Insight, analysis & opinion from Joe Paduda
Health policy, informatics, insurance, and similar bloggers are invited to submit their posts for the fifth edition of Health Wonk Review. Fard Johnmar of Envisioning 2.0 is this week’s host.
Colleague and friend Peter Rousmaniere has an excellent column in the latest Risk and Insurance detailing some of the issues with Ambulatory Surgery Centers. To net it out, while they can get patients in quickly, are usually much nicer (in appearance) than hospitals, and can have equivalent outcomes, they are also wicked expensive (that’s my New England accent) , especially in states without an ASC fee schedule.
As a result, payers are increasingly looking to outside expert firms to assist in determining an appropriate reimbursement level. One that is especially adept in this area is Fair Pay Solutions (also an HSA client).
An article in today’s Baltimore Business Journal highlights a study by the American College of Occupational and Environmental Medicine on the impact of disability on employers’ bottom lines.
It will come as no surprise to industry experts that disability costs a ton of money, both hard dollars and soft, for insurance premiums, wage replacement, medical expenses, replacement workers and lost productivity. And, while it is good to see ACOEM publicizing the real costs of disability, this is not something that has not been addressed by many employers and experts in the past.
Jennifer Christian, MD, is the most articulate and insightful expert on the role of the physician in disability management. Tom Lynch of Lynch Ryan is the industry’s leading expert on safety and return to work planning. There are any number of physicians in private practice who focus deeply on return to work – Jorge Trujillo and Yemi Owi are two occupational medicine physicians who focus on what the patient can do, rather than what they can’t, and as a result have a stellar record in this area. Choice Medical Management has proven that sending injured workers to the right docs can dramatically improve return to work results.
And I’ve argued till blue in the face that any group health payer that wants to really differentiate in the market can do so by demonstrating their impact on absenteeism and productivity. Here’s hoping that a nascent initiative to do just that (evaluating a large HMO’s impact on a large University) gets things rolling (I’m involved as the chief nag to keep things moving along).
A thoroughly excellent synopsis of the med mal insurance industry’s good fortune reveals that the number of suits filed is a small fraction of those that could be filed, and likely won.
According to Jason Shafrin;
“Less than 3% of people who receive negligent physician care actually sue.”
So, could politicians, physicians, and misguided health care economists please stop whining about med mal? It could be a whole lot worse.
Many years ago I was stopped for speeding in Montana – specifically doing 90 in a 55 mph zone. The fine was $5 and was paid on the spot. The officer wished me a nice day, and off I went at 90+. It looks like Massachusetts may have learned from the Big Sky state, at least when it comes to setting penalties for politically unpopular laws.
Yes, the new Massachusetts universal coverage law requires most employers provide employees with health coverage, but the penalty of $295 per employee for non-compliance is somewhat of a joke. With health insurance costs per employee in the $5000 plus range, the penalty amounts to a 6% fine for noncompliance.
Not exactly a strong message…
Meanwhile, the state’s law may well be challenged by corporations under ERISA…a nod to Paul Secunda for his interpretation of the situation and to John Rodat of SignalHealth for the heads up.
One of the main drivers of health care cost inflation is hospital expense. New information reported in the Detroit News reveals that despite layoffs, a dramatic increase in uncompensated care, and flat inpatient admissions, hospitals throughout the Detroit metro area enjoyed a very profitable 2005. Meanwhile, Sutter Health, the big hospital/health care company on the West Coast, also reported increased profits – $442 million on revenues of $6.7 billion.
The good financials are a result of aggressive cost cutting, an influx of sicker patients requiring more services, and increased reimbursement from private payers.
One item of interest is the huge growth in uncompensated care. According to the News, “uncompensated care reported by the region’s major health systems rose to about $740 million in 2005, up $163 million from 2004.”
My bet is that this rapid growth is due in large part to big increases in billed charges, and not necessarily to more services provided to more folks without insurance. The growth in billed charges is rampant throughout the US, as hospitals seek to offset their “losses” on uncompensated care by cost-shifting to other payers.
What does this mean for you?
If I was in the commercial insurance business I’d watch my hospital expenses really really carefully.
WorkingRx’s suit against the Workers Comp Fund of Utah will likely shed some light on Working’s billing practices, methodology, and legal strategy. Working is a third party biller; a company that buys WC scripts from retail pharmacies and tries to get insurers to pay for them.
While that’s fine, and is a time-honored business practice in many retail and other industries with large receiveables, Working’s approach tends to be a bit more combative.
Working submits bills for reimbursement after applying their version of usual and customary, and then demands payment. Sources indicate that the WCF’s position is they have paid for the scripts already, and that Working’s demands are unreasonable. If Working’s other legal and collection actions are any indication, WCF may have a good point.
The issue is this; Working gets the bill from the retail pharmacy, and then reprices it using their own “usual and customary” methodology and/or adds an administrative fee. This last was shot down pretty abruptly in the WorkingRx-ScripNet legal battle, and WorkingRx’s U&C methodology is, well, unique.
One of the factors driving WorkingRx’s aggressive posturing and actions may well be the incentives of their legal team. Sources indicate that Working’s legal folk are, at least in part, financially rewarded for success in getting payers to cough up additional payments.
Physicians will be getting coal in their stockings from Uncle Sam come Christmas, 2006. It looks like Medicare reimbursement will be cut by 4.6% for 2007, just in time for those holiday credit card bills.
For several years, these cuts have been mandated to take place on the first of the year as part of Medicare’s legal requirement to maintain expenses under a “sustainable growth rate”, or SGR. Up till now Congressional action has prevented the cuts from taking place, but the budgetary constraints on Medicare growth are likely to force Congress’ hand.
While that is bad enough, this is by no means the end of the bad news. According to California Healthline, the potential cut “represents the first in a series of reductions that will decrease reimbursements by 34% over the next nine years, during which time physician costs likely will increase by 22%.”
The cuts are a result of calculations by CMS based on 2005 increases in utilization of minor services and increased prices. Not surprisingly, the major driver was utilization.
Price fixes are a blunt instrument, but an effective one, at least for the Feds. While these cuts will reduce Federal expenditures, they will undoubtedly lead to higher costs for private payers, as physicians shift costs to their group health patients.
If this continues for many more years, we will have private payers and their insureds subsidizing more than 50% of the cost of Medicare patients.
Sounds like nationalized health care…
What does this mean for you?
Priivate payers’ costs will increase as physicians seek to recoup lost income.
The Washington Post published results of a study that indicate a generally modest level of satisfaction with Part D among enrollees. According to the Post, “Three-fourths of Medicare beneficiaries enrolled in the drug benefit say paperwork to sign up was easy to complete, and almost two-thirds say the program saves them money…”
I’d just point out that seniors are pretty sharp consumers, and the ones who signed up for Part D are likely those who did the math to figure out the cost-benefit.
This is called adverse selection, and is the main reason the program will not be successful over the long term. Simply put, the ones who sign up are the ones who will get more in benefits than they will pay in premiums.
Matt Holt’s Fierce Healthcare points out that the Post erred in stating that 29 million had signed up for Part D – this number actually included all seniors with some form of drug coverage from Medicaid, Medicare Advantage, or other sources, and grossly overstates the actual enrollment – which is about 30% of eligibles.
Also of note is this stat – among all seniors surveyed, (those with and without Part D coverage), 41% approve of the benefit and 45% don’t. Leaving aside the health policy issues of Part D, it sure does not look like a political win for the current Administration.
Pretty much everyone would agree that when it comes to information about physician practice patterns, outcomes, and costs, the more the public knows, the better. And the staunchest supporters of consumerism are the most ardent advocates of full disclosure of publishing health care provider data. Why just this week Pres. Bush was in Connecticut stumping for his various solutions to the nation’s health care crisis, proclaiming the benefits of information in driving down costs and improving outcomes.
No big news here.
Except that Medicare provider data, the nation’s largest database of provider-specific information, encompassing over a billion claims per year, with information on practice patterns on the vast majority of physicians in the US, and under the direct control of the Federal government (and therefore by Mr. Bush) has not been released to the public. Or anyone else, for that matter.
What’s going on? Well, the Feds claim that the data is private, is covered under a 1979 law prohibiting disclosure of individuals’ data, and therefore cannot be released. This is somewhat confusing, as most physicians practice in professional corporations (that’s the significance of the “P.C.” you see after the name of the doc or medical group) and therefore are not covered by the law.
I’ll admit to a bit of cognitive dissonance here. Are these are the same Feds that can unilaterally release confidential information about national security issues; use Executive Findings to claim exemption from Acts of Congress; the Feds that are of the same party that controls both Houses of Congress and therefore might have some say in what new legislation is passed; the Feds in control of the Attorney General’s office with all its resources, which has demonstrated its willingness to prepare legal documents authorizing all manner of actions?
Given the aggressive position of the Administration on other issues, its willingness to take steps that are bold and controversial on other matters, I’m really surprised that they have been so, well, wimpy on disclosure of Medicare data.
What does this mean for you?
Likely frustration, regardless of your opinion on consumerism in health care.
