Oct

How horrible is Medicare?

Posted by Joe Paduda on Tuesday, October 27th, 2009 | Comments

Depends on who you ask. If you ask group practice administrators about how Medicare compares to the private insurance industry, it is pretty darn good – in several categories, Medicare Part B is rated higher than any other large payer.
That’s partly due to the lousy performance of some of the private insurers, but administrators actually rate Medicare’s responsiveness, transparency, prompt payment, and overall administrative functions highly.
Yes, you read that correctly.
On a five-point scale, with 5 the highest rating, the much-maligned and oft-decried public plan for the aged has an overall satisfaction rating of 3.6, with Aetna at 3.1 and UnitedHealthcare bringing up the rear at 2.5.
Medicare was considered the most timely responder to inquiries, with Aetna second and UHC at the back of the pack; the same standings hold for accuracy and consistency of the payer’s responses to questions, speed of payment (Medicare 4.1, Aetna 3.5, UHC 3.1), disclosure of payment policies, and claims appeal process (Aetna was excluded from the report).
Medicare doesn’t appear on the list of questions regarding satisfaction with the contracting process, except in the ‘willingness to disclose the fee schedule’ category, where it is again rated at the top. This isn’t surprising, as CMS is not engaged in ‘2-way good-faith negotiations’ nor do practices have ‘leverage during the negotiation process’. I don’t know if responders didn’t ask about Medicare or if Medicare was ranked at all; I’ll let you know when I hear back from the Medical Group Management Association (MGMA), the organization that conducted the study.
As with any study or survey, you can find data to support any perspective.
That said, the ratings of the health plans are generally consistent with those reported by the Verden Group, an independent firm focused on helping providers deal with managed care organizations.
Aetna received top marks for clarity of communications, and was rated the most ‘provider friendly network’ by respondents to the Verden Survey in 2008.
As the public option becomes possible once more, and opponents lament the inefficiency, lousy service, and incompetence of the faceless bureaucrats that run Medicare, it is helpful to know what the people on the other end of the transaction think.
If you listen to them, on a number of fronts, Medicare’s a darn sight better than most of the private insurers they have to deal with

Oct

Swine flu and workers comp

Posted by Joe Paduda on Monday, October 26th, 2009 | Comments

While there will be differences due to jurisdictional rules, I’d be surprised if we don’t see Workers Comp cover many health care workers who get the flu.
Health care workers are getting inoculated due to their higher risk, the prevention information you mention indicates they are at risk due to their employment status, and there’s no question of their increased exposure risk.
The Federal government’s website, flu.gov, directs workers who are exposed to flu to contact their state work comp boards for questions on eligibility and coverage – that direction alone may encourage sick workers to file for comp, and if they were exposed at work and the exposure meets specific criteria, they may well have a compensable claim.
In addition, lower paid workers who do not have health insurance may – and I emphasize MAY – be more likely to claim WC for flu as they have no other coverage.
My sense is in many jurisdictions and for many claimants, swine flu would be compensable – if it can be demonstrated that the contact was ‘during the course of or arising out of employment’. And for health care workers, that shouldn’t be too difficult to prove.
Jon Coppelman wrote a good synopsis of this some months ago – here’s an excerpt from his piece:

In order for the flu to be a compensable event under comp, certain requirements must be met:
: the individual must be “in the course and scope of employment” when exposed to the virus
: the exposure must arise out of work (as opposed to being a totally random event)
: work itself must put the individual in harm’s way

My sense is in many jurisdictions and for many claimants working in health care service delivery, swine flu will be compensable – if it can be demonstrated that the contact was ‘during the course of or arising out of employment’. For health care workers, that shouldn’t be too difficult to prove.

Oct

Work comp drug fee schedules – what’s going to happen?

Posted by Joe Paduda on Friday, October 23rd, 2009 | Comments

No one knows just yet, not even the regulators and legislators who are the ones tasked with coming up with a mechanism to replace AWP – which is going away in less than eighteen months.
More accurately, the First Databank/Medispan version is going to disappear; the Redbook version will still be around.
One option is to use Redbook as the standard, and there are some indications from some states that they are looking at Redbook. But Redbook has its issues – folks who know more than I about these things say it is not updated as frequently as Bluebook, and while it covers more medications, this ‘delay’ may make it problematic for PBMs who may well get into disagreements with retail pharmacies over the reimbursement level.
Beyond that ‘quick fix’, here’s how the changes may roll out. States with fee schedules set by their legislatures may well find themselves hard-pressed to meet the deadline; some, like Texas, aren’t due to meet until 2011, and others have a rather full legislative agenda with a lot more important stuff to deal with than work comp drug fee schedules. Thus, it is entirely possible that some states may not be able to address the issue before the clock runs out.
In that case, PBMs and payers will likely have to use the last version of the FDB AWP file for repricing pharma bills. That’s fine if the delay in selecting a new benchmark is a matter of days or perhaps weeks, but if it goes much beyond that we’ll see problems as prices charged by pharmacies will change while the reimbursement levels don’t. Litigation will likely ensue…
States that manage fee schedules via regulatory process are (likely) going to be a bit better off, as these processes are not dependent on the legislative process and complications thereof. Several states are already carefully evaluating alternative methodologies, and from my interaction with a number of regulators at the IAIABC conference last month, they are goign about this thoughtfully and with their eyes and ears wide open.
The real risk is if fee schedules are changed to match the Medicaid reimbursement rates.
This would be a disaster, as it was in California when physician dispensing exploded, and drug costs actually increased after the fee schedule was linked to Medi-Cal. In NY, where the State also set WC reimbursement at Medicaid, every PBM sent letters to the Chairman of the Workers Comp Board relaying their intention to exit the state if rates were not revised. Fortunately for all parties, they were successful in their efforts.
Unlike workers comp, there is no eligibility problem with medicaid – all recipients have a card. The formulary and DUR processes are well known and electronically administered. In comp, many claimants don’t know who their PBM is, and the only drugs that are approvced have to be directly related to the occupational injury or illness. These are just a couple of the distinctions, but they serve to illustrate the fundamental, and real, differences between comp and Medicaid.
Stay tuned – it is likely the big group PBMs and payers will move to another pricing benchmark, and like it or not, that will become the de facto ‘standard’.

Oct

A bit of sanity on Capitol Hill?

Posted by Joe Paduda on Wednesday, October 21st, 2009 | Comments

The Senate rejected the Medicare Physician Fairness Act rather resoundingly today, preventing a ‘fix’ that would have added a quarter trillion dollars to the deficit.
Senate Dems were trying to pass the bill separately from any overall reform bill, as combining the two would have pushed the total cost well over a trillion dollars over ten years – a figure that would, in all likelihood, doom the bill.
But an interesting coalition of all 40 Senate Republicans, Evan Bayh of Indiana, Russ Feingold of Wisconsin, Claire McCaskill of Missouri and Ron Wyden of Oregon – a pretty broad spectrum – voted no, killing the bill in a procedural vote.
This is good news. Not because we’re still stuck with the dysfunctional Medicare Sustainable Growth Rate mechanism, but rather because fully a dozen Dems stepped up to the plate and rejected a huge increase in government spending on an entitlement program. Lest my Republican readers get too excited, their party has yet to participate in any meaningful, helpful way in the discussion, and Minority Leader McConnell’s snarky comments today were yet another example of his inability to set aside petty, stupid, childish politics for the good of the country.
Here’s hoping that the rejection means we will actually, finally, seriously start talking about cost. This is where the GOP should show some leadership, which will require McConnell et al get a sudden injection of statesmanship. None of the bills currently before Congress – with the exception of Wyden-Bennett – reduce costs.
We should throw them all out, pass Wyden-Bennett, and get on with other matters.
Yeah, right, that’s really going to happen…

Oct

The risk side of the biz

Posted by Joe Paduda on Wednesday, October 21st, 2009 | Comments

Is detailed in the biweekly Cavalcade of Risk, managed by good friend Hank Stern of InsureBlog fame, and this week authored by the incredibly talented Julie Ferguson.
While Health Wonk Review is focused on health policy stuff, CoR is more risk and insurance oriented – there’s some overlap, and a definitely different perspective.

Different perspective is often just what we need…

Oct

From Harry and Louise to Thelma and Louise

Posted by Joe Paduda on Tuesday, October 20th, 2009 | Comments

AHIP – did they jump or were they pushed?
I’m not pointing any fingers, but if I were, all ten would be pointed right at Bob Laszewski.
Yesterday Bob pointed out that AHIP could not possibly have screwed up any more than it did when it released the PwC ‘analysis’ of the Senate Finance Committee reform bill. Here’s how Bob put it.

When you are going to issue a report of the kind AHIP and PwC did–in terms of its intended consequences on a national political debate–you better be sure you can back-up everything you say in simple and unambiguous terms.
The ineptitude on the part of AHIP and PwC is startling. That either organization was not able to clearly and decisively defend their conclusion in the midst of the health care reform finals is one thing. That they couldn’t defend a conclusion that is generally right and consistent with common sense [emphasis added] is even more startling if not aggravating.
But then AHIP starts from way behind anytime it has tried to do anything in this town… there was the Congressional hearing this summer where three of their members told a House committee that they planned to continue retroactively canceling individual health insurance contracts even when they found only inadvertent and immaterial errors on the original applications.
Then, of course, there was the silly $2 trillion cost savings offer they spearheaded at the White House this spring, which Republican Chuck Grassley dismissed as nothing more than “fairy dust.”
When you have that kind of track record and lack of credibility and you want to issue a game-changing report you better have every duck in line. I swear, if AHIP issued a press release on a crystal clear day telling DC the sun was shining no one would believe them [emphasis added].

But you can’t blame Karen Ignani alone – her board, which includes CEOs of pretty much all the big and most of the medium-sized health plans, obviously played a big role in developing AHIP’s ‘strategy’, such as it is. There are some really bright and capable folks on that board, many of whom are likely stunned at the blindingly inept way AHIP tried to make their point – a point that I absolutely agree is entirely valid, and for which there is ample historical support.
Alas, the correctness of their opinion has been overwhelmed by the way it was ‘presented’ – a bucket of cold slops dumped over the heads of the Democrats who were (at the time) warming to the idea of sending forty million more paying customers their way.
Unless…unless Karen Ignani is a secret single payer zealot, the only explanation is they just woefully miscalculated – or the accelerator got stuck…

(much as I’d like to take credit for the Harry and Louise to Thelma and Louise, I stole it from someone on the toob)

Oct

A Quarter Trillion Dollars – from where?

Posted by Joe Paduda on Tuesday, October 20th, 2009 | Comments

That’s what it is going to cost to ‘fix’ Medicare’s physician reimbursement problem. A bill introduced into the Senate, and now scheduled for a vote within days would eliminate the Medicare Sustainable Growth Rate (SGR) program (which determines, or is supposed to determine, what docs get paid by the Feds for procedures) while adding another quarter trillion dollars to the program’s deficit.
Really.
The Medicare SGR formula/process was set up six years ago to establish an annual budget for Medicare’s physician expenses. Each year, if the total amount spent on physician care by Medicare exceeded a cap, the reimbursement rate per procedure for hte following year would be adjusted downward.
And for the last six years, reimbursement – according to SGR – should have been cut, but each year it was actually raised, albeit marginally. The result is a deficit that is now almost 250 billion dollars, a deficit that we’\re carrying on our books, and, by the way, is not addressed in the Senate Finance Committee’s reform bill. In order to pass, the bill, S 1776, will have to get at least 60 Senators to agree to waive a budget point of order because the measure is not offset in the budget – that is, there isn’t a cut of a quarter trillion in spending elsewhere in the budget, so the bill, which goes by the feel-good title of Medicare Physician Fairness Act of 2009 (MPFA) will add a quarter-trillion bucks to the deficit.
Physicians are, not surprisingly, all in favor of the bill – even if there are no details on what the ‘new reimbursement’ methodology or levels will be. Certainly not in the bill itself, which takes less than a minute to read. If you’re looking for what replaces SGR, and how Medicare will control costs, don’t look in the bill – it isn’t there. It looks like the docs think anything is better than the SGR; at least that’s what their thinking appears to be today.
But what about the cost? Where are we going to come up with a quarter trillion dollars, while adding another eight hundred billion or so for the big health reform bill? Does the MPFA have some magic bullet, a money tree, a golden goose provision?

Sources on Capitol Hill tell me this isn’t just a Democratic measure, but one that will likely garner perhaps a half-dozen Republicans voting ‘aye’. Both Harry Reid (D NV) and Minority leader McConnell have agreed the Senate will proceed to vote on S. 1776 next week.
Well, what can you expect from a body that voted in favor of Medicare Part D, and as a result added $8 trillion to the Medicare unfunded liability? This is a measly quarter-trillion, less than 3% of the Part D boondoggle.
Jeezus H Flippin Christmas. This is nuts.

Oct

H1N1 – the impact on employers

Posted by Joe Paduda on Monday, October 19th, 2009 | Comments

Of the many topics worthy of attention, I’ve been remiss in not learning more about swine flu, aka the H1N1 virus.
According to the CDC, to date there have been 9000 hospitalizations and over 600 deaths due to H1N1, and more are coming. There’s no doubt H1N1 will have a significant impact on employers – and also no doubt many have yet to plan adequately.
Here are a couple things to ponder…
1. If an employee gets sick after exposure at work (think teachers…) is that a work comp claim?
2. If a bunch of workers get sick, should you shut down operations for a while? If so, can employees work from home?
Broadspire, the big TPA, is hosting a webinar on H1N1 le\d by Jake Lazarovic, MD, the company’s medical director and in my experience a thoughtful and insightful clinician. The webinar is going to be held today (Monday) at 3 est, Wednesday at 1 est, and Friday at 9 est. Click on the links for more info.
Note – Broadspire is not a client.

Oct

Anti-trust and the Health Insurance Industry – what’s this all about?

Posted by Joe Paduda on Monday, October 19th, 2009 | Comments

Last week the Senate Judiciary Committee held an initial hearing aimed at removing some of the health insurance industry’s anti-trust exemptions. The hearing, entitled “Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry”, may be a reaction – at least in part – to the health insurance industry’s public (and private) assault on health reform legislation.
And over the weekend, President Obama added his considerable weight to the call for a review of the industry’s anti-trust exemptions.
To be sure, AHIP’s public slam of the Senate Finance Committee did nothing to strengthen relations with Democrats, and the hearing, (although put on the Committee’s schedule on October 2, well before the AHIP report was released), was a fine opportunity for Senators outraged by AHIP’s action to up the ante.
Like pretty much everything having to do with health insurance and reform and Washington, this isn’t simple, and I certainly don’t pretend to understand the details. But as near as I can make it out, here’s what is causing heartburn among some.
Here’s Julie Barnes’ synopsis: “There are three sets of laws involved here; 1) the federal antitrust laws; 2) the state laws that regulate the insurance industry; and 3) the federal law passed in 1945 called the McCarran-Ferguson Act. The antitrust laws promote competition, and states have a long tradition of regulating insurance practices for their citizenry. The McCarran-Ferguson Act doesn’t regulate insurance or prohibit certain anticompetitive behavior, but it does allow federal and state governments to regulate insurance and makes clear when antitrust laws do and do not apply to the insurance industry.”
The issue is the industry’s exemption from the McCarran-Ferguson antitrust laws (which is under the Judiciary Committee’s purview). Providers have long contended that it is unfair for the payers to be exempt from these laws when providers are not; this, providers contend, is unfair. I’m not sure I buy that argument, as provider consolidation has been continuing regardless of the regulatory environment, and the negative effects of that consolidation were clearly illustrated in the Boston Mass market.
McCarran-Ferguson exempts insurance industry activities that: (a) constitute the business of insurance; (b) are regulated by State law; and (c) don’t constitute an act of boycott, coercion, or intimidation. According to Barnes, the crux is the ‘business of insurance’ standard – and the Supreme Court has set up a test to determine if an activity is the business of insurance – (1) whether the activity has the effect of transferring or spreading a policyholder’s risk; (2) whether the activity is an integral part of the policy relationship between insurer and insured; and (3) whether the activity is limited to entities within the insurance industry.
Over the years, the exemption has been tightened considerably – in particular mergers and acquisitions and provider contracting activities are generally not exempt, so anti-trust laws and regulation apply.
So what happens if Congress repeals the exemption? Way too early to tell, but undoubtedly even the whisper of this possibility is most unwelcome in health plan executive suites.
If you look at market concentration, there’s no question the health insurance industry is not exactly competitive; 94% of insurance markets are ‘highly concentrated’. Here are a few factoids using 2005 data; if anything there has been more market consolidation, so these percentages are even higher today…
– in 96% of markets, at least one insurer has share higher than 30%
– in almost two-thirds of the markets, one insurer has share greater than 50%
– in a quarter of the markets, one insurer has share at or above 70%
But repealing the industry’s exemption is not likely to significantly increase market competition.
Which leads us back to the original question – Why?
My sense is this is a ‘OK, you want to mess with us?’ statement by the Senate Democrats. It is a very loud, and very close, shot across the bow of the industry intended to let them know in no uncertain terms that intransigence will be very, very costly.
What does this mean for you?
Watch to see how AHIP et al react. If they appear somewhat chastened, don’t be surprised.

Oct

The Baucus bill is out of committee…and that means exactly what?

Posted by Joe Paduda on Thursday, October 15th, 2009 | Comments

Over the last few weeks, all the media focus (as well as here at MCM) has been on the Senate Finance Committee’s health reform legislation, aka the Baucus bill. Now that the eponymous bill has been voted out of committee, it is no longer the only game in town, but rather one of six.
As the most ‘conservative’ of the six bills, it is highly likely the final version’s details will reflect a less ‘conservative’ approach, perhaps with some version of the public option, which the other Senate and all House versions contain.
First, the Senate is going to compare, contrast, and possibly combine it with the bill voted out of the Senate Health Education Labor and Pensions (HELP) committee – the one formerly chaired by the late Senator Kennedy. Among the major differences between the two; the HELP bill includes a public option; phases in the mandate penalty of $750 immediately (Finance doesn’t get to $750 till 2017); has a tougher employer mandate with higher penalties; expands Medicaid to individuals earning up to 150% of the Federal Poverty Level (Finance is 133% and is delayed till 2014); and the HELP bill does not contain the excise taxes that are included in Finance’s effort.
The differences with the House Tri-Committee bill (HB 3200) are even more stark (no pun intended).
HB 3200 has a much stiffer individual (2.5% of adjusted gross income up to the cost fo the average plan premium thru the Exchange) and employer mandate (almost all employers would have to contribute at least 75% of the cost of individual/65% family coverage or pay 8% of payroll into the Exchange; and offers up to 50% premium credit for smaller employers to help pay for insurance; increases Medicaid reimbursement to 100% of Medicare (Medicaid is usually significantly lower). HB 3200 also sets up an Insurance Exchange, is funded thru a higher tax on families making over $350,000 annually, increases rebates from drug companies, and significantly reduces Medicare Advantage subsidies. (there are several version of this bill, see the Kaiser site for additional detail).
CBO estimates HB 3200 will cost slightly over a trillion dollars over ten years, significantly more than Finance’s $850 billion.
These are by no means the only differences; they do serve to illustrate the yawning gap between the Finance bill and the other major bills before Congress.
So, what’s going to happen?
Can it get thru the Senate is the standard by which all revisions and edits will be judged. Just a week ago, that made it highly likely the final bill would look much like the Finance version, but the release of the PwC report by AHIP may have given potentially-wavering Senate Democrats the push they need to adopt some of the provisions from HELP and HB 3200. Democrats are outraged by what they (I think somewhat unfairly) view as a last-minute stab in the back by the health insurance industry, which heretofore had been publicly in favor of reform.
Democrats are also keenly aware that a failure to pass health reform will be a political disaster.
I’ve long doubted the votes are there to pass reform, but of late the odds are moving – slightly – in favor of reform.
The Kaiser Foundation has an excellent tool that enables side-by-side comparison of all of the bills, proposals, and suggestions; the NYTimes has a comparison of the several bills before Congress here.

Year: 2009