Obamacare is NOT just the Federal Exchange

Okay, deep breath here folks.

There’s no question the Federal Exchange is a mess.  And that’s the polite characterization.

But let’s not get too carried away, because the Federal Exchange is just a small part of PPACA/Obamacare.  In fact, the Exchange impacts just 7% – seven percent! – of the US population.  Thus, it is:

  1. Irrelevant for most Americans – specifically the 80% who get their insurance from their employer or are covered by Medicare or already covered by Medicaid.
  2. Not operating in 16 states plus DC, and that includes a couple of big ones – California and New York specifically.  In general, those exchanges are doing pretty well. Yes there are significant problems in Hawaii, Maryland and a couple other states, but overall they’re doing fine.
  3. Operating in states where 59% of today’s uninsured live.  Sure that’s a lot, but it isn’t everyone, not even close. And, a big chunk of that 59% are not eligible for coverage for various reasons (undocumented, state refused to expand Medicaid, etc.)

And, the Federal Exchange is just one part of Obamacare.

It is a means to an end, and that “end” is covering as many eligible people as possible, while fundamentally changing the competitive marketplace to force insurers to compete based on delivering the best outcomes at the lowest price.

Key components of Obamacare already implemented include:

  • Medicaid and CHIP expansion, providing coverage to the growing population of people who don’t make enough money to buy their own coverage, or who work for small companies that don’t provide insurance.  
  • Credits to help small businesses buy coverage
  • Elimination of medical underwriting, lifetime caps, and coverage of dependents to 26
  • Allocation of funds to Comparative Effectiveness Research to promote treatments that actually work.
  • Policy changes and funding for new delivery systems and reimbursement arrangements, funding which has generated explosive growth in Accountable Care Organizations and Medical Home-based models.

What does this mean for you?

Eventually, the federal exchange will be fixed.  Meanwhile, our health care “system” is going thru drastic change, change that will, over the long term, improve the health care we get and reduce the cost of that care.  

Of course, there’s going to be some well-deserved political fallout in the interim.




Obamacare’s dilemma, simplified

The website is not going to be fixed by the end of the month.

As a result, most people will NOT be able to enroll in commercial plans that start January 1.

Many of those who are already insured got cancellation notices, so their policies will not exist after January 1.  And it will be very, very difficult for insurance companies to postpone or “cancel” those cancellations. Not because they don’t want to but because they can’t.

Insurance companies have spent years preparing for January 1; programming computers, developing policy language and getting it approved by regulators, setting up new provider networks, cutting deals with providers; setting up EDI links with the government and banks, and building new reimbursement and clinical management programs. All are ready to go, tested, checked, and waiting for the ball to drop.

They can’t just undo this; they can’t call “Time Out” or hold off, or stop.  The train is leaving the station, and there’s nothing the President or anyone else can do to stop it.

Which puts the Administration in a very poor position, albeit one they built themselves.  The website won’t be ready, and the current policies won’t be in force as of January 1.

Is there a solution?

Not that I see.

What does this mean for you?

Depends on your state.  I’ll address the impact on workers’ comp in a future post.


Is Zohydro the next addiction creator?

I’m just as sick of writing about opioids as you are reading about them.

But the FDA’s approval of Zohydro, yet another highly-addictive, easily-abused opioid – the fourth in the last four years – requires our attention.

I’ve been trying to ignore the Zohydro story but today’s excellent piece in WorkCompCentral reminds us just how difficult the battle is. Zohydro is a very powerful, “extended release” opioid pill.  The problem is this; while the drug is formulated to allow the opioid to gradually “leak out” into the blood stream, abusers can get all the opioids into their system at once by crushing, dissolving, or melting the pill.

No one I have spoken with – or quoted in the WCC piece – understands why the FDA would approve Zohydro without tamper-resistance; some form of chemical or other method that prevents this crushing/dissolving/melting/burning process.  Many drugs on the market today have this type of modification.

But they did.  And we’re stuck with it.

So, what do we do?  Here are a few ideas.

  • Require all use of Zohydro is pre-authorized, and only allowed after failure on other, much less potent medications.
  • Require (where possible) substitution of one of the abuse-deterrent medications for Zohydro.
  • Monitor physician prescribing patterns, and intervene with docs/practices prescribing Zohydro.  Let them know you are watching, require proof of medical necessity, and constantly monitor their patients.  Require drug testing, opioid agreements, evaluation of pain and functionality.
  • Reach out to ALL docs who write scripts for Zohydro letting them know your policy. Do this early.

It comes down to the docs who treat your claimants.  If you have the right docs, this won’t be a problem.  If you have to work with all docs, monitor, manage, intervene.

Yes, it is a LOT of work.  But it is a LOT less work than dealing with more addicted claimants.

What does this mean for you?

Fortunately, most payers are far better prepared to deal with Zohydro than they were a few years ago.  Get ready, and measure how many claimants are taking Zohydro on a weekly basis.  That’s the metric to measure success.  


Obamacare – what’s REALLY happening

For those who want to really understand what’s happening with the rollout of Obamacare’s health exchanges, Brad Wright has compiled the best of the health policy wonk-o-sphere in this week’s edition of Health Wonk Review.

There’s insights into the faults of the Administration, successes of state-based exchanges, Medicaid expansion, and the growth of Accountable Care Organizations among other jewels.

Brad’s edition is timely, concise, and on point.



The future of work comp managed care

Specialty care is growing – in impact, popularity, valuation, attention. Meanwhile, the historically-dominant vendor, Coventry work comp, is shrinking.


I’d hazard a few guesses.

First, Coventry’s prior bosses starved the work comp unit, treating it as a cash cow but neglecting to ensure adequate feed for that cow. As a result, the bill review engine is rapidly running out of steam, the network is being overtaken by other generalists and hollowed-out by specialists, and little attention is being paid to case management, referral services, and other ancillary product lines.

A classic business situation, one that former Coventry CEO Allen Wise ordered with full understanding of the long-term consequences.

Now, it’s Aetna’s problem.

Word is the staff termination notices are starting to flow as the new owners look for ways to increase profitability.   Staff reductions may well hamper Coventry WC’s efforts to remain a  major player in comp – but that may not matter to the folks responsible for the business.  If their marching orders are to generate cash, then that they will do.

Meanwhile, One Call Care Management and Align sold for $3.2 billion. The entire work comp medical spend in the niches served by the new company is about $7.5 billion. 

I still have trouble wrapping my head around that.  And everyone – and I mean EVERYONE – I’ve spoken with can’t fathom that price for those assets.  By way of contrast, Aetna only paid $5.6 billion for all of Coventry – Medicaid, group health,  Part D, and work comp.

Leaving aside the price paid, does this mean specialty care is much more valuable/important/useful than the old-line generalist managed care firms?

Or is it just that Coventry’s lack of investment and neglect of product development has allowed other entrants into the market, entrants who have been able to capitalize on a market need not met by what was the company best positioned to do just that.

We don’t know what Aetna’s long term plans are for work comp, but the current staff reduction is an indicator – not THE indicator but AN indicator.  Meanwhile, the money is flowing into specialty care – and that’s where innovation, value, results, and progress will be.

What does this mean for you?

Work comp medical management will be fundamentally changed over the next two years.  It remains to be seen if that is a good thing.


5 – shut it down till it is ready to go

It is increasingly clear that is not working, and is not getting appreciably better. If it doesn’t get fixed – and I mean REALLY fixed – by the drop-dead date of December 1, the implementation will have to be delayed until it is.

And that may not happen until late next year.

There are two problems – the front end enrollment process, and the back end information distribution process. On the front end, a handful of people are successfully enrolling in health insurance on but a handful is nowhere near enough to get the program up and running successfully.  However, that’s just as well, and may actually be intentional.

If tens of thousands of people were successfully enrolling every day, the back end – where all the things happen that make health insurance actually work – would not be able to handle the volume.  That is a very polite way of saying it would be an unmitigated disaster.

Once you’re signed up, (among other things) your bank account has to be debited, subsidy calculated and applied (if there is one) and enrollment and eligibility information catalogued and prepared for distribution.  This process relies heavily on an EDI  process using an industry standard known as the “834”.

The problem is that each insurer has their own slightly-different version of the 834, so each health plan’s 834 has to be programmed, tested, and then tested each month to ensure the right data in the right format is getting to the right computer databases.  The best discussion of the issue was on Bob Laszewski’s interview with Daryl Chapman last week. Here’s an excerpt:

 There are lots of data elements and a lot of field variables. Because of this complexity, no one takes a file straight into a production system––too risky. There are variations on the process but every company has some type of validation process. Generally, the 834 goes through an acceptance process, which scans the file and checks for errors. If it passes the data check it uploads to some kind of “model office” where it is tested again and then, if it passes, it goes to production. Although most of that is automatic there are several chances for the file to “error out.” Once in production, the file drives the payment system, claim system, and is the source for the list of doctors and hospitals they need to confirm the person is eligible for benefits.

Files still have lots of opportunity to trigger false reports in each of these systems if they aren’t accurate.

For example, member data is not the same as payment or cash data (member payments in this case come from two sources; the subscriber and the government). Poor quality data can lead to lots of problems trying to reconcile who the health plan was paid for and who they have on their eligibility system. Very few systems ever connect cash to belly-buttons and even fewer have debit and credit carry forward accounting capability making reconciliation on the fly very difficult.

If the member data is a mess then the cash becomes a mess. When the subsidy cash goes to the carrier from the federal government, the carrier doesn’t just get you; they get thousands of member cash files. If there isn’t a match, the claim paying process has to be suspended until people with green eyeshades figure it out.

And out in the world where doctors and hospitals live if the data isn’t clean doctors and hospitals may not treat you if the carrier file doesn’t say you are covered. They may demand payment upfront from the patient until things are straightened out or balance bill if claims aren’t reimbursed. That is a particular problem here because so many of these people will presumably be low-income.

This is where the biggest problem lies, and the hinge on which the success or failure of Obamacare rests.  I do not understand why the Administration doesn’t bite the proverbial bullet and shut down the Exchanges until they are absolutely ready to go.  Sure, there’d be a lot of political fallout, but that would last for a few news cycles, and then they’d be off to some new celebrity scandal.

Instead, the President and his proxies are telling people to get on to the site and sign up.  A site that isn’t working, and is much harder to fix because the White House appears to want to avoid some political damage. That is unconscionable.

What we need now is Lyndon Johnson.  He’d get the right people in the room, beat them mercilessly, make the tough decision and move on.  Instead we have millions of people who desperately want and need health insurance spending hours trying fruitlessly to enroll on a site that is fundamentally broken.

 What does this mean for you?

An aphorism is appropriate – If you don’t have time to do it right in the first place, what makes you think you’ll have time to fix it?



Outrageous spine surgery costs in California – now we know why

The FBI caught two California politicians allegedly accepting bribes to stop legislation that would have drastically cut reimbursement for spine surgeries.

Here’s the money quote:

“We’ve been keeping him [a spine surgery hospital CEO] in business now for the last four years, because the governor kept pushing these regs (sic) to cut the funding on these spinal surgeries for workers’ comp,” [CA State Senator] Calderon was quoted as telling an agent during a conversation on Nov. 2, 2012.

“All we’ve been trying to do is hold off that cut so they continue paying for that. The way it is now, they are leaving it up to the administrator at workers’ comp to decide how much they pay for these implants, and if they get cut out of that, they are out of business. So that’s what we’ve been working the last four or five years. You know, we’ve kept them going. We’ve pushed it off, pushed it off, pushed it off.”

Now we know why employers have been forced to pay for the implants twice; a loophole in California WC reimbursement requirements allowed hospitals to bill for the devices as part of the facility bill then again separately (that’s not exactly it but pretty close).

The Calderon brothers allegedly accepted bribes well in excess of $28,000 from Pacific Hospital of Long Beach and related parties to stall or stop legislation that would have fixed the loophole.  According to an FBI affidavit obtained by Al Jazeera;

[State Senator} Ronald Calderon..accepted approximately $28,000 in bribes from [Pacific Hospital CEO Michael] Drobot in exchange for directly enriching Drobot’s business by supporting legislation that would delay or limit changes in California’s workers’ compensation laws relating to the amount of money medical care providers are reimbursed for performing spinal surgeries.

So, there was malfeasance perpetrated by plundering profiteers who were looking to suck money out of California’s taxpayers and employers.  That’s bad – very bad.  A complaint filed by California’s State Compensation Insurance Fund, Drobot and his affiliates “alleges that [Drobot] received $161 million through inflated surgery room and spinal implant reimbursement fees in what the state calls “multiple fraudulent schemes.”

What’s worse is it is likely many of the work comp back surgeries were unnecessary at best and harmful at worst. 

Most of the procedures involving devices (the driver of Calderon’s scheme) were spinal fusions, a highly controversial procedure.  In 2011, more than 465,000 spinal fusions were performed in the US, and “some experts say that a portion of them — perhaps as many as half — were performed without good reason. (WaPo)

According to the article in the Washington Post;

The rate of spinal fusion surgery has risen sixfold in the United States over the past 20 years, [emphasis added] according to federal figures, and the expensive procedure, which involves the joining of two or more vertebrae, has become even more common than hip replacement.

Kudos to Al Jazeera for breaking the news. Gotta love those local papers…


Opioids in Work Comp Survey – more results & Webinar

Almost done analyzing the megabytes of data from our Survey of Opioid Management in Workers’ Comp; here are some of the key takeaways.

Here’s the key takeaway; most respondents understand the problem and know (generally) what needs to be done, but their organizations aren’t doing many of the things they should be.

In the “not really a surprise” category, almost all respondents believe opioids are overused in workers’ comp.

But this doesn’t mean they should NEVER be used; over 95% of respondents believe there is an important role for opioids in comp;

  • over three-quarters believe opioids are appropriate for addressing pain associated with catastrophic injuries or
  • recovery from surgery,
  • and two-thirds also believe they are appropriate for dealing with short term acute pain.

In comparison, relatively few – under 25%, believe opioids are appropriate for addressing chronic pain.

Both qualitative and quantitative responses overwhelmingly indicate the prescribing physician is the primary “factor” driving opioid overuse; almost 3/4 of respondents are monitoring physician prescribing patterns.

Clearly we are in the early stages of dealing with the problem; while most respondents know a comprehensive and integrated approach is the optimal solution, few companies have developed or implemented one; most are one-off, separate processes that rarely tie together.

Sponsor CID Management will be hosting a webinar highlighting key results and takeaways, you can register for the free webinar here.  I’d do it now, as there are only 500 slots and there are a couple hundred plus already signed up.

We will be diving into details in the webinar, providing examples of programs that are in place, the results of those programs, and where things are headed.  The webinar is November 12 at 2 pm eastern, 11 pacific.



Are opioids driving up comp medical costs?

Two articles in WorkCompCentral yesterday grabbed my attention.

One discussed an 8.7% rate increase recommended by California’s regulators (down from a 9.5% recommended by another group.  Part of the increase was attributable to “overall market deterioration, the causes of which are not clear.”  Greg Jones’ piece went on to paraphrase Dave Bellusci, EVP and Chief Actuary for California’s rating bureau, who reportedly said it was “too early to say what is driving the higher medical loss severity and growing claim frequency.”

Another piece cited the latest research by CWCI and Axiomedics’ Dr Laura Gardner. The lede of the story was this:

“Claims featuring multiple opioid prescriptions are linked to higher rates of indemnity claims, more expensive medical benefits payments, a greater probability of attorney involvement and lower claim closure rates.”

I don’t want to leap to conclusions here, as correlation does not equal causation, however the juxtaposition of the two stories was striking, especially when one recalls that the prevalence of opioids in workers comp has increased dramatically over the last decade.

What does this mean for you?

What is the impact of opioids on your medical and claims costs?


Big doings in the world of opioid management…

While we’ve been marveling at the truckloads shiploads of dollars investors are pouring into work comp service companies, there’s been a lot more activity of much greater import out in the real world.

Here’s a quick update on the latest news in opioids, and opioid management.

Barry Meier continues to do the best national reporting on opioids; his piece this morning on moving Vicodin(r) et al to the Schedule II list is great reporting indeed.

Why is this necessary?  Mike Whitely’s eye-opener in WorkCompCentral summarizes a report from the Trust for America’s Health on stopping the prescription drug abuse epidemic. Couple of most distressing items:

  • more than one of every ten teens reported “non-medical” use of prescription drugs
  • Drug overdose deaths doubled in 29 states over ten years
  • Drug overdoses now kill more 25-64 year olds than motor vehicle accidents

A big part of the solution is instituting real prescription drug monitoring programs; Kudos to the Pennsylvania House for passing (191 – 7!!) legislation addressing prescription drug monitoring; a new bill is in progress that would require docs and dispensers to report controlled substance scripts within 72 hours, with the directive that a “real-time” reporting requirement should be implemented as soon as possible.  (hat tip to work comp central).

TPA Broadspire is doing good work on opioids; they report encouraging results as almost three-quarters of claimants in their pain management program reported a significant decrease in drug usage (mostly opioids). These were mostly long-term claimants, with an average claim duration of 8.1 years.

And we’re about to wrap up the work on our Survey of Opioid Management in Workers’ Comp; a webinar is scheduled for November 12 at 2 pm; I’ll get sign-up info out tomorrow.

Thanks to CID Management for sponsoring the Survey.