work comp system, things are likely going to remain stable at least for this year – and likely next.

Over the last two + weeks I’ve had a dozen or so calls with investors asking about the workers’ comp space.  Mostly this seems driven by the OneCall debt issuance and financial situation, but the conversations all started with a high-level view of what’s happening in work comp.

To save you investors money and me time, here’s my view from 30,000 feet.

Work comp is shrinking

Fewer workers are getting injured. Premiums continue to decline. The injury rate is declining.  Folks, we are in a shrinking business, and that isn’t going to change. If anything, when the next economic downturn hits, comp is going to get hit harder.

That means fewer medical services, fewer scripts, fewer first notices of injury, fewer claims.

Pharmacy is leading the shrinkage

Several new “work comp” PBM start-ups have emerged over the last couple of years, most of them talking “transparency” and better customer service for smaller payers.  Over the last 7 years, PBMs have done a pretty good job shrinking their top lines as they work with payers to reduce unnecessary opioid use and compete on price. Yes, there is money to be made here, but size and service matter – a lot. (more on this in a month or so when we do the next Survey of PBM in WC).

Why these folks are investing start-up funds in a business that has been declining by near-double-digits for several years is a puzzle indeed.

Big caveat – Coventry First Script won the Department of Labor PBM contract, which may well be the largest WC PBM deal awarded to date. Hats off to the Coventry folks who made that happen.

The big keep getting bigger

And that’s going to continue.  In a mature/declining business, the only way most companies can grow is to acquire other businesses, then reduce expenses.  This works even better when the businesses you acquire can replace external vendors you were using before – so you can count their revenue as top line and margin as profit. This is what Mitchell/Genex is doing with Priority Care Solutions.

Big caveat #2 – MedRisk continues to do quite well – proving that doing one thing really really well is the strategy that always works, everywhere. Of course, it’s also the hardest to get right and sustain. (MedRisk is a consulting client)

TPAs are one of the few niches that are “structurally growing”

Sorry about that terminology – but I couldn’t think of any other way to characterize the growth that TPAs are enjoying as insurers continue to outsource claims services to the industry. As premiums decline, insurers have fewer dollars to invest in people, technology, buildings, etc – so buying claims services on a variable cost basis looks a lot less risky than building/fixing/developing your own stuff internally.

And this will continue.

Yet, every work comp insurer I have spoken with is going to grow.

Which is NOT going to happen. The question is, will this quest for growth turn into a “how far over the stupid line will we jump before we figure out we’re screwed” contest.

Some will win, some will lose – and some are born to sing the blues (kudos to you if you know the band that sang these lines...) Those that are embarking on a quest up to the edge of the line may want to research Reliance Standard, Golden Eagle, Atlantic Mutual, and Kemper.

Jeez I’m getting old.

What does this mean for you?

If you’re an investor you’ve just saved a lot of money and time.