Insight, analysis & opinion from Joe Paduda
Louise has put a lot of effort into this week’s edition of HWR, and it shows. Really shows.
Her thoughtful analysis of each post makes for a cohesive, coherent whole – definitely greater than the sum of the parts.
WCRI’s annual meeting concluded with a panel discussion reviewing the previous day and a half.
Following up on Dr Mueller’s excellent presentation about the coming changes in the health care system, Keith Bateman noted that while guidelines may help increase consistency, a percentage of providers won’t follow guidelines because they are just in it for the money. Bateman is right; I’d add the rather obvious observation that guidelines help payers, judges, and analysts determine which providers are ‘good’. That is, who treats consistent with best practices. I’d suggest that this may actually be the most important benefit of guidelines.
There was discussion earlier in the conference re the influence of fee schedules on utilization of health care services; Bateman said utilization is driven by claimants but also by payers themselves, for without treatment there is no claim.
Scarlette Gardner Esq. spoke about provider networks saying that the perception is the larger the network the more savings due to the network’s market share. She did note that there is some research indicating networks do not actually result in lower costs. Gardner said in fact physicians actually view networks as an intrusion and evidence that payers don’t trust them. Networks want lower reimbursement for what are usually higher cost patients, with costs defined as more work for the provider.
Makes sense to me.
It got worse for networks from there. Gardner noted that the ‘medical home’ can deliver better outcomes, and this model requires good communication among all parties yet networks have removed the payer from a direct relationship with the provider. The doc rarely answers to the insurer, but rather to the managed care vendor. She concluded by asserting that there is some evidence suggesting that the impact of discounted networks may include lower fees, but these fee reductions are overcome by increased utilization.
She summed up with a few words lauding fee schedules as one way to manage reimbursement. Her point was that fees in work comp should be fair in that work comp reimbursement should be competitive with other payers – the same services should be reimbursed at the same rates regardless of who is the payer.
I’d note that Ms Gardner works for the North Carolina Medical Society. Nonetheless I’d have to say her points are well worth considering.
Darrell Demoss of Medrisk made two excellent points. DeMoss noted that sometimes we err when we think that something is common because it is easy to think of examples of that ‘thing’ occurring. Specifically DeMoss says this happens when payers apply UR to providers, and gave as an example UR for physical therapy. The law requires payers to review all requests for more than six PT visits in Tennessee. I agree with DeMoss, The technique is not wrong, the application of the technique is just not appropriate in this instance.
Managed care as differently defined and applied in the fifty-one plus jurisdictions can be a blunt instrument – at best. The impact of networks – big, discount based, compendia of every live and some dead docs – has been of questionable value. Mandatory UR, and its opposite, the refusal to consider any utilization review, are both problematic. One drives up admin expense while the other makes it very hard to eliminate inappropriate care.
Note – this was posted via an iPhone, which although really cool, doesn’t allow me to use some features of the blogging software. I’ll clean it up later.
Dave North, CEO of Sedgwick CMS was one of the morning panelists. He began with a rather strong statement about workers comp, a statement that was also an indictment of the industry’s complete inability to manage medical – the fact that medical costs have increased 892% over the last 25 years.
North’s presentation reviewed the history of medical management, evolution of managed care, and changes in regulations that have occurred over the last 25 years and then made a few suggestion about hat the comp industry should focus on over the next ten years. North said that despite changes in society, business, and medical care, the types of injuries we see today are similar to the injuries we say 25 years ago.
He made two particularly trenchant observations. First, the unintended consequences of regulations. Specifically, North noted that when the CA pharmacy fee schedule was changed several years ago, it had the unintended consequence of increasing costs – specifically, the repackaging of drugs and dispensing by physicians and clinics at much higher rates due to a loophole in the regulations.
Second, North stated (this is close but probably not word for word) “Discounted networks have underperformed and will someday be regarded as first generation, primitive efforts to address costs.”
Agreed. The question is, when will the industry stop decrying the problem, studying potential solutions and implementing tiny pilots and launch ‘second generation’, outcomes based networks?
today marks the start of the annual Workers Compensation Research Institute in Boston. Um going to put up a couple of lengthy – but still well worth reading in their entirety – posts on today’s presentations later this evening. For now, an initial observation.
Several of this afternoons panelists talked about the future, in the context if trends we should watch for and cost drivers we should be on guard against.
Dr Peter Barth led off the conference with a grey review of the history of work comp in the US. Dr Barth warned that worker comp may be included in any health reform initiative. He also noted that comp was part of the Clinton reform initiative.
With all due respect, for several reasons I very much doubt comp will be directly impacted by or addressed in any health reform bill. First, any politician with half a brain (which I grant may not include everyone in DC) knows that the way to get a bill passed is to get more supporters than detractors. It is going to be difficult at best to pass health reform legislation; adding comp to any bill would not add any support but would almost certainly drive work comp stakeholders to lobby against the bill. There’s just no upside for including comp in health reform.
Second, nowhere do the words ‘workers compensation’ or similar terms appear in President Elect Obama’s website, policy papers on health reform, or in the several speeches he has made on the subject.
Third, comp is not mentioned in the Wyden/Bennett Healthy Americans Act or any of the other reform bills considered in this Congressional session. These may be thought of as drafts of future bills; if policymakers were actively considering incorporating work comp it is likely we’d have seen it appear in one or more of these bills.
What does this mean for you?
Don’t expect to see work comp addresses in reform legislation on the Federal level.
Yesterday I opined that health care costs are on the way back up, driven by a worsening economy. Premiums will also rise due to cost-shifting by providers seeking compensation for underpayments by Medicaid and Medicare and no payments from the uninsured.
Those providers will also cost-shift to workers comp payers, driving up medical expenses, claims costs, and premiums. Physician income has been stagnant or declining for years, and many docs are struggling to keep the doors open. Here’s what comp payers can expect.
As a provider’s patient mix (Medicare, Medicaid, commercial, work comp) changes, their income is affected. The price per service is relatively fixed – either by Medicare’s RBRVS, the Medicaid fee schedule, their commercial contracts, or the workers comp fee schedule (most states have a physician fee schedule) or their comp PPO contracted rate. A provider seeking to increase his/her income has to either see more patients (pretty tough to do when many are already working sixty hours per week) or figure out how to do more services for the patients they see.
Increasing utilization is the key driver behind rising Medicare costs, with physician service volume up 11.3% in 2006.
Workers comp is particularly vulnerable to increasing utilization, as managed care models actually incentivize networks to drive up utilization by paying networks based on discounts per service delivered. The more services performed, the greater the “savings,” and the more revenue and profit for the network. Everyone benefits from this arrangement; that is, everyone except the payer.
There’s already evidence that comp medical costs are on the upswing in California, and my prediction is that true to legend, California’s experience foreshadows what we’ll see in the rest of the country.
What does this mean for you?
Expect medical to become an even larger part of the claims dollar, expect to pay your PPO network more for the ‘savings’ they deliver, and expect your combined ratio to deteriorate.
Health care costs are on their way up – or more precisely, the rate of inflation is going to increase.
Although the medical CPI, currently sitting at 2.8%, looks quite good compared to historical rates in the mid-single digits, there are several reasons for the coming rise in costs, and precious few factors likely to drive them down.
Let’s start with the worsening economy and its impact on employment. As people lose jobs, they also lose their insurance coverage (unless they can afford COBRA, which is doubtful for many desperate to hold onto cash). They will still need health care, but won’t have insurance to pay for it. As a result, they will either have to rely on the understanding of their current providers, or go to hospital emergency rooms for treatment. Either way, the folks who provide care have to recoup their loss on charity care by charging their paying customers more.
Expect to see more cost shifting as unemployment grows.
The economy will likely cause more employers to cancel their health insurance. While it is too early to see if this is actually occurring, it seems a safe bet that employers faced with declining sales will cut costs wherever they can. With the average family policy premium close to $13,000, terminating a health insurance policy will save any employer big bucks. Again, these newly-uninsured will still require health care, but they won’t have insurance to pay for it.
Those who hold onto their jobs, and their health insurance, will likely feel rather uncertain about their future and the stability of their employment. Seeing others lose their jobs and health insurance may well result in higher utilization on the part of the employed, as they get all their elective procedures done, prescriptions filled, and preventive care taken care of while still on their employer’s policy.
Finally, consider a situation we can think of as ‘retroactive adverse selection’. Seniority often plays a role in the who-gets-laid-off calculation; the older folks who have been there longer are more likely to be retained. As the younger, healthier folks leave the plan, the demographic mix becomes older and (usually) more costly. This drives up per-employee costs, which inevitably leads to higher premiums.
If the economy continues to stagnate, the effect of these cost drivers will grow. And the longer it takes to pull out of recession, the more we’ll feel the impact on health care costs.
For the first time since the first two years of the Clinton administration, Democrats are going to dominate the House, Senate, and occupy the White House, giving Capitol Hill a decidedly blue tint. There’s lots on the agenda, but three factors weigh against much in the way of health reform in the next Congress.
First, there’s little money to spread around.
Second, there are big problems that demand immediate attention – the collapsing economy, rising unemployment, Iraq and Afghanistan. Russian President Medvedev’s sabre-rattling yesterday is another signal that international issues will require significant attention from the executive branch. These meet the definitions of both ‘important’ and ‘urgent’ and will likely dominate the agenda for the next few months.
Third, the Democrats will not have a veto-proof majority in the Senate.
Despite the presence of these rather large obstacles, I’d bet we do see meaningful steps towards health reform in the next Congress. First, something has to be done to show progress on key issues. Second, several policy initiatives can be enacted that don’t ‘cost’ anything, and other measures can be funded with cuts in current programs. Third, I’m not so sure the Dems will need 60 votes from Democrats to pass health reform. Susan Collins and Olympia Snowe from Maine are generally well-disposed towards health reform, and the independents will likely vote with the Democrats as well.
And most importantly, Pres-elect Obama’s newly designated Chief of Staff, Rahm Emanuel, is a hard-nosed centrist who knows how to get votes for his boss. Emanuel was instrumental in getting welfare reform passed for Clinton; that success coupled with his experience in the House and high level of respect he commands in both the House and Senate stack the deck in favor of reform.
Let’s not forget Sen Kennedy’s ongoing efforts as well; his standing and longevity in the Senate make him a very powerful force.
Here’s what I’d expect we’ll see in 2009 – 2010 from Congress and the new President.
SCHIP will be first out of the blocks. The expansion of coverage for kids is a central piece of Obama’s platform on health reform, and with a Democratic Congress the chances of meaningful expansion of this program are pretty good. And it won’t just be Democrats voting ‘aye’. After the back and forth battles, marked by confusion and consternation from Republicans who felt Pres. Bush threw them under the bus by vetoing a bi-partisan bill to extend SCHIP earlier this year, enough Republicans are likely to cross the aisle to support funding of a somewhat-expanded program.
The fall will be highlighted by a debate over Medicare physician compensation. With docs scheduled to see their reimbursement drop by around 20% in 2010, the caterwauling will be heard loud and clear inside the Beltway. Don’t look for a major policy change, but rather something to satisfy the physician community and build a little equity for the future. Where will the money come from?
Do not be surprised if CMS is expressly ordered to negotiate prices with big pharma in the near future. The Part D program is a budget buster, big pharma has few political allies (despite big contributions) and reducing the cost of drugs will save CMS budget dollars that can be spent on physicians.
Also on the table will be reduced funding for Medicare Advantage, a program that has long struck Democrats as a giveaway to big healthplans. Foolishly. the insurance industry worked hard, and effectively, to block reductions in MA this year. As Bob Laszewski notes, with Congress and the White House changing hands, the bill they stopped this year will look great compared to what they’ll get next. Expect MA subsidies to be slashed, in what could, and should, be seen as a shot across the bow of the insurance industry.
What does this mean for you?
Politics is the art of the possible. And even now, meaningful health reform is, indeed, possible.
Yesterday was historic, nation-changing, incredibly rewarding. It was also exhausting and deeply disturbing.
The day started at 6 am. As an election observer, I was tasked with making sure a specific polling place was open and ready for business before 7. My precinct was up and running and ready to go, although not without a bit of confusion and scrambling around. By 7:30 the line was 45 minutes long, and it didn’t go down till well after 9.
From there I was sent to observe the polls in central Doylestown PA – a picturesque, tidy downtown with lots of good restaurants and shoppes. After checking in at one site, I was moved to another. It quickly became apparent that there were way more Democrats helping at each site than were really needed; I left and returned to what had been home base for the last two days – the Warminster Obama/Murphy GOTV office (get out the vote).
I walked in, was handed 150 door tags labeled with the correct voting site, a coded map, and assigned a co-canvasser and told to hit the road. My partner for the next four hours was an Indian-American retiree from ATT, a gentleman deeply committed to the democratic process who had been in Bucks for ten days, staying with a family friend. We walked in sporadic rain up one typical suburban street and down the next, knocking on doors, ensuring targeted folks had voted and if not knew where to go. The neighborhoods were spread out, with large lawns and lots and lots of walking. A quick lunch at 3 and back at it with a fresh list in a new neighborhood, this time solo. After two hours, dark and rain and lousy street lighting ended canvassing.
Returned to the Warminster office, and things got very interesting. I was sent with a local expert, a woman who had spent much of the past year working to increase voter registration in poorer areas of Bucks.
Make no mistake, Kathy and people like her won the election for Obama.
Now to the ugly stuff. Sorry, as much as we’d all like to revel in the wonder that is this country, rejoice in a new and amazing definition of ‘opportunity’, and pat ourselves on the back for contributing to the greatness of America, all is not good.
Kathy and I were sent to a polling place in a poor, very mixed neighborhood. There we found a single Democratic poll watcher over-matched by three very aggressive Republicans. I’ve come to learn there is a fine line between voter education (providing information) and voter intimidation (scaring away voters or otherwise disenfranchising them). The R workers pigeon-holed voters, blocking their way up a narrow ramp, encouraging them to split their vote while telling them about a candidate’s personal history. One R accosted voters, loudly telling them about how a candidate had personally helped her family.
This at a polling station where earlier in the day election officials had asked every voter for identification – a practice that is illegal in Pennsylvania for citizens who had voted previously at that location. And canvassers had heard on their walks through the neighborhood from voters told they had to bring their voter registration cards – again not true.
The local Judge of Elections allowed one of the R poll watchers into the voting area while she was wearing campaign buttons – also illegal. Repeatedly. This same R poll watcher stood immediately next to the door, buttonholing voters on their way in – also illegal, as the law prohibits electioneering within ten feet of the polling place.
When we protested, the Judge began screaming at us, called the voting constable, and threatened to have us arrested, claiming that until we showed up everything had been working fine. We politely and respectfully disagreed. By the time the constable showed up, it was almost closing time. I’ll spare you the rest, but it wasn’t pretty, and would have been more believable if it had happened in a third world country than in the US.
The net of the story is this – despite what appeared to my eyes to be a concerted effort to suppress the vote, this precinct went heavily Obama, as did Bucks County.
This was the only instance where I thought the Ds were outmaneuvered by the Rs; in a heavily Democratic precinct, the Rs put their resources where they would do the most good – targeting people likely to, or in the act of, voting. It could be the Rs were misinformed about Federal election laws regarding voter intimidation, or the Judge was ill-informed, or somehow over a dozen residents misheard a request for ID.
Anything’s possible – as the election of an African American President proved last night.
From there, to Obama headquarters in Doylestown to wait and watch. PA was called before we got to the office, so when we walked in their were high fives and toasts all around -even though most were dead on their feet. Shortly after, New Hampshire was called, and the celebration, although muted, went up a notch. Then Ohio went for Obama, and it was over.
Or rather just beginning.
Tomorrow, back to the world of managed care.
Today was another day of ‘dropping lit’ – this time myself and an attorney from Manhattan were tasked with hanging signs on doorknobs in a typical spread-out suburban community in Bucks County PA. The signs were specific to the polling place for each address, and also listed what voters needed to bring and polling hours. The signs, 146 to be exact, and the combination of big lawns, a highly targeted list of addresses, and a desire to not walk on lawns made for about seven miles of trudging around cul de sacs and wyndy roades (that’s how they spell in parts of Bucks). Spoke to several potential voters, including one irate McCain supporter who was apparently incensed at the idea that people would actually walk thru his neighborhood in an effort to encourage his neighbors to vote.
Truth be told, there were also two Obama supporters who seemed to have had just about enough of door-to-door canvassers…
Spent several hours this evening (thankfully sitting down) getting trained to be a poll observer. I’ll be working to help voters figure out where to stand in line, how to make sure each vote counts, and watching for any attempts at voter suppression. I can honestly saw I know way way more about the Danaher voting machine now then I thought needed knowing.
It is not exactly a triumph of technology – the machine uses a printed piece of paper that overlays rows of buttons which the erstwhile voter has to press – through the paper – to indicate his/her choices, and then confirm the vote by pressing another button.
like this…
There are counters, and accumulators, and figures that have to be cross checked against each other. And it seems these triumphs of American ingenuity break down fairly regularly, which then results in voters filing out paper ballots. Unfortunately, through the wisdom of the election officials in Bucks, each polling place will only have fifty (50) paper ballots on hand. Not to worry, they have another fifty for each polling place secured in an undisclosed location, which they will transport to any affected polling place pdq. This in a county where turnout is expected to top 75% of eligible voters, a county that is also deemed to be one of the key counties in the nation.
Tell me again, how is it that we have the gall to send people to oversee other countries’ elections to make sure they are fair?
I learned a lot of other interesting stuff about subtle means of voter suppression, how vote tabulation works, appellate court rulings on voter identification, and what defines ‘electioneering’ and why you can’t do it within ten feet of a polling place (definition of where that ten feet is measured from to be determined arbitrarily by the boss of each polling place.)
For now, I’m just thankful this only comes every four years. And after fourteen hours at my assigned polling place tomorrow, I’ll likely be even more thankful.
Today, tomorrow and Tuesday I’m in Bucks County, PA, volunteering for the Obama campaign. No, its not glamorous, I won’t be appearing on NPR or the Nightly Business Report. I will be being doing whatever the caffeine- and cheesesteak-fueled twenty-somethings running the local Obama campaign GOTV (get out the vote) team choose to delegate to me.
Got to the office (one of many in Bucks County, which is north of Philly) I was assigned to early this morning, and was immediately put to work doing menial clerical work by local boss John, who looked like he’d been awake for quite a while (as in days, not hours). About ten am, a bus arrived and disgorged about 60 New Yorkers. The seating capacity of the bus was 53, so seven stood all the way here from NYC (about 90 minutes). And they each paid $30 for the privilege of spending their Sunday working for Obama. And a couple dozen volunteers were left curbside in Manhattan as there was no more room on the bus.
They paired up those with cars (e.g. me) with those without (two recent Barnard graduates and a retired cellist), handed us a detailed, coded, yet simple map and materials and directions and sent us out to place literature on doorknobs of previously identified likely Obama supporters.
These people are organized. I mean, really, really organized. Organized like big businesses are supposed to be, but rarely are. There were over 120 of us there this morning, and all of us were trained, out, and canvassing within a half-hour, with computerized lists coded with directions, separated by odd and even house numbers so we could work both sides of the street most efficiently. They are also frugal – no one offered to pay for gas or tolls or lunch, there were no piles of buttons and swag laying around for the taking.
Yesterday (Saturday) was door knocking and contact day, when canvassers tried to engage those still undecided voters. Obama canvassers knocked on 69,000 doors yesterday. That’s not a typo – 69,000 doors in one day. In one county (Bucks), in one state, albeit a critical swing state (PA). Today and tomorrow are reminder days – voting times, polling place locations, specifics on what you do and don’t need to bring to vote. Tuesday is an 8-8 shift, making sure all potential Obama supporters get to the polls. And rest assured they’ll know precisely who makes it to vote and who doesn’t, and for those is the ‘doesn’t’ camp, some smiling Obama volunteer will be on their doorstep offering to drive them to the polls by early Tuesday evening.
Pennsylvania is supposed to be tightening up. The GOP’s vaunted 72-hour program has delivered in the past, and McCain is going all in in PA. The Senator from Arizona has to win Pensylvania to have any realistic chance of beating Obama.
From what I can tell, I don’t think McCain has a chance.
Admittedly I’m only seeing one tiny part of one candidate’s campaign, and I’m certainly no expert in these things. I do know Obama’s Get Out The Vote effort is extremely well run, efficient, and very focused. Obama also benefits from his volunteers’ weird combination of enthusiasm, paranoia, and sense of self-responsibility. To a person, everyone I spoke with or heard in passing believed it was their responsibility to do everything they could to get Obama elected. That includes the mom from Weston CT with two kids in boarding school, the high-school kids from the neighborhood, the retired veteran, the pipefitter, the farmer from rural western Massachusetts and two residents taking a day off from medical training.
This wasn’t a lark, it was a personal responsibility.
I’m going to be reporting from/commenting on the experience – be forewarned, MCM likely won’t have much to do with managed care until Wednesday. For those incensed/outraged/angry as my keystrokes meander away from the mainstream of managed care, I’ll be glad to send you a full refund.