MSAs – there’s more to the story

A bit more information on my least-favorite subject – Medicare Set-Asides.  After my post last week on NCCI’s recent report on MSAs, I heard from a couple folks seeking to clarify/educate/help me understand that there’s a bit more to the picture, and just before I was about to go to virtual print, along comes this excellent post featuring Jennifer Jordan Esq. of MedVal.

A couple key points.  First, as noted in last week’s post, the NCCI report was based on data from the NCCI data call and Gould and Lamb.  What I SHOULD have been more clear on was that this data “set” may not be representative of the entire universe.  To that point, a couple colleagues suggested there is a lot more nuance here.

First, a word on sources.  As Colleague A noted, many companies don’t send their MSAs to CMS period, and some just send those over X dollars.  Some payers (the Hartford being the largest I’m aware of) handle their MSAs in-house.  And, there are lots of other outfits out there that do MSAs, that have somewhat different perspectives based on their workflow and client base.

Second, unbeknownst to be, the change in vendors handling MSAs may well have had a big impact on the mass approval that occurred last December (thank you Colleague B).  Evidently the prior vendor did not have to continue handling those that were “in process”, and the new vendor wasn’t contractually obligated to handle them either. Somehow, the new vendor did end up handling them – with the result that almost all were processed in a short period, and the vast majority were approved as is.

Third, Jen Jordan knows way more about this than I ever will, so I’d encourage you to read her take on the NCCI report.  Among the key takeaways -

  • juris drives a lot – in some states you can’t settle medicals, while others have convoluted settlement regulations.
  • some MSA companies build high cost MSAs as they want them all to go thru the first time, while others are much more conservative, leading to lower total costs.
  • It may well be that turnaround times aren’t getting much better these days
  • Jen notes that the percentage of MSA dollars allocated to drugs is actually bifurcated, with drugs accounting for about three-quarters of the cost in a big chunk of MSAs and relatively little of the total cost in another chunk.  That said, she notes  “Drugs are and forever will be the major cost driver in the majority of MSAs”

What does this man for you?

Listen to the experts, and I’ll redouble my efforts to avoid writing about MSAs and direct readers to those who actually understand this stuff.


Friday catch-up

Today most of the news is about PPACA enrollment, prices, and issues related thereto.

First up, paid enrollment as of mid-August was about 7.3 million via the Exchanges. That’s a pretty big number, and substantially above initial goals (and below the President’s late spring estimate). To be fair, the President’ estimate was for those that signed up, not those who paid, and as those of us who’ve been in the insurance business know all too well, there are always enrollees who don’t pay their initial premiums.  A 9 percent non-pay is pretty good, actually.

Among those who got coverage via the Exchanges, most are generally happy. According to California Healthline;

  • 71% expressed confidence they would receive high-quality care;
  • 70% expressed confidence they could afford needed care;
  • 68% rated their plans as good, very good or excellent

While many (including me) thought we’d see a spike in health care costs as the previously uninsured got coverage and sought care, the overall cost increase has actually been pretty modest.  From Kaiser Health News:

health and social spending as measured by the Census Bureau grew by only 3.7 percent from the second quarter of 2013 to the same quarter of 2014. Hospital revenue increased 4.9 percent during the same period. Revenue for physician offices barely budged, growing by only 0.6 percent. Medical lab revenue rose 1.9 percent.

Amongst all the positive news let’s not forget there are still a bunch of hurdles to overcome, starting with the next enrollment process, and extending through the expiration of the feds’ backstop insurance plan for Exchange insurers.  There’s a long way to go before we know how PPACA really turns out…

Finally, there’s been a good deal of intellectual arguments back-and-forth about the validity and utility of the Dartmouth Atlas, with critics claiming it is inaccurate and presents a false picture of practice pattern variation, and supporters (of which I am one) taking issue with the critics’ complaints.  The best synopsis I’ve seen comes from Sarah Kliff writing at VOX.


Hope your teams win this weekend…

It’s the diagnosis…

If the diagnosis isn’t right, there’s a pretty good chance the treatment won’t be right.

A while back I had an interesting conversation with folks from Best Doctors about this issue, and they provided some interesting statistics about the incidence of misdiagnosis.

  • The American Journal of Medicine reported that at least 15% of all medical cases in developed countries are misdiagnosed.
  • Even doctors are not immune to misdiagnosis:  According to The New England Journal of Medicine, 35% of doctors have reported errors in their own care or that of a family member.
  • A July 2012 BMJ [British Medical Journal] Quality & Safety paper found that of 5,863 autopsies studied, 28% had at least one misdiagnosis.
  • A study in Mayo Clinic Proceedings of 100 autopsies found 26 of 100 patients who died in the hospital had been misdiagnosed. Same study also found “The number of missed major diagnoses remains high, and despite the introduction of more modern diagnostic techniques and of intensive and invasive monitoring, the number of missed major diagnoses has not essentially changed over the past 20 to 30 years.”
  • Review of pathology resulted in changes in interpretation in 29% of breast cancer cases, while in 34% of cases, a change in surgical management was recommended.  A second evaluation of patients referred to a multidisciplinary tumor board led to changes in the recommendations for surgical management in 77 of 149 of those patients studied (52%) (University of Michigan Comprehensive Cancer Center.)

Best Doctors’ own data for US-based cases in 2013 indicated they corrected or refined diagnoses in 37% of cases, and corrected or improved treatment in 75% of cases. 

Of course, BD’s cases are more likely to have a misdiagnosis; their clients send them claims that look problematic.

With that said, there’s no question diagnosticians can get it wrong; in fairness, it can be pretty difficult to pinpoint the specific physiological or anatomical issue that is causing a patient’s symptoms.  As an example, identifying the cause of back pain is notoriously difficult, especially when an MRI indicates an abnormality.  Liberty Mutual’s recently-published research spoke to this issue directly:

Claims in which MRI was performed either within the first 30 days of pain onset or when there was no specific medical condition justifying the MRI yielded significantly higher medical costs, even after controlling for severity. The study found these early or non-indicated MRIs led to a cascade of medical services in the six-month period post-MRI that included electromyography, nerve conduction testing, advanced imaging, injections or surgery. These procedures often occurred soon after the MRI and were 17 to nearly 55 times more likely to occur than in similar claims without MRI.

“Being a highly sensitive test, MRI will quite often reveal common age-related changes that have no correlation to the anatomical source of the lower back pain,” said Glenn S. Pransky, MD, MOccH, Center for Disability Research.

What does this mean for you?

The lesson here is clear – too much reliance on technology can be counter-productive.  And patients who demand MRIs are not helping themselves. 

Medicare Set-Asides and Workers’ Comp

I’m gingerly stepping into a topic I’ve mostly avoided to date – MSAs.  I avoid it because it is mind-numbingly complex, seemingly illogical in application, and served by often-contentious vendors.

NCCI’s Barry Lipton et al just released an excellent synopsis of the MSA situation (opens .pdf) and summary of where things are today. The report focuses on the feds’ review process, wherein they examine payers’ proposed MSAs.  Based on an analysis of data submitted by Gould and Lamb and NCCI’s Medical Call database, a few of the Research Brief’s highlights include:

  • most MSAs are for Medicare-eligible claimants, with 45% over 60
  • MSAs make up 40% of the average total proposed settlement
  • Drugs make up fully half of the MSA amount
  • CMS’ processing time for MSAs has declined of late to a median of 41 days
  • The gap between submitted and approved MSAs has shruck dramatically.
  • 29% of settlements are for amounts over $200,000, while 45% of the MSA amounts are less than $25,000.
  • Most MSA settlements are paid as a lump sum.
  • More than 90% of MSAs completed in December 2012 were approved as submitted.  That came after CMS changed approval vendors in July 2012.

The report is stuffed full of great information and, for those of us who are relatively ignorant of MSAs yet encounter them on occasion, well worth a read.

What does this mean for you?

If you don’t have the time right now, put it in your research file so you’ll have it when you need it.  And you will need it.

Friday catch-up

Today’s catch-up is pretty workers’ comp-centric.  Lots going on, so here we go.

The ACOG (APAX-Coventry-OneCall-Genex) conglomeration continues.  A couple of items of note; APAX is out recruiting several execs to add depth and experience to the senior management ranks.  They are looking for case management pros, and word is at least one former Coventry exec is being targeted for a return.

On the Coventry network side, a well-informed source indicates a couple hospital providers in TN and GA recently renegotiated a new contract with Aetna……and with a significant decrease in the discount % below fee schedule.

On top of the news that the Geisinger and Washington hospital system contracts did NOT include workers’ comp, it is not surprising that payers are seeing a decline in “savings” from the Coventry network.

Cheers from here for former Oregon SAIF CEO John Plotkin; an Oregon court just ruled that former CEO Brenda Rocklin is NOT entitled to a state-paid defense of Plotkin’s suit against her and others.  Rocklin was allegedly involved in ousting Plotkin based on what I can only describe as ludicrous, made-up, laughable charges based on statements by Plotkin that, if they were actually made – which is highly doubtful in some cases – merit no punitive action at all.

Seriously, asking an actuary to speak English is “culturally insensitive”? Since when are actuaries a “culture”? Warning a colleague that your dog is a “humper”? talking about a goats “teats”? Even this liberal progressive Democratic ACLU member Obama fan can’t fathom how anyone could possibly construe those comments as “offensive”.

Kick their asses, John! (and so I am not misconstrued, “asses” means their butts, not their donkeys)

At another state fund, things continue to spiral down.  The latest news (courtesy of WorkCompCentral’s Ben Miller) from North Dakota regards WSI’s (state fund) use of “Independent” medical examiners – which look anything but.


Fully three-quarters of the IMEs support the WSI adjuster’s position.

So, no big deal, right?

Wrong.  Those (very) few who follow WSI know long-time and highly-regarded Medical Director Luis Vilella recently resigned.  Why?  Well, it appears his concerns about medical decisions were a major factor; evidently adjusters and their legal department used “outside” medical experts instead of Dr. V.  The full story on this rather distressing – and all too common) lack of judgment by WSI senior management is here.

Notably, David DePaolo noted just yesterday that state requirements around IMEs may have made it difficult for adjusters to locate in-state physicians able and qualified to perform IMEs.  HOWEVER, this is a separate issue from the Dr V problem as it pertains to IMEs and not peer reviews.

Meanwhile, Karen Foshay has produced a three-part series on the California compounding mess.  The FBI is involved, an infant has died, and one of the alleged participants was recorded saying ““I’m a behemoth, I make 8 to 10 million a month.”

Is there a place for compound in workers’ comp? Yes. HOWEVER, the legitimate use of compounds is all too rare as crooks, thieves and liars are using compounds as the route to huge profits, regardless of the consequences for patients, employers, and taxpayers.

Hope your weekend is excellent!

Exchange health insurance premiums in 2015 – the real story

Shockingly, there’s a good deal of confusion out there regarding what will happen with health insurance premiums in 2015, more specifically what’s going to happen in the Exchanges.

Let’s leave aside (for now) the possibility that we’ll have another enrollment mess like we experienced last fall (CMS officials are likely still twitching over that disaster…).  Instead, here’s what we know now.

  1. Health insurers are pretty much guessing what the P&L on their Exchange business will be; there’s just not enough data, many didn’t fully enroll until late spring, and individual health plans’ enrollment is too small to be statistically valid (in many cases).
  2. So, they are pretty much guessing what their rates for 2015 should be.
  3. Some very big players – notably United Healthcare – didn’t participate in Exchanges last year, but will be this fall.  In some instances, their rates are very competitive, in others not so much.
  4. The number of insurers participating and the number of plans they are offering in most exchanges is either level or increasing slightly.
  5. A quick check of rates (thank you Kaiser Family Foundation) in a number of markets indicates prices for the benchmark Silver plans are decreasing by about 1 percent on average.
  6. As Bob Laszewski pointed out in a recent blog post, many of the insurers that were the benchmark Silver plans in 2014 will not be benchmark plans in 2015 – either their prices went up or in some cases they may actually have decreased – either way they no longer qualify to be the benchmark plan (the second cheapest Silver plan).
  7. Bob’s point – and it is certainly valid – is that the federal reinsurance program essentially protects Exchange insurers from significant losses.  No wonder the number of plans participating is increasing.
  8. With that said, from a pure pricing standpoint, 2015 consumer insurance prices declined in a number of markets, and in those where they did increase it was in the single digits.

We won’t know if that will continue for a couple of years, when the federal reinsurance program expires.  The hope is market dynamics, competition among insurers, increased experience with narrow networks, ACOs, and other cost saving mechanisms is able to drive down costs and the federal program is no longer needed.

What does this mean for you?

Consumers love low rates.  Health plans that figure out how to keep them low are going to win big.

Friday catch-up

The first week of September marks the start of the busy season in health care, insurance, and workers comp.  This week certainly maintained that tradition.

here’s what I noticed this week.

Health care costs

The news this week was pretty good - current health care cost trends are significantly lower than earlier projections, although predictions for future increases remain higher than we’d like.  That said, recall past predictions weren’t that accurate.

While we don’t KNOW what the impact of ACA, recovering employment, and health care system chances will be, we can look to Medicare – which isn’t affected much by the economy.  Jonathan Cohn’s take: “the slowdown in Medicare spending (which has little to do with the economy or changes to private insurance) is a powerful indicator that health care really is becoming a more efficient enterprise.” [emphasis added]

Another perspective is from the Washington Examiner - you can tell their bias as they lead with “President Obama’s health care law” – which PPACA decidedly wasn’t. Disregarding the Examiners’ disregard for accurate reporting, they cite a CMS actuary study which indicates government spending on health care will increase from 41% of the total to 48% in 2023.  That is accurate – however recall that CMS’ past projections for Medicare and medicaid growth have been shown to be too high.

 Health reform implementation

One of the concerns about PPACA was the employer mandate would encourage smaller employers to move workers to part-time status.  Early indications are there isn’t much of a shift – if any – to part-time work due to PPACA.  Rather the slow recovery of the economy seems to be the key factor.

A great piece by Incidental Economist Austin Frakt (a long time Health Wonk Review contributor!) in WaPo’s Upshot blog finds that the more competition in local markets, the lower the insurance premiums are.  Specifically, Austin notes the absence of United Healthcare from markets led to premiums that were 5.4% higher than they would have been with UHC participating.

Another take is that premiums in less competitive states were higher than in those with more health plans participating in the markets.

Pennsylvania is joining the ranks of the sane states that are expanding Medicaid, and in so doing will avoid:

*   $37.8 billion in lost federal spending over the next decade

*   $10.6 billion in lost hospital reimbursements over the next decade

*   380,000 low- and moderate- income people would not gain coverage in 2016

Workers’ comp

The BIG news just came out today – a study by McClatchy found rampant misclassification of workers as independent contractors receiving money from the 2009 stimulus. This is a damning indictment of governmental oversight, and one that demands our attention.

Liberty Mutual produced an excellent study that appears to indicate back pain patients who got MRIs early on had worse outcomes than those who did not have MRIs.  Their conclusion:

The impact of non adherent [not consistent with medical treatment guidelines] MRI includes a wide variety of expensive and potentially unnecessary services, and occurs relatively soon post-MRI. Study results provide evidence to promote provider and patient conversations to help patients choose care that is based on evidence, free from harm, less costly, and truly necessary.

Kudos to Liberty for conducting this research.

Remember – no emails, no business after 5 today – unplug!


Physician dispensing in workers’ comp is killing your financials

The cost of physician dispensing is far above the outrageous premiums the dispensers charge.  The real cost includes:

  • longer disability duration
  • higher medical expense – over and above the excess cost of drugs
  • higher indemnity expense
  • more and longer use of opioids

Lost in the conversation, ignored in legislation, and pooh-poohed by dispensers and their enablers, the research – real research by real scientists, not anecdotal BS by dispensers – proves dispensing is having cost implications far and above the cost of the drugs.

In addition to the ground-breaking work done by Alex Swedlow et al at CWCI, the folks at Accident Fund (kudos to Jeffrey Austin White) teamed up with Johns Hopkins to analyze the impact of dispensing on their claims.

The results – which will be discussed next week in an IAIABC-sponsored webinar – are striking.

Slots for the webinar are still available – it will be held next Wednesday, September 10 from 1-2 Central Time.

Kudos to IAIABC for their leadership on this.



What’s your Plan B?

The pending acquisition of Coventry Workers’ Comp Services by APAX will consolidate a very big chunk of the work comp managed care services market.  The potential impact bears careful consideration.

I’ve taken the liberty of quoting below from a piece I wrote back in April of this year, long before this was on the horizon. I believe it is even more relevant today, as payers consider how the aggregation of market power under ACOG (APAX-Coventry-OneCall-Genex) may affect them. 

Without further ado…

Coventry Work Comp was built by combining the “old” OUCH network with Healthcare Compare, followed by an acquisition of Concentra’s WC services division, which had acquired NHR, which had acquired MetraComp, plus the acquisition of a few other bits and pieces.  Along the way, the company became the dominant work comp PPO.  A few years ago, it was the “must have” network for workers’ comp payers as it was the largest, had the best discounts, and had the most coverage in the most states. While other vendors may have had better networks in one or a couple of states, Coventry’s was the best (defined as largest number of providers and deepest discounts) and broadest.

Coventry’s management (since departed) used this market leader position very effectively.  They forced (yes, that’s the right term) payers to use their network – and other services – by raising their fees for payers who carved out specific states where another network was stronger.  In addition, they discounted other services (notably PBM) if the payer bought their network and bill review services.

This put payers in a tough position.  Try as they might to seek out the best-in-class network, PBM, or bill review offerings, insurers would have to pay a LOT more for Coventry’s network if they didn’t buy everything.

For Coventry’s erstwhile competitors, the playing field was anything but level.  If they built a great network in a state or two, one that far exceeded the depth, effectiveness, and discounts of Coventry, they’d often find the big buyers would tell them they’d won their business, only to learn a bit later that the deal had been undone and Coventry was going to keep it, having told the buyer that their fees were going to go up – often way up – if the state/s were awarded to the competitor.

Things got even more one-sided after Coventry bought Concentra’s work comp services business.

Coventry actually raised their prices, telling customers that the larger network delivered more value, and therefore a higher price was warranted.  Never mind that the larger network would deliver more revenue just by virtue of including more providers; Coventry management very successfully leveraged their all-but-monopolistic status to increase prices and beat out competitors.

According to several colleagues who worked with Coventry at the time (remember this was a few years ago), Coventry knew they had the leverage, weren’t afraid to use it, and was only too happy to let their customers know it.  Even more troubling, customer service and responsiveness got steadily worse.  Managed care execs used words like “arrogant”, “uncooperative”, and “dictatorial” when describing their interactions; many were very surprised, if not shocked, by the tone and tenor of discussions and negotiations.

Which brings us to the current state of the market; it is highly likely a very few vendors will hold leverage akin to that enjoyed by Coventry back in the late 2000′s.  Managed care execs at insurers, TPAs, and large employers are apprehensive/concerned that this may well mark a return to the “bad old days.”

Tomorrow, ACOG will own the largest PPO, one of the largest bill review enterprises, the largest imaging, PT, DME/HHC network, case management vendor, and lots of other stuff. They will undoubtedly promote the benefits of one-stop shopping, data integration, leakage prevention, and consolidated IT interfaces, and streamlined vendor relations and billing, all of which, to the extent they are valid, are excellent selling points.

If I were them, I’d encourage customers to see the benefit of using ACOG, specifically using my dominant position to reward payers who bought all my services, and dis-incent payers thinking about using my competitors.  But that’s just me…

This isn’t bad or good, it is the nature of business.  And this approach worked very, very well a few years back – primarily because only one major customer - Broadspire – was ready and able to tell Coventry “no thanks” when informed about the price increase.

The rest, well, they had no other plan.

What does this mean for you?

You may want to think about a Plan B.  Just in case.