Jan
29

Health Wonk Review – The Tenth Anniversary Edition!

Well, that didn’t take very long…

Hard as it is to believe, Health Wonk Review has been around for a decade.  Yup, since way back in the DSL days, before the birth of the iPhone, before the Great Recession, before health care reform, back when I had brown hair, a group of health care nerds decided to publish a biweekly synopsis of the best of the health care blog-o-sphere.

Note – this post was delayed a couple days; here at HWR Inter-Galactic Headquarters we are still recovering from a mammoth 10th Anniversary Party.

party

The 200+ editions have been hosted by a who’s who of health care; physicians, health policy gurus, health care economists, workers’ comp pros, health insurance brokers, consultants, academics, not-for-profit execs, and even real journalists.  We owe a big thank you to all of you – and to Julie Ferguson, the expert who keeps things on schedule.

Throughout our loooong history, HWR has brought you perspectives from all political stripes – from hard-core free-marketeers to socialist single-payers; ultra-conservatives to hyper-liberals.

Fortunately, we haven’t had much of this..

liberal-vs-conservative-simpsons-300x288

And today is no exception!

With that – here’s what’s been on the blogs of the best-and-brilliantest this last biweek…

Ideas don’t die, they just take a long time to come to fruition.  That’s one view of single payer.  Linda Bergthold’s contribution from healthinsurance.org is a reminder that single-payer advocates haven’t gone away and are delighted indeed that Presidential candidate Bernie Sanders is giving full-throated voice to their cause.  The Bern’s campaign includes a Medicare-for-All proposal that would make consumers’ lives gigantically easier.

bernie-sanders

Dismiss it if you will – but not before you consider that universal health reform, an idea long derided as a non-starting never-happen, has been the law of the land for going on seven years…

A counterpoint to Bernie’s Single Payer comes from Hank Stern’s InsureBlog. Authored by Mike Feehan, the IB post says efforts to advance single payer in several states have been unsuccessful because it costs way too much. 

In fairness, I’d suggest that there cannot be “single payer” in any state, as Medicare alone accounts for more than a quarter of spend in many jurisdictions.  I’d also note that in defense of Sen Sanders, he has been quite up-front on the cost…

And this just in from the galaxy’s leading expert on ACA sign-ups, Charles Gaba. Charles was on the fence about Sanders’ candidacy for president, until Sanders released his single payer plan.

Now, Charles is off that fence and firmly in Clinton’s camp.  If you want to know why this single-payer fan is not favoring the single-payer candidate, click here.  Spoiler alert – Charles really, really understands this – and so will you after you read the entire piece…

My entry this fortnight attempts to cut thru the noise surrounding United Healthcare’s yet-to-be-followed-up-on threat to pull out of the Exchanges and the Rubio-induced death of many Co-Op plans.  It’s important to understand what UNH does – and does not – bring to the table; it’s also important to think of this in the context of what’s really going on.

Fixing an industry that accounts for one-sixth of the nation’s GDP is not going to be smooth, trouble-free, or painless.  Considering how change affected our industrial heartland, what we’ve seen in health care is minor indeed.

Sticking to the impact-of-tectonic-changes-in-healthcare beat, we welcome Roy Poses, MD.  Roy has been with us from the start; he is one of the leading voices identifying, criticizing, and educating us all on conflicts of interest, self-dealing, and, dare I say it, borderline corruption in the US health care delivery, device, pharma, and payer industries. Roy’s post details efforts by physicians at a not-for-profit, religiously-based hospital system in the Pacific Northwest to unionize.

mad-as-hell

Fed up with corporate BS and “managerialism”, the move by these docs may well be the harbinger of events to come.

With it’s foray into blogging, Health Affairs was one of the early adopters among the hard-copy research publishers; they have continuously improved and deepened their commitment.  Their latest is timely indeed, focusing on dramatic improvements in outcomes – and much lower costs – associated with early identification and treatment of mental illness.  

One key finding – 79 percent of high cost mental health patients were under 60 – almost the direct opposite of other high cost patients…

There are big claims for the benefits of wellness by fans – and equally strident derision of those claims by naysayers.  Jaan Sidorov MD sheds some much needed light on the “discussion” – citing studies that indicate a very strong association between wellness programs and total shareholder return. 

Jay Norris, one of the most insightful small-group brokers around, consistently provides insights into the real world of health reform.  His post this week is one of those adding much-needed color to the national discourse on ACA implementation; Jay’s job is to help employers and individuals navigate the system, and his advice and insight provide a real world perspective “policy makers” would do well to carefully consider.

One of the many pros who have been with us from the start is Jason Shafrin aka The Healthcare Economist.  Serendipitously, the good doctor is also celebrating the ten-year anniversary of his most-excellent blog. Jason’s contribution is a compendium of readers’ favorite posts.  Whether it’s comparing the US health care system to Canada’s; opining on other nation’s health care economies, outcomes, and services; defining ACOs or diving deep into the alphabet soup of medicare reimbursement policy, Jason’s the go-to guru.

David Williams of Health Business asks a knotty question – are supplements and food additives that are “Generally Regarded as Safe…safe? Given the dramatic improvements in safety testing, “maybe it’s time to reconsider the cost/benefit of cardiac safety testing at least for certain food additives.”

Pharma costs are high, going higher, and seemingly unstoppable.  Many – including your devoted author – believe direct-to-consumer (DTC) advertising is a major contributor. That’s been allowed under interpretation of freedom-of-speech protections.  Journalist Peggy Salvatore thinks that interpretation is the correct one – and even drug advertising is banned, digital health messaging/marketing will likely make a ban on DTC futile.

From the brains behind HWR – Julie Ferguson – comes the truly frightening news that there are 19 Texas facilities storing more than 10,000 pounds of ammonium nitrate within a half-mile of a school, nursing home, or hospital. Recall that an explosion at a similar facility in West, Texas killed 12, leveled structures all around the facility, caused $230 million in damages – $1 million of which was insured.

130418071414-texas-explosion-06-story-top

photo credit Mike Stone, Reuters

Julie’s message – training, education, and preparation for local emergency responders would have saved many lives – but Federal funding for the program that ensures local emergency responders know what they are responding to was eliminated in 2012.

HWR has been a labor of love – for all of us. Thanks for reading, and join us again next biweek!


Jan
28

Co-Ops fail, United pulling out of Exchanges; ACA’s death knell?

The demise of many co-ops and United Healthcare’s threat to pull out of the Exchanges due to some $700 million in past and forecast losses has generated more speculation that ACA, the Exchanges, and health reform in general are in dire straits.

Deep breath here, folks.

First, historically United has not been known for expertise – or much interest – in the individual marketplace.  Afer entering the Exchange markets late, it was operating in about 60% of the rating areas, an indication that the huge insurer jumped in to the market belatedly and then with both feet.

Second, United’s “big” losses are an estimate – UNH reported it lost around $500 million on ACA plans in 2015 (although it’s a bit early to come up with any number) and, depending on which source you read, is predicting it will lose hundreds of millions more this year. Given the huge insurer’s inability to predict financial returns on the front end, I’d suggest that these current predictions be taken with the proverbial grain of salt.

Third, the dominant low-cost insurers in the vast majority of health insurance rating regions are either Blues plans or Medicaid managed care organizations.  So, while the Co-Ops Rubio-induced failure is a major issue, it by no means is a harbinger of system-wide collapse.

Remember, the health care financing and delivery system accounts for 17% of our GDP.  It is going thru huge and wrenching changes, changes that mimic what we’ve seen in manufacturing, heavy industry, shipping, commodity production.  If anyone thought this was going to be smooth, simple, easy, and predictable they were naive beyond belief.

Change is always destructive for some, an opportunity for others, and unpredictable at best.  The genius of our economic system is that smart, adaptable, well-positioned companies will survive and thrive.

So, let’s not get too upset about United’s theoretical $720 million loss.  That accounts for  a whopping 0.42% of the company’s total revenue of $167 billion.

And, United’s departure from Exchanges opens opportunity for other health plans.

What does this mean for you?

Opportunity favors the prepared, and change is opportunity.


Jan
26

OneCall’s new CEO

is Dale Wolf.

Wolf, OCCM’s executive chair, was named CEO yesterday after serving as the interim CEO since Joe Delaney’s departure last summer.

Wolf’s history includes a stint running the small group health insurance business at the Travelers (where he was a client of mine), a series of progressively responsible executive slots at Coventry Healthcare, and a couple years working in the private equity world. Wolf’s tenure at Coventry concluded with former CEO Allen Wise removing his former protege from the CEO position after a series of underperforming quarters due to high medical loss ratios.

The announcement came after OneCall’s sales meeting in Jacksonville where close to 300 sales staff heard about a realignment that reportedly reflects a shift from field to corporate sales.  While many will not be directly affected by the change, the overall mood was, according to some, “muted”.

Word is OCCM will soon have the vacant CFO position filled, the last of the executive slots sitting open.

Where the company goes from here is a great question, and one of intense interest among OCCM’s debt and shareholders.  With its debt reportedly trading well below par and returns in the mid-teens there is, depending on your perspective, significant upside or a lot of risk.  Much will depend on the ability of leadership to staunch the bleeding from Align as that subsidiary is coming off a tough year with significant client defections; more are rumored over the next few months.

Meanwhile, changes in state fee schedules for imaging, especially in California, have reduced the profitability of that business line somewhat.  It remains to be seen if other states follow suit, although I do NOT expect future changes to have anywhere near the impact of California.

The net is Wolf has a tough row to hoe indeed.

 


Jan
22

Friday catch up

Made it home from warm and sunny Baton Rouge yesterday just in time to escape the travel disaster unfolding across the east coast.  Hope you and yours are warm and snug and home.

The big news-that-wasn’t was the completion of the acquisition of work comp PBM and specialty services firm Helios by OptumRx, United Healthcare’s PBM and ancillary business entity.  If you were looking for an announcement, there wasn’t one.  Although the deal was likely in the $1.5 billion range, Optum alone generated $67 billion in revenue last year, while the entire company totaled $157 billion in sales. Helios might be a blockbuster deal for work comp folks; it is not for United.

I was honored to speak at the Louisiana Workers’ Comp conference earlier this week, focusing on formularies and other tools payers use to ensure patients get the right drugs and don’t get the wrong drugs.  The audience was engaged, very knowledgeable, and had lots to say.  Good people looking to do the right thing despite what can be a very challenging environment.

Health care evolution

The canary-in-the-coal-mine that is California provides more insight into what will happen in your market – rapid and deep consolidation of health care providers into vertically-integrated delivery systems.  One market – the greater San Francisco Bay area – provides a view into the future for others.

This is especially important because these huge provider networks are critical to health care delivery, financing, access and cost and quality improvement.  Which raises the question – are they getting so big they are “too big to fail?”

Not surprisingly, a conservative view is the government is behind this, and the risk is high. The logic of that argument, while superficially valid, fails in the face of understanding.  What the author fails to note is the Co-Ops were established precisely to foster competition in a market dominated by hundred-billion dollar plus organizations.  More importantly, market consolidation has been going on for years – and while the ACA has likely sped up the process, this is an inevitable result of a maturing market.  This isn’t a government thing, this is a business thing.

Of course, if Sen Rubio et al hadn’t strangled the Co-Ops by cutting off their risk payments, there would be more competition…

Pharmacy

Interesting research published by the Pharmacy Benefit Management Institute, detailing the state of the PBM world over the last couple of years.  Not only does it have a cool picture of a women’s eight at the catch (that’s rowing talk), the pub has a wealth of information on what’s happening in the real world of pharmacy management. A few highlights:

  • driven by a near-20 percent jump in specialty med costs, overall trend was up over 10 percent.
  • most of the cost control efforts appear to be financial, with more payers adopting multi-level tiers for copays and the expansion of deductibles and other cost-sharing approaches.
  • the top goal across all respondents was managing the cost of specialty meds.
  • “The generic dispensing rate at retail pharmacies in 2002 was only 40%; today it is 78%”

Costs are going up at double digit rates despite more aggressive cost-sharing and a doubling of generic dispensing.

Work comp

NCCI is working on research aimed at tracking potential impacts of ACA on work ; their work includes monitoring time-to-treatment for comp claimants.  Kudos to Barry Lipton et al for this needed research.

Back at it next week – hope your team wins this weekend!


Jan
20

Workers’ comp; where the smart money is(n’t)

Earlier this month the fine folk at CWCI published a two-page briefing on NAIC’s workers’ comp insurer financial returns.  One could be excused for thinking the document detailed halcyon days of overflowing corporate coffers, treasuries stuffed with profits gleaned by jacking up rates and screwing employers and patients.

Shockingly, despite two terrific years of solid financial results, the work comp industry is only half as profitable as the rest of American industry.

I know, I was stunned too.

But the numbers don’t lie; US workers’ comp insurers’ 2014 return on net worth was 7.5% – while the US industry average was 14.3%.

And that wasn’t atypical. Over the decade ending in 2014, work comp insurers’ delivered an average return on net worth of 6.8% compared to the all-industry average of 13.9%.

Digging deeper into the numbers, there were only two years where WC hit a net worth return in the double digits – while the rest of US industry did that  e v e r y year.

Now, thanks to ProPublica, we KNOW you work comp carriers are totally and completely focused on jacking up profits by screwing workers. Clearly, you guys and gals are just NOT getting it done.

What does this mean for you?

Time to get cracking!

The NAIC report is available here.


Jan
18

How to reduce medical costs the easy way

Here’s one very effective way to reduce medical spend.

  1. Identify low-cost providers.
  2. Send your patients to them.

Do NOT send your patients to providers because they give a discount.

Do NOT send patients to providers because those providers are “in network.”

Fact is, there is wide variation between and among providers in the same geographic area – for the same procedure.

Another fact is, there’s no correlation between cost and “quality”.

There you have it.


Jan
13

What’s all this about “white space” in workers’ comp?


Investors focused on the workers’ comp network and specialty managed care businesses are a bit obsessed with “white space” – the “potential” business, the “opportunity” to capture unmanaged services, to get patients to network providers and thus deliver lower costs to payers and fees for networks/specialty vendors.

During management presentations, potential investors are smitten by the unmanaged care, seeing that as the growth they need to increase the value of the company they’re bidding on.

White space is the term used to describe the volume of services delivered to workers comp patients that are outside the networks used by the employer/insurer.  As these “non-network” services aren’t priced at a contracted rate, there is no reduction below the fee schedule or state-set reimbursement rate.  No reduction, no savings; no savings, no fee paid to the network vendor.

About 65% of medical services provided to patients are “in-network” – leaving about a third of spend – or around $11 billion in medical costs – unmanaged.

When potential investors look at “unmanaged” services, they see upside, return on investment.  What they may well not see is the reality – there’s a reason that space is “white”.  Employers, TPAs and insurers have been working since about 1991 to increase network penetration.  They’ve tried lots of approaches and generally had pretty good success, especially in states where employers can require patients to go to specific providers or choose from a network.

All the easy stuff has been done – now the real heavy lifting is needed.  Increased penetration will come from:

  • educating small employers (a huge challenge),
  • working with primary care providers to refer in-network (when work comp accounts for a very small piece of their business)
  • faster claim reporting, triage, and acceptance
  • reducing litigation
  • broader networks (but this means some providers will be not-so-good)
  • more effective, precise, and fool-proof medical bill processing systems and workflows
  • better provider data – much better

A good way to think about this is that each incremental percent of network penetration takes twice as much work as the previous percent.

That doesn’t mean it isn’t possible. In fact there are some specialty vendors, employers, and insurers making significant progress.  These are the careful, thoughtful, analytical companies with very well-developed workflows and a very deep understanding of state regulations, provider behavior, employer limitations, and a lot of people working this every day.

There are others that are stumbling badly – not so much because they don’t know what they are doing, but because actually doing it is really hard, complicated, and requires investment.

And that highlights one of the challenges investors have with work comp.  The private equity world is used to automation, stripping people out of processes to improve performance and cut cost.  That doesn’t work so well in workers compensation.

What does this mean for you?

If it was easy, it would already have been done.

 


Jan
11

Monday catch up

Too much work and travel last week – actually missed posting three days in a row – my apologies!

Here’s what happened.

In the never-ending saga of California work comp, a recent appeals court ruling found a UR doctor potentially liable for problems associated with terminating a patient’s prescription drugs.  The case, King v CompPartners, appears to revolve around the court’s assertion that the UR physician had a patient-doctor relationship with the patient, and thus had a “duty of care”.

If King v CompPartners stands, there could be major implications for California work comp, including significant changes to the entire UR process and landscape. (CompPartners is a subsidiary of MCMC, an HSA consulting client)

Mitchell Pharmacy Solutions acquired PBM Jordan Reses. Mitchell also announced they will re-brand the company’s PBM services as ScriptAdviser. Jordan Reses’ work comp PBM serves a diverse group of employers including school districts, managed care firms, the State of Kansas; it also provides services for the auto PIP program in NJ for Liberty Mutual and other auto insurers. (Mitchell is a member of CompPharma, a PBM consortium; I am president of CompPharma)

After a multi-year hiatus, friend and colleague Bob Wilson finally posted a top ten predictions for work comp .  Despite his antediluvian political views, Bob is the most entertaining of the work comp bloggers – myself included.

Final enrollment figures for the public Exchanges are outTimothy Jost of Health Affairs reports a total of 11.3 million enrollees, 3 million of which were new for 2016.  While 35% are under the age of 35, we do NOT know what percentage of this group were dependents.  That’s critical, as enrollment among young heads-of-household is key to determine the extent of adverse selectio n.

Tom Barrett of BBG posted on a echocardiogram test a client company paid for; same test, prescribing doc, insurer – two different test providers – 525% difference in cost.

Happy Monday!


Jan
5

Who, precisely, are you talking about?

Sales and account service people talk about what this or that company says, or wants, or complains about, or what it is basing a buying decision on.

But companies can’t talk – so who, precisely, are these sales & service folks talking about?

This isn’t just an academic question, rather it goes to the heart of customer understanding. The reality is each “client” account is a simply an aggregation of different people, each with their own view of what they want, when they want it, how they want it, and how much it should cost.

And that’s just the high-level stuff.

Successful customer relationships involve a deep understanding of and appreciation for how your company’s services affect the individuals touched by those services.  If the senior execs want to see a certain report, then the worker bees have to be able to quickly, easily, consistently, and accurately enter the necessary information.

If your client’s financial folks work best if they get invoices via EDI, then you need to work with their IT folks to set-up a smooth, easy, and fault-free interface and process.  Given your client’s IT department is severely under-resourced, and is also your “customer”, you have to figure out how to make this work for them – which may mean you, the vendor, have to do all the work, or pay another vendor to do it for them.

Your business volume depends on your customer’s customers buying services that incorporate your products/services.  So, the customer’s marketing and sales folks are also your customers.  How can you help them be successful? How does your service/product help them sell more stuff? When problems arise, how will you find out about them and fix them as quickly and completely as possible?

Companies don’t buy and use your services or products, people do.  For any product/service “bought” by a company, there are many individuals within that company who will help determine if that sale is a success, if your services are valued, if you get to continue supplying the service or perhaps get to deliver even more.

What does this mean for you?

Look wide and look deep, ask lots of questions and listen really hard – especially to the stuff you may not want to hear.