Thanks to Jay and Louise Norris for hosting this fortnight’s edition of Health Wonk Review.

The Coloradans’ effort is a most excellent summary of King v Burwell,  ACA issues, cost and utilization, and a cornucopia of commentary!

Gotta love the start of summer; hope your weekend is going to be filled with fun and family.

But before you go, here’s what’s been going on over the past couple of weeks.

First, your morning outrage...here’s the latest from the world of “how do we suck as much profit from employers and taxpayers as possible”…thanks to a colleague at PBM Helios.

Drug costs

A report from AARP indicates generic drug prices, which have been falling for years, leveled off somewhat in 2013.  Couple caveats – the data is for drugs commonly used by seniors, and the data is 18 months old. Among drugs relevant to workers comp:

• anticonvulsant prices increased 17.2% in 2013;
• muscle relaxants decreased 0.7%;
• opioid analgesics dropped 8.3%; and
• NSAIDs were down 8.4%.

Two other data points worthy of consideration.

• CompPharma is currently conducting the 12th annual survey of prescription drug management in workers’ comp; the top issue named by respondents so far is drug price increases (a major change from the historical focus on opioids)
• All the major PBM drug trend surveys released to date have identified drug price increases as a major issue.

Health reform implementation

The latest data indicates the percentage of Americans 18 – 64 without health insurance decreased to 16.7% in 2014, down from 20.4% in 2013.

According to California Healthline;

The uninsured rate for U.S. adults under age 65 in [Medicaid] expansion states during the study period was 11.5%, a 3.4 percentage-point drop from 2013. By contrast, the uninsured rate for U.S. adults under age 65 in non-expansion states was 16.3% during the first nine months of last year, a 2.1 percentage-point decrease.

There’s a LOT of useless and some outright harmful medical care delivered every day – as has been well documented by many.  A highly readable and compelling analysis comes from Dr Atul Gawande in a recent New Yorker; thanks to multiple readers and friends for the heads up.

Macro factors

Bad news came this morning; the economy actually shrank by 0.7% in Q1 2015; however that comes on the heels of a 5% jump in the latter half of 2014.  Projections for the rest of the year look modest but positive; it also looks like unemployment may drop to 5% by the end of 2015; a major improvement over the 8% we saw two years ago.

Research

Thanks to NCCI for updating our understanding of claim lag, the last broad-based analysis was the Glen Pitruzzello-authored study by the Hartford.

Deals

Summit’s acquisition of Paradigm is said to be close to completion.  While we don’t know pricing or details, expect the transaction will be in the $500 million range as Paradigm’s EBITDA is rumored to be around $60 million.

Finally, word from multiple sources indicate imaging network company MedFocus has been bought by OneCall Care Management.  MedFocus isn’t a major player with work comp revenues in the $25 million range, but the transaction does further limit the number of vendors available to serve comp payers.

During a conversation with an industry executive this morning I was reminded of the rather different perspectives, priorities, and incentives for adjusters and managers.

Faced with a virtual pile of incoming mail, messages, bills, documents, and voice mail, adjusters are tasked with determining compensability, closing claims, resolving litigation, getting claimants treated as quickly as possible – but only for covered services, dealing with vendors, catching fraud, setting and managing reserves, taking CEUS, communicating with employers, spouses, lawyers, and judges, approving drugs and medical services, directing to network providers, setting IMEs…the list is both endless and growing.

This while being measured on claim closure rates, three-point contacts (!?), reserving accuracy, litigation rates, network penetration, claimant satisfaction, and whatever the most recent metric du jour happens to be.

Home office folks have somewhat different priorities; managed care execs are evaluated based on network penetration, “savings” rates, staff productivity for bill review and medical management and various other process measures.

While there’s some alignment between the field and home office, what’s really important to one may be much less lower on the priority list for their counterpart.

For example, field folks’ priorities are to get claims moved along, claimants treated/examined/assessed, claims closed, reserves set.

A conflict can, and often does, arise when a network provider can’t see a claimant for a couple weeks, but another treater has an opening tomorrow. What’s the adjuster to do? In most cases, they will go for the quicker appointment as it moves the claim along more quickly.  This holds true for IME providers, PTs, dentists, you name it.  Time is of the essence.

The conflict here is obvious and happens all day every day, forcing adjusters to balance what are conflicting priorities in what can be a no-win situation.

What does this mean for you?

Clear priorities known and understood by all affected parties can remove a lot of unnecessary stress while eliminating much unneeded back-and-forth.