Insight, analysis & opinion from Joe Paduda
Steve Anderson’s HWR edition is one of the best I’ve read – Steve digs into alternative facts about ACA repeal, health care delivery, conflicts-of-interest, and work comp claims.
I’d emphasize a couple posts –
Charles Gaba’s got a great “app” for figuring out how many folks in YOUR Congressional district would lose coverage if ACA is repealed.
Louise Norris’ review of Trump’s executive order on ACA does what no one else could – explain what the order can, and cannot, do.
Steve – YOU THE MAN!
Through election after election, HealthWonkReview has been your go-to source for the real impact on healthcare, health policy, access, coverage, and the rest of the story about the industry that accounts for one-sixth of our nation’s economy.
In preparing this edition, I was struck by how much better these blog posts were than pretty much any articles in the mass media (with a couple notable exceptions.).
The depth, understanding of core issues, knowledge of how various parts of ACA interact, and ability of the authors to explain all this in words everyone can understand is impressive indeed.
Louise Norris, Roy Poses, Andrew Sprung, David Harlow, David Williams – these are the folks you need to be following.
Repeal…
Andrew Sprung’s contribution is a welcome list of 7 ways the GOP could blow up ACA gains. Or maybe not.
Andrew describes various paths to repeal and replace, dissects the problems, perils and promise of each, and handicaps the odds. It’s a very, very insightful read.
Tick, tock…Louise Norris just keeps getting better and better; as a small-business insurance broker she is on the front lines AND understands the core issues affecting ACA and health policy. Her entry this month discusses the Republicans’ plan to have legislation ready tomorrow – yes, January 27 – to begin the repeal process.
A bit of background on the trump Executive Order that required the January 27 legislation comes from the estimable David Harlow. A quick read, and a valuable one.
Friend and colleague Bob Laszewski’s wondering if the trump administration is prepping for it’s own “if you like your insurance you can keep it” fiasco. In a great companion piece to the Norris and Harlow reportage, Bob asks a question the current administration likely didn’t:
if you take this new executive order to its logical conclusion, doing things like killing or easing the individual mandate or allowing for cheaper medically underwritten plans can’t have any effect other than making an already fragile Obamacare risk pool worse. Making the pool worse can only lead to fewer consumer choices, or no choices, or higher rates and bigger out-of-pocket expenses for those who remain in the Obamacare risk pool.
My entry this month compares the Republican position on repeal and replace to Wile E Coyote’s headlong charge off the cliff. Beyond repeal and into replace, things could get pretty interesting – as Mr Coyote learns every episode, it’s not the fall that hurts, it’s the reality of the landing.
As I see it there are two main issues:
One of the big changes might be block grants for Medicaid – where the Feds just give each state a chunk of money and the state gets more flexibility in how they spend it. There’s a LOT of detail around this, but at least in Massachusetts, it may not be much of an issue. David Williams posits that MA is in a pretty different place than most states, one where a full-on total repeal of ACA wouldn’t be a big deal. That’s because Mass has been in the forefront of these changes, and things are working pretty well.
Federal changes…
OSHA is going to be a different animal altogether in the new administration; perhaps more akin to a cuddly panda than a persistent bloodhound. Julie Ferguson details how the agency is already shifting to a more “employer-friendly” mode.
Julie’s post also digs into the administration’s claim of a “dramatic expansion of the federal workforce in recent years.” and resulting hiring freeze and consequences thereof; quoting a source that finds there has been no federal workforce expansion and that “employment by the federal government as share of all US employment is relatively low compared to most of the last 70 years.”
That’s a fact, not an “alternative fact”, or what we would call a “lie”.
Peter Thiel is the focus of Roy Poses’ ire this month, and that ire is well-placed. The trump advisor supported one “Jim O’Neill, one of Mr Theil’s business associates, for this position [of head of the FDA], despite Mr O’Neill’s apparent complete lack of experience or training in medicine, health care, public health, or biomedical research, and Mr O’Neill’s obvious conflicts of interest.”
Other news of note
Brad Flansbaum’s penned a piece on healthcare CFO and CEO ratings at The Hospital Leader. Interesting take on how administrators – who currently are not being “rated” – perhaps should be. Brad provides his views on a few evaluation standards; good to see the proverbial shoe being placed on another foot!
And the ever-wonderful Hank Stern informs us that healthcare inflation is not limited to this side of either pond; costs are going up in other countries too – driven there by a demand for private care.
Just when you think things are calming down in the work comp world, you get a week like last week.
Leading off, management changes.
First, sources indicated occupational clinic company US Healthworks laid off a sixth of its management staff, most in headquarters state California. This comes just six months after the company announced a major expansion in the Southeast with the acquisition of Lakeside Occupational Medicine Clinics.
The Lakeside deal followed a series of clinic acquisitions in other states over the last few years.
Acquired by healthcare giant Dignity Health for $455 million in 2012,word from these sources is USHW has not produced the desired financial results of late.
Couple major management changes in the work comp Pharmacy Benefit Management business.
OptumRx CEO Emry Sisson will be departing effective March 1, 2017. Emry took the role after the Helios/Catamaran/Optum entities were combined; prior to that he shared the CEO slot at Progressive Medical and third-party biller Third Party Solutions with Tommy Young (Tommy left after the Optum acquisition).
Optum parent United Healthcare will be looking inside and out for a replacement. Knowledgeable sources within Optum indicate this was solely Emry’s decision and in no way driven by United or Optum.
Mitchell Pharmacy Solutions’ Brian Anderson will also be moving on; I’ve known Brian for over a decade and he is one of the most forward-thinking, innovative people in the industry. He helped start the third-party billing business, so I do hold that against him :). Haven’t heard of a replacement yet and will let you know when I do.
Coventry Work Comp Services business is said to be coming back on the market. Word is the “book” will be not be released until parent Aetna’s acquisition of Humana is resolved.
That may well take a while…
Evidently this was the subject of much speculation at the JPMorgan Healthcare conference last week. Key to any transaction will be the status of Coventry’s provider network contract. Industry followers will recall Aetna’s first attempt to sell the business ended rather abruptly when potential buyers’ bids were much lower than expected due to concern about Coventry provider network contracts.
Word is the vast majority of those contracts – and especially those with providers who have a lot of Coventry business – have been transferred to “Coventry paper”. This should make the company much more attractive.
Conflicting reports on whether Aetna will bundle all component parts or pursue a different path.
Finally, registration for NCCI’s Annual Issues Symposium is open, and AMCOMP’s annual meeting is set for mid-March in Las Vegas. Agenda is here.
New Hampshire and the Feds are going after opioid manufacturers with a vengeance.
NH State law enforcement has reached a $3.2 million settlement with fentanyl drug manufacturer Insys and is pursuing investigations against Purdue Pharma, Actavis Pharma, Janssen Pharmaceuticals and Teva Pharmaceuticals.
The FBI indicted six senior Insys executives last month on charges of racketeering.
And actions have been taken against the company’s sales force and/or prescribers in several other states as well.
Insys’ Subsys fentanyl drug was narrowly approved by the FDA for breakthrough cancer pain. In what has become an only-too-successful marketing strategy, allegedly Insys aggressively promoted Subsys for non-cancer treatment purposes. Reports indicate only 1 percent of Subsys scripts in New Hampshire were written by cancer doctors.
The Granite State has the highest death rate from fentanyl overdose in the nation.
A Physicians’ Assistant in New Hampshire was allegedly paid speaking fees as a backdoor way of incentivizing him to prescribe Insys’ Subsys(r) a version of opioid fentanyl.
Reports indicate of the 100,000 doses consumed in NH, this one PA, Christopher Clough, prescribed 84% of them.
What happened in New Hampshire is directly related to Insys’ marketing practices. Make no mistake, this was all about profits, regardless of the damage to patients, families, society, kids.
This from the NYTimes:
“As Subsys grows more mature, we expect the number of experienced patients to grow,” Michael E. Faerm, an analyst for Wells Fargo, wrote last year in a note to investors. “As the experienced patients titrate higher, the average dose per prescription should increase.”
The former Insys sales representatives said they were paid more for selling higher doses…
What a great business. A highly addictive drug creates more revenue for the manufacturer and for sales reps as patients need more and more and more to get “relief” – or get high.
New Hampshire has subpoenaed other large opioid manufacturers who have refused to comply with the demand to provide materials. It’s highly likely Purdue, Teva et al will be compelled to comply when higher courts rule.
What does this mean for you?
A bittersweet moment indeed, but at long last corporate crooks are being criminally charged for their actions that killed people to create profits.
Here’s hoping they are convicted and sentenced to long terms at awful places.
If you are confused and frustrated with the Republicans’ moves to repeal and replace ACA, rest assured they are way more frustrated – and more than a little concerned – than you are.
Here’s what’s going on.
There are two main issues.
Republicans are working to finalize a bill that would defund major parts of ACA. There is NO consensus among Republicans on the details of this bill – and won’t be until at least January 27 (don’t be surprised if the replacement bill isn’t ready till well after January 27…). This won’t require any Democratic support as it is a budget bill. The GOP will own the bill – and the bill’s repercussions.
Earlier this week the CBO gave us a taste of what a repeal without credible replacement would look like, and that taste was bitter indeed.
BTW the CBO’s Director was appointed by Republicans in 2015.
If the GOP moves forward with repeal without a replacement bill – which looks highly likely – it will get hammered by Democrats in what will be reminiscent of the Tea Party’s assault on Democrats during ACA’s passage. Dems will turn the tables on Republicans, and with voters primed to fear losing coverage, the message will resonate.
The GOP’s problem is simple – ACA funding is very complex and cutting funding (which is how Republicans are “repealing” ACA);
There’s intense lobbying going on as device manufacturers, hospitals, governors, insurance companies, the very wealthy and other special interests seek to protect themselves.
While Republicans do have “plans” to replace ACA, they do NOT have consensus on “A plan”. There’s a plan from HHS Secretary nominee Tom Price, another from Speaker Ryan, other plans based on prior GOP bills, plus lots of ideas from GOP-affiliated think tanks and lobbying groups. Make no mistake, there’s a lot of ideological division among Congressional Republicans.
When the GOP does write a replacement bill, it will be scored by the CBO. A part of that scoring has to do with the definition of health insurance. Up till now, CBO used the ACA’s definition; now that ACA is going away, it will revert to the previous definition. Not to get too deep in the weeds here, but that’s NOT good news for the GOP.
The dilemma facing Republicans is simple; there’s no way they can deliver on their promises to ensure people don’t lose coverage, reduce costs, and improve access.
Republicans are about to pull a Wile E Coyote, running full speed off the cliff. Given Democrats’ amazing ability to turn certain victory into crushing defeat by losing the messaging battle, the GOP may make it to the other side unscathed.
What does this mean for you?
The CBO is the key.
2017 is starting off to be the most interesting/bizarre/entertaining/terrifying year in memory.
As one who tracks the goings-on internationally and in DC with some diligence, it’s been impossible to keep up with the craziness. Here’s my attempt to summarize the week that was.
The one thing you missed – and why you shouldn’t have
Trying out a new mini-post on the most important thing may have missed this week. Today’s it’s UnitedHealthcare’s acquisition of a big outpatient surgical clinic company.
This is important because the giant ($175 billion) healthcare company is investing more in care delivery – likely to better control its “cost of goods sold”. As vertically integrated healthcare systems (think Kaiser, UPMC) get better at insurance, insurers have to get better at care delivery.
ACA Deathwatch
The reports of ACA’s death appear to have been greatly exaggerated.
Yes, the Senate passed a bill that is the first step in a repeal process. But it is ONLY a first step. Without diving too deep into the nerdy details, the bill just instructs Senate Committees to begin drafting a repeal bill and lays out general principles. But there’s no consensus on when the repeal would take effect, what a replacement would look like, or even how it would be funded.
Things are going to get pretty complicated, especially in the Senate. There’s a lot of concern among Republicans in key leadership positions that quick movement on a bill would lead to a considerable backlash – and major political damage.
For freemarketers and Libertarians, there’s this:
“We did have the government out of the individual market up until 2014 [when most of the ACA provisions went into effect], and we know exactly what happened: There were millions of people who couldn’t get coverage,” Field said.
The ACA created a market that did not exist before — one that insures sick people. Field says it’s a market failure that the industry on its own will not cover the highest-risk customers. “If you want to cover everyone, the government has to do something.”
Town said pushing the government out of the equation will leave many citizens without access to health care.
“If you want to live in that world, so be it,” he said. “But I think we as a society have made the joint decision that having a vast part of a population uninsured and having limited access to health care is not a route that we want to go. Getting rid of the ACA is not going to get rid of the government’s role in health care.” [emphasis added]
Here’s a good summary of some of the issues the Republicans face – and why they are treading carefully…key quote:
The real reason health care premiums and deductibles are so high is that medical care is very expensive in the United States — far more costly than it is anywhere else in the world. The United States pays very high prices to doctors and hospitals and drug and device makers, and Americans use a lot of that expensive medical care. [emphasis added]
And here’s why keeping only the popular parts of ACA won’t work. Alas.
Work comp
The M&A activity level has dropped off considerably – if not precipitously. The WLDI sale – a relatively small transaction – is one of the very few recent deals. Don’t expect activity to ramp up as the industry is:
Don’t miss the Rx Drug Abuse Summit – April 17-20 in Atlanta. It’s the most comprehensive and focused event on the biggest issue in workers’ comp.
Nothing is more important to work comp than the overall economy. Read this – when you have time – for a solid grounding on what to watch for in 2017. Spoiler alert – economic growth, which has trended up significantly over 2016, is likely to moderate over the next two years. And watch out for inflation.
Finally, for management wonks, here’s a great piece on execution from Harvard Business Review.
Today’s HealthWonkReview has a series of posts on:
The posts are all briefly summarized and you can click thru for more details…
Then there’s an expose on HHS Secretary nominee Price’s ethical problems from trading stocks in companies affected by legislation he was working on. Yeccch.
And lots more…
Of course, the posts have citations and backup info.
Thanks thanks thanks to Julie Ferguson for collating all this for your edification!
UPDATE – There’s some confusion about what the pending vote to defund ACA will mean
As reported last week, public and private sources indicate the new Congress will start the push to defund ACA as early as this week as part of the Fiscal Year (FY) 2017 budget. The Federal government has been funded under continuing resolutions, with the latest set to expire in late April. The FY runs from October 1 to September 30.
Here’s how this would work. (caveat – as noted last week, this is way more complicated than one might think, and there is NO consensus within the GOP on how to handle critical “details”)
House passes new rules next week that will allow it to defund ACA. There’s some complex stuff involved here which may well make this a difficult and protracted process.
Late in January the House and Senate will work on a bill to repeal much of ACA – including:
This is where things may well fall apart. A key problem is a repeal will increase the Federal deficit, a major issue for many Republicans. Also, there’s a real fear among some Republicans that changing ACA will cause major market disruption – and Republicans will own that. That’s why the GOP will delay implementing the “repeal” for several years.
I spoke with friend and colleague Bob Laszewski on this – here’s his take:
they will vote budget instructions early Jan. Some may claim that is the vote to repeal but it’s just a procedural vote with budget instructions for the committees with jurisdiction—Senate HELP and Finance. Then HELP and Finance pass a 2016 budget with ACA defunded. The House is the easy part but they will have to reconcile any differences in the 2016 budget with Senate. Then both houses pass the final. Then Trump signs that. The timeline is about 6 weeks from reconvening to actually defunding.
Here’s where it gets really messy. Laszewski:
they [the GOP] only have 50%+1 for defund (repeal). They have no consensus for anything thereafter. Some have talked about don’t defund unless they have the replace deal in place.
Replace will take 60 in the Senate. They have 52 seats. They don’t have 52 Senate votes or even a simple majority in the House for any replacement plan right now—or likely anytime soon.
I think we are headed to one hell of a “cliff” as time ticks down on the two or three year extension of the current system.
The summer and fall of 2017 will be frantic to get a deal of some sort. Odds are not great with a few on the right in the Republican Party, and the Dems closing ranks [and] not motivated to cooperate.
Key issues:
What does this mean?
Opposing an administration is easy and has no risk; actually passing legislation that will directly affect people and business is hard and very risky.
Oh, and there’s this…
Yesterday’s post re the Jobless Economy triggered multiple thoughtful responses, including one from a colleague noting construction may be somewhat insulated from automation.
I did some quick research, and here’s what I found.
Briefly, it looks like we will see more and more construction automation using 3D printing in the near future, especially for small projects (think small houses) and components of larger buildings and structures.
One Chinese company built 10 single-family dwellings in a day using 3D printing. More recently, they built a five story apartment building and large villa using a 3D printer that measures 6.6 meters in height, 10 meters in width, and 150 meters in length. This is China, where labor costs are a small fraction of what they are here in the US…
A company in Holland is building a pedestrian bridge using six-axis robots.
In Chicago, a machine built a mini-tower out of gravel and thread.
And here’s a luxury hotel in the Philippines built in large part by 3D printing.
But construction automation is by no means limited to 3D printing. Drones, automated construction equipment and vehicles,
Here’s a video of drones building tall structures out of bricks.
Komatsu is investing heavily in automated heavy equipment, what some might call “ground-based drones”.
A big player in this business is Skycatch, a U.S.-based company that allows for precise mapping of construction sites and integration with automated equipment.
And here’s your construction project of the future…workers operating computer pads and joysticks, not hefting shovels and hammers.
Here’s a very good detailed discussion of construction automation – required reading for work comp underwriters, construction defect insurers, GL writers.
So, what does this all mean?
6.7 million people were employed in construction jobs in November, 2016. If Congress approves a new infrastructure investment initiative, we can expect to see that go up significantly.
We will also see construction companies dramatically ramp up their investments in construction automation, robotics, drones, and automated vehicles.
What does this mean for you?
As with all automation, we’re going to see:
Service workers are VERY replaceable.
Amazon just opened the first cashier-less grocery store.
2 million trucking-related jobs are likely to disappear within a decade. Consumers’ costs for goods will go down significantly, driven by lower labor, fuel, insurance, and maintenance costs.
What is only just beginning to happen in the service economy is already well underway in manufacturing. Despite all the blather about US manufacturing’s decline, the fact is we remain the second largest manufacturer in the world, not far behind China. Yes, employment has declined dramatically, but productivity has increased by leaps and bounds.
US manufacturing:
Since 1947, we’ve figured out how to make five times as much stuff with 13% fewer workers.
source – https://audiotech.com/trends-magazine/the-american-manufacturing-renaissance-becomes-a-reality/
I bring this to your attention, dear reader, to pose the following questions.
In all the talk about the need to reform workers’ comp, there’s been very little discussion about these existential threats to the industry.
What does this mean for you?
You don’t need to “reform” an industry that won’t exist in a dozen years.