Workers' comp mega-claims...what's missing from the research

and what it reveals

Ten state rating bureaus delivered a 74 page report on mega-claims, providing a useful summary of body parts involved, cause of injury, total costs, trends over time, claim frequency etc.

Not in the report was any discussion of the biggest driver of claim costs - medical services.

I searched the report for:

• “medical” (6 mentions, none remotely useful),

• “hospital” (0 mentions),

• “facility” (0 mentions),

• “surgery” (0 mentions),

• “diagnosis/es” (0 mentions) and

• “health” (1 mention).

Meanwhile, facility costs are the fastest growing component of work comp medical; surgery costs are spiking (due in large part to provider-owned ASCs), rehab/PT costs continue to increase and health system consolidation of physician practices is adding millions of dollars to medical expense.

Oh, and workers’ comp bill review is pathetically unable to keep up with providers expert in “revenue cycle management”…aka “how do we Hoover as much money as possible from unsophisticated, unaware and ill-equipped payers.”

I get that these 10 rating agencies/bureaus may not have great data re medical - but that is proof that the workers’ comp industry is just clueless when it comes to what’s really driving cost and duration - medical.

This should be enormously frustrating to employers, brokers/consultants and taxpayers.

Thirty years ago I worked for an HMO consulting company, traveling around the country talking to big health insurance companies about how HMOs were delivering lower medical costs, under-pricing traditional insurers and growing rapidly.

The execs of these health insurance companies sat with crossed arms, looked at their watches, frowned and exchanged private jokes…a few got up and left midway through the presentation. The consensus was these HMOs would never last, or if they did only a few employers would use them because they were…well…not insurance companies.

Ten years later the health insurance operations of Home Life, Met Life, Travelers, Prudential, Hartford and dozens more were toast, chewed up and spit out by giants like UnitedHealth Group ($370+ billion).

UHG is now the 4th largest company in America, a whisker away from overtaking Apple.

At some point an insurer that really understands medical will do a UHG to workers’ comp insurers.

What does this mean for you?

How can a business survive if it doesn’t know anything about its cost of goods sold?