Ring in the New year with the latest and greatest…

Blog posts!

Health Wonk Review returns to the inter-webs after a holiday hiatus. Refreshed, renewed, and revitalized, we bring you the best from the brightest!

Drug costs 

Typically, we think that drug co-payments as affecting patient payments.  However, cost sharing can also affect the price drug companies charge for their goods.  The Healthcare Economist examines a case study in Germany to see how changes in cost sharing have affected drug prices.  

Adam Fein’s entry reveals a scary new cost shift; “plan sponsors—employers and health plans—will save big money because accumulators shift a majority of drug costs to patients and manufacturers.” 

ACA and related matters

Enrollment figures are almost final, and no one has a better grasp on the data than Charles Gaba.  HealthCare.Gov ended up exactly 5% behind last year( which in turn was 5.3% short of the previous year) State enrollments were also about 5 points lower. Considering the shortened deadline, lack of outreach/advertising and so on, this is actually pretty damned good all things considered.

From HealthAffairs blog, a post discussing how state-based strategies may help protect against the instability that the federal mandate repeal could introduce to health insurance markets.

Louise Norris looks at the impact of the Affordable Care Act’s medical loss ratio provision and explains how the “80/20 Rule” works, noting that it’s forced health carriers to devote more premium dollars to care and required them to send more than $3.24 billion in rebates to plan members when they haven’t.

We’ve got another timely post from Louise on the potential impact of expanded association health plans, including a summary of the current regulations and how they could change with expanded AHPs:

The impact will vary depending on what type of coverage people have now, but there are certainly concerns that the ACA-compliant individual or small group markets could face adverse selection in some areas of the country if AHPs expand significantly. There are also concerns that people might switch to AHP coverage and then find out that the coverage isn’t as good. 

InsureBlog’s Patrick Paule explains why the ACA’s Health Insurance Tax keeps bumping up insurance prices, including employer plans and even Medicare Advantage plans.

Workers’ Comp

At Workers‘ Comp Insider, Julie Ferguson takes a look back and a look ahead at the workers comp landscape in a substantial wrap-up of news that shaped the prior year and trends that we can expect in the year ahead.

The Pump Handle’s entry dives into a new report by the National Academies, noting that the occupational health surveillance systems in place today “have generally not evolved to address the changing nature of work.” The authors refer to non-standard work arrangements, such as through temp agencies, “on-demand” or the “gig” economy to make their point.

Interesting posts you can’t find anywhere else

In David Williams’ podcast, Vericred CEO Mike Levin describes the company’s role as a clearinghouse for health plan information on provider networks, benefit design, rates and drug formularies. 

Roy Poses has long been discussing how corruption – particularly of top health care leadership – causes health care dysfunction.  Yet now there is good evidence that the top level of US government, the presidency, has been corrupted.  A Sunlight Foundation webpage catalogs hundreds of instances of conflicts of interest and corruption affecting the president and his family.   So far, there have been no congressional investigations of this corruption, much less congressional action to combat it.  Dr Poses asks “how can we challenge health care corruption under a corrupt regime?  I now submit that doing so first requires excising the corruption at the heart of American government.”

My contribution is a brief descriptor of the change I see coming in the US health care “system”, change that will be massive, disruptive, and desperately needed.

 

WCRI is just around the corner

Had a chance to sit down with WCRI CEO John Ruser a couple weeks ago and get his take on the Institute’s Annual Meeting, scheduled for March 22-23.

For those who have yet to attend WCRI, get yourself there this year…and unlike other conferences, attendance is limited.

I’d strongly encourage you to register now if you haven’t already…

MCM – What’s going to be different about this year’s conference?

JR – We are going to start with a focus on the future – Dr. Erica L. Groshen, former Commissioner of Labor Statistics and head of the U.S. Bureau of Labor Statistics will open with a discussion of the changing workforce and technology’s influence from the perspective of a labor economist, more about what is going to happen.  The theme throughout the conference is we will revisit that.  The Sedgwick Institute’s Dr. Rick Victor (former WCRI CEO) will speak to the challenges facing work comp system including the changes in the workforce, We will close with a panel discussion to hear from different perspectives on this theme.

MCM – Why this focus?

JR – There’s been an acceleration in the rate of change in the workforce, we thought it was time to bring that topic into the conference and bring it to bear on workers’ compensation in particular, it’s time to start considering this in our conference. I anticipate there will be discussion of potential impact of these changes on claim frequency and claim severity.

MCM – Any teasers you can provide on what those trends might look like?

JR – In general, what’s going on in the economy in the labor market is the substitution of capital for labor; capital we used to think of as heavy machines, now it’s software and computers are driving the trend where high risk jobs will go away because of substitution of capital for labor.

Since I’m an optimist and this has been happening for 150 years or so, I believe new jobs will spring up, the question is what does that mean for workers’ comp. Along with that is the change in the employment relationship typified in part by Uber, but its gong to be amore general aspect of the labor market where workers won’t necessarily be attached to employers in the way they were before. That certainly creates challenges for workers’ compensation.

MCM – The implication is that insuring occupationally related injuries and illnesses is going to fundamentally change, is that fair?

JR – It certainly will change.  We’ve seen a quarter-century of declines in OSHA reportables and claiming rates, there is a notion the workforce is changing so there aren’t as many claims as there were in the past.

MCM – There is some indication that wages are heading up in some states, but given the substitution of capital for labor, that means folks in low wage jobs are not going to see increases in pay. For that and other reasons is it likely we will see medical expenses continue to increase as a percentage of claims?

JR – This is the area that Dr Groshen is going to get into…There are other factors as well, new technology that will help workers recover faster or even survive accidents that they wouldn’t have before. With that comes higher medical costs. Advanced prosthetics allow injured workers to function better, and while costs will go down over time, for now those devices are quite expensive.

MCM – Is there going to be discussion about Artificial Intelligence and the role that is going to play?

JR – Yes, that is likely to come up. There are lots of other topics, for example are we ready for value-based care? We are doing work interviewing stakeholders to determine if we are ready for that, and that will be a discussion topic at the conference. We have a session on opioids and the impact of opioids on return to work. The National Safety Council and a large employer will talk about the issue of opioids in the workplace.

Fee schedules, prices, and access to care is always a topic of interest. We will be looking at this, in particular comparing group health to workers’ compensation in several areas including delays in accessing primary care and other types of treatment.

The agenda is here.

2019’s conference will be in Phoenix…

So much for the “Opioid Crisis”

A 24-year old is acting as chief of staff of the Office of National Drug Control Policy.

Of course he has no experience, qualifications, or background that qualifies him for this role. And, ts ONDCP has no Director or Chief of Staff, this kid has been one of, if not the, senior executives at the federal agency tasked with addressing the opioid crisis.

Taylor Weyeneth, who happens to be from our town, also submitted a resume to the federal government that exaggerated his “credentials” (he claimed a graduate degree he does not have).

His parents did own a company here that federal records show was “secretly processing illegal steroids from China as part of a conspiracy involving people from Virginia, California and elsewhere.” Weyeneth’s resume claims he was head of production for this company when he was 16.

Weyeneth is the symptom, the Administration’s complete lack of attention to the opioid crisis is the problem.

This personnel debacle follows the Administration’s attempt to appoint Tom Marino as Director of ONDCP. Marino is a politician that sponsored a bill greatly limiting federal oversight of the opioid industry. an attempt that fortunately collapsed amidst bi-partisan outrage.

Seven Administration appointees have left the Office over the last year; that’s more than 10 percent turnover in the 65 person office. There is no Director in place, and no indication there are any plans to appoint one.

The President gives speeches about the crisis, and claims the Administration is doing everything possible to attack the drug crisis – and Taylor Weyeneth is appointed Deputy Chief of Staff.

Words are one thing, actions another.

What does this mean for you?

We aren’t going to get any help from the White House on opioids.

 

Why your “predictive analytics” program isn’t working

I’m hearing more complaints and concerns about the lack of results from projects involving “big data”, analytics, predictive modeling and the like. These have me scratching my head, as effective use of data is critical to any enterprise these days.

I think I’ve figured out why some of these projects haven’t turned out the way sponsors want.

An excellent article on the effective use of analytics identifies 6 keys to ensuring success hit my inbox a bit ago and I’ve read it seveal times, passed it on to respected colleagues, and gotten their feedback.

Targets and accountability. The Central Analytics Business Unit (ABU) was set up as a centralized profit center with ambitious targets and with direct reporting to the chief operations officer;

Support from the top. Obvious, critical, and bearing repeating.

Incentive scheme alignment. The returns generated by ABU’s analytics projects accrue to the departments, who do not contribute to the cost of the ABU. And the ABU team is paid using variable compensation, based on projects that have been fully implemented and based on their ROI.

Rigorous assessment of results. The contribution of analytics is always measured and in some cases is reviewed by the accounting department.

Communicating with strategic goals in mind.  The ABU emphasized communication

The right people. Recruited employees had:
(1) significant quantitative strength;
(2) negotiating skills and diplomacy;
(3) the ability to communicate with the business lines; and
(4) entrepreneurial instincts. Recruiting this high-demand skill set was not easy.

Most of the initial ABU recruits were external hires, and several of them had little knowledge of the banking industry.

BUT…information without action is nothing but a waste of time and money.

This from a physician executive colleague:

One of the things they don’t discuss that I see as an issue throughout the insurance industry (commercial as well as WC) is that analytics often produce counter-intuitive results, and/or suggest conclusions that are at odds with what passes for traditional wisdom.  

An example – I had 3 years of analytics (pretty good ones, too) that demonstrated a 5 or 6:1 ROI from the medical directors’ department (and that included all costs, fully loaded salaries, etc).  No one would believe it, and they dismantled the whole operation.  So, what I’d add to the HBR piece is that the CEO championing (which is one of their 6) has to include championing of business plans based on the analytics, no matter how uncomfortable that makes some people.  

Think analysis of the true costs of network discount strategies is going to be well received anywhere?

 

 

 

There’s no such thing as “sales”

The word connotes getting someone to buy your stuff, solution, or expertise – but the direction is all wrong. After making many mistakes in the sales process, I’m finally beginning to learn what works and what doesn’t; here’s a few takeaways that may be helpful to you.

This doesn’t work…

Salesman offers

Don’t think of it as selling to someone, rather it is get people to buy from you. A seemingly small semantic change makes all the difference, because the focus shifts from you to them.

People buy because they want or need the service or product.  Sure, a few may buy just because they want you to go away and leave them alone, but they won’t buy again and probably won’t like what you sold them.

They buy because you have something that solves their problem, obvious or not. That problem may be they can’t achieve their objectives using current provider networks, they need to expand into other regions but don’t have the infrastructure, their addressable market is shrinking and they need to find another source of revenue.

How many times have you actually figured out exactly what the buyer’s problem is? Not their employer’s problem, but the buyer’s? Because it’s not unusual to find out what works for the buyer is different from what you think is the best solution for their employer. 

When you approach selling from the buyer’s perspective, it forces a completely different focus. Here’s what I see as keys:

  • Ask questions.  Ask more questions. Then ask even more questions.
  • Until you are ready to close the deal, Do NOT talk about what your company does for more than 15 seconds. No one cares about your history, awards, building, number of employees, or mission.
  • People buy, companies don’t. Figure out what’s important to the buyer(s), and why. Don’t get caught up in the “but this is the best solution to your problem” trap; if the buyer believed that they would be writing the check.
  • Powerpoint (and other types of) presentations are too often a crutch, take way too much time to prepare, and are rarely helpful. Avoid them until you can present a buyer-specific solution.
  • Do not present your solution UNTIL the buyer has helped you design a solution that s/he believes is the best answer.

There’s a lot more to this, but I’ll leave you with this: when the buyer is talking you should be listening really hard, and when you are talking, you should be asking questions.

Be this guy…

 

Monday catch-up

Lots has been happening, here are a few items that caught my attention.

WCRI’s been diving deep into hospital reimbursement. This is an issue I’ve been tracking closely – and I’d suggest you should too. I see hospital/facility costs and utilization as a major cost driver; hear from Carol Telles in a webinar Thursday January 18 at 1 eastern.

As we’ve noted here previously, work comp payers would do well to pay close attention to facility reimbursement and utilization; expect work comp, auto, and other P&C lines to become even more attractive to hospitals seeking revenues and margins.

Healthcare spending inflation actually slowed significantly last yearAn analysis by Kaiser Health News indicates trend in 2016 was 4.3 percent, higher than the overall 2.8 percent inflation rate, but a 1.5 point drop from 2015’s rate.  Notably, drug cost inflation was just above 1 percent (although that’s a lot higher than the double-digit drop we’ve seen in workers’ comp).

Key point – this slowdown in the rate of growth occurred after ACA implementation.  Not surprising that costs went up; we insured millions more people, most of which had pent-up demand for services they couldn’t get or couldn’t afford.

While costs continue to grow, life expectancy declines. We have the most expensive healthcare in the world – by far – yet our life expectancy has dropped two years in a row. As a result, we rank 26th out of 37 developed countries for life expectancy.

Here’s why – we’re paying hundreds of billions for low-value care…

An excellent piece on how to make analytics actually work from Harvard Business Review.  Key points:

  • attach an ROI to the analytics unit itself
  • hire experts from OUTSIDE your industry…

Enjoy your week.

Predictions for work comp in 2018, part 2

Following up on yesterday’s predictions, here’s the second five – in no particular order… cf

6.  Claims counts will bump up
In hurricane-ravaged Puerto Rico, Florida and Texas. Alas a lot of injuries and illnesses will go unreported as unscrupulous companies hire day laborers and don’t insure them, or, in Texas, where work comp isn’t required.

7. But frequency will continue to decline, and total claims will too.
because a) frequency almost always declines, and b) we are at or very close to full employment, so a growth in employment won’t counterbalance structural decreases in frequency.

8. Work comp medical costs will increase slightly
On a per-claim basis, expect costs were slightly higher in 2017 than the previous year. Per-claim figures are the best measure, although total medical spend is helpful as well. Kathy Antonello will tell us at NCCI’s Annual Issues Symposium in May…

9. Innovative new approaches to financing work comp risk will emerge
Variations of peer-to-peer such as Lemonade, some enabled by blockchain technology, will gain a toehold in a few states. Don’t expect there to be a major move just yet as the regulatory, capital requirements, and distribution channels are going to adapt slowly. That said, there’s just too much opportunity to reduce costs inherent in the inefficient administrative processes in today’s workers’ comp system.

10. Payroll fraud incidents and other even more creative efforts to screw workers will increase
I’ll be looking at this in detail, but one quick take is the number of “contingent workers” in many industries has grown dramatically.  The biggest increases? farming, fishing forestry; logistics; personal care; protective service, education and training. The implications for comp are deep and broad; lower premiums, claiming incentives, fraud.

I know, there are implications aplenty for claims, occupational injury rates and the like.

 

Predictions for work comp in 2018

Good to be back at work – and ready to opine on what 2018 holds for work comp.  Here, in no particular order are my educated guesses, considered opinions, and wild-assed speculations.

  1. M&A  – specifically big deals – will increase.
    I expect we’ll see more very large transactions this year, mostly driven by strategic purchases of other companies. Work comp is a very mature industry, scale and size matter a lot, and that means getting bigger is key.  Expect to see several billion-dollar plus deals in the service sector.
  2. The market will stay soft.
    Claims frequency continues to decline, medical costs are pretty much under control, margins are healthy, and there’s still a lot of allocatable capital in the industry. Unless there’s some major  – as in huge – crisis I don’t expect a hardening of the work comp insurance market.
  3. Cost containment’s focus will shift to facilities and hospitals.
    Hospitals are increasingly vulnerable due to consolidation among payers, reductions in governmental program funding (thank you Trump Tax Bill), changes to Medicare reimbursement, and the systemic shift of care to lower-cost settings.  Facilities have already – and will continue to – look for revenues from payers less able to reduce reimbursement. That’s us, kids. Expect to see payers more closely analyzing facility costs, looking for solutions, and implementing programs focused on the issue.
  4. TPA growth will accelerate.
    Driven primarily by work comp insurers’ outsourcing. With a soft market, there’s little incentive for employers to self-insure, but the long-term decline in claims frequency is driving down insurer claim counts. Some insurers are making the strategic decision to shift claims to reduce fixed costs and capital investment requirements. Expect the big four TPAs to add significant new business from insurance companies and similar entities.
    ok…maybe not this much…
  5. Tele-everything will take off
    Tele-triage, -medicine, -rehab, etc is going to grow quickly. Expect lots of activity from companies big and small; Concentra, MedRisk (HSA client), CHC Telehealth, Coventry, Work Comp Trust of CT and others are pushing this care delivery model hard – as they should. Expect thousands of “visits” will logged by the end of 2018.

Tomorrow, I’ll finish up with the other five…

The greatest health “system” in the world

Is responsible for a two-year decline in life expectancy.

Make no mistake, the profit motive embedded in the US healthcare system is directly responsible for an unprecedented drop in life expectancy; opioid manufacturers’ and distributors’ focus on profits coupled with lax governmental oversight led to the opioid disaster.

So, 42,000 of your kids, neighbors, friends, relatives, co-workers died from opioids last year.

But fear not, the addiction treatment industry is riding to the rescue.  Funded by your insurance premiums and tax dollars, a plethora of “treatment” centers are popping up.  While some are excellent, many are nothing more than “treatment mills”, operations set up to suck as many dollars as possible from patients, taxpayers and insurers. Once the dollars run out, the patients are kicked to the curb.

Here’s one example…

The schemes are many, with treatment mills paying body brokers to recruit addicts, false addresses to ensure insurance coverage, fake credentials for “clinicians” and huge bills for non-existent services.

The next time some uninformed individual starts babbling about the exceptionalism of the American healthcare “system”, stick this under his/her nose – we’re exceptional at creating addicts, killing people, lowering life expectancy, crushing souls, while making huge profits for investors legitimate and not.

What’s the solution? 

We pay more for healthcare than anyone else in the world, dollars that are diverted from education, job creation, infrastructure. Many of these dollars are well spent, but the opioid treadmill is just one example of waste and fraud.

A good start would be to much more aggressively prosecute the opioid shills and their buddies in the “treatment” business.  Long and hard jail time for the executives and investors would help prevent the next disaster, but the $209 million in lobbying dollars spent last year by the pharma and device industry makes that unlikely at best.

You get the government you deserve, and you deserve to get it good and hard. HL Mencken.

 

 

We haven’t seen anything yet.

Healthcare is changing really quickly and quite dramatically. Stuff we never would have thought of is happening every day.

  • A huge PBM is buying one of the largest health insurers in the world.
  • Provider consolidation is rapidly accelerating.
  • Many insurers are vertically integrating; they own thousands of providers, care-delivery locations, and are racing to build even more infrastructure.
  • Private insurers are pushing hard and fast into the Medicaid and Medicare markets.
  • Pharma is making gazillions in profits and driving medical costs higher: many employers are beginning to rebel.
  • The world is finally taking opioids seriously, while many fraudulent and sleazy people and companies are looking to profit from the crisis.
  • Medicare and Medicaid are facing major changes; the Trump Tax Bill is just the beginning of efforts to cut benefits and reimbursement.

The healthcare infrastructure of 2021 will look a lot different than it does today.

A couple things to think about.

  1.  While scale is critically important, the bigger the organization, the harder it is to anticipate and adapt to change. Huge health insurers and healthcare delivery systems must force their people to take risks and innovate – but most of these institutions are led by executives with little tolerance for failure. 
  2. The fee-for-service system is deeply entrenched in our entire industry. Provider practice patterns, sales rep incentive programs, provider marketing strategies, employer healthplan purchasing priorities, hospital financial systems, billing and reimbursement infrastructure, insurer business models all are fundamentally based on fee-for-service. Improving outcomes and reducing costs cannot happen without disrupting the very roots of our healthcare “system”.
  3. Our healthcare system is vastly inefficient – and that is precisely why tens of millions of Americans live off that system. Disrupting that system will cost hundreds of thousands of jobs.

What does this mean for you?

The winners will be those that understand where things are going.

There are two basic strategic options: those with a long-term view must become part of the disruption or short-termers will have to carve out a niche that’s sustainable over the near term.

This is the third option, which most will inadvertently pursue.  Business-as-usual folks will wake up one morning and find out they’re toast.