Insight, analysis & opinion from Joe Paduda


WCRI kicks off…

and for the first time in forever I’m not there…apologies to my friends at WCRI; a Board meeting conflicted with this year’s annual meeting.

Good news is the estimable Stuart Colburn Esq. provided an excellent summary of the session on climate change’s impact on workers’ compensation at WorkCompCentral (subscription required). LWCC’s Jill Leonard and Jeff Rush at CJPIA.

 courtesy WCRI

[btw I’m eagerly awaiting news that several colleagues, long climate change deniers, have “evolved” their thinking to acknowledge the reality that is human-caused climate change.]

Stuart also reported on Dr Olesya Fomenko’s research into medical inflation, noting there’s been a steep rise in facility prices (no surprise to regular readers of this blog…a few relevant posts are here).

All told, hospital inpatient outpatient and ambulatory facility centers account for over half (!!!) of work comp medical spend. These costs have also been growing almost three times faster than physician expenses.

Think about that – facilities – which do what physicians tell them to do – are increasing their prices three times faster than physician services.  Docs admit patients, order treatments/surgeries/PT/medications/rehab, write return to work orders…they are directly and solely responsible for the medical care your injured workers get and their return to work.

Yet you are allowing hospitals and ASCs to charge you and your employer customers more and more every year, while refusing to significantly increase what you are paying the people who actually care for those injured workers. 

In word, this is dumb.

What does this mean for you?

Do. Your. Job. 


Banking crisis’ impact on workers’ comp…not so much?

The collapse of two banks and rescue of two others (so far) sent tremors throughout the financial world.

First and perhaps most importantly it looks like most workers comp insurers had very little – if any – exposure to either SVB or Signature.  So even if the Feds had not stepped in to keep all depositors whole, work comp insurers’ financials would not have been at risk. While there’s lots of external factors that the comp industry has to worry about, this doesn’t look line one of them – at least not directly.

I spoke with Bickford Actuarial’s Mark Priven to get his take: Mark is a very well-regarded actuary and good guy to boot. Here’s his view:

 I don’t think there will be a lot of fallout in the insurance P/C insurance industry in general. A good source of info on this would be Best’s Aggregates & Averages, which shows the industry balance sheet broken out by asset type. One would expect carriers would have a high percentage of invested assets in high-quality bonds. A very low % would be in cash/cash equivalents potentially sitting in a bank. But it’s possible that there are particular companies that have a lot of money tied up with some of the affected banks.

Fortunately insurers (unlike banks) aren’t subject to “insurance runs”. While the insurance liabilities are substantial, they claimants receive get their benefits dripped on them over an extended period, and claimants don’t have a lot of ability to demand immediate payment. Part of the delay is the whole legal process, settlement agreements and related factors.

What I am worried about is the debt ceiling. People keep telling me that since the consequences could be so severe, it’s in everyone’s interest to reach a deal on that. I disagree. If Rs or Ds think that they can blame the catastrophe on the other side, then they could very well want to bring it on.

I’ve got a couple other queries out and will share what I learn.

What does this mean for you?

Nothing (much) to see here folks…


Regulations – the good and the bad

Work comp and healthcare are probably the two most highly regulated sectors of the economy – and yes I’m including the financial sector.

Over the last 25 years I’ve spent a ton of time with regulators, legislators, lobbyists and the government folks tasked with implementing those laws and regulations.

Here are my learnings…

  • < 5 state legislators know anything about workers’ comp, and only a smidge more about healthcare.
  • what legislators DO know is from mass media (healthcare) or lobbyists (work comp, because there’s never any mass media coverage of work comp)
  • the laws that pass (with some exceptions) leave much to the regulators
  • Regulators are mostly thoughtful, diligent, attempt to do the right thing and generally open to input.
    • There are some glaring exceptions – Florida being the most problematic.
  • That said they rarely – and understandably – fully understand the potential impacts of their rulings, with big consequence for injured workers, employers, and taxpayers.

According to sources that know a lot about financial regulation, the collapse of Silicon Valley Bank was due in large part to laws passed by Congress (with mostly R and some D support) that loosened capital and other requirements for a lot of banks.

Incompetence added fuel to the dumpster fire. Now staunchly-Libertarian Silicon Valley investors and business owners have suddenly become huge fans of central government intrusion into private business (what a bunch of %$#(*&># hypocrites).

credit New Statesman

From the LATimes:

venture investment firms…actually launched the run on SVB on Thursday, when they suddenly urged their companies to pull their deposits from the bank, triggering the $42-billion outflow. “And they now want the Taxpayer to bailout their investments…?! Capitalism, Silicon Valley-style.”

Tellingly, SVB dropped a half-million dollars lobbying to get those laws passed…and their CEO – a huge champion of de-regulation was the biggest champion.

Now we have what just might become a global financial problem that – with better US banking legislation and regulations – would never have happened.

What does this mean for you?

If you are a state legislator, find and talk with objective and informed people in each area you’ll be voting on.

If you are a regulator, do what you can with what the legislature gives you, but be realistic…work comp is <1% of US medical spend, so do NOT expect healthcare providers to do anything different for their work comp patients – even if your regulations require them to.

If you are a Federal legislator, think a lot more about some massive effort to shrink the government.

Those Silicon Valley Libertarians sure wish they did.



Lessons from Ukraine

A recent report from Phillips O’Brien and podcast from War on the Rocks got me thinking about parallels between Ukraine’s military and the workers’ compensation industry.

The net is the military units that allow front-line forces to be creative, adapt, and make key decisions about tactics, weapons used and allocation of resources are much more effective than those units which must follow strict plans from distant leaders.


  • In less successful organizations senior leadership tends to be hidebound, sets plans in concrete, allows subordinate units and leaders little freedom or flexibility in carrying out those plans, and measures “success” with metrics that are usually more process (we fired XX artillery rounds and killed YY enemy) than outcome (we took X hectares of land at the cost of YY munitions and casualties)
    Or in work comp terms, process (we answered Y calls in Z seconds, filled out XXX forms, cut medical bills by XXX dollars…) instead of outcome (our medical cost per claim was YYY, claim duration on closed claims was AAA and our closure rate was ZZZ).
  • In more successful organizations (those with better outcomes) senior leadership listens hard to front-line staff, develops back-channel as well as formal reporting processes, sets clear objectives and asks local leaders what resources they need to accomplish those objectives, and uses that information – and local leaders’ insights – to help determine which objectives will be pursued.
    In workers’ comp terms, a really effective organization would provide front-line staff with intel on which providers are most effective, which are profiteering dirtbags, what hospitals have the highest clinical outcome and patient safety ratings and are most cost-efficient…educate front line staff on the importance of these metrics, and enable adjusters and case managers to figure out how to best use that information when talking with patients, providers, employers and families.

Until relatively recently Ukraine’s military was pretty much a carbon copy of Russia’s. Recall Ukraine was a Soviet client state and its military’s structure, leadership model, training, and equipment was identical to the USSR’s. The result was very much a top-down military with even platoon-level 40 soldiers) and squad-level (12 soldiers) leaders required to follow strict plans on:

  • where to go,
  • what path to take to the objective or when retreating,
  • what weapons to use,
  • when to attack and withdraw,
  • how to assault or defend an objective, and myriad other details.

That’s how Russia is fighting in Vuheldar – where it is failing miserably in large part due to stupid tactics.

Some Ukrainian units have evolved to a less-dictatorial leadership model; Ukraine is by no means immune from Russian-style leadership, but it appears to suffer somewhat less from it. Bakhmut is an example; (my layperson’s guess is) leadership sees the battle as a key to the upcoming Ukrainian offensive; Russia is suffering huge and unsustainable losses in personnel and equipment due to human wave attacks and massive shelling. Ukraine is losing hundreds of soldiers as well, but it appears to be delegating authority on local tactics to local unit leaders, likely reducing casualties.

That means fewer Russian soldiers, shells, cannons and vehicles to resist Ukraine’s spring offensive, and more Ukrainian assets to attack.

Alas leaders at many workers’ comp payers – and most insurers – focus way too much on “the plan” and way too little on the planning process and figuring out how to enable local leaders to achieve objectives,

For an excellent discussions of where Russia is doing smart and dumb things due mostly to leadership click here.

What does this mean for you?

Planning and setting objectives is critical, as is delegation and enabling local leaders to figure out how best to accomplish those objectives.


Why your facility costs are increasing.

Revenue Cycle Management.

RCM is the acronym for a focused, ever-evolving, highly sophisticated approach hospitals, ambulatory care facilities and healthcare systems use to suck as many dollars as possible from employers, taxpayers and insurers.

There are scores of RCM companies out there, some with programs specific to workers comp…

and this is a growth industry...

Reality is in many states workers’ comp is – by far – the most lucrative payer. Florida is the worst example of gaming by facilities to Hoover dollars out of employers and taxpayers pockets; Wisconsin is also hugely problematic as is Alabama and a bunch of other states.

And it is going to get worse.

With Medicaid enrollment scheduled to drop dramatically, CMS reducing COVID payments to hospitals, and many hospitals and health systems facing record deficits, hospitals’ scramble to find revenue is going to accelerate.

Meanwhile…bill review companies are woefully behind the Cognizants and Convergents, despite BR companies’ protestations otherwise.

Rather than seek expertise and capabilities and better performance by subcontracting to much-more-sophisticated and capable third parties, BR companies try to do it in-house…mostly so they can keep all those fees for themselves.

Meanwhile facility costs increase, and the ones getting screwed don’t seem to care. Expect Florida and Texas to be most problematic as those states did not expand Medicaid. 1.6 million Texans and 1.4 million Floridians will lose their Medicaid coverage, further hammering hospitals’ financials.

400,000 Wisconsinites could lose coverage…

Why I continue to berate the industry for failing to protect its own best interests is a puzzle even to me…employers aren’t exercised enough to demand better, neither are insurers, and TPAs are no better.

And don’t get me started on brokers and “consultants”…

What does this mean for you?

Do your job.


Two COVID things

It’s been a blissful few months as COVIDF has retreated into the background, likely to remain with us forever but hopefully as a nuisance not the million+ killer it was for the last couple of years.

So, two new items.

First, in what can only be described as a huge waste of taxpayer money, a very large and very scientific study found ivermectin does not reduce COVID symptoms. 

Shocking, right?


  • double-blind, randomized, placebo-controlled platform trial
  • 1206 US adults with COVID-19
  • median time to sustained recovery was 11 days in the ivermectin group and 11 days in the placebo group.

Hucksters, charlatans, former US presidents and other of the willfully-ignorant will undoubtedly parse, lie, misstate, ignore, or otherwise continue to claim that a veterinary medicine for treating bacterial infections is actually a cure for a viral infection.

to quote a T-shirt recently spotted…

Lab leak, nefarious plot, or animal-to-human transmission?

Last week the new broke that the US Department of Energy thinks  – albeit with “low confidence” – that COVID leaked out of a Chinese lab.

This is sort of like saying “Tom Brady is going to sign with the Yankees as a pitcher…heard this from a guy I know who was on a plane sitting next to a woman who looked like a reporter and saw her writing that Brady’s heading to spring training in Tampa…”

This is NOT to disparage the scientists at DoE, rather to remedy what seems to be a serious lack of reading ability on the part of too many who can’t seem to grasp – or rather refuse to accept – that things are rarely black-and-white, or as friend and colleague Pier Rousmaniere notes in his signature line;

Doubt is not a pleasant condition, but certainty is absurd. – Voltaire

[Unless, of course, one has completed a rigorous 1200 person RDB – CT study]

Nine Federal intelligence agencies have completed their research on the “where did COVID come from?” question…Two of those concluded a likely lab leak, five said natural causes and two said they don’t know.

Given the really lousy record these state-of-the-art labs have when it come to keeping deadly viruses contained, it is certainly possible it leaked.

Reality is  – it is unlikely we will ever know – for certain.

What does this mean for you?

Read carefully before posting.


It’s WCRI Time!

It’s just a couple weeks before WCRI’s annual meeting…in Phoenix’ warm and sunny clime. Register here – and do it now as this always fills up.

Unlike other events, attendees are mostly senior management leaders and the like; lots of expertise and experience all in one place makes for a very productive couple of days…

I caught up with WCRI’s John Ruser PhD and Andrew Kenneally to get their take on some of the topics…

MCM – Dr Autor – The implementation of the Biden administration’s IRA, infrastructure, CHIPS and other legislation is ramping up; where does Dr Autor see the direct and indirect impacts of this legislation on workforce, employment, and compensation?
JR – Dr Autor is a great speaker, and has won prestigious awards including one of the top prizes in labor economics, the Sherwin Rosen award. He is going to take a longer-run view, discussing the evolution of work.  Dr Autor will be talking about how tech and AI will affect the future of work and the way work is done.  One question to be addressed: “is tech substituting for (replacing) or supplementing workers?”

MCM – The medical inflation topic is top of mind for many…what will Dr Fomenko and Dr Yang be addressing?
They will be building on work they’ve done in the past on the design of fee schedules and WCRI’s own price indices to show how inflation manifests itself and how system features can serve to control medical inflation. The focus will be on medical payments, provider prices and the impact of fee schedules.

MCM – Very happy to see climate change on the agenda; what drove WCRI’s decision to give this topic the stage?
JR – Clearly we are seeing the impacts of climate change in the form of stronger storms, hurricanes and rainfall, these and others are affecting workers comp. This session is a no brainer as the direct impacts are pretty obvious.

MCM – Physical Medicine is has been somewhat of a concern for payers as costs are trending slightly upward along with utilization. What are some of the drivers of this increase?
JR – Drs Wang and Mueller will look across states and at factors that are associated with the extended use of physical medicine beyond guideline “limits”. They will identify some factors that are associated with extended physical medicine; some obvious like severity and others less so – such as whether there are multiple providers of physical medicine services and issues around coordination of those services.

JR -Finally, we are really pleased at the mix of our own research and panel discussions with a diverse group of stakeholders (unions, providers and employers, regulators and insurers), all of whom bring deep expertise to the discussion.


Trigger warning…

I love reading CWCI’s Bulletins – even if they make me want to tear my hair out and scream.

The latest from the brilliant analysts in Oakland is an update on 3 unnecessary-and-wildly expensive-drugs-with-no-purpose-other-than-Hoovering-millions-out-of-employers-and-taxpayers’-pockets… these three drugs account for 2% of anti-inflammatory scripts and almost half of anti-inflammatory drug costs.

I wrote about fenoprofen calcium two years ago…

these meds aren’t wonder drugs that grow hair while curing low back pain and strengthening joints and rejuvenating shoulder cartilage…they are similar to aspirin, ibuprofen, and naproxen.

OK, here’s how the scheme works.

Neither drug [Fenoprofen calcium and Ketoprofen] is on the California workers comp drug fee schedule, so employers and taxpayers have to pay 83% of the “average wholesale price”. AWP is a number made up by the drugs’ manufacturers, and can be anything they want it to be.

So, some smart schemers figured out that they could make a shipload of money by a) jacking up the price of a drug that costs pennies to make, and b) convincing a few docs to prescribe it to workers’ comp patients.

The latest from CWCI shows that things have gotten worse...
  • Profiteers increased fenoprofen calcium’s reimbursement from $192 in 2016 to $1,479 five years later.
  • in four years, ketoprofen went from $107 – $1,073 –   a 1000% increase in four years.
  • another drug – etanercept – went from $1,930 in 2012 to $7,716 in 2021.

So…what are you going to do about this?  Wait, this is the first you’ve heard about it?  Well, THIS IS NOT NEW NEWS.

CWCI first reported this two years ago.

WCRI did the same months ago.

What does this mean for you?

You have a fiduciary duty to stop this.

If you have ignored this to date, you should be embarrassed, ashamed, humiliated and

  1. Get a report from your payer/PBM about your spend on these three drugs over each of the last three  years.
  2. Find out what’s been done – or attempted – to address this.
  3. If you – the payer – haven’t done your part, do not blame anyone else.
  4. Regardless…
    1. Identify the docs prescribing this stuff.
    2. Kick them out of your MPN.
    3. Require prior auth for these meds.
    4. Work with your PBM – it probably has an on-the-shelf plan – but do NOT just dump it on the PBM and tell it to fix the problem.
  5. Put a process in place to make sure you are on top of this stuff long before it hits some blog.

Oh, and the CWCI bulletin identifies a bunch of other drugs that are – at best – questionable.


Wildly off-topic # 14 – the Russian “offense”

Last time we talked tanks

This time we’ll focus on Russia’s winter offensive. If you don’t have time, just skip to the takeaways at the bottom of this post.

credit Institute for the Study of War; I highly recommend ISW’s briefings

Quick take – the offensive isn’t going well. While Russia is making advances, they are measured in meters not miles, and are coming at horrendous cost in dead, injured, and captured Russian troops. The Russians did capture Soledar and have make barely measurable progress around Bakhmut and a couple other places but none of those are – in any way – changing the reality on the ground.

Which is Russia is screwed.

As we discussed in WOT #10, you need troops and equipment to fight a war.

The Russians lost a huge amount of equipment last year – hundreds of tanks, armored fighting vehicles, cannons, trucks, trains – equipment it cannot readily replace, if at all. If you want to attack, as Russia is trying to do in its winter offensive, you really need armored vehicles to penetrate opponents’ lines and break out into less well-defended territory. Dug-in defenses  – usually several lines deep – are very, very hard to defeat unless you can blow a really big hole in them and exploit the opening with fast-moving vehicles.

So, in what is eerily reminiscent of World War One, Putin the Butcher is throwing thousands of untrained men at Ukraine’s front lines. (If you want a taste of that, I highly recommend the book and film “All Quiet on the Western Front“.) Trigger alert – it is really awful and disturbing, and the German general is a bald version of Putin the Butcher.

PtB’s tactics are pretty awful…

  • untrained ex-prisoners and recruits from Russia’s far east are forced to attack Ukrainians positions.
  • they are slaughtered – because they have no idea what they are doing, have minimal weapons and ammunition, and are going up against entrenched, battle-hardened and well-supplied Ukrainians, but
  • in so doing, the Ukrainians reveal their positions, which are then bombarded with rockets and artillery and attacked by much more capable Russian troops.

That is NOT to say Russia’s “real” soldiers are invulnerable. Reports from the front indicate Putin’s “elite” units lost dozens of armored vehicles and hundreds of soldiers over the last few days…equipment and men which Russia cannot afford to lose.

Putin the Butcher has a seemingly inexhaustible supply of poor young men but they are a very poor substitute for modern military vehicles and artillery.


While others much more knowledgeable than I see this war grinding on for years, I’m hard pressed to agree.


  • cannot replace most lost equipment,
  • is losing more and more of its irreplaceable, experienced and well-trained troops,
  • has not demonstrated its generals have any idea what to do,
  • is facing an increasingly better-equipped and far more motivated enemy, and
  • is losing the information and intel dimensions.

Like we saw late last spring, all is well until it is not, and then it goes really, really badly for Putin the Butcher.

all previous posts on this topic are here.


Budget facts

credit Prof Galloway

The budget hawks in DC are threatening to prevent us from borrowing money to pay our bills..if we don’t agree to some yet-to-be-defined and pretty massive spending cuts.

The total Federal budget for FY 2023 is $6.2 trillion.

About $3.7 billion is pretty much off limits. So, you may want to ask yourself, where are the cuts going to come from?

$1.5 trillion of our spending is for Medicare and Medicaid, and there are hundreds of billions more for the VA and other health programs. And the GOP recently said thy’d leave Medicare alone, and more states are expanding Medicaid (North Carolina appears to be next), so it’s hard to see where cuts would be deep enough to move the needle.

Defense cuts? Defense is $900 billion…Given China’s saber rattling, Russia’s belligerence, Iran’s new air force and movies towards nuclear arms, and the North Korean’s continued aggressive posture, that’s highly unlikely

Social Security? that’s $1.3 trillion, and the GOP has recently said they won’t cut it .(after saying they’d like to figure out how to privatize it…)

What does this mean for you?

Threatening cuts is really easy when you don’t tell anyone what you’re going to cut…because one person’s waste is another person’s income. 


Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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