Sep
7

Healthcare costs and wages

The economy is booming, wage growth is not.

Healthcare is the big reason workers aren’t seeing higher wages – instead of spending their dollars on consumer goods, travel, cars and entertainment, workers are paying higher premiums and deductibles.

More than half of all workers have seen no increase in take home pay – ALL of their pay increases have gone to pay for higher health insurance premiums. And that’s before deductibles, copays, and co-insurance.

(graphs from WaPo)

Deductibles are zooming ever higher because high deductibles mean lower premiums. Think of this as cost-shifting to the sick; healthy folks pay lower premiums but if/when you need health care, BOOM!

You first have to pay for that care yourself, before you start getting some help from your healthplan.

This is even more of an issue for folks who work for smaller employers (<200 workers), where the average deductible for individuals (not families) is $2,069.

What does this mean for you?

You have less money in your paycheck because it is going to doctors, hospitals, pharma, device companies, and insurers.

And it’s going to get worse.

 

 


Sep
6

The latest deal in workers’ comp services

Paradigm announced it is purchasing Adva-Net, a Florida-based company with a network of pain management providers. While terms weren’t disclosed, word is the price was north of $105 million, a very healthy multiple of earnings.

I interviewed Paradigm CEO John Watts a few weeks back, but decided to hold off on publishing it until this deal was done. Watts, who has an impressive resume including multiple leadership roles in the “real world” (outside of work comp) is impressive; he has a clear strategic vision for the company, knows what he doesn’t know, and appears to understand the critical importance of branding. Quotes are from Watts

We talked about his strategy for Paradigm and the acquisitions the company made over the past year plus – specifically Foresight Medical and two case management firms – Alaris and Encore. In addition, Paradigm just acquired several ‘advisory solutions’ focused on pain management, catastrophic claims, and back care from Best Doctors.

Frankly I’ve long been somewhat puzzled by these acquisitions; NCM is old school, Foresight is anything but (and was wicked expensive).

Before those additions to the company, Paradigm had “a nice longstanding business doing pretty much one thing” – managing a carefully selected inventory of catastrophic claims, and doing so quite well.  Management realized that a sole focus on cat claims wasn’t enough and the company needed to diversify.  Acquiring case management assets, a business that Watt noted is “way more traditional than the cat claim business”, gave that cat claim “operation access to about 500 +/- employed nurse case managers.” Not only did this expand Paradigm’s ability to handle cat cases, it increased it’s customer footprint, provided a training ground for cat nurses, and added some “synergies” – management speak for reducing overhead expenses like management, finance, and HR.

Going forward, Paradigm “wants to stitch together assets with the ability to take risk in complex acute situations to manage clinical outcomes…[the company will likely handle] more types of catastrophic conditions while also moving into lower severity claims.” Alaris and Encore (Paradigm’s NCM firms) help them do that.

Foresight was another acquisition; I asked how these services align with Foresight.

Foresight stands on it’s own. According to Watts, it has a “Strong focus on implants, cost and quality…Foresight is also building a high performance orthopedic network using data analytics.”

In the near future, expect Paradigm to be a “big player in the musculoskeletal space.” The company (again this was several weeks ago) was “in an acquisitive place now.”  Going forward, the plan is to focus on becoming known as expert in managing ortho surgery care…first, couple [Foresight’s ortho network] services with NCM, then add catastrophic services.”

At the end state, expect Paradigm to handle a defined bundle from point of injury to back to work.

Future expansion will likely include a “front end solution on musculoskeletal condition to help clients avoid unnecessary surgeries” and the tools to do that.

So, Paradigm is focused on adding depth and breadth to the solutions it provides work comp payers – adding services to help with less acute claims, and broadening its capabilities to handle more of the claim medical service spectrum.

In this context, Adva-net will add a pain management provider network. After a rather prolonged development period, the company’s earnings recently ramped up significantly. The business model is primarily a traditional percentage of savings arrangement – the more services delivered, the more dollars earned.

The acquisition brings another specialty-focused business, some additional customers, and a provider network to the Paradigm portfolio.

The acquisition was expensive, but as the company has shown with Foresight, it isn’t afraid to pony up the bucks when it sets its sights on a deal.

My take.

Paradigm is intelligently diversifying and has a coherent and promising strategy. That said, I still don’t understand the prices paid.


Sep
5

Making “Medicaid for All” work

The US healthcare “system” is headed towards a cliff, and when it hits the edge, Medicaid may well be the replacement.

Briefly:

  • Managed Medicaid plans would be offered in every state
  • people would sign up for the plan they want, with the option of enrolling in regular fee for service Medicaid
  • funding would be from payroll taxes, individual service-based fees, and federal funds
  • provider reimbursement would be pegged to Medicare for ALL payers, eliminating payer-shopping by providers and increasing Medicaid FFS reimbursement

The details…

There are two ways this would work – Medicaid for All (MFA) becomes the way all of us get coverage, or Medicare remains in place for elderly folks and Medicaid covers everyone else.

It’s entirely possible employers continue providing basic healthcare coverage, but really, do they want to? It’s expensive and a pain in the neck. Instead, employers will be able to offer supplemental insurance (similar to what happens in Canada, the UK, and other countries) as an employment benefit.

Today, Medicaid comes in two general flavors – “classic” and Managed Medicaid.

Classic is fee-for-service Medicaid, where members can go to any provider that accepts Medicaid. Providers are paid on a fee for service basis, at rates that vary greatly between states (states set reimbursement).

Managed Medicaid is an option in almost every state. The states contract with healthplans to provide integrated Medicare and Medicaid in what are called “dual eligible” programs (members are eligible for both Medicare and Medicaid).

The Managed Medicaid (MM) plans are paid on a capitated basis – that is, a flat fee per member. That fee is based on the health status and health risks of the members; the sicker the member is, the higher the capitation amount.

This arrangement incentivizes MM plans to figure out the optimal ways to keep members healthy and keep costs down – keep them out of the ER, avoid inpatient hospital stays, and encourage healthy behaviors. If costs come in under budget, the plans make money (usually a couple percent at most). If not, the plan loses money – not the taxpayer. (MFA will be based on Managed Medicaid)

(a detailed explanation is here.)

Today, states with these plans in place enroll members in different ways. Some randomly assign members to plans, others allow more assertive competition among the plans for members. I’d expect this to continue under Medicaid for All; existing enrollment processes would be expanded, systems upgraded, and communications refined to address the broader market. Every fall, MM plans would compete for members, enrolling them before the end of the calendar year.

Individual contributions to premiums would be income-based (as under ACA today); there could be low copays for certain services but paperwork for members would be almost non-existent. (All Medicaid members today have ID cards that enable electronic record sharing, billing, and claims submission.)

Funding would be a combination of service-based fees (copays and co-insurance), payroll taxes, federal funds, and perhaps general state funds.

Remember, as employers would no longer have to deliver health insurance, those dollars could be spent on higher wages, to offset payroll taxes, or for other purposes. Similarly, individual payments for premiums, high deductibles and the like would be eliminated, altho some of those “savings” would go to higher payroll taxes to cover Medicaid for All.

Provider reimbursement would be up to the MM plans negotiating with providers – who would remain independent (unless they are employed in a health system that is also a MM plan provider). However, FFS Medicaid reimbursement would be increased to mirror Medicare’s rates.

Why this is the future

US healthcare is not sustainable. Period.

Family health insurance premiums are nearing $20,000, the number one cause for bankruptcy is medical debt, Medicare and Medicaid are the largest chunks of the federal budget, and industrial competitiveness is hampered by healthcare costs which are double the average costs in other countries.

And, 74% of Americans are worried about losing their insurance.

So, we can either keep driving off the cliff, or take an alternate route. One that will be very rocky, cause a lot of headaches and heartache, disrupt businesses and families and providers, but one that sooner or later, we’ll have to choose.

What does this mean for you?

It’s not a matter of if, but when.

Note – happy to engage in fact-based, citation-supported conversation. “I heard this” and “everyone knows” arguments are not helpful.

 


Sep
4

The case for Medicaid for All

When Single Payer becomes the law of the land, Medicaid will be the foundation.

We’ve looked at the current push for Medicare for All, the factors that I believe will drive us to some form of single payer, and posted a primer on Medicaid.

Here’s why it’s going to be Medicaid for All.

  1. Medicaid for All will spread the cost of universal coverage across states, reducing federal financing requirements.
    Medicaid is a state AND federal program; States provide a lot of the funding for Medicaid; on average the Feds contribute 63% and states 37%. This is critical, as Congress will want to spread the cost of a Single Payer solution and there’s no better way to do this than require states to pony up big dollars [State contributions vary based on a state’s average personal income relative to the national average; states with lower average personal incomes get more federal dollars.]
  2. Medicaid is already built to cover everyone.
    Medicare covers people of all ages, Medicare is very much elder-care focused.
    Adapting Medicare to handle everyone from newborns to elderly, maternity care to pediatrics will be difficult, time-consuming, and expensive. Medicaid does all this and more – today.
  3. Generally, Medicaid is less expensive than other “systems”.
    This is due to much lower provider payment and significantly lower administrative costs. Yes, this means providers are going to be paid less.
  4. Medicaid member satisfaction is pretty good; access to care is not much of an issue.
  5. Medicaid-based Exchange programs are much more successful in the Exchanges than commercially-based plans.
    The Centenes et al [Medicaid-based plans] understand the demographics of the uninsured, have lower medical costs, and already have provider networks, customer relations operations, workflows and processes set up and operational. At the end of the day, lower cost wins – and their costs are lower.
  6. Medicaid is a simple, fully-integrated healthplan.
    Medicare’s alphabet-soup of Parts A B C and D is confusing and convoluted, with different payers often covering the same individual. This increases administrative costs, member hassles, and decreases quality of care (co-ordinating pharmacy and medical care between different payers is problematic at best.
  7. Managed Medicaid plans are working.
    These plans currently exist in most states, and many have been able to deliver excellent care at lower costs through innovation and very tight focus on outcomes. One example is using paramedics to deliver care. [disclosure – I sit on the board of Commonwealth Care Alliance, a Massachusetts healthplan that serves dual-eligible members]

Tomorrow I speculate on how Medicaid for All will integrate with Medicare and employer-based coverage.

What does this mean for you?

Better care, lower costs, while a big impact on pharma, device companies, healthcare systems, and healthcare providers.


Aug
30

Medicare for All – explaining what it means and what it would cost

Yesterday we gave a brief overview of Medicare – the various parts and pieces.

Today – what exactly is the plan, who would pay for it, and how much would it cost?

Sen. Bernie Sanders, (I VT) is the original MFA (Medicare for All) advocate, and most other candidates echo his plan – which is pretty simple:

  • Everyone is enrolled in MFA
  • No one pays copays or deductibles
  • You can choose any healthcare provider
  • It isn’t really “Medicare” for all, but rather a simple “everything is covered” plan
  • Funding would come from:
    • higher taxes on high-income earners
    • re-instatement of the estate tax
    • payroll tax of 6.2% for employers
    • 2.2% income based premium for individuals and families
    • taxing capital gains as ordinary income
    • repealing tax exemption for premiums etc.

There’s been a lot of press about this, with claims and counterclaims muddying the waters  – but the net is this:

Sanders’ plan would enroll pretty much everyone.

The plan would save costs by:

  • reducing total provider compensation by 11% – 13% (physicians make a lot more money here than they do in most other countries)
  • it would do this by setting flat reimbursement rates – today employer plans pay about 40% more than Medicare, and much more than Medicaid (generally speaking).
  • However, reimbursement would be higher than today’s Medicaid rates.
  • MFA advocates note that administrative costs would be a LOT lower, as doctors and hospitals wouldn’t need the big IT operations and personnel required to track down payers and get reimbursed

MFA would be phased in over four years.

What would it cost?

That’s a tough one – the CBO won’t score it.

One Koch-funded research center came out with a report that said it would A) cost $32 trillion over ten years, and B) reduce total US healthcare costs by some $2 trillion while covering 30 million more folks. (yes, this was Mercatus’ higher estimate, but they fudged other numbers to make costs look higher, so I’m going with that figure)

Bernie and other advocates, claim savings would be higher – so the total cost would be lower.

However you slice it, you have to remember that employers and individuals would no longer be paying over a trillion dollars for healthcare every year via payroll taxes and premiums and deductibles and copays.

And yes, you’d save a lot of money by reducing provider reimbursement to Medicare rates.

Who and what gets disrupted?

Insurance companies. It isn’t clear who would administer this program, perhaps the current companies that handle much of Medicare. However, many or most commercial health plans, Medicare Advantage plans, Managed Medicaid plans (disclosure I am on the Board of one – Commonwealth Care Alliance) would shrink or disappear entirely.

Revenue Cycle Management – this huge industry would become obsolete overnight.

Millions of workers – no longer needed to handle the morass of regulations and insurer requirements

Pharma – Bernie would negotiate with pharma and medical device companies – as every other country does – to get the lowest possible prices.

Brokers and consultants. Ouch.

Remember – the US healthcare system is enormously inefficient, overall delivers mediocre-at-best results, and is not sustainable.

What does this mean for you?

Opponents of MFA would be well served to come up with a better answer than MFA, because that MFA is getting traction.

 


Aug
29

Medicare for All means…what?

After last night’s gubernatorial primary elections, no one can claim “those politicians are all the same.”

Gillum v DeSantis in Florida, Ducey v Garcia in Arizona, Abrams v Kent in Georgia, Evers v Walker in Wisconsin…the contrast between candidates in these and other states could not be more stark.

Many of the Democratic candidates for Governor – and some Congressional candidates as well – are pushing Medicare for All as a solution to the health care mess, while their Republican opponents are blasting the idea.

Why?

Before we dig into the details to understand the pros, cons, and challenges of “single payer”, let’s understand what Medicare is – and isn’t…

  • Medicare is a federal program, funded (mostly) by payroll taxes and member “premiums”. Unlike Medicaid, there is no variation between states, nor do states contribute financially.
  • Medicare is NOT simple – it is not a straight-forward healthplan, but rather several different plans covering hospital care (Medicare Part A), physician/provider care (Medicare Part B), and drugs (Medicare Part D).
  • Medicare Part C is the term for “Medicare Advantage” programs typically managed by commercial insurers. These plans include both A and B, and sometimes D coverage.
  • If you were setting out to design the most confusing health coverage possible, you could use A, B, and D as a great template. Medicare’s A, B, and D coverages include complicated deductibles, coverage limits (for stuff like rehab hospitals and nursing home care), qualifying periods, copays etc. It’s kind of like a camel, which is a horse designed by committee.
  • Medicare Advantage (MA) programs are a lot less complicated and sometimes have additional benefits, but often have restrictions on which providers members can see.
  • “Old style” medicare (not Medicare Advantage) pays providers on a fee for service basis, with reimbursement rates set by CMMS (Centers for Medicare and Medicaid Services).

So, Medicare is a federal program mostly for folks over 65 that covers most health care needs. Members can often choose between the “old style” Medicare, which allows access to pretty much any provider but has lots of cost-sharing provisions, and MA plans that restrict provider choice but have fewer complexities.

What’s often missing from the candidates’ calls for “Medicare for All” is any detail on:

  • what exactly they mean – Medicare Advantage? old style Medicare? Would patients be able to choose?
  • how would this be paid for?
  • would employers still be able to/required to provide health insurance?

We will delve into these issues tomorrow.

 

 

 


Aug
28

Asbestos is back!!?

The Trump Administration has loosened rules that will allow broader use of asbestos in manufacturing.  

Here’s how Fast Company put it:

A lengthy report of EPA’s new “framework” for evaluating risk, placed into effect this month, detailed how it would no longer consider the effect or presence of substances in the air, ground, or water in its risk assessments—effectively turning a blind eye to improper disposal, contamination, emissions, and other long-term environmental and health risks associated with chemical products, including those derived from asbestos.

No one knew how dangerous asbestos was until people started dying from exposure to it. How many thousands of dads, brothers, friends, moms and sisters would have been saved if researchers had studied exposure risks and informed the public?  How many tens of billions of dollars would have been saved, not spent on medical care, remediation, lawyers fees?

I don’t think we’ll see any big increase in the use of asbestos – the litigation risk is just astronomical and no insurance company would allow it – so no business will use it (wait, there are unscrupulous business owners that will do anything for profit, so there is some risk…)

But that’s not the point.

The point is that the health risks of any number of substances, compounds, fibers, chemicals will NOT be evaluated before we are exposed to them.

I’m thinking liability insurers are going to be quite concerned by this.

With the EPA abdicating its responsibility to protect the environment and us, the risk of lawsuits and huge awards increases dramatically.

While no insurance company will accept the liability for increased use of asbestos, they may well start re-writing coverage to ensure they aren’t on the hook for tomorrow’s asbestos suits.

What does this mean for you?

Increased health risks over the long term, and increased insurance costs over the near term.


Aug
27

Asbestos, short term health plans, and drug price wars

Thanks to Julie Ferguson of Workers’ Comp Insider for hosting this month’s Health Wonk Review…

If you want to learn a bit about:

  • those short term health plans touted by the Trump Administration,
  • what’s up with the drug price wars (in a great video, no less),
  • how asbestos is working its way back into US manufacturing,
  • and a bunch of other “wow, I didn’t know that!”

read on!

 


Aug
24

King v CompPartners – good news, but another shoe to drop?

Yesterday California’s Supreme Court fully supported the State’s workers’ comp UR/IMR process.

That is excellent news.

First, here’s the key takeaway – the Court ruled that workers’ comp remains the “exclusive remedy” for resolving disputes related to treatment approvals/UR/IMR.

Second, the California Legislature may well take up the issue and require payers to take into consideration the potential medical effects of a treatment decision, perhaps including weaning off medications that are no longer approved.

The Ruling

UR/IMR is an inherent part of the workers’ comp process, and therefore falls under the exclusive remedy provision of work comp. So, the plaintiff could not sue the IMR reviewer for an allegedly adverse treatment decision.

(Any treatment arising from the plaintiff’s medical care – which in this case was allegedly due to the suddenly stopping a medication – is part of the work comp claim.)

Here’s how CWCI General Counsel Ellen Sims Langille put it:

We have long contended that exclusive remedy was the beginning and end of the discussion in this case, inasmuch as the URO was acting in the capacity of the employer, and as a statutorily required part of the claims process, and now the Supreme Court has agreed.  The URO was acting as the “alter ego” of the employer, and the utilization review itself is a statutorily required part of the claims process.  That is the very definition of exclusive remedy.

The Court of Appeal had made an obvious error in finding that the seizures suffered by Mr. King were compensable outside of the workers’ compensation system because there were no allegations that he was working at the time he suffered the seizures.  That is a fundamental misunderstanding of how compensable consequences work.  As our Amicus brief argued, the injuries alleged by Mr. King were derivative of a compensable workplace injury, and the new compensable consequences injuries fall within the scope of the workers’ compensation bargain — and within exclusive remedy.

But there’s more, which may lead to additional legislative action to address the underlying event behind King…again from Langille:

Concurring Opinions were filed by two justices, and may prove to be the enduring legacy of the decision.  Justice Liu frankly invites the Legislature to examine whether existing safeguards provide sufficient incentive for competent and careful utilization review, pointedly noting his skepticism that “a care plan… appropriate for the medical needs of the employee” was established before the Klonopin was discontinued.  Even the Majority Opinion referenced the same language from §4610(i)(4)(C).  Unfortunately, it does not appear that any of the justices understood that this subsection applies only to cases of concurrent review, which is defined under Reg.  §9792.6(d) as “utilization review conducted during an inpatient stay” and thus inapplicable to the facts of this case.  Be that as it may, it is likely that the next legislative session will include some effort to expand the safeguards for the injured worker under utilization review.

What does this mean for you?

Consider the impact of medical treatment decisions on the patient’s future condition. 


Aug
21

This makes zero sense.

A totally unqualified person has been appointed to California’s Workers’ Compensation Appeals Board. The person in question is not a work comp person, legal scholar, labor advocate, or claims expert, but an 80 year old retired music teacher whose sole regulatory experience is a brief stint on the Alcoholic Beverage Control Appeals Board.

Mr Gaffney, undated photo from facebook

Mr Gaffney has no apparent experience, education, or training that in any way qualifies him for any role in the workers’ comp system, much less a role as significant as an Appeals Court Judge. He is a high school classmate of retiring Gov Jerry Brown, who reportedly ran into Mr Gaffney at an event, and after a discussion decided to help him out by appointing him to a very lucrative position.

The California Applicant Attorneys Association seems to think this is a good idea, citing Mr Gaffney’s “heart”:

Getting beyond legalisms and into the heart and humanity of the workers we represent could be music to our ears.

I don’t see the logic behind the CAAA’s statement that Mr Gaffney’s decades of involvement in choral music mean he is a “person who has dedicated himself to the hearts of ordinary people – working class immigrants.” Sounds like he has dedicated himself to their ears, not their hearts…

If intrinsic goodness, love, dedication to the downtrodden, and pureness of heart are key criteria, the sainted Mother Teresa would be a perfect candidate.

Further, this is an Appeals Board – one where Mr Gaffney will be involved in decisions that will set precedent. Where he will have to adjudicate complicated issues around causation, apportionment (!), penalties for unreasonableness, assignment of liability, exclusive remedy and the like.

This is really complicated stuff that attorneys with decades of experience struggle with.

No matter how wonderful one’s heart is, it is no substitute for knowledge and experience.

If you are hurt on the job and have a disagreement with your employer about your claim, you very much want the arbiter of that disagreement to:

  1. Know a lot about workers’ compensation
  2. Have a lot of experience dealing with cases like your’s
  3. Understand the laws so they can give a final ruling that won’t keep you in limbo

If the arbiter isn’t all of the above, you may well be treated unfairly, have your case appealed to an even higher court, and not get things resolved for years.

What does this mean for you?

The appointment will be reviewed by the California State Senate Rules Committee.  Encourage this body to reject the appointment.