Author: Joe Paduda

Jun
12

“Rate shock” explained

Posted by Joe Paduda on Wednesday, June 12th, 2013 | Comments

Obamacare is going to raise rates by 88% in Ohio while California officials think health reform has “hit a home run for consumers.”  As these are the only two large states with published rates (not that I don’t love and respect Vermont), we’ll focus on OH and CA.

(For the quick net-net, see the last paragraph)

As Jonathan Cohn points out, this is really an apples to grapefruit comparison.  In order to accurately assess the cost differential, one has to do an actuarially accurate comparison.

Alas, I can’t find any that are credible; Ohio’s doesn’t factor in benefit design differences or the impact of no medical underwriting and fewer age bands; there are several other factors that affect what consumers will actually pay.

First – this only affects people who get coverage thru the exchanges.  That’s about 14 percent in California. Most get insurance thru their employers, Medicaid, or Medicare, so they are unaffected.

Second, a LOT of people will get subsidized coverage, so what they pay will be less – sometimes a lot less – than the advertised price. In California, about half of those getting benefits from the Exchange will get coverage at a lower cost; a 40 year old who makes just under $24,000 a year will get very good insurance at $90 a month (Health Net Silver plan). (I know, taxpayers, hospitals, drug companies, and insurers will pay for those subsidies, but most of the press has been focused on what the insured’s cost will be, so we’ll focus on that)

Third, it’s NOT just the cost of the insurance, it’s the cost of care – premiums and out-of-pocket expenses.  The benefits covered by the Exchange plans are much richer than the lowest-cost plans now offered in many states.  For example, the individual Bronze plan in Ohio has an out-of-pocket cap of $6,350, compared to UnitedHealthcare’s Saver 80’s $13,000 max out of pocket.  But the Saver 80 doesn’t cover maternity, vision, mental health care, drugs or office visits (except for very limited wellcare visits).  So consumers who pay less in premiums for today’s Saver 80 than tomorrow’s Bronze plan will spend much more out of pocket, far outweighing any premium savings.

Fourth, costs for younger people will likely be higher under the Exchange, while costs for older folks may well come down.  That’s a function of the reduced number of “age bands”;  insurance-speak for charging us older folks more because we are worse risks than you young pups.

Fifth, because medical underwriting is banned under Obamacare, many individuals who can’t get coverage at any price today will get coverage tomorrow.  Today, many folks with a history of heart disease or cancer or other serious conditions can’t get any coverage in some states, and only at incredibly high prices in others – due to pre-existing medical conditions.  For those people, any conversation about higher costs is irrelevant, because no one will sell them insurance, or if they do it will be at rates unaffordable to anyone but the top 0.1%.  So, if you have high blood pressure, a family history of heart disease or cancer, a BMI above an acceptable range, lupus or diabetes or high cholesterol or asthma or depression or any of dozens of other “conditions”, you will be able to get coverage next year – at the same price as anyone else your age.

Here’s the net.

For older folks, benefits will likely be richer, out-of-pocket expenses and premiums lower.  Younger people will likely pay more for better coverage than they have today.

Jun
11

Controlling work comp medical costs – the impact of price

Posted by Joe Paduda on Tuesday, June 11th, 2013 | Comments

WCRI released the fifth edition of the Medical Price Index for Workers’ Comp yesterday (download available at no cost); analyzing 25 states that account for 80 percent of WC spend, the study focuses on prices paid for non-facility services and provides trends over time…here are a few highlights.  

  • Six states didn’t have fee schedules as of 2012; prices paid in those states were all significantly higher than the median of FS (fee schedule) states.
  • There was less variation in primary care than surgical services, with prices for surgeries in the highest price state almost five times higher than those in the lowest price state.  Primary care pricing varied by a factor of 2.5.
  • Prices increased significantly faster in non-FS states than in those with fee schedules, with Wisconsin’s prices up more than 50 percent more than the average of FS states.
  • Illinois, which underwent significant reform in 2011, saw a decrease of 24 percent in prices paid as a result; this drop was consistent across primary care and major surgery.  Notably, surgery prices are still more than twice the 25-state median, but that’s a lot less than rates pre-reform, which averaged 443 percent of Medicare.
  • Prices in states with fee schedules were – almost without exception – significantly lower than prices in non-FS states.  Often there were dramatic differences.
  • Prices paid in Massachusetts were above the median of prices paid in states without fee schedules.  This is somewhat counterintuitive, as Mass’ FS is generally considered to be quite low.

WCRI’s methodology has been consistent over time, relying on a marketbasket of services to assess changes in price (NOT utilization) over the years.  The data is especially helpful as it includes prices from services delivered less than a year ago; kudos to WCRI’s researchers – and the payers that supply the data – for dramatically improving the timeliness of their data.

Takeaways…

Generally speaking, fee schedules do keep prices paid down.  However, given the high prices paid in Massachusetts, FS that are “too low” may result in providers refusing to accept FS, successfully demanding higher fees in order to provide services. Anecdotally I’ve heard this many times from my neighboring state.  Those with more specific knowledge (Anthony C perhaps?) may wish to weigh in.

Fee schedules tend to keep price increases down as well, thereby having a “dual” effect by checking current and future costs.

Note this study only addresses prices paid, and NOT utilization.  There’s been much research on this area; refer to WCRI’s other studies more insights.

What does this mean for you?

Fee schedules – reasonable ones – do tend to keep prices down, and likely costs as well. But fee schedules that are too low may well be ignored.  

Jun
6

The next revenue-generator for work comp profiteers

Posted by Joe Paduda on Thursday, June 6th, 2013 | Comments

The next scam improvement in patient care and physician profits is…

in-office lab testing for drugs!!!  I’m not talking qualitative testing (the cup version) but rather tests done on a machine in a physician’s office. 

I received this email not once, but three times from a “consulting firm”.  I responded twice, intrigued by the opportunity to improve patient care AND generate more dollars for docs. I’m SURE insurers would be deeee-lighted to pay docs more for such wonderful improvements to patient care.

So, here’s the full text of the email.  Prepare to be amazed – there’s yet ANOTHER scam brewing in workers’ comp.

“We are a consulting firm that represents an innovative leader of in-clinic
drug screening solutions. Our client is seeking representation for its
toxicology offering for physicians who treat workers compensation patients.
Their testing options generate significant income for physicians and
representatives when testing workers compensation and commercial insurance
patients.

Like many ancillary offerings in medicine, Treatment Guidelines continually
evolve. Our client, unlike others, provides an automated portal into their
lab that is continually updated to keep physicians and related clinics
compliant. Their automated transactional software is considered best in
class in the industry and makes drug screening a snap. By providing
in-clinic testing solutions, physicians can now better manage patient
treatment regiments, generate significant additional revenue, mitigate
clinic liability and provide better patient care!

Our client is now reaching out to your organization to see if you are
perhaps interested in representing them in your local market. Our client
seeks reps that have direct/personal relationships with physicians.

— Reps now have the ability to add thousands of dollars per month to their
organization’s bottom line via these test offerings.

Benefits of Toxicology Testing for the Physician:
— Reduces Practice Liability.
— Prevents drug to drug interaction.
— Provides key information to better manage the treatment of patients.
— Generates additional clinic revenues with little to no out of pocket costs.
— Testing is simple, fast and easily compliments current daily clinic responsibilities.

The targeted Physician Practices/Clinics are:
— Any Physician that sees more than 10 or 15 new work comp patients per month
— Pain Management Centers
— Orthopedics
— Neuro Spine Surgeons
— Hand Surgeons
— Defense / Military suppliers
— Urgent Care
— Podiatry
— Specialists of Extremities
— Any Other Physician/Clinic that will benefit from administering toxicology testing.

If you are interested in representing this exciting best in class ancillary opportunity
in your local market, please call me or return by email your mailing address and
phone / fax number (or feel free to contact me directly). We are aggressively recruiting
reps in different local US markets and will immediately email you our client’s website
for your review. Please know that upon request, hard copy information can be sent
to you as well. We look forward to your response.”

What a great country.  Gotta love that free market!

Jun
5

Outsourcing customer service – I don’t get it.

Posted by Joe Paduda on Wednesday, June 5th, 2013 | Comments

Yesterday my bride was attempting to book a hotel room at a specific Hilton Garden Inn near the Sacramento airport.  She got bounced to Hilton’s intergalactic call center, and then spent 15 minutes trying to get a person – likely in another country – to reserve a room at that specific property at a rate they’d advertised.

My wife is a very patient person (she’s still married to me after 26 years…) but even she had to finally end the call after it became abundantly clear that the customer service agent had no idea where the airport was, what the rate should be, or why we didn’t want to consider another less expensive property located somewhere within a fifty mile radius.

Hilton lost a guest, and all because they decided it is more “cost-effective” to outsource customer service.  At the same time, the chain is working diligently to monitor and improve guests’ experiences on-site; I get a survey request for pretty much every hotel stay these days.

This makes NO SENSE.

Customers are the core of any business.  Without them, you’ve got a big bag of nothing.  Yet many companies – including some in this space – outsource the absolutely-critical business of talking with customers to some outfit on the basis of how cheaply they can get calls answered, how many calls can get answered how fast and other “metrics’.

Where’s the metric for “pissed off customers”?

There are processes and workflows that are not core, or central to a managed care business – maybe telecommunications, real estate management, accounting/auditing (perhaps).  But talking to your customers? How is that not the most important thing your company does? And why would you not want to have absolute, complete, 100% control over that at all times?

My sense is the reason we see outsourcing of call centers in managed care services is the ops folks are focused on keeping costs down.  That’s fine, but it ignores the overall importance of customer interactions.  It is very, very hard to acquire new customers, and very expensive to boot.  Cost of sales is escalating in this business, making customer retention critically important.

I’m aware of a couple firms that went to outsourced call centers only to reverse that decision and internalize the function.  My guess is the cost per call went up, and customer satisfaction went waaaay up.  Kudos to those companies for recognizing a problem and fixing it quickly.

What does this mean for you?

Figure out what’s important, and do it yourself.

Jun
3

Will Obamacare’s costs break your bank?

Posted by Joe Paduda on Monday, June 3rd, 2013 | Comments

There’s much confusion about the “costs” of Obamacare, with some opining that health insurance costs will explode and others citing recent data indicating the opposite.

This is a blog post, and therefore I won’t write, and you don’t have time to read, a comprehensive overview.  So, here are the highlights.

1.  The law requires insurers to sell only standardized benefit plans; one reason for this is to prevent plan-design-based “underwriting”;  today, health plans can use benefit design as a way to encourage sick people to go elsewhere and healthy people to sign up.

2.  In some instances, the plans some people have today are much less generous than even the lowest plan offered thru the Exchanges.  Thus, those people with very high deductible/low benefit plans will see a big increase in cost.  However, their benefits will be much better.

3.  The new law significantly restricts underwriting practices; charging higher prices based on age, pre-existing conditions, sex, and other factors is limited or banned. Thus folks who are very young and healthy today are likely to pay more – in some cases a lot more – while older and sicker people will likely pay less under ACA.  

4.  Employers that have health plans today are not going to see much change as their plans are grandfathered in as long as they don’t significantly reduce benefits.

So, what about costs?

“Rate shock” is the term used by some to describe the big increase in insurance prices due to the mandated benefits under ACA and elimination of pricing differentials based on age etc. There’s been a lot of speculation about pricing, but so far this has been mostly speculation – except for those states which have set up their own exchanges and negotiated pricing with insurers that will offer plans on those exchanges.

BTW, only about 2.5 percent of Americans will get coverage thru the exchanges next year, so all this babble about rate shock and the efficiency of exchanges is somewhat overblown

California published rates that were significantly lower than projected; the blog-o-sphere immediately responded with yelling headlines based on carefully-selected facts that supported their ideological positions.

Here’s the net.  Comparing costs via the exchanges to current published prices is an-almost pointless exercise; the benefits are different and there is underwriting today that will be illegal next year. I say “almost” because the rates for a “bronze level” plan in CA under the exchange are almost identical to those offered today for a similar plan.  However, a quarter of those applying for plans today can’t buy at the published rate because they have health risks that result in higher costs.

That said, I’m a big believer in well-regulated competition.  Insurers will figure out how to deliver lower-cost, higher-quality health plans – or they will go out of business.  Many will offer plans with small provider networks – which is good.  The prices published in California and Vermont are early proof of the power of the market. Some insurers will not adapt and will fail, others will flourish.

Lastly. ponder this.  Where would we be without Obamacare?  What would happen as health care costs continued to escalate and private insurers continued to risk-select? More uninsureds and ever-increasing costs as providers charge insureds more to cover the costs of treating those without insurance – or with insurance that doesn’t cover much.

What does this mean for you?

Obamacare has more than its share of warts.  But the alternative – the continued health insurance death spiral  – is much uglier.  

May
30

Hawai’ian Drug Summit – weird goings on…

Posted by Joe Paduda on Thursday, May 30th, 2013 | Comments

I attended and was privileged to speak at the Hawai’i Rx Drug Summit, held yesterday in Honolulu. Focused on opioids and drug controls but with a heavy emphasis on physician dispensing of drugs, the Summit also featured a random guy videotaping me, a guy who claimed he’s working on a documentary about the dearth of doctors on the Islands.

That line made no sense, as I wasn’t speaking about anything remotely related to that issue, yet he had three (!!) separate cameras recording both of my talks – and one followed me around recording me as I chatted with other attendees…

The guy, one Michael Cooper, claimed he was doing this on his own, was not affiliated with any other entity, and was funding this documentary all on his own.  I informed Cooper, in front of the 300+ people, which included law enforcement, that he could only use the video or any recording of me for the documentary and no other purposes whatsoever. Cooper agreed – again in front of the entire audience.

We shall see what develops; given my “popularity” with the physician dispensing crowd, I thought it might just be that somehow they’d want to record me saying something they could twist or slant or use to further their cause….

Here are a few of the highlights.

Tim Dayton of auto insurer GEICO spoke, noting 60% of auto loss costs are for auto repair, but losses are trending lower due to better, more efficient repairs and competition.  However, the trend in other coverages – especially PIP (medical coverage) is getting much worse.  In fact, GEICO needed a rate increase of 75% – 89% increase for PIP for some of their insurance lines, and ended up with a 25% rate increase for PIP.

A big driver is – surprise – physician dispensing.

Dayton is, to his dismay, quite knowledgeable about drug costs, drug pricing, and physician dispensing.  He opined that some very smart peole had figured out how to exploit a rule that had been written with the best of intentions – he was referring to a HI rule re reimbursement for drugs for medical treatment.   Dayton cited SpeedGel (you remember that, right?) and the “evolution” in pricing for that “medication”, it was $24.95 originally, then $59.95, then $258.96, now $416.01 at 140% of AWP, the reimbursement required by state regulations.  And all with barely a change in the wonder drug!

Dayton was followed by Paul Au, the risk manager for the City and County of Honolulu, where drug costs went up from $400k to 1.8 million over ten years; and a  half-million over two (1.25 to 1.78 from 2011 – 2012).  This was driven almost exclusively by physician dispensed drugs, which happened after a large dispensing entity entered the islands. (this could be mere coincidence…)

For the City/County, physician-dispensed drugs now account for 19% of scripts, 50% of costs; the cost is up 650% over 8 years.

This at a time when claim counts have declined by 300 claims, or 20% or so while drug costs are up 570% on a cost per claim basis.

I spoke twice – first on opioids (yes, again…) and then on physician dispensing, citing CWCI’s ground-breaking research, and debunking the five myths of physician dispensing (improves access (not), improves outcomes (actually worsens them), requires higher reimbursement due to higher cost for repackaged drugs (absolutely false), MD-dispensing is necessary to get life-saving drugs started immediately (completely untrue), reduces disability duration (actually increases it).

The Summit was put together by Kristy Kobayashi of CorVel, and sponsored by CompToday, Genex, ESI, PacBlue, and Allied Managed Care.  Kudos to those folks for sponsoring…

more to come.

May
29

Affordable Care and Workers’ Comp – a miss

Posted by Joe Paduda on Wednesday, May 29th, 2013 | Comments

Kudos to NCCI for devoting an hour at their annual issues symposium to a discussion of medical care and cost drivers provided by the Mayo Clinic’s Douglas Wood MD.

Woods noted – “If the entire country could achieve [quality improvement and cost reduction] results like the top ten states we could reduce spending by a third without reducing – and likely improving – quality.” 

And that’s pretty much what ACA seeks to do, in its convoluted, politically-driven, sausage-making way.

Wood noted that we have to not “ration” but be “rational”.  He reviewed the SGR (something that has been covered in detail in this blog) as a way to show that price controls do not equal cost (or quality) management.

As the “Choosing Wisely” campaign demonstrates, many common procedures don’t add any value. (about 5 of the 800 attendees have heard of this campaign…) This isn’t value defined as improved patient safety/better clinical outcomes/patient satisfaction, but rather functional health (sound familiar, workers’ comp folks?).

Which leads to ACA’s components intended to improve value delivered for dollars spent, focusing on reimbursement based not on per-procedure but episode-based payment – with a warranty for complications.  Wood reviewed the basics of ACA (presentation here).  About 19 states will have their own exchange, 25 will use the federal exchange, and the remainder will have a hybrid, or partnership arrangement.  Some of the larger national insurers don’t want to participate, but may change their minds if lots of employers and individuals buy policies thru the exchanges.

Wood delved into several related topics, many of which are old news to the better-informed medical folks out there, but new news to most in the workers’ comp business.  This included shared decision making, appropriate use criteria, and creating healthy communities.

Now, what’s all that got to do with work comp?  ACA will help “make healthcare more affordable” was Wood’s initial statement, but beyond that he didn’t connect the dots; there are several potential impacts on workers comp (tight access to specialty providers, better health status of claimants, no need for WC payers to pay for non-WC conditions when caring for injured workers, etc.), none of which he noted.

On balance, an excellent presentation on PPACA, but no understanding of workers’ comp or how it will impact WC.

 

May
24

Random observations from NCCI

Posted by Joe Paduda on Friday, May 24th, 2013 | Comments

NCCI’s conference is perhaps the best-produced workers comp conference I’ve attended.  Great support for speakers (thanks Mona Carter, Peter Burton, Lisa Lancelotti, Linda Simmonds et al), well run, tightly organized, and substantive as well.

Several single-state payers I spoke with at the conference said they attend NCCI, and other national conferences and affiliate with national trade groups (AIA) for a very good reason – they know it is important to keep abreast of national trends, share ideas with other payers, and avoid the perils of navel-gazing.  Less insightful regional payers don’t see the value, and will regret their myopia.

The keynote – David Gergen – was excellent.  Great to hear his perspective; Gergen is even-handed, deeply knowledgeable, and a good speaker.  Posted on that elsewhere…

Aron Ralston’s talk (he of the 127 hours; he’s the guy trapped by a boulder in a canyon in Utah who had to chop his own arm off to escape) was compelling – to say the least.  He talked little of the pain, the horror of near death by dehydration (reportedly one of the more awful ways to die), the personal misery – he didn’t ignore it but did not make that a main theme of the speech.  One cannot imagine the terror, much less the physical misery he suffered while trapped for five days. He used the trauma to focus his attention – and the audience’s – on identifying the important things in life; Not your typical NCCI talk (but I’d rather listen to Ralston than Krauthammer any day).  A risky choice for NCCI, and one that – by all accounts – was an excellent one.

I spoke on Thieves, Profiteers, and Enablers, a quick summary of physician dispensing, overprescribing of opioids, and the growth of compounded medications, physician-dispensed durable medical equipment and physician-office-based drug testing.  Notice a common thread here?  These are physician-centric…

Alas, I felt like I was preaching to the converted…

Attendance at the end-of-the-conference research discussion was high, proving that there is a large audience for the more analytical presentations.  There was a lot of discussion, attendee input, and dialogue, with many relevant points, observations, and recommendations for refinement or methodological modifications.

A couple more posts to come on the annual confab, stay tuned!

May
20

Kudos to CorVel

Posted by Joe Paduda on Monday, May 20th, 2013 | Comments

I’ve often had issues with CorVel for their billing practices and other matters, but I’d be remiss if I didn’t applaud the managed care firm for their willingness to fire a doctor that was allegedly prescribing Wasabi Rub, theramine pills, Gaba-2k rubs, and surface EMGs, some of which were allegedly upcoded to needle EMGs – and then refusing to discuss these treatments with peer review docs.

The incident happened – of course – in California, where CorVel and Dr Douglas Rogers have been in litigation for several years over CorVel’s summary termination of Rogers from their workers comp MPN. The court case is somewhat complicated by CorVel’s failure to follow their contractual obligations in terminating Rogers, but the court nonetheless upheld the decision. (Decision is here)

What makes this case so important is it “balances” an earlier case, known as Palm Medical, where SCIF (the state fund of California) refused to admit a provider to its MPN.  Ultimately the court found in the provider’s favor, much to the dismay of the insurer and employer communities.

The CorVel v Rogers case gives payers hope that they can terminate a provider who fails to meet the obligations contained in their contract with the payer, obligations which should – and almost always do – include requirements that the provider follow applicable treatment guidelines, respond to requests for consultation with peer review physicians, and otherwise treat appropriately.

That said, CorVel could have lost the case as it did not follow the “three-step” process in terming Rogers.

What does this mean for you?

Word to the wise payer – if you’re asking the providers to follow the contract, probably a good idea if you do too.  

Thanks to WorkCompCentral for the heads’ up.