Friday catch-up

Lots happening in the workers’ comp world these days – here’s what caught my attention this week.

WCRI released its CompScope report, which is actually 15 separate reports covering 16 states.  I’ll be reviewing it in detail next week; for those who can’t wait you can find the summary of the news on Illinois here.  WCRI will be releasing other highlights over the next couple of weeks.

The good news in IL is the change to the fee schedule has had the desired effect; costs are about 20% lower.  That’s the good news; but all is not rosy.

  • PT continues to be problematic; utilization in IL is much higher than average among CompScope states at 25 visits per LT claim.  Only PA, with 27, is higher…
  • Surgery costs per claim were also highest among the study states.

More work to do in the Land of Lincoln.

Several states are looking hard at implementing formularies; Arkansas is considering adopting ODG’s, scheduling a public hearing on that proposed change for later this fall.

There is considerable interest in Washington’s formulary.  CWCI’s analysis of the ODG and WA formularies and implications of implementing them in the Golden State has generated quite a bit of interest; with projected annual savings ranging from $124 million to $420 million that’s not surprising.

Notably, Ohio’s formulary – which is truly closed, has resulted in almost no “non-formulary’ drugs dispensed to claimants.  While it is not as well known as TX and WA, the OH formulary, adoption process, and results show just how effective a well-managed formulary and drug management program can be.

WCRI’s hosting a webinar on the potential impact of adoption of the ODG formulary in other states.  Led by Dr. Vennela Thumula, the one-hour  webinar is on Thursday, Nov. 20, 2014 at 2 p.m. ET (1 p.m. CT, 12 noon MT, and 11 a.m. PT).

For those interested in the future of the workers’ comp world – which should include anyone working in the work comp industry, a lengthy piece on the future of international labor markets by The Economist is worthy of your attention.  Very well-written (as is typical for the Economist), they key points (quoting the article) are: [emphasis added]

  • the rise of machine intelligence means more workers will see their jobs threatened. The effects will be felt further up the skill ladder, as auditors, radiologists and researchers of all sorts begin competing with machines. Technology will enable some doctors or professors to be much more productive, leaving others redundant.
  • wealth creation in the digital era has so far generated little employment. Entrepreneurs can turn their ideas into firms with huge valuations and hardly any staff.
  • these shifts are now evident in emerging economies. Foxconn, long the symbol of China’s manufacturing economy, at one point employed 1.5m workers to assemble electronics for Western markets. Now, as the costs of labour rise and those of automated manufacturing fall, Foxconn is swapping workers for robots

Time to get to work – the annual Health Strategy Associates Halloween party is tonight!


CorVel’s quarterly revenues up, profits down

I haven’t looked into CorVel for some time now, but a tipoff from WorkCompWire got my interest – specifically a passage that read:

Revenues for the quarter ended September 30, 2014 were $124 million, a 4% increase over the $119 million in revenue in the quarter ended September 30, 2013. Earnings per share for the quarter ended September 30, 2014 were $0.37 and were $0.41 for the same quarter of the prior year. [emphases added]

This was pretty much identical to CorVel’s press release.  Normally there’s a percentage given for any change over a prior period; that percentage was noticeably missing. A “normal” release would have read:

Earnings per share for the quarter ended September 30, 2014 were $0.37, down 10% from the same quarter of the prior year.

4 cents doesn’t sound like much, but 10 percent sure does.  It looks like the primary driver was a much higher cost of revenue, up 6.7 percent over the same quarter, prior year.  This isn’t a one-time thing, as CorVel’s cost of revenues increased 6.4 percent over the six months ending 9/30/14.

The stock, currently trading just over $34, is down rather precipitously from it’s 52 week high of $52.44.

The last earnings call transcript available from Seeking Alpha is, to borrow a term from “The Shawshank Redemption”, obtuse.  Whether it is the recording, the transcript thereof, or the comments made by Chairperson Gordon Clemons, I wasn’t sure what to make of their strategy, focus, or outlook.  Lots of comments about private equity’s involvement in WC, market consolidation, ACA and other matters but little clarity about how this would or would not affect CRVL.

What does this mean for you?

Perhaps we are now starting to see that effect.

The GOP wins the Senate – implications for ACA

While by no means certain, it looks as if the GOP is going to gain control of the US Senate in January.  What, if any, are the implications for PPACA?

There’s a good piece in today’s California Healthline digging into the issue; it cites two potential priorities for a GOP-dominated Congress.  Slowing or continuing to delay the employer mandate, and eliminating/ravamping the risk corridors seem to be the most likely approaches.

However, there’s a bit of political risk in that, as many GOP backers want ACA repealed; they may see “fixes” as compromise, a very bad word these days among conservatives.

While some will argue that a GOP Congress will push for repeal, I’m not so sure. With about 10 million more Americans covered under PPACA, that’s a lot of voters that might be upset if their coverage was yanked out from under them.  There are any number of provisions that are quite popular – covering children to 26, eliminating lifetime dollar caps on expenses, no-cost preventive care, no medical underwriting come to mind. Any move to go back to the bad old days would result in a lot of angry insureds.

Delaying the employer mandate is much more attractive politically; small business people would generally like it, the President has already done this so there’s precedent, and it isn’t that hard to do.

The risk corridor is a much tougher task.  Insurers would lobby very hard against it; while opponents of corridors make the argument that they are simply a taxpayer bailout of the insurance industry, politically speaking it might well by toxic.  It could potentially lead to higher premiums and fewer health plan options, both of which would likely be used against the GOP in the next election – which is a mere 24 months away.

Of course, the Tea Party Reps in the House may follow a “damn the torpedoes” strategy, which would result in a vote to repeal ACA, followed instantly by a Presidential veto, thereby setting up two more years of gridlock.

IF that occurs, and IF voters get into a “throw all the bastards out” mode, the GOP may find itself right back in the minority in the Senate; of the 34 Senate seats up in 2016, 24 are currently held by the GOP.

What does this mean for you?

Depends on voter turnout...




Friday catch-up

Here’s a quick tour of what else happened this week…

First, let’s just relax about Ebola.  Yes, a physician in NYC – who treated patients in Africa – has come down with the disease.  Yes, he traveled on the subway and went bowling before he was diagnosed.  No, this doesn’t mean there’s a nascent epidemic, the City needs to go into lockdown, and residents should panic.

Ebola is hard to catch – a symptomatic victim has to share bodily fluids with another person for the virus to be transmitted.

You don’t get it from a bowling ball or subway seat.

Oh, and the two nurses in Dallas are recovering nicely; one is virus-free and the other improving steadily.

And, of the eight people treated for Ebola in this country, one – Mr Duncan – died, six recovered (or are recovering) and one (Dr Spencer) is in treatment now.

Last word – the nasty, over-the-top criticism of the CDC from critics as diverse as Mitch McConnell and Bill Maher is completely off base.  Dinging the CDC because a hospital in Dallas didn’t immediately understand a potential Ebola patient had presented and wasn’t thoroughly prepared for that (remote) possibility is just ludicrous; as is the vitriol directed at the hospital.

okay, back to the real world. or what passes for it in the US health care non-system.

First up, a piece in JAMA finds patient care delivered by hospital-physician organizations costs more than physician organizations.

After adjusting for patient severity and other factors over the period, local hospital-owned physician organizations incurred expenditures per patient 10.3 percent higher than did physician-owned organizations, according to the study. Organizations owned by multi-hospital systems incurred expenditures 19.8 percent higher than physician-owned organizations. 

Let’s not read too much into this – JAMA is a doc-run publication, but it does have the ring of truth to it; billing practices change when hospitals/health care systems own doc practices, and they don’t get cheaper.  Abstract is here.

Coincidentally, Fitch recently published a study indicating for-profit hospitals are doing quite well, thank you! Seems “the financial headwind of caring for uninsured patients has lessened, evidenced by markedly lower adjusted bad debt expense for large hospital companies.” This is ‘more true’ in Medicaid-expansion states, but is also happening in non-expansion states.

Less need to cost shift to work comp…

A few years back we were hearing how ACA would cause large employers’ health care costs to explode, leading them to drop coverage.  Hasn’t happened.

From Bloomberg; “Employers and their workers have benefited in the form of lower premium increases for their insurance plans. Other than a spike in 2011, after the law required plans to cover children until age 26 and eliminated cost limits on care, premium increases have averaged less than 5 percent a year since 2010, according to Kaiser. ”

Notably, a big part of this is due to employers raising insureds’ copays, deductibles, and cost-sharing.  That was going on before ACA, but now it’s capped.

Sources indicate Aetna is proceeding with efforts to recontract the Coventry Work Comp network onto Coventry “paper”.  However, those efforts seem to be rather lackadaisical; negotiators aren’t pushing hard for discounts, seemingly more interested in “dots than discounts.”  That is, there’s much more focus on getting contracts signed then on the discount itself.

No details on how successful those efforts are; will keep you posted as we hear.

Time to get to work – enjoy the weekend – away from work!

Leaves are falling, and wonks are opining!

Thanks to Louise Norris, Colorado’s leading expert on all things health insurance related, for hosting this biweek edition of Health Wonk Review.

Among the submissions are several on Ebola, including a very good piece on CDC Director Dr. Thomas Frieden.  I’ve been a bit shocked at the piling-on suffered by the good doctor; everyone from Bill Maher to Mitch McConnell has had nasty things to say about him and his agency – most of which is ignorant blather.

There’s also a great synopsis of a post on health reform’s human side.  Something we forget far too often.

here’s a sample -

The ACA reduces the burden of health premiums on our family. By reducing this monthly expense, we have a little extra to purchase products, use services, save for vacation, and invest in the market. We have a little less anxiety and stress month to month.


Med mal’s not a factor in health care costs – more evidence

More research indicates tight restrictions protecting physicians and facilities from malpractice suits doesn’t reduce health care costs.

Three states, Georgia, South Carolina, and Texas, essentially prohibit suits unless the physician intentionally orders care that s/he knows will hurt the patient.  A pretty very high standard, and one that would – one would think – allow docs to practice care with no concern about “defensive medicine.”

That may indeed be the case, however it is also the case that there’s no evidence that this high standard reduces cost.  The research, which focused on Emergency Department utilization and costs, found tight limits on suits didn’t reduce the “cost or volume of ED care.”

Moreover, “Legal risk does not motivate physicians as much as some previously thought.” [emphasis added]

This will not still the wagging tongues in the talking heads – nothing will.  But they’ll have less to wag about.

What does this mean for you?

Question those assumptions…

Are the newly insured clogging the system?

We are starting to get some insight into how 10 million (plus or minus a couple million) newly-insured people will affect the health care delivery system.

For years, we’ve been speculating about the impact of coverage expansion on care – Will the new influx of folks onto the rolls of the insured increase waiting times?  Will they clog up emergency rooms, labs, doctors’ offices and surgery centers? Will it be impossible to get into a primary care facility?

Briefly, tighter supply early on, less so in the future as pent-up demand eases up.

Here are the details…

Using data from California’s Low Income Health Plan (LIHP), the Oregon Health Insurance Experiment and other studies, researcher Gerald Kominski and his colleagues assessed how the newly-insured use health care services, how that changes over time, and the impact on the health care delivery system.

The net is this -

“We see an increase in utilization in the first year, and especially in the first few months,” Kominski told California Healthline. “But then there’s a dramatic drop-off…this a temporary, not permanent phenomenon.”

There’s latent demand for health care services as those previously un-insured get those nagging health issues checked out and addressed, then things settle down. This makes sense; while there may well be a small population that has ongoing chronic issues, most will be pretty healthy.

Notably, the Oregon study appeared to indicate the population continued to use ER services at a relatively high rate; speaking to this Kominski was quoted saying: “the Oregon study, in a sense, has been the outlier. It calls into question some other studies, because it doesn’t show across-the-board positive benefits.”

That’s good; we need more research into the impact of increased enrollment on the health care delivery system, and different results will encourage deeper dives into the data.

What does this mean for you?

So far, access to health care hasn’t been too big a problem.  There appears to be more demand initially due to coverage expansion, and there will be somewhat more demand over time.

And we would do well to continue to monitor access data such as appointment times.

Physician dispensing in work comp; two victories!

I know, you are as tired of reading about physician dispensing in work comp as I am writing about it.  At last, there’s some very good news.

Quick refresher – docs dispensing drugs adds about a billion dollars in excess drug costs – plus increases disability duration by 10 percent, medical costs, and total claims costs.  Dispensing docs also prescribe more opioids to more claimants.

Benefits?  None, except huge profits to dispensing docs, dispensing companies, and their owners – we’re talking about you, ABRY. (investment firm that owns dispensing “technology” firm Automated Healthcare Solutions)

First up, a court case in Louisiana found in favor of the employer, as the 3rd Circuit upheld a workers’ compensation judge’s determination that a claimant would not be reimbursed for drugs dispensed by a third party pharmacy, in this case Injured Workers’ Pharmacy, when the employer had provided access to other pharmacies and otherwise complied with regulations. According to Troy Prevot, Executive Director of LCTA Workers’ Comp -  “The result of this decision will allow us to continue to use retail pharmacies to control pharmacy cost by negotiating lower pricing thru PBMs” instead of paying much higher prices for doctor dispensed or third-party mail order drugs.  

I’d add that LCTA’s victory will enable all other employers in Louisiana to ensure the clinical management of pharmacy is handled correctly by one entity.

Big news from Pennsylvania too – a bill (HB 1846) limiting physician dispensing duration and cost, and specifically targeting opioid dispensing, will become law (there’s some technical stuff going on, but it will happen). Among other things, the law will:

There has been much heavy lifting here – kudos to AIA, the Insurance Federation of Pennsylvania (the leader of the effort) PCI, the PA Chamber and CompPharma’s member PBMs (full disclosure I am president of CompPharma; the PBMs did the work).

This follows the good results in North Carolina – but all is not rosy, as Maryland and Hawaii employers and taxpayers are still stuck paying far too much for drugs and the crappy outcomes they deliver.

What does this mean for you?

Better outcomes for claimants, lower costs for employers and taxpayers!

Monday catch up

Quick and clean – here’s what else was going on last week.

First, hands OFF the Ebola panic button.  Yes, a nurse who treated the Liberian man in Dallas has reportedly been diagnosed with the disease.  That makes TWO people in this country – out of 320 million.  By way of comparison, more left-handed redheads with Lynryd Skynryd tattoos have been bitten by sharks wearing dentures than have contracted Ebola…

Hank Stern has a post wondering why some treatments for autism aren’t covered for people over 21. Kaiser Health News spoke to an expert who thinks these treatments will be covered as soon as someone initiates a legal challenge; the key is the Mental Health Parity law, which prohibits discrimination based on “quantitative” measures – age is one.

Work comp

Kudos to Arizona for pushing forward on opioid and pain management guidelines.  The guidelines and the draft rules to implement them are slated to be completed by the end of this year – and it’s obvious there’s been a lot of thought put in to implementation. Greg Jones has the details at WorkCompCentral.  [subscription required]

WCC’s Joey Berlin has the news that Tennessee is also working on opioid/pain guidelines, and his sources appear to be very well tuned in to issues related to comp – such as workers prescribed opioids who are still on the job.

This is very, very good news.  And, with this am’s WorkCompCentral reporting three other southeastern states are exploring adopting guidelines it is clear that the powers-that-can in many states are rapidly moving to address the issue.  Side note – the folks interviewed for the WCC article have a high level of understanding of guidelines and differentiation amongst different types – good news indeed.

The good folk in Oregon have released their biannual report comparing states’ workers’ comp premiums; California has the highest rates, followed by three northeastern states – Connecticut New York and New Jersey. Kudos to Jay Dotter and Mike Manley for their work – which is always eagerly anticipated as it is the only survey of its kind.

Texas’ work comp research folks published their annual report – WorkCompWire has the info here.

WCRI’s webinar on research into predictors of worker outcomes has been heavily subscribed, so capacity for the webinar has been doubled.  Sign up here.

Don’t miss Dr Jake Lazarovic’s article on Accountable Care Organizations and work comp.  The Medical Director for Broadspire has penned a solid piece on what ACOs are, how they operate, and how they may affect workers comp.

Finally, don’t forget to sign up for the Women in Worker’s Comp confab in Vegas just before the NWCDC.  Kudos to Healthcare Solutions for putting this together…

UPDATE – Lots of health policy stuff, all right here!

This biweekly edition of Health Wonk Review brings the best writing about health care, policy, and the impacts thereof direct to your eyeballs – with NO effort on your part!

Apologies to Hank Stern – somehow I missed his contribution for this edition.  The ever-prolific Mr Stern asks why coverage for some autism treatment ends at 21.  Good question.

Roy Poses leads us off with his intel on the rollout of the Sunshine Act - the part of PPACA requiring much more disclosure of financial relationships between doctors and suppliers.  Dr Poses opines that the beginning has been anything but smooth - but far better to have a rocky rollout than continued ignorance.

Our friends at Wing of Zock have a great post from Steve Lipstein, CEO of BJC Healthcare.  Steve has a much-needed outsider’s perspective on the Wilensky-Berwick committee’s recommendations on graduate medical education. His take is that re-vamping higher ed is going to be affected far more by operating models and the economic models in each physician specialty area than by pronouncements on high.

The problem in the diagnosis of Thomas Duncan, the Dallas Ebola patient, reflects the promises and pitfalls inherent in electronic health records, and Peggy Salvatore’s synopsis of the situation and lessons learned is a very high-value read.

From Health Insurance Colorado we get intel on how things are looking in Colorado – the state Exchange is doing very well; the uninsurance rate dropped by six points and enrollment in private plans via the Exchange has almost hit the 150,000 mark. That said, improvements can still be made.

If are ever going to get better quality and lower costs, it will happen because payers and providers work together to tie value much closer to payment.  Health Affairs brings us an update on progress to date – which is considerable – while warning that continued progress is not assured.  Here’s the Holy Smoke! headline – 40% of commercial insurers’ payments to doctors and hospitals now “flow thru value-based payment methods”, up from 11% in 2013.  See Suzane DelBanco’s take on value-based purchasing here…

A great companion piece is Jason Shafrin’s review of the recent national survey of ACOs, noting that there’s a lot of variation amongst and betweenst (my new word) ACOs – which is all to the good as the variability means we’ll learn a lot about what models work and what doesn’t.

There’s good news for those who like their current non-ACA compliant health plans; many will be “grand mothered”.  Louise Norris tells us “Grandmothered – or transitional – plans are those that are not grandfathered but were effective prior to 2014.”  Simply put, grand mothered plans must have some aspects of ACA-compliant plans while grandfathered plans don’t – unless they are changed significantly.  

Pharmacists are one of the more-often-taken-for-granted clinical professions, and Brad Flansbaum is here to update us on the state of the profession. In a phrase; “over-staffed”.  There are far more graduates of PharmD programs that jobs, with one pundit predicting 20% of graduates will not find jobs in 2018…

David Williams gets us up to speed on Apple’s health application plans and prognosticates on its market position – think “one of” and not “THE” health apps.  As always, David’s knowledge and experience make his view well worth consideration.

Starting in January, employers’ OSHA reporting requirements will change – while this may seem esoteric, it would behoove risk managers and their colleagues to make sure they are complying – Julie Ferguson gives us the skinny at WorkCompInsider...

Good friend and colleague Sandy Blunt reminds us that a lot of what drives success is the simple stuff – blocking and tackling.  While fancy moves and tricky plays are entertaining, they don’t deliver like the basics do…

Richard Krasner contributes his piece on poor actors and poor actions in work comp with a focus on an employer in Florida where over a hundred undocumented workers were accused of work comp fraud. Richard details other transgressions wherein workers were penalized/ due to transgressions that sure look to be endorsed, if not authorized by employers. Hat tip to David DePaolo for his original work on the FL case…noting that Florida CFO Jeff Atwater busted the FL workers for fraud, even though only a handful had filed work comp claims…as David said; 105 workers get arrested for immigration and documentation fraud under a workers’ compensation statute, even though most did not file any injury claims…”

I round out the work comp section with my take on the current non-sale of Aetna’s Coventry Workers’ Comp Services unit to APAX; while it may not be a dead duck, it looks to be on life support.

Thanks to all – see you in two weeks.