Category: Manage Care – Group Health

Jan
2

We haven’t seen anything yet.

Posted by Joe Paduda on Tuesday, January 2nd, 2018 | Comments

Healthcare is changing really quickly and quite dramatically. Stuff we never would have thought of is happening every day.

  • A huge PBM is buying one of the largest health insurers in the world.
  • Provider consolidation is rapidly accelerating.
  • Many insurers are vertically integrating; they own thousands of providers, care-delivery locations, and are racing to build even more infrastructure.
  • Private insurers are pushing hard and fast into the Medicaid and Medicare markets.
  • Pharma is making gazillions in profits and driving medical costs higher: many employers are beginning to rebel.
  • The world is finally taking opioids seriously, while many fraudulent and sleazy people and companies are looking to profit from the crisis.
  • Medicare and Medicaid are facing major changes; the Trump Tax Bill is just the beginning of efforts to cut benefits and reimbursement.

The healthcare infrastructure of 2021 will look a lot different than it does today.

A couple things to think about.

  1.  While scale is critically important, the bigger the organization, the harder it is to anticipate and adapt to change. Huge health insurers and healthcare delivery systems must force their people to take risks and innovate – but most of these institutions are led by executives with little tolerance for failure. 
  2. The fee-for-service system is deeply entrenched in our entire industry. Provider practice patterns, sales rep incentive programs, provider marketing strategies, employer healthplan purchasing priorities, hospital financial systems, billing and reimbursement infrastructure, insurer business models all are fundamentally based on fee-for-service. Improving outcomes and reducing costs cannot happen without disrupting the very roots of our healthcare “system”.
  3. Our healthcare system is vastly inefficient – and that is precisely why tens of millions of Americans live off that system. Disrupting that system will cost hundreds of thousands of jobs.

What does this mean for you?

The winners will be those that understand where things are going.

There are two basic strategic options: those with a long-term view must become part of the disruption or short-termers will have to carve out a niche that’s sustainable over the near term.

This is the third option, which most will inadvertently pursue.  Business-as-usual folks will wake up one morning and find out they’re toast.

Jul
28

What will Aetna do with Coventry Workers’ Comp?

Posted by Joe Paduda on Friday, July 28th, 2017 | Comments

That’s a question that’s been around for years, but one that’s being asked more and more these days.

One clue could be – but probably isn’t – Aetna CEO Mark Bertolini’s evolving view of the purpose of health insurance and healthplans.

Bertolini’s personal brushes with mortality (a horrific skiing accident and his son’s cancer diagnosis) have fundamentally changed how he sees the role of health insurance. Unlike other insurance executives, he is pushing Aetna to deliver health defined as “a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity,”

That’s what we do in workers’ comp, admittedly not all that well some times, but that’s our goal – prevent accidents and illnesses, get people healthy and functional if they do get hurt, and keep them that way.

I agree with Bertolini’s perspective.

That being the case, CWCS seems like a valuable asset indeed with exactly the right people, technology, business models, and intellectual property Bertolini needs to transform Aetna.

The question is, does Bertolini understand what he has, or will Aetna continue to treat CWCS as a purely financial asset?…a tiny part of a huge healthcare company valued not for its potential impact on the company as a whole, but for the dollars it delivers to the bottom line.

Rumors persist that CWCS is on the block, rumors without solid evidence behind them. As the work comp services industry continues to consolidate, CWCS’ name will continue to come up in conversations whenever investors are contemplating the next big deal. While it is indeed possible Aetna will entertain offers for CWCS, the division’s value (as a financial asset) has likely decreased over the past few years.  CWCS’ core asset, it’s provider network, is not the dominant force it once was, the bill review business has dropped off, and under-investment throughout the division has hampered innovation.

What does this mean for you?

Sometimes exactly what you need is right in front of you.

Jan
11

Monday catch up

Posted by Joe Paduda on Monday, January 11th, 2016 | Comments

Too much work and travel last week – actually missed posting three days in a row – my apologies!

Here’s what happened.

In the never-ending saga of California work comp, a recent appeals court ruling found a UR doctor potentially liable for problems associated with terminating a patient’s prescription drugs.  The case, King v CompPartners, appears to revolve around the court’s assertion that the UR physician had a patient-doctor relationship with the patient, and thus had a “duty of care”.

If King v CompPartners stands, there could be major implications for California work comp, including significant changes to the entire UR process and landscape. (CompPartners is a subsidiary of MCMC, an HSA consulting client)

Mitchell Pharmacy Solutions acquired PBM Jordan Reses. Mitchell also announced they will re-brand the company’s PBM services as ScriptAdviser. Jordan Reses’ work comp PBM serves a diverse group of employers including school districts, managed care firms, the State of Kansas; it also provides services for the auto PIP program in NJ for Liberty Mutual and other auto insurers. (Mitchell is a member of CompPharma, a PBM consortium; I am president of CompPharma)

After a multi-year hiatus, friend and colleague Bob Wilson finally posted a top ten predictions for work comp .  Despite his antediluvian political views, Bob is the most entertaining of the work comp bloggers – myself included.

Final enrollment figures for the public Exchanges are out – Timothy Jost of Health Affairs reports a total of 11.3 million enrollees, 3 million of which were new for 2016.  While 35% are under the age of 35, we do NOT know what percentage of this group were dependents.  That’s critical, as enrollment among young heads-of-household is key to determine the extent of adverse selectio n.

Tom Barrett of BBG posted on a echocardiogram test a client company paid for; same test, prescribing doc, insurer – two different test providers – 525% difference in cost.

Happy Monday!

Dec
4

Provider reimbursement changes – painful and necessary

Posted by Joe Paduda on Friday, December 4th, 2015 | Comments

Full or partial capitation, with or without risk withholds.  Per-episode payments or cost caps.  Fee-for-service with or without pay-for-performance.  Ambulatory care episodic payments.  Discount below billed charges.  Packaged prices. Value-based reimbursement.

The list of reimbursement types and variations is long and growing.  As providers and payers struggle to find the right mix of risk and reward, they are tinkering with long-established reimbursement methodologies (think capitation) and coming up with entirely new concepts (value-based pricing).

If there’s a universal, it is fee-for-service is falling out of favor, at least for the big payers – governmental and private.  It encourages overuse and over-treatment.  But it does have benefits.  FFS motivates providers to maximize their productivity, a goal that every health care provider organization is striving for.

Each variation has its plusses and minuses, but there are several common threads.

First, the providers affected need to buy in.  If they think they are being gamed, or worse, screwed, they will instantly figure out how to return the favor.  There’s a lot of skepticism among providers about these new arrangements, much of it well-founded.  Problems with capitation and risk withholds almost killed the entire managed care movement back in the nineties and providers remember those days all too well.

Which leads directly to the next have-to.

Transparency is key.  Price setting, risk-reward formulae, the bases on which capitation is calculated all have to be clear and readily understood.  That way when questions arise, all involved have “equal access” to the methodology and discussions can focus on material issues.

Third, it’s about outcomes and results, not volumes and procedures.  We are seeing a wrenching shift away from paying providers to do stuff to patients, and towards paying providers to maintain and improve health status.  This is going to be ugly, difficult, and painful for all involved.  There will be winners and losers, and some folks are going to be hurt.

What health care is going thru is not far from that experienced by manufacturing and heavy industry over the last forty years.

And, like manufacturing and heavy industry, the US health care “system” has to change if it is to survive.  We cannot continue with fee for service, rewarding providers for doing more and more expensive stuff to fewer and fewer insureds.  And allowing insurers and health plans to make money by covering only those people unlikely to have a claim.

If health care could be offshored, it would be.  As it (mostly) can’t be, we have to fix it right here.

That doesn’t mean it’s going to be any less wrenching.

What does this mean for you?

Huge changes are required.  Avoiding them is not an option.

Jul
24

Consolidation in the real world – implications for workers’ comp

Posted by Joe Paduda on Friday, July 24th, 2015 | Comments

There’s been a lot of mergers and acquisitions in the work comp arena, and certainly more to come.

But the activity in our little corner is minor indeed compared to what’s happening in the “real world” – group health, Medicaid, and Medicare. Make no mistake, these transactions will affect work comp.

You’ve probably heard of some of the activity among payers;

When these deals are completed, there will be three giant health insurers; United, Anthem, and Aetna.  All will have major operations in the Health Exchanges, Medicaid, Medicare, and employer-sponsored health insurance. Anthem, which owns many Blues plans, will have more local dominance in specific markets while Aetna and UHG are bigger players in the employer marketplace.

What you may not be tracking is the provider consolidation – which is equally frantic.  Just a few examples from the last few months:

The ongoing seesaw of market power is playing out nationally and locally – but the local scene is much more relevant for workers comp payers.  Local health systems negotiate with these big payers, with both sides coming to the table from positions of strength.  If Aetna wants coverage in southeastern PA, UPenn-Lancaster must be in their network.  For UHC to compete for employer and/or exchange business in New Jersey, they’ve got to have access to facilities and docs controlled by the two entities listed above.

The bruising battle over access, rates, and exclusivity is what’s driving the move to narrow networks. Health plans have to deliver more patients to specific health systems or those systems will not negotiate on price.

The best way to ensure increased patient volume is to make a deal exclusive – and we will see more and more narrowing of networks as competition heats up among the big three health insurers.

What does this mean for workers comp?

Work comp is incidental to Medicaid/Medicare/group/Exchange business. Health systems are going to get squeezed in these deals. Health plan execs will look to several reimbursement sources to make up margins; out-of-network care being most important but workers comp will be considered quite attractive as well. Comp is quite profitable, particularly as it drives orthopedic and ancillary revenue, services which have traditionally high margins for hospitals.

The other consideration is the care that is delivered via a health system or facility is billed under a hospital fee schedule. And, there can be a facility charge in addition to the physician fee. 

The net is work comp will be seen as a great source of very profitable patients.

Jun
2

Hospital prices are up. Way up.

Posted by Joe Paduda on Tuesday, June 2nd, 2015 | Comments

And this means higher costs for those getting treatment outside of their core networks, and especially for work comp payers.

While Medicare reimbursement has remained pretty level, hospitals have been busy raising their list prices by more than 10 percent over the last couple of years. This doesn’t really affect most patients as their rates are negotiated by private insurers or set by CMS for Medicare recipients (or Medicaid on a state-specific basis).

Examples of procedures with the highest increases are:

  • Back and neck procedures except fusions – 22.5%
  • Medical backs – 17.5%
  • Most fractures – 17.3%

The impact is felt most directly by privately-insured patients seeking care outside of their network, as deductibles will almost certainly be much higher, as will copays and out-of-pocket limits.

For workers’ comp payers in states without DRG-or similarly-based fee schedules, the price increases are having even more of an impact. For example, employers in states such as Florida that base reimbursement on a percentage of charges are seeing significant jumps in the prices paid for facility-based care.

But that’s only part of the issue.  There’s a “multiplicative” effect as well.  With more and more physician practices bought out by health systems, and more and more docs working for those health systems, their services are increasingly billed as facility codes which tend to be higher and include costs that don’t show up on physician bills.

Medicare is doing an admirable job holding down costs while increasing its focus on quality.

That said, there are some pretty ugly side effects.

As facilities scramble to increase their quality ratings; staff is evaluated on “patient satisfaction” which is a pretty iffy metric. The understaffing of inner-city emergency rooms is gaining more attention, as well it should. These are just two of the unintended consequences of what are dramatic and often wrenching changes in the American health care system.

What does this mean for you?

Higher facility costs for comp payers means they will need to focus even more tightly on the amount paid, and not the network discount for facility care.

Apr
20

Which better controls spending – Private insurance or Medicare/Medicaid?

Posted by Joe Paduda on Monday, April 20th, 2015 | Comments

Before you read further, cast your vote…

Okay, a couple initial thoughts.

First, when comparing health care systems’ ability to control cost over multiple years, the best metric is the cost trend per member; this accounts for differences in demographics and membership growth.

Second, this only accounts for cost growth; not outcomes, patient or provider satisfaction, or efficiency.

That said, cost growth is the best metric to use when thinking about long term cost control, governmental budgets debt and deficits, and tax implications.

Drew Altman at the Kaiser Family Foundation has a simple graphic here that tracks cost growth over time.  The net – from 2007 to 2013, private insurance costs increased 29%, more than twice Medicare’s growth and five times higher than Medicaid.

(side note – the most recent data indicates Medicare has higher member satisfaction than private insurers…)

What does this mean for you?

If your goal is cost control, the answer is obvious.  However, personal and policy decisions are never simple.

Apr
9

Where are the other insurers?

Posted by Joe Paduda on Thursday, April 9th, 2015 | Comments

Noticeably absent from the Rx Drug Abuse Summit are non-work comp or Medicaid payers.  The third-party payer track is dominated by workers’ comp PBMs, payers, and researchers.  Sessions are well-attended, well-done, and worth while.

One wonders if private insurers selling group health or individual coverage don’t have problems with abuse of prescription drugs, or perhaps more precisely, don’t think it’s a problem for their business.

Well, it is.

Kudos to work comp for taking the lead on this critical issue.  Here’s hoping the rest of the world follows your lead; the chances for success are going to be much greater, and that success will come much faster, if private and public health insurers get involved.

May
29

Health care cost trends – a new tool

Posted by Joe Paduda on Thursday, May 29th, 2014 | Comments

With 18% of the economy driven by health care, cost inflation rates are vitally important. A just-released white paper reviews a new approach to measuring health cost inflation rates that will help employers, health plans, and workers comp payers assess overall trends, compare their experience to a benchmark, and forecast where things are headed.

The research, conducted by S&P/Dow Jones uses a series of indices to break out various cost areas.  The white paper is available for free here; while the statisticians amongst us (that does not include your faithful author) will find much to geek out over, this amateur’s take is:

  • the methodology is sound and carefully constructed;
  • it uses payment data from commercial health plans representing about 40% of all enrollees;
  • the data is from fee-for-service plans;
  • it is state- and in many cases area-specific; and
  • it provides details on medical, inpatient, outpatient, pharmacy (brand and generic).

Any input from real analysts on the indices would be more than welcome.

Here are a few of the key highlights from the initial edition, which includes data from Feb 2010 to April 2013.

  • Overall trend has been at or below 5 percent since August of 2010
  • Trend as of April 2013 was about 4.3 percent
  • Drug trend has been bouncing between 0 percent (!) and 2 percent since October 2010, with brand cost showing much less fluctuation while generic inflation was at 15 percent when last measured.
  • Hospital trend is consistently 3 to 4 points higher than professional services trend
  • There’s a LOT of interstate variation; for example as of February 2013, IL trend was around 1 percent while Texas’ was about 4.75 percent.

What does this mean for you?

All in all, a very valuable addition to the toolset available for regulators, businesses, and health plans.

Mar
3

Are Narrow Networks Bad or Are There Bad Narrow Networks?

Posted by Joe Paduda on Monday, March 3rd, 2014 | Comments

This is a guest post from Tom Barrett of BBG, a highly-regarded employee benefits consulting firm with deep expertise in flexible spending programs and medical management.

The title above plays off of an old adage wisely employed by a very sharp and highly respected colleague.

Here’s one take on narrow provider networks as seen from the trenches.  While it’s mostly informal and unscientific it is cast with an experienced eye when it comes to networks:

Many of the narrow networks offered prior to 2014 placed a more discerning emphasis on contracting with higher performing providers.  We think these networks at least leaned more toward striking the combination of higher quality and lower cost.

Some (“some” emphasized) of the new narrow networks, especially those created primarily for the exchanges, appear almost exclusively aimed at low cost.  In fact, during the run-up to 2014 some carriers indicated that on the exchanges especially, low cost would win. Period. They indicated that network contracts comprised of low fee schedules was the way to get there.  New networks were developed with the key goal of being on the “first page” (lowest cost, think airfare searches, rental cars, hotels, etc.,) when plans were shopped.

Describing how carriers built these new networks, one highly respected industry insider indicated that contracts containing these low fee-schedules were mailed out to the provider community.  Carriers then waited to see which of the providers would accept the low fee schedules and sign-up.  The new networks were then built accordingly.

Probably not surprisingly, some of these new narrow nets bear a striking resemblance to Medicaid networks and are comprised mainly of providers willing to accept Medicaid-like fee-schedules.  We think that it’s safe to say that the quality and outcome side of the equation did not rule the day in the development of these networks.

So what’s the “net” for all of us?

Caveat emptor.  We’re not suggesting it’s necessary or even wise to shy away from all the narrow nets.

Rather, make darn sure you do your homework before building or selecting a plan that’s associated with one.

We don’t expect this to go away and expect provider and network evaluation to continue to grow in importance for everyone going forward, most especially for individuals and small and mid-size businesses ……….