Oct
30

Opioids, MSAs, and the Feds

The average California MSA includes almost $49,000 for drugs – about half of all future medical expenses.

69% of MSAs included funding for opioids.

But when researchers compared the MSAs to a

“case-matched control group of closed workers’ comp permanent disability claims for similar injuries, the authors found that the WCMSAs called for much stronger opioids, as average cumulative morphine milligram equivalents (MMEs) allocated to WCMSAs with opioids were 45 times the level used in the control group during the life of the claim.” [emphasis added]

Why?

Especially when the report goes on to say:

Federally mandated formulae to financially account for decades of sustained individual opioid use are at direct odds with a growing body of clinical evidence — and a widespread recognition — that opioids are often over-prescribed for the management of chronic, non-cancer pain.

The Feds want/require employers and insurers to pay for another 20 years of opioids, at relatively high doses, for claims that should not be getting opioids.

This is what makes all of us nuts; one hand of the government is pushing us to assertively reduce opioid use, while the other hand demands we pay for opioids for another two decades.

Worse still, many of the MSA patients are also taking hypnotics and/or muscle relaxants. 

[chart courtesy CWCI]

A couple thoughts…

The claims with MSAs may well be those that payers can’t resolve, where the patient, their attorney, or their provider just won’t cooperate in efforts to reduce opioid use. Thus, the MSA projections make sense.

Why are these patients being prescribed – and ostensibly consuming – a high volume of opioids for an extended time when clinical guidelines and best practice clearly contradict this practice, and other patients with similar conditions aren’t getting these drugs?

What does this mean for you?

We are making progress, but we have a very long way to go – and CMS isn’t helping.

 


Oct
27

Coventry work comp services will NOT be sold anytime soon

It’s been apparent for some time that the senior suite at parent Aetna has way too much on it’s plate to even begin to think about selling off Coventry’s work comp unit.

That plate just got heaped with a whole lot more; CVS Caremark is looking to buy Aetna for $66 billion. (thanks to Richard Krasner for the head’s up!)

Reportedly the two companies’ CEOs have been discussing the potential deal for several months, which implies they are in favor of the transaction.

There’s a lot more to this – but I gotta hit the campaign trail.

For now, Coventry work comp isn’t going anywhere.


Oct
25

Concentra – USHealthworks – implications for workers’ comp

Yesterday’s announcement that Concentra owner Select Medical is purchasing US Healthworks sent waves through the workers’ compensation world.  The “new” Concentra will:

  • have 565 occ health clinics and on-site centers in about 40 states,
  • handle around one out of every seven occupational injuries, and
  • further cement Concentra’s position as the largest initial treatment provider in work comp.

The transaction valued USHW at $753 million, or about $3 million per location. Concentra is currently jointly owned by Select Medical and investment firms Welsh Carson, Cressey & Company (and several other firms). It looks like one goal of the deal was to buy out minority investors, a not-uncommon objective for this type of transaction.

So, what does this mean for workers’ comp?

  1. Workers comp services is a very mature industry, where scale and buying power are critical. This is yet another indication that players in the industry recognize scale is critical.
  2. This looks to be continued move on the part of Concentra to focus on occupational care and de-emphasize urgent care – which is focused on non-occupational conditions.
  3. Concentra will have more bargaining power with work comp PPOs and payers. The giant provider can’t quite dictate terms today, but is certainly in a very strong position.
  4. USHW has a reputation for over-prescribing physical therapy, a concern some have with Concentra as well.  Payers would be well-served to monitor this closely going forward.

What does this mean for you?

Consolidation can be beneficial for all parties.

It can also be a cause for concern for customers.

 


Oct
24

Two big transactions; implications for work comp part 1

Yesterday we learned Concentra and USHealthwork are combining, and Aetna is selling it’s life and disability business.

Both deals have implications for workers’ comp.

Aetna

The Hartford is buying the life and disability unit for just under $1.5 billion. While this may seem like a lot to you and me, it isn’t to Aetna…the giant healthcare company’s pretax earnings for a three-month period were $1.8 billion this year.

Folks have been talking about a potential sale of the Coventry work comp business for what seems like years now, with more rumors coming over the last couple of months. I don’t see it. 

If a $1.5 billion transaction is “immaterial to 2017 earnings…[and] slightly dilutive for next year” then the work comp business may be even less significant to Mother Aetna. Sure, work comp is likely a more profitable business than the group benefits unit, but it would have to be an order of magnitude bigger to make it worth the time and attention of Aetna’s senior management.

Think of it from management’s perspective; their healthcare business is being whipsawed by the clustermess in DC, they don’t know from day to day what their Medicaid strategy should be, and the President’s talk about “giveaways” to insurance companies is anxiety-inducing indeed.

In light of all this, there’s just no bandwidth to think about selling a relatively tiny business that’s generating some reasonable cash flow.

Tomorrow, Concentra-US Healthworks.

What does this mean for you?

Remember, work comp is a very small business compared to the P&C world and healthcare.

Those businesses affect work comp far more than work comp affects them.


Oct
20

It’s been crazy busy.

Hello readers – apologies for my silence this week and a good chunk of the last few weeks.

As some may know, I’m running for County Legislator in Onondaga County, New York (Syracuse and surrounding towns and villages) and the election is November 7. I’d been told this was a lot of work – and the tellers were certainly correct. It’s a full-time job doing this right.

Even more so when you’re a political rookie and don’t know what you don’t know.

There are a couple items worthy of your attention this Friday.

  1.  TrumpCare has replaced ACA. A few key facts have been lost in the debate:
    1. Don’t expect many more health insurers to drop out of the Exchanges; those still in priced in the loss of CSRs a long time ago, which is why rates are so much higher.
    2. Most of the for-profit health insurers bailed out a while ago for two reasons; they can’t figure out how to make money in the individual market and they can’t deal with the lack of clarity due to President Trump’s conflicting statements and action.
    3. Remember only about 6 percent of us get our insurance through the Exchanges
  2. Reminder – some of the people in DC screwing around with our healthcare have no idea what they are doing. Healthcare is one-sixth of our economy, a major employer, and critically important for each one of us. Yet politicians who admit they don’t know anything about healthcare are trying to “fix” it. This is like putting an English teacher in charge of a nuclear plant.

 

 


Oct
16

Run like hell…

Shockingly, compound drug fraudsters allegedly lied when they sold accounts receivable to investors.

Who’da thunk it?

Thanks to Greg Jones for his excellent investigative reporting on this; Greg reports today that:

Exhibits filed in the lawsuit by Shadow Tree Investment against Praxsyn Corp. reveals connections to three providers accused of accepting kickbacks from other compounding pharmacies. Praxsyn owns Mesa Pharmacy in Irvine, California.

Mesa was partnering with three providers who now face criminal charges for accepting kickbacks to prescribe compound drugs to injured workers.

The basis for the case appears to be Praxsyn allegedly didn’t tell Shadow Tree about pertinent details about the A/R deal…details such as the accusations about the source of the bills, the alleged nefarious activities of some of the parties involved, and relevant lien settlement information.

I was peripherally involved in something similar to this, when a compounding company was trying to sell its receivables a couple of potential buyers called me for my opinions.

Which, briefly summarized, were “run like hell.”

What does this mean for you?

That remains good advice for anyone approached by compounders, physician prescribing companies, and so-called “revenue cycle management firms” doing most of their work in these areas.

 


Oct
13

President Trump announced two major policy changes yesterday; one will do little to affect healthcare markets and insurance, the other will have a drastic and almost immediate impact.

Cost Sharing Reimbursement payments help those making less than 250% of the poverty level pay for deductibles and other costs.

Ending CSR payments will force health insurers to:

  • increase premiums by almost one-fifth to offset the loss of CSRs; this is already happening in many markets…many had already done this, but others are sure to do so immediately
  • and/or stop selling insurance immediately and cancel policies already in effect, ending coverage for poorer Americans.

Here’s the funny thing; ending CSRs will INCREASE costs to the taxpayers because people who no longer get the payments will get tax credits – and others will too..

The reaction from many in Congress was negative; CSRs had been funded in the Republicans’ bills to repeal the ACA, and several House and Senate Republicans expressed concern that the President’s move would harm their voters.

This may be an unwise political move as well;

Trump’s supporters (51%)…[and] eight in 10 Americans (78%) say President Trump and his administration should do what they can to make the current health care law work.

Trump’s other Executive order will have far less impact on insurance markets. In sum, the order allows insurance companies to sell policies across state lines and offer stripped down policies 

The first – selling across state lines:

  • is already allowed in 3 states, and no insurers participate because mandates do influence costs, but the underlying cost of insurance is the cost of care.
  • Contradicts Republican orthodoxy – and ACA repeal efforts – that keep states in control of insurance markets. The across-state-line sale of insurance guts state insurance regulatory authority.

As does the part of the order allowing sale of stripped down policies. These plans, known variously as association health plans, multiple employer welfare arrangements (MEWAs), and multiple employer plans (MEPs), have a pretty crappy history. Allowed years ago, many went belly-up leaving healthcare providers unpaid and members uncovered.

There’s a lot of detail to these, (see here) but the real issue is simple – policyholders often get screwed, and, like selling across state lines, MEWAs flout state regulation of insurance.

What does this mean for you?

These orders will further screw up the health insurance industry. The real effect will be to push us closer to single payer, a result unintended and with far more drastic consequences.


Oct
12

Failure is good.

Had a great conversation with an old friend yesterday; he runs a mid-sized work comp insurer and is one of the most forward-looking executives in this industry.

The discussion worked its way around a wide range of topics, as these conversations usually do, before settling on failure – there it took an interesting twist.

Put simply, failure is under-rated.

Athletes learn more from missing the ball, failing to score, blowing the assignment, over-training than they do from winning. If you win, there’s much less motivation – and reason – to look for things that can be improved.

If you don’t win, there’s lots of reasons to figure out why. Of course you can get too deep into this, spend too much time dwelling on the problems and become fatalistic and negative. If one avoids that trap, one can learn a lot and be much better prepared for the next contest.

As a case study, look at Kaiser.  The huge health plan invested $400 million in a new Electronic Health Record project which failed. Rather than fire the team, blow up the effort, and forget about it, then-CEO George Halvorson doubled down, and the final investment was $4 billion – roughly $444 per member.

One reason – the EHR stripped out a lot of unnecessary cost and streamlined patient interactions:

Just having an electronic health record that is connected with all the systems that have to do with delivery of care to a patient means you don’t have patients taking duplicate tests. In the United States, I believe the cost of duplicate testing is about 15 to 17 percent of the total health care spend. We [Kaiser] don’t have that cost.

In talking with my colleague, we both marveled at the fortitude of Kaiser; if someone in work comp made even a $4 million “mistake” in a systems implementation – or anything else for that matter – their head would be on the block.

That’s one reason innovation is so rare in workers’ comp – the tolerance for failure is low indeed. With that tolerance for failure is an inability to learn, to take risks, to get better faster.

What does that mean for you?

Risk has rewards, but rarely in workers’ comp.


Oct
9

Claims, they are a’shifting!

There appears to be a “trend” among many work comp insurers to shift more and more claims handling responsibilities to third party administrators (TPAs).

I (and I’m sure many others) have been somewhat aware of this for a few years, but like the proverbial frog in the pot, the temperature has been increasing rather slowly, and the consequences have been barely visible.

Currently, the big TPAs – Sedgwick, GB, York and Broadspire are all doing a lot of claims handling for big work comp insurers. AIG has outsourced a big chunk of its claims for decades, but other insurers are slowly following suit.

The drivers are many:

  • decreasing claim frequency is now a structural trend; insurers have to work to stay ahead of the declining volume and off-loading claims to a third party makes managing a shrinking business a lot easier
  • total administrative expense, long a bugaboo for insurers, rating agencies, and regulators, has to shrink as well. Stripping out the upper management, IT, compliance, and related functions slashes unallocated loss adjustment expense, or perhaps more accurately shifts it into allocated expense.
  • some more “self-aware” insurers have realized that their company’s claims handling just isn’t that good.
  • technology, IT/systems changes and improvements, training requirements and the like are becoming increasingly expensive. As carriers look to move from their existing green-screen-based technology to SaaS or other cloud-based technology, some are finding the switch incredibly expensive, very risky, and potentially career-threatening (this last is perhaps the biggest driver). Better to just get out of the business then screw up a tech migration.

I’d expect the big TPAs to assume more and more responsibility for claims functions over the next few years.

There are implications aplenty for all parties involved; they have different revenue models, different service expectations and definitions, and different priorities.

What does this mean for you?

Good stuff if you’re a TPA. And perhaps fewer headaches if you’re a carrier…unless you pick the wrong TPA.