Author: Joe Paduda

Jan
22

More states will expand Medicaid

Posted by Joe Paduda on Wednesday, January 22nd, 2014 | Comments

Even those dominated by Republicans.

To understand why, here’s a quote from a conservative GOP legislator from Michigan:

State Rep. Al Pscholka: “When people say Medicaid expansion, I think to a lot of us that meant bigger government, and it meant expanding a program that doesn’t work very well…When I understood how it worked, and what we had done in Michigan in the late ’90s, that was actually pretty smart, we’ve privatized a lot of that already, which I think a lot of folks didn’t understand.”

But it’s more than that.

Hospitals and health care systems will be in dire shape without expansion.  Already the feds are reducing the amount of funds they are transferring to hospitals that provide a lot of uncompensated care and Medicaid services. The federal DISH (disproportionate share) allotments are established, HHS has a formula in place for rolling out those changes but that formula doesn’t account for states that don’t decide to use expansion. States that don’t expand Medicaid will see a reduction in these payments, and no increase in Medicaid, leaving the hospitals in a financial bind.

Without Medicaid expansion, hospitals and health systems will find it increasingly costly to care for the uninsured  – and they will pass that cost along to privately insured patients and workers’ comp payers.  This already happens, and is one of the arguments in favor of universal coverage.

More significantly, the poor uninsured with chronic conditions (diabetes, asthma, hypertension, depression) will become increasingly expensive to care for.   The lack of primary care will mean when they do get care, it will be much more expensive than if they’d been able to effectively manage their health and thus avoid hospitalization.

Unhealthy people find it harder to get and keep a job, don’t do well in school, and thus are less able to contribute meaningfully to society than those of us with insurance.

That’s not to say that Medicaid shouldn’t be modified; for example, some sort of nominal copay or coinsurance so services aren’t just a freebie makes sense to me. That’s happening in some states.

Finally, there’s a bit of history here; when Medicaid was originally introduced, many states opted out.  Within a few years, each one had signed up.

What does this mean for you>

History will repeat itself, and that’s good news indeed.

Thanks to Kaiser Health News for the heads’ up.

Jan
21

Why don’t workers’ comp payers have pharmacists on staff?

Posted by Joe Paduda on Tuesday, January 21st, 2014 | Comments

I’m only aware of three major work comp insurers (Travelers, BWC-Ohio, Washington L&I) that have pharmacists on staff; the North Dakota State Fund does as well.

With pharmacy costs accounting for somewhere around 15% of total medical spend, that seems like a “miss”.  Yes, pharmacy costs have been flat in recent years, but the impact of drugs on work comp claim duration and the medical and indemnity expense associated with long-term drug use is quite significant.

Many payers have medical directors, nurses, and other clinicians on staff to help address medical issues; in some instances ALL medical issues are the purview of clinicians. Yet these payers don’t have pharmacists on staff, relying instead on medical folks.  Sure, they have knowledge of pharmacy, but nowhere near the depth and breadth of expertise resident in even the greenest pharmacist.

As physician dispensing of medications increases, payers begin (yes, most are just beginning) to address their long-term opioid users, off-label prescribing continues to grow, new medications come on the market, and compounding spreads, payers will find themselves at a disadvantage if they don’t have inhouse expertise.

Sure, PBMs have pharmacists on staff, and most are very, very experienced, understand pain management, and know work comp.  They have the added benefit of being “free”; they don’t increase overhead expenses.  But they work for the PBM, aren’t available on an ongoing basis to address the issues listed above, and if the insurer switches PBMs, that experience and corporate history disappears.

Twenty years ago rare was the insurer with any real medical expertise on staff. Claim adjusters were quite capable of handling medical issues, thank you.

It won’t  – at least it shouldn’t – take that long for insurers to see the wisdom of hiring pharmacists.

 

 

Jan
17

Friday catch-up and heads-up

Posted by Joe Paduda on Friday, January 17th, 2014 | Comments

Lots happening this week – here’s a few notable events.

First, WCRI’s webinar on physician dispensing, opioids, and physician prescribing patterns.  A couple key takeaways:

  • after FL banned doc dispensing of potent opioids, almost all the docs who were prescribing and dispensing Schedule II and III data switched to NSAIDs; far less potent pain killers.  Which leads one to wonder…how scummy is a doc who does this?
  • Prescription Drug Monitoring Programs – properly designed and implemented – dramatically reduce doctor and pharmacy shopping.

Much more was discussed; the underlying research on Florida’s changes can be found here.

One of the more creative marketing campaigns was launched this week by Acrometis; the Year of the Adjuster. An excellent infographic is here; pay attention to the campaign and offshoots thereof.   My bet is this dramatically raises Acrometis’ profile…

12 of the nation’s 50 most expensive hospitals are in California; thanks to California Healthline for the heads-up. To find out which are in your state, click here.

The Sedgwick sales process is well underway, with bids due (I’m guessing here) within the next week or two.  Don’t expect this will close quickly as there’s a lot to review.

Finally, a tech research firm has a rather bizarre piece out on Google Glass, the next “Killer App” in insurance.  Bizarre because:

  1. there hasn’t been a Killer App out yet, so this would be the First…
  2. given the rather slow tech adoption rate (to be kind) in the P&C insurance industry, I wouldn’t expect companies that spent a year approving MIcrosoft Office upgrades to jump on the Glass platform; they’ll spend much of their effort figuring out how to prevent employees from mis-using the technology before assessing how hard it will be to tie the device and output into their systems.

See you Monday!

 

Jan
15

Did Illinois’ work comp costs go down after reform?

Posted by Joe Paduda on Wednesday, January 15th, 2014 | Comments

Yes – at least medical prices did, but the drop wasn’t as much as the reduction in the fee schedule, and it was a LOT less for expensive procedures.  Those are the quick takeaways from WCRI’s report (published yesterday).

The reforms brought a 30 percent reduction in the medical fee schedule as of September 2011, yet:

  • Professional service prices dropped 24 percent, with the 6 percent difference driven by lower provider participation in networks (thus fewer providers delivering care at a discount) and higher prices from in-network providers.
  • Radiology prices dropped 13 percent for MRIs and 22 percent for X-Rays, and ER services also only dropped by 18 percent; other than that, most service groups saw prices decrease somewhere in the mid-twenty-percent range.
  • Utilization appears to be on the increase, as WCRI’s research found “more complex office visits with higher prices were billed more frequently in Illinois.”
  • Surgeries are still waaaay more expensive in IL than in the median study state 2 1/2 times to be precise.  That’s 242 percent more than employers pay in Michigan...

What does this mean for you?

1.  Reducing prices does not lead to a corresponding decrease in costs as providers figure out how to make up for lost revenue by doing more, and more expensive, services.

2.  Kudos to WCRI for getting this info out so quickly; in the past it has taken much longer, so they’ve upped their game considerably. This makes the information much more actionable for payers and regulators alike who can figure out where potential issues lie and take steps to mitigate problems.

 

Jan
13

Are California’s work comp claimants denied necessary care?

Posted by Joe Paduda on Monday, January 13th, 2014 | Comments

One study published in the Spine Journal says no.

In fact, the opposite may well be the case; compared to Washington State, workers’ comp back patients in California get way too much unnecessary surgery, leading to higher costs and worse outcomes – including more wound infections, life-threatening complications, and device complications.  

The study used a case-mix adjusted of patients undergoing an inpatient lumbar fusion for degenerative disease in 2008 – 09, and produced the following results:

  • the rate of lumbar fusions in CA was 47% higher than in WA.
  • the complexity of procedures was much higher in CA.
  • CA costs were more than 20% higher in CA than WA.
  • CA costs were influenced by the (since fixed) double payment for surgical devices and coverage for bone growth enhancers (which have decidedly mixed reviews)

So, we have too many and too complex procedures performed on too many patients at too high a cost, with worse outcomes.

Why?

Well, the limits on lumbar fusion in WA are pretty tight, for very good reason.  In contrast, CA only required a second opinion to approve the procedure.

The financial incentive inherent in CA’s high payments for the procedure may (!) have had something to do with it.

What does this mean for you?

More surgery is often not better care, and in many instances means worse care – and a pretty crappy life for the patient.

 

Jan
10

Friday fast facts and catch-up

Posted by Joe Paduda on Friday, January 10th, 2014 | Comments

Here in no particular order are items of interest that have come up this week.

  • Heath care spending growth in 2012 was a low 3.7 percent – the fourth consecutive year it has been under 4 percent.  Moreover, health spending grew less than GDP growth, so health care’s percentage of the economy actually decreased.

  • Rumors persist that bill review and auto insurance tech company Mitchell International is buying bill review tech company Stratacare.  Word from multiple sources is the deal is close to done – that said, this one is especially tough to pin down… That said, there’s a lot of buzz out there.  IF this pans out we’ll dive into the implications – but as of now that’s a definite “IF”.

  • There’s a new book out on insurance regulation; it isn’t specific to WC however it is a good quick reference on PPACA, Dodd-Frank, and other timely topics.  It’s the Insurance Regulation Answer Book 2014.

  • On a much narrower but critically important issue, I direct you to the current issue of The Back Letter.  A colleague described the key takeaways thusly: “the ongoing Medtronic food fight around BMP (bone morphogenic protein)…The Back Letter has done a nice job identifying that the core issues here go way, way beyond a single product, and focuses appropriately on the pervasive evils (OK, those are my words) that conflicts of interest bring.”
    There’s also an excellent piece on doctor shopping for opioids in this issue; Thanks for the tip Doc.
  • A terrific paper by Milliman addresses the “adverse selection” and “Obamacare death spiral” nonsense.  Briefly, newborns, adult females, and older folks look to be the most profitable members – turning the industry on its head.  Back in the good old days – two weeks ago – insurers wanted healthy folks only.  Now, thanks to risk adjustment baked in to PPACA, things are a LOT different.

Enjoy the weekend!

Jan
9

How is California’s IMR process working out?

Posted by Joe Paduda on Thursday, January 9th, 2014 | Comments

To date, 94 percent of medical treatment requests are approved after initial/internal UR and elevated physician-based UR.

At most, 4.7 percent of all medical treatment requests are denied.

At most.

Those are the headlines from CWCI’s just released analysis of all completed IMR decisions (see 1/8/14 report), an exhaustive and precise project that involved a manual review of each of those requests and resolution thereof.

CWCI’s summary indicates “IMR agrees with approximately 79 percent of the elevated physician-based UR decisions.”

What does this mean?

There are two main takeaways.  First, there’s no widespread denial of care to injured workers, far from it.  The research clearly demonstrates that while the vast majority of treatment requests are approved, the vast majority of the IMR decisions uphold the UR determination to deny or modify treatment. (Update)

Which leads to takeaway two.  Do not assume this means the IMR process – or UR itself is unnecessary or superfluous.  While a cursory review of the results would lead an uniformed reader to draw that conclusion, the report provides insight into the potential downside of ending UR.  The authors reviewed a study conducted by the Washington state work comp fund, known as L&I. Back in 2000, L&I stopped requiring UR for MRIs, as almost all were approved. A few years later, they looked at the volume of MRIs conducted had jumped dramatically.

Here’s what they concluded:

L&I reviewed the effect that the elimination of UR had on MRI use and found a 54 percent increase in spinal MRI scans and a 72 percent increase in lower extremity MRI scans following the elimination of utilization review, and the reviewers were unable to identify any variable other than the removal of the UR requirement that accounted for the increase in MRI utilization. [emphasis added]

Other research into California-specific utilization further emphasizes the risk of ending UR, you can find it in the report at the link above.

That said, there’s no question the volume of IMR requests is much higher than anticipated; word is the State is considering various ways to address the volume including adding other  vendors.  But focusing on results to date, it is also clear the process is working as intended – as an exception management process.

As stakeholders gain more experience with UR and IMR, I’d expect the volume of requests to decrease.

What does this mean for you?

We know now that the IMR process is not a “medical treatment denial scheme” perpetrated by carriers looking to deny care.

Far from it. 

Jan
7

The health insurance world in 2014 – lots of uncertainty but no death spiral

Posted by Joe Paduda on Tuesday, January 7th, 2014 | Comments

Uncertainty.

That’s the best way to describe health insurance execs’ views on their business these days.  The massively-screwed-up-but-steadily-improving rollout of the federal exchange is the biggest reason for that uncertainty, but there’d be huge uncertainty even if things had gone flawlessly.

Health care providers are consolidating rapidly, increasing their negotiating leverage.  More and more physicians are working for health systems.  Some employers are dropping coverage, while others are moving to narrow-network based plans. All this against a backdrop of an aging population, increasing income inequality, major growth in Medicaid enrollment, reduced Medicare reimbursement for facilities and a possible “fix” to the fatally-flawed physician reimbursement system/mechanism.

And, the metrics they use to measure performance are in flux as well; the old measurements were fine when insurers could underwrite, adjust benefit designs, change deductibles and copays, and negotiate with providers from a position of strength.

Add to that the uncertainty over who is going to enroll via the exchanges – will there be enough “young immortals” to balance the older, sicker folks who sign up?  More importantly, how will that play out for individual health plans; Plan A isn’t concerned about the overall picture, but is very, very concerned about the demographics of their member group.

It’s no wonder senior management – and other stakeholders – are “uncertain” about the short-term, much less the longer-term.

Amongst all this confusion, there’s one thing that is clear – there isn’t going to be an “Obamacare death spiral”, at least not for three years.  The scaremongering about death spirals and adverse selection that might result from too many old folks and not enough young folks signing up is mis-informed.

There is a financial back-stop in the form of reinsurance that protects insurers from high cost claims for the next three years.  Bob Laszewski has an excellent description of the program and implications thereof here.  Funded by a tax on each insured, the program provides coverage for insurers “selling coverage on the state and federal health insurance exchanges as well as in the small group (less than 50 workers) market…”

By then, things will have settled down, insurers will have figured out what works, what doesn’t, and what they need to do to operate profitably.  Some will drop out of the exchange(s), while others will expand their service offerings and coverage areas.

What does this mean for you?

Lots of uncertainty means lots of opportunity for those aware, nimble, and stalwart enough to take advantage.  Not that there are many in this business that fit that description!

Jan
6

US health care – what we pay, and what we get

Posted by Joe Paduda on Monday, January 6th, 2014 | Comments

The US health care system costs way more than any other country’s, yet our health outcomes are mediocre.  At best.

An info-graphic from George Washington University helps explain what we pay and what we get.

015_Healthcare-VS-World-600