Aug
30

So you want to repeal Obamacare?

Quick, who said “A mandate on households [to buy health insurance] certainly would force those with adequate means to obtain insurance protection.”?

How about :”If a young man wrecks his Porsche and has not had the foresight to obtain insurance, we may commiserate, but society feels no obligation to repair his car. But health care is different. If a man is struck down by a heart attack in the street, Americans will care for him whether or not he has insurance.

See below for the answer…

For the gazillionth (okay, only 7,386th) House GOP members recently voted to repeal or defund Obamacare.  That principled effort has consumed 15% of the House of Representatives’ floor timeone out of every seven hours has been devoted to this Quixotic effort.  

Back in the day, there were calls to “repeal and replace”; those have disappeared of late, replaced by…nothing. Rather, the thinking seems to be “it’s not our job to fix this mess.”

Because there’s no question our health care system is a mess – expensive and horribly inefficient, while delivering outcomes that are far worse than embarrassing. And somehow the current system does not need oversight/repair/re-configuration?

Here are a few things to consider when pondering solutions to the current health care mess.

1.  Insurers won’t cover people with potentially expensive pre-existing conditions unless they are forced to.  That’s just common sense, and responsible behavior.

2.  Because insurers won’t cover high-risk individuals, we have “high-risk pools”.  Unfortunately, these  have always been and are now seriously underfunded.

3.  If a) insurers won’t cover people with history of heart disease, diabetes, obesity, asthma, depression, or a few hundred other conditions, and b) there’s no other coverage, these people will not get insurance coverage.  Unless they are super-wealthy, they won’t get care, either.  

Some make the principled argument that this is not their problem, that the Federal Government’s role does not include anything involving the health of Americans.  I respect that position, as long as it is consistent with their policy views on other matters. I would also note that it is at odds with most Americans who view Medicare – a Federal program – as sacrosanct.

Which gets us back to the original question, who wanted the mandate first?

The lede quote came from the Heritage Foundation; here’s what Heritage’s Stuart Butler said:

“[N]either the federal government nor any state requires all households to protect themselves from the potentially catastrophic costs of a serious accident or illness. Under the Heritage plan, there would be such a requirement…Society does feel a moral obligation to insure that its citizens do not suffer from the unavailability of health care. But on the other hand, each household has the obligation, to the extent it is able, to avoid placing demands on society by protecting itself…A mandate on households certainly would force those with adequate means to obtain insurance protection.”

BTW, Butler authored the Porsche quote as well…

A question.

Why is Obamacare now anathema to the very people who originated the idea?  

Is it the policy, or the person who’s name is now attached to the very idea first advanced by conservatives?

Note: As always, happy to engage in spirited debate; if you want to posit a different argument, use citations of primary sources to back up your positions.  I do, so you have to.


Aug
28

What’s happening with health care premiums and costs?

Employer health insurance premiums increased 4 percent for families, 5 percent for singles this year. While that’s a modest increase, over the last decade, family premiums are up 80 percent.

And, premiums have been held down of late in large part due to rapidly increasing cost-sharing; the average deductible for employers with 3-199 employees hit $1715 this year as the percentage of employers with deductibles over $1000 jumped from 49% in 2012 to 58% this year.

Large insurers’ actual trend rates continue to come in lower than projections, with the latest stats indicate Aetna, CIGNA, and Wellpoint all reporting mid-single digit rises.

Combining Medicare and commercial health care costs as reported by health care providers shows an increase of 3 percent in June over the preceding 12 months.  Medicare’s trend was a lowly 1.27 percent…Medicare is increasing hospital reimbursement by less than 1 percent, a move that will certainly help keep the program’s costs increasing very slowly.

But those price controls are far from the only reason Medicare’s cost trends are at historical lows.

What’s behind the relatively good news on cost increases?  While commercial insurers see the recession as a contributor to past success in keeping trend rates down, the recession doesn’t appear to have had much to do with Medicare’s relatively low cost increases from 2000 to 2010. According to the Congressional Budget Office, the modest trend rate:

“appears to have been caused in substantial part by factors that were not related to the recession’s effect on beneficiaries’ demand for services…other factors–namely, a combination of changes in providers’ behavior and changes in beneficiaries’ demand for care that we did not measure–were responsible for a substantial portion of the slowdown in Medicare spending growth.”

In fact, CBO is projecting Medicare’s total costs by 2020 will be some $169 billion lower than earlier projections.

So, what does this all mean.

Well, mostly good news for folks not in the health care sector.  The decline in projected costs will have a substantial – and very positive – effect on the Federal deficit and long-term debt.

Employers and individuals won’t see costs hit the troposphere just yet – I guess that’s good news, although they certainly aren’t going to drop out of the stratosphere…

For the health care provider sector (broadly defined), what have been wrenching changes to date are about to get even more dramatic.  I’d expect some payers will see increased efforts to cost-shift as providers seek to increase revenues where they can while they struggle to strip cost and inefficiencies out of their operations.

 

 

 


Aug
27

Opioid Survey – fixed!

Apologies to those who clicked on the (broken) link in yesterday’s post on our Opioid Survey – here’s the right one.  

All respondents who complete the Survey (and only respondents) will receive a detailed Survey Report…so click away!


Aug
26

Opioids in work comp – Survey says…

We are just about done with our Survey on Opioid Management in Workers’ Comp and there are a few early findings that caught our attention.

(to complete the survey, and register for the iPad we’re giving to one respondent, click here)

About 2/3 of respondents have been in WC for more than 15 years, and about the same percentage work in claims or medical management.  In all, a highly experienced, very knowledgeable group.

The most common first words that come to mind when they hear the word “opioids” are addiction and abuse. 

40% of respondents said senior management is “very concerned” about opioids.

A majority of respondents think payers’ efforts to address opioids have been somewhat or very ineffective; most blame lack of effective regulations.

Payers would like to see regulations: 

  • instituting evidence-based clinical guidelines; 
  • supporting urine drug monitoring;  and
  • requiring opioid agreements/contracts.

Finally, 94% said opioid usage has lead to addiction/dependency.

94%.

Is your hair on fire?

 


Aug
26

Building a better mousetrap – that’s the easy part

In the work comp world, the easy part is figuring out a better way to do things.  There are a gazillion opportunities for improvement; you could probably list a dozen without breaking a sweat.

The hard part is convincing the people you need to convince to actually make the solution work.

That’s where private equity folks seem to stumble.

They are used to finding a problem, identifying a solution, and relentlessly pushing execution – in technology, logistics, drug development, manufacturing, communications.  The weirdness of work comp doesn’t always – or even usually – work that way. In my experience, many private equity investors don’t “get” that their “solution” will ruin someone else’s business, hurt an exec’s performance evaluation, require IT resources that just don’t exist, and/or solve one individual’s problem while causing another grief.

A couple examples will help.

Reducing medical cost would seem to be a top priority for anyone on the payer side.  Yet managed care execs get evaluated and bonused based on network penetration and dollars saved below fee schedule.  Think about that – the more bills they get, for the more expensive procedures, and the more discounts they get on those bills, the better their performance is.  Meanwhile, medical expenses are going up, but that’s not part of the equation.

When I talk to PE folks about this, they have a hard time wrapping their heads around it.  It’s so nonsensical, so obviously backwards, so counter-productive, they just can’t get it.

Of course, they are right.  But that won’t make them succeed.

Getting adjusters to use specialty networks is another example.  I’ve been hearing about payers’ ostensible motivation to get as many claimants as possible using specific DME, Home health, imaging, and other providers.  The logic makes a world of sense – more control, lower net cost, higher savings and network penetration.

Except, work comp payers are just emerging from a long and very bleak soft market that lasted for a half-decade. Declining revenues, bare-bones budgets, no investment in IT, very lean staffing and very cranky stockholders/investors/owners have made for an industry that is very focused on turning a profit – and investing in new systems, new programs, and new business processes is not a priority.  Moreover, what is important to the specialty network investor is rather less important to the payer; DME HHC imaging account for less than 10% of medical spend.

Generally speaking, work comp network penetration (based on dollars) is about 62% nationally, and gross savings are about 11%. So, if one improves penetration by 30% (to 80%), and doubles savings on 10% of total spend, savings will increase just a bit less than one percent.

Compelling for the vendor, but less so for the payer.

What does this mean for you?

Be realistic and understand – REALLY understand – the market, the buyer, and the decision processes in the market and among the many buyers.


Aug
22

What’s going to drive real change in workers’ comp

It’s not regulators, employers, providers, or insurers.

It’s not judges, advocacy groups, or bloggers. Not employment changes, on-shoring, infrastructure investment or Obamacare.

It’s private equity.

There are dozens of PE firms looking hard at this business, with many heavily involved in bidding on past and present opportunities.  There are several reasons for this interest;

  • other PE firms are interested, and there’s a bit of herd mentality at play here
  • investors are increasingly leery of health care/insurance sector plays focused on care regulated by PPACA; some functionary at CMS could blow up an entire business model by changing a few words in a few regulations, and that’s just too risky.
  • the deals are getting bigger – much bigger.  Some PE firms don’t play in the hundred million to a few hundred million dollar range; as the deal size grows the mix of firms involved does too.
  • work comp is STILL seen as an aging, creaky dysfunctional industry ripe for process improvement and increased efficiency.

This last bullet is to the point.  The more that these PE firms are involved, the more they will seek to modernize the industry.  While the founders, and initial investors in work comp firms made their millions navigating thru the mess, and in many cases taking advantage of the very dysfunction that defines workers comp, the new owners have little patience for this, and a wealth of experience squeezing inefficiencies out of systems.

They will engage lobbyists and hire ex-regulators, invest in technology, build strong co-operative relationships, relentlessly reduce cost, and listen very, very hard. And when they act it will be decisive.

Of course it’s going to be difficult and time-consuming and frustrating, but these folks have done this before, and they’re about to do it again.

What does this mean for you?

Things will get faster smarter and more efficient, to the benefit of many and the detriment of some.

 


Aug
20

Immigrants in the workforce – and implications thereof

One of every seven workers in the US is foreign-born.

About half are Hispanic and a quarter Asian.  About a third of the foreign born workers are undocumented.

We’ll leave aside the problems with immigration regulation, drivers thereof, lazy Americans, and all the rest of the and focus on the impact of these foreign-born folks on workers’ comp.

Today’s WorkCompWire features a piece by friend and colleague Peter Rousmaniere on the subject; Peter’s been tracking this very closely for years, and is the most knowledgeable person I know on the subject.  Here’s a key passage:

When you estimate the number of future work injuries, taking into account the injury rates of the individual jobs and their expected growth of openings, you find that immigrant workers will likely sustain 20% — one of every five – of work injuries. (emphasis added)

Here are just a few of the implications I see; as the acknowledged expert Peter’s got a much deeper and broader perspective.

  • Most of these workers likely won’t know much about the US health care system or workers’ comp, and will get that information from people they know and trust – their fellow countrymen.
  • Many may not have primary care physicians, so will seek care at the most convenient/nearest location.
  • The language issues are both obvious and subtle; even those with passable English skills may not fully grasp what they’re hearing and reading, leading to mis-interpretations and misunderstanding.

With the share of jobs held by first-generation immigrants going to increase steadily for the foreseeable future, payers and service companies alike are going to have to alter their practices to accommodate an evolving workforce.

What does this mean for you?

Recognizing the reality will be much more productive than ranting about it.


Aug
19

It’s been a busy summer in the work comp sales world

The days of summer  – and particularly August – being slow for the work comp services business are over – at least for this year.

Word is the North Dakota state fund aka WSI, has chosen PBM PMSI to handle their work comp pharmacy requirements.  The Tampa-based PBM took the business from US Script; with the extractive industries’ employment zooming – and likely claims severity and frequency as well – this should be a nice addition to the portfolio.

CompSource OK – another state fund – is moving/has moved their bill review business to Medata. No official announcement here, and no other vendor lost the business as the inplace technology was a home-grown system.

Given the expected appearance of a “for sale” sign on Mitchell, there’s going to be a lot more action in the bill review market.  No word on Aetna’s plans for Coventry’s BR 4.0 platform, but there’s no doubt the increasingly creaky infrastructure will require some major investment, a complete re-write, or perhaps they’ll just blow it up and move to a current rival platform.

TPA QBE will be utilizing Sedgwick’s for claims adjudication – the TPA will be outsourcing some/a chunk of/most of that work to Sedgwick.  

I’m not in Orlando at the WCI Conference, so no reports from the Sunshine State, at least nothing first-hand.

Enjoy the week.

 


Aug
15

Highlights of the Survey of Drug Management in Work Comp – 2013 edition

Payers’ views of drug management in workers’ comp have evolved dramatically over the last decade; here are a few initial takeaways from the 10th Annual Survey of Prescription Drug Management in Worker’s Compensation.

  • For the third consecutive year, respondents’ drug costs declined in real terms, both for the average across all respondents (-3.9%) and the average of each respondent (-3.7%).
  • On a scale of 1 through 5 with 3 being “drug costs are equally as important as other medical cost issues,” drug costs were rated a 3.9, or “more important than other medical cost issues.”

  • Respondents are concerned (4.0) that drug costs will be more of a problem in the next 12-24 months than they are today.

  • Respondents deemed opioid prescribing, dispensing, monitoring, and management as the most important way to control workers’ compensation pharmacy costs. Respondents judged opioids to be an extremely significant problem, giving it an average of 4.8. This remains the highest score for any survey question in the history of the survey
  • All but one respondents had made significant upgrades and improvements to their clinical programs in 2012 

We’ve been surveying workers’ comp payers about their views on prescription drug management for ten years now, and the results from this year’s Survey show a remarkable increase in respondents’ expertise, depth of knowledge, and level of sophistication.  The responses to qualitative questions revealed most respondents are far more familiar with all aspects of the drug issue than they were a decade ago.

It is no surprise, then, that costs have declined over the last few years.  While there have undoubtedly been external factors that have contributed to that happy event, there’s also no question that the payers’ focus on this issue is paying off – in lower costs, better care, and reduced premiums.

That said, the looming opioid crisis will require a redoubling of that focus if payers are going to avoid the potentially devastating long-term financial consequences of opioid usage.

Past surveys are available here; a public version of the 2013 Survey will be available next week; I’ll let you know when it is.