[see update below]
Now that the Supreme Court has handed down the final word on the PPACA, we can stop speculating and start thinking thru how it will effect workers comp.
Overall, this is good news. That may not sit well with those ideologically opposed to reform, but here’s why.
The most important single impact is this – When injured workers have coverage, there is no need for WC to pay for non-occ conditions for injured claimants (whether the WC payer follows thru on this is a separate issue).
This is also the most significant short term impact, especially in states such as Texas and Florida where almost one in four working age people doesn’t have health insurance. Think of it this way – a claimant needs surgery for a rotator cuff tear, has diabetes and hypertension. If they don’t have coverage, the work comp payer will pay to treat the diabetes and hypertension – those conditions have to be addressed if the claimant is going to recover and get back to work. Now the comp carrier can send those bills over to the health insurer.
And, the adjuster, case manager and UR function won’t have to engage in the back-and-forth with the provider over treatment, delaying treatment and extending disability duration.
There are a plethora of other ways PPACA will impact work comp – here’s a summary
1. There will be somewhere around 24 – 28 million more Americans with health insurance; thus there will be a lotless need for hospitals and other providers to cost shift to work comp to make up for revenues lost due to treating the uninsured. Sure, Medicaid reimbursemt is lousy and Medicare only a bit better but something’s a lot better than nothing.
2. Possibly higher claims frequency, although this is based on assumptions and interpretations. The data indicate those workers with health insurance are more likely to file comp claims than those without, but that appears to be a statistical relationship and not a causal one. Employers who provide insurance have better employee relationships, which appears to make employees less afraid to file WC claims.
3. For the big managed care companies, continuation of a much stronger and tighter focus on managing individual and group health, Medicaid and Medicare will mean less interest in, and resources dedicated to comp. Make no mistake, this is an event for which the big and small health plans were woefully unprepared. Many have been scrambling to adapt, investing in technology, getting bigger via acquisition, and strengthening relationships with providers.
Coventry and Anthem are the large players most invested in comp; they appear to have different strategies and approaches which we’ll explore in a future post.
4. Healthier claimants – those with insurance are healthier than those without, and healthier claimants heal faster and don’t need as much treatment.
5. More science and less art in the practice of medicine as comparative effectiveness research gains traction – good news indeed for comp payers saddled with back surgeries and H-Wave devices.
While some states may decide to not accept funding for the expansion of Medicaid, on balance this won’t be a negative – any additional coverage is a net positive for comp.
UPDATE – A colleague reminded me (after I posted this today) of the access issue – and he is correct. There will (very) likely be an access problem over the near term as primary care providers are inundated with new patients, and over the medium term for specilaists as folks who’ve long avoided care because they could not afford it now get those problems resolved – knee replacements, etc. My colleague’s reminder is well worth considering, and payers would be well-advised to develop strategies to strengthen relationships with primary care – and specialist providers. WC primary care is best delivered by occ med docs, so this may also encourage payers and employers to direct their claimants to docs better equipped to deal with those patients.
What does this mean for you?
Healthier claimants, less cost-shifting, more science, and possibly slightly higher frequency – on balance, good news indeed for workers’ comp.
For those who are interested, I have a rather detailed presentation on this issue; send an email to infoAThealthstrategyassocDOTcom and we’ll get it out to you next week.
Health Wonk Review is hosting a special edition today compiling the views of the health bloggers on the Supreme Court’s decision on PPACA.
By now all know the Court upheld the Affordable Care Act by the narrowest of margins, with Chief Justice John Roberts the swing vote and author of the majority opinion. The quick synopsis from MCM (that’s me). Everything stands except the Feds’ ability to require states to expand Medicaid coverage or lose all their Medicaid dollars.
While there will still be a significant expansion of coverage, if some states opt out the number of uninsureds will not drop below 18 million as originally forecast. I don’t see a lot of states standing on principle and rejecting the money – which covers up to 90% of the cost for the first few years, and 50% thereafter. Then again, stranger things have happened. The basis for Justice Roberts’ opinion lay not with the Commerce Clause but rather the Constitutional power of taxation. We’re going to start with the legalities.
Which are much more than just “legalities.”
Several contributors explore the issue albeit from different perspectives.
David Harlow of Healthblawg fame finds the dissenting opinions rich in content and entertainment value, especially Justice Ginsburg’s statement “no one would offer the hypothetical and unreal possibility of a vegetarian state as a credible reason to deny Congress the authority ever to ban the possession and sale of goods. The Chief Justice accepts just such specious logic when he cites the broccoli horrible as a reason to deny Congress the power to pass the individual mandate.”
At Health Affairs, Tim Jost digs into the Roberts opinion, citing this key statement: “proper respect for a co-ordinate branch of government requires that we strike down an Act of Congress only if the lack of constitutional authority to pass [the] act in question is clearly demonstrated.” Clearly Roberts felt the “demonstration”, to the extent there was one, was not clear enough.
We welcome back HWR co-founder Matthew Holt to these digital pages. Matthew sees the tie to taxation as a watershed moment; “In any rational society health care ought to be a public good financed through taxation and distributed in some manner that makes rational sense. America has never officially believed that. [emphasis added] Now it at least has affirmed the concept.”
Jason Shafrin sees this from his economist’s perspective; saying the mandate-as-tax logic “is one that economists would support (whether economists support the mandate is a separate issue). All regulation is a form of a tax in that it restricts one’s choices and imposes a cost on consumers and/or producers.”
And Ezra Klein thinks Roberts toed the conservative line; “The 5-4 language suggests that Roberts agreed with the liberals. But for the most part, he didn’t. If you read the opinions, he sided with the conservative bloc on every major legal question before the court…Roberts’s coup in writing an opinion that has found support on both sides must inspire some grudging respect.”
Maggie Mahar – and we are happy to see her back at her signature Health Beat blog – was not only unsurprised by today’s ruling – she called it. Read why she was sure the law would not be overturned in her post, Today, the Supremes sang
At Workers’ Comp Insider, Julie Ferguson did a little live blogging of the Supreme Court ruling, catching some of the major media in “Dewey wins” moment. CEO Tom Lynch weighed in with some analysis of the impact today’s decision.
Jay at Colorado Health Insurance Insider sees Roberts’ decision as not inconsistent with the government activism of the Bush administration. Jay opines “While the individual mandate and wire tapping seem on the surface to be completely different topics, they’re both on the spectrum of government involvement in our lives, and government utilizing its powers to promote an agenda that it views as good for society at large…”
The only part of the ACA seriously affected by the decision was the expansion of Medicaid, which, according to Sara Rosenbaum, was to “reshape Medicaid from a program covering certain categories of the poor into one that offers universal public insurance for all non-elderly low income citizens and long-term legal residents living in poverty.” Rosenbaum believes Roberts was able to convince other Justices to split Medicaid into “two spending programs,” thereby preserving the existing programs while placating the states’ rights advocates.
The implications for Medicaid are succinctly summarized by David Williams in his podcast interview with Avalere Health CEO Dan Mendelson.
While David’s got the high level view, Liz Borkowski sees a lot of uncertainty at the Pump Handle; “If some states decide not to go along with the now-optional Medicaid expansion, their poorest residents who don’t already qualify for Medicaid will have neither Medicaid coverage nor subsidies to help them get private coverage.”
Hank Stern’s had it with all this reform and Obama-stuff; he’s ready to pack up and leave, and suggests the medical tourism folks may be big beneficiaries of the Roberts decision
Roy Poses notes the decision – and the PPACA – suffer from a lamentable lack of attention on the concentration and abuse of power that still pervades our health care system; without addressing those issues, we’re unlikely to see any real and lasting improvement.
And of course, there’s the internet’s ability to quickly give us the reaction of the public, Jon Stewart,
and, of course, President Obama…
In a 5-4 vote the Supreme Court upheld the individual mandate and the rest of the PPACA, with Chief Justice John Roberta the swing vote.
Medical cost containment expenses in California have doubled over six years. Yet medical expenses have continued to increase, led by facility and surgery expense, and WorkCompCentral reports the combined ratio hit 122 in 2011, a substantial jump from previous years. (sub req)
Are we wasting hundreds of millions on ineffective programs, or are these programs holding costs well below what they otherwise would be?
The answer isn’t readily apparent and it isn’t straightforward – no surprise there. Let’s reach into the cost containment bucket and see what we are paying for.
Bill review accounts for about $90 million of the $384 million total (based in a cost of about $6 per bill). We will be publishing our second Survey of Bill Review next month; a preliminary review shows most respondents see a good deal of value in bill review although that value would beach higher if UR and BR were electronically and tightly connected.
Networks are a bit knottier. Most incur a percentage of savings fee; I’ve long held that this arrangement – for generalist networks – encourages higher utilization of medical services and can drive up cost. My best guess is network costs in the Golden State account for about $110 million in cost containment expense, and that’s too much by far for many networks that don’t positively affect medical outcomes. (there’s no question some smaller tighter networks can and do have a dramatic impact on outcomes, but they just aren’t used enough.)
Case management can be very useful; if used correctly (Im seeing a pattern here…). Task-based field case management and well-coordinated telephonic CM can be very helpful indeed. Identifying problems, educating the employer about RTW and non-comp-savvy docs about comp, getting the claimant to the right providers and supporting the adjuster in assessing treatment are all necessary and cost-effective. But dumping cases on case managers, or allowing CM to run up lots of hours while doing not much more than documenting the downward spiral of case happens far too often.
And let’s not forget many (but by no means all) TPAs generate additional revenue and profit by employing CM whenever and wherever possible
Utilization review has been around forever, yet it is still misunderstood and controversial. Appropriately employed, UR can help ensure the care that is delivered is the right care for the claimant in the right setting at the right time. Used indiscriminately, it can be a cost driver that infuriates physicians, delays necessary treatment, prolongs disability, and does little to improve outcomes.
I’ll have much more to report on UR next month; we’re closing our first Annual Survey of UR in Workers Comp Friday. To date we have over 150 participants; if you’d like to add your thoughts to the Survey (and get a detailed copy of the report) click here.
Some payers are doing an excellent job managing medical and managing cost containment – by focusing on outcomes. But most are not.
Paying over a hundred million dollars for network access without clear and convincing proof that they are improving outcomes is not smart.
Using case management and UR indiscriminately across all providers in all cases is a waste of money and counter-productive.
More to come.
There’s precious little good news on the subject of opioid overuse in work comp; NCCI and WCRI report increased usage, pill mills abound, CWCI’s research shows longer disability durations, and payers lament their inability to do much of anything to fix the problem.
The last two weeks have brought news that is welcome indeed; early indications are that Texas’ adoption of a restricted formulary has led to significant reductions in the use of opioids early on in new claims, stakeholders are focusing on preparing to address legacy claims, and there may well already be some impact on legacy claims.
For those not deep into this issue, Texas is one of the few states (and almost all the others are monopolistic WC states) that has adopted tight guidelines re the prescribing and dispensing of opioids to workers comp claimants. These guidelines were imposed on all claims occurring on or after September 1 2011. While it is still early, preliminary research indicates a significant impact on prescribing and dispensing patterns. (the changes compare claims occurring from September to November 2011 to claims in the same timeframe in 2010)
- prescription drug costs for drugs “not recommended” (N) for 2011 claims were reduced by 75 percent when compared to 2010
- the number of claims receiving “N” drugs dropped by 54 percent
- total prescription drug costs for 2011 claims declined 26 percent – about $1.4 million
- “the frequency of opioid prescriptions dispensed to injured employees decreased by 10 percent and the costs associated with opioid prescriptions decreased by 17 percent”
Word is there has also been an impact on older, legacy claims. Anecdotally, PBMs are reporting they are seeing changes in prescriptions for some claims that were incurred long before 9/1/11.
The data from Washington state is another indicator that physicians can and do change prescribing patterns when forced to by regulation. Washington saw a significant decrease in the volume and potency of opioid prescriptions after passage of legislation addressing the issue.
What does this mean for you?
Prescribing patterns can be changed. All it requires is:
a) political will; and
b) tough regulations and/or legislation.
Actually, it was.
Faithful readers will note the delay in this biweek’s publication of HWR, a delay that was not an oversight but intentional; like many of you I’ve been waiting breathlessly for news of the Supreme Court’s pending decision on PPACA.
Alas, the distinguished folk in the black robes aren’t cooperating, so I’ll have to proceed without them.
Much as the real world is. For truth be told, the real world is moving rather quickly towards reforming bits and pieces of what passes for a health care system. And herein begins our tale.
We lead with the estimable Maggie Mahar. Maggie believes if the Affordable Care Act’s individual mandate is ruled unconstitutional by the Supreme Court the government will have to take a carrot-and-stick approach to encouraging healthy Americans to buy individual insurance – and it will likely have to focus much more on carrots. The individual mandate isn’t likely to drive much in the way of behavior change as the penalty wasn’t much of a “stick”.
Maggie’s fellows take this a step further, Harold Pollack and Henry J. Aaron explain how a new GOP majority would assault the health reform law, but wouldn’t stop there; Medicaid and Medicare are on the chopping block too.
At HealthAccess.org, Anthony Wright discusses the “evolution” of the GOP; it’s worth pondering the reasons of the amazing switch of Republican leaders on the individual mandate, from originating the idea to disowning it entirely and saying it in unconstitutional. This transformation is first and formost about politics, of course. But it is more than that–it’s that the mandate forces government to take direct and serious action to force insurers to abide by rules that encourage coverage; “showing that governmental action could actually make progress on social issues.”
David Williams, one of the more insightful observers of all things health care related, doesn’t think the GOP is ready or willing to engage in a meaningful discussion of health reform - but it will need to get serious quick if it wants to be taken seriously
The Huffington Post’s Sanjay Sanghoee thinks losing ACA isn’t that big a deal, as it wasn’t going to accomplish much in the first place. If it does get overturned, Sanghoee wants President Obama to push the public option as a much more robust solution that is much more likely to work.
Methinks the New America Foundation’s Justin Jones and Sanjay would have an interesting discussion re the role of the free market; Justin notes that while the Anti-ACA crowd has long vilified the ACA as an unprecedented intrusion of government into the free market, the ACA is actually very market friendly and free-market advocates should consider whether it would really be the end of the world if it is upheld in its entirety.
But the discussion between Justin, Sanjay, and Bob Vineyard of InsureBlog would be even more interesting; Bob thinks we are being “primed for single payer“; Bob says single payer is a “system with a 100% failure rate.”
Love ya, Bob, but I guess it depends on how one defines “failure”; with 50 million uninsured and tens of millions more under-insured, we ain’t exactly a model of success in coverage, or outcomes, or cost!
My contribution this fortnight focuses on the impact of health reform on employment – Massachusetts has been a great laboratory, and the results are instructive.
Roy Poses – who’s been with HWR since its inception seven (!!) years ago draws parallels between Wall Street, the financial debacle, and the inherent issues with conflicts of interest at the highest levels of government and health care.
Roy is joined in his effort to increase understanding of potential conflicts of interest by Alison Hwong, an MD-PhD candidate at Harvard, and Lisa Lehmann, the Director of the Center for Bioethics at Brigham and Women’s Hospital; posting at Health Affairs, Alison and Lisa stress the importance of going beyond simple disclosure of physican-industry financial relationships to help patients understand the context and implications of these relationships.
Neil Versel wants the public to know that they do have a right to access and correct their own health information, though few know about this or do anything about it. Better to do that now than when it’s critical to your life – and perhaps too late.
Among the other hot topics on the minds of bloggers was obesity – childhood and otherwise.
Kat Haselkorn digs into NYC Mayor Mike Bloomberg’s move to shrink the size of sugary beverages – she’s not sure it will succeed, but applauds the politically-sensitive mandate nonetheless.
This isn’t just a NY thing; out West one of our favorite insurance brokers Louise discusses a similar move in Colorado where a new law bans trans fats in “competitive foods” in public schools.
We conclude with thought-provoking posts about things most of us don’t spend enough time thinking about, and Jessie Gruman’s contribution calls for all of us to consider the implications of moving from curative to comfort care whe “Shifting to Palliative Care”.
Julie Ferguson shines a light on an important public health issue: domestic violence in the workplace. Homicide is a leading cause of occupational death in U.S. women, and while work homicides in general are trending down, homicides of women at work are trending up.
Michael Gavin wants workers comp payers to pay attention to the quantity of opioids their claimants are taking, and do something if it gets excessive.
John Goodman opines that failing to make consumers price-sensitive at the point of purchase is one of the biggest problems with health care. No argument there, although it is no panacea - when you’re on the ER table with chest pain you’re not exactly ready to negotiate.
We do know the Supremes’ decision will come down next Monday or Tuesday, and we’ll likely have a special edition of HWR when it does…if Julie says we can.
Prescription Monitoring Programs are state-based electronic information systems that collect and deliver information about the drugs dispensed to patients, the prescribers thereof, and the pharmacies that do the dispensing.
Each state now has legislation enabling a PMP, with New Hampshire just added to the list. Not all are operational, and even among those that are there is wide variation among and between PMPs. Some are mandatory – that is, they require physicians and/or pharmacies to check them before prescribing or dispensing certain drugs. Others are optional – not surprisingly, usage in mandatory states is much higher than in those states where usage is optional.
What drugs are entered into the system also varies, with some states requiring much broader lists of drugs be tracked via their PMP – typically Schedule II – V Others only require tracking for the most potent Scheduled drugs.
PMPs can identify likely doctor-shopping and patients getting multiple fills for the same script, prevent duplicate fills, guard against dangerous drug-drug interactions, help law enforcement identify potentially fraudulent or criminal activity, and help physicians assess the risk in prescribing narcotics.
There have been some significant results. This from Brandeis’ University’s PMP Center of Excellence:
• Ohio – emergency department medical providers found that 41% of those given PMP data altered their prescribing for patients receiving multiple simultaneous narcotics prescriptions. Of these providers, 63% prescribed no narcotics or fewer narcotics than originally planned, while 39% prescribed more.
• California – 74% of physician responders to a survey indicated they had changed their prescribing practices to a patient as a result of using PMP Patient Activity Reports (PAR); 91% rated the “effectiveness of the PAR in maintaining the care and health of your patient” as good to excellent.
• Kentucky – A 2010 survey of users of Kentucky’s PMP, Kentucky All Schedule Prescription Electronic Reporting (KASPER), found that were an aid to clinical practice, with 70% of prescribers and dispensers judged PMP reports to be “very” or “somewhat” important in helping them decide what drug to prescribe a patient; 90% of prescribers and pharmacists “refused to prescribe or dispense a controlled substance based on the information contained in a KASPER report.”
• Louisiana – Five doctor shoppers who each obtained an average of 16.9 controlled substances prescriptions per month prior to rollout of the state’s PMP in September dropped to 0 prescriptions by December.
• As the Massachusetts PMP began sending unsolicited PMP reports regarding possible doctor shoppers to prescribers in 2010, prescribers were asked about the usefulness of the reports. Of the first 162 responders, only 14% said they were “aware of all or most of other prescribers,” and only 13% said “based on current knowledge, including the report, the patient appears to have legitimate medical reason for prescriptions from multiple prescribers.”
PMPs – properly set up and implemented – can be valuable tools in the battle against opioid abuse and diversion. Alas, the AMA and some other provider and “patient advocacy” groups find fault with PMPs, decrying the extra labor involved in ensuring patient safety and raising what are mostly ill-founded concerns with patient data.
There will be much more to come on PMPs; they need support, strengthening, and financial resources. Remember this.
Seeking protection from double digit annual premium increases, employers have increasingly shifted premium costs to employees and increased deductibles and copays. That’s been largely responsible for the flattening out of rate increases, but there’s been a downstream effect that was entirely predictable.
Hospitals’ write-offs for bad debt were surprisingly stable during and immediately after the recession – since then, they’ve increased dramatically.
In Q4, 2011,“uncollectibles” hit 7.38 percent of gross revenue, up from an average of about 5 percent over the previous eleven quarters.
There’s likely a direct connection between increased employee deductibles and copays and hospital bad debt. And that trend will continue. According to a piece in Health Plan Week [subscription required], employees will pay “34.4% for health coverage (a combination of premiums and out-of-pocket costs) — up from 33.2% in 2011.”
In real money, that’s about eight thousand dollars, and headed higher.
While the higher deductible amounts are undoubtedly making consumers more price sensitive, they also require consumers to pre-fund those accounts so that if and when they need care, the dollars are there. What appears to be happening is many of the health savings accounts aren’t adequately funded so hospitals aren’t getting paid for the patient’s part of the treatment cost.
Simultaneously, Medicaid (about nine percent of the average hospital’s revenue) reimbursement is under enormous pressure as legislators look to reduce costs and Medicare is tightening up as well.
The result? Hospitals’ revenues are shrinking while they’re pressured to improve patient safety, streamline administrative processes, better document care, and invest in IT.
The money’s got to come from somewhere.
What does this mean for you?
Workers comp, auto, and general liability insurers, hold on to those wallets. You’re a very soft target.
We taxpayers agreed to pony up $182.5 billion to bail out AIG after the credit derivative debacle (well, mostly we taxpayers). There were two criticisms of the deal; first that the government should allow the market to determine winners and losers, and second that we’d lose our money. First, the second criticism.
As of yesterday, the Federal Reserve got all its money back plus more. AIG (now doing business as Chartis) announced it has repaid all the Fed money it borrowed (it did not need $21 of the $182.5 billion) and dramatically reduced the amount it owes the US Treasury.
To date, AIG has paid back about $152 billion.
While most of these dollars came from the sale of assets – insurance companies, leasing companies, and other subsidiaries of AIG, this would not have happened if not for significant improvements in the company’s ongoing operations.
That is a credit to the Chartis employees who suffered – and I do mean suffered – through the brutal conditions after AIG’s credit derivative investment group damn near killed the whole company, and a good chunk of the world economy along with it. Whether it was navigating the crowds of protestors outside company buildings, avoiding neighbors at cocktail parties and cookouts, testifying before regulators and Congress, or talking to customers, brokers and prospects, the late summer and fall of 2008 were just awful.
Chartis still has significant issues (excess work comp book is a big one), but CEO Benmosche has the company back on the right track. And thanks to those who stayed and fixed Chartis, the Fed has actually made a profit on that bailout – a profit of at least $3 billion and probably twice that.
In regard to the first complaint about the bailout, there’s a legitimate argument to be made that governments should not bail out companies that fail. In the case of AIG, I believe that’s not the case, for two reasons.
First, inadequate regulations undoubtedly played a part in the credit derivative issue. Thus, government was somewhat responsible for the disaster, and we – the people – are the government. We “allowed” AIG to made those now-obviously-incredibly-stupid investments (isn’t hindsight great?), so, because the problems inherent in a failure of AIG were so monumental, we have to share the responsibility for fixing the problem.
Second, AIG had its fingers in so many aspects of global finance that a failure would have been more than a disaster – it would have cratered the world economy and devastated many individuals, companies, and families. As I noted back in 2009, “AIG provides the underpinning for many pension funds and retirement plans; its financial instruments guarantee the returns for pensioners. It backs up the investment of many banks. It owns many of the airlines’ airplanes, planes that might be repossessed if AIG goes under. AIG insures many Fortune 500 companies, and is among the largest writers of workers comp in the nation. It is a large individual auto insurer as well.”
Thanks to WorkCompCentral for the head’s up.
I was invited to attend PMSI’s Opioid Summit last month and speak briefly on legislative and regulatory actions focused on this issue. The Summit featured Colorado WC Medical Director Kathryn Mueller MD MPH; PMSI Medical Director Natalie Hartenbaum MD MPH; Len Kamen DO and addictionologist; and representatives from several insurance companies, all speaking on their efforts to identify and address potential overuse and misuse of opioids.
Here are a few of the highlights from the meeting. I’ll skip the discussion of the scope of the problem; it’s huge and growing, but it’s time to talk solutions.
First up, what is pain management – Dr Mueller cited the AHRQ Technical Brief on chronic non-cancer pain, noting in part “the focus is not eliminating pain but managing pain to restore physical and mental function and quality of life.”
That is a KEY issue – managing v eliminating pain. It is unrealistic to expect to eliminate pain, and attempting to do so is in large part how we got to this disastrous point.
Dr Mueller went on to review ACOEM’s recommendations for opioid use, which, when compared to what actually happens out there, are pretty remarkable.
Dr Hartenbaum discussed urine drug testing (UDT) in chronic pain and workers comp, citing the WOEMA comparison of opioid guidelines and noting there are various testing protocols;
- before starting a patient on opioids and annually up to four times a year – more if misuse is suspected.
- once per year for “low risk”, up to 4+ times per year for higher risk, high dosage (>120 MED (morphine equivalent dosage)) and/or patients exhibiting aberrant behavior. Hartenbaum cited the opioid risk tool as potentially useful in risk-scoring patients.
Her discussion of UDT was detailed, thorough, and enlightening. (disclosure, Millennium Labs is an HSA consulting client; they were not present at the meeting).
There was more, which I’ll relate tomorrow.