Trump and workers’ comp

There’s no question the Republican sweep will hugely affect workers’ comp.

There are nothing BUT questions about what that impact will be.  Here are a few thoughts based on what little we know so far.

The quick take – huge uncertainty; if Trump delivers on his campaign promises, there’s a high likelihood of higher claims frequency and increased medical expenses. 

I preface this by noting Trump is already backing off campaign promises – including repealing “Obamacare”.

The DOL “intervention” in workers comp is dead.  There will be no new National Commission, no federal standards, no study or research or advisory panel. There will be much less emphasis on OSHA enforcement and workplace safety as well.

More jobs?

Energy projects will likely be fast-tracked, although there will be big battles in court as environmental concerns rally to intervene in the only way left open to them – civil suits. Pipelines, coal mines, oil will all see more jobs – although the world economy will have much more to say about that than the White House.

Trump has been touting a trillion dollar investment in infrastructure – anathema to Republicans who don’t want any increase in government spending. Where this will end up is anyone’s guess; if it does go forward, premiums, along with claims costs and medical expenses will rise significantly as these jobs are in high-claim-frequency and high-severity industries.

Trade drives jobs, consumer buying, and inflation. All of which impact work comp.

Trump will label China  – our largest trading partner – a currency manipulator (it’s been keeping the value of the renminbi low to make its exports more attractive). He has to, as that’s a big part of his campaign. BUT it’s going to be a lot of talk and NO action – this is going nowhere, for four simple reasons.

The law requires three conditions to be met for a country to be declared a currency manipulator; China only meets one.

Second, China has been increasing the value of the yuan for months.

Third, consumer demand has been a big part of our economic recovery. If Trump starts a trade war, consumer goods will get a LOT more expensive, driving down consumer purchasing power and consumer confidence. The working class that supported his election would be hurt the most.

Fourth, China owns a shipload of our debt. China can stop – or greatly reduce buying our debt, which will drive up borrowing costs, triggering inflation and more damage to consumer buying power especially for baby boomers who are already living paycheck-to-pacheck.

Oh, and we have a $28 billion surplus in the service sector. If a trade war does start, China will stop sending students here, stop importing movies and music, and its new moneyed class will find other travel destinations.

That said, even the whiff of a trade war will hurt work comp. Inflation will hurt investment returns and lower the value of claim reserves, export jobs will be lost, and the tourism, educational, and cultural industries will suffer as well.

For a brief and helpful summary of Trump and trade, click here.

ACA

Evidence suggests the Affordable Care Act has helped work comp. Work comp medical costs have declined since ACA’s full implementation despite rising employment and middling cost increases in group health. The newly-insured are in higher-frequency jobs.

If Trump rips out ACA “root and branch”, we can expect medical costs to increase and cost- and case-shifting to ramp up significantly.

There’s a lot more to this and we will be tracking it closely.

What does this mean for you?

Given Trump’s already walking back campaign promises, this is just speculation. For now, expect higher premiums, more claims, and higher medical costs.

TrumpCare – initial takes

Okay, time to dig into what this election means for health care.  I’m still working thru how this will affect workers’ comp; my first post next week will focus on that.

To my loyal readers, thanks for your patience while I diverted from health care and work comp and used MCM to discuss the election and its impact on me. For those friends and colleagues who thoughtfully and kindly contributed to the conversation, I deeply appreciate your insights and views. We may not agree and that’s fine as long as we seek to understand.

I’m really working to keep my inner snark under control here, so bear with me folks.

The biggest problem in crystal-balling about the election’s impact on health care is Trump has been all over the place.  He’s advocated for a Canadian-style system, vowed to repeal Obamacare, lauded single-payer, and gone off in other directions enough to convince me he doesn’t have any firm plan.

His party does have a “plan”, at least current Speaker Paul Ryan detailed one earlier this year.  It includes

  • Selling insurance across state lines (an air sandwich if ever there was one),
  • block grants for Medicaid;
  • no mandate but no coverage for pre-existing conditions without continuous coverage;
  • cap employer tax break for health insurance;
  • refundable tax credit for individual purchase of insurance;
  • end the Independent Payment Advisory Board.

Here’s the problem.  Nothing here will reduce the cost of health care. 

The voters who backed the GOP and Trump expect health care costs to come down, insurance to be cheaper, less complicated, and provide better coverage, and the whole system to function better/easier/faster with less hassle.

But mostly they want it to cost less.

These initiatives will not do that.

Reducing cost will require narrower networks (you can’t keep your doctor), lower benefits (what, this isn’t covered?!), price controls (anathema to conservatives) and/or tight utilization control (don’t get between me and my doctor).

Yes, forcing people to buy insurance and not covering pre-existing conditions if they don’t is going to make more people buy insurance and that’s good.  But it’s still unaffordable for many, and they will won’t sign up.

What does this mean for you?

It’s easy to criticize; now that Trump et al own this, they’re going to see just how hard it is to fix health care.

 

 

Halloween catch up

Off to New Orleans for client meetings; should be interesting spending Halloween evening downtown.

A couple tems of note that deserve mention.

Over the weekend 178 GOP and 1 Dem representative called on CMS to stop with all the value-based stuff. Claiming the agency is overstepping its bounds, a letter signed by these worthies evidently wants Medicare to return to fee for service.

In a word, this is dumb. FFS is a big reason health care costs are out of control while quality is spotty at best. Fiscal prudence would seem to demand rapid adoption of value-based care. I know taxpayers will be far better served when more care is based on what actually works, not on what providers can bill for.

CompPharma’s annual Survey of Prescription Drug Management in Workers Comp will be out tomorrow at CompPharma.com. Big news is respondents’ drug costs dropped 8.7% in 2015. Opioids are still the biggest concern and compounds the top emerging issue.

Finally it looks like occupational injuries declined yet again; the Department of Labor reported the injury rate dropped from 3.2/100 to 3.0.

That is good news indeed – especially for those workers who didn’t get hurt.

Hope your week is most excellent.

Note- sorry about no URL links; posting from my phone which makes that really complicated.

ACA: the real story

OK folks, deep breath here. Let’s take a minute and discuss what’s really going on with the ACA.

ACA – or the more-commonly-used-but-nonetheless-inaccurate-title Obamacare ≠ the Exchanges. I don’t know why pundits, pols, and regular people don’t understand this.

Let’s remember that enrollment in the exchanges and individual plans amounts to about 6% of all insureds in the United States.

2016_total_coverage_pie_chart

Six percent.

Second, remember that the ACA includes a lot more than just the exchanges.

Elimination of pre-existing condition clause, guaranteed issue, coverage of dependents to age 26, Medicaid expansion, changes in Medicare reimbursement all have much more impact on the overall industry and population than the exchanges.

It’s clear that rates in the exchanges are going up a lot. This is because there are not enough young people and healthy people buying coverage on the individual market to offset the expense of us older folks.  And, it’s because the big commercial plans aren’t very good at individual coverage.

As the penalties for failure to obtain coverage increase, we can expect more people to enroll in health insurance. But for now, rates are going up significantly.

That said, I can say from personal experience that our rates are going up less than one dollar for a platinum plan in upstate New York. We are enrolled in a very narrow network with no out of network coverage.

The big commercial plans, United healthcare, Aetna, Wellpoint are all experiencing significant losses in the exchanges. However the plans that are more locally focused and have more expertise in Medicaid and other individual markets are doing well.

Therein lies a lesson. The big commercial plans are very skilled and very experienced in dealing with employer plans. However their expertise is not in the individual market which is why they are getting crushed.

Let’s not forget the ACA is based on private insurers competing. The competitive market is working. As the plans that can’t compete are exiting Exchange markets others are earning more business. This will, over the long term, help control cost and deliver better care to individuals on the exchanges. And, it will make these individual market winners better able to compete for employer business as their cost of care is going to be lower.

Finally, unlike most major federal legislation, there has been no effort on the part of the opposing party to fix the problems with the original legislation.

Hopefully this will be remedied under a new administration.

What does this mean for you?

Progress is painful. But reforming our health care system is absolutely necessary.

Why are work comp medical costs decreasing?

Medical costs were up a mere 3% in 2014, and actually dropped by a point in 2015 (in NCCI states).

I’ve been in comp a long time, and nothing like this has ever happened. What’s going on?

One likely contributor – 20 million more Americans have health insurance, and work comp doesn’t have to pay for medical care for non-injury-related conditions. (Surprisingly, not many of us know that coverage has increased so much…)

If someone gets hurt at work, has comorbidities, and needs surgery, those comorbidities have to be addressed as part of the treatment plan. If the patient has health insurance, that’s what pays for the non-injury conditions.  If not, work comp’s on the hook.

Clearly, the more workers with insurance, the less added expense for work comp payers.  So, here are my back-of-the-virtual-envelope calculations of the impact of ACA on work comp (a more-qualified researcher needs to do a much more thorough job): 

In 2009 – 2010, 81.8 percent of the employed population aged 18-64 had health insurance. By March of this year, 90.3 percent had coverage, a 10.4 percent/8.5 point increase.

Around 150 million people were employed this March; running the numbers, that means about 13 million more workers had health insurance early this year than did six years ago.

At 3.2 injuries or illnesses per 100 FTEs, that’s 416,000 patients.  About 84,000 of those patients have more severe injuries, the type that may require surgery, physical therapy, and/or more expensive and extensive medication.

We do not know how much of the moderation in medical inflation can be accounted for by expanded health insurance coverage, but we do know there are around 84,000 folks with pretty significant injuries or illnesses that don’t need work comp to pay for non-occupational conditions.

Another factor – employed people with health insurance are healthier than employed people who don’t have insurance.  Sure, there are confounding factors here – how long do they have to be insured to become “as healthy” as folks who’ve had insurance for years, and how much healthier do they get for each year they’ve had coverage.  I get all that. And some really smart researcher at NCCI or WCRI or NASI will figure that out (c’mon, people, the race is on!)

What does this mean for you?

We don’t KNOW ACA how much reducing work comp medical costs, but it is very likely a major contributor.

Value-based payment – will it work in workers’ comp?

The IAIABC meeting in Portland Maine (a singularly GREAT location for conferences) includes some really deep dives into very hot topics – this morning’s discussion of value-based payment was certainly both.

Big takeawayCMS is going BIG into alternative payments tied to quality; estimates are 72 million people will be covered by ACOs by 2020.

David Deitz MD led off with a summary of what’s happening with Accountable Care Organizations (ACOs). Note this is NOT specific to work comp, but does have significant implications therefore. A few key takeaways:

  • Doc led ACOs performed better than hospital led-ACOs
  • ACO savings generally improved as ACOs got more experience, with half of the ACOs four years into the program earning performance bonuses.
  • some indication that quality has improved – BCBS MA, Marshfield Clinic are two that have delivered results.
  • several key process measures of quality show good improvement – hospital readmissions being one example.

What happens to losers in the quality race? Providers in NJ who didn’t meet quality standards sued and employed various other methods to try to address Horizon BC BS’ refusal to admit them to their Tier One network. Expect this “denial of fairness” argument to show up in other states where providers are booted out of narrow networks.

Kathryn Mueller, MD, Medical Director of Colorado’s Workers’ Comp and Dan Hunt, DO, Medical Director of Accident Fund, gave the regulator’s and payer’s perspectives.  As two of the more thoughtful medical leaders in workers’ comp, Drs Mueller and Hunt dug into the reality of work comp and value based payment.

Dr Mueller noted that bundled payments for surgery won’t necessarily help reduce the number of unnecessary surgeries, a point the audience heartily endorsed.

Dr Hunt has experience with bundled payments from his work as a surgeon; he noted that a lot of analysis and preparation went into developing a single bundled payment for one diagnosis in one location.  He also reported CMS is looking at a zero-based bonus system, where there may well be more losers than gainers (this is consistent with CMS’ expectations).  And, with work comp’s focus on functionality makes for a “better” outcome metric than those used in other payment systems.

So what does this mean for work comp?

  • FFS leads to more care – inevitably
  • FS may constrain costs but, FFS pays bad docs and good docs the same amount
  • So yes, value-based payment makes a ton of sense for workers’ comp, but…
  • Effective payment design must link value and outcomes – and NOT pay for harmful or valueless care.

What might work in WC?  Not medical homes, likely not shared savings or capitation. Possibly bundled payments, and pay for performance only with different metrics.

Emphasis on different metrics – because we in workers’ comp care about stuff other payers don’t, namely functional improvement and indemnity payments chiefly among them.

Data from a variety of providers indicates bundled payments have reduced length of stay, delivered lower costs and higher patient satisfaction.

And due to indemnity payments, work comp has even more incentive to pay for bundled care based on functional outcomes.  As a lot of high cost care in comp is orthopedic, which lends itself well to bundled payments, comp is well positioned to use bundled payments.

However…there are lots of barriers, regulatory, financial motivations of bill review and network vendors, TPAs, insurance companies, and no standard outcomes measures across work comp.

Dr Deitz opined that incentives to cost-shift may drive docs to categorize injuries as occupational in high FS states such as Connecticut and Illinois.

What does this mean for you?

Lots of frictional, regulatory, and entrenched interest resistance will make it hard for bundled payments – in fact most types of value-based payment – to see significant adoption in workers comp.

 

Note – I captured this as accurately as possible, however I may have unintentionally misquoted the speakers.  Corrections welcomed.

More insured via Exchanges is good news for Work Comp

People who obtained private health insurance coverage thru the Exchanges in 2014 were less healthy than those previously insured. A just-published article in HealthAffairs provides details on their medical issues and conditions, more on this below. [sub req]

That’s not surprising; prior to ACA, many individuals and families weren’t able to obtain coverage at a reasonable price, and some couldn’t get any coverage at any price, due to insurers underwriting practices.

Now that medical underwriting and pre-existing exclusions are outlawed, folks with health problems can get insurance.  Before we jump into the implications discussion, here’s the specifics.

among those with individual private coverage, the likelihood of reporting fair or poor health and the likelihood of being obese increased by 1.5 and 4.2 percentage points, respectively (Exhibit 1). We also found that the likelihood of having at least one of ten specific chronic conditions5 increased by 6.7 percentage points for this group—a change that was driven by increases in the likelihood of having hypertension (a 4.0-percentage-point increase) and diabetes (a 2.9-percentage-point increase)

The good news is many of these chronic conditions respond well to relatively inexpensive treatment, and the cost of caring for these individuals is much lower if they have access to good primary care.

For work comp payers, the good news is a bit less obvious – but it is good news – for two reasons.

First, in general the working population will be slightly healthier – because more workers will have insurance, and the least-healthy are more likely to be improving their health status. Thus if they do get injured, they will likely heal faster as their overall health status is better.

Second, work comp insurers won’t have to pay to treat their non-occ medical conditions, as the patients are more likely to have health insurance.

 

Details matter.

Someone who doesn’t do what you do may think it looks pretty simple.

Carpenters look at a house and see detailed planning, careful material selection, precise measuring, and skilled craftsmanship because they know what it takes to build a strong, sturdy, attractive, functional home. They are experts due to years of experience and hard-earned lessons and mentoring by their elders.

Me? I see walls and a roof. Building looks simple to me; get some lumber, nails, and tools, plus some other building stuff like shingles and wire and concrete, and start slapping stuff together.

Which house would you want to live in?

The same is true for any profession – teaching, medical bill processing, hitting a golf ball…right? Professionals – and we are all professionals in our chosen vocations – understand the complexity in what they do, while outsiders tell us it looks simple to them.

I’m thinking about the Presidential candidates’ positions on health care and health care reform.  Trump wants to “rip out Obamacare root and branch” and replace it with something much “simpler”.

In general, Trump’s calling for:

  • allowing insurers to sell health insurance across state lines
  • repealing the individual mandate
  • requiring insurers to cover anyone regardless of their pre-existing condition.

Sounds great…you don’t have to buy health insurance until you really need it, but the insurance companies still have to sell it to you even if you need a heart transplant or new kidney or are having premature triplets.  (We discussed the across state lines thing here)

Here’s where those “details” matter.

What will insurance companies do if they are required to cover people who don’t need to buy insurance until they get sick?

They have two choices – go bankrupt or stop selling insurance to individual sand families.

What do you think they’ll do?

Of course they will stop selling health insurance to individuals.  When that happens, the Paduda family, and most of the other 11 million folks insured thru the Exchanges will find themselves with no health insurance and no one to buy it from.

Then what?

Here’s the point. We live in an amazingly complex world, one where there are NO simple solutions.   I know, simple solutions are really appealing, but “see the ball, hit the ball” only works until you step up to the plate, when it gets a whole lot more complicated.

If health care reform was easy, it would have been done decades ago. It’s messy, complex, and there are no simple solutions where everyone wins. It requires consideration of the “what then” issues. When you move one lever, it triggers a whole bunch of reactions that, if not anticipated, will create way more chaos.

Yes, the ACA is messy and needs fixing. Yes, we need our politicians to engage, debate, argue, and work it out. What you and I do NOT need is a sound-bite solution that is NO solution at all.

What does this mean for you?

If you think health care is a mess now, can you imagine what it would look like if people could wait to buy insurance till they were sick, and insurers had to either sell it to them or stop selling insurance altogether?

It would look like this

San_bernardino_Train_Disaster_2a

Thursday catch-up

Swamped these days, so here’s what I don’t have time to opine upon in any depth…

In eight years, “Health spending growth…is projected to average 5.8 percent—1.3 percentage points faster than growth in the gross domestic product—and to represent 20.1 percent of the total economy by 2025.” [emphasis added] HealthAffairsarticle notes the main drivers will be changes to the economy, higher prices, and an aging population.

So, what are we going to do about this?  When considering candidates’ health care platforms, it is always helpful to start from where we are today.  To that end, Michael Joyner MD has an excellent briefing that builds on the HealthAffairs piece, with more info on what we spend, who spends it, and what we get for those dollars.

Spoiler alert – When you deduct estimated cost of unnecessary spending, US health care costs are about in line with other countries’.

Folks interested in what workers’ comp patients think of work comp should tune in to WCRI’s webinar on July 28.  WCRI surveyed patients in 15 states and will report on their findings across a broad spectrum of issues; a written version of findings is also available.

And those interested in the financial future of work comp can check out Fitch’s report on same; hint today’s flush days are not likely to continue.  (hat tip to WorkCompWire for the head’s up)

A troubling point:counterpoint discussion of opioids and chronic pain illustrates the biggest problem we face with this issue; to the general public, anecdote is often more powerful than data.  David Deitz MD PhD provides the scientific background for why limiting opioid use is a critical public health issue, and why opioids aren’t particularly helpful for many chronic pain sufferers.  The “counterpoint” is NOT a fact/research/science based expert, but one person who suffers from chronic pain.

This is not a terribly helpful way to educate folks about the issue and I would suggest ill-serves the public.

Mark Pew of PRIUM has a cogent perspective on California’s prescription monitoring program.  He’s all in – and, quite correctly, suggests everyone else should be as well.

Finally, the pending sale of ExamWorks is generating controversy, with some stockholders not pleased by the price offered, the possible conflict of interest of some of the parties, and various other complaints.  According to the NYTimes, opponents of the deal contend “lawyers at Paul Hastings, a law firm based in Los Angeles, were in cahoots with management and the investment banks to sell the company at a below-market price, something ExamWorks vigorously denies.”

Methinks they oughta be darn glad they’re getting 35 bucks a share.

Got to get back to work…

 

Exchange health insurance premiums up 10%…

ok, that’s the headline, but it’s so generalized that it’s all but useless. In fact, premium increases vary quite a bit around the country and even within markets.

Our plan is up less than 1 percent.  And here’s why.

The 10% figure is a very rough average of the price changes for the two lowest-cost “Silver” plans – the second-tier plans offered on the Exchanges in 12 states plus DC. In fact, premium changes for the benchmark second-lowest Silver plans range from a 13% decrease to an increase if 18% – and these are preliminary, before the state review process.

A couple other factoids.

  • 7 of the markets reviewed by KFF.org will have fewer insurers participating, while the other 7 will either stay steady or have more competitors.
  • Most of the plans that were the lowest-priced in 2016 will not be the cheapest next year. However, in most markets, consumers who shop around will be able to find plans with premiums below their 2016 rates.
  • On average, 5.5 insurers will participate in the 14 markets next year, down from 5.9 in 2016.

We buy our insurance thru the Exchange in upstate New York. Our premiums will increase about 1% in 2017 – for a platinum plan, narrow network, no out-of-network coverage for a three member family aged 58, 57, 24.  Very low deductibles, but a very limited choice of providers.

So, what does this all mean?

Clearly, the narrow network is working for Fidelis, our insurer.

Contrast this with UnitedHealthcare, which is exiting most markets after a financially abysmal couple of years.  Humana has also been hammered.  UHC (and to a slightly-lesser extent Humana) has long focused on the employed market, one where care management is far less of a priority than marketing to brokers, benefits managers, and folks with jobs.  Broad networks and generous benefit plans are absolute necessities, as moms – who are very influential in insurer selection – want their ob/gyns and pediatricians in-network.

Brian Klepper and Fred Goldstein said it very well when discussing Molina and Centene, two plans that are much like New York’s Fidelis:

[Plans with deep experience in managed Medicaid] have of necessity learned to manage risk more effectively than commercial plans. Medicaid plans receive a monthly rate for each enrollee, and then manage within that set budget. To accomplish this, they have become adept at understanding their populations’ clinical and financial risks, and putting medical management approaches into place that can mitigate those risks. In other words, when a plan with Medicaid experience moves into a fully insured (at-risk) commercial plan space, it is more likely to succeed.

The commercial plans, not so much. Most commercial plans have not been required to adhere to rigorous risk management disciplines and, if anything, their incentives are different. They can go light on large case management, for instance, allowing the costs of high-intensity patients to balloon, knowing that when costs exceed premium, they can recoup those costs through subsequent premium increases.

What does this mean for you?

Health insurance is changing, and plans that understand risk management are going to beat the pants off those who don’t – in the Exchanges.