Category: General Insurance Issues

Jan
8

Predictions for 2013 – page two

Posted by Joe Paduda on Tuesday, January 8th, 2013 | Comments

Following yesterday’s post on predictions for workers’ comp in 2013, here are three more.

4.  Aetna will keep – and grow – their workers’ comp services business

With the acquisition of Coventry, Aetna consolidated its position as one of the largest health plans in the nation.  They also jumped into a leadership slot in the comp services industry, a business that is attractive to mother Aetna for several reasons. Despite opinions to the contrary, it is all but certain that Aetna will keep and seek to grow the Coventry workers comp business.  That will be welcome news for CEO David Young, who’s long been tasked with generating cash while being starved of resources.

5.  Physician dispensing of repackaged drugs – we’ll see higher prices in some states and much more physician dispensing in many. 

With their gravy train in Illinois and Michigan brought to a screeching halt by new regulations, the physician dispensing industry will drive up prices in those states where the practice is still allowed.  North Carolina, Florida and Maryland are among those states where payers should keep a VERY close watch on dispensing and billing patterns. When and where possible, use direction to steer away from those bad actors…

There are also some distressing reports that the big dispensing firms are looking to hire lobbyists in states that currently prohibit or significantly restrict the practice.  Be on the lookout for this in NY and TX.

6.   Several more states will adopt clinical guidelines to help determine appropriate/medically necessary care.

While this may seem like a no-brainer, the reality – as demonstrated by recent events – suggests it is anything but.  The adoption and effective use of evidence-based clinical guidelines is often subject to political grandstanding, parochial attitudes, and ignorant complaints about “cookbook medicine”.  That said, I’m hopeful we’ll see significant progress in New York, Illinois, California and other states.  The more that evidence-based medicine is the basis for assessing workers comp treatment, the better.

We’ll finish up tomorrow.

Jan
7

Predictions for the workers comp world in 2013

Posted by Joe Paduda on Monday, January 7th, 2013 | Comments

Here’s what I see happening in the world of workers’ comp and WC services in 2013… three today, three tomorrow and the last four Wednesday – unless other news intrudes.

1.  Vendor consolidation

There are two main drivers – the dramatic increase in private equity involvement in workers’ comp services and large payers seeking to internalize services to increase their top lines and bolster profits.  And we ain’t seen nothing yet.  Expect several of the larger players to join forces/be acquired/become “platform” companies that PE firms use to build large, diverse service providers.

2.  Higher medical costs driven by facilities

We have seen harbingers of the future in WCRI’s report on cost drivers in Indiana and other research.  Facilities – hospitals, health care systems, vertically-integrated delivery systems – whatever version or name you want to give them – are becoming an increasingly large, and increasingly expensive provider of medical services to work comp claimants.  According to the latest data, about a third of all physicians are employed by hospitals – and that data is a couple years old.  And, provider consolidation is accelerating – driven by PPACA and market forces as well as much higher Medicare reimbursement (procedures billed by hospitals get paid at higher rates than those billed by docs).

Most WC fee schedules are based on Medicare – or on some mechanism that is even more lucrative.  Thus, as health care systems acquire occ med practices, work comp payers are going to see the same procedure cost more – just because it is billed by a facility rather than a doc.  Providers will figure out work comp is a really profitable line of business.  When they do, they’re going to be upgrading their occ med departments and tying them much more closely to orthopedics, home care, PT, and related services.

3.  Continued ignorance of opioids’ impact on long-term costs and outcomes, coupled with inaction by most payers.

When insurers finally figure out how bad this problem is, they’re going to either go catatonic or their heads will explode. We will know that top execs really understand how bad this is when they get very focused on this issue internally and externally and very demanding of their staff, vendors, and regulators.  This will manifest itself through aggressive efforts to identify and address existing claimants – and not just attempt to prevent extended use of opioids by new claimants. To those who would argue this is already happening, I would respond “perhaps in some small ways at a relatively few payers and in a handful of states, but the response to date is all out of proportion given the size of the problem.”

Three more tomorrow…

Jan
4

MCMC has acquired CompPartners

Posted by Joe Paduda on Friday, January 4th, 2013 | Comments

In a deal just done, workers comp managed care firm MCMC will be/has acquired California-based CompPartners.  The deal gives MCMC a greater footprint in the nation’s largest workers’ comp market, and adds significant strength in physician peer review along with CompPartners’ MPN network.

CompPartners’ clients include the state fund of California (SCIF). Bunch and Associates, Liberty, AIG, TriStar, and Harbor America.  As MCMC does not have much business with most of these, there’s every indication that CP staff will remain in place to serve existing customers and find cross-selling opportunities to deliver MCMC services to Comppartners’ present customer base.

Word from an informed source close to the deal is the two companies will continue to operate separately although cross-selling will be key to leveraging the deal.  The transaction, which closed before the end of the year, was a stock deal which makes a great deal of sense for all parties.

Finally, adding significant strength in California has long been a need for MCMC.  Acquiring CompPartners gives them a staff with long experience and a solid track record in the Golden State, along with a robust client list, certified/licensed product/service offerings, and all the benefits of taking over a going concern.

The net – Smart deal for both parties, and good news for their clients and owners.

Jan
3

Quick News Briefs for work comp folks

Posted by Joe Paduda on Thursday, January 3rd, 2013 | Comments

First up, another round of applause for the good folks at the Accident Fund  – their use of predictive analytics combined with medical management expertise to identify and intervene in workers comp claims with potentially inappropriate opioid usage was one of the top ten innovations in the entire insurance industry – group, life, property casualty, and reinsurance. (Accident Fund is an HSA consulting client).  Kudos to Jeffrey Austin White, Pat Walsh, Paul Kauffman, and their colleagues and co-workers.  This is EXACTLY the kind of project work comp carriers should – and can – be doing to attack this issue.

A reviewer for Best’s Review put it this way:

“the idea of using predictive analytics informed by medical subject matter experts with workers compensation claims management software in order to identify – and pro-actively facilitate early intervention when appropriate – cases where injured workers might be reliant on opioids…strikes me as particularly innovative…”

In a related bit of news, makers of so-called “tamper-resistant” opioids are losing a battle to prevent generic versions from hitting the market – this means workers’ comp payers’ drug costs will be lower as they won’t have to pay the premium price charged for branded drugs.  While manufacturers Endo and Purdue claim their new formulations are primarily designed to increase patient safety, the timing of their introduction – just as their current brand drugs’ patent protection expires – indicates profits may be the primary motive…

A great summary of the components of the fiscal cliff deal was put together by the National Priorities project.  In chart form, it tells what happened, what it means, and what’s next.  Read it during lunch…

One of the key components of the deal was the extension of current Medicare reimbursement for physicians.  Under SGR, reimbursement was slated to drop 26.5%, however the deal extends current rates for the rest of the year.  As most WC doc fee schedules are tied indirectly to Medicare, in some states this has a direct impact on WC; in all it as an indirect impact as a cut in reimbursement would likely have led to even more cost shifting to comp…

Of note, there are several deals still working in the comp services/managed care arena.  Now that the cliff deal is done, and the deadline for changes in the capital gains rate has passed, we’ll likely see a bit of a slowdown in transactions.  However, even though the capital gains rate is increasing from 15 to 20 percent, there will still be a lot of transactions in 2014, albeit not at the feverish pace we saw at the end of last year.

Finally, with Michigan and Illinois joining the increasing number of states restricting upcharging for repackaged drugs dispensed by physicians, some payers are starting to see price increases for repackaged drugs in Florida, Maryland, and other states where the sky’s the limit.

Tomorrow, predictions for 2013.  Hoping to do better than 65%…

Dec
17

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

Posted by Joe Paduda on Monday, December 17th, 2012 | Comments

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
13

Is this fiscal cliff thing going to affect workers comp?

Posted by Joe Paduda on Thursday, December 13th, 2012 | Comments

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
11

Comp medical costs on the rise

Posted by Joe Paduda on Tuesday, December 11th, 2012 | Comments

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

Posted by Joe Paduda on Monday, December 10th, 2012 | Comments

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.

Nov
27

Niches in work comp medical management

Posted by Joe Paduda on Tuesday, November 27th, 2012 | Comments

Reflecting back on the Vegas comp conference (perhaps the best one in recent memory), what struck me most was the significant increase in companies focused on seemingly ever-smaller niches in the medical management space.

Perhaps it’s partially driven by the rather stunning success of MSC after they dumped their pharmacy business, along with the growth of MSA firms (and all their sub-species); MedRisk, Align, and PBMs; the acquisitions of transportation and translation firms, dental specialists, and imaging companies; and the sudden (!) understanding that pain management is really, really important in work comp.

Regardless, I must’ve picked up a dozen business cards from various individuals who are investing/starting companies/focusing/seeing opportunity in various niche areas, including dental, pain management, addiction/dependence, imaging, DME, IMEs, and home health.  Some were pretty/very sharp, with tight understanding and deep knowledge, while others just had an idea and had little idea of what to do or how to do it or who would pay for it or what they’d pay – but gosh, there sure is an opportunity!

While there’s no doubt there are lots of opportunities, there’s even less doubt turning opportunities into revenue is a very tough slog requiring discipline and tight focus.  Here, in no particular order, are a few recommendations/observations about building a niche business.

1.  No one cares about your company or you or your idea.  They really don’t.  What they DO care about is their personal individual unique pain point – that’s what’s important to them. Don’t waste their time with descriptions of your business.  If you can address their specific pain point, you have an opportunity.

2.  Listen don’t talk.  Ask don’t tell.  When in doubt, ask it again. Figure out exactly what their issue is, how it relates to your solution, then ask what their opinion is.

3.  Lunch is not business.  A meeting is not progress.  A contract is not meaningful.  What is meaningful is revenue, services delivered, bills sent and paid.  Don’t get caught up in having meetings.

4.  There are lots of reasons potential buyers will use bigger, more established companies, most of them quite reasonable.  If you are to succeed, there has to be a compelling, customer-centric reason for a prospect to use your’s.  You can’t be as good as, you have to be better – with better defined by that individual prospect.

5. While niche companies can – and usually do – a much better job addressing the specific service area that is their focus, often that area is so small that a big reduction in cost won’t move the proverbial needle.  Drugs are about 12-14% of spend, PT about the same, imaging around 5%, DME and home health a few percent each, and transportation and translation perhaps a point or so each.  Saving a payer 20% on their DME isn’t going to be meaningful in terms of the combined ratio, but it may be very meaningful for the individual at the payer tasked with addressing that area.  But she can’t solve her problem unless your solution can actually be implemented and used.