Insight, analysis & opinion from Joe Paduda

Feb
23

Are you being gamed?

I’ve had a number of conversations of late with self-insured employers about their workers’ comp “savings” reports; one thing that keeps coming up is how- and why – vendors ‘game’ the numbers.

(this post is a follow up to a post I did seven years ago…)

Perhaps the greatest variation is in bill review “savings” – and the fees attached to those “savings”.

Bill review savings are reported as a percentage below the applicable fee schedule or, in states without fee schedules, usual and customary rates or billed charges (depending on the vendor and state). Savings are also attributed to application of state rules, for example a denial of an assistant surgeon’s fee or physical therapy 59 modifier. These savings don’t generate additional fees for the vendor as they arise from mere application of state regs and fees.

One would think this is an objective result, and therefore there should be little variation among and between vendors, and in an ideal world, one would be right.

However, there is almost always a bit of judgment involved in determining what the ‘right’ fee schedule amount is and what state rules apply. The complexities are many, and the justifications, while often thin, are given to payers unequipped to refute the vendor’s statements.

Then there is the gamesmanship where savings that should be attributed to fee schedule or application of state rules are put in a different bucket, a bucket that just happens to generate additional fees for the vendor.

Let’s look at the ‘why’ vendor BR savings vary.

Simply put, follow the money.

Most bill review services these days are priced on a flat charge per line or per bill; Most BR vendors also charge for additional ‘value-added’ services on a percentage of savings basis – typically 25% of savings delivered on top of fee schedule/UCR cuts. That’s where the…variation usually lies.

The financial motivation is obvious; the vendor gets the same fee for processing a bill whether they deliver $1 or $1000 in BR savings, but their compensation for ‘value-added’ services is based on the savings that are delivered – the higher the ‘savings’, the greater the fees for the vendor.

Therein lies one explanation – perhaps the most significant one – for the wide variation in BR savings percentages. In my consulting practice I’ve had access to reports from several of the larger BR vendors, and the variation can be as much as 300 percent from vendor to vendor. Yes, you read that right – one vendor’s bill review “savings” in a state can be three times higher than another’s.

Almost always the vendor with the lower FS savings delivers great results from ‘nurse review’, ‘complex bill review’, ‘coding edits’, ‘unbundling and upcoding review’, or whatever they call it – suffice it to say that the savings delivered from these ‘extra, value-added’ services – when added to the ‘standard’ bill review reductions – are usually only a bit higher than other vendors who don’t have all those extra, value-added add-ons.

That’s not to say that some savings can – and should – be derived from careful and professional review of bills – coding and clinical reviews are often helpful.

How can you protect yourself?

  1. Ask competing vendors to reprice a set of bills and provide savings numbers in aggregate and for each bill. Compare reductions from application of FS and state rules from the vendors, and on individual bills.
  2. Where there’s wide variation, ask the vendors for an explanation, and don’t accept mumbo jumbo BS.
  3. Make very sure your vendor knows you are holding them to the same standard they used in repricing your sample bill.
  4. Ask your colleagues if you can see their savings reports, and compare the savings allocations to your reports.
  5. Ask your broker, consultant, or adviser for their views, and get them to share de-identified client savings reports with you.

What does this mean for you?

The bad actors are known to many – make very sure you know who they are.


Feb
21

Single Payer is Inevitable.

It’s going to happen. The US healthcare system will collapse.

It’s hard to say what’s the worst thing about American healthcare; the outrageous cost, the crappy outcomes, the endless paperwork hassles, the ridiculous rules, the dead and damaged patients, the huge financial burden for taxpayers and families.

American healthcare sucks.

For people, that is. For insurers, pharma, device companies, it’s never been better. 

People are dying younger every year. Infant mortality rates are worse than any other developed country. Costs are going up. More and more people are uninsured. Rural hospitals are closing. Employer premiums are unaffordable.

All while pharma, device companies, and for-profit healthcare companies are making billions and the tax cuts are increasing families’ costs and generating huge profits for health insurers.

 

Funny thing is, the last best hope for our Frankenstein-like healthcare system was the ACA. Based on a Heritage Foundation/Republican plan, the ACA relies on a hybrid private/public system, using Medicare and Medicaid regulation to drive innovation and improve care.

That’s being gutted by the current controllers of Congress and the White House, who have no plans to fix anything.

This will continue until it no longer can. No one knows when voters will rebel, but they will.

And when they do, we’ll have single payer.


Feb
20

Hey Washington, where’s the health care fix?

It’s a hell of a lot easier to blow something up than to build a replacement.

Especially when you don’t care about a replacement.

Fact is, we – you, me, taxpayers, governments – cannot afford our current health care “system.”  And it is getting more expensive every day.

Congress and the President are continuing their efforts to weaken and hobble the ACA, and they are generally succeeding. Without enforcement of the individual mandate, fewer young folks are getting insurance, increasing premium for us oldsters. The number of Americans without health insurance is up, health care costs are rising, and future Medicare costs are escalating.

The misguided and ill-intentioned “work for Medicaid” effort is going to create a whole new governmental bureaucracy, raise costs, and have zero positive impact. Medicaid changes are going to lead to hospital closures, especially in rural areas and inner cities. 

Health care costs were $3.5 trillion last year – and they’ll top $4 billion in two years. That’s a meaningless figure – until you realize our national and your personal budget is going to get whacked.

But it’s worse than that. The bi-partisan budget deal and tax cuts will exacerbate our already-huge national debt, screwing our kids and grandkids. The biggest driver? Health care.

And Congress’ and the President’s solution is nowhere to be seen.

Where’s the “replacement” the GOP has been talking about? Where’s the “market-based solution” to our health care crisis? Where’s the plan to lower drug costs?

Have you seen anything from Congress or the President that gives you any hope they have any plan?

These politicians aren’t interested in governing, don’t care about your costs or your kids’ debt, and hope you don’t pay attention. They have no political courage, no interest in doing anything that might cost them the next election.

What does this mean for you?

Nothing good.

 

 

 

 


Feb
16

Friday catch-up

Buried under two projects this week – here’s what crossed my desk while I was trying to do actual work…

First, after the horrific tragedy in Parkland, I recalled this data point – the US has a significantly higher child mortality rate than other developed countries.  Gun violence is a major driver. A child age 15 to 19 in the U.S. is 82 times more likely to die from gun violence than such a child in the other countries.

More than 1500 of our kids die from gun violence every year.

The next time someone blathers on about “American Exceptionalism”, show them this graph.

Big spenders – 

We’ve long known that a few people account for a lot of health care spending. New news indicates this is more true now than ever; 5% of patients accounted for 53% of spending in 2015. What isn’t as well known is there’s a LOT of turnover in that 5%; fully two-thirds of the people in the group this year weren’t big spenders last year.

Consistently High Turnover in the Group of Top Health Care Spenders  Implications abound:

  • high risk pools can’t cover these folks if they can’t predict who they are
  • insurance is needed to protect us from the risk we need high cost services

Drug costs

From Adam Fein, news that the rest of the world is following in the work comp world’s footsteps at least when it comes to moderating drug cost inflation. There’s a lot of great information in Adam’s post, much of which refutes generally accepted wisdom or common knowledge.  One item of note – utilization – the volume of pills – was almost flat last year across all payers.  

Webinar on IME Reports  

Independent medical evaluations (IMEs) are a critical component of workers’ compensation and other disability benefit systems. Unfortunately, IME reports often lack quality, customer satisfaction of the various stakeholders is not measured, and TQM is rarely, if ever, applied to medicolegal and IME work.

On Wednesday, February 21 at 3 pm ET, Noon PT, Christopher R. Brigham, MD , a world-class expert on independent medical evaluations (IMEs), will host a unique, no cost webinar on “IME Reports: Assuring Excellence! ” 

You can register at this link https://zoom.us/webinar/register/WN_PsLc3YHXTRWBU6aq2W9Wsg

Have a safe weekend, and please demand your elected officials stop ignoring the causes of gun violence 


Feb
15

The Olympic Edition!

Of Health Wonk Review is up – thanks to Steve Anderson of healthinsurance.org…

Stronger, higher, faster, brilliant-er – all for your reading pleasure.  And really cool pictures too.


Feb
15

Stone Point buys Genex – again

Case management/bill review/UR/IME company Genex has been re-purchased by Stone Point Capital; Stone Point sold the business to Apax in 2014. Takeaways are:

  • Stone Point really understands workers comp and the WC services business. The company is currently pursuing insurer AmTrust and own or have owned a number of companies involved in workers’ comp including:
    • Cunningham Lindsey
    • Oasis Outsourcing
    • StoneRiver
    • Sedgwick
  • Apax’ divestiture is likely NOT a signal the firm is going to break up or sell off OneCall Care Management. OCCM is deep into a systems conversion intended to tie the disparate businesses it owns together and the company just moved most of it’s home office people into a single location. Perhaps most importantly, OCCM’s debt is still trading well below par, an indication the investment is under water.
  • CEO Peter Madeja and the core of the senior management team will stay on. Peter is one of the finest people I know, universally liked and respected in the work comp community, and he and his team have performed well, keeping Genex growing in a declining market.
  • My guess is Genex will likely keep acquiring related businesses. These could include firms in the IME and MSA space as well as the occasional case management company. Mature markets require participants to grow via acquisition, a strategy Madeja et al have mastered.
  • I’d also expect some much bigger acquisitions. I don’t think Stone Point bought Genex to get into the case management and bill review business; these folks have bigger plans.

A couple of side notes...

Stone Point’s initial investment in Genex back in 2007 was reportedly about $56 million. 

One report indicated a source said that this time around, Genex sold for three times the original equity investment (note Apax paid for Genex with a combination of debt and equity). Without any detail or ability to dig into that, I have no idea if that is accurate or even likely.

 

 


Feb
13

Anything but simple

To the casual observer, the work comp bill review process is pretty simple:

  • make sure the procedure codes are appropriate for the injury,
  • compare the billed codes to the state fee schedule/allowable amount,
  • apply any reimbursement rules, and you’re done.

The real story is far more complex.  It’s no longer just about making sure the claim exists, the body part matches the medical report, and the procedure makes sense for the injury.

Reimbursement has gotten enormously complicated. Coding and code modifiers, bundled payment logic, clinical appropriateness, duplicate identification, relatedness, location of service verification, surgical groupers are just a few of the issues and considerations often unappreciated – and not considered – during the bill review process.

Far from A to B, it looks more like this – and is unique for some bills…

While some will say this is “not new news”, what is new is the constant focus and attention required to stay abreast of the ever-more creative and sophisticated “revenue maximization” industry. (That’s the label for provider-focused efforts to get as many payer dollars as possible)

I’ve taken a close look at several approaches/techniques intended to help payers keep pace with provider billing. One that caught my eye is Equian’s Clinical and Coding Logic. The folks at Equian were kind enough to spend a lot of time educating me on the research behind their Clinical & Coding Logic (CCL) solution, how it is used, and where it can have the most impact.

CCL has it’s roots in a commercial health application purchased by Equian some time ago, an application that has been adapted for use in workers’ comp. Building on that application, the company continues research to identify emerging billing practices, and develop identification techniques and rules to address those practices; to date more than 100 additional rules and millions of additional edits not found within typical bill review engines are in place.

There’s a LOT behind CCL; while I can’t provide more than a superficial overview, here’s a few things that popped up for me.

  • Diagnosis and procedure codes with a “low-likelihood”of occurring in work comp are flagged; when they appear medical records are reviewed in detail
  • Experimental and Investigational services typically fall thru the cracks in routine bill review processes; these have been identified and payment logic developed.
  • CCL includes identification of services that appear to be body-part related but actually address pre-existing conditions
  • Extensive research on the notorious 59 modifier enables reductions for inappropriate charges associated with surgery

Equally important is Equian’s ongoing research and analysis to identify emerging and previously unseen billing practices, development of identification techniques and rules, and evaluation of results.

CCL is a supplement to, not a substitute for the regular bill review process and technology. It requires data transmission to and from Equian via secure link, similar to PPO pend-and-transmit processes. Results shared by Equian demonstrate CCL is most useful for high-volume bill operations. Across the board, reductions average about $45 per bill (I was not able to independently verify savings or impact, and note that results are almost certainly highly contingent on each payer’s unique situation.)

What does this mean for you?

Never stand still.


Feb
9

Gas, meet fire.

I’m no economist. But I get math.

And so does the stock market. There’s a very good reason portfolio values have crashed; Congress just dumped a whole lot of gas on what was a controllable fire.

After eight years of slow but steady economic recovery we’re about to see a return to inflation – and all the bad stuff that comes with it.

Congress just voted to pass a budget that will add over $2 trillion to the deficit, weeks after ramming thru a devil’s brew of huge tax cuts for the wealthy, real estate investors, and big corporations.

The economic stimulus that will come from the budget and tax breaks is coming exactly when it isn’t needed – when the economy is well and truly recovered from the 2008 recession. Instead, this huge flood of cash arrives just as labor markets are tightening, wages are increasing, debt is getting more expensive and loans tougher to find.

In other words, inflation.

  • Government borrowing is about to increase a lot.
  • The cost of debt for companies, cities, states, school districts is about to go up – a lot.
  • Millions of baby boomers are retiring every year, hoping to live off their 401ks. Which are worth a lot less today than they were – and will likely lose more value in the coming weeks and months.
  • Demographics will drive health care costs ever higher – soaking up more of your personal funds and tax dollars.

From The Economist:

Public borrowing is set to double to $1 trillion, or 5% of GDP, in the next fiscal year. What is more, the team that is steering this experiment, both in the White House and the Federal Reserve, is the most inexperienced in recent memory.

American fiscal policy is being run by people who have bought into the mantra that deficits don’t matter. [emphasis added]

From Andy Roth, vice president of the conservative Club for Growth.

“With this deal, we will experience trillion-dollar deficits permanently…That sort of behavior, the last time I checked, is not in the Republican platform.”

From Paul Winfree of Heritage Foundation and former Trump economic adviser:

There will be ups and downs in the stock market, but the irresponsible combination of unnecessary tax cuts and huge increases in spending means inflation is inevitable.

And the current crop of morons in DC doesn’t give a rat’s ass.

What does this mean for you?

Electing responsible adults would be a good start.

 

 


Feb
8

Pennsylvania’s work comp formulary – the real story

There are honest disagreements about policy matters, and there is ignorance and fear-mongering.

That’s what’s happening in Pennsylvania’s House of Representatives, where a bill to mandate adoption of a formulary failed to pass yesterday.  It appears some politicians are being swayed by mischaracterizations by those who should know better, including “several unions joining with…trial lawyers.”

What’s especially disturbing is these unions and “plaintiff advocates” are claiming to defend injured workers, yet their opposition to this bill risks patient safety and does nothing to improve patient care.

(Note: this is NOT a slam against all plaintiff attorneys or organized labor)

One plaintiff lawyer characterized the bill as “just a cost-savings package for insurance companies.” That claim is blatantly false. Wording in the bill, SB 936, “expressly requires regulators to make sure any savings form a formulary are passed on to policyholders via reduced rate filings” (quote from WorkCompCentral)

Opponents of the bill say they’d support a bill that only addressed opioids.

This is nonsensical and naive at best.

Why are a comprehensive formulary and UR necessary and appropriate? 

Formularies have been in place in Medicare, Medicaid, Group and individual health insurance for decades. Workers’ comp PBMs use formularies and utilization review to ensure patients get the right drugs for their conditions, protect patients from potential ill effects from inappropriate medications, and streamline the approval process.

Second, it’s not just opioids that are potentially dangerous or deadly. Benzodiazepines, muscle relaxants, anti-depressants: all have significant risks, can be mis-used, and represent clear risks for patients.

Third, combining a formulary with utilization review is essential for patient safety. A formulary alone is just a set of guidelines; UR is how these guidelines are applied.

The compound drug scandal in Pennsylvania is prima facie evidence of the need for a strong formulary and tight utilization review. This from the Inquirer:

Three partners at [law firm Pond Lehocky] and its chief financial officer are majority owners of a mail-order pharmacy in the Philadelphia suburbs that has teamed up with a secretive network of doctors that prescribes unproven and exorbitantly priced pain creams to injured workers — some creams costing more than $4,000 per tube.

Pond Lehocky sends clients to preferred doctors and asks them to send those new patients to the law firm’s pharmacy, Workers First. The pharmacy then charges employers or their insurance companies for the workers’ pain medicine, sometimes at sky-high prices, records show. [emphasis added]

Formularies and UR are not the entire answer. In addition, Pennsylvania – and other states – should:

  • adopt mandatory reporting to and checking of a drug monitoring program (PDMP),
  • require a comprehensive approach to opioid prescribing (Washington State’s example is one of the better ones),
  • vigorously enforce drug distribution reporting requirements, and
  • demand manufacturers and distributors pay for the damage they have and continue to cause.

Note – as I’ve opined before, I have concerns with closed or binary formularies, and strongly believe payers and PBMs should have the flexibility to adapt formularies to match the needs, conditions, and co-morbidities of individual patients.

What does this mean?

We are doing everything we can to ensure patients get the drugs they need quickly, while protecting those patients from potentially dangerous medications.

It’s not about costs, it never was, and it never will be. 

 


Feb
7

Lock ’em up!

In the State of the Union address, President Trump said:

“We must get much tougher on drug dealers and pushers if we are going to succeed in stopping this scourge,”

There was only a passing reference to treatment, and there’s been no appreciable effort from the White House to expand treatment.

That approach has not and will not work. Period.

Equally troubling, the White House has sidelined professionals in favor of political appointees with little knowledge of or experience in dealing with opioids, the opioid crisis, pain management, or treatment. Politico:

“Among the people working on the public education campaign that Trump promised is Andrew Giuliani, Rudy Giuliani’s 32-year-old son, who is a White House public liaison and has no background in drug policy…”

This is both personal and professional for me.

A family member in law enforcement ran a drug task force in a major city.  He died in the line of duty, leaving a gaping hole that will forever be an unbearable burden.

Our daughter and her husband deal with the opioid crisis every day in their jobs working in Emergency Departments. They see the futility of enforcement-based approaches several times each shift, and it is a crushing burden.

Patients with Substance Abuse Disorder (SAD) will do anything to or for anyone to get their drugs. Prostituting their kids, stealing from parents, abandoning their families…if people will do this, the risk of a jail sentence is NOT going to get them to stop taking opioids.

And the suppliers are making hundreds of millions of dollars every week…Nothing will prevent new ones from replacing any pushers unlucky or stupid enough to get caught.

The problem is both demand and supply.

Supply can be laid directly at the feet of opioid manufacturers and distributors. They lied, they knew they were lying, and they kept lying about the addictive risk of opioids. They convinced prescribers that addiction risk was so low as to be unimportant for patients that “truly had pain.”

Now that they’ve created demand – millions of users, they stand aside, blaming their victims for using the products pharma knew would cause addiction. Unable to obtain prescription opioids, users switch to heroin.

Purdue, Endo, J&J, and other opioid manufacturers created an incredibly “loyal” customer population of patients who will do anything to get their drugs.

We desperately need a major expansion of treatment programs and funding for those programs.

We do NOT need any more dead law enforcement officers, burnt-out first responders, bankrupt governments, profiteering private prison operators, devastated communities and ruined families.

But that’s exactly what we’ll get with a law enforcement approach to opioids.

I am deeply troubled that the President has done nothing to increase treatment, to add funding, to staff the Office of National Drug Control policy with people who have a clue.

The Administration has not appointed a director for ONDCP. A young man with no credentials or experience or demonstrable ability was the Deputy Director of ONDCP. The President’s budget proposed slashing ONDCP funding by 95%, a move that prompted fellow Republicans to promise to fight the cuts.

One example is telling. A program slated for major change is the High Intensity Drug Trafficking Initiative, the single most important program focused on fentanyl. According to one expert, moving the program out of ONDCP;

“does not make practical sense. Imagine taking the responsibility of emergency response away from the CDC in the middle of the Ebola emergency. It would never happen,”

What does this mean?

Without a focus on treatment, there is no change.


Joe Paduda is the principal of Health Strategy Associates

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