Author: Joe Paduda

May
8

Health inflation is down – and may stay down

Posted by Joe Paduda on Wednesday, May 8th, 2013 | Comments

There appear to be several reasons for the decline in the health care cost inflation rate with a poor economy and resulting job loss and changes in benefit design often cited – rightly – as chief contributors.  There’s some fear that an improving economy and higher employment will return us to the ugly days of 7+ percent health inflation rates.

Possibly. However there are indicators that changes to provider-payer contracts, a reduction in unused facility capacity, growth in medical homes and ACOs, changes in reimbursement methodologies, and less reliance on new technology are having an impact. These factors, and others unknown, look to be responsible for more than half of the decrease in inflation.

Here’s how the authors of a recent article in Health Affairs put it:

“we believe that current trends support cautious optimism that the spending slowdown may persist—a change that, if borne out, could have a major impact on US health spending projections and fiscal challenges facing the country, among other factors.”

The implications are vast.  At the highest level, lower medical trend allows employers and their employees to use cash for other purposes, alleviates some of the pressure for Medicare reform and reduces deficit and debt projections.

This last may be the most significant implication – an analysis indicates public-sector health spending over the next ten years may be $770 billion lower than projections.  

What does this mean for you?

Those of us with grey hair and fading eyesight have seen too many of our hopes for cost control crushed to get overly excited.  Nevertheless, this is far better than the proverbial stick in the eye…

 

May
7

Health care spending is stabilizing – why?

Posted by Joe Paduda on Tuesday, May 7th, 2013 | Comments

There have been a plethora of reports of late indicating health care spending trend has decreased significantly – to an average of 3.9 percent since 2009; the trend appears to be continuing today.  This after annual increases ranged from 6.2 to 9.7 percent between 2000 and 2007.  While there’s no denying an increasing portion of costs have been borne by insureds dealing with higher out-of-pocket costs, there’s something else going on here.

The question is – what?

The quick answer is – several things.

First, the continued sluggish economy; recent research published by the Kaiser Family Foundation attributes about three-quarters of the decline to the recession; others think it is only about a third.

Second, increased deductibles and co-pays account for about a fifth, according to some researchers.

More encouraging is the sense (and it is ONLY a sense) that the new contracts between insurers and providers are partially responsible.  

Health plans and providers (mostly health care systems) are increasingly basing reimbursement less on fee-for-service and more on accountable-care type methodologies, wherein providers benefit from delivering less, not more care.  The evidence for this is best described as “anecdotal data”; several health plans are reporting lower inpatient admissions, reduced length of stay, fewer expensive procedures, more generic meds, better care for chronically ill patients along with fewer acute episodes.

This is a big deal – a very big deal.  We will be digging into this for the rest of the week.

May
6

Coventry’s last earnings report

Posted by Joe Paduda on Monday, May 6th, 2013 | Comments

I’ll admit it, I’ve been slacking…It’s now five days since Coventry released their last-ever earnings report, and I’m only now posting on it.  Mea culpa; too darn much work. Here are a few quick takeaways followed by my perspective on the company and their results this quarter. 

(and so much for my title for the Q4 earnings report as the “last ever…”)

  • Very solid earnings – up 61% from the prior year quarter.  Pretty impressive.
  • Revenues were flat after some Medicare Advantage bookkeeping stuff
  • Commercial membership – and revenues – are down again.
  • Medical loss ratios (MLR) for Commercial risk and Medicaid are looking very good, improving substantially over the previous quarter; Part D is not.
  • Workers’ comp revenue is down substantially.

Let’s start with work comp (sorry David Young).  2012 was a tough year – revenue  decreased $26 million or 3.3 percent from the prior year. And Q1 was no improvement; revenues declined almost $8 million from the previous quarter; $16 million from the same quarter in 2012.

The main driver was likely pharmacy; the full impact of the loss of ESIS’ PBM business to Progressive was felt; the numbers may also reflect the USPS’ decision to change from Coventry’s FirstScript PBM to PMSI. Because ALL pharmacy revenue counts as “top line”, losing a PBM customer has a disproportionate impact on financials – just as winning one does (First Script won the Selective Insurance business recently).

I’ve said before – and will repeat again – Aetna is NOT going to dump the WC business.  If anything, they’ll likely invest in the sector.  There’s a bunch of reasons private equity is all over workers’ comp services these days: there’s lots of upside from automation; margins are very healthy; regulatory risk is minimal; and it is a good counterbalance to the group/public sector health plan business.

Overall, decent growth in Medicare Advantage and Part D revenues.  Medicaid growth was negative, driven by exiting one market and increasing membership in two others.  Overall, Coventry’s public-sector business continues to be the largest of the company’s three business segments – while commercial membership and revenues continue to sag.

This is why Aetna is buying Coventry – public sector expertise, market share, and membership.  Mother Aetna has the commercial sector pretty much figured out (as much as anyone does in these pre-ACA-implementation days); they need help in the public-sector health plan markets.

Unless the world ends, this will REALLY be their last earnings report.

What does this mean for you?

Size matters in the post-ACA days – a lot.  Expect more mergers and acquisitions, and some big ones too.

 

May
2

Marketing dispensing to physicians…

Posted by Joe Paduda on Thursday, May 2nd, 2013 | Comments

This from a vendor presenting at a recent specialty medical society meeting in California…

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I’m not sure who did the graphics on this, but I especially like the quality of the artwork (reminiscent of Highlights!) and subtlety of the message.

What’s your take?

 

 

 

May
1

Obamacare RFID chip – the best comments ever.

Posted by Joe Paduda on Wednesday, May 1st, 2013 | Comments

The second most popular post (6300+ readers )in the 8+ years of MCM was on Obamacare’s RFID chip – a fantasy of conspiracy nuts and the right-wing tinfoil hat crowd.

 

For those who don’t recall, these crazies believe anyone signing up for health insurance will be implanted with an RFID chip containing their medical and financial records. This is an intentional or ignorant mis-read of the PPACA’s Medical Device Registry language which calls for a database – NOT A CHIP – for tracking who’s got what stuck inside them.

Here are a few priceless comments…

  • Placing a chip, for any reason, within your body is the work of the devil. Devices can be tracked in other ways besides a chip. Just register the person’s information in the database. You don’t need a chip to do that..

  • Joe Palooka [naw, I’ve got no right hook] thinks we will believe him when he tells US that Obamacare isn’t planning on microchipping every one of US just like mutts in a kennel — he kisses NWObutt but it’s not going to do him any good WTSHTF
  • hey guys, I believe in the Lord. Don’t get the chip or else you won’t have eternal life with God. Please don’t use it and tag #savetheworld cause I’m against it. Please help! SAVE THE WORLD
  • I heard (actually not just heard but read on the “National Review’s” “Huffington Post” tribute section) that Joe Paduda is in fact a socialist, Nazi, fascist, communistic, capitalist, Keynesian, free-market, supply-sided, Reaganomic, Obamanomic, bipolar, schizophrenic, ADD/ADHD, hate-mongering compassionist. And frankly –from what I and that person who types their comments to Joe over a cup of morning coffee in their in their underwear know about Joe– that sounded about right to us … but what do we know.
  • the Illuminati is in control of all major world Governments and they don’t change any laws too fast that anyone can notice a big change happening, but they change it so little that we never mind it at all!  This RFID chip and the drafted laws are just perfectly a Illuminati proceeding
  • Do a little research its all true abd very sad it used to be subliminal now it all hidden in plain sight but amazingly enough 60%of the citizens still think everything is peachy who can see chemtrails and forced inauculations with their head always in the tv,cell phone, or computer wake sheeple befor it too late
  • i just wish i was in US i will have love it n perharps what it wrong of having i chip in forehead ? it just for u to get proper care n feel protected wherever u are in this world , so my brothers n sisters lets us support it Obama all the way
Apr
30

Express Scripts’ work comp results are in

Posted by Joe Paduda on Tuesday, April 30th, 2013 | Comments

Express Scripts’ 2012 Drug Trends Report provides an interesting picture of the trends experienced by their clients.  ESI has a pretty strong presence among the State Funds, with California and New York two of the larger ones served by the St Louis-based PBM.

As noted last week, you can’t compare statistics from one PBM to the next without ensuring you understand and factor in the definitions, formulae, claimant population and methodology/time frames used by the PBMs in question.

ESI’s stake in the ground is in avoiding “waste”, defined as “any additional spend on pharmacy costs that provides no incremental benefit in treatment outcomes.” Prescribing branded drugs when generics are available, maximizing home delivery, avoiding potentially abused drugs – all contribute to waste and thus higher costs and poorer outcomes.

A couple of interesting data points; ESI’s researchers determined that using non-morphine pain medications (typically synthetic opioids e.g. OxyContin) instead of morphine-containing meds “could have cost $1,172 in additional spend per injured worker for each year during which narcotic medications were used.” The point was specific to claimants receiving long-acting opioids relatively early in the treatment process, with ESI contending other, less expensive drugs are likely more appropriate.

Lead clinician TIm Pokorney RPh and his colleagues also looked at compounds and copacks; potency was “much higher than intended in MIssouri and Texas”, a particularly frightening finding given the well-publicized problems with compounds’ safety.

ESI’s average client saw trend increase 2.9% in 2012, driven by a 3.2% increase in the cost per script.  Oxycontin remained the top drug in terms of cost, at 9.7 percent of spend, however overall usage of narcotics was down 2.7% – a welcome change and one mirrored by other PBMs’ results.

Drugs that saw significant more utilization year-over-year include generic morphine, Cymbalta(R) gabapentin and oxycodone – all used for treating pain. On the positive side, utilization of Opana(R) ER and Oxycontin both declined dramatically. Clearly ESI’s efforts to move claimants from branded drugs to generics are paying off.

Progress.

 

Apr
29

Air traffic controllers, health care, and Head Start

Posted by Joe Paduda on Monday, April 29th, 2013 | Comments

I fly a lot. You probably do too.  Flying is not much fun – when it’s not downright miserable.  So the news that the furlough of air traffic controllers mandated by sequestration was leading to even more delays was most unwelcome.

Some rejoiced when Congress passed legislation allowing the FAA to stop furloughing workers  – and I’ll admit I was one of the some. Typical American – it’s all about me and my personal convenience.

In the cold light of morning, that’s a very short-sighted perspective.

Sequestration was supposed to be so bad that even the intransigent Congress would come together to pass a budget.  If the FBI couldn’t add any new agents, pork producers couldn’t get their meat inspected, physicians’ payments were reduced, drug approvals delayed, weather reports and warnings more sporadic, Head Start enrollment reduced, the hue and cry would be so unthinkable that even Congress would compromise.

Alas, rather than compromise, some Congresspeole decided protecting their principles was far more important than anything else.

Until the folks who vote complained that – God forbid – they might have to spend another hour in the terminal waiting for a flight.

Congress – Dems and Reps alike – and the President – promptly caved on their principles, ended the certainly annoying but not life-altering inconvenience of travel delays, and thereby showed that flight delays are waaaaaay more important than real solutions to real problems – health care fraud, runaway health care costs, poorly-educated kids, national security.  

If anyone still thinks they’ll solve the big problems, think again.  This was the perfect issue to force compromise.  A principled stand by anyone would have (perhaps) forced compromise – the public was feeling the effects, and that public outrage, channeled effectively, was precisely the intent of the sequestration.

Nope.  When the going got tough a little uncomfortable, the spineless caved. And in so doing screwed the country.

 

 

Apr
26

Opioids in workers’ comp – problems with long-term usage and what to do about it

Posted by Joe Paduda on Friday, April 26th, 2013 | Comments

WCRI hosted a webinar yesterday to discuss WCRI’s latest research into long term users of opioids, policy options and recommendations.  The event topped the list of best-attended webinars – the problems associated with opioids and potential solutions thereto is a critical issue facing all workers’ comp payers.

Dr Dongchun Wang started with a review of WCRI’s new information – with a focus on longer-term usage – lost time, musculoskeletal-related injuries without surgery who received opioids more than 6 months after injury. Here are a few of Dr Wang’s highlights:

  • In Louisiana, one in six claimants who received opioids early on were long term users, in other states it is one in ten.
  • The use of other treatment modalities in conjunction with opioids was quite low – 24% of claimants from 2009 – 2011 were receiving drug testing – ten points higher than the two previous years – whoever range was from 18% – 30%.
  • This was far better than psych evals – which were in the mid-single digits.  Very few claimants are evaluated on the front end for psych issues, or get psych treatment.

Dr Kathryn Mueller followed up with a discussion of the global pain problem and attendant issues with opioid over-prescribing and abuse.  Claimant MEDs (morphine equivalent dosage) varied by a factor of four across the study states.  This despite consistent guidance from all sources recommending limited use of opioids. ACOEM calls for limiting opioids to 3-10 days while all guidelines re CNCP (chronic non-cancer pain) essentially include the same treatment for pain – limited opioids, use of NSAIDs, manage not end pain, use CBT (cognitive behavioral therapy, 6-10 visits typically).  Opioid therapy is a very small part of pain therapy, which should also require documentation of functional improvement and change. Dr Mueller also:

  • recommended accessing PDMsP.
  • recommended including weaning language in all opioid agreements.
  • noted there are no studies that show long acting opioids are preferred or have better outcomes than short acting – and no evidence for or against a specific drug.
  • noted CO has a drug monitoring payment code to encourage payment for physicians managing opioids
  • said re urine drug monitoring, that physicians need confirmatory testing of metabolites and not just in-office screening

Dr Dean Hashimoto finished up; we will review his comments in a later post.

 

Apr
24

Workers’ comp drug trends – good news at last, Part 2

Posted by Joe Paduda on Wednesday, April 24th, 2013 | Comments

Workers’ comp pharmacy benefit management firms devote significant resources to research, much of which is published in their annual drug trend reports.  Today we focus on PMSI’s just-released report…

The big news – narcotic utilization in the first year of the claim was down 7 percent from 2010 to 2012.  There was an increase in NSAIDs, indicating physician prescribers were substituting NSAIDs for narcotics, a major step in the right direct.  For all claims, narcotic utilization declined 3.2%, an indication that there was less of a decrease among older claimants. Nonetheless, the top drug by spend continued to be Oxycodone at 9.1%

PMSI’s 2013 Annual Drug Trends Report covers three years of in-network transactions totaling just under $1 billion in spend spread over 5.7 million transactions.  Their researchers use cost per day and average days supply to level set for changes; for 2012, cost per day was up 2.8% while utilization declined 2.7% for essentially no change in cost year over year.  This was driven in part by converting more claimants from retail to mail order and associated 21% lower price per day supply. (mail order meds are a lot cheaper)

The report also cites the key role of generic conversion – PMSI clients’ cost for generics was 75% less than for brand ($2.83 v $11.09).  Overall, both generic efficiency and generic fill rates were up; however this varies by age of claim as rates decreased as claims age.

The report includes several excellent charts and maps detailing various regulatory and legislative issues – physician dispensing regs, repackaging reimbursement limits and the like.  There’s also an excellent graphic showing how carisoprodol dispensed by a physician can cost more than ten times the retail pharmacy’s cost ($138.60 v $11.03 – p 10)

One item of interest – the cost per physician-dispensed pill in HI was $4.71 v $1.68 for pharmacy in 2012…

Finally, the big PBM’s clients saw good results from their acetaminophen program as it cut number of claimants taking more than recommended dose by 40%.

Considering this report and Progressive Solutions’, it appears that PBMs have been able to make some progress in reducing the use of narcotics on new claims.  It may also be that physician prescribing patterns are changing; I’m looking into that through a couple of sources to see if we can discern any overall pattern.

More to come.