Feb
28

Friday fast facts, catch-up, and debunking

Today we begin with a plea for…research.

Can someone please provide evidence – that’s solid, well-documented, and not just opinion based on…common knowledge that employees file lots of claims under work comp that SHOULD be considered non-occ?

Or that Obamacare will lead to MORE claim-shifting to work comp?

because that’s what two recent analyses of Obamacare’s impact on P&C/work comp say.  One, from Marsh, says “Employers have long been concerned that injuries from non-work-related causes will be shifted to workers’ compensation.”  Why? Is there any basis for this “concern”? Any research? Science? Data?  Not disagreeing with Marsh’s conclusions, rather challenging what passes for “accepted wisdom” in our industry.

Another “analysis” of Obamacare and P&C, by the Insurance Research Council, reads “In some cases, the [workers’ comp] claim may be legitimate, but would have been previously filed as a health-insurance claim…While increased cost-sharing may decrease health insurer outlays, it also may encourage individuals with health insurance to assert coverage for injuries under property-casualty insurance where the opportunity is present to do so.”

Again, since when is idle speculation “research”? And the assertion that there is “increased cost-sharing” is just ludicrous. In fact, there is LESS cost-sharing in many plans due to lower deductibles and co-pays under PPACA plans than employees’ previous health insurance coverage. Research indicates that if the annual out-of-pocket caps had been in place in 2011, the 15 million people who exceeded the cap would have saved $25 billion.

Truth be told, I too “knew” employees abused work comp, until it turned out the research indicated it wasn’t.

Then again, I’m not a “research council”…I am, however, a big believer in credible research and analytics and science.

Narrow networks

A guest post on Monday will dig in to this deeply, so here’s the teaser.  A Kaiser Health Tracking poll just released finds “those who are most likely to be customers in the Affordable Care Act (ACA)’s new insurance exchanges (the uninsured and those who purchase their own coverage) are more likely [54% to 34%] to prefer less costly plans with narrow networks over more expensive plans with broader networks.” (emphasis added).

Not surprising; those who have to pay the entire cost are more price-sensitive than those whose employers’ subsidize their premiums.

Hospital inpatient volume is declining

And has been for five years, due to fewer elective admissions, tighter controls by health plans, more use of outpatient rather than inpatient facilities, and the structural shift towards “fee-for-value away from fee-for-service” due to more emphasis on prevention and practice care.

Sounds good right? Sure, unless you are a P&C payer – as patient census counts from governmental and private insurers declines, those smart hospital execs are going to look for ways to make up that shortfall.

Federal deficit

Then again, it’s not bad news for we taxpayers, as the decline has reduced Medicare spend below projections, which has helped give us the smallest deficit since 2008.

Always good to end on a high note!

 

 

 


Feb
27

The real cost of rejecting Obamacare

“When one person suffers it is a tragedy, when millions do, it is a statistic.”

As abhorrent as quoting Josef Stalin might be, the monster was right.

Opponents of Obamacare love to cite specific examples of people “harmed” by PPACA. As we’ve seen, while their “examples” are false, wildly distorted, and/or fake, they are also powerful as few bother to read the follow-up debunking stories.

Amidst all the complaints about Obamacare from individuals “suffering” under their new policies, it is easy to miss out on the big picture..

From a reader (thank you JR) came this – 4 million people with mental health issues will not gain coverage under Obamacare.  They will not have access to Medicaid, because the state legislators and/or governors don’t want to accept federal dollars to expand Medicaid.

These are real people – boys, girls, moms, dads, grandparents, friends, neighbors, sisters, brothers, wives, husbands, classmates.

They are suffering from bi-polar disorders, deep depression, addiction, autism, severe anxiety and panic disorders.  We are talking about seriously ill people, some with disorders similar to the perpetrators of the Newtown Connecticut and Navy Yard shootings; others who, without treatment, will never become productive, fulfilled, tax-paying members of society.  Instead they will be a burden on us all.

There are 11 southern states that have, for reasons of their own have refused to expand Medicaid as of now.  According to the piece in Insurance Broadcasting, “More than 1.1 million uninsured people who have serious mental health and substance abuse conditions live in just two states — Texas (625,000) and Florida (535,000).”

What does this mean for you?

The next time someone tells you what a great country we live in, ask them if this is how great countries treat their most vulnerable citizens.

When state politicians cut their own social support budgets while refusing to help those desperate for help, we become a smaller, meaner, and less-civilized society.

The full report is here.

 


Feb
26

Exchange enrollment – the big picture

Looks like the glitches, gremlins, and guffaws are just about over; CMS reported today that enrollment via the exchanges is up to 4 million, an increase of some 700,000 over the last few weeks. That despite the ongoing efforts in some states to hinder enrollment, efforts which include outlawing “Navigators”, refusing to expand Medicaid, and prohibiting or barring various forms of consumer education.

Of course, there have been many, many stories of citizens disappointed/angered/furious with their new health plans.

There’s the one about the Michigan woman with cancer who has to pay more.  Oh, wait, she actually doesn’t; her new plan through Blue Cross Blue Shield cut her monthly premiums almost in half, from $1,100 to $571; that plus the annual-max-out-of-pocket pretty much assures her she’s fine after all.

Whew!

Well, then there’s the woman who claimed “Obamacare raped her future”!  Wow, such inflammatory language!  Especially for one so…uninformed.  Ashley Dionne said her costs would go up by a factor of four, but she didn’t realize she’d likely qualify for Medicaid, which would have cut her monthly premium to, well, nothing.

And who could forget Bette from Spokane! She was socked with a $700-a-month increase!  Uh, well, not…exactly.

Oops.  Turns out Bette never checked the exchange, could have got a much lower price, and the price she was quoted was for a waaaay better plan than the cheap one she had – and that’s why it was more costly.

Huh.  Well, what about those folks in Texas?  You know the one Maggie Mahar wrote about, the poor woman (why are they always women?  why don’t we men get to be victims?) with MS who had her policy canceled and the new one cost – gasp – $1000 a month! The couple with a $20,000 deductible! OUTRAGEOUS!!!

Well, that was not true.  First, no policy for a 27 year old will cost that much.  Next, there are NO $20,000 deductibles.  Finally, the paper that printed this crap never fact-checked the piece, and didn’t print a correction, and the reporter assigned the story was told to “To find people who [had insurance policies that] were cancelled – and having some difficulty.”

There are more horror stories.  But please, before you read and repeat, think.  Does it make sense?  Is it objective?  Who printed/produced it?

What does this mean for you?

Yes, there will be horror stories.

But none as horrible as 50 million of our fellow Americans not covered by insurance.

None as horrible as a loved one with breast cancer who can’t get care.

Now that’s horrible.

 


Feb
25

So what’s really happening with Obamacare?

Amongst all the noise about the exchanges and enrollment, it is all-but-impossible to separate the BS from the RS  (real scoop).  So, here are a few factoids.

What’s the net?

Too early to tell.  Looks like things are going much better than late last year – but things were such a horror show that may be “damning with faint praise.”

We will have a much clearer picture in May, after the penalty period comes in to play, premium payment issues are straightened out, and most of the rest of the computer messes are cleaned up.


Feb
24

Fraud, huge profits, and long jail terms

Are all described in detail in Greg Jones’ terrific piece in this am’s WorkCompCentral.  The 1,000 + word piece lays out the fraud perpetrated on California’s employers by the owner of Pacific Hospital, the complicity of two California legislators, and the cost – a whopping $500 million.

Michael Drobot has pled guilty, and is looking at up to 10 years in prison for allegedly paying kickbacks to get docs to use his hospital for spinal fusions, while also allegedly bribing a state Senator, Ron Calderon.

Calderon is also facing charges; a 24-count indictment was filed last week charging bribery, money laundering, and conspiracy.  He and his brother are each looking at possible sentences of over 100 years.

Drobot paid “a kickback of $15,000 for each lumbar fusion procedure that was referred to his hospital and $10,000 for each cervical fusion procedure.”

Folks who have followed California work comp long puzzled over why the state allowed providers to double bill for the cost of implants (see research report dated 6/6/12); this was finally addressed a couple years back, but only after Drobot and his cronies sucked $500 million out of employers’ and taxpayers’ pockets.

There are two things to take away from Jones’ piece –

  • Investigative journalism lives on – although only at niche pubs, the very largest mass media outlets (NPR, Rolling Stone, NYTimes), and independents (ProPublica).

  • Employers and taxpayers are losing hundreds of millions of dollars to sleazeballs who’ve figured out work comp is a very soft target. And this continues with physician dispensing

Feb
21

Friday catch-up

It’s been a very busy week.

Today Mitchell announced they’re going to buy specialty bill review firm FairPay Solutions.  Makes sense for Mitchell, as FPS’ technology and expertise is unmatched in the business, and will add a lot of value to Mitchell’s WC and auto BR solutions. Looks like current FPS CEO Chad Birckelbaw is only sticking around for a few months.  That’s a BIG loss for Mitchell; Chad is not only one of the best people in the work comp services business, he’s also the guy who automated what had been a mostly-manual process and kept FPS moving forward in what has become a very competitive business.

Notably, Mitchell’s announcement said FPS will continue to support other bill review entities.  That’s not going to last.  I very much doubt the other BR companies are going to keep working with FPS; there’s just too much inherent conflict and the other firms are likely very concerned about KKR’s future plans for Mitchell.

There are a couple other transactions in process now which should close shortly.  Looks like the trend is positive for strategic buyers – other companies with related businesses as they are winning most of these bidding wars.

WCRI has just released their annual CompScope Medical Benchmarks reports; the latest info on what’s happening in 14 states; haven’t had time to dig into them but hey, that’s what weekends are for!

The Benchmarks will be discussed at length at WCRI’s annual meeting – if you haven’t signed up yet, best get on it as they do max out.  March 12-13 in Boston…details are here.

On the I-Can’t-Wait-Till-We-Drive-A-Stake-In-Their-Black-Hearts front, Pennsylvania, Arizona, Hawai’i and Maryland are doing their best to control physician dispensing in work comp.   Alas, bought-and-paid-for legislators are much more interested in taking cash from dispensers than saving taxpayer dollars and employer jobs; in a hearing in the PA legislature, Representative Donna Oberlander asked Labor and Industry Secretary Julia Hearthway how much money the Workers Compensation Program would save if the General Assembly ended physician dispensing.   

The response – $18-$26 million.  

 

 


Feb
21

The price of the pill is so last century

For every complex problem there is an answer that is clear, simple, and wrong.

Thank you, HL Mencken, for describing the problem inherent in picking a workers’ comp PBM based on how much they charge for drugs.  

It is really easy to compare bids from PBMs based solely on how much they’ll charge for brands and generics.

It is also wrong.

While workers comp insurers have (mostly) figured out that the price of the pill is a lousy way to decide on a PBM, every now and then I get a call from a payer who’s just been offered a GREAT price from a PBM, and is either a) gleeful that they have been so smart and such a cunning negotiator; or b) panicked because their boss wants to change PBMs and the vendor manager knows it’s going to blow up.

Okay, let’s walk thru this.

The price of the pill is important, but it is only ONE part of the equation. Which is as follows:

Price per pill x number of pills per script x percentage of scripts processed in the PBM’s network.

Price per pill is determined by the discount below AWP, brand:generic mix, and, most importantly, by the type of pills dispensed.  If a PBM does a crappy job managing the clinical aspects of the pharmacy program, you’re going to pay for far too many pills, and for the wrong kind of pills. It’s safe to say you’ll be paying for lots of opioids, Soma, and other highly-questionable-if-not-downright-harmful-drugs.

But hey, at least you’re getting them for cheap!

Lets say you don’t care about the kind and volume of pills, you just want the deep discount.  Even then, you will likely find the cheap PBM delivers crappy results.  Here’s why.

PBMs that pitch really low per-pill pricing are likely using a group health-contracted pharmacy network, which leads to problems with paper bills and administrative hassles for adjusters.  Regardless, the network penetration for the cheapo PBMs tends to be pretty low compared to the WC PBMs.  There’s a bunch of reasons for that which I won’t get in to here.

Suffice it to say that while you may get a great price on 40% of your scripts, you’ll be paying flat-out retail on the other 60%.

In contrast, WC PBMs typically deliver penetration in the 80+% range.

So, even if their discount isn’t nearly as low as the cheapo ones, the effective price will likely be lower – because you get that discount on twice as many scripts.  

What does this mean for you?

Look at the price, sure, but look at penetration.  And, of course, clinical programs.

Because the greatest penetration in the world is a big problem if its all opioids and Soma.


Feb
20

Whither Work Comp?

Hopefully it isn’t “wither”…

There’s been a good deal of reporting on trends in work comp premiums and coverage of late, with a good piece in WorkCompWire on Marsh’s market survey describing a softening market for many employers.  The WCW article comes on the heels of one in Insurance Journal announcing the “good news” that the P&C industry returned an underwriting profit for the first time in four years.

It’s a bit disturbing that the industry had to rely on investment income to make a profit for three of the last four years, nonetheless the news from AM Best that net income increased 60 percent to $63 billion in 2013 is encouraging news indeed.

WC is a relatively small part of the P&C industry, typically about 11 percent of total premium.  Here are a few quick takeaways.

So, what does this mean?

When profits climb, the market typically starts to soften as capital comes in to work comp, seeking to take advantage of the financial returns. Carriers get more competitive, seeking to add share, and there are more carriers bidding on employer business.

I’d expect this will happen this time, and we’ll see prices level out this year in most states.  This may not be readily apparent as the rates insurance companies file with regulators may not change much, but discount arrangements may well increase.

 

 


Feb
19

Why are drug dispensing firms supporting fee schedules for doc dispensed drugs?

Doc-dispensing firms have their minions out and about in multiple state capitols, using their dollars to buy lobbying prowess and support pliable politicians (talking about you, Clayton Hee in Hawai’i).

What’s different these days is they are supporting fee schedules in many jurisdictions – Hawai’i and Maryland being two.

Why?  Well, you could ask drug dispensing “technology” firm AHCS’ Board Member Hilary Grove. She’s with ABRY, the private equity firm that owns AHCS; shoot her an email at hgrove@abry.com.  Please.

Or you could track their recent activities.  Such as:

  • they’re getting in to the drug compounding business – actually they’ve been doing that for a while. There are at least two compounding pharmacies affiliated with AHCS or AHCS personnel – Compound Care Pharmacy Rx (which appears to be owned by AHCS) and ezCompound Rx, which has the same attorney as AHCS listed as their “correspondent”.

    No surprise there, as compounded drugs are becoming much more common in work comp, despite no credible research suggesting it is appropriate for the vast majority of patients. Compounds are very, very, profitable… 

  • they’re working with very small drug “manufacturers” who can “manufacture” drugs, file their own drug code (NDC) and price (AWP). Remember, in many states, WC fee schedules for repackaged drugs are based on the original manufacturer’s AWP – which is nothing more than whatever number the “manufacturer” wants to use, and bears NO relation to the ACTUAL price dispensing docs pay for the drugs.This is pretty clever as it essentially eliminates the price controls put in place by many states and allows dispensers and their enablers to continue making huge profits for their owners.

Alas, many payers are still focused on controlling the price of the pill or compound, a strategy that is obviously fundamentally flawed as it’s really easy to circumvent.  And ignores the research that demonstrates dispensing actually increases indemnity expense, keeps patients out of work longer, and increases other medical costs, thereby increasing employers’ and taxpayers’ costs.

Doc dispensing is a billion-dollar business.  It is maturing, getting smarter, and figuring out ways to sustain and grow its revenue. And work comp payers are not even close to keeping up.

What does this mean for you?

Doc dispensing increases loss costs about 3 percent.

How much premium do you have to sell to earn profits equal to 3 percent of loss costs?

That’s what this is costing you.