Do laws directing injured workers to providers matter?

It’s about the details.

Anyone reading the quick headline from WCRI’s just-published analysis of employer direction may well draw the conclusion that there’s no difference in costs between states where the employee or the employer has the ability to choose the treating physician – a conclusion that would superficially right – but actually wrong.

A summary of the study notes it addresses “injuries that occurred mostly between 2007 and 2010 across 25 states in which either employers or workers control the choice of provider. It excludes states where workers can choose a provider within their employers’ established network.”

(I’m not sure if we’d see a difference if more current claims data were used as after 1/1/2014, full implementation of ACA may have affected claim allocation to work comp or non-work comp insurance.)

Note the nuance here; WCRI is careful to describe the “direction” metric as one dividing states into those where employers or employees have the MOST control. The “line” between employer-choice and employee-choice is really not a line at all, but rather a shading of white to black, with many permutations of grey.

For example, there are states where the employer can direct the patient to a specific doctor, others where the patient can choose from a panel, and still others where direction is only allowed if the employer has some sort of state certification.

Then there’s the ability of the patient to “opt out” for a course of treatment (Illinois) or change physician to another one, perhaps inside the panel or maybe completely outside the employer panel – after some defined period of time.

And let us not forget that employers can suggest, soft-channel, encourage, provide transportation to, or otherwise get an injured worker to a particular doc or facility in almost every state without violating the law – they just can’t FORCE the employee to go to a doc or choose from a panel of docs.

Or, as authors David Neumark and Bogdan Savych state; “it is common for employees to choose the medical provider when policies give employers control over provider choice, and for employers to choose the provider when workers have the right to direct this choice.”

A key statement: states that give “workers the most control over the choice of provider were associated with higher medical and indemnity costs among the small share of the most expensive back-related injuries…” In other words, claims that are harder to diagnose and where there is less unanimity in agreement on preferred treatment tend to be more expensive in employee-choice states. 

What does this mean for you?

My main takeaway is as it’s been for years – employers should do their damndest to get their employees to high quality physicians who know and understand workers comp.  And then get out of their way.

WCRI – will value based care come to workers’ comp?

Value-based care is growing rapidly in the real world outside workers’ comp.  An excellent session asked if VBC will come to work comp.

Work comp care management today is really fee and utilization management using discounted networks and external vendors.

VBC involves bundled payments and is focused on the patient’s experience and results. Simply put, Value = Quality divided by Cost. That requires evidence based medicine, clinical practice guidelines, measuring outcomes, and monitoring and ensuring use of all these tools.

While VBC is complicated to implement in the real world outside work comp, the additional complexities inherent in work comp make it even more complex.  Dr Page noted there are few active VBC initiatives in workers’ comp.  While several states appear to support pilots, they are few, far between, and there doesn’t seem to be any results available just yet.

Dr Page sees objective measurement of outcomes – from the patient’s perspective – as key to the adoption of VBC in work comp.  She identified a sustained return to work as the desired end point.  While that’s true, as we learned yesterday – and undoubtedly you were well aware of this – there are any number of factors driving RTW that have nothing to do with medical care.  Employee-employer relations, psycho-social issues, the availability of employment are just three.  That being the case, I’m a little skeptical about the utility of RTW as the outcome point.

Other barriers to implementing VBC are

  • the need for accurate, consistent, and comprehensive data;
  • comfort and trust between the parties (alert!),
  • and the inherent complexity of designing payment formulae that consider outliers, risk adjustment, comorbidities, and specific state laws favoring or limiting opportunities to direct patients to use and stay with specific providers.

So, while VBC has a lot of promise, my sense is we aren’t going to see any widespread use for a very long time.

Dr David Deitz noted that one challenge is the lack of ability for or interest among orthopedic surgeons in sharing risk around RTW may be a significant obstacle to surgical bundles.

What does this mean for you?

VBC is an idea whose time has come in the real world, and likely won’t ever come in workers’ comp.

ACA Deathwatch: Hospitals, bankruptcy, and chicken-killing dogs

For those wondering why the GOP appears to be walking back its promise to “rip out Obamacare root and branch”, here’s why this is a whole lot harder than one might think.

And why the political realities make this picture far too real for the incoming Congress.

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The GOP has long prided itself as the party of fiscal responsibility; Speaker Ryan and Majority Leader McConnell have assailed ACA as unaffordable and a budget-breaker. However, among the myriad issues inherent in healthcare reform is this – repealing ACA would bankrupt Medicare’s hospital insurance fund next year.

(It would also alienate many who voted for Trump...but that’s another story.)

When ACA was passed, there were financial trade-offs put in place to address winners and loses in an attempt to make the law as budget neutral as possible.

Insurance companies, drug companies, device manufacturers, and hospitals paid higher taxes or got lower reimbursement because they were going to get a whole lot more business as millions more people got insurance. Specifically, hospitals’ Medicare reimbursement has been changed – in part to eliminate payment for medical mistakes and re-admissions, and in part by altering reimbursement mechanisms and formulas.

ACA also included a 0.9 percent payroll tax on the wealthy individuals earning more than $200k or couples making more than $250k.  This raised $63 billion, which went to fund Medicare’s Hospital Trust Fund.

The combination of lower total reimbursement and more revenue extended Medicare’s solvency by 11 years. Without ACA, the Trust Fund is bankrupt next year.

If the GOP repeals the ACA or eliminates the 0.9 percent tax on the very wealthy, Medicare Part A is technically bankrupt.

The incoming President, Congress, and HHS Secretary are facing the very same tradeoffs and complexities their predecessors faced in 2010 – health care is horrendously complex and inter-related.  There are no simple, easy answers.

What does the GOP do?

From here, it looks like they have a couple options.

  1. Repeal it, pass their own health care reform legislation that makes major changes, and claim success.  
    As noted above, and as we’ve seen over the last five years, changing the US healthcare system is brutally hard, there are way more unintended consequences than anyone could predict, and there are no simple answers. There is just no way they can cobble together legislation anytime soon that will address ACA’s issues and not result in a gigantic clustermess.
  2. Repeal ACA in two or three years, with the promise they’ll come up with a replacement in a year or two.
    Without a credible replacement, insurers and healthcare providers are going to panic. Expect insurers to exit the individual and small group health insurance markets in droves. Democrats will use Medicare’s pending insolvency to bludgeon Republicans in the mid-term elections.
  3. Rebrand ACA as TrumpCare, make a couple tweaks around the edges, declare victory, and go home.
    This gets my vote as most likely, primarily for the reasons noted above. Now that the GOP owns health reform and Medicare solvency, Democrats are going to tie the issue around their necks like a dead chicken.

For a more detailed discussion of the issue, here’s a good synopsis from Politico.

Later – Hospitals and Medicaid – it’s pretty scary. 

What does this mean for you?

Don’t be lazy. Healthcare reform is hugely complicated, and for those of us – that means you – invested in the industry, what’s about to happen is far too important for you to ignore it or pay it little heed.

Telerehab’s coming fast

Regardless of what happens to health reform on the national level, the healthcare industry is relentlessly and rapidly adopting technology that will revolutionize patient care.  Big players are seeking out new tech devices, platforms, and applications, buying start-ups and rapidly pushing their products and services into their distribution pipeline.

One example is Zimmer’s recent acquisition of RespondWell, a start-up delivering comprehensive at-home telerehab intended to improve patient compliance with PT and deliver better outcomes. I recently interviewed RespondWell CEO Ted Spooner.  Spooner has a long history in developing tech that delivers services faster/better/cheaper with far less human intervention.  He and his team have taken that experience and used it to build a home-based rehab solution.

The quick backstory – Medicare and other payers are bundling payments for surgical procedures, forcing providers to assume responsibility for any procedure-related care for 90 days post-surgery. In this model, a health care system might get $37,000 to do a total knee replacement; out of that fee, around $5,000 would go to physical therapy.

But there’s a problem – in some places, there’s more demand for PT than there is supply of PTs.  As a result, some patients are on a waiting list – and as a result of that, surgeons, operating rooms, and related staff are not working to full efficiency.

There’s another issue here, one that gets at an uncomfortable reality – many services can be delivered in ways that don’t require nearly as much human intervention.

Telerehab provider RespondWell has come up with a solution, one that uses existing technology, platforms, and communications to “create accessibility and convenience for therapy to patients and give providers visibility to patients to adherence to therapy. Kaiser is one of the early adopters of the Therapy@Home solution.  To date almost all customers are healthcare providers, but Spooner expects payers to be in the mix quickly.

Briefly, Therapy@Home is set up for each patient recovering from surgery; the provider prescribes a therapy plan which is “loaded” into the App. The patient sees a web-based on-screen virtual therapist that helps them perform exercises correctly, while allowing the care team to monitor patient performance and compliance via the internet-connected device’s web camera.

Sessions and communications are recorded and stored for provider access if and when needed.

Here’s one key takeaway; about 60% of in-person PT visits can be eliminated using Therapy@Home.

Considering most total knee patients are older folks, I challenged Spooner on adoption and usage by senior citizens.  He noted that the over 55 population is adopting technology very quickly, driven by easy-to-use smartphones and apps that allow them to connect easily with friends and family.

While RespondWell is focusing on bundled payment-driven care today, this technology/service model (I’m not sure exactly how to describe it) is absolutely transferrable to other types of care – both within PT and in other service areas.

What does this mean for you?

Be a disruptor. Or be disrupted.

Workers’ comp – for hospitals, it’s where the money is

Two recent articles in Health Affairs highlight a growing issue for employers and taxpayers; some hospitals are increasingly looking to work comp as a profit maker.

Depending on the state, facility costs can account for anywhere from around 32 – 40% of total work comp medical expenses (different states classify locations-of-service differently).

Ge Bai and Gerard Anderson examined the fifty US hospitals with the highest charge-to-cost ratios and found their markups over Medicare-allowable costs were three times higher than the average hospital.

This is critical in work comp because state work comp regulations often base facility reimbursement on charges – despite NO evidence or requirement that those charges have any basis in reality.

Fully 20 of the fifty hospitals are in one state – Florida – that uses a percent-of-charges reimbursement methodology for hospital outpatient services (manual is here).

Bai and Anderson’s latest work provides a deeper dive into hospital profitability.  A few key quotes:

  • Hospitals with for-profit status, higher markups, system affiliation, or regional power, as well as those located in states with price regulation, tended to be more profitable than other hospitals.
  • Hospitals that treated a higher proportion of Medicare patients, had higher expenditures per adjusted discharge, were located in counties with a high proportion of uninsured patients, or were located in states with a dominant insurer or greater health maintenance organization (HMO) penetration had lower profitability than hospitals that did not have these characteristics.

The methodology used by Bai and Anderson is somewhat different from that used by other researchers in that it excluded income from non-patient care services. I infer that they did this to focus specifically on the actual care delivery cost and not factor in other revenues from services such as parking, gift shops, investment income, etc.

So, what are the implications?

  • Work comp is a soft target for facilities in many states
  • The percentage-of-charges methodology is a license to…profit
  • More profitable facilities have likely already figured out how to make the most revenue possible from every source – including workers comp
  • Less profitable hospitals are going to learn from their more profitable competitors

A mass murderer brought to justice.

A California doctor, convicted of second-degree murder was just sentenced to 30 years-to-life in prison for overprescribing opioids that resulted in the deaths of 3 “patients”.

Dr Lisa Tseng’s apparent willingness to hand out scripts to anyone with cash was going on for years and reportedly resulted in the deaths of at least a dozen patients.  Worse, she knew her patients were dying; according to news reports the County Coroner called her office at least monthly to let her know one of her patients had died.

At least a dozen of her patients died of overdoses.

Let’s call her what she is – a mass murderer.

While her motives – apparently purely financial – may have been different than the Ted Bundys, John Wayne Gacys, and Jeffrey Dahmers, her death list is not.  Nor is the impact on the families and friends of her victims.

Her defense attorney complained that the verdict was already affecting other doctors’ behavior.  I should hope so.

Another physician bemoaned the verdict, saying:

“When you use the word ‘murder,’” said Dr. Peter Staats, president of the American Society of Interventional Pain Physicians, “of course it’s going to have a chilling effect.”

Staats said he believes an aggressive medical board — not prosecutors — should go after reckless doctors. But, he added, any doctor who is prescribing pills knowing that they are being abused or diverted shouldn’t be called a doctor.

Let’s understand what’s going on here.  Some in the medical community are totally missing the point.  Over a three-year period, this “doctor” wrote some 27,000 scripts for opioids and other very dangerous drugs.  That’s about 25 each day. 

Instead of whining about “chilling effects” and the impact on doctors, these protesters should be asking themselves why 28,000 people died as a result of “accidental poisoning” due to overdoses.

They should ask themselves why heroin use has exploded.

And why it came to this.

Fortunately, the Tseng case seems to be sparking some much-needed conversation in the pain physician community.  Here’s hoping it results in a lot more caution and far fewer opioid scripts.

Thanks to good friend and colleague Sandy Blunt of Medata for the heads’ up.

How to reduce medical costs the easy way

Here’s one very effective way to reduce medical spend.

  1. Identify low-cost providers.
  2. Send your patients to them.

Do NOT send your patients to providers because they give a discount.

Do NOT send patients to providers because those providers are “in network.”

Fact is, there is wide variation between and among providers in the same geographic area – for the same procedure.

Another fact is, there’s no correlation between cost and “quality”.

There you have it.

The Millennium Health settlement

Some weeks back, the Feds announced they’d reached a settlement with Millennium Health on allegations that drug toxicology firm Millennium Health was involved in illegal practices (my characterization, not theirs).

More recently, Millennium has been working through a reorganization wherein the company’s debtors will assume control of Millennium. This reorg (currently held up by legal wrangling) was driven in large part by a $256 million settlement Millennium agreed to pay to resolve allegations of improprieties.

Note: Millennium is a consulting client, has been for almost four years, and will continue to be a client for the foreseeable future.

A bit more detail on my relationship with Millennium.

I’ve worked very closely with Millennium to design and promote a work comp-specific program.  This program – a flat fee covering all drugs and metabolites tested by Millennium, coupled with a payer-specific outreach program and supported by clinical liaison personnel – has been widely accepted by and dramatically slashed drug testing costs for many payers. Everyone I’ve worked with at Millennium – their clinicians, researchers, operations, finance, executive, sales and account management staff – has been professional, highly ethical, and committed to their customers.  Over the last four years, I never encountered anything that remotely indicated a possible ethical transgression.

The drug testing program now being considered by Medicare – a flat fee for an entire panel of tests – is what Millennium has been offering work comp payers for over three years.

After extensive research into the allegations and legal wrangling among and between the parties, there appear to be two primary issues described in the DoJ statement referenced above – giving testing cups to physicians, and promoting/allowing physicians to have “standing orders” for drug tests.

Millennium was accused of violating Stark laws by giving docs test cups that the docs would use to collect urine specimens and send those specimens to Millennium for quantitative testing if further testing was required.  Millennium was also accused of inappropriately billing Medicare for drug tests by promoting custom “panels” wherein physicians would always request the same panel of drug tests for each payment.

First, the cups – and this is where things get a little confusing.  According to  Health Law Attorney Blog, 

Millennium initiated the practice of entering into “cup agreements” with physicians under which Millennium agreed to provide POCT [point of care testing] cups to physicians free of charge if the physicians agreed: (i) not to bill any insurer for the urine testing service; and, if further testing was required, (ii) to return each test cup to Millennium for lab testing of the urine specimen. If the physicians failed to comply with these requirements, then Millennium would charge them for the price of the cups.

There’s an illuminating discussion of the cup issue here.  It looks to me like the key issue is the government’s contention that by giving docs cups with immunoassay test strips attached, Millennium violated Stark laws.  If the cups did NOT have those test strips, this would not have been an issue.  I’m not clear as to how MH could have violated the Stark laws if the docs did not bill any payer for those cups and thus did not receive any remuneration, but it is clear that this was indeed a violation.   As the above-reference Blog notes:

quoting the government here – “whenever a laboratory offers or gives to a source of referrals anything of value not paid for at fair market value, the inference may be made that the thing of value is offered to induce the referral of business.” With that statement, the government clarifies its position that the fact the physician does not bill for the item or service does not, by itself, negate this inference.

So, just giving the cups away, even while requiring the docs to not bill for them, was a violation.

Now, the panels.  Drug test are supposed to be specific to a patient; the allegation against Millennium was that physicians and/or Millennium created custom panels of drugs and metabolites, specific to individual physician, panels that would be tested for every patient.  Here’s how the Department of Justice described this:

Millennium caused physicians to order excessive numbers of urine drug tests, in part through the promotion of “custom profiles,” which, instead of being tailored to individual patients, were in effect standing orders that caused physicians to order large number of tests without an individualized assessment of each patient’s needs. [emphasis added]

The DoJ also notes the agreement settles allegations that Millennium inappropriately billed Medicare for genetic testing.

Clearly, these were very significant issues. They have resulted in major changes at Millennium including an overhaul of the Board and significant changes to management and ownership.  There’s also a requirement that Millennium operate under a “corporate integrity agreement” overseen by HHS for five years.

The $256 million settlement addresses the Feds’ allegations, and there has been no determination of liability.  That said, some may well infer that Millennium’s decision to settle the case and essentially turn the company over to its creditors indicates the company was not confident it would prevail if things progressed to trial.

It’s been an ugly, messy, and at times repugnant story.  Here’s hoping the legal wrangling ends soon.  In the meantime, I will continue to work with Millennium to help them deliver on their commitments to the work comp industry.

Note: Millennium Health has not provided any information to me regarding this matter other than what is publicly available on their website.  Millennium has been aware of my intention to write a post on this topic once the legalities were resolved.  MIllennium has not reviewed, seen, edited, or otherwise been involved in this post.

Provider reimbursement changes – painful and necessary

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.

Friday’s here!

And you get to start the weekend early (we hope).

While you were focused on other stuff – like work – here’s what else was going on in our little world.

Fraud – two very different views.

This morning’s WorkCompWire arrived with the news that some small businesses are concerned that their employees may be contemplating workers comp fraud.  In a survey sponsored by EMPLOYERS Insurance, 13% of respondents were concerned “employees would commit workers’ compensation fraud by faking an injury or illness in order to collect benefits.”

(according to EMPLOYERS, 6% were very concerned, 7% somewhat concerned)

The other fraud-related topic comes from WorkCompCentral’s Sherri Okamoto. Ms Okamoto filed a story on the Labor Dept.’s just-published finding on employee misclassification.  In the announcement by DOL, the following statement appeared:

A worker who is economically dependent on an employer is suffered or permitted to work by the employer. Thus, applying the economic realities test in view of the expansive definition of “employ” under the Act, most workers are employees under the FLSA.

WCC’s piece noted several recent court cases, rulings, and other findings that have forced employers to pay back wages, re-classify workers as employees, and otherwise restricted businesses’ efforts to avoid identifying workers as contractors.

The implications for health and workers’ comp insurers are clear: more premiums and a larger market.

Note – DoL’s document is well worth the read as it is highly relevant to the evolving “sharing economy”.

Implementing health reform

Following up on my piece re “there is no Obamacare”, found this from Avalere Health;

the average provider networks for plans offered on the health insurance exchanges created by the Affordable Care Act (ACA) include 34 percent fewer providers than the average commercial plan offered outside the exchange.

No one should be surprised by this.  Health plans competing on exchanges MUST be price competitive; now that healthplans can’t just deny coverage, they have to compete on the basis of delivering care at the lowest possible cost (yeah, outcomes will be a factor at some point, but they really aren’t so far).  The cost of care is determined in large part by provider reimbursement and utilization of health care services, both of which are driven by the payer-provider contract.  Providers want more volume, lower administrative burdens, less uncertainty about and much speedier reimbursement – and do NOT want to share patients with every other Dr Tom, Dr Dick, and Dr Mary in their service area.

And that’s why we have narrow networks on exchanges – providers give lower prices in return for more patients and less hassle.

BTW, this is right where we were back in the heyday of group- and staff-model HMOs; they fell out of favor as members wanted more choice.  Now, those people who want choice are going to have to pay a lot more for it.

Expect to see much more “network narrowing” in the future.

Another state is going to expand Medicaid – Alaska.

Providers are getting stronger

This week’s announcement that Connecticut-based Yale-New Haven health system is acquiring another big hospital in the eastern part of the state is just one more indication that the provider world is consolidating and gaining negotiating leverage.  Both health care providers and the payer industry are consolidating, but to date it appears the providers are the ones gaining the upper hand in the battle for leverage.

See you next week