Is up at Healthcare Economist, where industry veteran Jason Shafrin provides insights into ACA and all things health policy.
Happy December. While we were doing all things Thanksgivukkah, the world continued. Here are the “high”-lights. Such as they are.
The deadline to “fix” the federal health care exchange passed; with White House officials declaring:
- it never really was a guaranteed drop-dead date;
- it’s fixed for
most someabout 50,000-at-a-time users; and
- the small employer enrollment deadline has been extended for a year.
What is NOT fixed is the back end; insurers are not getting accurate information about who enrolled; the plans they enrolled in; or the amount, if any, of their subsidy. It appears the Administration has decided that somehow the insurers will figure it out and if they don’t that’s the insurer’s issue.
That’s unfair, wrong-headed, and blithely ignorant, not to mention irresponsible. Health insurers have spent hundreds of millions of dollars preparing for January 1, and now they’re being told “we screwed up and it’s your problem if you don’t know who your members are, don’t get paid for those members, and can’t tell doctors if someone is covered.”
On the state exchanges, there’s a mixed bag with states enrolling lots of folks, while others (MD, OR) having their own issues. Those states signing up folks may find the problems with the interface with the feds spill over. Here’s a sampling of the latest figures:
- New York – 76,177
- California – 385,556
- Kentucky – 60,000+
- Colorado – 6001
The Feds get much more oversight authority over compounding pharmacies; a bill addressing the issue was just signed into law that gives the FDA a significant role in monitoring compounders. Recall one Massachusetts compounder was implicated in illnesses and least five deaths associated with contaminated drugs used for back injections.
In the much smaller work comp world, there’s been a shake-up at Coventry Workers Comp, with Art Lynch taking over the top spot from suddenly-departed David Young. Some may see this as a sign that owner Aetna isn’t interested in comp; I don’t.
On the even-smaller work comp doc dispensing issue, Pennsylvania is the latest battleground, with legislation just introduced to cap reimbursement for physician dispensed repackaged drugs at 110%, with a five day limit on scripts. Legislation is here; Please please please forward the link and get your government affairs folks involved, and thanks to WorkCompCentral’s Mike Whitely for the heads’ up.
Finally, as far as I know, there weren’t any more acquisitions in the work comp world over the weekend…
It’s got to be weird.
Former competitors standing next to each other in the booth, greeting guests at their events, talking up the advantages of companies they were competing with just a month ago.
It may be even stranger for those people who were not competing but now are, the ones whose companies have acquired units that now conflict with companies they used to work with, or at least be supportive of.
Nonetheless thats where the industry is these days. And that consolidation and disruption is going to continue for the foreseeable future. The word from the investors I’ve spoken with is that they are still very actively pursuing investments in work comp. Met with several yesterday who were on the floor and in meetings all day, looking for the next deal.
My sense is the interest is primarily in big deals – not taking companies from $20 million to $100 million but from $400 million to a billion dollars plus. Sure, the smaller deals will continue, but the big stuff is where the focus is these days.
Here’s a very brief take on what I see happening.
Coventry is going to get lots if attention as investors seek to pull it out of Aetna and either operate it as a standalone or use it as a platform to compete with. For all the reasons I enumerated here, that isn’t going to happen. If anything, the current Obamacare debacle will make it even less likely Aetna exits a complementary, fee-based, non-PPACA-affected business.
Not gonna happen. If anything, Aetna is going to look to add to their work comp portfolio; expect to see them in the hunt, albeit very selectively.
One Call is reported to be looking for add-on deals, and I’d have to think one likely product-market is work comp PBM and a broader network. The Apax folks are here and, according to a couple reports, asking lots of questions about market opportunities.
Expect OCCM to add business, although the prices current owners will demand are going to be
outrageous unthinkable in line with the Align/One Call multiples.
Stratacare was mentioned several times; there’s been lots of talk over the last few months but no public action. I’d have to expect something will occur here; perhaps KKR, the new owners of Mitchell, will make a play to buy them out and consolidate the bill review industry. If they do, I have to believe Medata and MCMC would be licking their chops.
What does this mean for you?
A very busy holiday shopping season!
And, no, I’m NOT referring to the type Bob Wilson discusses in a recent investigative report...
First up, and timely indeed, is a post from friend and colleague Sandy Blunt about the integration of guidelines with medical bill review. Medata ran a large sample of medical bills from a very well managed work comp payer against medical guidelines and identified “15 percent in cost savings from questioned medical procedures” – over and above what the payer was already finding. Now, I’d note that “questioned” does not mean “actual”, nor should it. However, it does indicate a major opportunity that I daresay many payers are missing out on; employing guidelines as part of the bill review process.
Compounding drugs isn’t just for people anymore! A colleague sent me a link to a story of a drug dealer in Texas that has been selling performance-enhancing drugs for racing horses. Good to know they aren’t limiting their expertise to just us humans!
Millennium Labs and Texas Mutual just inked a deal wherein Millennim will be providing drug testing services for claimants prescribed opioids. (ML is an HSA consulting client). Texas Mutual has been at the forefront of opioid management for a couple years now; this further enhances their program.
The Claims and Litigation Management Alliance is hosting what looks to be an interesting conference in January; the NYTimes’ Barry Meier will be keynoting; Barry has written several books on opioids and published articles on physician dispensing and opioid usage in work comp
About a group of people that refuses to fund the government because it objects to a law passed by both Houses, signed by the President, and upheld by the Supreme Court.
So we’ll focus on the one thing that people in both parties seem to agree on – a desire to repeal the medical device tax.
- went into effect this year,
- applies to things like catheters, MRI machines, surgical implants – but not toothbrushes and other personal care items, and
- will raise about $29 billion over ten years, funds that will be used to offset some of the insurance subsidies enjoyed by folks who don’t make a lot of money.
Shockingly, some Rs and Ds agree that the tax should be repealed. Not shockingly these Senators and Congresspeople are from districts where big device companies operate – companies such as Medtronic, GE, Phillips.
Not surprisingly, the device industry is in full voice over the issue, claiming the tax will cost 45,000 jobs (really!), increase consumers’ costs, be hard to implement, and distort the market. What is really happening here is the industry refused to go along with an initial request from PPACA backers to pony up some funds to help pay for the bill – a request acceded to by the insurance industry, pharma, and hospitals. Thus the device folks were on the outside looking in in the final days of negotiations.
It’s understandable that they’d want to undo the tax – it’s also unrealistic and a bit weird. After all, the industry is going to get a LOT more revenues from the newly-insured next year, growing their top line and increasing profits as well. And this for an industry that already generates profits in excess of 15 percent of revenues…
The other industries that are going to benefit from PPACA are contributing to the cost, so it seems logical that the device manufacturers should too.
What does this mean for you?
It is unlikely the device tax will be repealed, as the President and Senate Majority Leader are bot adamantly opposed to a repeal.
But even if it is, it isn’t going to have much – if any – effect on consumers or payers.
read Peggy Salvatore’s edition of Health Wonk Review to find out!
Even if the crazies in Boehner’s House refuse to raise the debt limit.
It is not going to happen. President Obama would never agree to it, and the Senate would never vote for a delay/defund in return for a debt limit raise.
Now, you can argue that, despite what the (conservative) Supreme Court ruled, PPACA is somehow unConstitutional. But the highest Court in the land, the arbiter of Constitutionality, said it is.
You can hate it, abhor it, despise it, decry it, believe it is evil incarnate. But you aren’t going to get rid of it. PPACA is now the law of the land – and will be for the foreseeable future.
Many refuse to accept this, and therefore are making business decisions thru glasses fogged by ideology. That is a very, very dangerous way to operate a business.
I continue to be amazed that the GOP crazies are willing to go nuclear over a law based in large part on ideas promulgated by the Heritage Foundation and worthies like Senator Bob Dole, R KS. Methinks it has something to do with the “Obamacare” name and more specifically a desire to see the current occupant of the White House embarrassed/defeated/humiliated.
What will happen (I can’t believe I’m writing this) is the crazies in the House will refuse to raise the debt limit (to pay for stuff they already voted for!), leading to all kinds of financial confusion and disruption to individuals, businesses, state and local governments, school boards…pretty much everyone and everything.
How anyone could think this is a good idea is a mystery; if the debt ceiling isn’t raised, the Treasury will only be able to pay a portion of the bills it gets every day, bills for things like Social Security; Supplemental Security Income; Medicare; Medicaid; national security needs, including military salaries, military retirement, veterans’ benefits, and defense contractors; income tax refunds; federal employee salaries and retirement; law enforcement and operation of the justice system; unemployment insurance; disaster relief; goods and services sold to the government under contracts with small and large businesses; foreign aid; the list is endless.
Eventually those crazies will come to their senses, the debt ceiling will be raised, and hopefully enough of them will be voted out so we can get back to a sensible Congress peopled with sensible people.
If not, well, we get the government we deserve.
Regardless, PPACA will continue to be the law of the land.
Yes, the deal is in process.
PBM PMSI’s new owners will be Kelso & Company and Stone Point Capital. And yes that’s the same Stone Point that owns Stone River/Progressive Medical.
Emry Sisson and Tommy Young will remain as Co-CEOS, with current PMSI CEO Eileen Auen taking the top spot as Executive Chair. The new company will have revenues near $750 million.
Given recent transactions, I’d hazard a guess that PMSI’s price was hefty, likely well above a double digit multiple of their EBITDA.
Auen has done a remarkable job turning around an almost-defunct PMSI; her leadership is key to the success of the new company and she will remain with the new organization in a full time role. Anyone who knows Eileen knows she’s full-time executive, with an excellent reputation in the industry and strong relationships with many payers.
More to come
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 time – one 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…
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.
This week I’m on vacation in New York’s Finger Lakes – as my lovely bride has a strict “no work on vacation” policy, and I really like being married, there will be no posts on MCM this week.
Hope yours is excellent.