Jul
29

Obamacare and workers’ comp – part 7 of 9

Last week we briefly discussed a few ways PPACA may affect quality of care; this morning it’s a bit about outcomes research.

To see what this has to do with comp, skip to the last couple paragraphs below.

PPACA aka Obamacare funded the Patient-Centered Outcomes Research Institute, which focuses on research intended to help individuals determine what care is best for them, what they can do to improve their outcomes, and what they can expect given their health condition and treatment choices.  (details are here). The idea is pretty basic; to quote Sy Syms, “an educated consumer is our best customer.”  Patients who know their health conditions, understand their treatment options and the pros and cons of those options, and are able to discuss those options with their providers are going to get better care and better outcomes – defined as what is best for them as an individual.

If an individual understands the risks and potential implications of treatment options, then that individual can make the best decision – defined as what’s best for that individual.  As an extreme example, I may choose a risky and painful course of chemotherapy to treat my cancer, while you may decide that’s not for you. 

In actuality, there were a lot more funds in the Recovery Bill (remember the 2009 bill?) known as ARRA than in PPACA.  While most of that legislation was in the form of tax reductions, there was some spending on health care; specific to our discussion $1.1 billion was allocated to health research. This was split between three agencies;  $300 million to Agency for Healthcare Research and Quality, $400 million to NIH, and $400 million for HHS itself. The money has been allocated to several areas; data infrastructure, evidence generation, evidence synthesis, research and evaluation, implementation and others.  (a detailed discussion is here.

All of NIH’s and most of AHRQ’s dollars were invested in comparative effectiveness research (CER), evidence generation and translating and disseminating the findings.

Simply put, CER assesses “which interventions are most effective for which patients under specific circumstances.” NIH is looking into health care for seniors, diabetes prevention follow-up care, schizophrenia, breast imaging, chronic kidney disease, and many other conditions.

AHRQ’s work identified key gaps in evidence, found researchers qualified to fill those gaps, and funded their research. It’s hard to overstate the importance of this work; there is precious little consensus around treatment for many conditions, with wide geographic variation in treatment patterns.  The Clinical and Health Outcomes Initiative in Comparative Effectiveness (CHOICE) focuses on pragmatic research; what actually works, in real-world clinical settings.  There’s also a registry of diseases and specific medical tests, devices, and surgical procedures intended to track long-term outcomes and the viability of devices.

So, what does this have to do with workers’ comp?

There are direct and indirect impacts – for example; one of the projects funded by PCORI focused on “Long Term Outcomes of Lumbar Epidural Steroid Injections for Spinal Stenosis”; a procedure far too common in worker’s comp (if not for stenosis specifically).  Another focuses on improving primary care for back pain, a third on non-surgical treatment methods for lumbar spinal stenosis, a fourth addresses obesity care in a primary setting, a fifth evaluates the best ways to disseminate outcomes research, a sixth looks at quality metrics for medical rehab, a seventh focuses on psycho-social treatment for chronic pain…

Given the oft-heard complaints – entirely appropriate complaints – from work comp professionals about the wide variation in quality of care, over-use of surgery, inability to manage chronic pain, impact of obesity, and generally crappy medical care delivered to far too many injured workers, there’s no question the funds from PPACA and ARRA will greatly benefit work comp.

As a side note, we spend about $2.6 trillion a year on medical care in the US, and less than one-tenth of one percent of that amount on objective research to figure out what works and what doesn’t.

Is it any surprise US health care is so wasteful and screwed up?


Jul
26

Pennsylvania’s drug problem

The profiteering plunderers of the workers’ comp system have moved into the Keystone State, proffering their repackaged drug get-rich-quick scheme for physicians treating workers’ comp claimants.

Patient safety?  Hah!

Conflict of interest? So what!

Higher taxes?  Screw ’em!

Alas, there’s no evidence of movement on the part of PA’s legislators to address the issue, despite the public discussion of problems inherent in physician dispensing.  An article in the Philadelphia Enquirer last year noted:

“A 2007 Institute of Medicine report showed that medication errors originate most often during the medication prescribing process. At least half of these prescribing errors are detected and corrected when pharmacists review the safety and appropriateness of the medication. [emphasis added] But having the same physician prescribe and dispense eliminates that safety net before the error reaches the patient…

Don’t let advocates for doctor dispensing fool you. The potential safety issues with physician dispensing cannot be easily dismissed.”

Despite the concerns, physician dispensing is increasing in PA.  WCRI reports that a fifth of all drugs were dispensed by docs in 2010/2011, accounting for 27% of drug costs – up from 15% in 2007/2008. The price for doc-dispensed generic Vicodin went up 23% over that period – while the cost for the same drug bought at a pharmacy dropped 10%.

In all likelihood, doc dispensing now accounts for over a third of all costs in Pennsylvania, increasing employers’ and taxpayers’ costs while endangering even more patients.  

To be sure, physician dispensing advocates will trot out their hoary arguments that dispensing reduces costs and speeds return to work, tired old lies that have been exposed by the CWCI’s research proving the opposite is true – medical and indemnity costs are higher for claims with physician dispensed drugs. Unfortunately, it does not appear the industry’s shills will have to stir themselves at all, as there doesn’t appear to be much interest on the part of the worker’s comp industry or their advocates to do anything about the problem.

Perhaps when the press uncovers a patient killed by a dispensing doc they’ll decide it’s worth their time.  That will happen.

What does this mean for you?

Until then, employers and taxpayers will just have to pay more for drugs claimants may well not need at prices inflated two to twelve times.

 


Jul
25

Obamacare and workers’ comp – Part 6 of 9; quality of care

Quality of care – will it increase or decrease as a result of Obamacare?

That is a major concerns among those work comp professionals tuned in to health reform, as well it should be.

For quality of care, it depends on what care you’re talking about, and how it is measured.  Compensation for primary care activities – spending time with patients discussing their condition, health status, medical options and the like is going to be compensated more richly – in some states, MUCH more richly (e.g. California). The thinking behind this is it is far better to have an educated patient aware of their treatment and prevention options, potential issues, and thereby engaged in their treatment than a clueless patient treated as a lab specimen. And educated patients may well view their care as “better” as they understand what’s happening and why; they also have better outcomes in general.

Moreover, with more covered, the health status of the population will improve (research indicates insured people are healthier than those without insurance).  If they get injured, they will recover faster with fewer complications, reducing indemnity expense as well as medical costs associated with more and longer treatment.

Quality of care for specialty services is more ambiguous.  With a reduction in Medicare (and in some states Medicaid) reimbursement for surgeries, imaging, and other procedures, providers may seek to deliver more services to work comp patients to make up for lost income.  Thus we may see more surgeries and related hospital/facility care, more scans, more tests and injections and implants and pumps.  This will lead to more expense for comp payers, and will likely be a reduction in the quality of care: delivering services that are not needed, even if they are performed at a high standard, reduces the overall quality of care.

Perhaps the most significant , and least recognized, contribution to quality of care under Obamacare is the requirement that insurers cover everyone with standardized benefit plans.

The impact of this cannot be overstated; it changes the competitive dynamic from selling insurance to healthy people who won’t have claims to managing the health risks and outcomes of everyone insured.  Insurers will have little ability to pick and choose who they cover, and their success will be based on delivering the best outcomes to their entire population.  This will force them to:

  • partner with providers on health improvement initiatives (ACOs)
  • research and implement – quickly – quality improvement initiatives
  • identify and change behaviors of unhealthy insureds

If they don’t, they are out of business.

I’ve run out of time, and likely so have you.  We’ll look into the outcomes research funded by Obamacare next…

What does this mean for you?

This is a complex and multi-faceted issue, one successful comp payers will have to monitor carefully if they are to avoid very unpleasant surprises.  


Jul
23

Allstate sues AHCS subsidiary Prescription Partners

Allstate Insurance has filed suit in Federal Court against Prescription Partners, the billing entity owned with Automated Healthcare Solutions.

The suit was filed in the Eastern Michigan Federal District Court; here are a couple of the more salient assertions in the suit:

4. Allstate seeks a declaration that it is not obligated to pay any claim for PIP benefits submitted to it by Prescription Partners, including pending claims in excess of $81,021.

5. Allstate further seeks restitution from Prescription Partners in the amount by which Prescription Partners has been unjustly enriched, an amount in excess of $25,085.

6. Prescription Partners does not provide any products, services, or accommodations relative to an injured person’s care.

7. Prescription Partners is not a healthcare provider and does not in any way treat injured persons…

10. Prescription Partners’s actions in this regard are both not permissible under the clear language of the No-Fault Act and are violative of the purpose and goal of Michigan’s No- Fault Act.

11. By this Complaint, Allstate seeks a declaration that Prescription Partners has no right to submit such claims to Allstate and that Allstate has no obligation to pay claims for PIP benefits made by Prescription Partners.

Sources indicate there are several other large auto insurers tracking this case closely; other legal action may be in the offing.

The case is focused on Prescription Partners’ alleged activity related to Allstate’s auto insurance business in Michigan. Unlike every other state, Michigan has unlimited medical benefits for those injured in auto accidents.  This make it a very attractive target for physicians dispensing drugs, as there are no limits on the insurers’ liability.  Interestingly, there is somewhat less interest among physicians in dispensing to auto claimants in other states, where maximum medical benefits may be as low as $5000 or $10,000.


Jul
23

Medicare-based fee schedules and work comp

Medicare bases the physician fee schedule, known as RBRVS, on estimates of how much time it takes docs to do specific things, plus their operating expenses adjusted for regional cost factors.  That’s a gross oversimplification but close enough. (more on the details of the price-setting process is here.)

Turns out the time estimates are (generally) way overstated, resulting in higher compensation for docs, higher costs for taxpayers, and a whole raft of downstream unintended effects – including higher costs for work comp payers.

The AMA’s Resource Based Relative Value System Update (RUC) Committee actually does the estimating.  According to a great piece in the Washington Post, “the AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent [emphasis added]…If the time estimates are to be believed, some doctors would have to be averaging more than 24 hours a day to perform all of the procedures that they are reporting. This volume of work does not mean these doctors are doing anything wrong. They are just getting paid at the rates set by the government, under the guidance of the AMA.”

Who sits on the committee was essentially a secret until a couple years ago, when the Replace the RUC Committee published the names of Committee members, along with their potential conflicts of interest.  Pretty scary reading.

The AMA RUC committee’s estimates come from surveys of physicians, who are explicitly told the surveys are used to set payment levels.  Shockingly, their estimates are seven times more likely to raise the estimate of time required than to lower it, making medicine the only industry that has gotten less efficient over the past decades.

I’d be remiss if I didn’t acknowledge that experts including Brown University’s Dr Roy Poses have been on the RUC story for years; Here’s one of his gentler statements:

The RUC seems to embody a corporatist approach to fixing prices for medical services to create perverse incentives for physicians to do more procedures, and do less conversing with and examining patients, examining the best clinical research evidence about their problems, and rigorously thinking about how best to help them.  More procedures at higher prices helps physicians who do procedures.  It may help even more the corporations that provide the devices and drugs whose use is necessitated by such procedures, and the hospitals who can charge a lot of money as sites for performance of procedures.

Impact on workers’ comp

Of the 33+ states with fee schedules for physicians and other providers, all save one – California – use RBRVS as the basis, and California is adopting RBRVS.  The RUC’s time estimates have resulted in estimates that are often twice the actual time it takes to perform a procedure.  Significantly, the Post article cited orthopedics as one area where time estimates are particularly generous.

It is important to note that CMS sets the dollars per time unit, so the ultimate cost is partially based on that as well as the AMA’s time estimate.  But there’s no getting around the AMA’s RUC is inflating the time, and thereby inflating their members’ income, and employers’ and taxpayers’ work comp costs.

Kudos to the WaPo for their terrific investigative reporting, and to Roy Poses for being on top of this for years.  

What does this mean for you?

A deeper understanding as to why our health care system is – by far – the most expensive in the known universe.


Jul
19

AASCIF – report from the annual conference

If you’re going to have a conference in Austin Texas in July, you’d best make sure there are lots of things to do, excellent speakers, and a great staff.

Texas Mutual, host of this year’s AASCIF annual conference, got it done.

Unlike many WC industry conferences, AASCIF devotes much of the time to social/networking events. The most-common complaint about most conferences, that there’s not enough time to just talk with others in the industry, wasn’t an issue in Austin.

The speakers were mostly not workers’ comp focused, instead providing insights into leadership, communications, management, and marketing. (I was one of the only work comp speakers, thanks to the folks at Claim-Maps for sponsoring my talk) And therein lies a message for conference planners, those considering attending conferences, and the work comp world in general; There’s a great big world out there; show it to us.

One of the best speakers I’ve ever watched/experienced/heard is Erik Qualman, he of Socialnomics fame.  While most workers’ comp payers look at social media only as a way to find pictures of claimants doing things they say they can’t, Qualman got many thinking of what they’re missing by not fully engaging with social media.

The social-media-as-fraud-detector is tip-of-the-iceberg stuff; social media is becoming the dominant means of communicating with customers, prospects, influencers, and media, supplanting traditional channels or perhaps more accurately, supplementing and leveraging them.

As most insurers and suppliers are run by us old guys, that shouldn’t be surprising; however a VERY few companies have embraced social media for other, more positive reasons, and they are going to reap huge rewards.

A couple examples…(the fact that there aren’t dozens tells us something…)

Marsh – smart enough to steal Mark Walls and the 10,000+ LinkedIn folks on his Work Comp Analysis Group from Safety National, they got themselves a huge footprint, a great brand, and a positive image just by hiring Mark.  Kudos to SN for allowing Mark to build the group; that said they really didn’t take advantage of what he’d done, and not seeing the potential benefit for their brand, their company, and their business was a huge miss.

State Fund of Minnesota’s Mike Happe was an early adopter of Twitter, has several hundred followers, and gives his employer a presence they otherwise wouldn’t have. Mike’s involved in about a dozen groups on LinkedIn, and he’s one of the very, very few insurance execs with a Twitter.

Bob WIlson, Peter Rousmaniere, and Jody Thompson did a great survey of social media in workers’ comp earlier this year; the detailed report is available here. Get it, read it, and get going.

What does this mean for you?

For anyone who thinks this isn’t worth doing, you may want to consider what you’re reading right now, how you learned about this blog, and how the author ended up speaking at AASCIF…

Because your competitors are.


Jul
15

Obamacare and workers’ comp – Part 5 of 9

We are now getting into the meat of the matter; we are not going to get health care costs under control and quality improved without major structural change in the health care delivery and financing “system”.
Several components of PPACA address delivery system reform, the most promising of which are the Independent Payment Advisory Board (IPAB) and Accountable Care Organizations.
The IPAB kicks in if costs continue to increase faster than the rate of inflation, and no, it is not a death panel or rationing body – although we certainly could use the latter. ACOs re-structure the care delivery model, focusing on care coordination especially for chronic patients.  The emphasis is on global fees rather than fee-for-service, a good way to think about ACO payment is it is based on reimbursing health care systems for patient management and episodes of care rather than individual providers for procedures.
Given the relatively low frequency of WC injuries in any particular geographic region, and the wide severity range, it is highly doubtful an episode-of-care reimbursement system will work in comp.  There are just not enough cases in a service area, some of which are relatively benign and others quite severe, to make it possible to model out a global reimbursement methodology and reimbursement.
will not translate easily or immediately into WC.
However, the strong emphasis on primary care that is central to the ACO model, the focus on patient interaction rather than expensive and often unnecessary tests and diagnostics, and the additional pricing transparency coming with ACOs are all strong pluses for workers’ comp.
At a deeper level, the success of ACOs, if they are a success, will represent a sea change in health care delivery and financing, one that shifts the paradigm from pay-for-procedure to one focused on rewarding for health.
That would be a very, very good outcome.
There’s ample evidence that large payers and delivery systems are embracing the ACO model with both arms:

There are going to be disruptions, incidents of lousy patient care, and fraud eruptions.  And when those hit the news, remember – our current system is not sustainable, and change is never without disruption.

What does this mean for you?

ACOs are coming, and the shift in thinking, rather than the delivery system itself, bodes well for comp.


Jul
11

Dispensing docs to Hippocrates: Drop Dead.

That’s the only conclusion one can reach after reading WCRI’s latest report, The Impact of Banning Physician Dispensing of Opioids in Florida.

Here’s why.

As of July 1, 2011, Florida’s docs could no longer dispense most opioids from their offices.  Before that date, 5.7% of the scripts dispensed by docs were opioids that fell under the ban.

After?  0.6%, and almost all of those were dispensed by docs outside of FL for FL claimants.

Well, we’d expect the volume of pharmacy-dispensed opioids to go up dramatically, wouldn’t we?  After all, no physician would ever prescribe opioids to a patient who absolutely didn’t need them, right?

Wrong.

The volume of pharmacy-dispensed opioids declined.  Went down.  Decreased.

In fact, 3.5% of patients were receiving the stronger opioids from docs before the ban, only 0.5% after (again these were mostly from cross-border trips by FL claimants to out-of-state dispensing physicians).  And the percentage of claimants getting stronger opioids from pharmacies went up by a mere one-tenth of one percent.

Conclusion?

Dispensing docs were prescribing and dispensing strong opioids to many patients who DID NOT NEED THEM.  Why?  For the money.

Opioids are incredibly dangerous.  Opioids kill people.  Destroy families.  Ruin lives.  Addict children.  An intelligent, articulate, promising young woman I know is now a prostitute, selling herself to strangers because she became addicted to prescription drugs.  Her family is devastated, her dreams reduced to the next high.

And these money-grubbing bastards allow this to happen, just to make money to buy nicer cars, better wines, fancier dinners.  

What does this mean for you?

STOP ALLOWING ANY PHYSICIAN DISPENSING.


Jul
10

Obamacare and workers’ comp – part 4 of 9; cost shifting

After a brief diversion yesterday to focus on breaking news and research, it’s back to the impact of health reform on comp, with today’s post delving in to cost-shifting.

Cost-shifting is a general term for provider behavior involving seeking more revenue from some patients/payers to make up for lower/insufficient revenue from others.  The term itself is not without controversy, but we’ll set aside semantics and focus on a simple question – will Obamacare lead to higher costs for comp payers as providers seek to make up for lower/lost revenue from other sources.

The short answer is – probably not.

The longer answer is this – more reimbursed patient car leads to less motivation to cost shift, and although many of the newly insured will be low-reimbursing Medicaid patients getting 85% of cost is a lot better than 11%.  Therefore, if anything Obamacare’s broader coverage will reduce the motivation to cost-shift.

The detailed answer follows…

Providers, particularly hospitals (which account for about a third of all WC medical costs) have to provide emergent care to patients without insurance.  Currently there are about 50 million folks without insurance in the US; post reform there will be about 20 million (estimates will vary, but regardless there will be a LOT fewer uninsureds).

Logic implies that more paying patients is better than fewer, and more providers will get paid for more patient care next year than this, leading to less motivation for those providers to shift costs to their workers’ comp patients.  The key word here is “motivation”; just because there’s less rationale for cost-shifting does NOT mean providers will suddenly decide to stop charging higher fees and doing more for their comp patients.  I’d also note that it is unlikely that most providers consciously decide to alter their treatment based on their patient’s reimbursement.

However, this being workers’ comp and health care, logic doesn’t necessarily apply.  Here are a couple things to consider.

First, a just-published analysis of the impact of lower Medicare reimbursement rates on private payer costs found:

“a 10 percent reduction in Medicare payment rates led to an estimated reduction in private payment rates of 3 percent or 8 percent, depending on the statistical model used. These payment rate spillovers may reflect an effort by hospitals to rein in their operating costs in the face of lower Medicare payment rates. Alternatively, hospitals facing cuts in Medicare payment rates may also cut the payment rates they seek from private payers to attract more privately insured patients.”

The analysis was based on hospital data from 1995 to 2009, a period during which Medicare hospital reimbursement was increasing quite modestly.  Of course, workers’ comp was not considered nor WC reimbursement analyzed by the study’s author, so we are left with more questions than answers.

It is also important to note that almost the entire study period was before anyone had even contemplated health reform and the dramatic impact on hospital reimbursement that will follow.  The world has changed dramatically, and this historical perspective may no longer provide much in the way of insight into future behaviors. 

Second, private payers have a LOT more bargaining power than work comp payers and network developers; WC insurers are already seeing significantly higher facility costs (anecdotal information from HSA consulting clients). And these higher costs are coming on top of research clearly indicating comp pays a lot more for hospital services than private insurers (see results of WCRI research on outpatient hospital costs).  So, comp already pays more, and until and unless networks and insurers figure out ways to better control utilization and price, they are going to continue to pay more.

Here’s what this means for you.

Third, some comp payers are beginning to figure out which hospitals are screwing them, and which are not, and doing whatever they can to direct away from the high cost facilities and to the low cost/high outcome providers.  Cost shifting will continue, but these smart payers will mitigate its impact while their less-smart competitors will wonder why their medical expenses are rapidly escalating.

 


Jul
9

OneCall for sale – again

This just in – word is that One Call Care Management is up for sale, reportedly for a price in the $1.5 billion range.

Reuters just reported their sources indicate things are in the “exploratory” stage; if the sources are accurate, this would be the largest – by far – transaction in the work comp services business.

Odyssey Investment Partners has been carefully assembling OCCM by acquiring firms in the medical management space – DME/Home health (MSC), imaging (OneCall), dental (Express Dental), transportation/translation, ancillary services, and provider assessment/analytics (Harbor Health).  Word is OCCM will soon be adding another translation firm to their portfolio; 3i is the most commonly cited target.

Odyssey has done very, very well in comp; they’ve purchased, grown, and sold York Claims/Risk and built OCCM into the largest and most profitable WC services company in a very short four years.  With an EBITDA around $140 million and strong year/year growth, a 10x multiple is well within the realm of possibility.

With MSC’s acquisition just over a year old, and TechHealth to be added to the portfolio shortly, management is pressing ahead with their growth despite – or perhaps in part because of – a potential sale of the entire company.

I’d be remiss if I didn’t note this has not been confirmed by anyone at any of the firms mentioned above.

That said, kudos to OCCM, OCCM management, all the folks who work for OCCM’s companies, and Odyssey for building the first billion dollar business in work comp services.