Author: Joe Paduda

Mar
18

Medicare pay for performance gets a push

Posted by Joe Paduda on Friday, March 18th, 2005 | Comments

Even though it’s just a small one, it is stilll significant. Rep Nancy Johnson (R) CT (my home state) is promoting a drastic change in the way Medicare pays physicians. Rep. Johnson is calling for a pay-for-performance scheme to replace Medicare’s fee schedule arrangement.
Details below, but in case you can’t read that far, think of this.
1. many state workers comp fee schedules are based on Medicare’s. What are the implications for state programs?
2. Group health reimbursement is often tied to Medicare as well…
3. Medicare is based on paying for services needed for and delivered to a population that is over 65. If the reimbursement arrangement changes, and it factors in some kind of “performance” metric, will it even be possible to adapt that to younger populations?
Now that your head hurts, here’s the details…
According to California HealthLine;
“Johnson said that, although physician performance measures and systems to collect data on performance are not perfected, lawmakers must move to address the issue because of scheduled reductions in Medicare physician reimbursements over the next several years. Elimination of the SGR (Sustainable Growth Rate) system “is the only possibility,” Johnson said, adding, “It’s unfortunate that we have to do this two years in advance of the technology.”
Johnson also indicated that lawmakers could enact “a one-year fix of physician payment while a more permanent system is being designed,” although she hopes to enact permanent revisions to the Medicare physician reimbursement system this year, CQ HealthBeat reports. She estimated that the replacement of a 1.5% reduction in Medicare physician reimbursements for fiscal year 2006 with a 1.5% increase would cost $11 billion over five years.”

Mar
17

Medicaid, Round three

Posted by Joe Paduda on Thursday, March 17th, 2005 | Comments

It appears that Medicaid is safe, at least in the Senate, from Pres. Bush’s attempt to cut $14 billion over five years. Smith, Republican Sen. of Oregon, claimed to have enough votes to pass an amendment restoring the dollars, and creating a Commission to study Medicaid.
According to California HealthLine,
“Smith said at least six Republicans support the amendment. A vote is expected as early as Wednesday. According to the Post, the budget resolution’s current language prevents lawmakers from filibustering legislation to implement entitlement cuts, allowing it to be approved by a simple 51-vote majority (Washington Post, 3/16).
Smith said, “I’m afraid of the consequences for the disabled if we do Medicaid reform in a hurry,” adding, “I’m specifically … concerned about how Medicaid cuts are first made against mental health coverage” (Schuler, CQ Today, 3/15).
However, the House may be a different story. Representatives are not sanguine about the possibilities of reaching agreement on a budget compromise if the amendment passes the Senate. In fact, HealthLine goes on to state:
“The House Budget Committee on March 9 proposed a FY 2006 budget resolution that would require the House Energy and Commerce Committee, which has jurisdiction over Medicaid, to find $20 billion in savings over five years ”
This bout may be a long one.

Mar
16

Medicaid Round Two

Posted by Joe Paduda on Wednesday, March 16th, 2005 | Comments

In what may prove to be a critical indicator of the future of Medicaid funding, a bipartisan group of senators has introduced an amendment that would restore the $14 billion in Medicaid funding cuts in the President’s budget proposal. The senators expect a vote on the amendment tomorrow…
According to California HealthLine, 14 sponsors and co-sponsors:
“have introduced a bill that would create a commission of experts to evaluate Medicaid and recommend improvements before lawmakers cut funding or make changes to the program. The commission would be made of experts to be appointed by the president, Congress, governors, and state and local officials. Commission members would hold public meetings and deliver recommendations on how to improve Medicaid (American Health Line, 2/10).
The amendment’s sponsorship is important, as it indicates the Senators have listened to their states’ governors, who were all but unanimous in their protest over the cuts. Clearly, the Administration’s desire for a quick resolution to the Medicaid budget issue will not be satisfied. In fact, many governors are actually asking for additional funds, as Medicaid expenses continue to grow at rapid rates.

Mar
16

Coventry’s plans for work comp

Posted by Joe Paduda on Wednesday, March 16th, 2005 | Comments

Coventry Healthcare’s acquisition of FirstHealth (closed 1/28/05) was viewed with some concern by FirstHealth’s workers comp payer customers. Several of Coventry’s key management staff came from organizations that had divested workers comp managed care SBUs, causing speculation (on this blog as well as among present FH customers) about the future of WC at Coventry.
Indications now point to a commitment to the WC business for at least the near and mid-term. Sources indicate Coventry senior management has met with some of FH’s key customers to discuss past issues, get input on future directions, and assure customers of Coventry’s commitment to the business. While this last point (assurance) may be viewed with skepticism, Coventry’s moves appear to indicate it is more than a platitude. These include
–Coventry’s search for a senior leader for the FH WC business, which will be separated from the group health business (now directed by Skip Creasy). They are looking for the right person with the right blend of credibility, understanding of the WC industry, and insights necessary to move the WC business forward.
–seeking input from present customers on general and specific topics ranging from candidates for the top job, to bill review technology, to gaps in systems, operations, customer service, and network coverage
–early indications the company is rethinking the acquisition and expansion strategy implemented by the old management staff.
–some evidence of increased flexibility in regards to customer requests for specialty managed care carve-outs and the like.
Perhaps most notably, Coventry’s decision to lop off the top managers at First Health sent a clear notice that big changes were to come.
I believe that is good news for present customers, as well as the rest of the market. A reinvigorated First Health may actually bring new approaches, new ideas, and a more flexible attitude to the industry, all of which are desperately needed.

Mar
16

Small managed care plans disappearing

Posted by Joe Paduda on Wednesday, March 16th, 2005 | Comments

A new report indicates what many have perceived for some years; the world of health care insurance is increasingly dominated by larger payers. Conning & Co.’s report indicates that larger insurers/managed care firms are buying up smaller ones in an effort to grow market share.
This is consistent with HSA’s own experience; as the larger plans seek to keep their stock prices moving up, revenue growth becomes increasingly important. Their growth choices are pretty limited –
1. grow organically by taking market share from a competitor by cutting price (a really bad long term plan) or
2. buy up other plans.
The acquisitions of FirstHealth, Oxford, Connecticare, et al are all indicative of this trend. Good news if you own a smaller managed care firm; bad news if you are a provider or employer operating in an oligopoly environment.
The health care market is rapidly maturing, and will come to be dominated by a selection of large players – Aetna, UHG, Anthem, and a few others.

Mar
15

WCRI CompScope reports published

Posted by Joe Paduda on Tuesday, March 15th, 2005 | Comments

The Workers’ Comp Research Institute has just published the latest edition of CompScope, their annual report on trends and comparisons across 12 states.
CompScope is used by regulators, managed care firms, and WC payers to assess the market environment in individual states. Some of HSA’s clients use this publication when determining market strategy, as it provides an objective comparison of key markets for comp.
WCRI also publishes their Anatomy reports, which are more detailed analyses of the medical and other aspects of WC claims in individual states. The Anatomy report has proven to be quite useful for claims execs and managed care professionals in the business.
WCRI charges for both publications.
Yes, I’m a fan of WCRI, but have no other affiliation.

Mar
14

Greenberg leaving AIG

Posted by Joe Paduda on Monday, March 14th, 2005 | Comments

Several sources reported the imminent departure of Hank Greenberg, long-time Chairman and CEO of AIG, from the company effective tonight.
According to MarketWatch, “Greenberg, 79, the long-time chief executive of insurance giant American International Group, is expected to officially step down after an AIG (AIG: news, chart, profile) board meeting Monday night, paving the way for Martin Sullivan to ascend to the $166 billion global insurance conglomerate.”
There are some indications that the Board at AIG is working to move as quickly as possible to address issues related to alleged stock price manipulation (prior to the purchase of American General); fallout from the Spitzer investigation of alleged bid-rigging and sham-bidding, and inappropriate usage of “insurance products” to smooth earnings for certain AIG customers.
Mr. Greenberg’s age, 79, may be cited by some as contributing to the decision, but I wouldn’t buy it. He has remained one of the more engaged and energetic CEOs of late.

Mar
11

Medicare drug battle marches on

Posted by Joe Paduda on Friday, March 11th, 2005 | Comments

Two Republican Senators have introduced legislation that will cap annual Medicare drug expenditures. Here’s the article from “California HealthLine” –
Sens. Lindsey Graham (R-S.C.) and Jeff Sessions (R-Ala.) on Thursday introduced legislation that would cap spending on the Medicare prescription drug benefit to the original Congressional Budget Office estimate of $395 billion over 10 years, CongressDaily reports. The new CBO estimate for the benefit is $849 billion between 2006 and 2015.
The bill would establish annual spending caps for the benefit, and the president would be required to submit legislation to scale back the benefit if spending goes beyond that amount. Graham said, “I was always concerned the projected costs of the Medicare prescription drug benefit would turn out to be wrong. Even I was surprised at how quickly and dramatically the projected costs of the program spiked” (CongressDaily, 3/11).
This is rather significant, to say the least. There are clearly cracks in the Republican wall, cracks that appear to be generated by deep concern over the cost of this huge entitlement.
As one wag put it when talking about the Medicare drug bill, “I didn’t realize conservatives could be THAT compassionate!”

Mar
11

Briefs on WC managed care firms

Posted by Joe Paduda on Friday, March 11th, 2005 | Comments

Notes on some of the goings on in the WC managed care world.
Concentra has laid off the IT staff in Minnesota (effective 3/31) responsible for maintaining both the “Advancer” case management system (acquired in the purchase of NHR) and the company’s “datamart”. Evidently Concentra is switching maintenance of the system to their Dallas IT staff, and will be transitioning to a flat file format for reporting purposes.
Tom Cox, an executive in the company’s network operations, will be leaving the company sometime this summer. Cox has been with the company and their predecessor organizations since the early nineties.
Coventry’s First Health continues their search for an executive to lead their WC business line. The position is located in Illinois, and the company is looking both within and outside the WC world.
One of the new boss’ first steps may well be to mend fences with the company’s larger clients. First Health has been known for their somewhat-heavy-handed approach to customer relations; while this had diminished over the latter part of 2004, recent indications are they are back to their old tricks. More than one customer has been ‘surprised’ by First Health’s recent demands or inflexibility in contract re-negotiations, systems enhancements, or customer-specific requirements.
The company recently landed Fireman’s Fund as a network and bill review client. FFIC left Fair Isaac after a somewhat troubled relationship.

Mar
11

State approaches to health care coverage

Posted by Joe Paduda on Friday, March 11th, 2005 | Comments

Families USA sponsored a conference last month entitled “Health Action”, which pulled together a variety of leading lights from politics, policy, government and the private sector to discuss individual states’ efforts to improve access to and coverage for health care.
Key findings include:
1. many states recognize that health care is “an unavoidable issue, and every sort of option