Insight, analysis & opinion from Joe Paduda

Apr
21

What business are you in?

Hint – if you are a specialty network, you are NOT in the specialty network business…

Over the  last few weeks I’ve been talking with Rita Wilson of Tower MSA: Rita’s been attempting to educate me about the MSA world, a Herculean task to be sure.

What struck me about our conversation is Rita kept referring back to Tower’s purpose, which is claim settlement. From Tower’s website…

Tower focuses on the settlement of claims as we deliver measurably better Medicare Secondary Payer (MSP) compliance. We identify cost drivers and other barriers to closing claims, recommend and implement clinical interventions, and benchmark our performance against CMS responses [emphasis added]

Tower is not in the MSA business…it is in the claim settlement business.

Work comp payers don’t care about MSAs, they care about settling claims – once and for all.

By clearly defining Tower’s focus, the company speaks directly to the problem its clients and prospects are facing, demonstrating Tower knows what payers want and need.

Back to a specialty network…

NO ONE CARES ABOUT YOUR NETWORK.

What buyers care about is their combined ratio (if an insurer) or controlling costs and return to work (if a self-insured employer).

If you can directly show how your PT/imaging/DME/whatever network reduces combined ratios, controls costs and improves RTW, then AND ONLY THEN should you talk about HOW you do that.

What does this mean for you?

Be like Rita.


Apr
18

Private Equity healthcare investment in 2022

Private Equity healthcare investment declined sharply last year as the average deal’s value and the number of transactions both fell off.

Firms invested over $45 billion in 167 US healthcare deals last year – a pretty massive decrease from 2021’s 216 deals for $107.5 billion.

While 2022 started off quite strong, deal volume halved in the second half of 2022 due to interest rate hikes, tighter credit, economic concerns and Putin’s War.

Those are the headlines from Bain & Company’s Global Healthcare Private Equity and M&A report 2023 (download for free here.)

note – I have worked with Bain entities in the past, respect the firm and the Bain people I’ve worked with. I am not currently working with Bain.

key highlights…

  • Provider sector deals accounted for about half of all transactions and dollars invested…but slowed dramatically to 7 transactions in Q4 2022
  • IPOs pretty much disappeared in 2022 (initial public offerings, when a private company goes public)
  • Value-based care and primary care were a big focus of strategic buyers…
    • Optum bought several provider groups
    • Amazon acquired One Medical
    • Humana and Welsh Carson did a joint venture, investing in a value-based primary care company.

There’s a lot on value-based care…although there’s precious little evidence that it is a panacea, investors are still betting billions …From the report:

For more than a decade, value-based care (VBC) has been positioned as healthcare’s “next big thing.” And while progress has been uneven 

The number of accountable care organizations (ACOs) plateaued at around 1,000 in recent years, while 15 of the 53 entities participating in CMS’s direct contracting program in 2021 experienced net savings losses. 

Value-based care stakeholders are doubling down on their commitment as healthcare spending outpaces GDP growth and CMS leans further into VBC models. 

What does this mean for you?

Expect PE investors to remain quite cautious until interest rates stabilize, the debt ceiling is raised (or much, much better – eliminated) and inflation trends level out.

Warning – if House Republicans don’t raise or eliminate the debt ceiling there will be hell to pay. 

Register for Bain’s webinar on the report here.


Apr
17

Wildly off topic #15 – Leaks and the coming offensive

There’s much rending of clothes and gnashing of teeth in the mass media about how Jack Teixeira’s criminal stupidity will:

  • help Russian generals defeat Ukraine’s pending attacks by identifying attacking units and eliminating surprise
  • really tick off our allies
  • reveal key shortages of materiel (military-speak for ammunition, spare parts, supplies and weapons systems)

Uh, no. Let’s take these in order. (much more detail at Phillips O’Brien’s excellent substack postings.)

The upcoming offensive

Is the worst-kept secret since Trump’s sexual antics with porn stars.

Ukrainian officials, military leaders, Allied intelligence, Russian military bloggers have all talked about this. Heck, they even know the military units that will do the attacking. What we don’t know is when and where…and Teixeira’s documents don’t give a date or location..

Angry allies

What? An ally is spying on us? How…common.

Reality is everyone spies on everyone else all the time. There will be outrage and histrionics from politicians from Israel to Norway, all furious at such conduct.

All will be for public consumption, this will die down pretty quickly, and really…does anyone think allies will abandon the US or Ukraine over this?

Materiel shortages and impact thereof

This is perhaps the most ridiculous “disclosure.” There have been hundreds of public reports, news articles, blog posts and stories about this over the last few months.

Lastly, among the “revelations” in Teixeira’s documents is that our intelligence community has doubts about whether Ukraine’s upcoming offensive will achieve much.

Hardly.  With some notable exceptions (e.g.the timing of Russia’s initial attack) US intel has a rather poor record of predicting what’s going to happen in Ukraine. And that is being kind.

What does this mean for you?

Top Secret…isn’t.

More than 1.3 million individuals have Top Secret clearances.

You can bet your house the Russians knew everything in Teixeira’s documents long before they hit Discord.

 


Apr
10

 

WCRI is out with its latest inventory of state regulations re prescription drug management. This is a must-have for claims execs, managed care leaders, medical directors and risk managers…pricing, utilization review, opioid management, formularies and PBM regs are all covered.

Revenue Cycle Management – aka hoovering mounds of cash from workers’ comp payers – is the focus of a “white paper” targeting hospital and health system execs. If you want to know the hooverers’ playbook, sign up and be prepared to be amazed.

A closely-related item…

From the wonderful folks at Kaiser Family Foundation comes the shocking news that facility fees are driving ER costs to the moon. As most of you (hopefully) know, regulations allow any service delivered at a facility to uncharge a facility fee. It is not hyperbole to note hospitals are wildly abusing this, taking on facility fees to services provided at

      • remote clinics
      • physician offices
      • even telemedicine visits

oh, btw, many hospitals are STILL not complying with Federal requirements to post prices…

Finally, from HBR comes this excellent advisory on how not to anger/frustrate/alienate customers…something many worker’s comp entities seem surprisingly good at. (We are NOT looking at you, LWCC…your work on patient engagement is really good stuff)

All too common is the industry’s maniacal prioritization of efficiency over everything else. From HBR:

when focusing on efficiency, many companies overlook the emotional aspect of the customer experience — how customers feel when interacting with the business.

The piece focuses on consumers – which every injured worker is.

What does this mean for you?

Tired of being hospitals’ piggy bank?… then understand facility cost drivers and techniques.

Injured worker engagement is critical to helping them return to functionality.


Apr
7

What we found – the audit results

Our report on the audit of the Department of Labor’s federal employee (FECA) work comp pharmacy program is now public.

Key findings…during the audit period (FY 2015 – FY 2020):

    • 1330 oral fentanyl scripts were dispensed and paid for without evidence of required cancer diagnosis (remember Actiq and Fentora?)
      • that does NOT include any such scripts that were dispensed and paid for BEFORE the audit period
    • over 25,000 scripts that should not have been filled were.
    • Agencies, Departments, and taxpayers spent $300+ million more than they should have because they didn’t use competitive pricing metrics and methods
    • DOL failed to address opioids and compounds in a timely manner…in both cases DOL was years behind the private sector and state government comp programs
    • The FECA program – which is the biggest single work comp payer in the nation – didn’t have a full time medical director OR clinical pharmacist.

Before you ask…we did not assess or otherwise study the potential impact of these findings on injured workers as that was outside the scope of the project.

The audit covers Fiscal years 2015 – 2020; the analysts and pharmacists at HealthPlan Data Solutions did the analytical heavy lifting, crunching data on millions of scripts and reimbursements. HDS handled the clinical questions as well. CompPharma provided a lot of the qualitative assessment and program operational benchmarks. (Thanks to all who participate in our Annual Survey of Drug Management in WC.)

CPA firm HRK was the lead on this (they speak Federalease and have the right credentials to navigate the Federal contracting system).

Note – Haven’t been able to post for days due to server problems (I’m blaming Putin’s hackers)…and as many of you told me (thanks!) the blog site was down for a while as well. Thanks for your patience and keep those emails re service outages coming.

What does this mean for you?

Audits can be really useful. 


Apr
4

Stanley Zax on “outcomes”

Got this from a colleague responding to last week’s posts on outcomes...

Back in the day (I was there) when Stanley Zax ran Zenith, he went looking for the VP in charge of MBR. Said VP was out of his office but he had left the latest report from Zenith’s MBR vendor on his desk. Stanley picked it up. The VP had thoughtfully kept this report away from Stanley up to that point. Stanley went straight to the section titled “Savings.”
 
Stanley walked into the middle of the underwriting bullpen waving the greenbar like a flag and bellowed, “According to this damn report, I’ve saved enough money on medical bills to buy France. Now where the hell’s my money?”
 
The VP soon found solace working for a different insurance company.

Apr
1

Medicaid for All – Biden goes big.

Medicaid for All is back on the table.  In a speech in Rolling Fork MS, President Biden revealed that his administration is working in concert with Progressive Democrats – and Sen. Mitt Romney (R UT) – on legislation that would allow any citizen to enroll in Medicaid.

Citing Mississippi as an example of major problems with healthcare access, widespread un-insurance particularly in southern states, rising healthcare inflation, and massive bad debt from medical bills, Biden sketched a (very thin) outline of Medicaid for All. (no details on cost, timing, or much else, a lot of soundbites about babies, insulin, nursing homes and affordability)

While this may seem like a bolt out of the blue, it is pretty clear Biden’s administration has been working this since before he took up residence in the White House. The latest was a major streamlining of the enrollment process back in August of 2022 intended to make it much easier for families to sign up for Medicaid and eliminate caps on child care coverage.

Biden has been teasing a major announcement on healthcare for a couple weeks, most recently during an event lauding the ACA’s birth…

from the Washington Examiner:

Public support for major changes to healthcare has grown alongside support for the ACA. Seeking to highlight Dems’ perceived strength in healthcare and Social Security well ahead of the 2024 elections, White House spokesperson Robyn Patterson noted:

note this is NOT Medicare for All (M4A), a concept that was widely circulated back when  the ACA was in development. Biden briefly alluded to M4A in his remarks, noting his team ruled it out as Medicare “is not comprehensive, is confusing to many, and is mostly focused on older Americans…it wouldn’t work for young families…”

Reports indicate VP Kamala Harris has been pushing this since Biden named her his VP. Sen. Brian Schatz (D HI) an early advocate of Medicaid for All, has been meeting regularly with Biden staff, other elected officials, and HHS leaderships in an effort to build support. Schatz is close with Utah Sen Mitt Romney; recall Romney led the charge to revamp Massachusetts’ healthcare system and establish “RomneyCare” over a decade ago.

We can count on a full-throated opposition from almost all Republicans, although Romney’s reported involvement will give Biden much-needed “bipartisan” cover. I would not be surprised if Louisiana’s Sen. Cassidy also signs on; he’s been a behind-the-scenes advocate for a major revamp of healthcare for years. Long an advocate for state control of healthcare, Medicaid fits his policy views far better than Medicare.

in my view, there are a host of reasons Medicaid For All makes a lot more sense than Medicare for All; here’s what I wrote about this back in 2018…

  1. Medicaid for All will spread the cost of universal coverage across states, reducing federal financing requirements.
    Medicaid is a state AND federal program; States provide a lot of the funding for Medicaid; on average the Feds contribute 63% and states 37%. This is critical, as Congress will want to spread the cost of a Single Payer solution and there’s no better way to do this than require states to pony up big dollars [State contributions vary based on a state’s average personal income relative to the national average; states with lower average personal incomes get more federal dollars.]
  2. Medicaid is already built to cover everyone.
    Medicare covers people of all ages, Medicare is very much elder-care focused.
    Adapting Medicare to handle everyone from newborns to elderly, maternity care to pediatrics will be difficult, time-consuming, and expensive. Medicaid does all this and more – today.
  3. Generally, Medicaid is less expensive than other “systems”.
    This is due to much lower provider payment and significantly lower administrative costs. Yes, this means providers are going to be paid less.
  4. Medicaid member satisfaction is pretty good; access to care is not much of an issue.
  5. Medicaid-based Exchange programs are much more successful in the Exchanges than commercially-based plans.
    The Centenes et al [Medicaid-based plans] understand the demographics of the uninsured, have lower medical costs, and already have provider networks, customer relations operations, workflows and processes set up and operational. At the end of the day, lower cost wins – and their costs are lower.
  6. Medicaid is a simple, fully-integrated healthplan.
    Medicare’s alphabet-soup of Parts A B C and D is confusing and convoluted, with different payers often covering the same individual. This increases administrative costs, member hassles, and decreases quality of care (co-ordinating pharmacy and medical care between different payers is problematic at best.
  7. Managed Medicaid plans are working.
    These plans currently exist in most states, and many have been able to deliver excellent care at lower costs through innovation and very tight focus on outcomes. One example is using paramedics to deliver care. [disclosure – I sit on the board of Commonwealth Care Alliance, a Massachusetts healthplan that serves dual-eligible members]

What does this mean for you?

 


Mar
30

Benchmarks and outcomes

So what exactly are “benchmarks”?

Yesterday we dove into outcomes vs process metrics, and why focusing on process measures (e.g. call abandonment rate, three-point contact timeliness, savings below fee schedule) instead of outcomes can result in the classic…

Benchmarks are standards by which outcomes can be measured or judged. Outcomes drive process improvements, financial results, and most importantly, healthy, fully functional patients.

In work comp, you’ll most often see vendors or payers comparing their results to ACOEM and/or ODG...while that can be somewhat useful, it’s important to recognize several issues/potential limitations…

(beware of comparison’s to the vendors’ clients…while that can be helpful and illustrative, it’s usually a very small sample set, and begs the question – “just how good are the vendor’s overall results?)

  • median values are typically used…but they reflect average, run-of-the-mill performance, which is NOT the standard we should be aiming for.
  • data comes from a limited number of payers and other sources and may not reflect your injured worker population’s demographics, locations, injury types and other factors
  • case-mix adjustment tools can be very helpful – IF the tools are:
    • used with robust data sets that reflect your patient population,
    • specific to the time frames you are evaluating,
    • relevant to payer type, and
    • straightforward, with limitations explicitly acknowledged and explained.

This can get pretty complicated, as in migraine-inducing complicated. Don’t obsess…and unless you are a statistical whiz, Do NOT get caught up in the minutiae, it is up to the vendor to help you understand, not to baffle you with BS.

(very helpful to have a statistically literate person on your team to clarify, help explain, and when necessary call BS…there’s a LOT of it out there)

Rather, challenge the vendor to explain in layperson’s terms specifically and in detail why and how these benchmarks are relevant to your population, their limitations and strengths, and where you fall on the spectrum from worst to best. Also, get written documentation of their analyses and the methodology you can share internally and with your customers as necessary.

Vendors who cite benchmarks must be able to explain all of this...just don’t expect them to do this the first time around, as it is likely they’ve never been challenged.

What does this mean for you?

Know your outcomes.


Mar
29

You call THAT an “outcome”?!

OK, let’s agree that the best metrics to measure workers’ comp claims are:

  • speedy and
  • sustained recovery,
  • return to work, and
  • medical cost.

NOT:

  • reductions below billed charges, or
  • discounted medical costs, or
  • network penetration, or
  • litigation rate, or
  • case management “impact”, or
  • successful denials of treatments.

The latter are process measures – NOT outcomes. Yes, process can drive outcomes – but often does not. (See discussion of mythical “savings” from WC bill review and PPO)

How to evaluate a program, vendor, network, provider group, or delivery system:  First, what types of information are relevant and for what? (we’ll get to benchmarks in a bit)

or…anecdote vs data, and treatment records vs, aggregate reports.

from Statistically Funny

  1. Using the outcomes metrics listed above, review their reports – aggregate reports that is – across their patient population. This will tell you two things; the entity’s overall “results,” how they think about outcomes, and what metrics they use.
  2. Ask a lot of questions, such as:
    1. Who selected these metrics, and what is their relevant experience, education and training?
    2. Why did you choose those metrics?
    3. Explain each metric, how it is helpful, its limitations, and the research you conducted to elect that metric.
    4. What other metrics did you consider? Why didn’t/don’t you use them?
    5. What is the statistical validity of your data?
    6. How do our results compare to the rest of your customers?
      1. Why are they similar/different?
    7. What would you like to include but didn’t, and why not?
    8. How are other customers using this information?
    9. How are you using this information?
    10. How do you see your outcomes measures evolving in the future?

Be prepared to be underwhelmed…and do NOT allow your vendor to provide case-specific reports or findings instead of aggregate data.

Vendors love to cite specific cases, which a)distracts you from their overall impact and b) is way more interesting as it is “real” and not just a bunch of numbers and statistics.

That’s NOT to say those specific case notes/treatment records aren’t helpful..in fact the next step – once you’ve decided the vendor produces good “outcomes” – is to find out how they do that.

And that is where and when case notes/treatment records can be quite useful…they show HOW the vendor delivers the outcomes.

So how do we know if outcomes are “good”, that is, if injured workers are being treated appropriately and employers/taxpayers are well served?

Enter an industry bugaboo – comparisons to meaningless/wrong/misleading “benchmarks.”

That, dear reader, is the subject of the next post.

What does this mean for you?

The mistake most work comp payers make is skipping the first – and by far the most important step – evaluating vendor performance based on REAL outcomes.

 


Mar
28

Medicaid, workers’ comp claim severity, and healthcare deserts

Medicaid is the second largest payer in the US, with spending approaching three-quarters of a trillion dollars this year.

In 2023, workers’ comp medical spend will be around $32 billion – just over 4% of Medicaid.

Medicaid is a major payer for many facilities in poor and rural areas, a financial lifeline that is thin indeed.

Ten states have yet to expand Medicaid, an ethically- and financially-unconscionable failure that has major repercussions for workers’ comp, poverty, child health and healthcare access (two – SD and NC – are in the expansion  process).

Access to care

Most rural areas in those 11 states were already hospital deserts; that will get a lot worse as over a third of rural hospitals are in those eleven states.

Average operating margins, razor thin before COVID, recovered somewhat during the pandemic but will turn negative as the pending Medicaid disenrollment takes effect.

More hospitals and their emergency and trauma units will close. Today in 40% of US counties most patients are more than an hour away from a trauma center…as more rural hospitals close even more trauma patients will be further away from hospitals.

What’s known as the “golden hour” is the first 60 minutes after an injury, when healthcare can save lives, limbs, and livelihoods.

What does this mean for you?

Claim severity will increase in those ten states. 

note – reminder, Saturday is April 1…beware.


Joe Paduda is the principal of Health Strategy Associates

SUBSCRIBE BY EMAIL

SEARCH THIS SITE

A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.

 

DISCLAIMER

© Joe Paduda 2024. We encourage links to any material on this page. Fair use excerpts of material written by Joe Paduda may be used with attribution to Joe Paduda, Managed Care Matters.

Note: Some material on this page may be excerpted from other sources. In such cases, copyright is retained by the respective authors of those sources.

ARCHIVES

Archives