The dog days of August are upon us, and I’m going to be on vacation for most of next week, so there won’t be much activity at the Intergalactic HQ of Health Strategy Associates – or here for that matter.

Let’s get caught up on what happened this week.

Workers Comp

First, from the arcane world of Pennsylvania billing comes this note – a recent Supreme Court case, Selective Insurance v Physical Therapy Institute resulted in a ruling favorable to Selective – and other payers in PA.  Allegedly PTI – a Medicare Part A provider – was providing billing services for Medicare Part B PT providers; as PTI was not the provider, the court found the insurer did not have to pay PTI for the services.

Thanks to Linda Schmac of Premier Comp for the heads up. Ms Schmac suggests payers may want to ask their PA patients to sign an affidavit from providers other than PTI to maintain this protection.

In the possibly-even-more-esoteric world of work comp pharmacy, the good folks in North Carolina passed legislation restricting physician dispensing to workers’ comp claimants.  Pricing has to be based on a non-repackaged drug, docs are prohibited from dispensing more than a five-day supply of Schedule II and III drugs.  Kudos to Industrial Commission Chair Andrew Heath and his staff for shepherding this bill thru.

Finally, we’ve just finished collecting the data for the Eleventh Annual Survey of Pharmacy Benefit Management in Workers’ Comp; I’ll do a quick post on highlights Monday.  If you want to peruse past editions, click here.

Health care inflation

Has stayed remarkably low over the last few years.  Now comes a solid analysis that indicates most of that “reduction in the rate of inflation” is due to economic factors.  In an article published in Health Affairs, the authors found that about 70% of the decrease was due to those economic factors associated with the slowdown; whether PPACA implementation will help keep rates down going forward is not yet known. That said, it looks like PPACA could only be responsible for about 30% of the decrease.

Don’t jump to conclusions – the impact of reform won’t be known for several more years. 

Health reform implementation

Those who think the problems with the Federal Exchange are behind us may want to wait just a bit before declaring victory.  Re-enrollment will require verification of income and other bits of data aggregation, assembly, and verification; word is some of these processes are not yet ready for prime time.  Here’s hoping they are before prime time arrives – in two months…

From “The National Memo comes a report on a recent Gallup finding that the uninsured rate is down 4 percentage points in the 21 states that have both “expanded Medicaid and set up their own state exchanges; in the 29 that have taken one or neither of these steps, it has fallen only 2.2 percent.” Given the Federal Exchanges’ problems, this isn’t surprising. 

Notably, “9 of the 10 states that have experienced the largest reductions in their uninsured rates are governed by Democrats (with the exception being New Mexico, where Republican Susana Martinez is governor).” GOP governors happen to run the ten states with the lowest reductions in uninsured rates. 

A big chunk of this is due to not expanding Medicaid; another study indicates:

• 6.7 million residents are projected to remain uninsured in 2016 as a result
• Non-expansion states are giving up $423.6 billion in federal Medicaid funds over ten years.
• Hospitals in the 24 non-expansion states are going to lose out on $167.8 billion “in Medicaid funding that was originally intended to offset major cuts to their Medicare and Medicaid reimbursement.”

As I’ve noted, those hospitals are going to have to make up that revenue shortfall from somewhere…

Medicare Solvency

The Medicare Trustees’ Report is out – just in time for that beach reading!  NASI has produced their much-more-readable review, which finds that there’s currently enough funding to cover all hospital expenses till 2030 – that’s four years more than last year’s assessment.

Good news to be sure.  Now if we can just keep those providers from shifting costs to work comp patients…

Summer is in full swing, which means the A/C is running at full blast in Florida and Texas, while those of us in upstate NY are gloating…I know, you will be soon when we’re subzero and you’re at 70…

Things are supposed to slow down somewhat – they haven’t yet. Here’s what happened last week while I was working on a couple projects last week.

P&C results

The P&C industry is doing well – very well. For the second straight year it will show an underwriting profit, and the combined is still almost three points below 100. Rating agency Fitch thinks things will deteriorate somewhat as the cost of weather-related cats increases; that and lower investment performance (as the equity markets cool off) will lead to lower return on surplus as well.  Still and all, things are looking pretty good – for the P&C industry.  That said, P&C financials are not exactly good; historical return on equity is really low and the cyclical nature of the industry is legend.

Work comp

One of my favorite states, Montana, is suffering from dramatic increases in already-high workers comps cost, driven in large part by drugs; pharmaceutical costs account for 16 percent of total medical compared to 11 percent nationally. Their top drug, accounting for almost 15 percent of total spend – Oxycontin.  That is about twice what it is nationally.

One more time folks – Oxycontin has almost NO PLACE IN WORKERS’ COMP.

Hopefully the state’s new medical guidelines will help reduce this.  Kudos to State Medical Director for Carla Huitt MD for highlighting the issue.

There’s a news brief from NCCI re claim frequency – they report that it continued its decline last year, with indemnity claims dropping 2 percent.

The Coventry work comp auction is proceeding, albeit without many of the big private equity firms. I’ve heard they are concerned about:

• the PPO network, specifically Aetna’s unwillingness to help re-contract providers. As this is the crown jewel, the lack of a fail-safe strategy to preserve the network greatly reduces the deal’s appeal.
• the lack of tech and other support for BR 4.0, the bill review platform.  With the layoff of much of the application support staff and chronic under-funding for BR 4.0, the new owners need to either private label someone else’s app or get out of bill review altogether.  Not good.
• the mediocre-at-best-performance of the other businesses (case management, UR, PBM, etc)
• the need to recruit a “name” exec to lead the company (nothing against current management, they’ve been handed an impossible task by mother Aetna)

I’d expect Apax/One Call to be the winning bidder – if there is one.  If that happens, the mega-humongous OCCM/Apax will have even more market power.  Methinks payers are going to be most worried about that.

Joe Boures has been promoted to CEO at Healthcare Solutions, replacing David George who stays on as Board Chair.  Under George, predecessor company Cypress Care acquired Procura to become Healthcare Solutions, then added PBM ScripNet and PBM/DME/HHC provider Modern Medical, making HCS one of only two companies to offer a full range of work comp managed care services. Joe is a friend and good man whose steady, thoughtful style will serve the company and its customers well. [disclosure – I have a very small equity position in HCS]

Also just heard that Acrometis has landed a new customer – MacRisk.

Implementing PPACA

For the states that opted out of expanding Medicaid, the proverbial chickens are headed home to roost – and they’re dropping loads of red ink on hospitals in the process.  That’s the news from Fitch,

Fitch has downgraded 10 entities [hospitals and health systems]. Of those, five are in states that have not participated in expanded Medicaid coverage. Several of those downgrades were driven by operating performance declines related to funding and reimbursement pressures, which may have been lessened by Medicaid expansion. Conversely, of the nine upgrades since Jan. 1, eight were hospitals in states that have expanded Medicaid. [emphasis added]

From Jonathan Cohn comes the news that states that decided to expand Medicaid have seen insurance coverage increase almost three times more than states that have foregone expansion.  As folks in these states are healthier to start with, the health disparity between the states will – depressingly – increase.

I’m really confused by House Speaker John Boehner’s decision to sue President Obama over alleged abuse of executive power; after all the caterwauling about immigration, Guantanamo, the border, drone strikes, recess appointments, and the Bowe Bergdahl trade, the best he can come up with is the delay in the employer mandate...

It doesn’t make sense.  Politically, there’s increasing evidence that voters are feeling better and better about PPACA, torpedoing what had been THE key talking point for GOP candidates this fall.  GOP senators and congresspeople have all but abandoned “Obamacare” as a talking point.  Bringing more attention to an issue that may redound to their opponents’ benefit is puzzling at best.

As evidence, I give you the news that political ads slamming “Obamacare” may well have resulted in higher enrollment in “blue” states.

Back to work now!

Bet you’re missing that polar vortex now, eh?

Well, take your browser off to Wing of Zock’s edition of Health Wonk Review, and enjoy the chill.