Managed Care Matters will be spending the next week at a lake in New Hampshire, blissfully unaware and unconcerned about happenings in the real world.
See you in August
Jul
25
Insight, analysis & opinion from Joe Paduda
Category: General Insurance Issues
Jul
10
Yesterday’s 69-30 Senate vote to reduce the subsidies for Medicare Advantage and Private fee for service plans and rescind the cut in physician reimbursement will have far reaching implications. I watched the historic vote while sitting in a bar in DC (only in DC would the TV over the bar be tuned to CSPAN); when Sen Kennedy walked on the Senate floor in his first appearance since being diagnosed with cancer the outcome was foregone conclusion; his vote would be the 60th. Faced with the inevitable, nine more GOP senators switched their votes to side with the Dems, despite the looming threat of a veto.
The margin in the Senate and the House is enough to overcome that veto. It will also serve notice that the physician lobby and the AMA remains a very powerful force, a lesson that will be heeded when the health care reform process gets serious next year.
The vote is another body blow to big health plans.
Coming amidst announcements of declining revenue projections and battered earnings forecasts, the cut in the MA and PFFS subsidies (13% and 19% respectively) is going to further the slide of healthplans’ financial fortunes… At least for those plans with significant MA and PFFS exposure. Think UHC, Humana, Coventry, and Universal American.
The ongoing battle over Medicare reimbursement is another wake-up call to state legislators and regulators. Many states base workers comp fee schedules on Medicare, thereby ceding control over medical payments to a third party that could not care less about the impact of their decisions on a state’s work comp system and the willingness of physicians to participate in that system.
Finally, the vote is a major victory for Senate majority leader Harry Reid. According to sources close to the Senator, “there was no plan B” if the required 60 vote threshold wasn’t reached.
From here it looks like the back-against-the-wall was just what the doctor ordered, and may well strengthen Reid and his fellow Democrats.
May
28
Productivity.
Lost in the great debate about the role of the employer, the individual, and the government in health care reform is the critical link between health insurance, care, and productivity.
Years ago when I was responsible for the Travelers’ utilization review account management function I met with Bruce Bradley, who was then the head of employee benefits at telecom giant GTE. I was going thru the data, reporting on how well Travelers had done reducing this and cutting that, when he stopped me and asked about the ER and inpatient admissions rate for children with asthma. I didn’t have the data, and asked why he wanted to know.
Bradley proceeded to educate me on GTE’s workforce and their functions. To summarize, they had a lot of employees who were single parents or one parent in a dual-income family. Many of their employees worked in line maintenance, directory assistance, and other blue- and pink-collar jobs.
And when one of these workers was out of work, caring for a child experiencing an acute asthmatic attack, the lines didn’t get fixed and calls didn’t get answered. Bradley wanted to know what the Travelers was doing about this. Truth was, we weren’t doing anything.
GTE is long gone, swallowed up in the telecom mergers in the nineties. But Bradley’s point is as true now as it was then – keeping workers, and their families, healthy and productive is the primary objective of health insurance.
I’ll grant that few policy wonks look at it from this perspective. Perhaps that’s because they didn’t have the pinned-to-the-wall-like-a-butterfly-in-a-display-case experience I went thru. But because they don’t consider the impact of health insurance on employer productivity, they miss the reason employers offer health insurance in the first place – to attract, and keep, good workers.
If employers are removed from the process of vetting and selecting health insurance vendors, individuals would be responsible for choosing their carrier. Insurance companies would ‘win’ based on how cheaply they could provide insurance to individuals and families, and the less care delivered, the lower the premiums. I don’t see what would prevent those vendors from suggesting each and every injured or ill worker or dependent tried bed rest and over the counter drugs for two weeks, then an x-ray or basic lab test, and only then would they get to see a diagnostician.
What does this mean for you?
Health care reform based on an individual market would work against employers’ desires and needs, and over the long term, against the nation’s best interests.
May
2
the new big thing at RIMS this year seemed to be weather; the prediction of it (both long and short term forecasting), and the closely related business of disaster recovery. There were several vendors marketing sophisticated technology that ostensibly enables users to predict the date time and precise location of tornado touchdowns, along with the precise path and extent of destruction and list of addresses that will be affected (well, I may be exagerating just a touch).
Just in case an insurer hadn’t taken advantage of that new technology, there were several disaster recovery firms pitching their incredible ability to make disaster damage disappear overnight. Perhaps they should market themselves to parents of teenagers for those inevitable parents-out-of-town-party cleanups. Now that would be a test…
If it is any consolation, there were dozens of security firms at the 2002 RIMS: they’ve all but disappeared from the show floor, perhaps due to the lack of unfortunate events in 03, 04, 05…
Apr
1
THIS WAS A SPECIAL POST IN HONOR OF APRIL 1.
In a deal set to be announced later this week, billionaire Warren Buffett’s Berkshire Hathaway unit will be acquiring troubled health plan Wellpoint.
This may be the first of several deals, as Buffett’s empire is flush with cash ($40 billion in BH’s operations alone) and looking for opportunities in businesses related to its core insurance operations. Indications are the sage of Omaha has been carefully following the fortunes of the health plan sector for years; he had not moved previously because, as he stated in one of his legendary annual letters; “prices are way too rich for my modest resources”. The recent dramatic declines in valuation (the sector is down over 35%) appear to have wakened Buffett’s legendary bargain-hunting instincts.
Wellpoint’s stock is trading just above its 52 week low, at a PE of under 8. Although no price has been mentioned, analysts expect a premium of 15-20%. Given BH’s current equity position, and stable stock price, “this will be no problem for them; it will likely be an all stock deal, and any Wellpoint stockholder who doesn’t want to trade in their paper for part of Buffett’s empire is crazier than Henry Paulson” (Henri Bludgeon, Merrill Lynch).
What does this mean for you?
Watch and learn.
Here’s the full press release.
Mar
11
The 2007 numbers are in, and once again AIG is the largest writer of WC in the US. They are followed by Liberty Mutual, Zurich, the Travelers and Hartford, with theCalifornia state fund dropping out of the top five.
The shift is likely driven by the market cycle as much as any individual insurer’s efforts to grow share. With WC premium rates continuing to decline, many formerly self insured employers are now able to buy insurance cheaply, cheaply enough to outweigh the benefits of self insurance.
Witness the bloodbath in the FL TPA market for proof of just how widespread this is
Mar
7
pharmaceutical costs have been growing faster than most other types of health care expense for years. Except for the odd year when unusual factors (eg demise of the cox-2s) slow things down, drug costs go up year after year.
Then there are the years (2006) where other factors push costs up even faster (part d).
PBMs, formularies, tiered plans, all reduce trend a bit, but only a bit, and not for long.
We have to something fundamentally differenrt if we are to control costs, something that takes into account utilization, price, generics and efficacy. It has to address every payers’ costs.
I propose a national cap on pharmaceutical expenditures, defined as dollars spent by all payers public and private. Before my conservative friends start howling, hear me out.
Feb
14
The last couple weeks have been tough for United HealthGroup subsidiary Ingenix. Everyone’s heard about NY Atty Gen Andrew Cuomo’s announcement that his office is filing charges citing Ingenix’ determinations as inaccurate.
A bit less well-known is the January decision by an appellate court in Massachusetts – less well known but no less significant. The Mass. ruling essentially threw out ingenix’ claim that its health care database is an accurate representation of prevailing provider charges.
The case, Davekos v Liberty Mutual, involved a provider who objected to the insurance company reducing his bills; the basis for the reduction was Ingenix’ database and the use of that database to establish a range of ‘reasonable and customary’ charges.’ Davekos was heard in the Northern District. The court found that Ingenix’ database was hearsay and therefore not admissable.
Nov
12
Just when you think the health insurance industry just could not do anything more self-destructively stupid, they raise the bar.
From FierceHealthcare comes the news that HealthNet actually paid bonuses to staff based on how many claimant policies they could terminate.
Nov
2
Critics of universal coverage argue that it is unaffordable, that it will result in costs we can’t afford. Yet there is no correlation between universal coverage and high health care costs.
If universal coverage will result in higher costs, why do the countries with universal coverage spend at most two-thirds what we do?