Repeal and replace Obamacare – making the case

Refusing to accept reality, the efforts of some states, individuals, corporations, and elected officials to “repeal and replace” Obamacare continue; a recent conversation on Mark Walls’ WCAG focused on this issue as well – with far too much demagoguing and scare mongering. Bluto would be proud.


The “plans” to replace Obamacare typically include some/all of the following:

  • allowing people to buy insurance across state lines
  • providing a refundable $2500 tax credit to all to buy insurance
  • giving states block grants to use for their Medicaid programs and freedom to spend it however they want
  • funding high-risk insurance plans for people with pre-existing conditions so they can get coverage when insurers reject their applications.
  • additional tort reform

Let’s briefly review these ideas, focusing on their implications for coverage and cost control.

Coverage across state lines

Folks advocating this idea base their view that selling coverage across state lines will reduce costs by eliminating mandated benefits, which one wag says would reduce costs 30-50 percent.

Ha.  That view reflects a complete lack of understanding of the cost drivers in health insurance, the primary driver being – you guessed it – the cost of medical care.  For anyone to suggest that a person in Massachusetts will save thousands if they can buy a policy sold in Idaho is lunacy.  yes, mandates do influence costs, but the underlying cost of insurance is the cost of care.

Refundable tax credit

People can’t buy insurance for $2500, so giving low-income people that amount won’t make them buy it as it is still unaffordable – especially if there’s no mandate to do so. Moreover, many who don’t have insurance couldn’t get it due to pre-existing conditions, and no insurance company would sell insurance to anyone who may end up costing the insurance company lots of money.  That would be foolhardy.

Block grants

Good idea, if they actually use the money to increase the coverage and benefits for Medicaid eligibles, instead of trying to dissuade or discourage potential eligibles from signing up.

Funding high risk pools or insurance plans

These have been tried, and almost all have failed miserably as states don’t like to keep funding them.  Florida’s high risk pool has been closed for years, and only a couple hundred citizens are still covered.  Moreover, this dumps the potentially high cost individuals on taxpayers, allowing commercial insurers to cherry-pick the best risks that will generate the largest profits.

Tort reform

Tort reform will not appreciably reduce medical costs. 

Research indicates defensive medicine accounts for 2.4 percent of US health care costs.  That’s not to say medical malpractice and associated costs are not significant contributors to health care costs as they most certainly are.  However, the majority of malpractice victims never pursue a claim.

Of course, lost within this mishmash of convoluted half-thoughts and unworkable, un-informed, and simplistic “solutions” is a rather awkward truth; the individual mandate and other key parts of PPACA, currently reviled as socialism, communism, or worse, came from ideas advanced by conservative icon William Kristol, right-wing think tank Heritage Foundation, Sen Orrin Hatch (R UT) and former GOP Presidential candidate Mitt Romney, among others.

So, repeal and replace, with, what?


Fun Friday Factoids

In St Pete at CompPharma’s annual meeting, so can’t do a deep dive into any big blog-able issues…yet there’s so much deserving of attention.  Here – in easily digestible bite-size chunks – are a few items of interest.  Happy dining!

Congress will NOT fix the Medicare physician reimbursement issue this year – so they will boot that can into Q1 2014.  Why do you care? Because work comp fee schedules are usually based on Medicare’s rates, so this will affect work comp.  And, if it is changed, it will impact cost-shifting and commercial reimbursement rates.

Since Florida implemented its Prescription Drug Monitoring Program, oxycodone-related deaths have dropped 41%.  Someone remind me why the governor refused to fund this for months…

Higher medical costs in northern California appear to be driven by consolidation of the provider market.  A report in the NYTimes discusses Sutter Health’s high charges and the lack of justification therefore, Sutter is one of the most costly providers in the nation.

A hearing in Pennsylvania on physician dispensing in work comp included a discussion of the higher medical costs, longer disability duration, and higher indemnity expense associated with doc-dispensed drugs.  Reportedly one of the legislators displayed an ad from a dispensing company’s website that discussed how dispensing docs could make $100,000 without doing any work.

Enrollment in Exchanges has picked up dramatically; according to the Kaiser Foundation, as of this time last month 1.3 million applications had been completed, a quarter of those from California.  WIth over 26,000 enrollments in just the first two days of December, there’s a lot of pent-up demand yet to work its way thru the system. We shall see if the back end, where data gets shared with insurers, holds up. Jury is out…



Recapping the NWCDC

The feet have stopped throbbing, business cards have been entered into the CRM (aka contact database), and the whirlwind that is NWCDC has been left behind to be replaced by some general themes.

Here are a couple of takeaways.

Big show, lots of attendees. Looks like the economy’s recovery, change in venue, and increased profitability of work comp (for payers and vendors alike) drove more folks to attend the conference.  Either that or a whole lot of Latin music fans were attending sessions and working the floor.  Sessions were well attended; topics and/or speakers seemed to attract more interest than at other meetings I’ve been to recently and there was some new information from different folks that I hadn’t heard before.  

Lots of sessions on opioids, which indicates a) the industry is paying attention; b) payers are looking for solutions; and c) there are business opportunities.  I’d note that the depth of knowledge demonstrated by some hawkers pitching solutions was rather unimpressive.  There were far too many instant solutions that are anything but, thrown together by folks with very little understanding of the problem and obstacles to solutions.

I met with several new up-and-comers, folks who built businesses before, sold them, and are now developing their next offering.  Unlike the mega-companies that were the talk of the show, these are focusing narrowly, building slowly, and finding under-served, or not-well-served niches.  Liked what I saw.

Comp remains attractive hot in the investment community.  Among the many private equity folks in circulation were several Apax folks, the PE firm that just acquired One Call and Align.  More to come.

There’s nothing like sharing space with the Latin Grammys to show an old white guy just how uncool and out-of-the-loop he is.  If a celebrity walked by me, I never knew it.

And the Mandalay Bay is waaaay nicer than the former LV Hilton.  Need to get the exhibits closer to the sessions, though.


What happened while we were focused on important stuff

Happy December.  While we were doing all things Thanksgivukkah, the world continued.  Here are the “high”-lights. Such as they are.

The deadline to “fix” the federal health care exchange passed; with White House officials declaring:

  1. it never really was a guaranteed drop-dead date; 
  2. it’s fixed for most some about 50,000-at-a-time users; and
  3. the small employer enrollment deadline has been extended for a year.

What is NOT fixed is the back end; insurers are not getting accurate information about who enrolled; the plans they enrolled in; or the amount, if any, of their subsidy.  It appears the Administration has decided that somehow the insurers will figure it out and if they don’t that’s the insurer’s issue.

That’s unfair, wrong-headed, and blithely ignorant, not to mention irresponsible.  Health insurers have spent hundreds of millions of dollars preparing for January 1, and now they’re being told “we screwed up and it’s your problem if you don’t know who your members are, don’t get paid for those members, and can’t tell doctors if someone is covered.”

On the state exchanges, there’s a mixed bag with states enrolling lots of folks, while others (MD, OR) having their own issues. Those states signing up folks may find the problems with the interface with the feds spill over. Here’s a sampling of the latest figures:

  • New York – 76,177
  • California – 385,556
  • Kentucky – 60,000+
  • Colorado – 6001

The Feds get much more oversight authority over compounding pharmacies; a bill addressing the issue was just signed into law that gives the FDA a significant role in monitoring compounders.  Recall one Massachusetts compounder was implicated in illnesses and least five deaths associated with contaminated drugs used for back injections.

In the much smaller work comp world, there’s been a shake-up at Coventry Workers Comp, with Art Lynch taking over the top spot from suddenly-departed David Young. Some may see this as a sign that owner Aetna isn’t interested in comp; I don’t.

On the even-smaller work comp doc dispensing issue, Pennsylvania is the latest battleground, with legislation just introduced to cap reimbursement for physician dispensed repackaged drugs at 110%, with a five day limit on scripts.   Legislation is herePlease please please forward the link and get your government affairs folks involved, and thanks to WorkCompCentral’s Mike Whitely for the heads’ up.

Finally, as far as I know, there weren’t any more acquisitions in the work comp world over the weekend…




Changes at Coventry work comp

David Young is no longer heading up the Coventry work comp business.  

His departure, announced to customers after the conclusion of the work comp conference took the work comp management staff (and me) by surprise.  Long-time Coventry exec Art Lynch is now running the show, reporting up to Aetna’s Steve Doyle.

While I’ve been a long time critic of Coventry, I’ve also noted Young was in a no-win position.  Tasked with generating cash for the enterprise, Coventry’s work comp unit never received the investment or attention it needed to grow and evolve.  Instead Young and his colleagues had to raise prices, convince customers to stay with the increasingly-creaky BR 4.0 bill review application, cross-sell all services, and do so with fewer and fewer resources.  As a result, customers weren’t happy, and there wasn’t much Young et al could do to make them any happier.

Lynch knows the business, is well-regarded and well-liked, and is a consummate professional.  He knows Coventry’s customers and is known by those customers.

What does this mean?

I’d be throwing darts if I speculated, so I won’t. 


Vegas – the elephant hunt is on

It’s got to be weird.

Former competitors standing next to each other in the booth, greeting guests at their events, talking up the advantages of companies they were competing with just a month ago.

It may be even stranger for those people who were not competing but now are, the ones whose companies have acquired units that now conflict with companies they used to work with, or at least be supportive of.

Nonetheless thats where the industry is these days. And that consolidation and disruption is going to continue for the foreseeable future. The word from the investors I’ve spoken with is that they are still very actively pursuing investments in work comp.  Met with several yesterday who were on the floor and in meetings all day, looking for the next deal.

My sense is the interest is primarily in big deals – not taking companies from $20 million to $100 million but from $400 million to a billion dollars plus. Sure, the smaller deals will continue, but the big stuff is where the focus is these days.

Here’s a very brief take on what I see happening.

Coventry is going to get lots if attention as investors seek to pull it out of Aetna and either operate it as a standalone or use it as a platform to compete with.  For all the reasons I enumerated here, that isn’t going to happen.  If anything, the current Obamacare debacle will make it even less likely Aetna exits a complementary, fee-based, non-PPACA-affected business.

Not gonna happen.  If anything, Aetna is going to look to add to their work comp portfolio; expect to see them in the hunt, albeit very selectively.

One Call is reported to be looking for add-on deals, and I’d have to think one likely product-market is work comp PBM and a broader network.  The Apax folks are here and, according to a couple reports, asking lots of questions about market opportunities.

Expect OCCM to add business, although the prices current owners will demand are going to be outrageous unthinkable in line with the Align/One Call multiples.

Stratacare was mentioned several times; there’s been lots of talk over the last few months but no public action.  I’d have to expect something will occur here; perhaps KKR, the new owners of Mitchell, will make a play to buy them out and consolidate the bill review industry.  If they do, I have to believe Medata and MCMC would be licking their chops.

What does this mean for you?

A very busy holiday shopping season!


Today’s work comp briefs…

And, no, I’m NOT referring to the type Bob Wilson discusses in a recent investigative report...

First up, and timely indeed, is a post from friend and colleague Sandy Blunt about the integration of guidelines with medical bill review. Medata ran a large sample of medical bills from a very well managed work comp payer against medical guidelines and identified “15 percent in cost savings from questioned medical procedures” – over and above what the payer was already finding.  Now, I’d note that “questioned” does not mean “actual”, nor should it.  However, it does indicate a major opportunity that I daresay many payers are missing out on; employing guidelines as part of the bill review process.

Compounding drugs isn’t just for people anymore!  A colleague sent me a link to a story of a drug dealer in Texas that has been selling performance-enhancing drugs for racing horses. Good to know they aren’t limiting their expertise to just us humans!

Millennium Labs and Texas Mutual just inked a deal wherein Millennim will be providing drug testing services for claimants prescribed opioids. (ML is an HSA consulting client).  Texas Mutual has been at the forefront of opioid management for a couple years now; this further enhances their program.

The Claims and Litigation Management Alliance is hosting what looks to be an interesting conference in January; the NYTimes’ Barry Meier will be keynoting; Barry has written several books on opioids and published articles on physician dispensing and opioid usage in work comp


What to check out at the Work Comp Conference

For those attending the National Work Comp and Disability Conference in Las Vegas next week, here are a few things you may want to check out.

Following up on last week’s webinar reporting the results of our Survey on Opioid Management in Work Comp, I’ll be discussing the report and answering questions at CID Management’s booth.  It’s an invite thing, so click here to get signed up.

Wednesday at 5:30 good friend and colleague Peter Rousmaniere will be discussing his new book, Work Safe: An Employer’s Guide to Safety and Health in a Diversified Workforce.  The event will be held in the Mandalay Bay Hotel; stop by either the Concentra or Broadspire booth to get details.

MedRisk (consulting client) will have their magician on hand; if you haven’t seen him do his stuff, it’s a must-see.

I’ll be at Millennium Labs’ booth (1245) Wednesday at 10 and 4, stop by to catch up on the latest in drug testing, new illicit substances making the rounds, and creative things folks are doing to try and fool the testers.

The AMA – American Medical Association is there.  You may want to ask them what their position on physician dispensing for profit is; I and others (thank you, American Insurance Association!) have been trying to get them to get real about this for years…their policy statement says it’s a no-no, but their lobbyists seem to support it.

Alkermes is the company that manufactures Vivatrol; the injectable intended to address opioid addiction.  I’ve heard some payers are considering the medication as part of a comprehensive treatment program – may be worth checking them out.

There are a ship-load of medical device companies on the floor, most with products intended for spinal surgical implants.  There are also a few companies offering solutions to the implant problem. You may want to visit one of the suppliers, then hop on over to a cost containment firm to compare and contrast… 

Gensco Labs – these are the wonderful purveyors of SpeedGel(r), that amazing concoction guaranteed to speed recovery, reduce pain, maybe even grow hair on turtles, and all for a price just ten times more than it’s almost-identical off-the-shelf competitor; Ben-Gay.

Ask them: How exactly is your stuff different and better than Ben-Gay? Show me the research!

Alas, Automated Healthcare Solutions (the folks who sued me for defamation in federal court, only to have the case thrown out), is not exhibiting; located in the same Florida ‘hood as Gensco, and sharing at least one corporate exec, perhaps they don’t want to steal the limelight…

I’m going to try and report from the conference, but with few minutes to breathe it will be difficult – at best.

Pleasant travels, and remember – what happens in Vegas, gets recorded on smartphones.


Obamacare is NOT just the Federal Exchange

Okay, deep breath here folks.

There’s no question the Federal Exchange is a mess.  And that’s the polite characterization.

But let’s not get too carried away, because the Federal Exchange is just a small part of PPACA/Obamacare.  In fact, the Exchange impacts just 7% – seven percent! – of the US population.  Thus, it is:

  1. Irrelevant for most Americans – specifically the 80% who get their insurance from their employer or are covered by Medicare or already covered by Medicaid.
  2. Not operating in 16 states plus DC, and that includes a couple of big ones – California and New York specifically.  In general, those exchanges are doing pretty well. Yes there are significant problems in Hawaii, Maryland and a couple other states, but overall they’re doing fine.
  3. Operating in states where 59% of today’s uninsured live.  Sure that’s a lot, but it isn’t everyone, not even close. And, a big chunk of that 59% are not eligible for coverage for various reasons (undocumented, state refused to expand Medicaid, etc.)

And, the Federal Exchange is just one part of Obamacare.

It is a means to an end, and that “end” is covering as many eligible people as possible, while fundamentally changing the competitive marketplace to force insurers to compete based on delivering the best outcomes at the lowest price.

Key components of Obamacare already implemented include:

  • Medicaid and CHIP expansion, providing coverage to the growing population of people who don’t make enough money to buy their own coverage, or who work for small companies that don’t provide insurance.  
  • Credits to help small businesses buy coverage
  • Elimination of medical underwriting, lifetime caps, and coverage of dependents to 26
  • Allocation of funds to Comparative Effectiveness Research to promote treatments that actually work.
  • Policy changes and funding for new delivery systems and reimbursement arrangements, funding which has generated explosive growth in Accountable Care Organizations and Medical Home-based models.

What does this mean for you?

Eventually, the federal exchange will be fixed.  Meanwhile, our health care “system” is going thru drastic change, change that will, over the long term, improve the health care we get and reduce the cost of that care.  

Of course, there’s going to be some well-deserved political fallout in the interim.