Category: Implementing health reform

Jul
10

There’s no such thing as an “Obamacare” health plan

Posted by Joe Paduda on Friday, July 10th, 2015 | Comments

Some blame “Obamacare” for pretty much everything; high insurance costs, increasing deductibles, access issues (real and imagined), narrow networks with fewer physicians, hospital closures, global warming (oh, wait, no such thing).

And worst of all, this is all due to the “Obamacare health plan”.

Which is kinda weird as there’s no such thing.

Outside of Medicaid and Medicare, there is no governmental health plan option available anywhere. None.  Yet I’ve heard from doctors’ office staff (who really should know better), folks in the health care industry, and lots of the “people on the street” who attribute everything bad about health insurance, coverage, cost, bureaucracy to Obamacare.

Facts…

  1. All health plans are offered by commercial insurers and health plans.  Anthem, Blues plans, United Healthcare, Aetna, Humana, you name it – all are independent, private insurers.
  2. These health plans design their own insurance offerings, market them to the public and employers, balancing access and cost, coverage and deductibles, benefits against market demand.  Yes, there are tight definitions about core benefits that must be covered: this is so consumers’ health needs are addressed, not excluded by some fine print buried deep in a Summary Plan Description.
  3. Health plans alone determine what doctors are in-network, deductibles and copays, premiums and physician reimbursement. Not the feds or the Exchanges, but each insurer/health plan.
  4. Health care costs are going up (in some places by a lot, in others not so much) because of factors like:
    1. too much crappy medicine,
    2. a reimbursement system that pays docs too much for doing stuff to patients and not enough for talking with those same patients,
    3. over-utilization of some health care services,
    4. an aging population,
    5. obesity and other lifestyle factors,
    6. outrageous prices for some drugs (driven by for-profit pharma)
    7. a large uninsured population that forces health care providers to charge insured patients more to cover their costs of treating those without coverage (we’re talking about you, Texas, and you, Florida, and Kansas and Mississippi and Alabama and Wisconsin and…)
    8. stupid benefit design that relies way too much on deductibles and nowhere near enough on coinsurance (where members pay a percentage of the cost for each service, thereby exposing them to the real cost of services)
    9. a completely disjointed and dysfunctional health care non-system with prices much higher than any other industrialized country and outcomes mostly worse.

As Donald Rumsfeld said, “you’ve got to go to war with the Army you’ve got.”  Much as I despise Rumsfeld, he was unfairly pilloried for that very perceptive comment.  The reality is simple – “Obamacare” was, and is, an attempt to broaden coverage and allow the private market to figure out how to improve care and reduce costs.

Yes, there are a lot of regulations about how insurers have to do that; given the insurance industry’s financial motivation to avoid insuring sick people and actually pay claims it is no surprise that the regulators are trying to protect consumers from big insurers and their legions of lawyers.

Is this ugly and are there stupid regulations and are costs going up way too much in some areas and is it all way too complex and confusing?

Oh yeah.

What did we expect when reforming an industry that is responsible for one out of every six dollars of our economy? And was failing miserably at delivering good care at a sustainable cost?

Hell, we can’t even prevent trains from crashing, or fund a bill to fix our crumbling infrastructure, or reform our amazingly nutty income tax system, or stop doctors from making millions dispensing drugs to work comp patients.

We are well on the way to fixing one of the biggest problems in our country, And we’re “disappointed” in health care reform?

Really?

What does this mean for you?

It is, indeed, a clustermess.  

Some people will get hurt.  Some companies will fail,  Some will get fabulously rich.  Some will go to jail.  But in the end, more will have insurance, insurers will compete on a relatively level playing field, and incentives will be more aligned with what we consumers want – better health at low cost.

Jul
2

Thursday catch-up

Posted by Joe Paduda on Thursday, July 2nd, 2015 | Comments

Hope you, your family and friends have a terrific Fourth of July; we will be celebrating at home in upstate New York and watching the American women take on Japan in the World Cup Final.

The brief update on what’s happened this week and last.

The economy

A sizable increase in employment in June – 223,000 new jobs were added.  About 1.2 million jobs have been created so far this year. (edit – quoted May’s figure in an earlier version; apologies for my confusion)

The unemployment rate dropped to 5.3% from May’s 5.5%, but the labor force participation rate also decreased, driven by lower participation among teens and younger men.

This morning’s employment report shows an economy that is adding jobs in construction, retail and business services.

While wages were essentially flat in June, over the last twelve months employers have been (slightly) increasing wages in an effort to land and keep good workers – work comp folks can expect more premium dollars, and likely more injuries as newly-employed workers tend to get hurt more often experienced employees.

Overall, the report is good news; more workers making more money means they spend more – a virtuous cycle.  BUT there are some economic headwinds. The strong US dollar is hurting exports which isn’t good for manufacturing.

The ACE – Chubb deal

Looks like “Hank Junior” is following in Hank Sr.’s footsteps; with the acquisition of perhaps the most respected brand in the P&C business, ACE becomes one of the largest insurers in the industry with a diverse portfolio of insurance lines, complementary distribution, and very strong management and culture in Chubb.

Notably, the new company will take the Chubb name.

There’s a LOT of press out there on this deal, most authored by folks with a lot more insight than I have.  My take is this is a smart deal for ACE; IF they don’t screw up Chubb and thereby damage a highly-regarded brand.  Evan Greenberg et al are too smart to do that; they didn’t pay a 30% premium for Chubb without clearly understanding why the company is worth it.

Healthcare reform

Lots of information out there re who’s newly insured, what they are paying, and related matters.

There are more uninsured men than women, and they have more problems accessing and paying for care.

There’s been a lot of talk about premium increases for next year – and that’s caused a lot of confusion. The latest data suggests that people with the most common plan – the lowest cost silver – won’t see those big price jumps. KFF reports a survey of the benchmark plans in 11 cities indicates an average premium increase of 4.4%.

The range is wide, from a 16.2% jump in Portland OR to a 10.1% decrease in neighboring Seattle (go figure).

BUT – there have been some big jumps in some markets, and pricing is all over the place.  Some plans have filed for increases north of 20%. Expect the marketplace to reward those plans that have held the line – and expect those plans to have narrow networks and hefty financial penalties for out of network care…

The reason there’s been so much talk about big price jumps is healthplans planning on raising premiums more than 10% have to report that to regulators early on; that generates a lot of buzz. Obviously, that buzz doesn’t take into consideration the plans that are NOT planning on big price jumps.

Much more on this in future posts.

There are a couple of really interesting work comp research reports that came out this week; I’ll be reading them on the plane back from Seattle today and report back to you, dear reader, next week.

Enjoy the weekend, and cheer for our women on Sunday!

Jun
26

King v Burwell – implications for workers’ comp

Posted by Joe Paduda on Friday, June 26th, 2015 | Comments

 

The Supreme Court decision against the plaintiffs in King v Burwell marks the end of the significant legal challenges to the PPACA.

It also makes it much more difficult for a future President to undo key parts of ACA, as the Court opined that the mandate, penalty, subsidies, and other key components are set in statute and therefore cannot be modified or eliminated by administrative or executive action (I’m no attorney, so may have the wording wrong; clarifications welcomed).

Yes, there will be continued attempts by opponents to attack this or that part of PPACA. And the GOP may well pass repeal legislation if the party wins the necessary seats and the White House next year.  But I don’t think they will.

17 percent of our nation’s economy is in the health care sector, a sector that has, for the better part of a decade, totally focused on operating under PPACA.  If PPACA is overturned, the stuff will hit the fan, and the overturners will be blamed.  Politicians don’t like blame, and while the hard core right may rail, their Representatives and Senators will keep focused on the swing voters who decide elections.

Okay, so much for my amateur political punditry.

What does this mean for workers’ compensation?

Not much.  In fact, I can’t discern any meaningful impact other than “business as usual.”

That doesn’t mean ACA hasn’t impacted work comp, however so far the data is rather inconclusive.  I’ll post on that early next week – spoiler alert – the evidence to date indicates there has NOT been a problem for claimant access to care.

Jun
25

Supreme Court upholds ACA

Posted by Joe Paduda on Thursday, June 25th, 2015 | Comments

In a ruling that just came down, the Supreme Court ruled in favor of the Obama Administration and against the plaintiffs in King v Burwell.

The Court ruled 6-3, with Thomas, Scalia, and Alito dissenting.

The opinion was written by Chief Justice John Roberts, who also authored the opinion in the previous case concerning the individual mandate. His strongly worded opinion included this: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them…[the decision will] avoid the type of calamitous result that Congress plainly meant to avoid.”

The King v Burwell case was based on six words in PPACA, namely “an Exchange established by the State”, with the plaintiffs contending “the federal government isn’t allowed to provide subsidies to the residents of states that refused to establish health insurance exchanges under the law.” (quote from HuffPo).

There are 37 states where the federal exchange is operational; losing the subsidies would have increased members’ costs by an average of 417% in the ten states that would have been most affected.

Opponents of ACA said these words meant subsidies were illegal and must end, while proponents averred that this was just a small misstatement in the original language.

While this may appear as a defeat for GOP opponents, it may well be a decision that GOP politicians are privately relieved to see.  If the Court had ruled in favor of the plaintiffs, the subsidies in the majority of states would be thrown out – or at least would be ended unless a legislative fix was authored either on a Federal or state level.  If these efforts had not borne fruit, and there’s a lot of doubt they would have, GOP politicians running for office would have faced many voters angry that their subsidies were gone, along with their health insurance.

As most of the would-have-been-affected states are GOP strongholds, this would have been bad news indeed in a Presidential election year.

What does this mean for you?

Not much – unless you work for a health plan…

Of course, this guy is pretty happy…

ACA continues, and while we may see some additional legal challenges, they will be minor at best, and nowhere near the significance of this decision. 

If you work for a health plan, there’s a huge sigh of relief.  The opposite decision would have murdered health plan stocks, thrown markets into chaos, and led to an administrative cluster-mess.

Oh, and if you own health care stocks, it’s a pretty great day, with three big health care provider stocks up close to double digits.

 

 

Jun
10

Health care cost drivers, or, Here’s where you’re getting screwed

Posted by Joe Paduda on Wednesday, June 10th, 2015 | Comments

Forgive the vulgarity, but it seems apt when considering two articles just published in the venerable journal Health Affairs.

First, as physician practices consolidate, markets become more concentrated.   A study indicates orthopedic fees paid by private insurers are measurably higher in those markets with higher concentration.  As “Physician groups are growing larger in size and fewer in number”, expect this trend will affect other, currently-less-concentrated markets, thereby driving up the price of orthopedic services.

While the research by Alex Sun and Laurence Baker focused narrowly on knee arthroplasty, it’s likely an examination of other orthopedic procedures would yield the same finding.

A couple key quotes that should resonate among workers’ comp payers:

  • Our results suggest that the potential for reduced costs [due to larger physician groups] may be outweighed by providers’ ability to negotiate higher physician fees.
  • the ACA encourages further concentration to some degree by incentivizing physician groups to form ACOs to provide care. Again, our results suggest that the potential benefits of the formation of ACOs must be balanced against the potential for these organizations to negotiate higher physician fees.

I’d suggest that if private insurers are paying higher rates, workers comp payers are likely paying way higher rates.

Which is an excellent segue to the companion article on hospital markups (hat tip to Richard Krasner for getting to this a day before I did). The authors identified the 50 hospitals with the highest charge to cost ratios; this is a simple analysis comparing their chargemaster, or published price list, to Medicare’s assessment of their allowable costs. Here are a couple enlightening excerpts:

While most public and private health insurers do not use hospital charges to set their payment rates, uninsured patients are commonly asked to pay the full charges, and out-of-network patients and casualty and workers’ compensation insurers are often expected to pay a large portion of the full charges [emphasis added]

forty-nine (98 percent) are for profit, compared to 30 percent in the overall sample; one for-profit hospital system (Community Health Systems) operates half of the fifty hospitals with the highest markups (Exhibit 3). Hospital Corporation of America operates more than one-quarter of them.

Florida has 20 of the fifty hospitals with the highest markups; this is also a state with a fee schedule based on a percentage of “usual and customary” charges.

A notable finding; “markup varies substantially across medical services in the same hospital, and an overall hospital-level charge-to-cost ratio might not reflect the extent of markup for a specific patient. For example, among the fifty hospitals analyzed in this study, the average charge-to-cost ratio for anesthesiology is 112, for diagnostic radiology it is 15, and for nursery it is 3.”

What does this mean for you?

External forces are dramatically reshaping the health care delivery landscape; winners will be those payers who successfully adapt to those changes, not those who ignore them.

Jun
5

Friday catch-up

Posted by Joe Paduda on Friday, June 5th, 2015 | Comments

What’s up?

Implementing health reform

Remember the big concern that employers would drop employee health insurance in response to ACA, and employees would lose coverage?  Looks like that has not happened. The latest data indicates that the number of employees enrolled in employer health insurance actually increased over the last two years albeit incrementally.

The 1.1 percent increase may look small, but when compared to the 11 percent drop in employer coverage seen from 2000 – 2012, it represents a considerable change in direction.

Of course, this may not continue; that said, so far the “problem” predicted by notables including Douglas Holtz-Eakin has yet to appear. (note – Holtz-Eakin’s original article is no longer available on the web)

There’s been much talk about early indications of health insurance premium changes for 2016.  Friend and colleague Bob Laszewski is of the opinion that the increases are “eye-popping”; Bob also notes that the rate changes posted to date are ONLY for those plans that will see increases above 10 percent.

Others note the story is much more nuanced.

Several caveats.

  • data is only for federally-run exchanges
  • the insurers requesting the big increases appear to insure a population that is older/sicker than average
  • data does not include increases of less than 10 percent
  • all rate increases are subject to regulatory review and approval; historically many of the requested increases have been cut during the review process

I’d humbly suggest that before you cite the report as showing ACA is a big success/abject failure, read the citations.

Work comp service providers 

Humana’s sale of Concentra is done. The $1.06 billion deal was completed Monday, with Select Medical and PE firm Welsh Carson partnering on the acquisition.

Welsh Carson, one of the early investors in the workers’ comp/occupational medicine market(s), sold Concentra to Humana back in 2010 for $770 million.  While the original strategy – based on using Concentra as an entry point/primary care provider for Humana’s group insurance  and other members – made a lot of sense at the time (there were major concerns about a flood of newly-insured people overwhelming primary care docs), the predictions have not borne out.

Concentra just changed leadership – and indications are the company is returning to its roots in occupational medicine.  Former COO Keith Newton just rejoined Concentra as President and CEO.  Newton left the company after it was acquired by Humana five years ago.  While the company’s website has yet to reflect the transition, expect to hear more from the nation’s largest occ med provider as it reaches out to past customers and markets.

Humana pushed Concentra to change its focus from occ med to family practice to support Humana’s group health and other insurance business.  As a result, most of the physicians hired over the last 5 years were family practice docs, not occ med physicians. In some markets the change was dramatic; a former Concentra exec noted a key southeastern market did not have any Board Certified Occ Med physicians that treated in clinic. 

Concentra’s traditional employer customers were, understandably, not enamored with the change; there’s a multi-pronged strategy in place to win them back.  On-site clinics are dropping non-occ med services and many clinics are eliminating primary care as well. Hiring is focused on recruiting board eligible and board certified Occ Med physicians. 

CorVel had a tough quarter; net income was down 35% to $5.6 million while revenues increased 1.7% to $122 million. The stock was down 11.7% on the news, but still carries a healthy PE ratio near 22.  CorVel indicated the drop in earnings was due to investments in the company’s provider network…

Competitors opine CorVel is “giving away” their TPA services in an apparent effort to capture new employer clients.  With profits increasingly derived from managed care services (which are much harder for employers to predict, track, audit, and report), this isn’t a unique strategy by any means.

FWIW a source indicated Sedgwick recently took the North Carolina Dept of Public Instruction business from CorVel.

Finally, an anonymous commenter said my report that OCCM is acquiring MedFocus was incorrect.  If any non-anonymous reader has information, please send it to me.  I will respect your confidentiality if you email me directly.  (I responded to the commenter via email, but s/he used a fake address).

 

Jun
2

Hospital prices are up. Way up.

Posted by Joe Paduda on Tuesday, June 2nd, 2015 | Comments

And this means higher costs for those getting treatment outside of their core networks, and especially for work comp payers.

While Medicare reimbursement has remained pretty level, hospitals have been busy raising their list prices by more than 10 percent over the last couple of years. This doesn’t really affect most patients as their rates are negotiated by private insurers or set by CMS for Medicare recipients (or Medicaid on a state-specific basis).

Examples of procedures with the highest increases are:

  • Back and neck procedures except fusions – 22.5%
  • Medical backs – 17.5%
  • Most fractures – 17.3%

The impact is felt most directly by privately-insured patients seeking care outside of their network, as deductibles will almost certainly be much higher, as will copays and out-of-pocket limits.

For workers’ comp payers in states without DRG-or similarly-based fee schedules, the price increases are having even more of an impact. For example, employers in states such as Florida that base reimbursement on a percentage of charges are seeing significant jumps in the prices paid for facility-based care.

But that’s only part of the issue.  There’s a “multiplicative” effect as well.  With more and more physician practices bought out by health systems, and more and more docs working for those health systems, their services are increasingly billed as facility codes which tend to be higher and include costs that don’t show up on physician bills.

Medicare is doing an admirable job holding down costs while increasing its focus on quality.

That said, there are some pretty ugly side effects.

As facilities scramble to increase their quality ratings; staff is evaluated on “patient satisfaction” which is a pretty iffy metric. The understaffing of inner-city emergency rooms is gaining more attention, as well it should. These are just two of the unintended consequences of what are dramatic and often wrenching changes in the American health care system.

What does this mean for you?

Higher facility costs for comp payers means they will need to focus even more tightly on the amount paid, and not the network discount for facility care.

May
19

Is ACA affecting work comp medical waiting times?

Posted by Joe Paduda on Tuesday, May 19th, 2015 | Comments

Research to date says no.

Equian’s Glen Boyle shared some research with me that indicates there doesn’t seem to be any delays in claimants getting physician appointments.  Glen was following up on my post on NCCI’s research report at last week‘s AIS which also didn’t find any ACA-related delays.

Here’s Glen:

I tracked 10,000 claims for [an insurer client] (2012-2013 – matured 24 months with a minimum of 6 months maturity).  

The study focuses on Indiana, Iowa, Minnesota, Illinois, and Wisconsin.

The claims were placed into agreed benchmark categories and we are measuring dozens of data elements. Aside from DOI to first medical visit (and the time between subsequent visits), we are tracking the time to first major surgical service, the time to first PT (and the time between subsequent visits), and the time from the first medical treatment to the last medical treatment.  

 The 10,000 claims created our “foundational benchmarks”, and we just completed our first comparison of claims from the 1st quarter of 2014 (post ACA) with maturity through 9/30/14. We’ve also just completed another data pull with two additional quarters of new data, while updating the claims already in the mix. We were able to take our first look at some post-ACA benchmarks – many are still VERY immature, but DOI to first DOS develops immediately (FYI we show no delays to first office visit in any of the jurisdictions). [emphasis added] You had pointed me to the Robert Wood Johnson report and that seems to indicate that newly insured patients are NOT flooding into waiting rooms – so you wouldn’t expect any delays from that perspective.  

(this references a previous post on the RWJ study; excerpt below)

A Robert Wood Johnson Foundation report (thanks to AthenaHealth) report indicates docs are not getting swamped with newly-insured patients seeking primary care.  Key findings include:

  • New patient visits to primary care providers increased from 22.6% of all appointments in 2013 to 22.9% in 2014.
  • The percentage of visits with patients with complex medical needs decreased from 8.0% of appointments in 2013 to 7.5% in 2014.

So far, doesn’t look like primary care providers are overwhelmed – HOWEVER that is national data, and things certainly vary from region-to-region.

While primary care isn’t being overloaded, the health care delivery system is undergoing wrenching changes – with small, safety-net hospitals probably the most affected. Expect to see closings, consolidation, and takeovers as these most-vulnerable providers lacking scale, resources, and brand find they can’t survive.  For a glimpse into the near-term future, track what’s happening in California.

What does this mean for you?

17 months into full ACA implementation, there’s no indication that WC claimants are seeing delays in getting medical care.

May
7

Medicaid and Workers’ Comp

Posted by Joe Paduda on Thursday, May 7th, 2015 | Comments

21 states have not (yet) chosen to expand Medicaid; one can (and I have) argued that this is nonsensical at best, as

  • the Feds are paying for ALL of the additional cost for another two plus years, and
  • the vast majority of the cost (90% +) thereafter; and
  • the savings to the states for uncompensated care would be anywhere from $4 to $9 billion;
  • health care providers in non-expansion states are in dire straits due in large part to the “non-expansion.”

My sense is the non-expansion states will eventually decide to accept the Medicaid deal as the financial cost to hospitals and health systems will force them to. And, the Feds will work with the states to create different models that will be ideologically palatable, providing cover to those politicians obsessed with such things.

But until – and unless – Texas, Florida, Virginia, Wisconsin and the rest expand Medicaid, there’s a raft of problems created by their principled if (in my view) wrong-headed position.

Mostly, these problems are due to two things.  Over the short term, the cost pressure placed on facilities and health systems and the fallout therefrom will lead to increased pressure to cost shift – and yep, work comp is a pretty soft target.

And long term, the 6.4 million adults who remain uninsured will be less healthy, have more incentive to get care under workers’ comp, and heal more slowly with more complications if they do get injured on the job.

What does this mean for you?

For work comp payers, nothing good.

Apr
29

Florida’s conundrum

Posted by Joe Paduda on Wednesday, April 29th, 2015 | Comments

Florida’s legislature can’t decide if it does or doesn’t want federal money.  That’s the policy question; it’s discussed in some detail below.

A quicker explanation by way of metaphor was conveniently provided by a native Floridian; Austin Hatfield adopted a pet water moccasin, one of the most aggressive and poisonous snakes in this Hemisphere.  He liked it.  Then it bit him in the face when he kissed it.  Now he’s in critical condition.

hatfield

Kinda like what’s about to happen to Florida’s health care system.

While Florida’s Senate wants to expand Medicaid, the state house has said NO to Medicaid expansion under PPACA, but wants the billion dollars of federal money that has been supporting struggling hospitals; these dollars will disappear at the end of June.

Governor Rick Scott (former CEO of HCA, which paid a $1.7 billion fine for Medicare and Medicaid fraud, and involved in at least one more company alleged to have committed Medicare fraud) is outraged that Florida can’t get the money that no longer exists, even if the Sunshine State doesn’t want to expand Medicare.

The reason the hospital dollars were cut is simple; by expanding ALL coverage, hospitals would have far fewer uninsured patients and thus wouldn’t need federal taxpayer dollars to cover their costs.

What Florida’s House and Governor are saying is they don’t want Medicaid, but do want the “lost” dollars replaced.

I don’t get it.

Remember the Feds are paying ALL of the Medicaid expansion costs thru 2017, then their support ratchets down gradually until they are paying 90% of the costs.

Ninety percent…

For some reason that doesn’t make sense to the House; but they DO want the billion plus dollars for hospitals, dollars that no other state gets. Of course, the legislators didn’t THINK about this when they adopted their principled stand against federal largesse, but quickly changed their tune – somewhat – when hospitals screamed about the financial disaster the House’ position would bring upon them.

To their credit, the Florida House and Senate seem to have figured out they have adopted a water moccasin, and it is about to bite them in the face.  Now, they want the Feds to defang their beloved friend before it kills them.

I was at a Florida Chamber meeting a couple years back when Scott and an Orlando hospital system CEO talked about the need to expand Medicaid; At that point the unindicted former CEO of the company convicted of the biggest Medicare/aid fraud in history was kinda sorta in favor of Medicaid expansion.  The business people in the room got it; the ideologues didn’t.

Hidden in this mess is the damage caused to the 800,000 or so lower-income Floridians who won’t get coverage. [sub req].  Orlando Sentinel columnist Scott Maxwell said it very well:

…the feds are basically saying: We’re giving you the money to provide citizens cheaper, preventive health care. If you won’t give them that, we’re not going to clean up your mess by spending tax dollars on costlier ER care.

This is what fiscal conservatives should want.

It’s like offering to pay for your daughter’s insurance plan and having her say: No thanks, Dad. I’d rather you just pay for my ER bills instead.

You’d tell her: No way. Well, Rick Scott is that defiant daughter, suing federal taxpayers to keep welfare-for-hospital-ER’s going.

What does this mean for you?

Either you want federal taxpayers to subsidize your health care system, or you don’t.

And if you don’t, you can’t complain when your head blows up to the size of a prize watermelon.