Health Reform's Implications on Workers' Comp

Thursday, April 1, 2010 | 0

By Joe Paduda
Health Strategy Associates

There are two types of comp networks, those based on group health network contracts and comp-specific preferred provider organizations. The comp-specific PPOs include HFN, Rockport, CompPartners; they are contracted specifically for work comp although they may include some rental network agreements. These networks are likely to come through the next few years relatively unaffected by reform.

Not so for the group health-based 'work comp' networks.

To understand their future, consider how reform affects health plans. It's all good; despite their complaints about government interference and regulation, execs are gleefully rubbing their hands in anticipation of tens of millions of new members.

But these very same plans will no longer be able to compete by being better at risk selection; instead they'll have to get a whole lot better at managing cost and care.

This will require a lot more focus on provider assessment and partnership, development of new and innovative provider-payer relationships and contracts and reimbursement mechanisms and communication.

Health plan staff will be working flat out on these initiatives with precious little time for anything else.

Now let's think about work comp. Total medical spend in comp is less than two percent of national helth care spend. Coventry, which dominates the work comp network business, gets about 9% of revenues from comp, and probably no more than two percent from network revenues. Aetna, which actually provides the networks for Coventry in 18 states +/-, may get 0.1% of total revenues from work comp networks.

So. You're a health plan exec with limited resources. Are you going to spend any time, devote any resources, focus any provider relations, information technology, or compliance staff on work comp?

Didn't think so.

Joe Paduda is principal of Health Strategy Associates, a Connecticut-based employer consulting firm. This column was reprinted with his permission from his blog, http://www.managedcarematters.com