Category: Providers

May
23

Work comp drugs – Three things

Posted by Joe Paduda on Tuesday, May 23rd, 2023 | Comments

Workers’ comp news…

After a long and litigious delay, myMatrixx has been awarded the contract to manage pharmacy benefits for the Coal and Energy programs run by the Federal Department of Labor’s Office of Workers’ Compensation Programs (OWCP). Details of the case – which involved a protest by rival PBM Optum – are here.

That’s the good news (the Feds should have had a PBM managing these programs years ago).

Now, the bad news.

The press continues to dive into the audit of the other OWCP program – the one that provides workers’ comp to all Federal employees (FECA). [audit report is free for download here]

The latest is from Leslie Small of AIS Health. [available at no cost via free trial subscription].

From Ms. Small’s piece:

  • “OWCP has been doing a poor job of both controlling the FECA programs spending on prescription drugs and implementing its own policies to ensure that prescriptions are being appropriately dispensed, said the OIG report.”
  • OWCP published a bulletin in 2011 that forbid reimbursement for fast-acting fentanyl prescriptions unless claimants had been diagnosed with a certain type of cancer…during the audit period…98.7% of the fast-acting fentanyl scripts that OWCP [and taxpayers] paid for “went to claimants without evidence of one of hte eligible cancer diagnoses” 
  • Even more troubling – if that’s possible – OWCP did not institute controls to mitigate opioid usage until the end of 2016, years after many commercial insurers, third-rate administrators, and large employees had done so…”

Here’s hoping this much-needed attention results in even-more-needed improvements.(my opinion only)

Drug costs in California are getting well deserved attention again; CWCI’s research identified 9 drugs – 3 each opioids, dermatologicals and antidepressants – that account for a significant percentage of total drug spend. CWCI members can get the full report at no cost; it’s $18 for others.

Briefly, branded anti-depressants, tapentadol/Nucynta, and the three anti-depressants make up a small percentage of scripts but a big percentage of dollars.

Of course, in the vast majority of cases the dermos are just BS drugs that should never be allowed…

What does this mean for you?

Don’t sleep on pharmacy...sure costs are down, but it still has a major influence on recovery, RTW, and claim closure.

Apr
18

Private Equity healthcare investment in 2022

Posted by Joe Paduda on Tuesday, April 18th, 2023 | Comments

Private Equity healthcare investment declined sharply last year as the average deal’s value and the number of transactions both fell off.

Firms invested over $45 billion in 167 US healthcare deals last year – a pretty massive decrease from 2021’s 216 deals for $107.5 billion.

While 2022 started off quite strong, deal volume halved in the second half of 2022 due to interest rate hikes, tighter credit, economic concerns and Putin’s War.

Those are the headlines from Bain & Company’s Global Healthcare Private Equity and M&A report 2023 (download for free here.)

note – I have worked with Bain entities in the past, respect the firm and the Bain people I’ve worked with. I am not currently working with Bain.

key highlights…

  • Provider sector deals accounted for about half of all transactions and dollars invested…but slowed dramatically to 7 transactions in Q4 2022
  • IPOs pretty much disappeared in 2022 (initial public offerings, when a private company goes public)
  • Value-based care and primary care were a big focus of strategic buyers…
    • Optum bought several provider groups
    • Amazon acquired One Medical
    • Humana and Welsh Carson did a joint venture, investing in a value-based primary care company.

There’s a lot on value-based care…although there’s precious little evidence that it is a panacea, investors are still betting billions …From the report:

For more than a decade, value-based care (VBC) has been positioned as healthcare’s “next big thing.” And while progress has been uneven 

The number of accountable care organizations (ACOs) plateaued at around 1,000 in recent years, while 15 of the 53 entities participating in CMS’s direct contracting program in 2021 experienced net savings losses. 

Value-based care stakeholders are doubling down on their commitment as healthcare spending outpaces GDP growth and CMS leans further into VBC models. 

What does this mean for you?

Expect PE investors to remain quite cautious until interest rates stabilize, the debt ceiling is raised (or much, much better – eliminated) and inflation trends level out.

Warning – if House Republicans don’t raise or eliminate the debt ceiling there will be hell to pay. 

Register for Bain’s webinar on the report here.

Apr
10

Stuff I missed while my server was down…drugs, profiteering hospitals

Posted by Joe Paduda on Monday, April 10th, 2023 | Comments

 

WCRI is out with its latest inventory of state regulations re prescription drug management. This is a must-have for claims execs, managed care leaders, medical directors and risk managers…pricing, utilization review, opioid management, formularies and PBM regs are all covered.

Revenue Cycle Management – aka hoovering mounds of cash from workers’ comp payers – is the focus of a “white paper” targeting hospital and health system execs. If you want to know the hooverers’ playbook, sign up and be prepared to be amazed.

A closely-related item…

From the wonderful folks at Kaiser Family Foundation comes the shocking news that facility fees are driving ER costs to the moon. As most of you (hopefully) know, regulations allow any service delivered at a facility to uncharge a facility fee. It is not hyperbole to note hospitals are wildly abusing this, taking on facility fees to services provided at

      • remote clinics
      • physician offices
      • even telemedicine visits

oh, btw, many hospitals are STILL not complying with Federal requirements to post prices…

Finally, from HBR comes this excellent advisory on how not to anger/frustrate/alienate customers…something many worker’s comp entities seem surprisingly good at. (We are NOT looking at you, LWCC…your work on patient engagement is really good stuff)

All too common is the industry’s maniacal prioritization of efficiency over everything else. From HBR:

when focusing on efficiency, many companies overlook the emotional aspect of the customer experience — how customers feel when interacting with the business.

The piece focuses on consumers – which every injured worker is.

What does this mean for you?

Tired of being hospitals’ piggy bank?… then understand facility cost drivers and techniques.

Injured worker engagement is critical to helping them return to functionality.

Mar
9

Why your facility costs are increasing.

Posted by Joe Paduda on Thursday, March 9th, 2023 | Comments

Revenue Cycle Management.

RCM is the acronym for a focused, ever-evolving, highly sophisticated approach hospitals, ambulatory care facilities and healthcare systems use to suck as many dollars as possible from employers, taxpayers and insurers.

There are scores of RCM companies out there, some with programs specific to workers comp…

and this is a growth industry...

Reality is in many states workers’ comp is – by far – the most lucrative payer. Florida is the worst example of gaming by facilities to Hoover dollars out of employers and taxpayers pockets; Wisconsin is also hugely problematic as is Alabama and a bunch of other states.

And it is going to get worse.

With Medicaid enrollment scheduled to drop dramatically, CMS reducing COVID payments to hospitals, and many hospitals and health systems facing record deficits, hospitals’ scramble to find revenue is going to accelerate.

Meanwhile…bill review companies are woefully behind the Cognizants and Convergents, despite BR companies’ protestations otherwise.

Rather than seek expertise and capabilities and better performance by subcontracting to much-more-sophisticated and capable third parties, BR companies try to do it in-house…mostly so they can keep all those fees for themselves.

Meanwhile facility costs increase, and the ones getting screwed don’t seem to care. Expect Florida and Texas to be most problematic as those states did not expand Medicaid. 1.6 million Texans and 1.4 million Floridians will lose their Medicaid coverage, further hammering hospitals’ financials.

400,000 Wisconsinites could lose coverage…

Why I continue to berate the industry for failing to protect its own best interests is a puzzle even to me…employers aren’t exercised enough to demand better, neither are insurers, and TPAs are no better.

And don’t get me started on brokers and “consultants”…

What does this mean for you?

Do your job.

Jan
23

Hospital profit margins – a bipolar mess

Posted by Joe Paduda on Monday, January 23rd, 2023 | Comments

For profit hospitals have very solid operating margins.

Some Not for profits are really struggling…others are doing just fine thank you.

credit FierceHealthcare.

That’s the headline – the question is…why? and what does this mean?

First, a little more explanation…

From the Kaiser Family Foundation’s report…

So far this year [2022], operating margins among the three largest for-profit health systems in the country have met or exceeded pre-pandemic levels. HCA and Tenet in particular have had high operating margins.

the largest for-profit systems have had operating margins that exceed pre-pandemic levels. [emphasis added]

Also, most hospitals and systems saw declines in investment income; as this falls outside their core business, we are focusing on operating income which excludes investment and other categories.

Why?

It appears that the more profitable hospitals/healthcare systems:

  • saw surgical and other profitable service line volumes return to or exceed pre-pandemic levels
  • better controlled staffing costs; contract staffing costs (traveling nurses and other clinicians) were a major factor for several not-for-profit hospitals
  • benefitted from non-healthcare operations (insurance for UPMC) and financial gains from mergers (e.g. Intermountain Health)
  • increased prices for commercially-insured patients (this is an assumption although there’s this…)

The merger thing continues to be a major influence, with $45 billion in transactions in 2022 across 53 deals… again the results aren’t consistent as some systems really benefited while others did not.

Meanwhile, the American Hospital Association continues to call for higher reimbursement and other federal intervention to help hospitals financials.

For my workers’ comp readers…

Look at the costs of providing care at an HCA hospital vs some of the not-for-profit hospitals in your service areas. You will very likely find HCA’s costs are several times higher than not-for-profits’. 

Oh, and they are waaaay higher in Florida…

More on this here.

What does this mean for you?

Don’t use HCA or Tenet facilities. 

Oct
10

Private health insurance – can it be fixed?

Posted by Joe Paduda on Monday, October 10th, 2022 | Comments

I’ve been thinking long and hard about why our health insurance and healthcare systems are such a clustermess. Hugely costly, lamentable outcomes, a morass of bureaucracy, red tape and stupid rules enriching a few and impoverishing many.

So, I think I have a solution – and it involves workers’ comp.

First, the problem.

Today I’m reprising a post from a couple years back – if anything it is more accurate today than it was way back then.

If you had “government” health insurance for the last decade, your costs would be 20 – 25% lower today.

That’s because private insurers have not controlled spending nearly as well as Medicare and Medicaid have.  This from KFN via Axios.

Doesn’t matter what your economic or political ideology is – that’s a fact.

You and your insurance company pay your doctors and hospital more than twice what Medicare does. Yes, the Feds can exert pricing power – but why can’t United Healthcare, or Aetna, or Blue Cross?

Those healthcare giants should be able to negotiate better deals with providers; they have massive buying power and millions of members to leverage. They should be able to use that power to give you lower insurance costs – but they can’t.

Those private insurers are (theoretically) more nimble, smarter, better run, and more efficient than the government. And they have hundreds of billions of healthcare dollars to leverage.

Yet they’ve failed to outperform a bunch of bureaucrats.

I won’t dive into the “whys” today, because that would take away from the over-arching truth – government has been much more effective than private insurers.

What does this mean for you?

Cutting your health insurance costs by a quarter = more dollars you could have spent on other stuff.

note – happy to hear other thoughts; please use citations to back up any assertions.

Sep
22

The hospital shakeout

Posted by Joe Paduda on Thursday, September 22nd, 2022 | Comments

Is well underway.  Likely impacts include:

  • more hospitals shutting down their inpatient operations
  • a decline (!!) in hospital employment
  • even more aggressive land-grab efforts by rival health systems seeking highly profitable commercially insured patients (that’s you, dear reader)
  • doubling down on “revenue maximization” (that’s you, work comp payor)

(Kudos to the estimable Merrill Goozner for his cogent discussion of the issue)

What’s happening…

  • hospital admissions dropped precipitously last year – despite the major impact of COVID admissions. As I noted a while back, COVID patients aren’t very profitable; they rarely get surgeries or other procedures which generate big dollars for hospitals…
  • meanwhile expenses are climbing – driven mostly by labor costs (up $86 billion this year)
  • more than half of all hospitals are going to lose money…before COVID, the money-losing facilities amounted to only a third of the total.

Why this is happening…

  • states that didn’t expand Medicaid are getting hammered as the other safety net payment programs mostly stopped helping hospitals make up revenue shortfalls.
  • care has largely shifted to outpatient facilities which are way less costly – and generate way less revenue per admit – than inpatient stays
  • it’s really hard to find staff – many are way past burnout, driven by overwork and abusive patients.

What does this mean for you?

Facility costs will go up.

Quality likely won’t.

Aug
9

Amazon, Kaiser, and primary care

Posted by Joe Paduda on Tuesday, August 9th, 2022 | Comments

Two seemingly-unrelated new items hit my news feed – Kaiser Permanente lost over a billion dollars last quarter, and Amazon paid $3.9 billion to buy One Medical, a primary care company.

Amazon is betting it can make primary care “work”, yet one of the best healthcare systems hasn’t been able to translate excellent primary care into lower costs.

Reality is, in the US primary care is (mostly) a money-loser.

One Medical, Amazon’s new purchase, has consistently lost money – a lot of money. That’s because reimbursement for primary care remains pretty low – despite Medicare’s move to increase pay.

We spend twice as much on healthcare as other developed countries, yet our outcomes, well…suck. One driver is likely access to primary care:

  • High income countries spend 2 to 3 times more on primary care services than we do; United States as a proportion of their (14% of total health care expenditures vs. the US’ 5% to 8%)
  • In those other countries primary care providers (PCPs) account for a substantially higher proportion of all practicing physicians; almost half of French physicians and a quarter of docs in the UK are PCPs compared to just one out of 8 in the United States.
  • that last data point may be due to pay; family practice docs make less than half what orthopedic docs do.

Good primary care saves big bucks by reducing the need for specialty care – an economic impact that isn’t reflected in primary care reimbursement in the US. At least not in most reimbursement schemes; risk-taking, ACOs, risk share, and other variations are among the models that attempt to reward PCPs for effectively managing patient health.

Amazon’s move to buy One Medical comes on the heels of lots of other investments in primary care; what’s notable is how few have resulted in profits.

Can Amazon “fix” primary care?

Well, they’ll  have to be a lot better than Kaiser Permanente.

KP is one of – if not the best – health care systems in the world, with excellent primary care and provider compensation that better reflects the value of primary care.

Yet KP lost over a billion dollars last quarter – and over $2 billion for the first half of 2022. Yes, a big chunk of the Q2 loss was due to investments, and there are extraneous factors – COVID-related mostly; Kaiser also has to pay orthopedic surgeons and other specialists a lot (increasing KP’s overall cost of care) because those docs could make much more outside KP.

Still, when one considers that Kaiser Permanente’s operating margins are generally pretty thin and certainly KP is less profitable than other health plans (UnitedHealth Group’s Q2 profits were up 19%) it shows just how difficult it is to make primary care “pay.”

What does this mean for you?

Pay more for primary care. 

Aug
1

Just the facts, ma’am…

Posted by Joe Paduda on Monday, August 1st, 2022 | Comments

Today we’re doing a very quick recap of stuff we learned over the last couple of weeks…no opinion here (yeah that was really hard for me…)

Extra credit for identifying the man in the picture…

But first, for those of us perennially mad at ourselves because, well, we screw up and aren’t perfect, read this. Short take – perfectionism…

“…makes for a thin life, lived for what it isn’t rather than what it is. If you’re forever trying to make your life what you want it to be, you’re not really living the life you have.”

Drug prices

Make for great politics…even when all the caterwauling is wrong. The issue is what we – the consumer – pay is NOT what insurers, PBMs, and other payers pay.

That’s due to the “gross-to-net bubble”, a term popularized by the estimable Adam Fein Ph.D.

When rebates and discounts were factored in, brand-name drug prices declined—or grew slowly—in 2021.

So…you getting those rebate checks?

COVID’s origins

Remember the theory that COVID came from a Chinese lab? It is looking increasingly sketchy.

A comprehensive, detailed, and multi-factor analysis by scientists from four continents found

the emergence of SARS-CoV-2 occurred via the live wildlife trade in China, and show that the Huanan market was the epicenter of the COVID-19 pandemic.

The peer-reviewed research published in the journal Science covered molecular epidemiology and spatial and environmental analyses.

Investors and physician practices

Private equity investment in physician practices varies a lot by specialty and region. Quick takes…

  • about 5% of physicians were in private equity-acquired practices
  • The highest percentage was in D.C. (18.2%)
  • More than one in ten docs in AZ, CT, FL, MD, and FL were in PE-acquired practices

The researchers wrote…

“Because some private equity acquisitions consolidate physician practices into larger organizations, geographic concentration of private equity penetration may be associated with reduced physician competition, which could lead to increased prices, [emphasis added]

An interactive map and the research report are here.

Gun violence

Gun makers earned over 1 Billion (with a B) dollars from sales of military-style assault weapons over the last decade. A report to Congress found:

  • gun makers marketed to young men by claiming their weapons will put them “at the top of the testosterone food chain”…
  • the weapons were described as an “apex predator”
  • some ads for these weapons “mimic first-person shooter video games popular with children.”

source here

The AR-15 is the most common of these weapons…the NRA named it “American’s Rifle” back in 2016. (and here I always thought it was Davy Crockett’s flintlock rifle…)

(disclosure – I hunt and have several rifles – none are semi-auto like the AR-15)

Workers’ comp physician fee schedules

…are all over the place…Louise Esola at Business Insurance reported on a recent WCRI analysis that found:

About one-quarter of the fee schedule states established their rates for office visits near the Medicare level or below, while about the same number of states set their fees for major surgery at triple the Medicare rates or more in each state…

The study – authored by Olesya Fomenko and Te-Chun Liu and up to date as of this spring – is here. (sorry for misspelling of Dr Fomenko’s  name in  earlier version…darn spellcheck!)

Clearly politics trumps policy…unless someone can tell us why it makes sense for Florida to pay docs below Medicare, while paying hospitals many times Medicare… I’ll stick to politics, campaign contributions, lazy legislators and hand-cuffed or ineffective regulators as the main driver of work comp fee schedules. (oops opinion inserted into post…just can’t stop myself)

Happy August!

Jun
7

Those damn facility fees

Posted by Joe Paduda on Tuesday, June 7th, 2022 | Comments

If you are a work comp payer, you don’t have to pay those ridiculous facility fees when care is delivered outside the hospital – at least not in Pennsylvania.

That’s the decision rendered by the Pennsylvania Bureau of Workers’ Compensation in a case dating back to 2017. The case arose when a hospital (which I promised not to identify) tried to get reimbursed for care delivered by an affiliated provider, which was NOT “located within XXX hospital”.

The details

The hospital, a “Part A provider and billing entity” didn’t provide the billed services, rather a

“part B provider whose clinic [was] not located with[in] XXX hospital performed, billed, and was reimbursed for services.  XXX hospital is not entitled to payment as XXX hospital provided no medical services…”

The actual provider – a “part B provider” affiliate of XXX hospital, delivered the services, submitted a bill and supporting documentation, and was reimbursed.

The hospital also submitted a bill along with documentation that the treating provider had a professional services agreement (PSA) in place with the hospital.

Notably, the PSA “designates that all care and treatment is rendered by [the affiliate’s] personnel, therefore the payer’s attorney questioned exactly what XXX hospital was “providing.”

There’s a LOT more to this; location codes, provider details, Medicare regulations, bill types and the like are all important. The knowledge level required to correctly reimburse and successfully uphold a denial of payment for facility fees in PA is quite impressive; the entity providing that expertise has a wealth of experience and expertise in the Keystone State.

The cost reduction is equally impressive .

What does this mean for you?

  1. If you are paying facility fees for care delivered outside of a hospital (Part A) provider, you better get your act together.
  2. Expertise is way more important than price or throughput.