Dec
20

What’s up with CorVel?

It’s been a while since we last looked in to see what’s going on at the managed care company/TPA.  Back in May, CEO Dan Starck left to go back to his previous employer, leaving a hole at the top.

Senior staff welcomed former CEO Gordon Clemons senior back, but Gordon junior was rumored to be in the running for the top slot.  Word is senior management wasn’t all that excited. More to come…

Financials for the most recent quarter are not great: revenues are essentially flat and earnings down 10 cents per share from 68 cents the prior quarter.

CorVel has been operating as a TPA and managed care firm for several years now.  While I don’t have access to any data on their TPA performance, there is data available on their managed care results.

Fortunately, the good folk at Texas Division of Workers’ Comp provide an evaluation of the networks operating in the Lone Star State; CorVel’s is included. The news is not so good.  CorVel’s network performance in Texas is, well, poor relative to the competition.  With average medical cost per claim almost 10 percent higher than the next most costly HCN, CorVel’s customers have the highest medical cost per claim of any HCN in the study. Other data points of note:

  • 37 percent of injured employees reported problems accessing care, second lowest among all HCNs in the study.
  • 12 percent of injured employees reported they had not returned to work, second worst in the study.

It is possible CorVel’s client base has greater risks and more severe injuries.  The 2011 report indicated CorVel had the highest rate of lost time claims of all networks – a whopping 42% of all claims were lost time

I was talking to an insurance company claims exec about CorVel; this was her/his take: “We have always been concerned about them from an ALAE [allocated loss adjustment expense] standpoint.  They only started the TPA business because the other TPAs were taking all their other bill review and case management business away.

Unfortunately, they are not alone when it comes to TPAs who put greater emphasis on ALAE billing than claims handling.  It’s a plague of the industry right now.”

As I’ve noted in the past, this is partially the responsibility of employers.  They’ve been able to beat up TPAs for ever-lower administrative fees to the point that some TPAs were losing money on claims handling.  As TPAs seem to remain solvent, many have looked to increase charges for managed care services, and perhaps CorVel is one that has followed this route.

 


Dec
19

Work comp hospital costs on the rise

Workers comp payers around the country are seeing their bills – and payments – for inpatient and outpatient services increase significantly faster than other costs.

And all indications are those increases are going to…increase.

The latest WCRI reports (kudos to Rick Victor et al for getting ever-more current data into their studies) show facility costs are up substantially in several states.  Indiana’s facility costs were substantially higher than WCRI’s median states, driven by prices.  As Indiana doesn’t have a fee schedule for facilities, hospitals can jack up prices whenever they want – and they are.

WCRI reported overall hospital inpatient payments per stay increased 12% per year from 04/05 to 09/10; anecdotal information from HSA consulting clients indicate Indiana hospital prices are up significantly this year.

At that rate, your costs will double every six years.

And that’s the best case scenario.

What’s behind my pessimistic forecast is the news that hospitals will likely take a big hit in the fiscal cliff deal.  Medicare is going to get cut, and policymakers are focusing on facilities rather than physicians as the primary target for reductions in reimbursement.

What does this mean for you?

When – not if – those cuts are announced, we can expect facility costs to increase. In states like Indiana where there is no fee schedule, those increases will be driven by a combinaton of higher prices and more services per episode.

In fee schedule states, watch for significant increases in utilization – more and higher-intensity services per stay.

For a detailed view into workers’ comp outpatient costs and cost drivers, watch WCRI’s webinar on the subject.


Dec
18

The latest on compounding pharmacies

Looks like Congress is pressing forward on efforts to clean up the regulatory gaps implicated in the New England Compounding Center tragedy.

Rita Ayers, CEO of Tower MSA Partners, has been tracking the US Senate’s work on the issue; the latest is Tom Harkin, (D IA) Chair of the HELP Committee sent a letter to the Boards of Pharmacy in all fifty states requesting information on their oversight of compounding pharmacies and their efforts to follow up on the NECC disaster.  The letter, which went out in mid-November, requested responses by December 7 of this year.

No word on what Harkin et al heard back, or if the Pharmacy Boards did respond on schedule.

What we do know is this.

  • Oversight of compounding pharmacies is quite a bit looser than pharmaceutical manufacturers, and the regulatory compliance process is much less onerous for compounders
  • Compounds are supposed to be developed/made up for individual patients or a relatively small number of patients.
  • Some compounders look a lot like manufacturers, as they make thousands of doses – just like manufacturers
  • Some states have a very light regulatory “touch” while others are pretty tough.

What does this mean for you?

A warning for patients, providers, and pharmacists alike, and evidence that – in some instances – we need more and better regulation, not less.

 


Dec
17

The Florida Medical Association’s new tagline: Profits before Patients

Mike Whitely of WorkCompCentral reported this morning that the Florida Medical Association has decided that their doctors’ profits are far more important than patient safety.

Sure, they’re hiding behind grand words such as “patient choice” and “return to work”, but those are just code words for “we’ll sock taxpayers and employers for as much as we can as long as we can, and to hell with ethics.”

The president of the FMA, one Miguel Machado, said last year “encouraging patients to comply with prescriptions ensures that they will get back to work sooner.” His legislative lead said:

“The FMA maintains that physician dispensing of medications is one of the most effective means of patient compliance, which means injured workers can return to their jobs sooner.”

There are two issues here; one is the FMA’s inability to support that statement with any research, and two; the fact that physician dispensing is outright dangerous.

Truth is there is not one shred of evidence that dispensing drugs results in faster return to work or better outcomes.  There is NO DATA, no research, no information, no studies, no indication whatsoever that physician dispensing does anything positive; unless you count enriching doctors, repackaging companies, and the firms that enable those practices as positives…

And let’s not forget it enriches investors, specifically ABRY Partners, that own physician dispensing companies.  And yes, that’s the same ABRY that also owns TPA York Claims and MSA firm Gould and Lamb. (Nothing against York, mind you – the people I know there are very good and very committed to doing the right thing for their customers)

There is a plethora of evidence indicating that ending outrageous profiteering on physician dispensed drugs does NOT end the practice of physician dispensing, but it seems Machado’s medical degree did not come with even a basic understanding of science or statistics.  If it did, he would be able to read WCRI’s report on California which showed no significant decrease in physician dispensing after CA tied the price of repackaged physician dispensed drugs to the original manufacturer’s price.

The second issue is even more troubling.

Machado’s doctors don’t have access to pharmacy databases that retail stores use to prevent potentially deadly drug interactions. Pharmacists in retail stores are required to check computerized databases to ensure the drugs they are dispensing don’t conflict with other medications their patients are taking. There’s no such requirement for Machado’s doctors.  And, because most work comp claimants are seen by docs who haven’t seen the patient before, the treating physician doesn’t have a complete medical record – or access to one.

So Machado’s words ring completely, unequivocally, blatantly, hypocritically false.

I don’t know what it will take to convince these hypocrites of the error of their ways; perhaps news of the first – or second, or third – patient death caused by a fatal drug interaction from a physician-dispensed drug. It is horrible indeed to consider, but when one remembers Florida is the same state that refuses to fund its prescription drug monitoring program and waited years before closing pill mills, it may well take multiple deaths before the FMA does the right thing.

Kudos to Sen Alan Hays, DMD for his principled and active commitment to fixing this problem.

If you want to let the FMA know your thoughts on this, their number is 800-762-0233; even better, their twitter handle is @FloridaMedical.

Of course, it’s up to you, but you may want to tweet something like “@FloridaMedical’s drug dispensing position puts #ProfitsBeforePatients”.

Michael Gavin at PRIUM has a somewhat more measured but equally disappointed view…

 


Dec
14

Is workers’ comp over?

Should it be?  Has it become such an unwieldy morass of conflicting regulations, an all-too-soft target for profiteers and plunderers that it is largely dysfunctional?

If so, we may well see other states follow Texas’ lead and allow employers to opt out of workers’ comp.

Friend and colleague Peter Rousmaniere has authored a comprehensive study of the subject, one regulators and legislators would be well-advised to put on their holiday reading list.


Dec
13

Is this fiscal cliff thing going to affect workers comp?

Not directly.

But there’s a wealth of indirect effects.  Here are a few worth contemplating…

But first, I’m not seeing a plunge “off the cliff” as all that big a disaster.  Sure, there will be much consternation among pols and pundits, but that’s as much to  generate readers and viewers as to “report” on reality. The negative impact of the political deadlock has already been baked into the economy, so the economy isn’t going to get any worse over the next month or so.

That said, if we don’t get a resolution by mid-January, the proverbial stuff will hit the fan.

So two scenarios.

One, it gets fixed over the next month.  Some delay in premium payments from governmental entities. Perhaps a holdup on changes to Medicare physician reimbursement and docs hold bills in hopes their reimbursement doesn’t get slashed.  Some employers will hold off on hiring while they wait for the kids in the sandbox to get their $%&(@% together. And delays in starting infrastructure work or continuing existing projects will undoubtedly occur…

That’s about it.

Which leads us to the “oh crap” scenario, the one where DC pols decide to cross the stupid line.

Government spending on infrastructure would all but cease; employers would stop hiring and might well lay off workers; health care providers – especially hospitals – would likely cut staff as well; manufacturing would slow appreciably, state, local, and municipal governments would furlough employees…

You get the picture.  As a result, comp premiums would drop significantly, few employers would look to switch insurers or administrators, and service providers/vendors would likely see a significant decrease in business as well.

So, let’s not go there.

I fully expect our elected officials will fix this before it’s too late.  The political consequences (are there any other?) would be catastrophic if they don’t.

As Winston Churchill said of us: “The Americans will always do the right thing… after they’ve exhausted all the alternatives.”

 

 


Dec
12

Here’s $200 billion in deficit reduction for Boehner and Obama

There’s an easy $200 billion in deficit reduction out there – require CMS to negotiate drug prices with manufacturers, a move that would reduce annual expenditures by over $20 billion – or $200 billion closer to a “cliff”-avoiding deal.

As I’ve noted repeatedly (but unfortunately few in the mass media have), Part D is perhaps the biggest deficit problem we have – the ultimate unfunded liability is now over $20 trillion.  A decade ago the Republican House and Senate  passed the single largest entitlement program since Medicare – the Medicare Part D drug benefit – with no dedicated financing, no offsets and no revenue-generators. Fully three quarters of the total future cost – which is now around sixteen trillion dollars [see page 122] – was simply added to the federal budget deficit. (the rest is paid for by senior’s fees and State transfers).

The cost to taxpayers for Part D in 2011 was $53 billion; over the next ten years, our cost will balloon to $990 billion.

Of course, we could solve the majority of our budget problems by just canceling Part D, but neither the Democrats nor the Republicans will do that.

So, as long as we’re stuck with the damn thing, we ought to make it as inexpensive as possible. The best way to do that is to use the buying power of Part D to negotiate with manufacturers to get the best possible price for drugs that you – the taxpayer – are paying for. Believe it or not, the original Part D legislation expressly forbids negotiation with manufacturers for pricing. 

In a 2006 House analysis, a report “showed that under the new Medicare plan, prices for 10 commonly prescribed drugs were 80% higher than those negotiated by the Veterans Department [emphasis added], 60% above that paid by Canadian consumers and still 3% higher than volume pharmacies such as Costco and Drugstore.com.”
Another study indicated “An annual savings of over $20 billion could be realized if FSS [Federal Supply Schedule] prices could be achieved by the federal government for the majority of drugs used by seniors in 2003-2004…”
Are there problems with this? Absolutely. Reducing prices may impact R&D expenditures and will affect pharma margins – effects that must be balanced against the nation’s long-term financial viability.

Notably, the President’s public statements on the negotiations haven’t mentioned the long term costs of Part D either. It is puzzling indeed that President Obama has not publicly put this chip on the table.  Perhaps it’s because pharma has already “contributed” to paying for health reform with their $80 billion in

That said, Speaker Boehner’s the real hypocrite here. The Orange One could have been courageous – admitting he and his party made a mistake in refusing to allow CMS to negotiate with pharma, and thereby saving taxpayers $200 billion over the next ten years. Sure, he would’ve taken a hit from older Americans who love Part D, but true statesmen, real leaders, know that tough, unpopular stands are necessary some times.

Like now.

What should we do?

Either a) end Part D or

b) allow the Feds to use their buying power to negotiate with pharma. That alone would save about $20 billion a year.

To recommend either, contact Speaker Boehner here and President Obama here.

Canceling Part D won’t happen; neither party is about to tell seniors they can’t have free medicine. If Boehner, McConnell, Tea Party Congresspeople- and the Administration – were really concerned about the deficit, they’d agree to use the government’s buying power to reduce costs and thus lower the deficit. But of course they won’t; that would alienate big pharma and cut into their campaign contributions.

I’d be remiss if I didn’t acknowledge there are a few on the right as angry as I am about this blatant hypocrisy.


Dec
11

Comp medical costs on the rise

The latest report from WCRI shows medical costs in Indiana have been rising rapidly over the last few years, driven by facility cost increases.  This comes as no surprise, as facilities’ increasing leverage and ability to raise prices has been affecting comp in many states.

This comes on the heels of a similar report on Virginia and news of a significant rate jump in New Jersey, in large part due to increased medical trend.

Rates are up in the Sunshine State too, and yes, higher medical costs – facility and repackaged drugs – are the driver.

Over the last few years, medical inflation, as reported by NCCI has been pretty much under control.  It certainly looks as if those days are over.

What does this mean for you?

Time to dust off those medical management programs – and update them as well.  Because what worked back in the day will likely not work now.  If it did, you wouldn’t see these cost increases.

 

 


Dec
10

Obamacare – status update

Here’s where we are with the implementation of PPACA aka Obamacare.

1.  Several states have either rejected the Medicaid expansion or are waffling. Expect most to decide to take the money; hospitals, physicians, and their lobbyists are working overtime to make sure this happens.  It’s a no-brainer; the feds are paying all of the cost for the first five years, 95 percent for the next five, and 90 percent thereafter.

2. A new tax to subsidize lower-income folks’ Medicaid goes into effect January 1. Most of the new revenue (85 percent) derives from the top 1 percent of taxpayers, with lower-income people getting most of the benefits. for Medicaid and insurance subsidies.

3. The growth of Accountable Care Organizations is quickening – but some are ACOs in name only, while most are ACO 1.0. While there’s much skepticism about the eventual ability of ACOs to control costs/improve outcomes, I’m convinced they will do both.

This from David Harlow:

“…we’re at the leading edge of a significant disruption built around the Affordable Care Act’s provisions on ACOs and related initiatives: a sea change in the way health care is conceptualized, and radical change in delivery and payment systems.  We’re ahead of the curve on these issues in Massachusetts, with a law passed this summer that will move us into ACOs for all — not just Medicare beneficiaries — and away from fee-for-service medicine, and a local Blue Cross-Blue Shield plan known as the Alternative Quality Contract that has been working on this basis — budgeted caps with quality kickers — for several years already. It’s the latest form of pay for performance, or value-based payment.”

4. The feds will charge insurers who go thru Federal Exchanges 3.5% of premiums. This is likely quite a bit more than private insurers were figuring.  If nothing else, it will increase pressure on governors who until now have rejected operating their own Exchange; expect insurers in the 21 states that have rejected exchanges to increase pressure on their governors to set up their own state-run exchanges.

5. There’s much angst in the insurer community over definitions of benefits – which are set by each state – and the cost of providing those benefits.  States with few mandates may well see costs go up significantly, especially for younger folks with individual coverage (who now must more heavily subsidize older members).

Lastly, there’s a whole lot of uncertainty surrounding implementation of Obamacare/PPACA, along with a lot of prognostication about costs, coverage, and impact on providers, employers, and taxpayers.

One thing to remember; if private insurers had controlled costs, we wouldn’t be talking about Obamacare.