The GOP wins big – now what?

With big wins in the Senate, House, and governors’ races, the GOP is poised to push its policies – here’s a brief review of potential moves.  For the next two years the GOP will be in charge of Congress where it can do a lot to hamstring PPACA via budgeting procedures and incremental changes.  Then, GOP candidates can point to the failure of PPACA as proof of the incompetence of Dems.

Pretty neat.

First, let’s not jump to the conclusion that this race was all about “Obamacare”. Polls indicate ACA and implementation thereof was a secondary issue - if that - in almost every race.

Second, the next two years will be mostly political positioning in preparation for the 2016 election.  Republicans will seek to show Democrats are “the party of no”, offering up a plethora of bills for President Obama’s veto.  Dems will lick their wounds and take heart in the favorable Senate electoral landscape, which is pretty much the opposite of this year’s.  Whether that will remain the case two years’ hence remains to be seen.

Changes to ACA -

There will almost certainly be yet another effort on the part of the House to repeal PPACA, and the Senate will likely go along – subject to a filibuster. That will be political theater, laying the groundwork for incremental moves.

Expect an early effort to dramatically alter, if not repeal, the mandate for employers with more than 50 workers. It has been delayed already, is anathema to conservatives, and if combined with other “fixes” may force a signature.

There may also be a movement to overturn the individual mandate; this will also be veto’ed.

Copper plan – some have advanced the idea of a cheapo health plan that would cover about half of an insured’s medical costs.  While this doesn’t make much sense, it does have the backing of a couple Democrats in the Senate which may be enough to get it past the filibuster hurdle

The risk management program (the “3 Rs”) program that shifts ‘excess’ profits from insurers with low claims to help insurers with high claims costs cover their expenses (full explanation here) is particularly distasteful to conservatives who want insurers to rise or fail on their own.  It is scheduled to expire at the end of 2016; expect the GOP to push to end it sooner.  That said, the insurance industry and their allies will push very, very hard to keep the 3Rs in place.

The much-despised medical device tax will face repeal; not for good policy reasons but because the device industry is loaded with cash and spends it lavishly on lobbyists and politicians.  Washington at its best…

There’s a push to release more data on outcomes and pricing so consumers have a better idea what treatment costs and who has what outcomes.  Don’t expect this to get very far; for some good, and some not-so-good reasons, physicians don’t want this information out there – primarily because some will look bad.

Medicaid expansion – there’s likely going to be more resistance to expanding Medicaid due largely to the extent of the Republican wins.  Kansas and Maine would have added coverage if the Dems had won; there would have been more support in other states as well.  The broad-based wins by conservatives will push expansion off the agenda – at least until the next election.

What does this mean for you?

Washington is dysfunctional now, and will be much worse.

For investors, insurers, and employers, even more uncertainty about the future of health care.  Just what we need.

Asbestos pokes its long nose out from under the workers comp tent

Judgments in two recent court cases held that long-tail asbestos claims are not subject to the comp bar.

A very good friend who spends most of his time dealing with asbestos claims for a very large carrier shared this with me in a recent email.  Here’s how he put it:

If this contagion were to spread (and that depends very much on the precise wording of the comp statutes in each state), a lot of employers who might have believed that they were protected by the comp bar will find themselves defendants in lawsuits brought by former employees, which raises lots of questions about the applicability of their GL or EL coverage, assuming they had it and can identify the insurers.  [emphasis added]

The two cases are Tooey v AK Steel Corp et al., 81 A.3d 851 (Pa. 2013) in Pennsylvania and  Folta v. Ferro Engineering, 2014 Ill. App. LEXIS 444 in Illinois.

In Tooey, the PA Supreme Court ruled that the exclusivity provisions of the Pennsylvania Workers’ Compensation Act did not bar former employees alleging asbestos exposure from bringing lawsuits against their former employers when the asbestos related disease didn’t appear until after the time limit for filing for statutory work comp benefits had ended – which is 300 weeks in PA.

In Folta, an Illinois appeals court used the Tooey citation in revisiting an asbestos injury suit filed by an alleged victim who wasn’t diagnosed with an asbestos-related disease until 41 years after leaving his employment.

There’s a lot of legal detail involved including determining which statute takes precedence, however the likelihood that the Courts’ rationales are not likely to be limited to asbestos claims may well be the most significant.

What does this mean for you?

This strikes me as one of those things that could either be very, very meaningful.  What think you?

Friday catch-up

Lots happening in the workers’ comp world these days – here’s what caught my attention this week.

WCRI released its CompScope report, which is actually 15 separate reports covering 16 states.  I’ll be reviewing it in detail next week; for those who can’t wait you can find the summary of the news on Illinois here.  WCRI will be releasing other highlights over the next couple of weeks.

The good news in IL is the change to the fee schedule has had the desired effect; costs are about 20% lower.  That’s the good news; but all is not rosy.

  • PT continues to be problematic; utilization in IL is much higher than average among CompScope states at 25 visits per LT claim.  Only PA, with 27, is higher…
  • Surgery costs per claim were also highest among the study states.

More work to do in the Land of Lincoln.

Several states are looking hard at implementing formularies; Arkansas is considering adopting ODG’s, scheduling a public hearing on that proposed change for later this fall.

There is considerable interest in Washington’s formulary.  CWCI’s analysis of the ODG and WA formularies and implications of implementing them in the Golden State has generated quite a bit of interest; with projected annual savings ranging from $124 million to $420 million that’s not surprising.

Notably, Ohio’s formulary – which is truly closed, has resulted in almost no “non-formulary’ drugs dispensed to claimants.  While it is not as well known as TX and WA, the OH formulary, adoption process, and results show just how effective a well-managed formulary and drug management program can be.

WCRI’s hosting a webinar on the potential impact of adoption of the ODG formulary in other states.  Led by Dr. Vennela Thumula, the one-hour  webinar is on Thursday, Nov. 20, 2014 at 2 p.m. ET (1 p.m. CT, 12 noon MT, and 11 a.m. PT).

For those interested in the future of the workers’ comp world – which should include anyone working in the work comp industry, a lengthy piece on the future of international labor markets by The Economist is worthy of your attention.  Very well-written (as is typical for the Economist), they key points (quoting the article) are: [emphasis added]

  • the rise of machine intelligence means more workers will see their jobs threatened. The effects will be felt further up the skill ladder, as auditors, radiologists and researchers of all sorts begin competing with machines. Technology will enable some doctors or professors to be much more productive, leaving others redundant.
  • wealth creation in the digital era has so far generated little employment. Entrepreneurs can turn their ideas into firms with huge valuations and hardly any staff.
  • these shifts are now evident in emerging economies. Foxconn, long the symbol of China’s manufacturing economy, at one point employed 1.5m workers to assemble electronics for Western markets. Now, as the costs of labour rise and those of automated manufacturing fall, Foxconn is swapping workers for robots

Time to get to work – the annual Health Strategy Associates Halloween party is tonight!


CorVel’s quarterly revenues up, profits down

I haven’t looked into CorVel for some time now, but a tipoff from WorkCompWire got my interest – specifically a passage that read:

Revenues for the quarter ended September 30, 2014 were $124 million, a 4% increase over the $119 million in revenue in the quarter ended September 30, 2013. Earnings per share for the quarter ended September 30, 2014 were $0.37 and were $0.41 for the same quarter of the prior year. [emphases added]

This was pretty much identical to CorVel’s press release.  Normally there’s a percentage given for any change over a prior period; that percentage was noticeably missing. A “normal” release would have read:

Earnings per share for the quarter ended September 30, 2014 were $0.37, down 10% from the same quarter of the prior year.

4 cents doesn’t sound like much, but 10 percent sure does.  It looks like the primary driver was a much higher cost of revenue, up 6.7 percent over the same quarter, prior year.  This isn’t a one-time thing, as CorVel’s cost of revenues increased 6.4 percent over the six months ending 9/30/14.

The stock, currently trading just over $34, is down rather precipitously from it’s 52 week high of $52.44.

The last earnings call transcript available from Seeking Alpha is, to borrow a term from “The Shawshank Redemption”, obtuse.  Whether it is the recording, the transcript thereof, or the comments made by Chairperson Gordon Clemons, I wasn’t sure what to make of their strategy, focus, or outlook.  Lots of comments about private equity’s involvement in WC, market consolidation, ACA and other matters but little clarity about how this would or would not affect CRVL.

What does this mean for you?

Perhaps we are now starting to see that effect.

The GOP wins the Senate – implications for ACA

While by no means certain, it looks as if the GOP is going to gain control of the US Senate in January.  What, if any, are the implications for PPACA?

There’s a good piece in today’s California Healthline digging into the issue; it cites two potential priorities for a GOP-dominated Congress.  Slowing or continuing to delay the employer mandate, and eliminating/ravamping the risk corridors seem to be the most likely approaches.

However, there’s a bit of political risk in that, as many GOP backers want ACA repealed; they may see “fixes” as compromise, a very bad word these days among conservatives.

While some will argue that a GOP Congress will push for repeal, I’m not so sure. With about 10 million more Americans covered under PPACA, that’s a lot of voters that might be upset if their coverage was yanked out from under them.  There are any number of provisions that are quite popular – covering children to 26, eliminating lifetime dollar caps on expenses, no-cost preventive care, no medical underwriting come to mind. Any move to go back to the bad old days would result in a lot of angry insureds.

Delaying the employer mandate is much more attractive politically; small business people would generally like it, the President has already done this so there’s precedent, and it isn’t that hard to do.

The risk corridor is a much tougher task.  Insurers would lobby very hard against it; while opponents of corridors make the argument that they are simply a taxpayer bailout of the insurance industry, politically speaking it might well by toxic.  It could potentially lead to higher premiums and fewer health plan options, both of which would likely be used against the GOP in the next election – which is a mere 24 months away.

Of course, the Tea Party Reps in the House may follow a “damn the torpedoes” strategy, which would result in a vote to repeal ACA, followed instantly by a Presidential veto, thereby setting up two more years of gridlock.

IF that occurs, and IF voters get into a “throw all the bastards out” mode, the GOP may find itself right back in the minority in the Senate; of the 34 Senate seats up in 2016, 24 are currently held by the GOP.

What does this mean for you?

Depends on voter turnout...




Friday catch-up

Here’s a quick tour of what else happened this week…

First, let’s just relax about Ebola.  Yes, a physician in NYC – who treated patients in Africa – has come down with the disease.  Yes, he traveled on the subway and went bowling before he was diagnosed.  No, this doesn’t mean there’s a nascent epidemic, the City needs to go into lockdown, and residents should panic.

Ebola is hard to catch – a symptomatic victim has to share bodily fluids with another person for the virus to be transmitted.

You don’t get it from a bowling ball or subway seat.

Oh, and the two nurses in Dallas are recovering nicely; one is virus-free and the other improving steadily.

And, of the eight people treated for Ebola in this country, one – Mr Duncan – died, six recovered (or are recovering) and one (Dr Spencer) is in treatment now.

Last word – the nasty, over-the-top criticism of the CDC from critics as diverse as Mitch McConnell and Bill Maher is completely off base.  Dinging the CDC because a hospital in Dallas didn’t immediately understand a potential Ebola patient had presented and wasn’t thoroughly prepared for that (remote) possibility is just ludicrous; as is the vitriol directed at the hospital.

okay, back to the real world. or what passes for it in the US health care non-system.

First up, a piece in JAMA finds patient care delivered by hospital-physician organizations costs more than physician organizations.

After adjusting for patient severity and other factors over the period, local hospital-owned physician organizations incurred expenditures per patient 10.3 percent higher than did physician-owned organizations, according to the study. Organizations owned by multi-hospital systems incurred expenditures 19.8 percent higher than physician-owned organizations. 

Let’s not read too much into this – JAMA is a doc-run publication, but it does have the ring of truth to it; billing practices change when hospitals/health care systems own doc practices, and they don’t get cheaper.  Abstract is here.

Coincidentally, Fitch recently published a study indicating for-profit hospitals are doing quite well, thank you! Seems “the financial headwind of caring for uninsured patients has lessened, evidenced by markedly lower adjusted bad debt expense for large hospital companies.” This is ‘more true’ in Medicaid-expansion states, but is also happening in non-expansion states.

Less need to cost shift to work comp…

A few years back we were hearing how ACA would cause large employers’ health care costs to explode, leading them to drop coverage.  Hasn’t happened.

From Bloomberg; “Employers and their workers have benefited in the form of lower premium increases for their insurance plans. Other than a spike in 2011, after the law required plans to cover children until age 26 and eliminated cost limits on care, premium increases have averaged less than 5 percent a year since 2010, according to Kaiser. ”

Notably, a big part of this is due to employers raising insureds’ copays, deductibles, and cost-sharing.  That was going on before ACA, but now it’s capped.

Sources indicate Aetna is proceeding with efforts to recontract the Coventry Work Comp network onto Coventry “paper”.  However, those efforts seem to be rather lackadaisical; negotiators aren’t pushing hard for discounts, seemingly more interested in “dots than discounts.”  That is, there’s much more focus on getting contracts signed then on the discount itself.

No details on how successful those efforts are; will keep you posted as we hear.

Time to get to work – enjoy the weekend – away from work!

Leaves are falling, and wonks are opining!

Thanks to Louise Norris, Colorado’s leading expert on all things health insurance related, for hosting this biweek edition of Health Wonk Review.

Among the submissions are several on Ebola, including a very good piece on CDC Director Dr. Thomas Frieden.  I’ve been a bit shocked at the piling-on suffered by the good doctor; everyone from Bill Maher to Mitch McConnell has had nasty things to say about him and his agency – most of which is ignorant blather.

There’s also a great synopsis of a post on health reform’s human side.  Something we forget far too often.

here’s a sample -

The ACA reduces the burden of health premiums on our family. By reducing this monthly expense, we have a little extra to purchase products, use services, save for vacation, and invest in the market. We have a little less anxiety and stress month to month.


Med mal’s not a factor in health care costs – more evidence

More research indicates tight restrictions protecting physicians and facilities from malpractice suits doesn’t reduce health care costs.

Three states, Georgia, South Carolina, and Texas, essentially prohibit suits unless the physician intentionally orders care that s/he knows will hurt the patient.  A pretty very high standard, and one that would – one would think – allow docs to practice care with no concern about “defensive medicine.”

That may indeed be the case, however it is also the case that there’s no evidence that this high standard reduces cost.  The research, which focused on Emergency Department utilization and costs, found tight limits on suits didn’t reduce the “cost or volume of ED care.”

Moreover, “Legal risk does not motivate physicians as much as some previously thought.” [emphasis added]

This will not still the wagging tongues in the talking heads – nothing will.  But they’ll have less to wag about.

What does this mean for you?

Question those assumptions…

Are the newly insured clogging the system?

We are starting to get some insight into how 10 million (plus or minus a couple million) newly-insured people will affect the health care delivery system.

For years, we’ve been speculating about the impact of coverage expansion on care – Will the new influx of folks onto the rolls of the insured increase waiting times?  Will they clog up emergency rooms, labs, doctors’ offices and surgery centers? Will it be impossible to get into a primary care facility?

Briefly, tighter supply early on, less so in the future as pent-up demand eases up.

Here are the details…

Using data from California’s Low Income Health Plan (LIHP), the Oregon Health Insurance Experiment and other studies, researcher Gerald Kominski and his colleagues assessed how the newly-insured use health care services, how that changes over time, and the impact on the health care delivery system.

The net is this -

“We see an increase in utilization in the first year, and especially in the first few months,” Kominski told California Healthline. “But then there’s a dramatic drop-off…this a temporary, not permanent phenomenon.”

There’s latent demand for health care services as those previously un-insured get those nagging health issues checked out and addressed, then things settle down. This makes sense; while there may well be a small population that has ongoing chronic issues, most will be pretty healthy.

Notably, the Oregon study appeared to indicate the population continued to use ER services at a relatively high rate; speaking to this Kominski was quoted saying: “the Oregon study, in a sense, has been the outlier. It calls into question some other studies, because it doesn’t show across-the-board positive benefits.”

That’s good; we need more research into the impact of increased enrollment on the health care delivery system, and different results will encourage deeper dives into the data.

What does this mean for you?

So far, access to health care hasn’t been too big a problem.  There appears to be more demand initially due to coverage expansion, and there will be somewhat more demand over time.

And we would do well to continue to monitor access data such as appointment times.

Physician dispensing in work comp; two victories!

I know, you are as tired of reading about physician dispensing in work comp as I am writing about it.  At last, there’s some very good news.

Quick refresher – docs dispensing drugs adds about a billion dollars in excess drug costs – plus increases disability duration by 10 percent, medical costs, and total claims costs.  Dispensing docs also prescribe more opioids to more claimants.

Benefits?  None, except huge profits to dispensing docs, dispensing companies, and their owners – we’re talking about you, ABRY. (investment firm that owns dispensing “technology” firm Automated Healthcare Solutions)

First up, a court case in Louisiana found in favor of the employer, as the 3rd Circuit upheld a workers’ compensation judge’s determination that a claimant would not be reimbursed for drugs dispensed by a third party pharmacy, in this case Injured Workers’ Pharmacy, when the employer had provided access to other pharmacies and otherwise complied with regulations. According to Troy Prevot, Executive Director of LCTA Workers’ Comp -  “The result of this decision will allow us to continue to use retail pharmacies to control pharmacy cost by negotiating lower pricing thru PBMs” instead of paying much higher prices for doctor dispensed or third-party mail order drugs.  

I’d add that LCTA’s victory will enable all other employers in Louisiana to ensure the clinical management of pharmacy is handled correctly by one entity.

Big news from Pennsylvania too – a bill (HB 1846) limiting physician dispensing duration and cost, and specifically targeting opioid dispensing, will become law (there’s some technical stuff going on, but it will happen). Among other things, the law will:

There has been much heavy lifting here – kudos to AIA, the Insurance Federation of Pennsylvania (the leader of the effort) PCI, the PA Chamber and CompPharma’s member PBMs (full disclosure I am president of CompPharma; the PBMs did the work).

This follows the good results in North Carolina – but all is not rosy, as Maryland and Hawaii employers and taxpayers are still stuck paying far too much for drugs and the crappy outcomes they deliver.

What does this mean for you?

Better outcomes for claimants, lower costs for employers and taxpayers!