Category: Implementing health reform

Oct
24

Why are work comp medical costs decreasing?

Posted by Joe Paduda on Monday, October 24th, 2016 | Comments

Medical costs were up a mere 3% in 2014, and actually dropped by a point in 2015 (in NCCI states).

I’ve been in comp a long time, and nothing like this has ever happened. What’s going on?

One likely contributor – 20 million more Americans have health insurance, and work comp doesn’t have to pay for medical care for non-injury-related conditions. (Surprisingly, not many of us know that coverage has increased so much…)

If someone gets hurt at work, has comorbidities, and needs surgery, those comorbidities have to be addressed as part of the treatment plan. If the patient has health insurance, that’s what pays for the non-injury conditions.  If not, work comp’s on the hook.

Clearly, the more workers with insurance, the less added expense for work comp payers.  So, here are my back-of-the-virtual-envelope calculations of the impact of ACA on work comp (a more-qualified researcher needs to do a much more thorough job): 

In 2009 – 2010, 81.8 percent of the employed population aged 18-64 had health insurance. By March of this year, 90.3 percent had coverage, a 10.4 percent/8.5 point increase.

Around 150 million people were employed this March; running the numbers, that means about 13 million more workers had health insurance early this year than did six years ago.

At 3.2 injuries or illnesses per 100 FTEs, that’s 416,000 patients.  About 84,000 of those patients have more severe injuries, the type that may require surgery, physical therapy, and/or more expensive and extensive medication.

We do not know how much of the moderation in medical inflation can be accounted for by expanded health insurance coverage, but we do know there are around 84,000 folks with pretty significant injuries or illnesses that don’t need work comp to pay for non-occupational conditions.

Another factor – employed people with health insurance are healthier than employed people who don’t have insurance.  Sure, there are confounding factors here – how long do they have to be insured to become “as healthy” as folks who’ve had insurance for years, and how much healthier do they get for each year they’ve had coverage.  I get all that. And some really smart researcher at NCCI or WCRI or NASI will figure that out (c’mon, people, the race is on!)

What does this mean for you?

We don’t KNOW ACA how much reducing work comp medical costs, but it is very likely a major contributor.

Sep
29

Value-based payment – will it work in workers’ comp?

Posted by Joe Paduda on Thursday, September 29th, 2016 | Comments

The IAIABC meeting in Portland Maine (a singularly GREAT location for conferences) includes some really deep dives into very hot topics – this morning’s discussion of value-based payment was certainly both.

Big takeaway – CMS is going BIG into alternative payments tied to quality; estimates are 72 million people will be covered by ACOs by 2020.

David Deitz MD led off with a summary of what’s happening with Accountable Care Organizations (ACOs). Note this is NOT specific to work comp, but does have significant implications therefore. A few key takeaways:

  • Doc led ACOs performed better than hospital led-ACOs
  • ACO savings generally improved as ACOs got more experience, with half of the ACOs four years into the program earning performance bonuses.
  • some indication that quality has improved – BCBS MA, Marshfield Clinic are two that have delivered results.
  • several key process measures of quality show good improvement – hospital readmissions being one example.

What happens to losers in the quality race? Providers in NJ who didn’t meet quality standards sued and employed various other methods to try to address Horizon BC BS’ refusal to admit them to their Tier One network. Expect this “denial of fairness” argument to show up in other states where providers are booted out of narrow networks.

Kathryn Mueller, MD, Medical Director of Colorado’s Workers’ Comp and Dan Hunt, DO, Medical Director of Accident Fund, gave the regulator’s and payer’s perspectives.  As two of the more thoughtful medical leaders in workers’ comp, Drs Mueller and Hunt dug into the reality of work comp and value based payment.

Dr Mueller noted that bundled payments for surgery won’t necessarily help reduce the number of unnecessary surgeries, a point the audience heartily endorsed.

Dr Hunt has experience with bundled payments from his work as a surgeon; he noted that a lot of analysis and preparation went into developing a single bundled payment for one diagnosis in one location.  He also reported CMS is looking at a zero-based bonus system, where there may well be more losers than gainers (this is consistent with CMS’ expectations).  And, with work comp’s focus on functionality makes for a “better” outcome metric than those used in other payment systems.

So what does this mean for work comp?

  • FFS leads to more care – inevitably
  • FS may constrain costs but, FFS pays bad docs and good docs the same amount
  • So yes, value-based payment makes a ton of sense for workers’ comp, but…
  • Effective payment design must link value and outcomes – and NOT pay for harmful or valueless care.

What might work in WC?  Not medical homes, likely not shared savings or capitation. Possibly bundled payments, and pay for performance only with different metrics.

Emphasis on different metrics – because we in workers’ comp care about stuff other payers don’t, namely functional improvement and indemnity payments chiefly among them.

Data from a variety of providers indicates bundled payments have reduced length of stay, delivered lower costs and higher patient satisfaction.

And due to indemnity payments, work comp has even more incentive to pay for bundled care based on functional outcomes.  As a lot of high cost care in comp is orthopedic, which lends itself well to bundled payments, comp is well positioned to use bundled payments.

However…there are lots of barriers, regulatory, financial motivations of bill review and network vendors, TPAs, insurance companies, and no standard outcomes measures across work comp.

Dr Deitz opined that incentives to cost-shift may drive docs to categorize injuries as occupational in high FS states such as Connecticut and Illinois.

What does this mean for you?

Lots of frictional, regulatory, and entrenched interest resistance will make it hard for bundled payments – in fact most types of value-based payment – to see significant adoption in workers comp.

 

Note – I captured this as accurately as possible, however I may have unintentionally misquoted the speakers.  Corrections welcomed.

Aug
1

More insured via Exchanges is good news for Work Comp

Posted by Joe Paduda on Monday, August 1st, 2016 | Comments

People who obtained private health insurance coverage thru the Exchanges in 2014 were less healthy than those previously insured. A just-published article in HealthAffairs provides details on their medical issues and conditions, more on this below. [sub req]

That’s not surprising; prior to ACA, many individuals and families weren’t able to obtain coverage at a reasonable price, and some couldn’t get any coverage at any price, due to insurers underwriting practices.

Now that medical underwriting and pre-existing exclusions are outlawed, folks with health problems can get insurance.  Before we jump into the implications discussion, here’s the specifics.

among those with individual private coverage, the likelihood of reporting fair or poor health and the likelihood of being obese increased by 1.5 and 4.2 percentage points, respectively (Exhibit 1). We also found that the likelihood of having at least one of ten specific chronic conditions5 increased by 6.7 percentage points for this group—a change that was driven by increases in the likelihood of having hypertension (a 4.0-percentage-point increase) and diabetes (a 2.9-percentage-point increase)

The good news is many of these chronic conditions respond well to relatively inexpensive treatment, and the cost of caring for these individuals is much lower if they have access to good primary care.

For work comp payers, the good news is a bit less obvious – but it is good news – for two reasons.

First, in general the working population will be slightly healthier – because more workers will have insurance, and the least-healthy are more likely to be improving their health status. Thus if they do get injured, they will likely heal faster as their overall health status is better.

Second, work comp insurers won’t have to pay to treat their non-occ medical conditions, as the patients are more likely to have health insurance.

 

Jul
29

Details matter.

Posted by Joe Paduda on Friday, July 29th, 2016 | Comments

Someone who doesn’t do what you do may think it looks pretty simple.

Carpenters look at a house and see detailed planning, careful material selection, precise measuring, and skilled craftsmanship because they know what it takes to build a strong, sturdy, attractive, functional home. They are experts due to years of experience and hard-earned lessons and mentoring by their elders.

Me? I see walls and a roof. Building looks simple to me; get some lumber, nails, and tools, plus some other building stuff like shingles and wire and concrete, and start slapping stuff together.

Which house would you want to live in?

The same is true for any profession – teaching, medical bill processing, hitting a golf ball…right? Professionals – and we are all professionals in our chosen vocations – understand the complexity in what they do, while outsiders tell us it looks simple to them.

I’m thinking about the Presidential candidates’ positions on health care and health care reform.  Trump wants to “rip out Obamacare root and branch” and replace it with something much “simpler”.

In general, Trump’s calling for:

  • allowing insurers to sell health insurance across state lines
  • repealing the individual mandate
  • requiring insurers to cover anyone regardless of their pre-existing condition.

Sounds great…you don’t have to buy health insurance until you really need it, but the insurance companies still have to sell it to you even if you need a heart transplant or new kidney or are having premature triplets.  (We discussed the across state lines thing here)

Here’s where those “details” matter.

What will insurance companies do if they are required to cover people who don’t need to buy insurance until they get sick?

They have two choices – go bankrupt or stop selling insurance to individual sand families.

What do you think they’ll do?

Of course they will stop selling health insurance to individuals.  When that happens, the Paduda family, and most of the other 11 million folks insured thru the Exchanges will find themselves with no health insurance and no one to buy it from.

Then what?

Here’s the point. We live in an amazingly complex world, one where there are NO simple solutions.   I know, simple solutions are really appealing, but “see the ball, hit the ball” only works until you step up to the plate, when it gets a whole lot more complicated.

If health care reform was easy, it would have been done decades ago. It’s messy, complex, and there are no simple solutions where everyone wins. It requires consideration of the “what then” issues. When you move one lever, it triggers a whole bunch of reactions that, if not anticipated, will create way more chaos.

Yes, the ACA is messy and needs fixing. Yes, we need our politicians to engage, debate, argue, and work it out. What you and I do NOT need is a sound-bite solution that is NO solution at all.

What does this mean for you?

If you think health care is a mess now, can you imagine what it would look like if people could wait to buy insurance till they were sick, and insurers had to either sell it to them or stop selling insurance altogether?

It would look like this

San_bernardino_Train_Disaster_2a

Jul
14

Thursday catch-up

Posted by Joe Paduda on Thursday, July 14th, 2016 | Comments

Swamped these days, so here’s what I don’t have time to opine upon in any depth…

In eight years, “Health spending growth…is projected to average 5.8 percent—1.3 percentage points faster than growth in the gross domestic product—and to represent 20.1 percent of the total economy by 2025.” [emphasis added] HealthAffairs‘ article notes the main drivers will be changes to the economy, higher prices, and an aging population.

So, what are we going to do about this?  When considering candidates’ health care platforms, it is always helpful to start from where we are today.  To that end, Michael Joyner MD has an excellent briefing that builds on the HealthAffairs piece, with more info on what we spend, who spends it, and what we get for those dollars.

Spoiler alert – When you deduct estimated cost of unnecessary spending, US health care costs are about in line with other countries’.

Folks interested in what workers’ comp patients think of work comp should tune in to WCRI’s webinar on July 28.  WCRI surveyed patients in 15 states and will report on their findings across a broad spectrum of issues; a written version of findings is also available.

And those interested in the financial future of work comp can check out Fitch’s report on same; hint today’s flush days are not likely to continue.  (hat tip to WorkCompWire for the head’s up)

A troubling point:counterpoint discussion of opioids and chronic pain illustrates the biggest problem we face with this issue; to the general public, anecdote is often more powerful than data.  David Deitz MD PhD provides the scientific background for why limiting opioid use is a critical public health issue, and why opioids aren’t particularly helpful for many chronic pain sufferers.  The “counterpoint” is NOT a fact/research/science based expert, but one person who suffers from chronic pain.

This is not a terribly helpful way to educate folks about the issue and I would suggest ill-serves the public.

Mark Pew of PRIUM has a cogent perspective on California’s prescription monitoring program.  He’s all in – and, quite correctly, suggests everyone else should be as well.

Finally, the pending sale of ExamWorks is generating controversy, with some stockholders not pleased by the price offered, the possible conflict of interest of some of the parties, and various other complaints.  According to the NYTimes, opponents of the deal contend “lawyers at Paul Hastings, a law firm based in Los Angeles, were in cahoots with management and the investment banks to sell the company at a below-market price, something ExamWorks vigorously denies.”

Methinks they oughta be darn glad they’re getting 35 bucks a share.

Got to get back to work…

 

Jun
23

Exchange health insurance premiums up 10%…

Posted by Joe Paduda on Thursday, June 23rd, 2016 | Comments

ok, that’s the headline, but it’s so generalized that it’s all but useless. In fact, premium increases vary quite a bit around the country and even within markets.

Our plan is up less than 1 percent.  And here’s why.

The 10% figure is a very rough average of the price changes for the two lowest-cost “Silver” plans – the second-tier plans offered on the Exchanges in 12 states plus DC. In fact, premium changes for the benchmark second-lowest Silver plans range from a 13% decrease to an increase if 18% – and these are preliminary, before the state review process.

A couple other factoids.

  • 7 of the markets reviewed by KFF.org will have fewer insurers participating, while the other 7 will either stay steady or have more competitors.
  • Most of the plans that were the lowest-priced in 2016 will not be the cheapest next year. However, in most markets, consumers who shop around will be able to find plans with premiums below their 2016 rates.
  • On average, 5.5 insurers will participate in the 14 markets next year, down from 5.9 in 2016.

We buy our insurance thru the Exchange in upstate New York. Our premiums will increase about 1% in 2017 – for a platinum plan, narrow network, no out-of-network coverage for a three member family aged 58, 57, 24.  Very low deductibles, but a very limited choice of providers.

So, what does this all mean?

Clearly, the narrow network is working for Fidelis, our insurer.

Contrast this with UnitedHealthcare, which is exiting most markets after a financially abysmal couple of years.  Humana has also been hammered.  UHC (and to a slightly-lesser extent Humana) has long focused on the employed market, one where care management is far less of a priority than marketing to brokers, benefits managers, and folks with jobs.  Broad networks and generous benefit plans are absolute necessities, as moms – who are very influential in insurer selection – want their ob/gyns and pediatricians in-network.

Brian Klepper and Fred Goldstein said it very well when discussing Molina and Centene, two plans that are much like New York’s Fidelis:

[Plans with deep experience in managed Medicaid] have of necessity learned to manage risk more effectively than commercial plans. Medicaid plans receive a monthly rate for each enrollee, and then manage within that set budget. To accomplish this, they have become adept at understanding their populations’ clinical and financial risks, and putting medical management approaches into place that can mitigate those risks. In other words, when a plan with Medicaid experience moves into a fully insured (at-risk) commercial plan space, it is more likely to succeed.

The commercial plans, not so much. Most commercial plans have not been required to adhere to rigorous risk management disciplines and, if anything, their incentives are different. They can go light on large case management, for instance, allowing the costs of high-intensity patients to balloon, knowing that when costs exceed premium, they can recoup those costs through subsequent premium increases.

What does this mean for you?

Health insurance is changing, and plans that understand risk management are going to beat the pants off those who don’t – in the Exchanges.

 

Jun
8

Clinton health plan 2.0, updated

Posted by Joe Paduda on Wednesday, June 8th, 2016 | Comments

Now that Hillary Clinton is the Democratic Presidential nominee, it’s time to delve into her health policy platform.  The quick recap is she is looking to expand and build on ACA, tweaking various parts and pieces to fix legislative errors, incent states to participate, and reduce out of pocket costs. (we discussed this in yesterday’s Blab; you can watch it here.)

Expand Medicaid

Clinton would offer 100% funding for any state that expands Medicaid for at least three years, then tapering down to 90%.  This would likely encourage more states to take the step; Florida and Nebraska are two where elected officials are under increasing pressure to make the move.

Remove the family glitch

A drafting error doesn’t allow taking an employee’s family into account when determining subsidies for insurance bought via the Exchanges.  Clinton would offer tax credits to offset those out of pocket costs for eligible families.  The tax credit proposal is a convoluted way to fix what should be done via correcting the original language.

Allow near-seniors to buy-in to Medicare

More an idea than an actual policy position, Clinton is talking about allowing “people 55 or 50 and up” to voluntarily pay the entire “premium” to join Medicare.  With much to be fleshed out, this looks to be a response to Sen Sanders’ call for free public insurance for all.

This could have some major downstream effects; by removing we older and more expensive people from the privately-insured pool, insurance costs for younger folks would decrease.  This “public” option would also inject competition into areas where there isn’t any due; rural markets in particular could benefit.

Address drug prices

Clinton has several ideas including eliminating the tax deductibility of marketing expenses, setting limits on consumers’ out of pocket costs for prescription drugs, and allowing Medicare to negotiate directly with drug companies.

Most striking is the mostly-unformed concept of forcing drug developers to spend a set amount on R&D, with any additional revenues handed back to the Feds for government research on new therapies. This is intended to address the industry’s argument that research costs demand high prices (an oft-criticized and rather doubtful argument).

Sounds good, but I doubt – very much – if it could be implemented without causing a lot of problems as drug companies quickly figure out ways to game the system.

At some point it may make sense to review Trump’s, but at this point the GOP nominee  has yet to come forth with any coherent health reform plan other than “repeal Obamacare” and sell insurance across state lines.

May
2

The ACA and employment

Posted by Joe Paduda on Monday, May 2nd, 2016 | Comments

Several years ago the CBO (Congressional Budget Office) predicted the Affordable Care Act would negatively, if minimally, impact employment.  Since then, there’s been much parsing of employment data – and way too much credence given to anecdotal reports – by ACA lovers and haters alike. Much of this has been focused on ACA provisions that ostensibly incentivize employers to shift full time workers to part time (<29 hours per week on average).

There’s been much distortion of the CBO’s report as well, most from ACA haters (here, here, and here are just a few examples; a thorough discussion of the issue is here).

In reality, it is still too early to tell what, if any, impact on employment ACA has had.  That said, the most credible information available indicates at most a few hundred thousand workers have seen their hours reduced by employers seeking to avoid insuring those workers.

(I would note that these decisions are not eliminating the cost of health care for their workers and dependents, rather they are shifting the cost to the taxpayer and local health care delivery system (most notably hospital ERs and Community Health Centers))

Moreover, it is and will be very, very difficult to separate out the impact of ACA from that of other economic factors affecting employment such as trade patterns and policies, consumer sentiment, the strength of the dollar v other currencies, global energy markets and the like.

Here’s what we know now.

To date, there’s been little to no change in part-time employment as a result of the ACA. This from a study reported in Health Affairs earlier this year:

[there is] no evidence consistent with the thesis that the ACA caused an overall increase in part-time employment in the United States. Our evidence came from data through 2015, the first year of the employer mandate and the second year of expanded access to coverage through Medicaid expansion and the Marketplaces. As a result, both employers and employees may have still been adjusting to provisions of the ACA.

Another study came to pretty much the same conclusion.  While both used slightly different methodologies, neither of which was specifically designed to compare real-world results to the CBO’s predictions, both indicated we haven’t seen hours worked or number of jobs negatively impacted by ACA.

But, that does NOT contradict the CBO.

First, here’s what the CBO said…

CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent [and reduce total compensation by about 1 percent] during the period from 2017 to 2024, [emphasis added] almost entirely because workers will choose to supply less labor.

They went on to note that much of this will be voluntary: spouses will reduce their hours because they will gain coverage under their spouse’s plan; some lower-income folks will reduce their hours so they don’t lose out on a subsidy; some will retire early as they won’t lose health insurance coverage previously tied to an employer.

The net…

Because the longer-term reduction in work is expected to come almost entirely from a decline in the amount of labor that workers choose to supply in response to the changes in their incentives, we do not think it is accurate to say that the reduction stems from people “losing” their jobs. [emphasis added]

CBO also opined that the ACA “also will affect employers’ demand for workers, … both by increasing labor costs through the employer penalty (which will reduce labor demand) and by boosting overall demand for goods and services (which will increase labor demand).”

What does this mean for you?

I bring this to your attention, dear reader, in hopes that it helps provide you with a framework to use when evaluating claims that ACA a) is killing jobs or b) has no effect.

 

Apr
19

ACA’s 20 million increase in insureds – implications for workers’ comp

Posted by Joe Paduda on Tuesday, April 19th, 2016 | Comments

That’s a bit of a misstatement; ACA alone is not responsible for increasing the number of insureds by some 20 million, but there’s no question it was the primary causal factor.

Be that as it may, let’s examine who the newly-covered are, what they do, and where they reside.  The insured population’s demographics may be of interest to workers’ comp payers.

As noted yesterday, the newly-insured population is poorer, more likely to be recent immigrants, and much more likely to be Hispanic than the rest of the country. For work comp, what may be of more interest is the jobs they hold and where they live.

First, the percentage of part-time workers insured rose by 5.8 points, while the full-time population’s coverage went up 2.8 points. Those concerned with so-called Monday-morning injuries, may see this as a plus for work comp as more working people have insurance to pay for non-occ injuries.

Next, what do these workers do?

Pretty much everything; of particular interest to the work comp community, several high-severity &/or high-frequency industries saw significant jumps in the percentage of workers with health insurance. (details below)

  • agriculture +5.4%
  • construction +4.7%
  • transportation/warehousing +4.0%
  • manufacturing +3.3%
  • natural resources + 3.9%

Why is this important?  A few reasons.

Insured people are healthier than the uninsured, so they will heal faster if they do get injured on the job.

Work comp payers won’t have to foot the bill for medical conditions non-occ-related for insured workers.  This isn’t the case for claimants who do not have health insurance; actually work comp payers technically don’t need to pay for non-occ conditions, but end up paying for those conditions if by so doing the claimant gets better faster.

Monday-morning injury frequency may be reduced (if it is a real problem and not just commonly-accepted wisdom).

(chart below from NYT article)

Screen Shot 2016-04-19 at 12.33.44 PM

I bring this to your attention, dear reader, because clients, friends, and all manner of industry folk are keenly interested in the “impact of ACA on work comp.”  Fact is, we don’t know what it will be, but we can prepare if we look closely at what’s happening and make some educated, experience-based guesses.

What does this mean for you (work comp payers)?

A long term and incremental plus…perhaps.

Apr
18

ACA – who’s covered now and why it matters

Posted by Joe Paduda on Monday, April 18th, 2016 | Comments

20 million more Americans are covered today than were pre-ACA.  ACA’s insureds are poorer, more likely to be recent immigrants, and much more likely to be Hispanic than the rest of the country.

And for many, their new coverage is the first time they’ve had the “luxury” of insurance. They aren’t scared when a new pain or malady erupts, moms not terrified when a child wakes up with a fever, dads not losing sleep wondering how to pay the doctor’s bill or buy the insulin.

The disparity in coverage between and among ethnic groups, while still present, is narrowing – although black Americans would be doing much better if many didn’t live in states that have refused to expand Medicaid.

Make no mistake, this is very, very big news.

Beyond the much better life for the newly-insureds, the economic and long-term economic impacts are strongly positive.

Identifying and helping at-risk members is the top priority for health plans, community health centers (serving a large portion of the Medicaid community) and ACOs.  The more these providers are able to reduce the severity of chronic medical conditions, the lower their costs will be.  And the healthier, and more productive, their members will be.  And the more they will produce, and the more taxes they will pay.

ACA’s success will be measured over the long term.  Reducing unpaid ER visits reduces hospitals’ costs.  Preventing amputations and blindness among diabetes patients, cuts treatment costs and increases productivity. Keeping Americans healthier decreases first-year costs for Medicare recipients.

Despite the good news, there are two ongoing, knotty, closely-related and so-far unsolved issues. First, premiums in some areas are still too high to be “affordable”. Notably, that’s particularly true in non-Medicaid expansion states, but they’ll come along eventually (although far too late for many of their poorer residents, who will suffer needlessly while pols demagogue).

Second, many plans come with high deductibles, making routine care still problematic for poorer members.

Both will be addressed by health plans fighting for members – their survival, growth, and profitability demands it.

It won’t be tomorrow, and it won’t be pretty; remember we are fixing a broken industry that accounts for almost a fifth of our GDP. Networks will narrow, vertically-integrated delivery systems will get way more efficient, new models will emerge, and the health care system of 2021 will look a lot different than the one we have today.

Tomorrow, a deeper dive into who’s covered now and an examination of the potential impact on workers’ comp.