Month: December 2015

Dec
8

Does the ACA cause providers to shift cases to work comp?

Posted by Joe Paduda on Tuesday, December 8th, 2015 | Comments

The ACA is in place and causing massive changes to the provider and payer landscape. One question broached by WCRi in recently-published research deals with the possibility of “case shifting” from group health to work comp.

That is, do primary care providers selectively “allocate” cases to work comp based on reimbursement motivations?

If yes, there are obvious and significant ramifications for all of us, many of which will have negative consequences for employers and insurers.

But, in my view, the picture is anything but clear – on many levels.

WCRI’s hosting a webinar this Thursday at 2 pm EST on the topic.  They have been kind enough to invite me to present a contrasting perspective.  There are already over 100 registrants, so the good folk from WCRi have opened up registration to accommodate the demand.

Sign up here.

Webinars are $39 for WCRI members; $79 for non-members; and no charge for members of the press, legislators as well as their staff, and state public officials who make policy decisions impacting their state’s workers’ compensation system.

See you there.

Dec
7

Monday catch-up

Posted by Joe Paduda on Monday, December 7th, 2015 | Comments

CompPharma’s annual meeting was held last week; CompPharma is an association of workers’ comp PBMs of which I am president.  This year the focus was on connecting payers’ Medical Directors, PBMs, and regulators in an effort to broaden all parties’ understanding of each others’ priorities, issues, concerns, and constraints.

A few key takeaways;

  • Drug formularies must be evidence-based and supported by utilization review.  UR must incorporate a quick and intelligent way to resolve disagreements.
  • Formularies should NOT be restrictive – on either side.  That is, regulations should support payers’ ability to restrict access to inappropriate drugs and readily approve drugs that a formulary may deem inappropriate.
  • We continue to make good progress against overuse and abuse of opioids, but the biggest challenge remains long-term users of the drugs.
  • The regulator’s task is beyond complex. Rapid changes in medical knowledge, conflicting state and federal laws (e.g. marijuana), reduced staff in many jurisdictions, and an adjudicatory process built for far less complicated times combine to ensure very few answers are simple and straightforward.
  • Things are getting better in California, where the UR process has likely prevented serious harm in multiple instances.  That said, well over 95% of all medical procedures and treatments are approved, a result that may indicate too much leniency rather than too little.  

CDC’s draft opioid usage for chronic pain guidelines was obtained by an organization despite efforts to keep it closely held..  Notably, CDC’s researchers found precious little evidence supporting the practice.  Note the draft is just that.

Implementing reform

Things are getting contentious in the provider – health plan world.  As payers seek to promote narrower networks, some providers left out of those networks are not happy. While the most public airing of the dispute is in New Jersey, rest assured this is occurring in your state.

Expect a lot more in the news about this early next year; we’ll be all over this in January.

Meanwhile, both primary care and specialist physicians have seen a slight increase in pay since reform implementation.

Health insurance premium increases have been the subject of much reporting and even more confusion – some of it caused by the reporting.  Here’s a quick summary of what’s REALLY happened.  One key quote:

The average premium of the lowest-cost silver plan increased by less than 5 percent in five states, increased between 5 and 10 percent in five states, and increased by more than 10 percent in just four states.

Workers’ compensation

Jennifer Wolf-Horesjh, Executive Director of IAIABC has launched a podcast entitled Accidentally.  The initial effort is well worth a listen.

Along with former SAIF CEO John Plotkin, Bob Wilson, and Bob Reardon of ISG I participated in a panel discussion on Social Media at NWCDC, focusing on positive aspects of social media.  The video is up here.

Meanwhile, the US economy continues to improve, and the workers’ comp world is benefiting as employment increases lead directly to higher premiums.  While rates are decreasing in most states, the jump in payroll is more than enough to offset the rate drop.

NCCI’s out with the final report on how things went for work comp insurers in 2014.  Overall, ’14 results were pretty good despite low investment returns. The combined ratio (claims plus admin expense) stayed below 100, indicating insurers made money on an underwriting basis (not counting investment returns).

And t he good folk at WCRI have just published their latest research on Louisiana; you get order the publication here.  Key takeaway – after adoption of medical treatment guidelines, utilization of medical services decreased.  Remember, correlation is not necessarily causation…

Dec
4

Provider reimbursement changes – painful and necessary

Posted by Joe Paduda on Friday, December 4th, 2015 | Comments

Full or partial capitation, with or without risk withholds.  Per-episode payments or cost caps.  Fee-for-service with or without pay-for-performance.  Ambulatory care episodic payments.  Discount below billed charges.  Packaged prices. Value-based reimbursement.

The list of reimbursement types and variations is long and growing.  As providers and payers struggle to find the right mix of risk and reward, they are tinkering with long-established reimbursement methodologies (think capitation) and coming up with entirely new concepts (value-based pricing).

If there’s a universal, it is fee-for-service is falling out of favor, at least for the big payers – governmental and private.  It encourages overuse and over-treatment.  But it does have benefits.  FFS motivates providers to maximize their productivity, a goal that every health care provider organization is striving for.

Each variation has its plusses and minuses, but there are several common threads.

First, the providers affected need to buy in.  If they think they are being gamed, or worse, screwed, they will instantly figure out how to return the favor.  There’s a lot of skepticism among providers about these new arrangements, much of it well-founded.  Problems with capitation and risk withholds almost killed the entire managed care movement back in the nineties and providers remember those days all too well.

Which leads directly to the next have-to.

Transparency is key.  Price setting, risk-reward formulae, the bases on which capitation is calculated all have to be clear and readily understood.  That way when questions arise, all involved have “equal access” to the methodology and discussions can focus on material issues.

Third, it’s about outcomes and results, not volumes and procedures.  We are seeing a wrenching shift away from paying providers to do stuff to patients, and towards paying providers to maintain and improve health status.  This is going to be ugly, difficult, and painful for all involved.  There will be winners and losers, and some folks are going to be hurt.

What health care is going thru is not far from that experienced by manufacturing and heavy industry over the last forty years.

And, like manufacturing and heavy industry, the US health care “system” has to change if it is to survive.  We cannot continue with fee for service, rewarding providers for doing more and more expensive stuff to fewer and fewer insureds.  And allowing insurers and health plans to make money by covering only those people unlikely to have a claim.

If health care could be offshored, it would be.  As it (mostly) can’t be, we have to fix it right here.

That doesn’t mean it’s going to be any less wrenching.

What does this mean for you?

Huge changes are required.  Avoiding them is not an option.

Dec
3

Health care spending up 5.3% in 2014

Posted by Joe Paduda on Thursday, December 3rd, 2015 | Comments

Health care costs accounted for 17.5% of GDP last year after a 5.3% increase in spending. 

The overall spending increase, which followed 5 years of relatively low inflation, was attributed primarily to the addition of 8.7 million people to the rolls of the insured in 2014.

Health Affairs reported the biggest jump was in pharmacy costs which increased 12.2%, driven in part by Hepatitis C drugs including Sovaldi and Harvoni, both manufactured by Gilead. The big increase came despite a rise in the generic dispensing rate to 81.7 percent, up from 80.1 percent in 2013 and 77.3 percent the year before.

Total pharmacy costs were just under $300 billion with Hepatitis C drugs accounting for $11.3 billion in total spend.

Other goods and services also saw increases:

  • Hospital costs accounted for $972 billion, an increase of 4.1 percent. This was little changed from 2013’s 3.5% trend.
  • Physician and clinical services rose 4.6 percent to just over $600 billion.  The increase was due to a major jump in Medicaid expenditures.

Looking a bit deeper, Health Affairs broke down the cost increase to separate out the effects of price, demographic, and utilization:

Of the 4.5 percent increase in per capita health spending in 2014, changes in the age and sex mix of the population accounted for 0.6 percentage point, medical price inflation accounted for 1.8 percentage points, and the change in residual use and intensity accounted for the remaining 2.1 percentage points.

Interestingly, private households didn’t see much of an increase in costs; the report indicated a rise of less than 1.5%.