Oct
17

Workers’ Comp – the answer to the spinal fusion question

Kudos to USAToday for publishing a pretty good article on variations in practice patterns related to back surgeries. In a front page story today, the paper that has been derided by some as “McNews” explores the issues surrounding the explosion in the number of spinal fusions.
The reporting is balanced, insightful, and thorough, a bit of a surprise coming from a paper that prides itself on short sentences, really short words, and lots of color, not depth and nuance.
Noted throughout the article is the primary problem – no one knows how many spinal fusions are the right number, and there is significant disagreement among stakeholders re when a patient should have surgery. (free registration required) That’s all true, and that’s where workers compensation comes in.

Continue reading Workers’ Comp – the answer to the spinal fusion question


Oct
12

The provider – payer debate continues

My recent post on the battles between large health plans and hospitals/health systems generated a good bit of debate. One comment deserves special attention; “the other Joe” notes that the western PA landscape is marked by a combination health care system/health plan that dominates the region. While this type of vertical integration has been tried many times in the past with rather limited success, this version looks to be much better positioned to succeed.
But as the other Joe points out, there are significant costs associated with that “success”, costs that are borne by the system/plan’s employees, payers, insureds, patients, and employer customers.


Oct
11

Direct contracting

A reader asked several excellent questions about when and under what circumstances direct contracting makes sense. That’s when an employer contracts directly with health care providers.
My take is an employer has to have at least 750 lives in one area – plant, school, city government, facility, etc. in order to have any buying power at all. And 750 may well be on the low end.
As to whether a partially self-insured employer, say one with a specific deductible of $50,000, should do this, I’d say yes. The vast majority of bills will come from members with total costs well under the $50,000 limit.
Lastly, direct contracting takes expertise and patience. Knowledge of provider payment mechanisms and expectations, an understanding of the related legal issues, an intimate understanding of the local provider community, and really good employee relations are the bare necessities. Without these, stick with a “regular” health plan.

Continue reading Direct contracting


Sep
28

Ugly ugly ugly

Payer-provider interactions are getting downright pugnacious. Perhaps a more accurate characterization is the big health plans and health care systems are raising pugnacity to new levels.
Denver is the scene of one highly public row featuring United Healthcare and HCA’s HealthOne, one of the largest health care systems in the Denver metro area. The ongoing contractual dispute has led to lots of nastiness:
– termination of the UHC-HealthOne contract,
– filing of a temporary restraining order on the part of UHC to force HealthOne to enable UHC members to access some HealthOne facilities, and
– efforts by HealthOne to tightly control UHC case managers’ access to their facilities after reports that case managers were tring to get UHC patients to transfer out of HealthOne facilities.
This is not an isolated issue. Recent disputes have arisen in Rhode Island, Tennessee, and western Florida. Notably, several of the more contentious battles are between UHC and HCA.
Hospital and facility costs are the largest single contributor to health care cost inflation, and hospitals’ negotiating power, and willingness to use same, has grown significantly in recent years. It’s likely that the recent announcement that HCA will be bought out by private investors will lead to an increase in the number and intensity of contractual battles.
What does this mean for you?
As United and others seek to constrain medical inflation, and hospitals work to maintain their margins in the face of increasing numbers of uninsured patients expect to see more of these battles hit the news around the country.


Sep
27

Workers comp’s top problem drug

Actiq, the lollypop pain killer, is rapidly becoming the biggest problem drug in workers comp. FDA approved only for treating cancer pain, the potent narcotic is now on most payers’ top 5 drug list (ranked by dollars spent).
There are likely several factors that have enabled a drug clearly not approved for musculo-skeletal conditions to achieve this high “honor”.

Continue reading Workers comp’s top problem drug


Sep
11

HMOs cost less because they pay less

HMOs are cheaper than other forms of health insurance due to lower provider costs. At least that’s what an analysis of a 2004 study comparing HMOs to other forms of insurance discussed by Jason Shafrin in a post on Healthcare Economist says.
The difference amounted to 9.3%, with no measurable difference in utilization rates or risk selection between HMOs and other plans.
So, as an industry, HMOs are not more efficient because they are better at managing care or selecting risk, they are cheaper because they pay providers less. I would note that the analysis is based on data from the nineties, so perhaps a more accurate statement is that in the past HMOs were more efficient.
I don’t know if that’s the case today.


Aug
29

Drug repackagers and physician dispensing

As a public service, I’ve put together a (partial) list of firms that repackage drugs for physician dispensing. This is primarily a workers comp issue, as comp insurers and TPAs are increasingly concerned about the cost of drugs dispensed by physicians. In some circumstances, the billed and payable amount can be several times higher than the cost for the same type of drug dispensed through a pharmacy.

Continue reading Drug repackagers and physician dispensing


Aug
29

Direct contracts – the solution for a select few

It’s happening. Actually, it has been happening for years, albeit not very often. Frustrated with increasing premiums and no real solutions from the health insurance industry, large employers are investing in direct contracts with health care providers to deliver health care services to their employees and their dependents.
The practice got its start before WWI, when lumber mills in Tacoma Washington contracted with the Western Clinic to provide health care services for their employees. Leland Kaiser built health care facilities and hired staff to provide services to workers on the Grand Coulee Dam in the nineteen-thirties, a project that was the beginning of today’s Kaiser Permanente.
While there are no statistics on the number of lives covered under direct-contract arrangements, the total number is probably tiny. Unless there is a “magic” combination of a large employer and a dominant health care provider group with extensive facilities in a relatively small geographical area, direct contracting will just be too complicated and difficult to pull off.
But when those conditions do exist, expect more employers to seriously consider the move. Employers that are likely to consider direct contracts include large municipalities, school boards, manufacturing concerns, transportation hubs and entertainment companies.
What does this mean for you?
A business opportunity for providers, another challenge for health plans, and another way to tackle the problem of access and cost.


Aug
28

Quality means exactly what?

Some “quality” awards are based on rather shaky ground. And the Mercury Awards, which used to be handed out by HCIA (now Solucient) appear to fit that category.
According to the website for the North Ohio Heart Center (a cardiology practice in Elyria Ohio), “EMH Regional Medical Center had the top score for quality of care in Cardiology. According to the award, “It had the lowest complication rate and the most efficient length of stay. Its Patient Services score was boosted by its staff ratio and broad offering of cardiac services.”
That’s great, and if you were looking for a place to get your ticker checked, this impressive award may influence your decision. But the basis for the award should get anyone thinking, and at the very least asking a few pointed questions.
For example, the center had “the lowest complication rate”. That could be because the cardiologists are really great. Or it could be because they perform a lot of procedures on low risk patients , patients that are likely to require relatively short lengths of stay and experience low complication rates.
Evidence indicates that the latter may be reality. In fact, compared to national averages, there are four times as many angioplasties performed by the docs at EMH than in the rest of the country. More procedures = more experienced docs; more experienced docs doing procedures on low risk patients = good outcome scores, lower complication rates, shorter lengths of stay.
This looks more like an award for doing too many procedures including procedures on patients that may not have needed them in the first place, resulting in lots of income for both the docs and the hospital.
And the money ain’t bad either. (reg. req.)


Aug
22

Why would anyone buy a hospital company?

In what appears to be straight out of alternative papers’ “News of the Weird” column, several private equity firms are looking to buy HCA and take it private. These are really smart people who make lots of money finding gold where others only see dross; they must see something here that I (and lots of others) don’t.
Pro, demographics favor the deal; older folks need more hospital care. Con, there is a growing recognition that end-of-life care is too expensive, and hospitals are the most expensive place to deliver this care. Expect to see a push to relocate terminal patients from hospitals to hospices and other less-intensive facilities.
Pro, hospitals’ profitability has been improving. Con, legislators and regulators are looking to reduce hospital costs.
Pro, hospitals have been investing heavily in profitable lines, e.g. cardiology and orthopedics. Con, in some areas ambulatory surgical centers partially owned by physicians (where that’s possible) have been capturing a significant number of profitable cases, leaving the hospitals to handle the more severe and less profitable patients.
The deal has passed the FTC approval process, and now is closer to reality. However, don’t expect this to be the first of many deals; the private equity community does not seem enamored with the industry, but rather sees HCA as the best bet in a troubled business.