Insight, analysis & opinion from Joe Paduda


What’s keeping workers’ comp execs up at night

After 28 calls with workers’ comp execs over the last 8 days it’s quite clear many are very concerned about specific issues.


With payrolls plummeting, small businesses closed and many not likely to re-open, and many governmental entities under severe pressure due to lack of income from sales and other taxes, insurers are quite nervous about premium income.

With PPP expiring at the end of next month, more employers may lay off workers they had to keep on payroll.

Impacted most will be carriers focused on smaller businesses, especially hospitality, retail, and tourism-related sectors.

Multi-line liability

Several insurer execs voiced deep unease about general liability-related issues related to employees contracting COVID at the workplace. If those workers go home and family members become infected, there’s concern the employer may have some degree of liability. Especially if they knowingly flaunted or ignored safety guidance.

This unease may well be justified…

From the Austin Statesman


The tail

Several execs specifically tasked with leading their companies’ COVID response noted a lack of clear understanding about the near-term and long-term impacts of COVID on patients. Permanent lung damage, kidney problems, blood clots, cardiac issues, and health problems related to long-term use of ventilators were all cited as potential concerns for patients with severe cases of COVID19.

Relatively few patients are likely to suffer these conditions. However for those that do, the potential impact on the patient’s health and well-being, along with future employment implications merit close attention.


Most of all, executives want certainty. Ideally, many want COVID to be classified as a “disease of life”, but in multiple states that ship appears to have sailed.

What does this mean for you?

We don’t know much at all about COVID, so we’d better pay very close attention to facts and data, not political pandering and nonsense.


Covid’s impact on workers’ comp – initial Survey results

We are more than halfway thru our second Survey of COVID19’s Impact on Workers’ Compensation (details on the first survey and a link to the abstract is here).

Respondents include:

  • TPAs
  • Insurers
  • State Funds
  • Large self-insured/self-administered employers
  • Service providers/managed care firms

Top takeaways from the 18 surveys completed to date:

  • 83% of respondents rated COVID’s impact on workers’ comp a 4 or 5 (very or extremely significant impact)
  • Across all respondents over 10,000 COVID claims have been reported
  • To date about 15% have been accepted; many are still under review
  • The number of new injury claims has dropped significantly, although this varies greatly by type of employer
  • Disability durations are a major concern due to high unemployment and far fewer jobs to return to
  • To date, the incurred cost for COVID claims has been relatively modest

Service provider takeaways:

  • Field case management took a big hit early on and has yet to recover
  • UR volumes plummeted as well
  • Transportation got hammered early on…there’s some evidence it is recovering
  • Medical bill counts are trending lower (there’s a lag)
  • Pharmacy management is among the service lines least affected

I’ll finish the Surveys late tomorrow, then it’s analysis and report prep. Respondents will get a (very) detailed version of the Survey Report; an abstract will be available to the public.

And thanks VERY much to the 30+ payer executives who are sharing their experience; their reward will be knowing a lot more about the impacts of COVID, how other payers are responding, and how others are adapting.

What does this mean for you?

COVID’s impact on workers’ comp will not be COVID claims or costs. 


Hey legislators…don’t do stupid stuff

Four months into the COVID pandemic, early data show workers’ comp insurers are doing the right thing.

Two data sources support this assertion – CWCI’s just-released analysis of 1,077 California claims and a dozen conversations I’ve had with insurers, large self-insured employers, and service providers over the last two days.

First, CWCI.

CWCI’s researchers and statisticians analyzed 1,077 COVID-19 claims from 28 insurer and self-insured CWCI members. Notably, these are claims filed before April 30, a week before the governor’s Order granted the disputable presumption.

Key findings:

  • Only 35% of the COVID-19 claims were denied
  • 7 out of 10 workers whose claims were denied tested negative for the virus
  • Other denials were due to:
    • the employee had not been exposed at work,
    • no diagnosis or symptoms of COVID-19,
    • the employee had been working at home, or
    • refused to take a COVID-19 test.

Next, I’m in the midst of a second national survey of payers and service providers about their experience with COVID-19. (details on the first survey are here.)

Key preliminary findings (based on a dozen completed surveys):

  • most payers have developed COVID-specific intake processes, trained staff to handle COVID claims, and set specific policies and procedures to address COVID.
  • so far, payers have accepted about 15% of COVID-19 claims
  • the range is about 10% to 25% of COVID claims filed
  • where possible, insurers surveyed are “paying without prejudice” on claims filed but not yet accepted or denied. That is, insurers are paying medical bills even if they don’t know if the patient has COVID-19.
  • Several very large self-insured employers are providing two weeks’ leave with pay to workers who fear they’ve been exposed at work, regardless of test results

What we know so far.

  1. Some percentage of filed claims are still under review, so the acceptance rate will increase.
  2. Employees who think they may have been exposed at work are filing claims, even if they are asymptomatic.

Based on what we know today, workers’ comp insurers, state funds, and self-insured employers are doing the right thing.

Despite that, several states are contemplating bills or executive action to make workers’ comp the default payer for COVID19.

California’s SB1159 is the poster child; from CWCI – “By including all types of employment without regard to the level of risk actually posted, the presumptions greatly expand the nature and scope traditionally encompassed by presumptions of compensability in California.

More specifically, the bill makes workers’ comp responsible for COVID-19 diagnoses even among workers deemed “low risk” for contracting the disease at work by OSHA. That is, workers with “minimal occupational contact with co-workers or the public.”

COVID-19 is a relatively small occupational issue, but a huge societal one.

Yes, workers who contract the disease through work should be covered by workers’ comp – and all the evidence to date indicates that’s happening.

But work comp should NOT be the piggy bank for any and all COVID claims – which is precisely what SB1159 and similar actions in other states would do.

What’s driving this is our totally dysfunctional healthcare system, one that relies on private insurers, employers, and employees to generate much of the revenue and all of the profits. Hospitals, health systems, medical practices and other providers are in desperate financial shape; it will get worse over the next few months.

Dumping the responsibility for a societal pandemic on a tiny industry that pays less than 1 percent of total US medical costs is not only irresponsible, it also won’t work. Workers’ comp insurers, excess insurers, employers, and governmental entities don’t have the financial resources, skills, staff, or capability to manage and pay for the care of hundreds of thousands of patients, while also covering their lost wages.

This is society’s problem. It’s time governors, state legislators, Congress and the President do their job. Take responsibility – just like the workers’ comp industry has.

What does this mean for you?

Workers’ comp payers – keep doing what you’re doing.



Hospitals and medical practices are losing billions.

And that has big implications for private insurance and workers’ comp.

An insightful piece by Milbank Fund President Chris Koller details the carnage (Chris and I serve on Commonwealth Care Alliance’s Board of Directors).

Total healthcare spending in March was more than 5% lower than the same month in 2019.

From Altarum’s report:

This decline was led by the two largest spending categories: hospital spending, which showed an 8.7% decline, and spending on physician and clinical services, which declined by a huge 19.3%, year over year.

In late April, outpatient office visits were down more than 60%. Visit counts have rebounded in the last few weeks, but are still quite low – especially for surgical and orthopedic specialties.  (From the Commonwealth Foundation)

The financial impact on healthcare providers is devastating.  To date, big health systems have already lost about $400 million – each.

80% of New York doctors have lost more than half of their income, and providers in other states haven’t fared much better. Not surprisingly the ones hardest hit are those that do procedures – especially surgery. While primary care docs and behavioral specialists have been able to switch some patient visits to tele-services, that isn’t possible for proceduralists.


  • Some practices will not survive. New practices, those without strong referral sources, and those with high debt are most at risk.
  • Provider consolidation will ramp up and the number of smaller practices will shrink as the big get bigger – and more powerful. Big practices and healthcare systems are getting more than their share of relief dollars, and are better equipped to make it through months of financial losses. They’ll be snapping up physician practices for pennies on the dollar.
  • Near term, proceduralists are going to favor profitable payers as they open up. Expect provider billing and collection practices to get a lot more aggressive.

Workers’ comp bill review systems, logic, and rules are woefully inadequate and payers using those systems will suffer the consequences.

Private insurers are significantly better off due to much more sophisticated systems…but over the longer term they can expect provider groups will push hard for increased reimbursement.

What does this mean for you?

Workers’ comp payers and private insurers are making a lot of money these days. That will not last.

They would be well-advised to invest now in reimbursement systems, expertise, and tools.




Clarification, chronic pain treatment, COVID’s impact, and camel pee

First, a clarification.

Last week’s post re NCCI’s virtual Annual Issues Symposium needs clarification.

Before I published the post I asked NCCI to comment on the lack of any reference to COVID claims counts in the presentation, saying “Any early data would have been quite helpful; any comment?” I received a response and published it in the post. NCCI’s response did not indicate that it did not yet have any Q1 data.
After the post was published, NCCI wrote me to clarify, stating they won’t receive any data on Q1 claims until October, 2020 at the earliest.
NCCI CEO Bill Donnell wrote me as well; here’s the relevant part of that email:
I wanted to respond to what I would label a policy issue. The post includes a sentence…”I can understand why NCCI-and other research organizations don’t want to provide any data that might encourage politicians to look to WC to cover the costs of Covid-19.” I take issue with this because it implies that we would withhold data for political reasons (my interpretation).

Fair point.

If I had known NCCI didn’t have Q1 data, I would not have made that statement. However, Bill’s concern is valid and I should have been more careful with my choice of words – and will be in the future.

Workers’ comp has made remarkable progress preventing overprescribing of opioids to new patients – but there’s much to be done to address chronic pain and long-term opioid use.

One therapy that must be considered is medication-assisted therapy. From HealthAffairs comes new research indicating the long-term use of buprenorphine shows significantly better outcomes than short courses of treatment do.

Research estimates that 28 million surgeries have been postponed or will not be done over a 12 weeks period due to COVID. That’s a major reason US health systems are in dire financial straits…to date, average losses are $400 million. 

Colleague Peter Rousmaniere is having a very productive “retirement”; his latest post at Working Immigrants includes these findings:

  • Nationwide, one quarter of practicing doctors are foreign born [emphasis mine]
  • 23% of all science and engineering workers are foreign born (40% in California)

COVID will alter the US healthcare system – experts opine on 9 potentially significant changes.

One potential change will likely NOT include ingesting camel urine to cure COVID…despite a claim that drinking a glass of the elixir three times a day for three days will do just that. (btw, camels are notoriously cranky…one wonders how amenable they are when a urine collector involves himself in a very personal process… and would any injury be compensable?)

There is one bright spot…unlike some other unproven cures, ungulate urine won’t cause heart attacks.

What does this mean for you?

Be careful with assumptions, thank your immigrant healthcare worker, support medication-assisted therapy…and keep your sense of humor.


COVID update – hope for the best, plan for the worst.

I’ve stayed away from most of the COVID stuff because Tom Lynch at WorkersCompInsider has been… as the kids say…crushing it.

Yesterday’s news that Moderna, a new company in Massachusetts reported very early results from tests of a potential vaccine was welcome indeed. The experimental vaccine appeared to help increase resistance** to COVID19 in a handful of people without undue harm.

It was also extremely preliminary.

The trial actually involved 45 people, but the press reports were based on results from 8. That’s less than a fifth of those involved…as one wag put it, “The drug trial sample size seems to be as big as 2 full of people.”

The double asterisk after “resistance” is because the experiment involved taking a blood sample from those 8 people, putting it in petri dishes with the virus, and measuring the antibodies ability to “kill” the virus. That is waaaaaay different from conveying immunity in the human body.

Perhaps coincidentally, the person charged with leading Operation Warp Speed, the White House initiative to develop a vaccine, has 156,000 shares of stock in Moderna, the vaccine research firm in question. And the company had just been awarded almost a half billion dollars in taxpayer money to help fund research.

I get that we are all looking for any hint of good news, and we all desperately hope Moderna’s vaccine:

  • is effective and preventing COVID;
  • is safe for humans;
  • can be manufactured in huge quantities quickly and cheaply.

But vaccine development is full of fits and starts, blind alleys and dead ends, promising early results leading to disappointing failures.

Fewer than one in ten vaccine candidates reach production. Vaccines typically take 10 – 15 years to develop. “And while biotechnology underlying this drug has existed for nearly 30 years, it has never yielded a working vaccine for any human disease” (quote from NatGeo).

Yet we’ve never seen the might of the entire world’s vaccine expertise focused on a single problem, an unprecedented level of effort that – hopefully – will produce an unprecedented result.

Meanwhile, the virus has killed over 90,000 of our friends, parents, neighbors and grandparents so far, while infecting over 1.5 million of us. Thousands more will die, even if the vaccine is everything we hope it is.

People and organizations who focus on what they can control – reducing the risk of infection – will come out of this far better off than those who ignore the risks that remain real and deadly.

What does this mean for you?

Hope for the best and plan for the worst.





A useful discussion of how some companies are handling this crisis is here.


It’s the facility costs, folks.

Hospitals are drowning in red ink. In many states, workers’ comp is the lifeline.

Privately-insured patients are avoiding hospitals while those facilities have spent huge dollars to buy PPE, make modifications, and ensure they are ready for a COVID19 patient influx.

Kaufman Hall provides the graph; the blue curve shows hospital profits pre-COVID, the yellow line reflects COVID. The “0” vertical line is the breakeven point, so the graph indicates the vast majority of hospitals are losing big bucks.

Staff layoffs are all over the news, while research shows the most profitable facilities are getting disproportionally more taxpayer dollars as part of Congress’ aid packages. Rural hospitals are especially hard hit – and this comes after over 150 closed in the last 15 years.

Where are those facilities going to find the $$ they desperately need?

(your picture here)

Just in time, the fine folk at WCRI published a detailed review of outpatient hospital costs and related services. [free to members, there is a charge for non-members] I read the report (yes, the entire thing, minus the super-wonky discussion of statistical methodology). The lede was spot-on:

While the full impact of COVID-19 is currently unclear, this study will also be a useful baseline to monitor the effects on hospital payments.

The analysis is thorough, comprehensive, and easy to follow. Rui Yang PhD and Olesya Fomenko PhD have analyzed 36 states; here are a few key takeaways.

  • costs in states without fixed-amount fee schedules are at least 50% higher than in those with fixed-amount reimbursement
  • in states with fee schedules, percent of charges fee schedules are the worst offenders [my words not the authors’]
  • BUT, there are gaping loopholes in other fee schedule types that allow facilities to maximize reimbursement (looking at you, Florida)
  • many states don’t even have fee schedules, which in some cases is just as bad.

What’s a payer to do?

First, identify low cost, high quality facilities and direct your patients to them.

Second, do NOT allow physicians to schedule surgeries in high-cost facilities. The Golden Rule applies – she who has the gold rules, and you are that “she”.

Third, “cost” is the actual cost, NOT the PPO discount. Don’t be fooled – discounts tend to be higher at high-cost facilities.

More on this issue here, here, and here.


NCCI – quick hits, a deeper dive, and a critique

Apologies for not getting this out sooner; wanted to wait until I heard back from NCCI on a couple items.

Quick hits

  • Insurers are enjoying record profits.
  • Frequency is down again – continuing a 30+ year downward trend.
  • Medical costs grew  – just barely.
  • Premiums dropped.

A deeper dive

The meeting planners did excellent work, the production was quite good and NCCI’s actuaries and statisticians bravely took on the role of media communicators. CEO and Chair Bill Donnell led things off, noting that the COVID19 pandemic requires agility – a talent not often associated with insurance in general or workers comp in specific (my words not his).

Bill is confident that workers’ comp is in good financial condition to deal with COVID19 – a confidence that is well founded.

For six years the industry has been quite lucrative. Investment gains and underwriting margins have driven record profits – and the profit train kept rolling in 2019.

Steady declines in frequency and relatively stable claim costs over the last five years that continued in 2019 are a big driver of record profits. (I’ve also argued that rates are way too high.)

Chief Actuary Donna Glenn reported private insurers’ reserves grew by $5 billion last year; there’s now a $10 billion reserve redundancy, so the industry has $10 billion more than it projects it needs to cover all current claims liabilities. Coming on top of billions in reserve releases in 2019 it is clear workers’ comp rates are still far too high (my words not Ms Glenn’s).

In 2019 claim frequency dropped again – by 4% – paralleling the long-term trend of 3.8% over the last three decades. According to an NCCI video, key drivers include:

  • better risk management,
  • workplace safety,
  • better training,
  • wellness,
  • automation,
  • a continued shift away from heavy manufacturing and towards a service-based economy.

Intuitively it makes sense that these factors have helped lower claims frequency. However, the video didn’t provide any data or identify any specific research supporting these assertions. I would have expected NCCI  – at its core a research organization – would include references to studies that supported the video’s claims.

I asked NCCI for the research that supported these assertions – as usual Cristine Pike and her colleagues were very responsive; additional research is here and here. However the citations provided didn’t conclusively demonstrate these factors were the cause of frequency declines – and didn’t mention most of the drivers cited in the video.

Donna Glenn, NCCI’s new chief actuary, provided an update on the State of the Line. Lots of good news…

On a per-claim basis, for private carriers, medical severity ticked up 3 points for lost time claims, a very modest change. Combining the 4% decrease in frequency with the 3% increase in severity likely yields no appreciable change in overall workers’ comp medical spend (my assumption, not NCCI’s).

NCCI projects claims incurred in 2019 will ultimately result in a 99% combined ratio reflecting continued underwriting profitability for private carrier business.

Thus it’s not surprising that premiums for state funds and private carriers dropped by $1.6 billion to $47 billion [a 2.6% drop] in 2019 as rates trended down.

Bob Hartwig did provide some context, citing Willis Towers Watson ‘s May 2020 analysis as the basis for projections on changes in workers’ comp premiums motor vehicle accidents and the like

My complaint.

NCCI has extensive access to workers’ compensation data. Given that the world has dramatically changed from 2019 to today and all of us are desperate for information, a discussion of changes in claim counts and types of claims would have been extremely helpful. I get that data is scant and spotty, but generalities and qualitative statements aren’t nearly as helpful as data. I asked NCCI about this; here’s the response:

NCCI has spoken to a number of carriers about their COVID-19 claim experience.  However, I would be very careful about making assumptions based on these conversations.  Until more time has passed and we can get information from a significant portion of the market, we would not be sharing any observations on COVID-19 claim activity.

Here’s where I’m perplexed. The discussion of frequency drivers attributed declines to a host of factors without citing specific research, data, or studies. That’s an assumption.

NCCI could have – and in my view should have – provided data on Q1 2020 claim counts by claim type (cause). That would not have been an assumption, but rather initial reporting of concrete data.

Given potential moves by governors and legislators to make COVID19 illness a covered condition and the lack of certainty about where this is headed, I can understand why NCCI – and other research organizations – don’t want to provide any data that might encourage politicians to look to workers’ comp to cover the costs of COVID19.

What does this mean for you?

The more we know and the sooner we know it, the better.


Now, about those drug rebates…

Drug rebate dollars account for a big chunk of brand drug costs – more than 40% in some cases. While list prices for brand drugs have been rising rapidly, net prices – the prices actually paid to the manufacturer – have not.

That’s mostly because manufacturers have been paying rebates to employers, insurers, and others in the drug distribution system.

This from Adam Fein PhD of Drug Channels:

A drug’s net price equals the actual revenues that a manufacturer earns from a drug. The net price equals the list price minus rebates as well as such other reductions as distribution fees, product returns, chargeback discounts to hospitals, price reductions from the 340B Drug Pricing Program, and other purchase discounts.

AARP is one of those making bank off rebates, along with lots of healthplans and insurers.

Workers’ comp

The picture’s a bit different in workers’ comp, for several reasons. Rebate payments tend to be lower because:

  • fewer brand drugs are dispensed to work comp patients
  • far fewer speciality drugs – the really expensive ones – are dispensed to work comp patients
  • the brand drugs dispensed to work comp patients typically don’t have big rebates.

But – there’s always a but – rebates must be considered when evaluating your drug spend. If you are an insurer or self-insured employer, a few things to consider:

  • ask your PBM how rebate payments affect your current pricing, and how.
  • if you’re pricing a new PBM, ask if you’re going to get the rebates paid directly to you, or if rebates are included in a calculation of your drug price
  • find out if you are getting ALL the rebate payments, or other entities in the supply chain are getting a cut. [that’s not necessarily a bad thing, but you do want to know where your dollars are going – because they are your dollars]
    • the big PBMs have more buying power, so you’re more likely to get more of the rebate dollars if you’re working with one of the big players

What does this mean for you?

These are your dollars. You need to ask the hard questions to be sure you’re getting the right answers. 


COVID19 catch up

Three key takeaways from this week’s COVID19 news.

Do we KNOW how bad things are, who’s dying, and Remdesivir.

  1.  Do we know how many are infected, the death rate, and the number hospitalized/in the ICU/on ventilators?


We are three plus months into the crisis and if anything, the picture is muddier than it was a month ago. From the highly-credible COVID Tracking Project;

it is impossible to assemble anything resembling the real statistics for hospitalizations, ICU admissions, or ventilator usage across the United States.

Also from the Project:

the CDC does offer a national-level account of “specimens tested,” this data is incomplete and lagging, and it uses a different unit (specimens tested) for total tests than for positive results (which are counted in people). This makes it impossible to accurately match testing totals with positive tests to infer a complete picture of COVID-19 testing, even at the national level…a simple count of identified COVID-19 cases doesn’t show the true location or comparative severity of outbreaks. Simple case counts show where people are being tested, not where people are sick. [emphasis added]

Yep, the greatest country on Earth can’t even capture and accurately report infections, hospitalizations, and deaths…you should be pounding your head against the wall.

Or maybe just scream in frustration…

2. Who’s dying.

In the New York City, it’s mostly older folks.

From Statista…

Alas, our nation’s leaders still do NOT KNOW how many of our loved ones in nursing homes have been killed by COVID19. 

Almost three weeks after CMS Administrator Seema Verna took to the podium to announce HHS would begin publishing the numbers, we’ve seen nothing.

3. Finally, Remdesivir is NOT a cure – far from it.

The results of a study conducted by NIAID on about 1,000 patients found it does shorten the course of COVID19 – by four (4) days – in some patients. Manufacturer Gilead hasn’t said what remdesivir will cost, but indications are about $4,000 per patient.

NIAID’s study found the anti-viral drug:

  • has been shown to be safe in humans,
  • is given intravenously (it is injected into the blood stream),
  • the course of treatment is 5 – 10 days,
  • has to be administered in a hospital, and
  • the vast majority of patients who recover at home will NOT get the drug.

Perhaps the most important impact will be shortening the course of COVID19 (although that didn’t happen in all patients who got the drug). This will free up more bed-days in facilities and allow them to treat more patients.

Note an earlier study in China did not find remdesivir was effective in treating COVID19. From the study: “Remdesivir use was not associated with a difference in time to clinical improvement”

Lastly, who will actually get the drug depends on luck – some hospitals will get it, others will not, with no rhyme or reason.

For my work comp readers, over at Workers’ Comp Insider Tom Lynch has a quick summary of COVID19 and its impact on workers’ comp.

What does this mean for you?

We should expect way more from our elected officials. 

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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