Archive for November, 2015

Workers’ Comp Fraud: The Drobot Case Grinds On

Monday, November 30th, 2015

In late February, 2014, we wrote about the sordid tale of corruption perpetrated in southern California by Michael Drobot and his gang of thieves. Honor Sold, Trust Betrayed: Unbridled Greed In California describes the astonishing criminality of a large group of highly placed people whose job it was to care for others.

This from our original post:

Suppose you’re a doctor in California with a patient who complains that his back hurts a lot. Suppose further that Michael Drobot, the owner of California’s Pacific Health Corporation, will give you $15,000 if you refer your patient to his Pacific Hospital of Long Beach for lumbar fusion surgery, which may or may not be warranted. And what if Drobot’s Pacific Hospital were hundreds of miles away and that other qualified hospitals that wouldn’t pay you a kickback were much closer. What would you do?

The answer? Many doctors took the money and delivered up their patients to the Drobot surgical mill. Drobot paid the doctors in this scheme somewhere between $25 and $50 million.

Drobot’s two hospitals, Pacific Hospital of Long Beach and Tri-City Regional Medical Center in Hawaiian Gardens, billed thousands of mostly spinal fusion surgeries to California’s workers’ compensation system, the U.S. Department of Labor and workers’ compensation insurers. Over an eight year period, the hospitals were paid more than $500 million.

Drobot pleaded guilty in early 2014 to paying the kickbacks. He also pleaded guilty to bribing state Senator Ron Calderon to the tune of $100,000 for massaging the SB 863 legislation so that the fraud could continue for all of 2013. After his indictment in February, 2014, Calderon pleaded not guilty.

The wheels if justice have ground slowly but exceedingly fine in the nearly two years since. Former U. S. Attorney Andre Birotte, Jr., now a U. S. District Judge in California’s Central District, passed the baton to his replacement U.S. Attorney Eileen M. Decker. Last week Decker announced that Drobot’s CFO, James L. Canedo, and Paul Richard Randall, a “health care marketing recruiter” (he recruited doctors to refer patients in return for the illegal kickbacks) pleaded guilty to fraud, money laundering, conspiracy and other crimes. Also, two orthopedic surgeons, Philip Sobol of Studio City and Mitchell Cohen of Irvine, and Alan Ivar, a Las Vegas chiropractor who used to live in Southern California, have agreed to plead guilty to conspiracy and other charges.

There will certainly be more to come in this tale of sleaze.

New Thanksgiving edition of Health Wonk Review at Wright on Health

Thursday, November 19th, 2015

Getting ready for a Thanksgiving hiatus next week? Take a few minutes to catch up on the goings on in the health policy arena. Brad Wright has posted Health Wonk Review: Counting Our Blessings Edition at Wright on Health. Brad finds a few things to be thankful for – and some that he is not so thankful for, too!

It’s a roundup from prominent health policy bloggers, who submit their “best of” posts for the prior two weeks so it’s always an eclectic array of topics and issues. Check it out – we won’t be back until December!

Misunderstanding the business of workers comp

Wednesday, November 18th, 2015

Anyone who is familiar with Joe Paduda’s blog know that he is pretty forthright and frank in putting forth his opinion, apologies to no one. His strong point of view combined with his deep expertise on the medical side of comp makes Managed Care Matters a compelling read and one of our most frequent blog stops.

So when we find an article by Joe that starts off with an alert that what he is about to say runs the risk of alienating most people in the workers comp world, well, we take notice. Nothing we like better than a good workers comp controversy.

The article: What Is the Business of Workers’ Comp? posted at Insurance Thought Leadership.

The controversy:

“Most workers’ comp executives – C-suite residents included – do not understand the business they are in. They think they are in the insurance business – and they are not. They are in the medical and disability management business, with medical listed first in order of priority.”

We agree with Joe and we fail to see the controversy! We’re a little disappointed because we envisioned a work comp mud wrestle but he lays out a clear case that’s pretty hard to dispute.

Joe points to a graveyard littered with household-name healthcare insurers of yesteryear who mistook their core deliverable and he makes the parallel with property casualty work comp insurers of today.

For us “olds,” we started in an industry where indemnity or wage replacement was about 60 percent of the claims dollar. In recent decades, that has upended and the medical costs dominate most claims. But even in that seemingly simpler time, you could make the case that the industry focus was misdirected. And if the insurance CEOs have a misunderstanding about their core deliverable, perhaps it is partly because they have been aided and abetted by employers, who have all too often misunderstood what they are buying.

Lynch Ryan came into being because what was essentially an unmanaged human issue was largely being handled as a financial transaction: people were getting hurt at work and there was no consistent, effective process to get them well and get them back to work. Those were the bad old days before “return to work” had entered the industry lexicon in any meaningful way. Employers were essentially outsourcing their core responsibilities to insurers and washing their hands of the process. Today, thankfully, most employers are much more enlightened about workers comp and the hand-on role they must play.

But all too often, buyers are still shopping for the cheapest work comp “solution” and the biggest network discount, sacrificing the immediate micro gain for the big picture.

Joe raises some good challenges and we think they are good ones for the buyer every bit as much as for the seller:

“Then why is the industry focused almost entirely on buying medical care through huge discount-based networks populated by every doc capable of fogging a mirror (and some who can’t)? Even with those huge networks, why is network penetration barely above 60% nationally? Why has adoption of outcome-based networks been a dismal failure? Why do so few workers’ comp payers employ expert medical directors, and, among those who do, why don’t those payers give those medical directors real authority? Why do non-medical people approve drugs, hospitalizations, surgeries, often overriding medical experts who know more and better?”

 

Hot off the press: Health Wonk Review: Open season on open enrollment edition

Thursday, November 5th, 2015

Catch up on everything from “mattering mabobs of managerialism” to MACRA, MIPs and more in Health Wonk Review: Open season on open enrollment edition posted by David Williams at Health Business Blog.

Are We Only Paying Lip Service To Psychosocial Issues In Workers’ Compensation?

Wednesday, November 4th, 2015

It is a cliché in the workers’ comp industry that claims adjusters never want “to buy a psych claim.” Perhaps that’s why they rarely resort to psychologists until the horse is out of the barn and grazing four pastures over. By then it’s a last resort kind of thing.

I was reminded of this last week in Idaho at the Industrial Commission’s annual conference when Bob Wilson opined during his presentation that he considers the “psychosocial” issue one of the most difficult facing the workers’ comp industry today, one that will become even more problematic tomorrow, a veritable iceberg dead ahead.

I could not agree more.

So, why is it adjusters don’t want to “buy a psych claim?” Pretty simple, really. Most claims adjusters have had the unfortunate experience of referring an injured worker to a psychologist after all else has failed only to discover that the injured worker turns into the psychologist’s lifetime annuity and the adjuster’s worst nightmare. Treatment goes on forever. Also, it often turns into an attitude thing. Claims adjusters consider “going on forever” claims their “problem children.”

That’s a logical inference. The steady march of time is a formidable opponent as one tries to assist an injured person to return to the bosom of the workplace. The longer a worker stays out of work, the more difficult the problem becomes. Comorbidities begin to sprout like the weeds in my woebegone garden. In many cases, staying out of work becomes the new full-time job. What’s an over-burdened adjuster to do?

Perhaps on Day 1 of the claim giving strong consideration to the psychosocial would help. Unfortunately, as adjuster pros know, the First Report of Injury won’t give many clues here. Deep digging is required. If available, predictive analytics can be the adjuster’s best friend. Still, an even better bosom buddy is experience. Over thousands of conversations with injured workers, an experienced claims adjuster will acquire a profound recognition of nuance. Not settling for the basic questions, but rather peeling the injured person’s personality onion to discover what really matters will allow for early detection of those relatively rare cases where speedy referral to a qualified psychologist might make all the difference.

And psychologists need to shoulder some responsibility here. Most know not even the first thing about workers’ compensation and give every indication of being proud of it. The only insurance premium that matters is the one labeled “Malpractice.” Experience Modification is nothing more than an oxymoron. Many do not understand, and do not want to understand, that helping someone become as mentally healthy as the day of exiting the womb is not the same thing as maximum medical improvement.

And what if payers and psychologists could agree to the rules of the road right up front. For instance, coming to an understanding about qualitative and quantitative goals, about the need for a finite number of sessions, about agreeing that there are certain signs which, if manifested at the beginning of a claim, suggest that the claim would benefit from early psychological intervention? And what about the idea that entrance into a payer network should not be determined solely by a License to practice and the forced acceptance of a ridiculously low fee? Quality and results matter.

There’s a fair amount of education that ought to go on here. Payers would be wise to begin that education today. Why? Because identifying early and resolving quickly the factors that have the potential to turn physical injuries into mental health problems will save employers, the folks who pay the bills, a significant amount of money and adjusters, whose goal it is to put the toothpaste back in the tube, considerable otherwise wasted time.

From a Lonely Gate at O’Hare Airport

Monday, November 2nd, 2015

No trip is ever totally smooth. To prove the point, a couple hundred of humanity’s weary children  and I now sit at O’Hare’s Gate B9 waiting for a pilot to fly us home to Boston. Seems that the pilot originally scheduled has gone AWOL. Whatever the reason, he’s not here, so United Airlines is scrounging around for a replacement. None of the passengers has volunteered.

The rest of the trip has been excellent. I’m returning from Boise, Idaho, where I was honored to deliver the keynote address at the Idaho Industrial Commission’s Annual Workers’ Compensation Conference.

Commission Executive Director Mindy Montgomery, conference organizer Dara Barney and the rest of the outstanding Commission staff did a wonderful job pulling together a highly informative and stimulating day for more than 300 of Idaho’s workers’ comp professionals, including attorneys, claims adjusters, medical providers, agents and brokers.

And before we go any further, I want to publicly acknowledge a debt I owe to the Commission’s Chair, R. D. Maynard, who is also the current President of the IAIABC. In his opening remarks he used a phrase I’ve never heard, but which I intend to steal for the rest of my life. The phrase? In describing a smart person, R. D. suggested she was “smarter than a treeful of owls.”

In my hour and a half presentation (yes, that’s a long one) I didn’t come close to R. D.’s bon mot, but I did discuss three big picture issues and their relationship to workers’ comp:

  1. Rapidly accelerating artificial intelligence
  2. The generational changing of the guard as Baby Boomers pass the torch to Millennials
  3. The New Normal Economy.

I asked the attendees to what degree they thought our industry has or has not kept pace with these transformational issues. I suggested strongly that it has not. By the end of the presentation, most seemed to agree. It’s almost as if for the industry it’s business as usual, but for the industry’s customers, the employers who pay the bills, it’s full speed ahead toward tomorrow.

In the possibly absurd leap of faith that our Jetway’s umbilical cord to O’Hare will be brief, in this post I’m only going to address Item #1, above, the rapidly accelerating development of artificial intelligence.

During the Great Recession that began in 2008, American business lost 16% of its workforce, which forced a major re-evaluation of how business is done. Sixty percent of the jobs that were lost were lost by the middle class, but, according to the Federal Reserve Bank of St. Louis, only 22% of those jobs came back, the other nearly 40% dropping into significantly lower paying jobs. Why? Well, one reason is that beginning in 2010, we saw The Rise of the Robots. Since then, there has been a nearly exponential growth in the deployment of industrial robots and the artificial intelligence that is more and more governing them. Employers are realizing that fewer and fewer humans are needed to make high-quality, reliable products. And robots don’t get hurt and enter the workers’ comp system. You certainly insure them, but not with workers’ comp.

Two examples:

  1. At an Ikea factory in Sweden, book case components are assembled, packaged, shrink-wrapped, palletized and made ready for distribution 24 hours a day without the touch of a human hand.
  2. Since defeating Ken Jennings on Jeopardy, IBM’s Watson has continued to learn at a faster and faster pace. Today, Watson seems more like a thinking person, whoops, excuse me, make that thinking machine, than most humans.

In Idaho, I challenged the attendees to ponder how long it would be before some forward thinking insurance hotshot cottons on to the idea that Watson might make a great claims adjuster. Think about it. Handling no more than 125 open claims today is pretty much considered  ideal. Watson could handle thousands – 24 hours a day.

I’m not suggesting that we are on the cusp of watching claims adjusters suddenly go the way of the Wooly Mammoth. No, there is a nuance to the claims process that human beings possess and robots, such as Watson, don’t — yet. But it seems inevitable to me that Watson and his brothers and sisters will continue to learn at an ever faster rate, to the point that they will, at some point in the not too distant future, acquire the nuance displayed by today’s best adjusters.

And what about the armies of highly-trained and, in some cases, highly-paid people populating the many pockets on the workers’ comp health care pool table?

The point is that big change is not coming; it’s here. So, the question becomes – What is the more than 100-year-old workers’ compensation industry doing about it? What is the plan?

Before wheels up (yup, we’re finally getting off the runway), I’d like to congratulate both Bob Wilson, of workerscompensation.com, and Mark Pew, of Prium, for their spellbinding (I’m not exaggerating) presentations at yesterday’s Idaho conference. It was a privilege to be on the same program with these workers’ compensation thought leaders.

I’ll post this sometime after getting safe and sound to Boston, “the home of the bean and the cod, where the Lodges talk only to Cabots, and the Cabots talk only to God.”