Monday catch-up

Had a great few days of vacation last week; completely ignored work, spent a lot of time with many old friends, and learned for the millionth time how unbelievably lucky I am to be married to Deb.

Here’s a VERY brief summary of some of the happenings that happened while I was doing everything possible to ignore them.

Workers’ Comp

NO acquisitions were announced.  Maybe it’s because August is a big vacation month – not that the investment world ever takes vacations – but no deals were announced, or even rumored to be done last week.   Word is APAX/OneCall is still the front runner for Coventry Work Comp, more accurately that’s the consensus of the rumor mill.  There are a couple other interested parties, but for now IF a deal gets done it will likely be finalized in October.  

The big Florida Work Comp conference is happening this week and it’s likely to be bigger than ever.  Your trusty author isn’t there, but Bob Wilson, Mark Walls, Roberto Ceniceros and the other real experts will be keeping us posted on the goings-on.  There’s also WCI-FWCI TV; the conference broadcasts selected sessions and does an update each day on happenings.

In what will likely be the top topic on everyone’s mind, a Florida judge ruled that the state’s work comp law is unconstitutional; the Miami Herald reported ““The benefits in the act have been so decimated,” [Judge Jorge] Cueto wrote, “that it no longer provides a reasonable alternative” to filing suit in civil court.”

More details here from the Herald.

Health reform roll-out

The latest PPACA Chicken Little story is that Exchange enrollment is falling off dramatically as newly-insureds drop out.  According to the Investor’s Business Daily, the attrition rate is around 30 percent…

Except that’s completely wrong.

IBD’s piece distorted the figures by using the initial enrollment data as a baseline – NOT the initial PAID enrollment figure. A chunk of those who originally signed up didn’t pay, so they never had coverage to begin with. Comparing the total number of those who signed up (regardless of whether they paid or not) to those who stopped paying is apples to oranges - unless IBD’s intention was to mislead.

In fact, the decline in paid enrollment pretty much parallels what health plans normally see in an individual health block – a couple percent a month.  That’s due to enrollees getting jobs, going on to Medicare, getting married, dying, losing their jobs – normal life events.

IBD – and their fellow ideologues – either don’t understand the basics of the health insurance business, or choose to ignore facts and figures that don’t fit with their ideology.  Either way, it makes one wonder how credible the rest of their reporting and opining is.

Methinks “IBD” stands for “Ideologues Being Deceitful”…

 

Survey of Drug management in work comp – quick take

This is the eleventh (!) year I’ve been involved in surveying workers’ comp payers to get their take on pharmacy management.  Now that Yvonne Guibert (thank you Yvonne) has finished collecting the data, I’m working on the report.  It’s going to take a week or so, but I’ve pulled a couple highlights to whet your appetite.

  • Overall, drug spend declined for most of the 25 respondents, with some seeing percentage decreases in the double-digits.
  • In addition, total spending (across all respondents) declined as well – by about the same margin.
  • Top problem? close between opioids and physician dispensing, same as last year.
  • Biggest emerging problem? Compounds, without a doubt.
  • 21 of 25 respondents said prescription drug costs were more or much more important than other medical cost issues at their organization.
  • 88% of the 25 respondents (large, mid-sized, and small WC TPAs, state funds, and carriers) have a urine drug monitoring program in place today or will by the end of the year.

Much more to come – the data geek in me is getting all fired up about what we’re going to learn.

Thanks to the 25 organizations who spent time collecting their data, then sharing it with Yvonne.  This is not an easy task, but one that really helps all of us understand what is going on with pharmacy programs, utilization, solutions and cost drivers and how payers are addressing the issue.

Stay tuned…

Friday catch-up

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…

 

 

Frequency, high finance, and the future of work comp managed care

NCCI’s recently-released report that indemnity claim frequency dropped another two points last year is just the latest indication that the market for traditional managed care services is shrinking.  

Fewer claims = fewer services needed = fewer bills; less need for UR, case management, and related services.

Sure, severity is increasing, so there may be more utilization for a subset of claims, but this is not likely to offset the structural decline in frequency that looks to be baked in to workers’ comp – frequency is down over 50% over the last two-and-a-half decades.  And yes, cost-shifting from providers scrambling to deal with tighter controls from private payers and reduced reimbursement from governmental payers will increase providers’ efforts to get more revenue from work comp payers.

Meanwhile the supplier market is consolidating, and managed care vendors are scrambling to capture enough of the shrinking market to survive the coming shakeout. If APAX/Genex/OCCM buys Coventry – which looks increasingly likely - they will control the largest network, case management company, PT vendor, DME/HHC vendor, and imaging network; one of the largest (albeit fading) bill review entities, a big PBM, and a ton of other services  - MSA, UR, peer review, IME.

Some may think the FTC may find this dominant position a bit too much and not allow the transaction.  I disagree; no one in DC cares about workers’ comp, there are many other networks out there, many other bill review entities and specialty managed care providers, and this is an election year and the focus certainly isn’t on a relatively small industry.

The implications are rather significant.  Leverage is all-important – and I don’t mean the financial leverage but the customer leverage.  With all these services, it would be surprising indeed if AGOC (APAX Genex OCCM Coventry) didn’t encourage payers to buy everything from them in return for discounts on some/most/all services, enhanced reporting, integration services and technology and/or some other incentives.  Some buyers, already hard-pressed by reductions in staff, low IT budgets, and increasing demands for more “savings” and higher network penetration might find it hard to resist such a pitch.

The pitch would be compelling – more cost reductions and less hassle at discounted fees.

The trade-off would be ceding effective control over medical costs to a third party, one with arguably different incentives and motivations.

That alone will give many pause, as well it should.

For those who say I have a dog in this fight, you are correct.  I work with several entities that directly or indirectly compete with these entities, and that is by choice.

More to the point, I also work with several very large payers on various aspects of medical management, and my opinion is control over medical management MUST reside with the payer. 

What does this mean for you?

Workers’ comp is a medical business.  Three-fifths of claims costs are medical, and that’s going to be two-thirds very soon.  It makes no sense to outsource two-thirds of your costs to a third party.

Great news for taxpayers may be bad news for workers’ comp

The just-released report of the Medicare Actuary finds that hospital costs have been increasing at a historically low rate – below 1 percent – for the last four years.

And that’s not likely to change.

Medicare is pushing facilities to reduce costs, driving down readmission rates, using a variety of tools including Value-Based Purchasing, MS-DRGs, and increasing the emphasis on other types of pay-for-performance (basing a small part of compensation on quality measures).  While these can be somewhat blunt instruments and may lead to some unwanted consequences, overall the strategy is working – costs are coming down.

In the 24 states that have not (yet) expanded Medicaid, the effects of Medicare’s changes are even more stark. Payments to safety-net hospitals under the Disproportionate  Share Program have been drastically reduced, while the additional revenue anticipated from Medicaid expansion did not.  The result is a budget shortfall that many are scrambling to address.  The issue is particularly acute in Texas, Florida, and Georgia, which account for about half of the 5 million people in the “coverage gap”.

Non-DSH facilities (which accounts for most of the hospitals) in non-expansion states have a similar, if somewhat smaller problem; their indigent patient loads are (very likely to be) significantly higher than they would be with Medicaid expansion.

Impact on workers’ comp

In a phrase, cost-shifting.  Sure, hospitals are doing better post-PPACA than they were before, however they are also much more focused on financials, developing ever-more sophisticated coding, reimbursement maximization, and revenue-enhancement tools. (Google “hospital revenue maximization” if you are curious…).  They don’t apply these just to Medicare or Medicaid patients; in fact they look for other payers where they can increase revenue to make up for projected shortfalls.

And folks, workers’ comp is a very soft target.

  • Work comp networks’ ability to get deep discounts from hospitals and health systems is diminishing.
  • More and more physician practices are being acquired by health systems.
  • Facility fee schedules have not kept pace with technological or billing practice changes, and any effort to address these via regulation or legislation results in a battle with the (very powerful) hospital lobby.
  • Some bill review entities are playing games with network facilities, trying to negotiate
    prompt pay discounts instead of using the network rate.

What does this mean for you?

Watch those facility costs.

Friday catch-up

Here’s the quick summary on a couple happenings in work comp this week.

The big news comes from Liberty Mutual, where long time Medical Director David Deitz will be retiring, and Frank Radack has been named VP of managed care.

David is one of the true stars in this business, and this will be a big change for Liberty.  Word is one of his regional medical directors will assume the leadership role on an acting basis; more to come on that to be sure.  Dr Deitz has a wealth of experience; he has developed and implemented evidence-based guidelines, is an extremely knowledgeable analyst, a very effective communicator to clients, prospects, and regulators alike, understands the US health care delivery system like few others, and knows work comp.  I am fortunate indeed to count him as a friend, and hope we get to work together again.

Frank is a very experienced business guy with a strong history at Liberty; he ran Liberty’s bill review operation years ago before taking over their reporting/RMIS function some years back.  His depth of knowledge about what customers want to know and what is important to them will undoubtedly help Liberty focus their managed care efforts.

Friend and colleague Todd Brown informed me (and others) that Maryland is looking for input from self-insured employers and groups on prescription drug costs.  Their survey is here.  Given the physician dispensers’s BS claims about lower costs and better outcomes associated with their nefarious practices, it would behoove any and all self-insured employers to respond to the Survey.  Like, NOW.

Delivery systems and workers’ comp

There’s been quite a bit of focus on alternate health care delivery methods of late, with medical homes and Accountable Care Organizations prominently noted as ways care will be improved and costs reduced.  One source indicates there are 270 ACOs currently operating with an estimated 20 million members.

While the early evidence is somewhat mixed, in general the news is positive; a Pennsylvania ACO raised quality, and decreased infections and readmission rates, leading to a year over year decrease in medical costs.  Generally, ACOs involve facilities and providers agreeing to focus on specific quality measures and reward performance instead of paying on a fee for service basis.  In PA:

Half of hospitals and physicians’ potential earnings are based on their performance improvement in hospital-acquired infections, patient experience, readmissions, surgical care, and treatment for heart attacks, heart failure and pneumonia. The other half of the earnings are based on the providers’ ability to manage costs across inpatient care, outpatient care, ancillary care, home health services and prescription drugs.

There are problems inherent in the model; patient satisfaction is a tough metric to achieve when ER patients only want narcotics for their pain, while readmission rates are going to be higher when patients refuse to be responsible for post-discharge care. Our daughter works in an inner-city ER and this is all too common; patients KNOW these are key criteria and tell care givers they will downscore them if they don’t get their meds.

Nonetheless, it’s a far better financial model than fee for service as it doesn’t incent more care and higher intensity care.

Notably, it’s hard to find any evidence of ACOs in work comp.  I’d be most grateful if readers could point me to any reports or information related to alternative delivery systems in WC; while there are some bundled payment models, and a couple episode-of-care pilots I’m aware of, there’s just not much going on as far as I can see.

Just leave a comment here – and thanks!

Adjusters are happier than we thought…

Jack’s been getting ever deeper into the world of the adjuster of late – here’s his latest post.

Over the past couple weeks Joe and I developed and sent out an Adjuster Survey to get more insight into adjusters’ (and other front-line staff’s) work life. We are looking for first hand information as website reviews and other second-hand sources can be easily misinterpreted.

Surprisingly, the response rate to date is an astronomical 24.4%.  We are delighted with our results, but we’re looking for more.

Perhaps even more surprising adjusters’ views of their work life are very positive; contradicting what I had read online prior to developing the survey.

Just over 90% of our participants claimed that their daily workload was either “manageable” or “a bit too much, but still manageable.”  We were very pleased to see that these participants were not getting overworked and that they were at least tolerating their work environment.  About 66% of the survey participants said that their work environment was “great” or even “unbelievably fun and enjoyable,” while another 30% said that the work environment was “tolerable.”

A tiny percentage – 3% of participants – claimed that their work environment was “not fun at all.”

We are data hounds here at Health Strategy Associates, and need you to help develop an even better understanding of adjuster likes, dislikes, and attitudes.

Please take roughly 2 minutes out of your day (that’s all it takes!) and fill out our survey.  In appreciation of your participation, you will receive a $5 Starbucks eGift card via email if you fill out our survey by Friday.

We’ve been getting great feedback thus far and would like to continue this run.  Once again, here is the survey link if you missed it.  Enjoy the (generally pretty good) work week!

Friday catch-up – the work comp world

WorkCompCentral’s Joey Berlin wrote up the details of a presentation on chronic pain treatment featuring Gary Franklin MD, Medical Director of Washington state fund L&I, Kathryn Mueller MD, Medical Director of Colorado’s Work Comp department, Noah Aleshire of the National Center for Injury Prevention and Control, and John Hanna PharmD, Pharmacy Director of Ohio BWC.

This august panel laid out the problem and discussed the potential for solutions including cognitive behavioral therapy, exercise, tight dosing and opioid treatment guidelines, and tight formularies. Hanna’s BWC has made solid progress in reducing the number of long-term claimants on opioids, adding more support for the expansion of formularies – and the tight UR rules that make them effective – to other states.

Kudos to CDC for bringing these folks together.

Mail order pharmacy IWP has been sold.  

The auction had been going on for several months, with many private equity firms taking an initial look at the company; the new owners are a quad-umvirate (my new word) comprised of PE firms ACON and Triton Pacific along with two individuals, Patrick Keefe and Tracy Finn.

I’m not a fan of IWP; they rely on doctors and attorneys to get injured workers to use their pharmacy services, claiming that these worthies do it because the workers can’t get their drug otherwise. While that may be true for a (very) few claimants, it most certainly is not for the vast majority.  So, why do docs use IWP? That was the question asked by several of the potential investors I spoke with, and none were comfortable with the answers.

CEO Ken Martino is a long-time friend and colleague, much as I respect the guy I just don’t see the value and the distribution model is a question mark.

Sticking with the pharmacy story line, IAIABC is hosting a primer on Prescription Drug Monitoring Programs on August 26.  PDMPs are another piece of the solution to the opioid disaster, helping to prevent doctor shopping, duplicate therapy, fraud and diversion.  Sign up here.

Payers – insurers, TPAs, and self-insured employers – should pay particular attention as some states allow payers and their agents to access PDMP data, while others don’t.

Off to work – enjoy your mid-summer weekend!