Here are the trends I’m currently observing:

Unemployment is skyrocketing: US unemployment claims soared to last week—far above the expected 5 million. We have had weeks in a row of unemployment claims and have lost about 10% of the workforce in that time. The graph below, which reflects only the first week of the three (the next two were both significantly higher) shows the scale of this crisis. Less workers means less premium for carriers, less taxes for the government, and less volume for providers of workers’ compensation services. James Bullard, the president and CEO of the Federal Reserve Bank of St. Louis, has ,which is higher than the ever hit at 25% unemployment. Bullard’s prediction would mean a 30% drop in new claims for workers’ compensation in general, as already evidenced by many noteworthy companies ���𳾱���Dz����.

Accidents are decreasing: Given the daily news, one might think the overall national death rate is soaring. However, it appears any increases in deaths from COVID-19 are being more than offset by reductions in fatalities from car and workplace accidents, for instance. For weeks 9 through 11 for the four prior years (2016 – 2019), the nation averaged 170,555 deaths. For weeks 9 through 11 this year, the total was 153,015—meaning 17,540 fewer people died in America during the first three weeks of March 2020 than could be reasonably expected. The final will take some time to come out, but the current trends make sense. Fewer people are driving and physically at work, thereby reducing situations where injuries can occur. Some automobile insurance carriers have to their policyholders because risks and injuries are so far down. California and other states are starting to . Moreover, driving injuries may be reduced permanently as more people and companies adapt to work from home arrangements effectively.

Medical treatment is declining: People cannot or will not get live medical treatment due to social distancing or fear. Elective surgeries are being put on hold nationwide. This can be seen in the financials of hospitals. With the COVID-19 outbreak, one may assume that hospital systems would be overwhelmed but making money. Instead, they are , laying off workers, and experiencing . There are even articles such as “?” I spoke to a neighbor who sells surgical implants and is often in operating rooms with doctors. His company is currently conducting rolling furloughs. He said all the hospitals are bleeding money.

Layoffs Usually Drive More Workers’ Compensation Claims: People who fear being laid off or fired sometimes file false (or minor) workers’ compensation claims. This could lead toward a short-term spike in new claims.

COVID-19 Covered: For positions that are required to treat patients, including hospital staff and first responders, it is likely COVID-19 will be covered under workers’ compensation policies.

Supply Chain Returning to the US: Due to the difficulties many companies have had (and will continue to have) with various supplies chains, I expect many companies will be hesitant to keep all production and suppliers off-shore in the future, especially if China is involved. While it does not change much in the short-term, we could see a long-term increase in US manufacturing and on-shore workers’ compensation services.

Shift to In-Home Medical Services: Medical care at home will become more accepted and needed.�� 911�Թ� has increased our level of telemedicine and telephonic case management (TCM) to ensure patients continue receiving care during these times. We have also increased in-home services like mail order prescription fulfillment and mail order medical supplies,durable medical equipment (DME), and home health modifications to get patients the care they need outside of hospital settings.

Like every industry, the workers’ compensation and auto markets will retract dramatically in size for as long as our nation is shut down and for some time afterwards. Finding safe and healthy ways to return to normal life is the challenge before us.

Stay safe, stay strong.

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Admittedly, the law only recently went into effect. But given that SB 1160 passed in October 2016, organizations have had nearly two years to prepare. So why are so many still not compliant?

My answer is twofold: effort and expense. 911�Թ� first navigated the complex path to URAC accreditation in 2008 and has undergone three reaccreditations since. We know firsthand how time consuming, resource intensive, and financially demanding the process is for an organization. It is an enterprise-wide commitment. In addition to daily processes the UR team must document and follow, our Technology, Compliance, Talent Management, and Marketing departments must also enact and adhere to detailed protocols. The cross-departmental efforts and sophisticated infrastructure needed to establish and maintain URAC accreditation, coupled with the financial investment necessary to meet the accreditation’s requirements, is likely why so few California providers have pursued it.

What remains to be seen is how long these non-accredited providers can hold out. According to the WorkCompCentral article, the California Division of Workers’ Compensation is drafting new regulations which may include penalties to ensure organizations comply with the law. But no amount of penalties can expedite the URAC accreditation process, which takes 10 to 12 months with no guarantee of success.

I urge companies currently processing California work comp claims to verify their UR��vendor’s accreditation status. For those who discover their vendor is among the non-compliant 40 percent, now is the time to consider an alternate solution. With the lengthy accreditation timeframe and the likelihood of increasing provider disputes over the validity of UR determinations by non-accredited UR organizations, it’s wise to��be proactive.

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The California Workers’ Compensation Institute (CWCI) issued a Research Report in early June regarding the impact of physician networks in California Workers’ Comp. In the report, one thing jumped out even more than the MPN data.  The recent reforms California has made are not working.  The workers’ compensation system is eroding badly.

First, though, a look at the MPN data.  In almost every instance, network providers had better results than non-network providers:

• Lower attorney involvement (17.4% for network  versus 32.9% for non-network providers)
• Faster claims closure rates
• Average risk-adjusted medical payments  were 16% less for network claims versus non-network claims 24 months post injury

The only area that was better for non-network providers was, surprisingly, opioid prescriptions (54.5% in network versus 30.4% out of network). Overall, it sounds good for the MPN (although the opioid data scares me).

However, in almost all situations, the results of the period prior to the MPN were better than those during the MPN period:

• Attorney involvement in indemnity claims went from 38.1% to 44.6%
• Indemnity claim closure rates  at 12 months decreased from 72.7% to 61.2% during the MPN period
• The percentage of in-network claims with at least one opioid prescription went from 39.1% to 54.5% during the MPN period

What I can glean from the data is that while the MPN produces somewhat better results in the current California environment, the overall changes in the California workers’ compensation environment since 2009 are all negatively impacting results—far more than the MPN is improving them.  This is not a trend anyone wants to see continue in the largest workers’ compensation market.

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Fuzzy Math

Let’s start with a macro-level analysis of the numbers.�� The article’s statistics do seem to support the “decimation” of the workers’ comp system.�� However, the basis for many of their assumptions was faulty math.�� For instance, in most cases, they use total paid wages as a denominator to indicate that the employees’ share of the benefits is declining, which is problematic for a number of reasons.�� Through improved technology and training, and the fact that many high-risk jobs have gone overseas, the number of work comp incidents per employee is dropping each year.�� An office job will have far less injuries than a manufacturing job, for example.�� The workplace is becoming safer.

So let’s say that 2 people out of every 100 were hurt before a safety improvement was made, and afterwards it dropped to 1 per hundred.�� With the exact same benefits, using their logic, the injured worker just had their benefits cut in half.���� This is obviously not true.�� The proper denominator is the number of injured workers, not total paid wages.�� With a state-specific system, there will obviously be anomalies and outliers among 50 different states, but on the macro-level we have seen wage benefits increase at around the rate of inflation for the last decade.�� This, to me, seems fair.

The Profitability Puzzle

The article also cites the profitability of workers’ comp and how employers are lobbying to make more money through reforms.�� Yet according to the very studies they cite, employer costs increased 6.9% between 2011 and 2012, but the number of covered employees only increased 1.6%.�� That is a 5.2% cost increase per employee.�� That is much higher than the Consumer Price Index for 2012, and doesn’t correspond with a profit-taking climate.

A critical situation that the articles did raise, and that we as a society must address, is the shift of workers’ compensation liability to the taxpayer through Social Security Disability and Medicare/Medicaid. Perceived profits in the workers’ comp arena aside, this shift of liability to already heavily burdened programs is a critical issue.�� Candidly, Social Security and Medicare were designed as a program for the elderly.���� The expansion beyond the original scope into disability insurance is one of the primary reasons (that, and the fact that there was no adjustment for increased life expectancy) these programs will not be sustainable long term.

The Workers’ Comp Social Contract

Workers’ compensation is a social contract to provide benefits to those hurt at work, regardless of fault.�� In the industrial revolution, someone injured at work could be promptly discarded.�� Unable to work, they often became beggars or homeless.�� This resulted in a backlash of lawsuits and strikes, putting companies and all jobs at risk.�� By covering medical care for those hurt at work, and providing some income, the deal was employees’ healthcare and basic income would be covered and unnecessary friction costs (e.g. legal fees) would be reduced in order to pay for these benefits.�� Frankly, it was designed for catastrophic injuries, and has expanded to encompass any bump, bruise or paper cut, but that is a different story.�� How has it worked?�� OSHA recently reported on the earning power of people in the 10 years after a workers’ compensation injury, finding that the average person makes 85% of their pre-injury wages.�� This is certainly not ideal, and obviously hard on many people, but candidly it is pretty amazing.�� From no earning power historically, to 85% over 10 years, is an impressive impact from our system.�� To a major extent, it is obviously working.

But as the ProPublica article points out, there are gaps in the impact on employees.�� Objective severe injuries (those medically visible) likely do not receive enough benefits and subjective (patient word only) ones are draining too much of the money available.�� An employee making high wages will never be able to sustain the same lifestyle, while some employees can make the same or even more by staying on workers’ compensation.�� States need to find ways to improve their systems to not only ensure that benefits are being fairly distributed to the most severely injured, but also make sure there is a safety net WITH a strong incentive to come back to work.�� People should not make as much not working as working.�� These are needed updates to the terms of this social contract.

In our country, we have an expectation of fair play. So when something seems inequitable or one-sided, in written contracts or even in social contracts, it offends our sensibilities. One point where the ProPublica authors and I agree is that the CA IMR rules, where the reviewing provider can remain anonymous, is pretty un-American.�� Much like red light speed cameras, it is easier for the regulatory body, but that does not make it right.�� We have a right to face our accusers in the United States.

As I’ve said before, there are no easy answers. But we must not take short-cuts in defining the problems that we face, nor make blanket condemnations of state legislatures, insurers, or employers in a rush to judgment. The challenges facing the workers’ compensation industry today are very real, and frankly deserve nothing less than a measured, thoughtful analysis as to how to make it better overall for society.

The post A Few More Observations on the ProPublica/NPR Debate appeared first on 911�Թ�.

The fact that one third of employees that return to work experience a re-injury within 6 months demonstrates the non-linear and difficult nature of getting someone back to work. ��It takes expertise, finesse, knowledge and persistence to achieve the best outcomes. The results and outcomes we see speak to the quality of our staff and great partnerships with our clients.

This is a good read for anyone that wants a better feel for what’s involved in case and claims management.

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Issues with this practice include:

• The costs are way higher than a pharmacy or PBM (pharmacy benefit manager). They can only sell these drugs to workers’ compensation, auto or liability patients in states that allow it. Group health will not pay enough so this method is not worth it to them.
• There is a massive incentive for physicians to prescribe drugs, even when they are not needed. This is ESPECIALLY true for addictive drugs that could require lots of follow-up visits and prescriptions.
• It circumvents the formulary and controls of a PBM.
• The��physician can only prescribe what they have in-house, which may not be the best choice for the patient, may not be a generic, etc. ��The machines have limited selections.

No matter how you slice it, there is no benefit to society (except that the patient does not have to go to a Walgreens).����This small inconvenience does not seem to be a reasonable offset for the cost.

Read this amusing article addressing this topic, ��

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For those of you who do not know the trends in the industry, hospital groups are consolidating and buying physician practices and Ambulatory Surgery Centers (ASCs). They can charge more for government services than independent groups (Medicare, Medicaid, etc.) so the value of the purchased entity jumps as soon as they purchase it. In addition, with regional monopolistic power, they have more leverage negotiating PPO rates, which drives up costs to the general market.�� This trend will continue with the national healthcare law changes.

This is why 911�Թ� has been focused on developing new techniques to attack this problem.�� ��and focusing on has been at the forefront of our product development innovations for the last few years.�� Having medical management programs that can impact this trend will become more and more critical as time goes on.

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