Medicaid and Workers’ Comp

21 states have not (yet) chosen to expand Medicaid; one can (and I have) argued that this is nonsensical at best, as

  • the Feds are paying for ALL of the additional cost for another two plus years, and
  • the vast majority of the cost (90% +) thereafter; and
  • the savings to the states for uncompensated care would be anywhere from $4 to $9 billion;
  • health care providers in non-expansion states are in dire straits due in large part to the “non-expansion.”

My sense is the non-expansion states will eventually decide to accept the Medicaid deal as the financial cost to hospitals and health systems will force them to. And, the Feds will work with the states to create different models that will be ideologically palatable, providing cover to those politicians obsessed with such things.

But until – and unless – Texas, Florida, Virginia, Wisconsin and the rest expand Medicaid, there’s a raft of problems created by their principled if (in my view) wrong-headed position.

Mostly, these problems are due to two things.  Over the short term, the cost pressure placed on facilities and health systems and the fallout therefrom will lead to increased pressure to cost shift – and yep, work comp is a pretty soft target.

And long term, the 6.4 million adults who remain uninsured will be less healthy, have more incentive to get care under workers’ comp, and heal more slowly with more complications if they do get injured on the job.

What does this mean for you?

For work comp payers, nothing good.

Florida’s conundrum

Florida’s legislature can’t decide if it does or doesn’t want federal money.  That’s the policy question; it’s discussed in some detail below.

A quicker explanation by way of metaphor was conveniently provided by a native Floridian; Austin Hatfield adopted a pet water moccasin, one of the most aggressive and poisonous snakes in this Hemisphere.  He liked it.  Then it bit him in the face when he kissed it.  Now he’s in critical condition.

hatfield

Kinda like what’s about to happen to Florida’s health care system.

While Florida’s Senate wants to expand Medicaid, the state house has said NO to Medicaid expansion under PPACA, but wants the billion dollars of federal money that has been supporting struggling hospitals; these dollars will disappear at the end of June.

Governor Rick Scott (former CEO of HCA, which paid a $1.7 billion fine for Medicare and Medicaid fraud, and involved in at least one more company alleged to have committed Medicare fraud) is outraged that Florida can’t get the money that no longer exists, even if the Sunshine State doesn’t want to expand Medicare.

The reason the hospital dollars were cut is simple; by expanding ALL coverage, hospitals would have far fewer uninsured patients and thus wouldn’t need federal taxpayer dollars to cover their costs.

What Florida’s House and Governor are saying is they don’t want Medicaid, but do want the “lost” dollars replaced.

I don’t get it.

Remember the Feds are paying ALL of the Medicaid expansion costs thru 2017, then their support ratchets down gradually until they are paying 90% of the costs.

Ninety percent…

For some reason that doesn’t make sense to the House; but they DO want the billion plus dollars for hospitals, dollars that no other state gets. Of course, the legislators didn’t THINK about this when they adopted their principled stand against federal largesse, but quickly changed their tune – somewhat – when hospitals screamed about the financial disaster the House’ position would bring upon them.

To their credit, the Florida House and Senate seem to have figured out they have adopted a water moccasin, and it is about to bite them in the face.  Now, they want the Feds to defang their beloved friend before it kills them.

I was at a Florida Chamber meeting a couple years back when Scott and an Orlando hospital system CEO talked about the need to expand Medicaid; At that point the unindicted former CEO of the company convicted of the biggest Medicare/aid fraud in history was kinda sorta in favor of Medicaid expansion.  The business people in the room got it; the ideologues didn’t.

Hidden in this mess is the damage caused to the 800,000 or so lower-income Floridians who won’t get coverage. [sub req].  Orlando Sentinel columnist Scott Maxwell said it very well:

…the feds are basically saying: We’re giving you the money to provide citizens cheaper, preventive health care. If you won’t give them that, we’re not going to clean up your mess by spending tax dollars on costlier ER care.

This is what fiscal conservatives should want.

It’s like offering to pay for your daughter’s insurance plan and having her say: No thanks, Dad. I’d rather you just pay for my ER bills instead.

You’d tell her: No way. Well, Rick Scott is that defiant daughter, suing federal taxpayers to keep welfare-for-hospital-ER’s going.

What does this mean for you?

Either you want federal taxpayers to subsidize your health care system, or you don’t.

And if you don’t, you can’t complain when your head blows up to the size of a prize watermelon.

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

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.

Where are the other insurers?

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.

Medicare doc fix – here we (don’t) go again…

The annual caterwauling about Medicare physician reimbursement has begun.

For those who just want the takeaway – there very likely won’t be any substantive, long-term “fix”, but rather another temporary – and very slight – increase in reimbursement.

The latest version of Congress is arguing back and forth about what to do to address the Sustainable Growth Rate or SGR, with the GOP sharply divided and more liberal Dems objecting to any fix that will require seniors to pay more for their Medicare.

What’s going to prevent a longer-term fix is simple; by not doing a long-term fix and thereby kicking the can down the road, Congress doesn’t have to recognize – and deal with – a big addition to the federal deficit.

Well, that and the normal inability of Congress to do anything at all.

Lest you think this is new, it has been going on for over a decade; here’s more detail – just in case you want to be the center of attention at your next cocktail party…

The Medicare SGR formula/process was first implemented in 2000, intended to establish an annual budget for Medicare’s physician expenses and thereby better control what had been steadily increasing costs. Each year, if the total amount spent on physician care by Medicare exceeded a cap, the reimbursement rate per procedure for the following year would be adjusted downward.

And for thirteen of the last fourteen years, reimbursement – according to SGR – should have been cut, but each year (except 2002) it was actually increased, albeit marginally. Because Congress didn’t fix the problem, each year the difference between what Medicare was supposed to spend on docs and what Medicare actually spent was added to an off-the-books deficit.

The result is a deficit that is now about 210 billion dollars, a deficit that we’re carrying on our books.  Don’t blame CMS, blame Congress.

The reason the deficit is still there, and still growing, is simple – fixing SGR permanently will require acknowledging the deficit and thereby adding it to the total debt.

As we discussed a while back, not fixing SGR may well be worse, as it is a fatally flawed cost containment “approach”. The SGR attempts to use price to control cost. The complete failure of the SGR approach to control cost is patently obvious as utilization continues to grow at rapid rates. This was a problem seven years ago, and its done nothing but get worse. Not only does the SGR approach contribute to cost growth, it also ‘values’ procedures – doing stuff to patients – more than primary care.

It’s not quite that straight forward, but pretty close. For those who want way more detail, read this

What does this mean for you? 

For readers in the work comp world, any change to Medicare’s fee schedule will eventually affect many state work comp fee schedules – but this is by no means straightforward.

What happened while we were at WCRI wrap-up

Just digging out after WCRI; between built-up work and a desire to give you, dear reader, a break after filling your inbox late last week, MCM has been on a brief holiday.

We’re back!

While we were buried in all things work comp-related, the real world kept a-spinning. First up, what’s been going on with health reform, the costs thereof, and the impact on budgets.

A lot.  The most recent federal budget projections show a decline of around $300 billion in future costs for health insurance.

That’s huge.  Gigantic. Monumental.  Unprecedented.

In comparison, cutting NASA completely – $77 billion.  Ending Amtrak subsidies – $14 billion. Eliminating the deduction for all charitable giving? $214 billion.

There are two ways the federal government “pays” for health insurance – subsidies for folks insured via their employer; the portion of their “pay” isn’t taxed.  Second, the feds subsidize premiums for individuals buying insurance via the Exchanges on a sliding scale based to income. A more detailed discussion of the changes and impact thereof is here.

Note this does NOT include Medicare – although those projections are decreasing as well.

The latest budget estimate has Medicare costs over ten years coming in about $700 billion below 2010 projections.  

One of the reasons Medicare cost projections are declining – Between January 2012 and December 2013 there have been 150,000 fewer readmissions among Medicare patients—an 8% decline.” – hat tip to the Economist, and don’t forget to credit PPACA!

As if that’s gonna happen…

From a couple weeks back  is this news that California’s docs aren’t likely to be overwhelmed with patients due to ACA.  This from California Healthline:

  • 13.04 additional emergency department visits per week by newly insured individuals; and
  • 1.16 additional primary care visits per week by newly insured individuals.

 Back to work comp…

Good piece by PRIUM CEO Michael Gavin in WorkCompWire on work comp drug formularies; my only suggested add would be to make sure formularies aren’t rigid.  Need to allow payers, and their PBMs, to okay and reject meds based on the claimant’s diagnosis, medical treatment, other drug regimen, and other clinical factors.

Medata has promoted long-time COO Tom Herndon to president.  Tom’s not only a black belt in all things bill review and IT, he’s also a good guy, knows ops inside and out, and casts a mean dry fly.  Congratulations to Tom and his colleagues at Medata.

Enjoy hump day!

Indiana expands Medicaid

A remarkable experiment is about to begin in Indiana; the state will expand Medicaid, but recipients with incomes above the poverty line will have to contribute to the cost and pay something towards doctor and hospital visits.

I don’t buy the argument that this is a step onto the proverbial slippery slope, that next we know Medicaid beneficiaries will be forced to pay higher and higher deductibles and copays.

That’s as specious as the argument that states shouldn’t expand Medicaid because some day in the non-defined future the feds will pull the funding.

Nope, it is high time beneficiaries had some skin in the game.  Heck, I’d even go for giving the lower-income recipients a cash account they can use for similar deductibles and copays, with any balance at the end of the year going into a fund for education, child care, food, whatever.

Indiana follows in the footsteps of Iowa; several other states are looking into a similar program.  This is exactly what we need, states trying different things, seeing what works and what doesn’t.  We’ve learned a lot from Massachusetts – the state’s Connector plan has produced remarkably positive results.

Here’s hoping IN, IA and the other experimenting states learn a lot, and learn it quickly.

 

 

MSAs – another perspective

In follow up to my posts on MSAs, I had the chance to interview Peter Foley of the American Insurance Association yesterday. Peter is quite knowledgeable about MSAs, the Medicare Secondary Payer Act, CMS’ perspectives, and how this affects payers. He’d be the first to say he is not an “expert”, but in my view he is certainly one of them.

Here is our conversation – and I hope I got it right.

What payers are affected by MSP Act?

All payers – group, Self-Insured (SI) and non group health plans, workers comp auto general liability etc. – including claims where no medicals have been or can be paid. (E.g a claim on an accountant’s E&O insurance)

Does any payer have to file an MSA w CMS?

No. It is not statutorily required and never has been, it has been recommended but not required.

Why do payers send MSAs to CMS?

The payer thinking is in some way they can use a submission as a defense against Medicare coming back to them and say the payer did not take Medicare’s interest into account when settling the claim. While it does not definitively protect the payer from future action but does show that at that point in time they made an effort to protect Medicare’s interest.

If a company stops sending in MSAs, they may be concerned that CMS would think there’s a problem and perhaps subject them to more scrutiny.

Is there a “safe harbor” in regards to MSAs?

There is no safe harbor.

After an MSA is established and set aside does the payer have any protection from future action from CMS?

No. One can’t prevent the federal government from asserting its perceived rights if it so chooses.

It appears the backlog has come down, but other sources indicate it has not. What do you see?

Medicare doesn’t make available what is submitted or processing times they simply capture how many MSAs they have approved for how much in what time frame. The only data available is what individual companies report on their own.

There is no available comprehensive data on turnaround time – MSA companies have repeatedly asked CMS to bring more transparency to the process; my interpretation of transparency is data on the number of submissions, timeframes, and financial data. The problem that CMS has is they only capture numbers of MSAs approved, the date they are approved, and value of those set asides. We and they don’t know when or if the settlements have been finalized or indeed if the claim was settled at all. CMS does not report submission and approval dates, just approval date – what has been made available is just that.

There is no consistent reporting from CMS on those data points, much of the information available required a specific request to CMS, or may have come from congressional testimony.

The information currently available is limited and sporadic and not generalizable to the entire MSA population.

MCM – There’s some hope that legislation currently pending in Congress will provide some relief. There are two bills, a House and Senate version, which appear to be pretty similar.

The bill will be scored (to assess its impact on the budget and deficit) while the Senate and House are out for election and will score favorably. The hope is it will be attached to a bill and considered in the lame duck session. The American Bar Association endorsed it yesterday joining a broad coalition that includes the plaintiff bar, self-insured employers, AIA, and the Property Casualty Insurance Ass’n. More on this from Jennifer Jordan here.

Key elements of the bill:

  • Requires federal govt to adhere to state WC laws
  • Codifies current procedures which otherwise could be changed at any time without prior notification.
  • Allows for parties to submit funds directly to CMS if mutually agreed upon
  • Also includes a separate appeals process on the MSA determination.

Peter – “We are asking for transparency and clarity, and insurers, plaintiffs bar, and self insured employers are all supporting this bill.”

Thanks to Peter for his time, and to AIA for allowing a pseudo-journalist to interview one of their staff for the record.

From my admittedly uneducated perspective, CMS’s position, stance, and requirements border on the ludicrous.

Insurers and self-insured entities will be required to send data on essentially ALL claims to CMS, where the data will likely sit for eons, hopefully untouched unless some hacker gets in and steals all the personal health information, SSNs, and other data, an event that is only possible because CMS requires payers to send it to CMS.

What does this mean to you?

While I applaud the thinking behind the Medicare Secondary Payer Act (taxpayers shouldn’t have to pay for services that an insurer or employer should be liable for), the powers that be at CMS have taken that thinking and turned it into an expensive, ridiculously burdensome, wholly-unnecessary, potentially dangerous and likely pointless exercise.

 

Medicare Set-Asides and Workers’ Comp

I’m gingerly stepping into a topic I’ve mostly avoided to date – MSAs.  I avoid it because it is mind-numbingly complex, seemingly illogical in application, and served by often-contentious vendors.

NCCI’s Barry Lipton et al just released an excellent synopsis of the MSA situation (opens .pdf) and summary of where things are today. The report focuses on the feds’ review process, wherein they examine payers’ proposed MSAs.  Based on an analysis of data submitted by Gould and Lamb and NCCI’s Medical Call database, a few of the Research Brief’s highlights include:

  • most MSAs are for Medicare-eligible claimants, with 45% over 60
  • MSAs make up 40% of the average total proposed settlement
  • Drugs make up fully half of the MSA amount
  • CMS’ processing time for MSAs has declined of late to a median of 41 days
  • The gap between submitted and approved MSAs has shruck dramatically.
  • 29% of settlements are for amounts over $200,000, while 45% of the MSA amounts are less than $25,000.
  • Most MSA settlements are paid as a lump sum.
  • More than 90% of MSAs completed in December 2012 were approved as submitted.  That came after CMS changed approval vendors in July 2012.

The report is stuffed full of great information and, for those of us who are relatively ignorant of MSAs yet encounter them on occasion, well worth a read.

What does this mean for you?

If you don’t have the time right now, put it in your research file so you’ll have it when you need it.  And you will need it.

More states will expand Medicaid

Even those dominated by Republicans.

To understand why, here’s a quote from a conservative GOP legislator from Michigan:

State Rep. Al Pscholka: “When people say Medicaid expansion, I think to a lot of us that meant bigger government, and it meant expanding a program that doesn’t work very well…When I understood how it worked, and what we had done in Michigan in the late ’90s, that was actually pretty smart, we’ve privatized a lot of that already, which I think a lot of folks didn’t understand.”

But it’s more than that.

Hospitals and health care systems will be in dire shape without expansion.  Already the feds are reducing the amount of funds they are transferring to hospitals that provide a lot of uncompensated care and Medicaid services. The federal DISH (disproportionate share) allotments are established, HHS has a formula in place for rolling out those changes but that formula doesn’t account for states that don’t decide to use expansion. States that don’t expand Medicaid will see a reduction in these payments, and no increase in Medicaid, leaving the hospitals in a financial bind.

Without Medicaid expansion, hospitals and health systems will find it increasingly costly to care for the uninsured  – and they will pass that cost along to privately insured patients and workers’ comp payers.  This already happens, and is one of the arguments in favor of universal coverage.

More significantly, the poor uninsured with chronic conditions (diabetes, asthma, hypertension, depression) will become increasingly expensive to care for.   The lack of primary care will mean when they do get care, it will be much more expensive than if they’d been able to effectively manage their health and thus avoid hospitalization.

Unhealthy people find it harder to get and keep a job, don’t do well in school, and thus are less able to contribute meaningfully to society than those of us with insurance.

That’s not to say that Medicaid shouldn’t be modified; for example, some sort of nominal copay or coinsurance so services aren’t just a freebie makes sense to me. That’s happening in some states.

Finally, there’s a bit of history here; when Medicaid was originally introduced, many states opted out.  Within a few years, each one had signed up.

What does this mean for you>

History will repeat itself, and that’s good news indeed.

Thanks to Kaiser Health News for the heads’ up.