Friday’s what-I-missed-this-week post

Another quick week is done, altho after the two inches of snow Tuesday I’m not sure that’s a bad thing.  So here’s what happened while we were digging out.

There’s a bunch of news re ACA enrollment and the impact thereof; I’ve picked out the key parts (as I see them) for your edification.

The latest projections on PPACA enrollment are out, and the Administration is touting a higher-than-even-originally-projected 8 million insureds. Notably, this does NOT mean all are newly insured, and does not exclude those who have not paid their premiums as of yet (for the newly-enrolled population, there’s no way to tell until their premium payment late period has expired.

Why aren’t GOP-led states jumping on the Medicaid block grant bandwagon?  If they are so sure they can do a better job (and I don’t doubt that some can) than the feds, what’s with the reluctance?  Bob Laszewski asks this vital question – and the answer is…

From investment research firm L.E.K. comes an excellent review of the impact of health care reform on hospitals.  Yes, it’s a complex issue, and no, don’t say you don’t have time to read it.  This is a very good piece, and relevant for work comp as hospital expenses are rising in many states. Of note – Medicare’s hospital expenses are projected to drop over the next decade – there may be an effort on the part of facilities to make that deficit up from…somewhere.

Health insurance premiums will be 15% less than predicted next year - so says a just-released study by the CBO, which did that initial prediction back in 2009, just before ACA became law.  The CBO study also lowered the total cost projection for ACA by $105 billion over the next decade.

Finally, with RIMS coming up in just over a week, there may well be a couple big deals announced end of next week or at the show in Denver. I won’t be there (too much client work, and work comp isn’t a big part of the show) but many will.  Expect at least one announcement; there may well be two deals completed by the time the show opens.

Here’s hoping the sun shines on your weekend.

Friday catch-up

Happy spring – hope the weather where you are is as great as it is in the northeast…we finally get to tell our friends in Florida that things are just fine, thank you.

Off we go to catch you up before you start the weekend

First, thanks to Billy Wynne for hosting the April Fool’s Edition of Health Wonk Review. There’s discussion of Obamacare’s status, the ICD10 situation, medical devices and pharma, and a great piece on hospitals and health systems’ future.

WorkCompWire’s got the very welcome news that the long-sought TRIA extension may happen sooner rather than later – good news indeed for the WC industry.  There’s a bill moving in the Senate to extend TRIA for seven years, raise the deductibles and make other changes necessary for bi-partisan support.

Pennsylvania’s House unanimously passed a bill limiting physician dispensing of drugs to work comp claimants to 15 days from the date of injury.  That’s great – but not as great as it seems.  Word is opponents are going to work to slow/stop the bill in the Senate.  Email your Senator and voice support for HB 1846.


The workers comp investment world is all abuzz; there are at least four pending transactions with two rumored to be looking for a pre-RIMS close date.  Whether they make it is anyone’s guess, but the opportunity to make a splash at the annual confab is plenty of incentive for all parties.  Expect hoop-la and trumpets blaring, announcements touting the wonders the new deals will have for all, and accolades for the geniuses who got them done.

Then ask yourself, this helps me how?

Quick update on health insurance enrollment

According to several recent analyses, insurance enrollment has increased significantly from last September to this April.

The latest, from RAND, indicates about 9.3 million more are insured, decreasing the uninsurance rate from 20.5 percent to 15.8 percent.

For several other estimates. the range is from 5.4 million to 9.5 million additional insureds; but – and it’s a big but, these are estimates from surveys of small populations.

From California Healthilne comes this [emphases added]:

Last month, the Los Angeles Times reported that at least 9.5 million previously uninsured U.S. residents gained coverage under the ACA during the initial open enrollment period for the exchanges. The analysis was based on various national surveys and enrollment data (California Healthline, 3/31).

Earlier this month, a study by the Urban Institute’s Health Policy Center reported that as many as 5.4 million previously uninsured residents gained coverage since the federal and state insurance exchanges were launched in October 2013 (California Healthline, 4/4).

Last week, a Gallup-Healthways Well-Being Index survey found that the uninsured rate had fallen to its lowest since 2008, with 14.7% of adults lacking coverage in the last half of March (California Healthline, 4/7).

I would quickly emphasize – again – that these are estimates, and likely to be somewhat off.  However, they are net of dis-enrollment/cancellation.

What does this mean for you?

Looks like this is here to stay; it would be very, very hard to tell 5 million people “never mind.”

Sorry about that…

well, not really.

I’m referring to yesterday’s annual April Fool’s Day post, in which I “reported” Obamacare would include a single-payer federal workers’ comp system for small employers.  While some chalk it up to my sophomoric attempt at humor, (and they would be right), there’s another, more important takeaway, one that is particularly relevant in the work comp industry.

There’s a lot of mis-information out there, much in the form of reports, statistics, metrics, findings, research, and it often goes unchallenged.  Here are a couple examples.

“Research” published by benefits giant AFLAC claims companies that set up voluntary disability programs saw reductions in work comp claims.  Except the “research” is not credible, isn’t reproducible, is based on nothing more than opinion, and therefore is just marketing BS. (hat tip to Mark Larsen of WorkCompCentral for the info)

The key here is don’t believe “research” unless it is credible, which means there was a solid methodology (asking people their opinion then drawing a statistical conclusion from those opinions is NOT a solid methodology).

Vendor claims that they can “save” X% more than your current vendor on pharmacy/medical bills/provider costs/whatever are often – but not always – pure speculation.  Fact is, unless the vendor making the claim really, really understands what your current program/vendor is doing, how they are doing it, the methodology they are using to calculate results, and reviews the bill/provider/script data, their claims are suspect at best.

That’s not to say that some programs don’t deliver measurably better performance, but unless the vendor pitching you can provide a detailed analysis of why and how they can do better, they’re just blowing smoke.  How can you figure this out?  Simple – ask lots of questions – starting with how, when, who, how much, where.  Dig deep and do not be satisfied with generic marketing-speak answers.

You will find some vendors are only too happy to get into the details, while others get really uncomfortable.  And that tells you a lot about their REAL ability to deliver.

Finally, the April Fool’s post caught more than a few readers, so if you were one, you’re in pretty good company (there were several clients and a few regulators – all shall remain nameless – who fell for it).

What does this mean for you?

Don’t be an April – or any other month – fool.


Friday’s catch up post

A week on the road ends today – if flights are on time and the weather gods are merciful.  Here’s what I missed while sitting on planes and in airports…

This week marked the 103rd anniversary of the Triangle Shirtwaist Fire, the tragedy that led to major changes in employment law, drove adoption of workers’ compensation coverage, and focused the nation’s attention on abusive employers – here in the US.  The rest of the world has a long way to go, as we’ve seen.  There’s a very good, and very graphic, video here that shows the rest of the world needs their own drastic changes in employment law and policy. What happened 103 years ago in New York happens far too frequently today – just not here. 

With the witching hour fast approaching, it looks like the PPACA rollout will end up with somewhat more than 6 million enrolled, most taking advantage of a subsidy or covered thru Medicaid.  Before we all start declaring victory or pronouncing defeat, let’s just sit back and realize we won’t know if PPACA’s goals of reducing cost, improving outcomes, and covering many more Americans will be realized for at least a few years…

Saw an item in Insurance Thought Leadership by one Al Lewis claiming that wellness is a fraud, an” industry conceived in lies, retractions, and hypocrisy.” Lewis doesn’t suffer from a lack of ego; he claims, among other things, to be “widely credited as” the inventor of disease management (now that’s a ballsy assertion). Lewis’ assertions about wellness are similar; simplistic to the point of being misleading.  

Fact is, the wellness story is much more nuanced, more complex, and while there are certainly misstatements and over-the-top claims (akin to naming oneself the “inventor of disease management), there is ample evidence that properly conceived and implemented programs can and do have measurable, positive effects on individuals’ health status and health costs. A RAND study reported:

  • We found statistically significant and clinically meaningful improvements among program participants in exercise frequency, smoking behavior, and weight control, but not cholesterol control.
  • Participation in a wellness program over five years is associated with lower health care costs and decreasing health care use. The average annual difference is an estimated $157, but the change is not statistically significant.

I’d note that almost all business decisions are made based on evidence that is not “statistically significant“, so don’t get caught up on that metric.  More evidence of wellness programs’ effectiveness is here and here.

Back in the real world, a 12 month fix for the Medicare physician reimbursement mess known as SGR will happen before the end of the month. The House passed legislation yesterday, and word is the Senate will follow shortly.  There’s a few other provisions in the bill that, among other things, reduce long term care reimbursement, delay ICD-10 rollout for another year, and cut Medicare payments to rural hospitals.  These may or may not, end up in the final bill that gets signed into law.  I’ll keep you posted.

This matters to workers comp as all states with doc fee schedules use Medicare as the basis (except IL).  In only a couple states is there a “direct” linkage, but what Medicare does tends to eventually work its way into WC fee schedules, and, perhaps more importantly, affects physician behavior.  A cut would motivate docs to shift costs to work comp…

Sticking with work comp, the rumors that Aetna will sell off its work comp subsidiary continue.  As I’ve noted ad nauseum, that’s just not possible.  Can they sell PBM First Script?  Sure, and well they might.  How about their case management and UR and IME and other “ancillary” business? Well, if anyone wants to buy it, perhaps.  Bill review?  no way – unless they do a renewal rights deal, as the current application is just not viable. That, and the fact that Aetna laid off most of the tech support staff indicates they may just let it fade away.

Which leaves the work comp PPO – the Coventry network. Word is Aetna execs have been trying to figure out how to sell it – except it isn’t “sell-able”, at least not for a price that would be anywhere close to the money they are making off the network today.  As I said a couple years back; 

if Aetna wanted to sell the WC business it is hard to see how it could transfer the network’s provider contracts to the new owner as most are a combined WC/group/governmental contract. Sure, Aetna could guarantee access to their contracts going forward for some period certain, but given Aetna’s history with workers comp, any buyer would be very reluctant to bet the future of their investment on that guarantee.

I do have first-hand knowledge of this; about 15 years ago UnitedHealthcare sold MetraComp’s WC network to NHR, which was then sold to Concentra. (I worked for then consulted for MetraComp) There was a deal in place wherein UHC was supposed to maintain the network contracts; didn’t happen.  Discounts declined, the network shrunk, and the asset value diminished rather quickly.

I’d be remiss if I didn’t make sure you are going to Operation UNITE’s Prescription Rx Summit in Atlanta April 22 – 24.  The Summit is focused on all aspects of the prescription drug abuse problem – the top problem in worker’s comp today.

Enjoy the weekend – hope your flowers are blooming!

Friday catch-up and quick takes

Yikes – where did the week go?

Apologies for not keeping up with the daily blogging – too darn much paying work these days.  Alas…

So here are a few quick takes.

Prime Health got $8 million in debt financing from LongueVue Capital; this likely means the PPO won’t be on the block any time soon.  No word on what they’re going to use the funds for…

Drug compounding hit the big time this week, with the news that both the FDA and HHS’ Office of the Inspector General are looking into compounding.  This from AIS’ Health Business Daily: (free sub req)

“…state-regulated compounding in hospitals and federal oversight of manufacturers — are colliding, as the FDA in January urged hospitals to buy drugs only from compounders that voluntarily register with the agency and abide by “good manufacturing practices.”

Compounding — which is the mixing of two or more ingredients to tailor a drug to a specific patient’s needs — also is a new target on the 2014 Work Plan for HHS’s Office of Inspector General, with the OIG eyeing practices inside hospitals and oversight by Medicare accreditors.


About 80% of survey respondents want their elected officials to fix O-care - not make it fail.  Fully three-quarters of non-Tea Party Republicans want their representatives to fix – not kill – Obamacare…and the less-educated one is, the more likely they are to oppose Obamacare.

Of course, among those who disapprove are some who want a single payer system.

Re Obamacare implementation, there were mis-leading headlines and ledes out there saying that insurance markets are less competitive than they were pre-reform.

Once again, these media got it wrong.

Here’s what the study  - which only looked at 7 states – really said:

“early indications suggest that some exchange markets are more competitive than their states’ individual markets before the ACA (emphasis added)…Two states (Connecticut and Washington) that have also been successful at enrolling consumers seem to have less competition than in their 2012 individual markets.  Results from the remaining states generally show either similar levels of competition as their pre-ACA markets or mixed signs.(emphasis added)

There’s a great infographic up at JAMA’s site showing what people are paying under Obamacare – check your state here.

Finally, myMatrixx has a webinar on specialty pharma in work comp next Tuesday at 2 PM eastern.  Highly recommend it – this is a rapidly growing and very complex issue and Phil Walls is a great “explainer”.

Enjoy the weekend, best of luck in your brackets, and here’s hoping my beloved Orangemen make it thru!

WCRI – Shuford on how the economy drives work comp

NCCI’s Dr Harry Shuford gave a great brief talk on the economy’s impact on the financial performance of WC.

A few key takeaways.

  1. WC is a relatively small part of the overall property and casualty insurance industry (around 11% or so)
  2. Average operating gain of WC has been about 5% over the last 20 years. That factors in an average return on investment of 14% and the underwriting results.
  3. WC premium dropped 23% from 2007 – 2009, then grew 18% from 2010 to 2012.
  4. Markets for all P&C lines seem to go thru cycles in synch.  That is, when the personal auto market is soft, so is WC, etc. Harry’s inference – poor investment returns are key to understanding when cycles occur, and, perhaps more significantly, help us understand overall business cycles as high investment returns APPEAR to predict recessions.
  5. Cost drivers include:
  • Long term structural decline in frequency  - this is global and not limited to the US.
  • The ebb and flow of inexperienced workers drives frequency as part of the business cycle – temps get added, frequency goes up.
  • Medical severity is a huge driver – utilization, price, and intensity of services.


Friday’s (delayed) catch-up and fast facts

Apologies all – too much work last week and not enough time to get this out.

Here’s what I missed reporting last week.

WCRI’s annual meeting is starting Wednesday – there’s a ton on the agenda, attendance looks high, and I’ll be “live blogging” throughout.

There’s increasing evidence that health care cost trends have continued to moderate.  However, people – employees, individuals, moms and dads – are seeing higher cost-sharing and contributing more to their premiums.  Thus the “good news” is mainly “good” for policy wonks and not for real people.

On the Obamacare issue, a poll released Friday indicated 55 percent of the currently-uninsured respondents will get coverage rather than pay a fine. The same poll indicated the uninsuranace rate has decreased 1.2 points since the end of 2013.

Meanwhile, those zany, madcap House Republicans are at it again! Yes, they are trying to hold up O-care, this time by tying a fix to the Medicare physician reimbursement rate to delaying the mandate for a couple-or-ten years.  What will they think of next?

In the wild world of work comp, the big news last week was – there was only one private equity deal! Fairpay Solutions was sold by Riverside to Mitchell International in a transaction that sources indicated made the Riverside folks happy but not ecstatic.

That’s it for last week.  Gotta save up my pixels for the forthcoming blog-o-thon aka WCRI.



Obamacare’s success is NOT about enrollment

At least not ONLY about enrollment.

What’s missing from the reporting on and discussions about how many and who and where they signed up for health insurance is a much more important issue – what are the health plans doing to improve health and control cost?

You wouldn’t know that from the press or pundits.

The are fighting the proverbial last war, and are not thinking about what it will take to succeed in this one. Amidst all the back-and-forth about young invincibles and risk corridors and subsidies is this reality; the basis for health plans’ financial success has changed – dramatically.

Health plans will no longer succeed by underwriting; that’s dead.  Yes, pricing is critical, but it can’t be used to drive demographics and enrollment, and neither can benefit design.

These tools – benefit design and underwriting – had been the fundamental business drivers for decades.  Now, they no longer exist.

They have been replaced by population health management.

Going forward, health plans’ success will be driven by much-improved, streamlined, integrated health care delivery systems focusing on population health management.

This means identifying those members with chronic health conditions and reaching out – assertively and proactively – to those members.  It means keeping them healthy; the annual cost of an asthmatic that has an acute episode is 20x more than one who doesn’t. Hypertension, diabetes, depression, COPD are all major contributors to health costs, and those health plans that get their members to higher health status will win.

They will have lower total medical costs, and will be able to offer lower premiums, which will drive more enrollment, including enrollment of younger, healthier (that means cheaper) members.

The “how” to do this is incredibly complex, requiring multiple stakeholders to completely change their thinking and success criteria and financial orientation.  To wit:

  • Docs will no longer be motivated to admit/treat/prescribe, but rather to work with patients to get those patients to “do the right thing”
  • Hospitals will want fewer transplants/surgeries/ER admits
  • Medical people will run insurers and health plans
  • In some markets, health plans all become appendages of delivery systems, while the big national players will continue their efforts to partner with local health care delivery systems.
  • Expect much faster and deeper adoption of evidence-based medical guidelines as health plans and their provider partners rely on science to drive improved outcomes.
  • Some smart health plans may actually figure out how to market themselves.  Seriously, it is possible!  Yep, after many, many years of underinvesting in marketing, branding, positioning, health plans are going to spend tens of millions in an effort to brand themselves and achieve “mind share” among consumers.
  • Employer involvement in arranging for employee health benefits will diminish – a lot.

This is already happening – it isn’t pretty, there are lots of starts, stops, and dead-ends, plans will fail and providers go belly-up, but the market will determine the winners. Notably, this wouldn’t have happened without guaranteed enrollment and pre-set benefit plans.

What does this mean for you?

The current flattening of health care trend will continue due to this transformation.

With clear boundaries set by Obamacare, health plans will succeed – or not – based on their ability to do what they should have been doing all along – deliver the best outcomes for the lowest cost.