July 8, 2002 CareWorks wins in 2002 MCO Open Enrollment (Article as it appeared in Columbus Business First)

MCOs see decline in premium values

By Jeff Bell Business First of Columbus

Most workers' compensation managed-care organizations in Central Ohio recorded setbacks in the state's recent open enrollment for their services. Nine of the 11 managed-care organizations (MCOs) based in the Columbus area will sustain net losses in the number of employer groups they serve. Eight of them will see a reduction in their workers' comp premium value.

Only CareWorks and Ohio Comp Choice came out ahead in both categories, according to figures from the Ohio Bureau of Workers' Compensation. CareWorks registered the state's largest net gain in employer groups, at 2,420, and premium value, at $20.43 million, of those groups. Ohio Comp Choice added 147 employers and $379,294 in premium value. Vantage Occupational Health Plan reported a net employer loss of 50, but will gain $312,073 in premium value.

Premium value is the annual amount an employer pays into the state workers' compensation fund. MCOs receive administrative fees in the range of 3 percent to 7 percent based on those premiums. MCOs handle medical management of workers' comp claims.

On the loss side of the open enrollment ledger were CompManagement Health Systems and GatesMcDonald Health Plus, two of the largest MCOs in Central Ohio as well as the state. CompManagement will post a net employer loss of 242 and premium value drop of $12.63 million; GatesMcDonald will lose 81 employers and premium value of $9.03 million, state figures show.

The changes went into effect July 1 and are for two years, said bureau spokesman Rob Glenn. An open enrollment period occurs every two years.

Minimal turnover Overall, 14,274 of the 260,000 public and private employers in the state fund switched MCOs - a 5.49 percent turnover rate.

"That means people are pretty happy with their MCOs," said CareWorks Chief Executive William Pfeiffer. "That's not a lot of change. It's a pretty stable industry."

Glenn agreed, though he said those who did make changes "are trying to get the best value for their premium dollar."

"If an MCO lets a lost-time claim dangle without seeing if any rehabilitation is being done, then that's extra premium dollars," Glenn said. "If there's a back-to-work program and the employer is paying wages, then the workers' compensation costs go down."

He attributed some of the switching to data that employers were able to find in the MCO Report Card, which the bureau published last spring. It detailed how each of Ohio's 34 MCOs stacked up in areas such as first report of injury timing, return to work program management and overall employer and injured worker satisfaction. Many employers read the report card, Pfeiffer said, but he thinks it does not drive the decision to switch MCOs.

"The bottom line," he said, "is when companies look at an MCO, they want service and to see how you will customize programs for their companies. "If you do a good job with your current customers, word gets out and you attract new customers. That's the way it worked out for us this time," he said.

With the enrollment gain, CareWorks will enroll more than 60,000 employers with $605 million in annual premium value in its managed-care programs, Pfeiffer said. Those levels make it the largest MCO in Ohio.

The additional business will prompt CareWorks to add 22 employees and lease an additional 15,000 square feet at the Dublin office building where it is based, he said. CareWorks employs 611 workers and leases 70,000 square feet in its building.

Schools make switch

CareWorks' biggest open enrollment gain came from the Columbus Public Schools, Pfeiffer said. The 9,000-employee district had been using CompManagement. About a third of CompManagement's $12.63 million drop in premium value can be attributed to losing the public school system, said company President Randy Jones.

CompManagement's premium value is now around $371 million, he said. That is about 2.9 percent below where it was before the open enrollment changes. Overall, the company will pick up 2,103 employers and lose 2,345. It will continue to manage workers' comp medical claims for about 52,000 employers.

"It's not a significant loss in that regard," Jones said. "We're certainly going to review the results and look where we need to make adjustments, but nothing significant is expected."

No changes in employment levels at CompManagement's offices in Columbus and Cincinnati are expected, Jones said. The company has 330 employees with about 190 of them in Columbus. Executives at GatesMcDonald were unavailable for comment.