With the news that Aetna has entered into the work comp pharmacy benefit management business, there are now officially a bazillion WC PBMs doing business. Maybe even two bazillion.

Aetna has been in and out of the WC business in the past, and now appears to be in it, at least as a managed care vendor. Aetna Workers Comp Access is the brand name for the company's PPO network, one that is gaining some traction in certain jurisdictions. The new PBM venture appears to be an attempt to use Aetna's group health-oriented PBM to deliver drugs to comp patients. But the WC PBM business is much much different than group health. There are no deductibles or copays in comp, identifying the patient's PBM is much more of a challenge, and the country is a crazy quilt of different regulations, as each state sets its own rules, reimbursement levels, and operating standards.

The strategy is to cross sell the PBM to Aetna's (group health) employer clients. One of the touted benefits is the ability to identify potentially harmful drug interactions across both group health and WC medical treatment. Aetna has landed their first customer, CostCo, and are also bidding on carrier business (several of the larger insurers have been or are out to bid for PBM services).

Aetna is not doing this on their own, but has contracted with Rockville, MD based CatalystRx to provide the WC expertise needed to operate in the comp market. This is a somewhat puzzling choice; Catalyst is not a big player in WC and does not have a lot of experience in the space. Their contribution will be key if Aetna's newest venture is to become a viable option for comp drug buyers.

What does this mean for you?

Another option in the already-crowded WC PBM industry, albeit one with a different twist.

Posted by at 1:44 PM | Permalink

As a public service, I've put together a (partial) list of firms that repackage drugs for physician dispensing. This is primarily a workers comp issue, as comp insurers and TPAs are increasingly concerned about the cost of drugs dispensed by physicians. In some circumstances, the billed and payable amount can be several times higher than the cost for the same type of drug dispensed through a pharmacy.

There are benefits attributed to physician dispensing; less hassle for the injured worker, potentially greater compliance and dispensing accuracy. But these benefits appear to be far outweighed by the increased cost.

Here's the list. Additions are welcome - if they have been vetted.

Bottom line medical

Physicians total care

PDRx

MedXDispensing

Coordinated Care Network

MDScripts

DispenseWorks

Dispensing Solutions Inc.

Physicians Dispensing Systems Inc.

American Physicians Service Group

MedXSalesForce

MedVantX

Concentra

Posted by at 3:39 PM | Permalink | Comments (10)

It's happening. Actually, it has been happening for years, albeit not very often. Frustrated with increasing premiums and no real solutions from the health insurance industry, large employers are investing in direct contracts with health care providers to deliver health care services to their employees and their dependents.

The practice got its start before WWI, when lumber mills in Tacoma Washington contracted with the Western Clinic to provide health care services for their employees. Leland Kaiser built health care facilities and hired staff to provide services to workers on the Grand Coulee Dam in the nineteen-thirties, a project that was the beginning of today's Kaiser Permanente.

While there are no statistics on the number of lives covered under direct-contract arrangements, the total number is probably tiny. Unless there is a "magic" combination of a large employer and a dominant health care provider group with extensive facilities in a relatively small geographical area, direct contracting will just be too complicated and difficult to pull off.

But when those conditions do exist, expect more employers to seriously consider the move. Employers that are likely to consider direct contracts include large municipalities, school boards, manufacturing concerns, transportation hubs and entertainment companies.

What does this mean for you?

A business opportunity for providers, another challenge for health plans, and another way to tackle the problem of access and cost.

Posted by at 7:17 AM | Permalink | Comments (4)

Some "quality" awards are based on rather shaky ground. And the Mercury Awards, which used to be handed out by HCIA (now Solucient) appear to fit that category.

According to the website for the North Ohio Heart Center (a cardiology practice in Elyria Ohio), "EMH Regional Medical Center had the top score for quality of care in Cardiology. According to the award, "It had the lowest complication rate and the most efficient length of stay. Its Patient Services score was boosted by its staff ratio and broad offering of cardiac services."

That's great, and if you were looking for a place to get your ticker checked, this impressive award may influence your decision. But the basis for the award should get anyone thinking, and at the very least asking a few pointed questions.

For example, the center had "the lowest complication rate". That could be because the cardiologists are really great. Or it could be because they perform a lot of procedures on low risk patients , patients that are likely to require relatively short lengths of stay and experience low complication rates.

Evidence indicates that the latter may be reality. In fact, compared to national averages, there are four times as many angioplasties performed by the docs at EMH than in the rest of the country. More procedures = more experienced docs; more experienced docs doing procedures on low risk patients = good outcome scores, lower complication rates, shorter lengths of stay.

This looks more like an award for doing too many procedures including procedures on patients that may not have needed them in the first place, resulting in lots of income for both the docs and the hospital.

And the money ain't bad either. (reg. req.)

Posted by at 7:26 AM | Permalink | Comments (2)

Perusing the blogroll on Managed Care Matters over the morning cup, I had that oh-so-rare flash of insight - the blog world is populated by some incredibly intelligent, deeply insightful, prescient folks. Some nutjobs too, but let's stay positive.

I know, what a "duh" comment. But really - here's some examples...

Effect Measure follows the bird flu as only public health experts, and I do mean experts, can.

Roy Poses et al at Health Care Renewal dig deep, really deep, into ethical issues, including Pfizer and publicly-funded medical schools. And there's a lot of muck to be raked by Dr. P.

Kevin Piper posts occasionally, but thoroughly. Really thoroughly. Read his piece on Medicare drug plans, risk corridors, and why smart players are going to make lots and lots and lots of money on Part D.

Medpundit is written by a practicing doc, who (among other talents) has this neat ability to find and report on strange, unsettling, and downright scary happenings in medicine and environs. Here's one on a report that Chinese prison officials are "harvesting" organs from executed prisoners - if that doesn't make your skin crawl...

And there's lots more. So the next time you're stuck on that interminable conference call, cruise on over to the blogroll and get entertained, educated, and enlightened. You may even find stuff that will be useful in the call...

Posted by at 5:49 PM | Permalink

Okay, here's a kind of out-of-left-field diversion from our usual diet of policy, insurance, managed care and industry news. Lets talk about motorcycle helmets.

When jurisdictions have mandatory helmet laws, the number of fatalities goes down. By most measures, that is a good thing. However, it does mean there are fewer organs to be transplanted, which is a bad thing.

One of the "bad" things is the increase in medical costs. When Florida dropped its mandatory helmet law, hospital costs for motorcycle injuries jumped from $21 million in the thirty months prior to the change to $44 million for the same period post-enactment.

Readers with good memories will recall that Florida also has a lot of folks without health insurance; 81% of these folks are of working age.

EMTALA laws require hospitals to treat patients, including injured motorcyclists without insurance, who show up at the emergency room.

So society is paying for motorcyclists who want to exercise their free right (choice of words intentional) to suffer brain injuries by riding without a helmet. But I don't want to pay for their health care.

Do you?

Posted by at 6:54 AM | Permalink | Comments (7)

This week's edition of Health Wonk Review is up at the Lucidicus Project, hosted by Jared Rhoads. Jared's done an admirable job culling from diverse sources; one of the best things about HWR is the wide range of perspectives and opinions.

When a community includes Matthew Holt and Jared Rhoads, that's a broad spectrum.

Posted by at 7:47 PM | Permalink

For an intriguing answer to the question, does risk selection work to maximize profits in health insurance?, see Jason Shafrin's article.

For those too lazy to click-thru, the answer is yes, for the health plan.

Jason also has a related post on the dark side of risk selection, which is what happens to those risk selected against. In a word, the uninsured.

What's good for the company is bad for the economy.

Posted by at 2:13 PM | Permalink

Aetna continues its effort to provide information on physician pricing and quality with the announcement that it is now publishing data for the Washington DC metro area. Given the problems encountered by members of other health plans trying to be good "consumers", this initiative, while very limited, is certainly going to help Aetna's DC-area members.

What's missing are the pricing and outcomes for procedures that are less common, but potentially more costly and more critical to individual patients - minor surgery, major surgery, endoscopy, etc.

What does this mean for you?

A step in the right direction, but only a small step. Consumers will need a lot more information in a lot more areas if the whole consumer-directed thing is going to have any chance.

and thanks to Fierce Healthcare for the heads up.

Posted by at 6:56 AM | Permalink | Comments (3)

California Healthline reports that Gov. Arnold has agreed to sign a bill that would allow injured workers to select their own physicians for two years past the (scheduled) expiration of that right in April 2007. This may not be all that meaningful, as many employers have joined WC managed care plans that allow employers to select treating providers.

In fact, it may drive even more employers to managed care plans as they will now not be able to direct care for another two and a half years.

Posted by at 6:44 PM | Permalink

In what appears to be straight out of alternative papers' "News of the Weird" column, several private equity firms are looking to buy HCA and take it private. These are really smart people who make lots of money finding gold where others only see dross; they must see something here that I (and lots of others) don't.

Pro, demographics favor the deal; older folks need more hospital care. Con, there is a growing recognition that end-of-life care is too expensive, and hospitals are the most expensive place to deliver this care. Expect to see a push to relocate terminal patients from hospitals to hospices and other less-intensive facilities.

Pro, hospitals' profitability has been improving. Con, legislators and regulators are looking to reduce hospital costs.

Pro, hospitals have been investing heavily in profitable lines, e.g. cardiology and orthopedics. Con, in some areas ambulatory surgical centers partially owned by physicians (where that's possible) have been capturing a significant number of profitable cases, leaving the hospitals to handle the more severe and less profitable patients.

The deal has passed the FTC approval process, and now is closer to reality. However, don't expect this to be the first of many deals; the private equity community does not seem enamored with the industry, but rather sees HCA as the best bet in a troubled business.

Posted by at 4:40 PM | Permalink | Comments (1)

In a transaction that surprised many (including me), Atlanta-based claims administrator Crawford and Co. announced it is acquiring FL-based Broadspire Services from investment group Platinum Equity. The deal is valued at $150 million, and will move the combined companies into third place on the list of top property and casualty TPAs (third party administrators; firms that process claims on a fee-for-service basis without taking any insurance risk).

Broadspire CEO Dennis Replogle will be staying with the new company, which likely will go thru some transition and specialization as Crawford figures out where it fits in.

The deal is another in the ongoing parade of consolidation that started with the original firesale of Kemper National Services to Platinum several years ago. Since then, Sedgwick was acquired by Fidelity National and then bought CMI; Broadspire bought Cunningham Lindsey and RSCKO, and several smaller deals were consummated as well.

Rumors had been circulating for some time that Sedgwick CMS was looking at Broadspire, and internal sources at the target company reported that Sedgwick staffers had been at the Broadspire offices in Plantation FL. Sedgwick management has been under serious pressure to increase revenues, and absent serious price cutting, a large acquisition looked to be the most likely route.

If the price seems low, it may be due in part to the timing of the deal. The softening insurance market (which may not be softening for long) makes insurance a better buy in some instances than going self-insured. If the market does turn, Crawford will be able to congratulate itself for buying at the right time.

Posted by at 7:50 AM | Permalink

Two recent articles highlight the massive inefficiencies in the US health care system. In Philadelphia, five hospitals now have heart transplant programs, even though there are only enough patients for two. The result? Hospitals will not perform enough to gain the experience needed to improve safety and efficiency while lowering variable costs.

A few hundred miles away, a (reg req)group of cardiologists in Elyria Ohio have evidently decided that their Medicare patients need angioplasties four times more frequently than the national average. I wonder if it's the fried dough at the Elyria fair?

Whatever the cause, the net impact on the bottom line of the North Ohio Heart Center (NOHC) amounts to over $2.7 million a year, or just under $100,000 per year per physician. And their local hospital benefits as well, earning $11,000 per procedure for a total of $37 million annually.

And it's not just the money. According to the NYTimes article, the 31 docs in the NOHC practice not only perform angioplasties on patients at the lower end of the risk spectrum, they also do them when other docs would recommend a bypass. Unfortunately, NOHC docs aren't able to perform bypasses, as they are not surgeons. And because almost all the cardiologists in and around Elyria are part of NOHC, patients unwilling to travel have little choice in their care.

Let's see. Docs that are financially incented to perform angioplasties dominate a local market, increasing the local hospital's revenues while also raising local employers' health care costs and Medicare taxes.

Over in Philly, the increasingly competitive market for heart care has hospitals scrambling to provide the widest possible range of care, up to and including transplants. This despite the consensus that the market can't support more than two transplant centers.

I'm betting the heart transplant rate in Philadelphia goes up substantially this year.

Any takers?

and thanks to FierceHealthcare for the Phila tip!

Posted by at 7:15 AM | Permalink | Comments (2)

A recent survey indicates middle income Americans are deeply worried about health insurance, the cost of care, and the impact of both on their well-being. The survey authored by the Commonwealth Fund and reported in California Healthline, highlights concerns across incomes, with individuals at higher income levels somewhat less affected by health care costs (although one in five still had trouble paying medical bills).

And this is not just a general fear; according to California Healthline; "half of U.S. adults living in middle-income families say they had a "somewhat serious" or "very serious" problem paying their medical bills over the past two years.

Most intriguing - three-quarters said the "U.S. health care system needs to be fundamentally changed or completely rebuilt (Agovino, AP/Long Island Newsday, 8/17)" (California Healthline).

Politicians - are you listening??

Posted by at 5:52 AM | Permalink | Comments (1)

The Hartford's annual study of drug costs provides insights into what drugs are driving costs, and the results a carrier can expect if they work hard at managing drugs. The big insurer enjoyed a reduction (!) in drug costs year-over-year of one percent, driven largely by the demise of the COX-2 drugs and the emergence of generics for Oxycontin and Neurontin.

Heavy-duty pain med Actiq continues to be a big problem for the Hartford, as it is for other payers. Of note, one payer I work with has been able to sharply curtail the use of Actiq through a targeted clinical management program involving physicians doing peer review. And, Actiq is coming off patent next year, which may reduce the price per dose. (but the manufacturer has developed a "new and improved" version that will likely be used as a substitute...)

The Hartford's results are not surprising. Payers with aggressive, integrated approaches to managing drug costs are experiencing modest increases in drug expenses, while those without a strong focus on managing pharmaceutical expense have been hammered by costs increasing upwards of 15% annually. The Hartford participated in my firm's third Annual Survey of Prescription Drug Management in Workers Compensation; their results, and the results of several other large payers, helped keep the industry's overall inflation rate to 10%.

The keys to success? Managing utilization. A strong clinical management approach. The intelligent use of prior authorizations. And a company-wide commitment, backed up by the resources needed to attack the problem.

What does this mean for you?

You too can control drug costs - by focusing on utilization and clinical management.

Posted by at 7:12 AM | Permalink | Comments (2)

The property-casualty industry looks to be heading for a profitable year, but (no pun intended) storm clouds are on the horizon. The latest prediction comes from Conning and Co, the Hartford, Conn. based insurance research firm.

According to Conning's analysis, 2006 looks very strong, with past price hikes fattening bottom lines. The bad news is the industry can't ever seem to maintain pricing discipline, which is (inevitably) leading to price competition in some lines, which in turn will result in rising loss costs and a decline in return on equity (which isn't all that strong to start with at 9.2% in 2005).

So far, prices have remained flat to slightly down, with mild variations among the various insurance lines (work comp prices are slightly lower, property (outside of hurricane areas) flat, D&O down somewhat...)

The big worry continues to be the storm season, which has been quite mild to date. One knowledgeable source, a reinsurance broker, told me the reinsurers are holding their collective breath while watching the Weather Channel. if the weather continues its' current quiescent state, reinsurers may well recover a big chunk of the losses they incurred over the last couple of years. If not, expect to see reinsurance premiums zoom up for all property and casualty lines, as reinsurers seek to maintain solvency.

What does this mean for you?

Primary insurer profitability follows reinsurer profitability, hope for calm winds.

Posted by at 7:11 AM | Permalink

Three workers comp physicians and one medical practice were recognized as the best comp providers in Florida at the fourth annual Florida Choice Awards for Workers Compensation banquet last night in Otlando. Sponsored by Choice Medical Management (a consulting client), the awards are one of the few, if not the only, attempt to recognize the second-most important player in workers compensation, the physician.

These are the folks who diagnose the injury, assess causality and relatedness (is the injury work-related and to what extent is work responsible) write the scripts, encourage the patient, talk with the employer about alternate duty, fill out the innnumberable forms, develop treatment plans, and deliver the care.

The Choice awards represent the right way to work with comp docs - respect them, recognize them, reward them.

They are also in marked contrast to the way other networks, payers, and insurers think about and act towards physicians. For example, the head of claims for a large work comp insurer, speaking at the Florida Work Comp Institute conference (host of the Choice Awards) noted in his speech that driving greater network penetration and "savings" was key to reducing work comp expense. That mis-prioritization is largely responsible for the explosion in medical expense in work comp.

And physicians are beginning to reject the discount-oriented "managed care" approach employed by many work comp payers. Sources indicate that the Florida chapter of the American College of Occupational and Environmental Medicine (the professional association of occupational medicine physicians) will be forming a committee to develop a position statement related to managed care networks.

Here's hoping it is direct, definitive, and blunt.

Posted by at 7:37 AM | Permalink

Transparency. The basic requirements of consumer-directed health plans (CDHPs) are price transparency and outcomes data. The foundational concept underlying CDHPs is that consumers will ask how much services cost, and providers will be able to tell them.

Oh were it only possible. It looks like the six million folks who have bought CDHPs from an insurance industry eager to tout them as the second coming of (pick a deity) are having a tough time getting the pricing info they need to make informed decisions.

Aetna is ahead of the rest of the industryin providing information about phyeicians and pricing; they have been providing actual reimburement amounts for specific procedures in selected markets for some months. Humana is also doing this on a limited basis in at least one market (southern Wisconsin).

Here's a quote from the Chicago Tribune article:

" But basic data about what services cost generally aren't available. Medical providers and insurers consider this to be highly sensitive competitive information, and their contracts require that it remain secret.

That leaves consumers with more financial responsibility for their care but without the tools to manage these expenses.

"The market just isn't ready yet to deliver on the promise of these new insurance products," said Larry Boress, president of the Midwest Business Group on Health..."

While recent legislation will require hospitals and some other facilities to disclose their prices, the "prices" will be the list prices, and not the discounted rates. Thus this requirement may not be terribly helpful for consumers looking for useful information.

What does this mean for you?

Another (very large) hiccup on the way to consumer-driven nirvana.

Thanks to FierceHealthcare for the tipoff to the Trib's article.

Posted by at 5:28 PM | Permalink | Comments (7)

According to several providers in Florida, Aetna is recruiting physicians for its workers comp network while requesting discounts that are quite aggressive.

I'm attending the Florida Workers Compensation Institute annual conference in Orlando, and spent much of Sunday moderating a session for physicians. I caught up with several providers after the meeting, and the conversation turned to work comp networks (in my opening comments at the physician seminar, I posed the question "why are you, the acknowledged experts in treating WC patients, providing care at a discount?).

Several of the providers had been recruited by Aetna for participation in their AWCA workers comp network; all were already participating in Aetna's group health and other arrangements. According to these providers, Aetna's letter, which was sent regular mail and was thus no different from the dozens of letters they get each week from managed care firms, stated that unless the provider informed Aetna that they did NOT want to be part of their WC network, they were going to be listed as a participating provider.

That runs counter to what I have been hearing from Aetna, so perhaps there is some confusion on the part of these providers. Or perhaps Aetna is assuming that because the providers are already in their group network, this is all they have to do to enroll them in the WC version. If that is the assumption, Aetna may want to rethink their strategy.

(virtual Sidebar - I'm not an Aetna basher, and believe that on balance Aetna is one of the better mega-healthplans. My sense is their people really try to do the right thing, their leadership is smart and thoughtful, and their "brand" of health care is much preferred over that of their major competitors.

But no one is perfect.

(Back to the main post)
There was no confusion regarding the reimbursement offered by Aetna, which ranged from 30% off the work comp fee schedule to 20% off to 20% below Medicare. These were seasoned, intelligent veterans of the managed care world, well-versed in contract negotiations and reimbursement, and all agreed that the proffered rates were, to say the least, inadequate.

Perhaps that is why Aetna is having a bit of trouble launching a FL workers comp network.

I'd also note that the providers were quite clear in describing the contents of the letter, and the requirement that they inform Aetna if they declined to participate.

Discounting key providers is not the way to reduce workers comp costs. And if Aetna is requiring its group health docs to inform them if they do not want to participate in the group health network, it is setting itself up for major confusion on the part of the physicians, anger on the part of injured workers, and frustration on the part of WC claims adjusters.

For the reality is most practices will either not read the letters, understand the contents, and respond in a timely fashion.

What does this mean for you?

A likely delay in implementing in FL, and potential problems when you do.

Posted by at 7:20 AM | Permalink | Comments (3)

Several industry sources indicate UPS has decided to move about a quarter of its workers compensation business from Liberty Mutual to TPA Gallagher Bassett. The transition date is 1/1/2007.

UPS has been with Liberty from the beginning, and this represents a significant loss, as both claims administration and managed care will be moved to GB.

This is a major win for GB, and may mean that the big TPA has revised its business practices and cleaned up its act. GB has had a few embarassments in the marketplace of late, notably the Broward County School Board fiasco. UPS' adviser is Aon, a consulting/brokerage house I have been less than impressed with in the past; perhaps Aon, which developed a managed care contracting and evaluation strategy as a direct result of its consulting work at a very large payer, has also upgraded its talent and output.

It appears the rationale was UPS' desire to reduce the number of eggs per basket. It remains to be seen if the folks in brown have used the right approach and picked a decent basket.

Posted by at 8:49 AM | Permalink | Comments (13)

United Healthcare's stock plunged yesterday after it reported it could not file its second quarter financials on time due to difficulties dealing with stock options for Chairman Bill McGuire and others.

UHC's stock has dropped 22% this year, largely due to regulatory scrutiny of UHC's practice of backdating stock options for McGuire, who now holds options valued at about $1.6 billion. At least that was the options' value before the stock's slide.

This is not the only issue UHC is facing. It's management of HMO Medica has come under scrutiny of late as well. There are allegations that the management contract was much too lucrative and UHC's performance was substandard.

UHC grew in large part due to McGuire's visionary leadership, business acumen, and focus on building value. The dark side of the McGuire era, one that may now be ending, is now showing itself, and it isn't pretty. It looks like outright greed from here.

Posted by at 6:46 AM | Permalink | Comments (2)

Coventry's First Health unit enjoyed an uptick in workers comp revenues in 2006 from Q1 to Q2, but revenues have been essentially flat over the last five quarters.

Here are the work comp division's revenue numbers (in millions of dollars)

2005 Q2 $54
2005 Q3 $51
2005 Q4 $53
2006 Q1 $51
2006 Q2 $55

Overall, the entire FH division (work comp, commercial, and other lines) has seen declining revenues, from $224 million in Q2 2005 to $215 million in the most recent quarter. Note that the most recent 10-Q filing indicates revenues have gone up appreciably from the first half of 2005 to this year; this is partly because the acquisition did not close until January 28 2005, making revenue numbers from that quarter artificially low.

More on First Health is here.

Posted by at 6:24 AM | Permalink

Apologies for acronym-itis; Matt Holt at The Health Care Blog has posted the latest edition of Health Wonk Review, employing his usual sharp wit and canny insight. Or is is sharp insight and canny wit..

You decide.

Posted by at 6:11 PM | Permalink

News reports indicate Amerisource Bergen (ABC), the hospital supply firm, is unloading its Pharmerica subsidiary. Actually, it is forming a joint venture with Kindred Healthcare to combine both companies' long term care businesses in a new entity.

These companies provide drugs and supplies to nursing homes around the country, have annual combined sales of $1.9 billion and rather thin profits of $75 million.

Pharmerica also was the parent company of workers comp PBM Tmesys/PMSI, which evidently is staying within the ABC company fold.

Last week PMSI/Tmesys also made several changes in management, including promoting Mark Hollifield to president to replace Dave Weidner, who moved on to another senior position within the parent company. Hollifield, who was promoted to COO at the end of March 2006, is a well-regarded manager. Tamara Wagner, the long-time head of sales departed as well, and an interim sales leader was appointed from within.

Other sources indicate Coventry's First Health unit is looking into entering the WC PBM business, likely by going the acquisition route.

Posted by at 12:04 PM | Permalink | Comments (1)

Jason Shafrin at Healthcare Economist has an intriguing analysis of administrative expense in Medicare v private insurance. My net is that Medicare is less costly from an admin expense perspective than private insurance, but not as "less" as I thought.

This is where blogs really excel - making us rethink "common knowledge" and question our assumptions...

Posted by at 7:03 AM | Permalink | Comments (2)

In the "we could not make this stuff up" category, former Ohio coin dealer/money manager Tom Noe (!) is set to be sentenced on September 12 for funneling illegal campaign contributions to the Bush re-election campaign . Noe is likely to spend upwards of two years in prison, and perhaps a lot "upwards". The funds totaled $42,000, and helped Noe attain the coveted "Pioneer" status in the Bush campaign.

The bad news won't end there for Noe; several weeks after his sentencing he will begin defending himself against separate charges filed by the state of Ohio relating to his alleged theft from the reserves of Ohio's Bureau of Workers Compensation. For those who have not been following Noe's transgressions, be advised, the man was pretty busy.

Posted by at 6:06 AM | Permalink

CMS is going to change the way it pays physicians. Really. Well, CMS Director McClellan says they will, and soon. Policy types will recall that every year, physician reimbursement for procedures under Medicare is slated to drop by between 3% - 5%, depending on total expenditures the prior year and a really complicated formula (that is never followed). So each year, physicians scream, and every year, politicians say "no, just kidding", and tweak the reimbursement to send a few more dollars to the docs. And I do mean "few".

This year expect the same to happen; it is an election year, there are lots of powerful (read "lots of money") forces in play here, and few elected officials want to take the political hit for cutting Medicare. So far, 80 senators have signed a letter asking that reimbursement levels be increased, not reduced.

Despite the political realities, McClellan is of the opinion that our elected officials will come up with a pay-for-performance scheme for CMS. Whether it ever gets through Congress is another story altogether.

For further edification, I'll pass on the perspective of Bob Laszewski, long-time national health care policy expert and good friend. Bob's view is that the increase in utilization driven by physician practice patterns is leading to the huge cost increases we are seeing in Medicare, and the stats back him up. Medicare's per-service reimbursement in 2006 is essentially unchanged from five years ago, while utilization has gone up dramatically. So, price controls have not worked to hold down medical inflation.

Thus the interest in pay for performance for physicians. While it sounds interesting, it's really hard to do.

As tough as it's going to be, I see no better alternative.

Posted by at 1:23 PM | Permalink | Comments (1)

The increasing consolidation in the health insurance market is beginning to run up against the same situation among health care providers, creating the market condition known as a bilateral oligopoly (few sellers and few buyers). This appears to be happening in Denver, where UHC is battling HealthOne over contract terms, reimbursement and likely other sticky issues.

There are two points here.

First, according to several sources, HealthONE is an excellent system with enviable outcomes; therefore is entitled to ask for better reimbursement than lower-performing systems. One of those sources is UHC itself. Here's a quote from the press release

""Interestingly, HealthONE hospitals earned the highest quality rankings among Denver metropolitan hospitals for a majority of procedures evaluated in UnitedHealthcare's first ever-report card, released in June of this year," said Patrick Powers, HealthLeaders-InterStudy senior analyst. "These report cards are part of UnitedHealthcare's new pay-for-performance initiatives, which should translate into improved rates for high quality hospitals." That's only half of the story, as we aren't privy to the rates UHC is offering and HealthONE is demanding. That said, HealthONE seems to have a strong case for strong rates.

Second, while a "bilateral oligopoly" may send you (and certainly sent me) scrambling for the e-dictionary, the net is the big players do battle while the consumers try not to get trampled underfoot. Here we have a very large insurer and a very large provider fighting over rates and access, while the consumer waits anxiously for these behemoths to resolve (or not) their squabbles.

Reminds me of the old joke about what you find between elephants' toes.

Slow running natives.

Posted by at 6:42 AM | Permalink

I've received an invite from the folks conducting the Consumer Driven Healthcare Summit to attend the September 13-15 conference as a representative of the blog world, sort of a "press invite". I applaud their openness in two respects - first, I've not exactly kept my skeptical views of consumerism in health care to myself; and second, bloggers are a wierd, strange, new form of media that many don't yet recognize as important or even worth noting.

So, I'm looking forward to it.

The agenda includes talks by Paul Ginsburg of the Center for the Study of Health System Change (one of the few truly excellent policy/analysis concerns); Jon Gabel on how much consumers are actually contributing to their HSA accounts; Karen Davis of the Commonwealth Fund, Ron Pollack of Families USA and John Iglehart of Health Affairs on the Downside of Consumer Driven Healthcare; and several sessions on results of studies and research into various aspects of CDHP and its cousins.

This should be fun. And I'll be doing my best to report live from the scene, in the best tradition of Matthew Holt.

Posted by at 5:42 AM | Permalink | Comments (4)

Sen. Bill Frist, the senate majority leader and ex-cardiac surgeon and heir to the Frist family fortune (they started hospital firm HCA), has launched a health care blog. A quick perusal indicates posts on med mal reform, Massachusetts' health care reform initiative, and bioterrorism. There are also copies of articles by the Senator for those inclined to learn more about his opinions.

As a relatively new entrant to the field, we'd suggest a couple of things to the Senator. First, hotlinks are pretty useful, and help provide support for statements such as "Many states have passed laws that attempt to keep frivolous lawsuits from being filed and keep liability premiums down..."

It's also helpful to be specific and clear when writing. Parsing out the quote above, it is notable that the dependent clause "that attempt to keep frivolous lawsuits from being filed and keep liability premiums down" relates to the "passed laws", and does not imply that these laws actually do reduce frivolous lawsuits. Kind of nuanced, but readers appreciate the clarity.

At the risk of being accused of being snarky, I'd also point out that the focus on medical malpractice is somewhat bizarre, given the Doctor/Senator's propensity for refuting other physicians' diagnoses without first examining the patient.

Posted by at 10:34 AM | Permalink | Comments (1)

Here's another way health care costs weave their way into our lives - the town of Richland Hills, Texas is increasing property taxes to pay for a 20% rise in health insurance costs. While the increase in the mill rate (the cents per hundred dollars of property value) will only go up 0.6, it's another example of the growing awareness of the impact of health care costs on a community.

The same is occuring in communities as different as MIssoula Montana, Boxborough Mass, and the state of New Jersey.

This is a national problem. Today's NYTimes reports that property taxes have gone up two to three times faster than personal income in the tri-state area. As a resident of Connecticut and eight year veteran of my Town's Board of Tax Assessment Appeals, I have first hand knowledge of taxpayers' growing concern, and even anger, over rising property taxes. Now, new laws will require municipalities to report their future health care liabilities, a requirement that had a significant impact on public companies' valuations and financial reporting.

And may well lead to even more taxpayer unrest; public entities typically provide health care benefits that are considerably more generous than those dispensed by the private sector. One of the stated reasons is these benefits are a form of compensation that makes the jobs more attractive given the wages, which tend to be somewhat below the private sector. While the latter may be true, the rationale instantly brings to mind the disaster unfurling at US auto manufacturers, who used the same logic decades ago to provide very generous health benefits in lieu of salary increases.

And look what's happened to them.

Posted by at 7:49 AM | Permalink | Comments (4)

Drugs account for over one-eighth of workers compensation medical expenses, and that number continues to increase. The data from NCCI's latest research paper on workers compensation drug costs is consistent with the findings of my firm's research, and provides additional detail on the specific drugs that account for the majority of dollars spent.

NCCI's report includes results up to 2003; while there have been several significant changes since then (the disappearance of most of the COX-2s, patent expiration on Oxycontin, and the explosive growth of Actiq), the report's year-over-year trend data is sobering.

Of note, experience indicates that the most sophisticated payers are holding increases in the 2-5% range through the use of clinical management programs, data mining, adjuster training, strong EDI connections, and intelligent third party biller strategies.

Their less-sophisticated colleagues are at the other end of the spectrum, experiencing 15% and higher annnual inflation rates.

What does this mean for you?

If you aren't working hard on this, you may want to get started.

Posted by at 10:26 PM | Permalink

There’s been so much activity on the national health care scene involving managed care, medicare, provider reimbursement, consumer-directed health plans and Part D, I’ve neglected another loyal readership, the brave souls who toil in the workers comp managed care business.

Apologies, and let’s catch up.

Aetna’s workers comp network initiative (Aetna Workers Comp Access, AWCA) appears to be pleasing some and not pleasing others. The big managed care company has been working hard to become an alternative to the comp network offerings of First Health, CorVel and Concentra/Focus, and achieved some early successes, at least in terms of customer commitments. However, as those experienced in managed care sales know all too well, a “commitment” may not translate into appreciable revenue for many months, and some commitments never do. While many deals have been announced, sources indicate Aetna’s sales force has been scrambling of late to encourage potential customers to implement by making concessions on contract terms and pricing.

A relatively recent success has been the decision by Concentra to incorporate Aetna's network into the Focus PPO. For now, Aetna is in 13 states. Given Concentra's market share in the combined network/bill review sectors, this may be a significant win for AWCA.

The company’s deal with the Hartford to provide networks in many jurisdictions appears to be moving in fits and starts. Evidently six states have been implemented to date and several more are in "test" mode. AWCA missed its implementation dates in a couple of states due to regulatory complications and difficulty contracting enough providers. One of the tougher states is Florida, where it is notoriously tough to sign up providers in the Panhandle and north central parts of the state. That said, the Hartford folks are none too pleased with the missed deadlines, as the expected savings were baked into the company's 2006 budgets.

Aetna’s WC technology has also been a challenge; sources indicate the company's reliance on multiple systems (likely a result of its acquistions of PPOM in Michigan and other health plans in other jurisdictions) and decision to stay out of the bill repricing business may be costing it business or slowing down implementations. In defense of Aetna, most of its initial customers are bill repricing firms who would likely not find more competitiion to their liking, and the WC payer world is not exactly known for its technological sophistication...

Meanwhile, UnitedHealthcare’s Ingenix subsidiary has begun selling access to a “workers comp network” offering in the Maryland area. The network contracts, which at least in theory included workers comp as an authorized payer, are on MAMSI’s paper (MAMSI is a regional health plan purchased by UHC several years ago). This represents UHC’s first venture into work comp networks since it sold MetraComp to NHR (which was then bought by Concentra) several years ago. No news on any customer signings yet, and they have yet to get around to putting any info on their website about the WC product offerings...

First Health, which was struggling to compete against Aetna at this time last year, has made some significant progress of late and may be the primary beneficiary of Aetna’s failure to complete network development in some states (FH is the incumbent network at the Hartford). Notably, FH signed a deal with specialty managed care firm MedRisk (a Health Strategy Associates consulting client) that provides FH clients with the ability to access MedRisk’s best-in-class physical medicine EPO (Expert Provider Organization). Reports indicate Bluebell PA insurer PMA is the first FH customer to implement the new program, going live today. The benefits to FH are significant; MedRisk’s savings are two to three times greater than FH’s previous physical medicine solution, and as FH customers pay based on a percentage of savings, FH generates a lot more revenue, while outsourcing all the work (and probably a good bit of expense) to the acknowledged industry leader in physical medicine management. Other FH clients include St. Paul/Travelers, the Hartford, SRS, AIG, and Broadspire.

Notably, before signing the deal with MedRisk, FH first tried to develop their own PT answer internally via First Health Priority Services, a venture that was quite unsuccessful, delayed their entry into this lucrative sector, and deeply frustrated a couple of large customers who were brave enough to sign up for the experiment.

FH still has not officially announced a new leader for the WC business. Rob Gelb continues in his role as VP with responsibility for strategy and product development, a public promotion to the top spot does not appear imminent. Industry veteran and long-time sales leader Art Lynch remains as SVP in the WC division. Both report up to Jim McGarry at Coventry.

What does all this mean for you?

Aetna remains a work in progress, but it appears to be delivering on its initial promise to be a viable alternative to First Health.

Posted by at 7:20 AM | Permalink | Comments (1)

Julie Ferguson, the force behind more than a couple health-related blogs, is hosting the latest edition of Cavalcade of Risk at Workers Comp Insider. With only five editions, the C-cade is up to 20 entries, and quality ones at that.

Peruse and ponder the non-purple prose!

Posted by at 7:06 AM | Permalink

Fard Johnmar of Envision Solutions and Dmitriy Krugylak of The Medical Blog Network are working on a survey of health care related bloggers. The survey, which is on-line (natch) covers a variety of topics and is open to any blogger that devotes a third of their time to the health/medical world.

So if you qualify, hop on over and render your thoughts and opinions.

Posted by at 6:57 AM | Permalink | Comments (2)

Assuaging concerns about quality, treatment standards, and outcomes is one of the biggest challenges facing off-shore medical facilities eager to extract a fraction of US health care dollars. That and figuring out how to make a Mumbai hospital look and feel like the one just down the street from the medical tourist's neighborhood.

Into this business opportunity (the former, not the latter) has stepped an Australian certification body, the Australian Council on Healthcare Standards. Working with two Indian groups, the Quality Council of India (QCI) and the National Accreditation Board for Hospitals and Healthcare Providers (NABH), the Aussies will help revise national credentialing and standards for Indian health care facilities.

The standards are likely to closely parallel those developed by another body, the ISQua, The International Society for Quality in Health Care. ISQua includes board members from URAC, JCAHO, and accrediting organizations from other countries, and is operational in 70 nations.

As healthcare goes global, and American companies and individuals seek to reduce expenses while assuring quality, expect that we'll hear more about health plans that include first-dollar coverage for services rendered at ISQua certified facilities.

What does this mean for you?

The world is getting smaller, flatter (thanks Tom Friedman) and more competitive, and providers who ignore competition from overseas do so at their peril.

Posted by at 6:48 AM | Permalink | Comments (2)

As corporate profits have surged over the last six months, retiree health care benefits have been reduced at many companies. That's the headline, but the reality is not so simple.

Large, old-line manufacturers with negotiated benefits and lots of retirees (think steel and autos) are facing bigger-than-huge retiree health care costs, driven in large part by benefit plans that don't even have deductibles or copays. As these firms continue to get hammered by international competitors with much lower labor expenses, they are seeking ways to reduce their costs.

And retiree health care costs are a very big drag on many of these companies, hurting their ability to invest in new products, new employees, new plants and equipment. Sure, GM, Ford, Kaiser Aluminum, US Steel and other companies made lots of decisions, including trading benefits for labor peace, that don't look so smart in hindsight. And GM and Ford completely missed the boat on fuel economy.

But all that is beside the point. If American manufacturers can't reduce their cost of health care, they will be increasingly unable to compete.

Here's one potential solution.

Posted by at 7:20 AM | Permalink | Comments (1)