If Medicaid isn’t your business, you may be tempted to ignore the implications of the current kerfuffle over whether or not states should accept free money to expand Medicaid. That would be a mistake.
As all-powerful and influential as Medicare has become, the Medicaid expansion will make the joint state-federal program THE payer to reckon with, setting reimbursement, defining “care”, restructuring provider contracts and relationships, and dramatically affecting provider billing patterns and practices.
With the Medicaid expansion now up to invidiual states, we’re hearing some say “no way” and others say “Hell yes”. At first, this split mirrored political lines, but now it’s getting harder to tell which side of the argument a governor is on merely by the color of their political stripes. The indecision on the part of governors who would seem to be natural enemies of federal largesse is telling.
In every state capitol where the decision is uncertain, there’s fierce lobbying on the part of providers attempting to convince governors to take the money and expand Medicaid. Make no mistake – providers have a huge stake in this decision, and are pulling out all the stops. Perhaps the most powerful influence in this is going to come from states’ hospitals and provider communities – but mostly the hospitals. These are the ones most affected by the increase in uninsured’s, and they will be the ones that benefit the most – financially – from a Medicaid expansion.
States such as Florida and Texas are particularly important. 29% of the Sunshine state’s working-age population doesn’t have health insurance; bad as that is, it is better than Texas, where fully a third is uninsured. And these data are from 2010; it is highly likely those percentages have risen as a result of the recession.
Both Governors Scott and Perry say they will turn down the federal money (covers 100% of expansion costs initially, declining to 90% eventually), hospitals and other providers – currently struggling to meet the needs of very large populations with zero ability to pay for care – are going to be in ever worsening shape.
(Governors of Mississippi (27% uninsured), Alabama (22%), and Louisiana (25%) have also said they won’t expand Medicaid.)
They are going to have to make up the revenue loss from somewhere, and that “somewhere” is going to be from privately-insured patients. That will lead to health insurance costs increasing much faster in “non-expansion” states than in the rest of the country, which will lead to employers dropping out of the system, which will lead to more uninsured, which will lead to more uncompensated care…
You get the picture.
There’s already huge cost-shifting in our health care system, in effect a hidden tax on private payers, workers comp, and auto insurance coverage, a tax levied by providers desperate to cover the costs of the uninsured.
What does this mean for you?
If governors stand on principle and refuse the expansion, the result will be more cost-shifting, really unhappy providers, and higher insurance costs for everyone.
Category Archives: Managed Care – Auto
Physician dispensing and auto insurance
Over the last couple weeks I’ve fielded several calls from automobile insurance companies seeking information about the big drug bills they’ve been getting for physician dispensed drugs.
This is more of an issue in states with high dollar coverage for medical costs, but there’s increasing evidence that physician dispensing is hitting more and more auto claimants in many different jurisdictions.
There’s several reasons these bad actors are pushing into auto.
1. some states are controlling the pricing of repackaged/physician dispensed medications for workers comp, so docs – and their suppliers – are looking for greener pastures.
2. many auto insurers aren’t yet aware of the practice, so they’re just paying the bills without much scrutiny
3. it’s profitable – really, really profitable.
There’s a downside for consumers as well as their insurers. In addition to the added health risks inherent in physician-dispensed medications, these inflated charges also cause insureds to reach their policy limits much faster, thereby running out of insurance coverage for their medical costs.
This is happening in Hawai’i, Michigan, Georgia, Florida, and likely many other states.
So, what’s an auto insurer to do?
I suggest you start by figuring out the size of the problem. Find out the TINs these entities are billing under, total up their charges, scripts, and your payments, and see how bad it is.
If it’s not much, that’s great – for now. That won’t last.
Auto insurance and hospital cost shifting – so THAT’s why my premiums are so high!
Cost-shifting – the practice of seeking higher reimbursement from some payers and patients to cover shortfalls due to low or no reimbursement from others – is rampant in the US health care system. Having worked with providers, health care systems, and payers, I can attest to the pervasive nature of the beast – it happens all the time, everywhere.
More evidence came across my virtual desk yesterday in the form of a study by the Insurance Research Council entitled “Hospital Cost Shifting and Auto Injury Insurance Claims” [available for purchase thru IRC]. The study compared auto injury hospital costs in Maryland to those in 38 other states that don’t have the all-payer hospital rates mandated in Maryland. Thus, whether a patient is covered by a health plan or auto insurer in MD doesn’t matter – all are reimbursed at the same level.
Here are a few of the highlights.
- the “percentage of a state’s population without health insurance was found to be the strongest predictor of average hospital costs for auto injury claimants”
- “another important predictor of average hospital costs for auto injury claimants is the percentage of a state’s population covered by Medicaid”
- IRC estimated of the impact of cost shifting to auto insurers totaled $1.2 billion in 2007.
It is clear that cost shifting is rampant, particularly to property and casualty payers. Work comp payers are particularly vulnerable as their network arrangements are under growing pressure from hospitals seeking higher reimbursement.
What does this mean for you?
Your hospital costs are headed up. What are you going to do about it?
predictive modeling
And
artificial intelligence
How much are we spending on orthopedic implants?
According to market research firm Supplier Relations LLC, the total US surgical appliance and device industry’s revenue for the year 2007 was “approximately $30.4 billion USD, with an estimated gross profit of 46.15%”.
Note that this total includes more than just implantable devices – sutures, surgical dressings, and prosthetics and other stuff are also counted towards the totals. Without buying the report for $600, you won’t know exactly how much is spent on which categories. But research indicates the orthopedic and surgical device share of the total has been quite significant – well above 50%.
The growth of the implant market has been marred by allegations of illegal kickbacks, sleazy business deals between manufacturers and physicians, and hugely inflated prices to payers.
That hasn’t slowed the market.
Another report (more specific to orthopedics) predicts total implant demand will rise “9.8 percent annually to $23 billion in 2012. The four major product segments — reconstructive joint replacements, spinal implants, orthobiologics and trauma implants — will all provide strong growth opportunities.”
But the big growth will come from spine. According to an excerpt from the report,
“Spinal implants will show strong growth due to advances in product technologies and related surgical techniques, coupled with an increasing prevalence of chronic back conditions. Fixation devices and artificial discs used in spinal fusion and motion preservation surgeries, especially procedures for the repair of vertebrae and replacement of degenerative discs, will account for the largest share of the market and best growth opportunities.”[emphasis added]
What does this mean for you?
Higher costs with uncertain results.
ASCs — good, bad, or just ugly?
A recent court ruling in New Jersey could shut down Ambulatory Surgical Centers across the state.
The judge determined that physician-owned ASCs (almost all ASCs are at least partly owned by physicians) violate a state law banning physician self-referral. Not surprisingly, the 200 ASCs in the Garden State (there are about 5000 nationwide) are pulling out the stops to overturn a ruling that, if it stands, would effectively shut down most ASCs in NJ.
Medicare sneezes
The adage goes something like – when the US sneezes, the world catches a cold, signifying just how much influence this country has on the rest of the world.
That’s analogous to Medicare’s impact on the health care sector. And Medicare is about to change the way it pays hospitals, a change that will have a dramatic effect on every private payer from HMO to individual carrier to workers comp insurer to self-insured employer.
Should we just let Darwin decide?
If only it were that easy. I’m talking about the legislation proposed in Michigan to allow motorcyclists to ride without helmets. If they are dumb enough to do that, fine. Except we end up paying their health care bills, which is most definitely not fine.
You need a P&T Committee
Pharmacy and Therapeutics committees have been around for ages in the provider community - they are the “link between medicine and pharmacy”. In the managed care world, P&T committees take on a somewhat different role, establishing formularies, reviewing medical device reimbursement (at some health plans), contributing to coverage determinations and benefit design.
Mostly, they provide the health plan or insurer with an expert opinion on most things pharmacy-related. Without a P&T Committee, these decisions often are left to a medical director, or worse, claims adjuster (in the P&C world), individuals who are not equiped to make educated decisions about pharmaceuticals.
Concentra’s IME business – what happened?
No, I’m not obsessed. At least not with the Concentra-FirstHealth merger. But information keeps popping up about various aspects of the deal that a few readers actually find very interesting.
The latest concerns the IME business.
Developments in the WC PBM world
Cypress Care, one of the leading Workers Comp Pharmacy Benefit Management firms, has just announced the company has received a “strategic investment” from Dallas-based Brazos Private Equity Partners. The company has also added David George (former President of AdvancePCS) to the management staff; George will be taking over the CEO spot from co-founder Hank Datelle and has also made an investment in Cypress Care.
The press release contains the typical comments about all parties’ delight at the deal and enthusiasm for the future. As one who has been directly involved, I can attest that in this case, the PR has it right. David George is a highly experienced and very well respected managed care pro with stints at United Healthcare and on the Board of Concentra, Inc. Bart Hester, a former colleague of George’s at AdvancePCS will be joining Cypress as EVP Account Management and Strategy; the rest of the Cypress senior management team including co-founder Lisa Datelle and President Marc Datelle are all staying with the company.
Note – Cypress Care is a Health Strategy Associates consulting client an dsponsors our annual Survey of Prescription Drug Management in Workers Compensation.