Year: 2006

Jun
12

BWC heads start to fall

Posted by Joe Paduda on Monday, June 12th, 2006 | Comments

The train wreck that is the Ohio Bureau of Workers Comp scandal continues to claim more victims (actually, more accurately perpetrators).
The ex-CFO recently was convicted of corruption and will likely serve seven years in prison for his actions. His actions, and the inactions and outright incompetence of internal investigators, enabled Gasper’s fraud to dig a very deep hole for BWC and its policyholders.
Gasper is now starting to name names, which could make this rather delicious scandal even more tasty.

Jun
12

More reimbursement nastiness

Posted by Joe Paduda on Monday, June 12th, 2006 | Comments

Reimbursement policy has long been one of the more misused means of managing the cost and quality of care. Providers and payers have long fought over risk withholds, capitation, per diems, case rates, and their kin, all in an effort to maximize, or minimize, payout.
By fighting over these issues, the parties are getting no closer to a resolution, and are doing themselves no favors. Instead of this no-win battle, providers and payers should be focusing on the real problem – the un- and under-insured.
But first, the detail on this squabble. The latest trend comes out of California, where Wellpoint has decided to pay docs less for performing colonoscopies in hospitals than in their offices or ambulatory centers. The cut in reimbursement for hospital-based procedures is about 20%, while the increase for non-hospital-based services is 5%.
Readers will no doubt be shocked to hear the hospitals are crying foul, using patient safety as the instrument to bludgeon Wellpoint. Unfortunately, this dispute breaks no new ground in the care v cost dialogue, with CA Hospital Association president Duane Dauner saying “Health plans shouldn’t force doctors to make patient-care decisions based upon money.”
The response from Wellpoint was predictable; “It’s really litigation over dollars, not patient safety,” WellPoint spokesman Robert Alaniz said”, noting that hospital-based colonoscopies could cost “up to ten times” more than non-hospital services.
Without data on actual quality outcomes and specific cost differentials (something a little more specific than “up to ten times more expensive”), it’s hard to cut thru the sound bites. That said, I’m having a tough time with Dauner’s statement that health plans should not ask docs to factor in cost when considering patient care decisions. That’s the attitude that has gotten us to where we are – runaway costs are due in large part to the “buyer’s” ( the physician exerts the most control over the buying decision ) complete lack of concern over costs.
There is a separate issue here; hospitals continue to rely on overpayments by private insurers such as Wellpoint to pay for the underpayments of Medicaid and nonpayments by the uninsured.
If providers and payers addressed the underlying disease state (access) instead of fighting over the symptoms (payment differentials) they might actually have some chance of getting to a solution. Instead, they insult, degrade, and denigrate each other, eliminating any chance for constructive dialogue.
When do the adults take over?

Jun
9

URAC is getting into drugs

Posted by Joe Paduda on Friday, June 9th, 2006 | Comments

URAC, the national body that is the self-described “leader in promoting health care quality through its accreditation and certification” of managed care firms, processes, and programs, is getting into the PBM certification business. According to a recent press release, URAC has formed a standards committee to “advise the organization on the creation of requirements for the first-ever accreditation programs addressing pharmacy benefits management in the Medicare, commercial insurance and health plan arenas”.
URAC has gotten into the managed care approval business in a big way of late, and now provides accreditation in 15 areas, including call center operations, consumer directed health, UR, workers comp UR, and claims processing. While the accreditation process can be onerous, some industry sources question the diligence, precision, and rigor of the process itself. According to one highly experienced workers comp clinical manager, the accreditation of one vendor was “shocking; I don’t know what they (URAC) were looking at…my audit clearly showed some major deficencies in (the vendor’s) QA, documentation, timeliness of communications, and feedback to the (clinical) staff.”
This echoes other comments I have heard from entities evaluating vendors; it appears that URAC certification/accreditation, which serves as a seal of approval, demonstrating the vendor has met rigorous standards, may be losing a bit of its “gold seal” status. This would be unfortunate, as many state regulators, employers, public entities, and vendors rely on URAC to be the expert in evaluating potential vendors for quality and consistency of operations.
What does this mean for you?
If URAC develops a PBM evaluation process that is rigorous, appropriate, and sensitive to both vendors’ and purchasers’ needs and requirements, your job should be easier. That doesn’t mean you shouldn’t do your own due diligence, and do it diligently.

Jun
8

Watch out for that hole…

Posted by Joe Paduda on Thursday, June 8th, 2006 | Comments

The Fresno Bee editorial page picked up on a study published in the New England Journal of Medicine about the impact of deductibles and copays on compliance. The study analyzed what happened to seniors once they met their coverage limit under a drug program known as Medicare Premium Plus. (this limit was set at $1000)
The results are not terrible surprising – visits to the ER rose, compliance with drug regimens diminshed, blood pressure rose.
We may well see the same result around October, when many seniors will hit the “doughnut hole”; after they have incurred about $2250 in costs, they are responsible for the next $3000 or so, after which coverage kicks in again. If they stop taking their medications, we can expect to see a bump up in ER visits and potentially other services. When you add in their copays and the doughnut hole payouts, a beneficiary who hits $5100 in total expenditures will have paid $3,600 out of pocket.
About 25% of beneficiaries are projected to hit the doughnut hole; 10% will hit the $5100 level and therefore be defined as catastrophic cases.
It is likely that these folks will be less healthy than the seniors who don’t spend that much on drugs. And for many, the drugs are keeping them out of the hospital by managing their blood sugar, hormone levels, lipids, hypertension, psychiatric issues, and chronic pain.
If they stop taking their meds, Part D costs may well come in under projections. The other Medicare “Parts” wiil not be so fortunate.

Jun
7

Ohio hospitals’ misguided complaints

Posted by Joe Paduda on Wednesday, June 7th, 2006 | Comments

Hospitals in Ohio are complaining that proposed cuts in reimbursement by the Bureau of Workers Compensation are unfair, even though the proposed reimbursement level is Medicare +15%. According to one spokeswoman for the hospitals, “There is a misconception that a broken arm costs the same in Columbus, Ohio, as it does in Los Angeles, Calif.,” said Tiffany Himmelreich, spokeswoman for the Ohio Hospital Association, which has 170 member institutions.
Well, talk about a non sequitur. No one is claiming that hospitals in LA have the same costs as hospitals in Columbus. What Ms. Himmelreich is missing is that the proposal would pay the hospital their costs plus a 15% margin. And, with Medicare hospital reimbursement generally accepted as satisfactory, I have a tough time following the Hospital Association’s argument that the cuts are unfair.
Here’s why. Ms. Himmelreich went on to say “”For instance, a hospital with a high level of uninsured patients might charge more than a hospital with a lower level of uninsured.” Since when is it the responsibility of BWC, or Ohio employers, to cover the costs of the uninsured?
I’m as vocal as anyone about the problems of the uninsured, the drag they place on our economy, and the desperate need for our elected officials to get out of their golf carts and fix the problem.
But shifting costs to workers comp payers is not the solution. It hides the problem, and in the long term the Hospital Association’s complaints will do them more harm then good.
Workers compensation premiums are a significant cost of doing business. The BWC is well within its rights to refuse to subsidize a problem that is societal. In fact, between 1997 and 2004, Ohio’s employers overpaid hospitals over half a billion dollars. Think about what that money could have done if it was invested in employee training, new technology, alternative energy sources…
BWC and the Ohio Hospital Association should be working together on the uninsured issue, not fighting.
What does this mean for you?
A reminder to look deeper into issues, because there is a lot of common ground among payers and providers.

Jun
6

First Health’s new Work Comp exec

Posted by Joe Paduda on Tuesday, June 6th, 2006 | Comments

Sources indicate First Health is set to announce they have hired a new executivefor their workers comp business. The new guy will be Robert Gelb, late of IntraCorp where he most recently led their sales and account management effort. This may mark the end of a seventeen-month long search for a leader for this highly profitable but somewhat troubled property, acquired by Coventry in January of 2005.
IntraCorp’s recent struggles have been well-documented, and I have commented at length on the challenges facing any new leader of First Health.
IntraCorp has recently lost a significant amount of business, with Sedgwick moving a big chunk of bill review to Concentra and ESIS doing the same. I’m not sure what Mr. Gelb’s role was in this process, but I’m guessing it came up during his interviews.
For Mr. Gelb’s new employer, the biggest question remains the present strategic position of First Health; the company is trapped in what Clayton Christianson calls the “Innovators’ Dilemma”. And its WC revenues have been flat over the past five quarters, in contrast to management’s projections for significant growth.
Placing a sales guy in charge of WC at First Health may makessense, as Coventry has been quite public about their desire to grow WC significantly. And the original compensation package, with a base in the $300k range plus bonus and equity, should have been enough to entice a strong leader. It remains to be seen whether Mr. Gelb is that person.
What does this mean for you?
Either not much or an awful lot.

Jun
5

CMS data release – and their point is…?

Posted by Joe Paduda on Monday, June 5th, 2006 | Comments

To much fanfare, CMS released several data files containing hospital charge and payment data by state, county, (but not by individual facility) for the 30 most common DRGs and elective procedures. National, state and county financial ranges are included, and the volume of services provided at individual facilities are also available.
This is the first of three planned data releases; the next scheduled for this summer is for ambulatory surgical centers followed this fall by hospital outpatient numbers.
Promoted by the Administration as a part of Bush’s “commitment to make health care more affordable and accessible, President Bush directed the U.S. Department of Health and Human Services to make cost and quality data available to all Americans”, the data is available at CMS’ website. I’m not sure how this data will help consumers become better…consumers, but in the meantime here’s my positive spin on the effort.
Here’s my take on what you can do with the data.
1. FIgure out how your payments compare to the Feds’, and use that to assess your contracting strategy.
2. Identify the hospitals that do the most specific procedures, and direct your patients/insureds/injured workers to those facilities…and away from the others.
3. Publish the data (after translating it into English) on your website so patients can draw their own conclusions.
4. Examine the volume of procedures at specific facilities and compare that to your payments to same see if there is a link between experience and efficiency (or at least billing practices).
5. Look at the payment to charge ratio and wonder.
6. Wonder how the release of the data will help consumers make better decisions, as individual hospital charge and payment data is not available.
There seems to be a problem here. How are consumers going to improve their ability to consume if individual facilities’ results are not posted? How could an individual consumer use these data to make better decisions? Do the Feds have a clue?
Here’s the detail on what’s in the files.
“Top 30 Elective Inpatient Hospital DRGs” contains the volume and ranges of Medicare payments between the 25th and 75th percentiles for a limited set of conditions treated in U.S. states and counties. Included are the 30 conditions that had the highest utilization rates among all Diagnosis Related Groups (DRGs). Data are aggregated at the county, state and national level.
“Other Inpatient Hospital DRGs of High Utilization” contains ranges of Medicare payments between the 25th and 75th percentiles for a limited set of conditions treated in U.S. states and counties. These conditions are not among the top 30 utilized Diagnosis Related Groups (DRGs), but were deemed of interest to the Medicare community. Data are aggregated at the county, state and national level.”
What does this mean for you?
See above.

Jun
2

National health care is coming.

Posted by Joe Paduda on Friday, June 2nd, 2006 | Comments

National health care will be reality within five years. All the theory, intellectual debate, politicking, lobbying, trips to Scottish golf resorts and campaign contributions funded by lobbyists, insurers, providers, and big pharma will come up against two overwhelming forces – demographics and the weight of bad decisions in the past.
As of the last Medicare trustee report, Medicare’s long term debt is $32.4 trillion. Part D alone is responsible for a quarter of that amount, or $8 billion. In comparison, the entire Social Security debt is $4 trillion.
In the face of that incomprehensibly huge figure, we have a Congress that is incapable of doing anything that might alienate seniors, doctors, pharmaceutical manufacturers or hospitals. We have an administration seeking to cut provider reimbursement and increase seniors’ costs by $36 billion over 4 years. That’s about 1% of the total medicare deficit. And we have the Bush tax cuts set to expire by 2011, which just happens to be the same time the Medicare trust fund cash flow turns from black to red as the Baby Boomer generation starts cashing in.
This will force change. The only question is will there be a single payer system, universal coverage via private insurers, some form of hybrid, or a new and as-yet unformed model. Given the recent transgressions of the major national health plans, I wouldn’t go too long on Aetna, United Healthcare, or CIGNA stock.
If you are looking for what it may look like and the features thereof, see here and here.
What does this mean for you?
Your decision – part of the solution or part of the problem?

Jun
1

Part D results are…

Posted by Joe Paduda on Thursday, June 1st, 2006 | Comments

Part D’s enrollment deadline came and went, and along with it the orgy of claims, counter claims, blames and counter blames. So now that at least a bit of the dust has settled, where are we?
Confused.
Depending on whom you read or watch or listen to, the program has either been a success or a failure, is working or is not, is profitable or a loser, has enrolled “enough” people or has fallen well short.
The reality is as confusing as the perceptions appear to be. In any effort to cut through the spin, I checked in with Bob Laszewski of Health Policy and Strategy Associates. His take is it is too early to tell how things are going, and in the absence of truly meaningful metrics, we’re just going to have to wait and see.
Here’s why there is so much confusion.
There is no consensus on how many seniors have signed up for Part D or have alternate drug coverage under other plans. For starters, health plans and the Feds can’t agree on who is signed up by whom. Some health plans have been told they have thousands more members than they can account for, while others are being told large numbers of their “enrollees” actually signed up for Part D when they already had coverage under Medicare Advantage or another plan.
As near as I can figure it, there are between 8 million and 4.5 million seniors still without coverage. More details to follow…
Meanwhile, Humana, one of the more “successful” health plans in terms of signing up seniors for its Part D programs, recently saw its debt ratings outlook downgraded by AM Best from ‘stable” to “negative” in part due to large Part D enrollment and associated reliance on government contracts and increased capital requirements.
And AM Best may be on to something. The Medicare Trustees recently projected that the Part D program’s costs would increase by 11.5% annually over the next ten years. If those projections hold true, early claims about the currently “favorable” loss ratios may be short-lived.
We’ll have to wait until at least mid-July for reasonably accurate enrollment figures, and accurate financials will take another five months or so. If someone provides numbers in either category before those dates, be skeptical.