Archive for the ‘Workers' Compensation’ Category

Louisiana Comp Cost Higher Than Other Study States

Friday, September 25th, 2009

A recent study by WCRI indicates that Louisiana has higher Comp medical payments per claim than many states, the report finds.   

The study cites several reasons, but among those are:  Utilization for neurological testing was 40% higher than the medial states surveyed (32 states).  The study showed that providers bill for more services at time of visit. The study goes on to cite many examples that are similar.

However, one of the major problems in LA is that the major PPOs have pulled out of the state due to litigation concerns.  I talk to clients that are still experiencing problems from bills where discounts were taken years ago, and these were legitimate PPO discounts.  Until LA gets it together regarding allowing the PPO industry back into the state, medical costs are going to remain high. 

Sometimes the bill review industry, carriers, and TPAs understimate the benefit of PPOs.  However, look no further than LA to see that significant savings can be achieved from valid PPOs.

For more information on the study see the following article on the recent study from Risk And Insurance:  http://www.riskandinsurance.com/story.jsp?storyId=256570095 

TX and TN, Proposed Legislation

Friday, March 7th, 2008

It is legislative season again.  I am always nervous between January and May of each year, as you never know what the various state legislatures might put in place for Workers’ Compensation.  This year is no exception, as legislators and commissioners are out to “tweak” the system again in various states.

In my home state of Tennessee, SB 3886, has both a House and Senate bill for consideration.  This bill is making its way through the process, and is rumored to have support of the Lt. Governor.  To summarize the bill very quickly, it basically says that a workers’ compensation PPO in Tennessee must be able to produce a workers’ compensation contract between the provider and PPO on demand.  Also, the contract must be between the PPO and the provider, and that contract cannot be assigned to another entity including another PPO.  Thus, a PPO in Tennessee could not lease any other PPO; instead, they would have to be direct contracted in the state.  For example, if Coventry or Focus are not directly contracted in any given county or MSA, they could not lease another network to fill in that gap.

The word on the street is that this bill has legs.  As always, only time will tell.  But, I do know that providers in Tennessee are really tired of bill disputes when it involves lease networks.

In the state of Texas, new rules for “medical billing and processing” is underway which seems to indicate that providers are going to have to be informed of exactly who is accessing them under the voluntary and informal system.  This of course is outside of the HCN model that Texas has adopted.  Some PPOs already inform their providers of anyone accessing them via website or other electronic means.  Proposed 133.4 would require electronic notification to the providers of who is accessing them for discounts on a quarterly basis.  There is also an “800” number requirement for providers to call into.

For Texas, these proposed rule changes are 35 pages of legal speak, that will require a lot of interpretation.  Yet, it seems the intent is that providers need to know who is accessing them.  My understanding is that these proposed rules/regs will probably go into effect.  Stay tuned.

Both Texas and Tennessee seem to have the same intent, which is to eliminate silent PPOs in workers’ compensation and to provide the medical provider with assurance that there discount to a PPO is being given for the stated purpose.  By the time May gets here, who knows what will have passed in these two states or any other, but hold on its always a wild ride this time of year.

Work Comp Bill Review

Monday, December 17th, 2007

A week ago, Joe Paduda on his blog examined the current state of bill review and several of the major players in the market. See an excerpt from a recent post of his:

“King hired former Medata exec Don Theis to head up sales and marketing; Theis’ task, and it is a formidable one, is to bring a market- and customer-orientation to the company. With no ownership of networks, Medata is looking to be neutral and customer-driven regarding network access, building links to the major network vendors and assessing customers a transaction fee for access. Word from Medata is the transaction fees will be transparent and modest.Medata’s new leadership could not have come along at a better time, and the tight focus on WC and ‘Switzerland’ approach to networks may help King and Theis reverse the company’s course.”

Regarding all the various bill review organizations that Joe examined, I think he nailed it just right in discussing the need for bill review companies to be “Switzerland”. It seems to me that in the long run it will be hard for them to be successful, if they don’t take a netural approach regarding PPOs, TPA functions, etc… Over the years, the partnership between independent bill review company and PPO has served the industry well.

Proposed Work Comp Changes in Louisiana

Friday, December 7th, 2007

Everyone that has operated a Workers’ Compensation PPO in Louisiana knows what a nightmare this state has been recently. I talked to one PPO back in the summer that indicated they had close to 1 billion dollars in exposure for penalties associated with PPO discounts taken where ID cards had not been used. Of course, using an ID card for workers’ compensation is just almost impossible. Most workers’ compensation PPOs simply chose to quit doing business in the state. Now, with new Republican Gov. Bobby Jindal, the thought is that workers compensation can be revisited in the state. In a recent article from Louisiana Medical News (see quote below), there is new hope for LA.

“Sharma says that LWCR, which represents 250 large employers and hospitals and close to 1 million workers, is taking a comprehensive approach to changing the workers’ comp system. Sharma said he is confident that changes will be made by the legislature.

The group has recommended lowering compensation costs, changing the dispute resolution process to promote consistency and efficiency, and creating quality medical provider networks to treat injured workers.”

Thus, any changes to allow PPOs to operate effectively in the state again will help to lower medical costs. This just might solve some of LAs problems such as Louisiana employers have the longest temporary disability duration rate, 40 percent higher than the median, and pay more than the national average in workers’ compensation costs, with higher premiums.

Colorado New Workers’ Comp Law and PPOs

Friday, November 30th, 2007

Letters are now going out from PPOs to their payor clients requesting their help to comply with the new workers’ compensation Colorado law (Senate Bill 79). In these letters work comp PPOs are requesting the following information from their payor clients: (1) where should doctors send the bills (2) where to call for inquiries. The real difficulty in the law is that the injured worker has to present the above information to the medical provider at the first visit.

It is somewhat easy for the PPO to comply with these requirements for direct clients. Yet, it is much more difficult when a reseller such as a medical bill review company is the client of the PPO. For PPOs to follow this law, it is going to take the help of the medical bill review companies and their clients.

This state law, as in so many, once again shows the limited understanding legislatures have of the various layers of workers’ compensation cost containment.

National Work Comp Conference Summary

Friday, November 9th, 2007

I just got back earlier this week from the National Work Comp Conference in Chicago. It was a productive conference, although I liked the setting of Las Vegas better last year.

The big difference at the conference was the buzz over Coventry. With all of the mergers and deals this year, it was clear Coventry was going to be the main topic for everyone, which held to be true. An irony of the conference was that Coventry seemed to be very quiet themselves. There was not a big splash from Coventry promoting their new “super network”. Instead, there was just a lot of talk from Resellers as to if they were going to be termed by Coventry or see their rates go up (or both).

I also heard a lot of buzz regarding Fair Pay and other “fair and reasonable” business model companies. It seems the time has come for this major form of cost containment.

Otherwise, it was a quiet conference.

Coventry Work Comp PPO Strategy

Saturday, November 3rd, 2007

As stated in other posts, it continues to amaze me the changes in 2007 for the workers’ compensation PPO market. This week brought more changes.

From my discussions with many different people, it seems that Coventry has now entered a new strategy. What I am hearing is that they are now going to offer a “Super Network” (not a very creative name) consisting of Focus, Aetna, and Coventry. For this “Super Network” the payor will get all 3 networks but at a much increased price. We shall see if this ends up holding true, but it seems to be the understanding of a lot of industry people. I imagine we will all know much more after the National Work Comp Conference held next week in Chicago. Also, it sounds like the plan from my sources is for Coventry to cancel all of the reseller agreements they have in place to drive everyone to them as a total solution (thus cutting out all of the resellers including software companies and bill review companies). If this is the strategy, it will only work if they term all of the resellers.

PPO percentage of savings have just gone to low, so the market is about to adjust itself with Coventry’s plan if it holds true. In a sense, I think this is a good thing as PPOs can’t continue to offer full coverage at increadibly low prices. Payors always underestimate what it really cost to run a PPO.

Whatever the strategy ends up being, the payors just needs to understand that options exist like Prime Health Services. No one has to be cornered by Coventry or any other company. The free market always wins in the end. New companies will emerge and existing ones will rise to the top to take on the “super network”

Available National Work Comp PPO Networks

Sunday, October 21st, 2007

I continue to be amazed that many in the work comp industry do not understand the PPO industry, although it is a mature business model. Many payors and consultants believe payors are limited to only Aetna or Coventry work comp PPO networks. See the below statement from joepaduda.com:

“Unstated but obvious is the most important rationale - as the Coventry combo is the last big WC network standing, national WC payers have no other options. Yes, CorVel does have a national network, but none of the payers surveyed consider it a serious option.”

The above is simply not true. There are several quality national workers’ compensation PPO networks in the marketplace. Prime Health Services, Beechstreet, IHP, and others. The market simply does not have to be stuck with Coventry and Aetna. Payors and consultants need to pay attention to the market options. Otherwise, they are going to be paying more than necessary for their PPO.

Why All The Workers’ Compensation PPO Consolidation in 2007?

Saturday, October 13th, 2007

Why is the medical cost containment industry experiencing all the PPO consolidation in 2007? The answer is fairly simple. The payor community won’t make fast decisions. It is not unusual to see payors take two (2) to three (3) years to make a decision to choose a new workers’ compensation PPO. With such a slow response, it doesn’t allow PPOs to easily gain new business, even if they are much better than the current PPO vendor of the Payor.

It takes approximately 10 years to create a really quality PPO that is able to compete on the national stage. However, if a workers’ compensation PPO doesn’t obtain new business early in its genesis, then it may never have the 10 years needed in development. It takes a lot of capital and patience to last the years of needed.

The market in late 2007 had a major shift. Two larger named PPOs, including the market “800 pound Gorilla”, for all practical purposes merged in the market place. In my opinion, this occurred because the payors were not making choices at a fast enough pace to satisfy the business model needs of those two PPOs.

Most PPOs are paid on a percentage of savings that they achieve for their clients. However, these rates have been pushed down greatly over the past seven (7) years. This decline in % of savings rates has reduced revenues to PPOs along with ever increasing and deepening fee schedules in the various U.S states.The payor community consisting of TPAs, Insurance Carriers, and Self Insured employers are unfortunately hurting themselves by not choosing new PPO options more quickly. The consolidation of the market continues to take away PPO choices. However, all is not lost. There are quality PPO choices in the mature space of workers’ compensation PPOs. Hopefully, the payor community, which is now faced with a consolidation process that is ongoing, will understand and react by choosing competitive quality PPOs. If they don’t act soon, they will be paying much more for PPO savings all across the country. As in economics in general, monopolies only drive up costs. The new “800 pound Gorilla” is going to be pushing pricing up much sooner than later.