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

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.


Monday catch-up

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…


Provider reimbursement changes – painful and necessary

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.


Health care spending up 5.3% in 2014

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%.



Would you want your family covered by Opt Out?

Today’s WorkCompCentral brings an editorial on the “trend” in some state capitals towards plans legitimizing opting out of workers compensation.  Friend and colleague Peter Rousmaniere has done more research and investigation of opt-out programs than anyone else I know.

He knows of what he speaks, and his view of opt out is one we work comp folks should carefully consider.  His reporting on Oklahoma, overall trends, and progress to date are clear evidence of Peter’s expertise.

Among Peter’s concerns are:

  • the requirement that employees report injuries within 24 hours.  Peter notes there’s no good reason for this requirement.
  • Very low wage replacement levels, so low that higher-compensated employees may well be discouraged from filing claims
  • plan documents that are indecipherable
  • documents pertaining to individual claims that prohibit injured employees from sharing the document with anyone.
  • opt out plans being considered in several states may well violate ERISA.

It is important to note that many employers opting out in Texas are doing so responsibly, however the new efforts promoted by AAWC are anything but.

The net is this – would supporters of these programs want their family members covered by these plans?

Pro Publica published an extensive review of opt out; it is damning however in my view it suffers from a lack of credibility coming from its biased, slanted, and in many cases patently false “reporting” on workers comp.

What does this mean for you?

AAWC’s opt out promotion smacks of continuing a race to the bottom, adding yet another insult to working people.  If AAWC is really interested in doing right by workers it sure has a strange way of showing it.



The Anti-Opioid Movement is gaining speed and traction

The pushback on opioids has accelerated dramatically; every day there’s at least one major announcement about states, the Feds, or other entities taking major steps to attack the overuse of opioids.

We are starting to see some progress.  Perhaps most noticeably, a few weeks ago the CDC published draft guidelines re the use of opioids for treating chronic pain.

Unsurprisingly, the pain industry wasn’t happy. They’ve penned letters to CDC officials and Congress, with one complaining: “a lobbying organization that seeks to reduce the prescribing of opioids appears to have played a significant role in developing the guidelines.”

Allow me a moment to pick my jaw off the floor.  This is the height of hypocrisy.

This is coming from an industry that has used the billions it has made from selling opioids to:

  • lobby state and federal elected officials and regulators,
  • pack ostensibly unbiased review panels with drug company shills,
  • fund “research organizations” that published biased research supporting opioids, and
  • brilliantly and effectively promote the use of this incredibly dangerous and damaging drug.

I’m just stunned at the unmitigated gall of these people.

CompPharma (the work comp PBM advocacy organization of which I am president) has joined with the National Safety Council, Physicians for Responsible Opioid Prescribing, American Society of Addiction Medicine, National Coalition Against Prescription Drug Abuse and several other groups to support the DC guidelines.

The human cost of opioids is a constant and terrible reminder of the impact the opioid promotion industry has on each of us.

Yesterday the estimable Steve Feinberg MD sent one of his periodic emails re interesting issues related to work comp and the delivery of care in comp.. This one was a column by Bob Beckel, an editorialist who recounted how he had to check himself into rehab after a mere eight weeks post-op care involving OxyContin and Percocet had addicted him to the stuff.

Truly frightening.  And very common.

A truly awful side effect of the rampant overprescribing of prescription opioids has been the explosive growth in heroin use.  When patients can’t get prescription opioids, those addicted or dependent may well turn to illicit versions of opiates, namely heroin.

myMatrixx’ Phil Walls RPh has written an excellent synopsis of the history and current status of heroin. Detailed, thorough, readable; download and read on your next flight.

Perhaps the most trenchant observation appeared a couple weeks ago in an editorial in the New York Times entitled “How Doctors Helped Drive the Addiction Crisis”.  Here’s Dr Richard Friedman’s concluding paragraphs:

WHAT is really needed is a sea change within the medical profession itself. We should be educating and training our medical students and residents about the risks and limited benefits of opioids in treating pain. All medical professional organizations should back mandated education about safe opioid treatment as a prerequisite for licensure and prescribing. At present, the American Academy of Family Physicians opposes such a measure because it could limit patient access to pain treatment with opioids, which I think is misguided. Don’t we want family doctors, who are significant prescribers of opioids, to learn about their limitations and dangers?

It is physicians who, in large part, unleashed the current opioid epidemic with their promiscuous use of these drugs; we have a large responsibility to end it. [emphasis added]

Kudos to Gov Charlie Baker (R) of Massachusetts.  Gov Baker is calling for a strict limit on initial opioid prescriptions throughout his state.  Of course several docs are protesting this, noting problems of access for patients who need the medications.  It would be even better if these docs noted the problems inherent in opioid prescribing; perhaps they did but the reporter didn’t publish those comments… (thanks to Jake for the tip!)

Finally, there are many, many pieces and parts to ACA, including significant funding for clinical research, patient outcomes research, and research into improving the delivery of care. The Patient-Centered Outcomes Research Institute just closed it’s request for proposals for research into Clinical Strategies for Managing and Reducing Long-Term Opioid Use for Chronic Pain.

There’s nothing more important in the work comp world than this issue. 


The Thanks Giving edition of Health Wonk Review

Brad Wright has penned a wonderful edition of Health Wonk Review, replete with the latest insights into health policy, workers’ comp, ACA implementation, and nefarious efforts by device manufacturers.

Pleasing to the eye and brain, Brad’s effort is just terrific!


ACA – what can we expect in the healthplan market in 2016?

First, benefit plans offered on Exchanges are evolving rapidly, with smaller, closed networks getting a lot more traction. A recent report from Avalere found:

from 2014 to 2016, the percentage of plans offering PPO networks dropped from 39 percent to 27 percent. This represents a 31 percent decline over the three year period. Meanwhile, use of health maintenance organization (HMO) and exclusive provider organization (EPO) networks has increased.

This isn’t surprising; health plans get better reimbursement, tighter relationships, and fewer management with small networks.  Expect this trend to continue.

But not without major challenges from regulators, health care providers, and consumers. In New Jersey, the dispute between Horizon Blue Cross/Blue Shield and a big hospital over Horizon’s value-based care initiative and that initiative’s impact on St Peter’s University Hospital is now before a judge.  Essentially, St Peter’s isn’t on Horizon’s Tier One provider list, which means consumers would have to pay more for care there.  They don’t like that, and want in.  Horizon claims St Peter’s is not committed enough to population-based care.

Expect these disputes to become commonplace.

Next, Co-ops – those start-up health insurance programs designed to add competition to the marketplace, are failing left and right.  Clear evidence that PPACA is failing, and another example of government’s inability to get anything right.  RIght?

Well, no.

In reality, this Congress screwed the Co-Ops.  

Long story short, the start-up Co-Ops were supposed to get financing in part from a risk corridor program that was part-and-parcel of PPACA.  The idea behind the arrangement was to help small players get started so they could provide an alternative to the behemoth health plans dominating our world.

Then Congress intervened.  Here’s Louise Norris:

On October 1, 2015 the federal government notified health insurance carriers across the country that risk corridor payments from 2014 would only amount to 12.6 percent of the total owed to the carriers. The program is budget neutral as a result of the 2015 benefit and payment parameters released by HHS in March 2014. And the “Cromnibus bill” that was passed at the end of 2014 eliminated the possibility of the risk corridors program being anything but budget neutral, despite the fact that HHS had said they would adjust the program as necessary going forward. But very few carriers had lower-than-expected claims in 2014. So the payments into the risk corridors program were far less than the amount owed to carriers – and the result is that the carriers essentially get an IOU for a total of $2.5 billion that may or may not be recouped with 2015 and 2016 risk corridors funding (risk corridors still have to be budget neutral in 2015 and 2016, so if there’s a shortfall again, carriers would fall even further into the red).

Many health insurance carriers – particularly smaller, newer companies – are facing financial difficulties as a result of the risk corridors shortfall. CO-OPs are particularly vulnerable because they’re all start-ups and tend to be relatively small. All of the CO-OPs that have announced closures since October 1 have attributed their failure to the risk corridor payment shortfall.

So, what happened is entrepreneurs based their business plans in part on the risk corridor program.  Congress, in its infinite wisdom, decided to not deliver on its original commitment, thereby killing off competition in many key markets.

One analyst has what I think is a pretty insightful take on non-financial enrollment challenges faced by new entrants to the health plan markets:

“I think the problem with [insurers not doing business profitably on public exchanges] is that it takes time…for them to mature. It is the nature of the insurance business when there is a brand new insurance line, where people had no insurance previously. There needs to be a motivating factor to buy insurance,” which may come when people face more significant fines in 2016 for not having coverage.

— Vishnu Lekraj, securities analyst for Morningstar, Inc. in HealthPlan Week

For a thoughtful piece on just what it takes to start an innovative health insurance plan/company/business, read this.  A key takeaway is it is not just about financing…

What does this mean for you?

Health plans are evolving rapidly, painfully, and some successfully. It’s not pretty but it is necessary.


NWCDC – key takeaways

What was noticeable about this year’s NWCDC was what wasn’t.

That is, I didn’t hear or see much that was surprising or new or revelatory.  After a score of scheduled and many more unscheduled meetings, what emerged was an overall sense that the work comp industry is doing pretty well, the big takeaway being the status quo continues.

That needs some additional explanation. Today’s “status quo” is marked by:

  • consolidation both within and among industry verticals;
  • emergence of smaller, niche-specific service providers; and
  • continued interest on the part of investors.

Let’s take those on in order.

First, there’s no question consolidation continues.  In an industry with a structural decline in claims frequency, the rules of a mature industry are incontrovertible.

  • Scale and efficiency are critical to success.
  • Some service offerings/verticals are being commoditized.
  • Market share is hard to come by.
  • Service deficiencies lead to customers leaving, while
  • price is key to gaining other suppliers’ unhappy customers.
  • Vendors are broadening their services by acquiring “sub-vendors” (think TPAs acquiring medical management assets); and
  • Vendors are acquiring other vendors in the same market vertical (think Genex acquiring other case management firms).

Yet there are multiple examples of new competitors emerging, looking to take advantage of opportunities that arise because their much larger competitors are focussed on streamlining, efficiency, consistency, cost control.  While these tactics make sense in a mature market, they also create openings because customers don’t all want the same thing delivered the same way.

I’ll dig deeper into that tomorrow.

Finally,  investment professionals were evident on the floor and at sessions.  This year I encountered representatives from hedge funds in addition to the usual investment banking and private equity folks.

The investment interest seems to be concentrating in a couple areas – the really big and pretty small. On the “really big” end of things, the continued reports that UnitedHealthcare is going to invest in the WC PBM space, Examworks’ ongoing acquisition campaign, and Mitchell’s move into pharmacy management are all indicative of the trend.

While I haven’t seen much in the way of funding for small firms, it could well be there’s a good deal of activity I’m not aware of.  Certainly there’s a lot of interest among investors as they focused their time on the periphery of the exhibit show floor, looking for smaller companies with intriguing, potentially disruptive solutions and services.

Finally, I was somewhat surprised to hear about a good deal of innovation on a variety of fronts.  More on this later this week.

What does this mean for you?

Status quo does not mean static.  The industry continues to evolve, but there are potentially significant external factors that may well change where we are headed.