Willie Sutton and Your Comp Program
Feb 28, 2019

Joe Paduda's always insightful blog, ManagedCareMatters, ran a two part look earlier this month (02/07 and 02/11) at what's happening with facility costs inside comp. Joe's lead should make you want to know more: "Costs for hospital-based care - driven by large price increases - are increasing faster than any other medical service." Note also that facility costs - inpatient and outpatient - are the most variable type of medical cost in comp. For reasons not readily apparent to normal human beings, facility costs for the same procedure can vary by as much as 800% from one state to the next.

Joe quotes a recent study of costs in Florida published in Health Affairs:

   

...in the period 2007-14 hospital prices grew substantially faster than physician prices. For inpatient care, hospital prices grew 42 percent, while physician prices grew 18 percent. Similarly, for hospital-based outpatient care, hospital prices grew 25 percent, while physician prices grew 6 percent. [emphasis added]

 
Why? Because comp is the softest target around for hospital fee negotiations. Compared to the big health plans, comp has very little negotiating leverage. Patient volumes are simply too limited. What can you and your TPA do to minimize the damage? Here are two tactics that will help:

 

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When possible, direct care to not for profit hospitals. Don't be distracted by so-called discounts. The charge-master, the base price list, is what counts.

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Make aggressive use of detailed bill review (don't get charged for things like screws dropped on the OR floor during the operation*) and, for larger bills, try direct negotiation with the facility. One on one discussion can be remarkably effective.

 
Joe points out that hospitals and O/P facilities overprice their services for comp cases for the same reason that the famous bank robber Willie Sutton** robbed banks - "that's where the money is." In sum, facility charges, while relatively small in absolute frequency numbers compared to things like PT visits, can account for a considerable chunk of change - your change. Pay close attention because these are the details that count.

*One titanium screw for a common type of spinal implant costs roughly $1,000.00 and, yes, they do get dropped and the 10 second rule does not apply.

** Hey, millennials, google William Francis Sutton, Jr. We had some classy bank robbers back in the day. Sorry you missed it.

 

Wearables, Surveillance, and Risk

Fitbits, Apple watches, and similar devices - generally referred to as "wearables" - seem to be spreading faster than fleas in a pack of old dogs. Employers, health plans, and wellness programs are all working hard to get a wearable on everyone's wrist, according to a recent article in the Washington Post. While these devices are set up in several different ways and report employee activities to different parties, depending on the goals of the program, every risk manager should be keenly aware of any such programs in his/her company.

While the goals of using wearables to track employee steps (and often a great deal more, including such things as sleep habits) are essentially benign, the troves of data being generated are a potential land mine waiting to be stepped on. Your employer just wants to encourage you to get healthy and stay that way. Do your 10,000 steps every day, lose that extra 20 pounds you're hauling around, get your 7.5 hours of sleep every night and health care and disability costs will go down. Slender, well-rested employees will probably live longer, look better, and be happier as well. What's not to like?

Well - first of all, this is largely unregulated territory. Practice is running way ahead of the law. HIPAA does not apply, in most cases, to the data being generated. The information is being used by various parties for various purposes. In some cases your boss knows everything your fitbit knows the following morning. Don't speed-read that sentence, friend. Think about it. In many plans your boss, or other company managers, can read everything your fitbit or Apple watch picks up during the day - and know it all came from you. Not some aggregated and analyzed mythical average employee - you.

Now, we're in the risk business, right? Let's think about the risks inherent in these programs and whether they are adequately covered - or covered at all - in your risk mitigation and insurance plans. If the health data trove sitting in your systems is hacked, what happens? If a manager uses what most of us think is private health data to terminate an employee - with the knowledge and implicit permission of the C-Suite, what happens when you all get a quick education on the phrase "wrongful termination"?

Most important of all, was risk management at the table when HR and the health and wellness plans put their heads together to design this wearables to wellness program? If not, you may have an unscheduled date with destiny. Wearables are 2019's shiny new toys. Better make certain they don't have sharp edges or can be a choking hazard.

The Chinese have been in the game for 5,000 years. They have a saying concerning bright new toys: 那是非常闪亮的在外面, 就像驴的粪便 Loosely translated: that is very shiny on the outside, just like donkey droppings.

 

The Dark Side of Good Times

Let's take a look at on the job injuries in the show me state, Missouri.

 

   

For the state's largest workers compensation underwriter, Missouri Employers Mutual Insurance Company [MEMIC] based in Columbia, new hires made up about 28 percent of spending on critical injuries in 2015. Over the past two years, new hires accounted for about 60 percent of the company's payouts on critical injuries.

 

 
This is from an excellent article in the Columbia Tribune this past week. Note that top drawer local journalism isn't dead yet, not in Columbia, MO, anyway.

The fact that as the number of jobs being filled goes up, the number of relatively inexperienced workers goes up as well isn't news by itself. Everyone who's been in the workers' comp business through more than one business cycle knows what happens. The newbies have more accidents. What is important here is the degree of severity. "People are getting killed," MEMIC CEO Jim Owen said. "People are having really serious injuries when they're new hires."

The article focuses on the trucking industry, but the same issues are turning up in other industries, such as construction, as well. How is this playing out in your operations? Given the well-established overall trend to fewer on the job injuries, it's easy to pay a little less attention to safety and training, but the news from the heartland strongly suggests that now is a time to beef up safety and to pay special attention to your newest risk factors - the people you've hired in the last 12 months or so.

Your faithful correspondent worked on some of the earliest in-depth epidemiological studies of comp back in the 90s. We found over and over that one of the two most dependable indicators of claim severity was time on the job. Less than six months on the job was the major window for claim severity. Age was the other. Odds are that no one was born knowing how to do the jobs that your company runs on. Are all of your training/safety materials up to date and in synch with any new equipment? Have you put a watch on accidents involving new hires to insure immediate corrective action? Had any recent pep talks, campaigns, reminders about how it's everyone's duty to watch out for the newest workers?

Let's give the last word to Jim Owen of MEMIC: "Every day should be about safety. If you make safety the No. 1 thing in your company every day, all other productivity goes up."

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