Author: Joe Paduda

Jul
19

AASCIF – report from the annual conference

Posted by Joe Paduda on Friday, July 19th, 2013 | Comments

If you’re going to have a conference in Austin Texas in July, you’d best make sure there are lots of things to do, excellent speakers, and a great staff.

Texas Mutual, host of this year’s AASCIF annual conference, got it done.

Unlike many WC industry conferences, AASCIF devotes much of the time to social/networking events. The most-common complaint about most conferences, that there’s not enough time to just talk with others in the industry, wasn’t an issue in Austin.

The speakers were mostly not workers’ comp focused, instead providing insights into leadership, communications, management, and marketing. (I was one of the only work comp speakers, thanks to the folks at Claim-Maps for sponsoring my talk) And therein lies a message for conference planners, those considering attending conferences, and the work comp world in general; There’s a great big world out there; show it to us.

One of the best speakers I’ve ever watched/experienced/heard is Erik Qualman, he of Socialnomics fame.  While most workers’ comp payers look at social media only as a way to find pictures of claimants doing things they say they can’t, Qualman got many thinking of what they’re missing by not fully engaging with social media.

The social-media-as-fraud-detector is tip-of-the-iceberg stuff; social media is becoming the dominant means of communicating with customers, prospects, influencers, and media, supplanting traditional channels or perhaps more accurately, supplementing and leveraging them.

As most insurers and suppliers are run by us old guys, that shouldn’t be surprising; however a VERY few companies have embraced social media for other, more positive reasons, and they are going to reap huge rewards.

A couple examples…(the fact that there aren’t dozens tells us something…)

Marsh – smart enough to steal Mark Walls and the 10,000+ LinkedIn folks on his Work Comp Analysis Group from Safety National, they got themselves a huge footprint, a great brand, and a positive image just by hiring Mark.  Kudos to SN for allowing Mark to build the group; that said they really didn’t take advantage of what he’d done, and not seeing the potential benefit for their brand, their company, and their business was a huge miss.

State Fund of Minnesota’s Mike Happe was an early adopter of Twitter, has several hundred followers, and gives his employer a presence they otherwise wouldn’t have. Mike’s involved in about a dozen groups on LinkedIn, and he’s one of the very, very few insurance execs with a Twitter.

Bob WIlson, Peter Rousmaniere, and Jody Thompson did a great survey of social media in workers’ comp earlier this year; the detailed report is available here. Get it, read it, and get going.

What does this mean for you?

For anyone who thinks this isn’t worth doing, you may want to consider what you’re reading right now, how you learned about this blog, and how the author ended up speaking at AASCIF…

Because your competitors are.

Jul
15

Obamacare and workers’ comp – Part 5 of 9

Posted by Joe Paduda on Monday, July 15th, 2013 | Comments

We are now getting into the meat of the matter; we are not going to get health care costs under control and quality improved without major structural change in the health care delivery and financing “system”.
Several components of PPACA address delivery system reform, the most promising of which are the Independent Payment Advisory Board (IPAB) and Accountable Care Organizations.
The IPAB kicks in if costs continue to increase faster than the rate of inflation, and no, it is not a death panel or rationing body – although we certainly could use the latter. ACOs re-structure the care delivery model, focusing on care coordination especially for chronic patients.  The emphasis is on global fees rather than fee-for-service, a good way to think about ACO payment is it is based on reimbursing health care systems for patient management and episodes of care rather than individual providers for procedures.
Given the relatively low frequency of WC injuries in any particular geographic region, and the wide severity range, it is highly doubtful an episode-of-care reimbursement system will work in comp.  There are just not enough cases in a service area, some of which are relatively benign and others quite severe, to make it possible to model out a global reimbursement methodology and reimbursement.
will not translate easily or immediately into WC.
However, the strong emphasis on primary care that is central to the ACO model, the focus on patient interaction rather than expensive and often unnecessary tests and diagnostics, and the additional pricing transparency coming with ACOs are all strong pluses for workers’ comp.
At a deeper level, the success of ACOs, if they are a success, will represent a sea change in health care delivery and financing, one that shifts the paradigm from pay-for-procedure to one focused on rewarding for health.
That would be a very, very good outcome.
There’s ample evidence that large payers and delivery systems are embracing the ACO model with both arms:

There are going to be disruptions, incidents of lousy patient care, and fraud eruptions.  And when those hit the news, remember – our current system is not sustainable, and change is never without disruption.

What does this mean for you?

ACOs are coming, and the shift in thinking, rather than the delivery system itself, bodes well for comp.

Jul
11

Dispensing docs to Hippocrates: Drop Dead.

Posted by Joe Paduda on Thursday, July 11th, 2013 | Comments

That’s the only conclusion one can reach after reading WCRI’s latest report, The Impact of Banning Physician Dispensing of Opioids in Florida.

Here’s why.

As of July 1, 2011, Florida’s docs could no longer dispense most opioids from their offices.  Before that date, 5.7% of the scripts dispensed by docs were opioids that fell under the ban.

After?  0.6%, and almost all of those were dispensed by docs outside of FL for FL claimants.

Well, we’d expect the volume of pharmacy-dispensed opioids to go up dramatically, wouldn’t we?  After all, no physician would ever prescribe opioids to a patient who absolutely didn’t need them, right?

Wrong.

The volume of pharmacy-dispensed opioids declined.  Went down.  Decreased.

In fact, 3.5% of patients were receiving the stronger opioids from docs before the ban, only 0.5% after (again these were mostly from cross-border trips by FL claimants to out-of-state dispensing physicians).  And the percentage of claimants getting stronger opioids from pharmacies went up by a mere one-tenth of one percent.

Conclusion?

Dispensing docs were prescribing and dispensing strong opioids to many patients who DID NOT NEED THEM.  Why?  For the money.

Opioids are incredibly dangerous.  Opioids kill people.  Destroy families.  Ruin lives.  Addict children.  An intelligent, articulate, promising young woman I know is now a prostitute, selling herself to strangers because she became addicted to prescription drugs.  Her family is devastated, her dreams reduced to the next high.

And these money-grubbing bastards allow this to happen, just to make money to buy nicer cars, better wines, fancier dinners.  

What does this mean for you?

STOP ALLOWING ANY PHYSICIAN DISPENSING.

Jul
10

Obamacare and workers’ comp – part 4 of 9; cost shifting

Posted by Joe Paduda on Wednesday, July 10th, 2013 | Comments

After a brief diversion yesterday to focus on breaking news and research, it’s back to the impact of health reform on comp, with today’s post delving in to cost-shifting.

Cost-shifting is a general term for provider behavior involving seeking more revenue from some patients/payers to make up for lower/insufficient revenue from others.  The term itself is not without controversy, but we’ll set aside semantics and focus on a simple question – will Obamacare lead to higher costs for comp payers as providers seek to make up for lower/lost revenue from other sources.

The short answer is – probably not.

The longer answer is this – more reimbursed patient car leads to less motivation to cost shift, and although many of the newly insured will be low-reimbursing Medicaid patients getting 85% of cost is a lot better than 11%.  Therefore, if anything Obamacare’s broader coverage will reduce the motivation to cost-shift.

The detailed answer follows…

Providers, particularly hospitals (which account for about a third of all WC medical costs) have to provide emergent care to patients without insurance.  Currently there are about 50 million folks without insurance in the US; post reform there will be about 20 million (estimates will vary, but regardless there will be a LOT fewer uninsureds).

Logic implies that more paying patients is better than fewer, and more providers will get paid for more patient care next year than this, leading to less motivation for those providers to shift costs to their workers’ comp patients.  The key word here is “motivation”; just because there’s less rationale for cost-shifting does NOT mean providers will suddenly decide to stop charging higher fees and doing more for their comp patients.  I’d also note that it is unlikely that most providers consciously decide to alter their treatment based on their patient’s reimbursement.

However, this being workers’ comp and health care, logic doesn’t necessarily apply.  Here are a couple things to consider.

First, a just-published analysis of the impact of lower Medicare reimbursement rates on private payer costs found:

“a 10 percent reduction in Medicare payment rates led to an estimated reduction in private payment rates of 3 percent or 8 percent, depending on the statistical model used. These payment rate spillovers may reflect an effort by hospitals to rein in their operating costs in the face of lower Medicare payment rates. Alternatively, hospitals facing cuts in Medicare payment rates may also cut the payment rates they seek from private payers to attract more privately insured patients.”

The analysis was based on hospital data from 1995 to 2009, a period during which Medicare hospital reimbursement was increasing quite modestly.  Of course, workers’ comp was not considered nor WC reimbursement analyzed by the study’s author, so we are left with more questions than answers.

It is also important to note that almost the entire study period was before anyone had even contemplated health reform and the dramatic impact on hospital reimbursement that will follow.  The world has changed dramatically, and this historical perspective may no longer provide much in the way of insight into future behaviors. 

Second, private payers have a LOT more bargaining power than work comp payers and network developers; WC insurers are already seeing significantly higher facility costs (anecdotal information from HSA consulting clients). And these higher costs are coming on top of research clearly indicating comp pays a lot more for hospital services than private insurers (see results of WCRI research on outpatient hospital costs).  So, comp already pays more, and until and unless networks and insurers figure out ways to better control utilization and price, they are going to continue to pay more.

Here’s what this means for you.

Third, some comp payers are beginning to figure out which hospitals are screwing them, and which are not, and doing whatever they can to direct away from the high cost facilities and to the low cost/high outcome providers.  Cost shifting will continue, but these smart payers will mitigate its impact while their less-smart competitors will wonder why their medical expenses are rapidly escalating.

 

Jul
9

OneCall for sale – again

Posted by Joe Paduda on Tuesday, July 9th, 2013 | Comments

This just in – word is that One Call Care Management is up for sale, reportedly for a price in the $1.5 billion range.

Reuters just reported their sources indicate things are in the “exploratory” stage; if the sources are accurate, this would be the largest – by far – transaction in the work comp services business.

Odyssey Investment Partners has been carefully assembling OCCM by acquiring firms in the medical management space – DME/Home health (MSC), imaging (OneCall), dental (Express Dental), transportation/translation, ancillary services, and provider assessment/analytics (Harbor Health).  Word is OCCM will soon be adding another translation firm to their portfolio; 3i is the most commonly cited target.

Odyssey has done very, very well in comp; they’ve purchased, grown, and sold York Claims/Risk and built OCCM into the largest and most profitable WC services company in a very short four years.  With an EBITDA around $140 million and strong year/year growth, a 10x multiple is well within the realm of possibility.

With MSC’s acquisition just over a year old, and TechHealth to be added to the portfolio shortly, management is pressing ahead with their growth despite – or perhaps in part because of – a potential sale of the entire company.

I’d be remiss if I didn’t note this has not been confirmed by anyone at any of the firms mentioned above.

That said, kudos to OCCM, OCCM management, all the folks who work for OCCM’s companies, and Odyssey for building the first billion dollar business in work comp services.

Jul
9

Why do docs dispense meds to work comp patients?

Posted by Joe Paduda on Tuesday, July 9th, 2013 | Comments

Yesterday’s  WCRI report on physician dispensing in Georgia post-reform is stuffed with insights into physician behavior and motivators thereof.

In April 2011, the Peach State capped the price of physician-dispensed repackaged drugs at the AWP of the original, non-repackaged drug, thereby eliminating the outrageous markups the docs and their enablers were charging employers and taxpayers.  WCRI examined prescribing behavior pre- and post-reform; here’s my take on the more interesting results;

  • Post-reform, drugs dispensed by docs were still substantially more expensive than the same pills from a pharmacy.
  • Dispensing docs are more likely than non-dispensing physicians to write scripts for Tylenol, ibuprofen, Aleve, and Prilosec – drugs that can be bought cheaply over the counter.
  • Prescribing patterns among dispensing docs changed post-reform to include more expensive versions of similar drugs
  • After reform, drugs dispensed by docs cost 20 – 40 percent more than the same drug bought at a pharmacy; likely because almost all payers use a PBM, which provides the payer with a big discount on drugs bought at a pharmacy. WCRI: “Because pharmacy benefit managers (PBMs) often contract with pharmacies for discounted prices below AWP, it would not be surprising to see that the pharmacy prices were, on average, lower than the prices paid to physician-dispensers for the same drug.”
  • As in California post-reform, the price cut by eliminating the up-charge for repackaged drugs did not significantly reduce dispensing; 35% of scripts were dispensed by docs before reform, 28 percent after.

So, what can we surmise from the data.  I’d suggest several one things.

  1. Dispensing docs do it for the money.  Duh. 

Despite all the BS about patient care, outcomes, convenience, and access, they do it for the dollars.

Here’s proof.

Jul
8

Obamacare and workers’ comp – part 3 of 9

Posted by Joe Paduda on Monday, July 8th, 2013 | Comments

There are (at least) two additional implications of more people and more workers covered by health insurance; cost-shifting, and access to care.  Each is deserving of careful and thorough consideration; for now we’ll touch on the highlights and leave a deeper discussion for another time.

First, the scope.  21 percent of working-age Americans don’t have health insurance.  This varies widely by state, from 31% in Texas to 6 percent in Massachusetts, with several in the high twenties.  That’s more than 40 million people between 18-64.

Access to care

Stands to reason that adding 30 million to the rolls of the insured is going to lead to a lot of demand for primary and specialty care; many of the newly-insured will have foregone routine care – primary and specialty – for years.  They will need check-ups, tests, drugs, evaluation and counseling.  Some will need major procedures; knee replacements, shoulder surgery, stents and cancer treatment.

A lot – best guess is somewhere over half – of primary care in workers comp is delivered by family practice/internal medicine/generalist physicians and physician extenders.  Many injured workers go to their ‘regular’ physician when they get hurt, and we can expect this to continue.  As there is already a relationship in place, those claimants who’ve had coverage are likely going to see some delays in getting into their doc for anything other than emergent care.  The primary care access problem will arise from the newly-insured; these folks likely don’t have existing physician relationships, and will find it tough to get into see a family practice doc post 1/1/2014.  As a result, they’ll head to the local ER, further burdening hospitals short on capacity. Of course, their care will get reimbursed at a pretty nice rate, and smarter health systems will divert WC patients to their in-house occ med departments.

Alas, there are not a lot of “smarter health systems” when it comes to occ med…and payers will face the usual set of problems/challenges encountered when dealing with providers who don’t know much about workers’ comp.

Specialty care is where the big problems are going to be.

Orthopedic surgeons get paid to do orthopedic surgery, and there are going to be millions of newly insured patients with conditions that may justify/require surgery.  Stands to reason that specialty care – particularly for musculo-skeletal conditions – is going to be in high demand.  The “good news” here for workers comp payers is Medicare, and many private insurers, are doing their darndest to reduce utilization and reimbursement for specialty care.  And, as WCRI so ably reported just last month, workers’ comp pays a lot more for specialty care than most, if not all other payers.  While just paying more won’t guarantee priority access, it will certainly help.

So, what’s an insurer/employer to do?

1.  Stop buying care based on a discount below fee schedule; identify good providers and pay them fairly – above the fee schedule if necessary (or in Massachusetts, all the time).

2. Be easy to work with.  Stop bothering the good docs with pointless UR requests; have your case managers help schedule PT and MRIs instead of badgering the doc and her staff.

3.  Pay quickly.

Do this all now.  It’s almost too late, but if you haven’t started reaching out to key docs yet, better late than never.  Let them know you value them, and want to work with them, and make sure your billing and claims departments support that intent with action.

Or, just sit around waiting to see what happens, and then, when your claimants can’t get an ortho consult for six weeks, blame Obamacare.  

I’ll have to deal with cost-shifting tomorrow – too much work to do today.

Jul
3

Obamacare and workers’ comp – Part 2 of 9

Posted by Joe Paduda on Wednesday, July 3rd, 2013 | Comments

Monday we kicked off the discussion of the impact of PPACA/Obamacare/health reform on workers’ comp with a review of the (very limited) direct impact of reform on comp.  Today it’s the the impact of increased group and Medicaid insurance coverage on workers’ comp.

Let’s leave aside yesterday’s announcement by HHS that the employer mandate will be delayed till 2015; we’re after the long-term impact, so the one year delay will not be material to our discussion.  There will be somewhere around 30 million more folks covered by health insurance post implementation, with 32% covered under Medicaid, 45% from the individual exchanges, and 23% from employers.  Here are the major effects of the increased coverage…

  • Healthier workers heal faster – people without health insurance are not as healthy as those with coverage, and as healthier people heal more quickly when they are injured, the increased coverage means more work comp claimants will heal more quickly – reducing medical cost and indemnity expense.

  • The preventive benefits will help identify – and hopefully lead to early treatment for – health issues that can prolong/delay recovery.  Diabetes, asthma, depression, hypertension, and other conditions often go undetected until something really bad happens – an acute episode requiring a visit to the ER is typical.  Controlling these conditions and keeping them under control will speed recovery from injuries.
  • Many injured workers don’t have health insurance. If they have health conditions – say obesity – that are affecting recovery from an injury, the comp payer often ends up paying to treat that condition as well as the occupational injury.  If the diabetic injured worker does have health insurance, the comp payer doesn’t have to pay to treat the diabetes – a key consideration as the condition can dramatically affect recovery from surgery.
  • There appears to be a correlation between the availability of health insurance and claim filing, but it isn’t what many think.  A 2005 RAND paper notes “uninsured and more vulnerable workers are actually less likely to file claims than the insured.” Why?

“even repeat injury-sufferers are more likely to file during episodes in which their employer offers health insurance, but not statistically more likely to file during episodes in which they themselves are insured. This suggests that the workplace environment and employer incentives may have a significant, or perhaps even the dominant, impact on workers’ compensation filing.”

Next week — more on the impact of PPACA – bet you can’t wait!

 

Jul
1

Obamacare and workers’ comp; Part 1 of 9

Posted by Joe Paduda on Monday, July 1st, 2013 | Comments

The closer we get to January, the more interest there is in how health reform, aka PPACA, aka Obamacare will affect workers’ comp.  In a meeting with a dozen industry executives last week the issue garnered much attention – as well it should.

While there are no direct ways Obamacare will impact work comp, there are a host of indirect ways it will – some of which are obvious, many rather subtle.  I’ll explore the 8 “indirect impacts” over the next couple of weeks, but we’ll begin with a bit of table-setting.

First, recall that worker’s comp is tiny.  Compared to the total US health spend of $2.6 trillion, comp’s $30 billion is just over 1 percent.  The implications are clear – we are the flea on the tail of the dog, and a mighty big dog at that.

Second, while there is no direct impact on workers’ comp, there are a couple things in PPACA that affect occupational disease – some changes to the feds’ Black Lung program, and “LibbyCare”. The Black Lung changes are rather obscure and relate to reinstating presumption of cause and widow’s benefits provisions.  Libby Care is a bit more complicated.

Some background is helpful. In the Senate, PPACA fell under the jurisdiction of the Finance Committee.  The chairman of the Senate Finance Committee, Max Baucus, hails from Montana. Libby is in Montana, and Libby is the site of massive asbestos mining and manufacturing operations, and an attendant public health disaster.  Not only were workers affected by asbestos-related illness, but residents in and around the town have also been harmed.

Briefly, Libby Care is the assumption by Medicare of the responsibility of providing care to Libby residents affected by asbestos and related illnesses/conditions. Victims will also receive special home care, pharmacy, medical device, and other services.  The details are in Section 10323, Medicare Coverage for Individuals Exposed to Environmental Health Hazards.

While some might argue that Libby Care is the first step in some sort of federalization of workers’ comp, that is far-fetched at best.  In fact, this is a powerful politician’s use of that power to serve a specific constituency; a one-time fix to a specific ‘problem’. That’s not to say that the work comp industry has done a good, or even passable, job in addressing occupational disease, but the Libby Care Amendment isn’t an attempt to Federalize management and treatment of occupational disease.

Color me a cynic if you will, but my sense is the Manager’s Amendment (technical term for the Libby Care language) isn’t so much the ‘camel’s nose under the tent’ as a political move by Sen Baucus (D MT) to curry favor and win votes.

Here’s why.
1. The Amendment requires a site be designated a “Public Health Emergency” by the Secretary of HHS. To date, Libby is the only site so designated, and the requirements for designating any site as a Public Health Emergency are stringent indeed.
2. The provision covers care for all affected residents and employees, not just workers. This is clearly far beyond ‘occupational’ and is much more of a public health issue than a work comp one.
3. Care is to be delivered through the Medicare system. This will require allocation of additional funding for each new site, something a cash-strapped CMS is unlikely to encourage.

Finally, PPACA funding includes about $20 billion from a medical device excise tax of 2.3%. This may add a few pennies to workers’ comp medical costs – but remember a) medical devices are just a few percent of WC medical costs, and b) markup on these items is already so high that another couple percent isn’t going to move the proverbial needle. While the device industry is lobbying its brains out to get this repealed, claiming it will cost jobs, hamper innovation, and bring asteroids crashing down on our heads (well, perhaps not that), a dispassionate analysis indicates this is a non-event.

Next up – the impact of increased group and Medicaid insurance coverage on workers’ comp…