Month: December 2012

Dec
10

Obamacare – status update

Posted by Joe Paduda on Monday, December 10th, 2012 | Comments

Here’s where we are with the implementation of PPACA aka Obamacare.

1.  Several states have either rejected the Medicaid expansion or are waffling. Expect most to decide to take the money; hospitals, physicians, and their lobbyists are working overtime to make sure this happens.  It’s a no-brainer; the feds are paying all of the cost for the first five years, 95 percent for the next five, and 90 percent thereafter.

2. A new tax to subsidize lower-income folks’ Medicaid goes into effect January 1. Most of the new revenue (85 percent) derives from the top 1 percent of taxpayers, with lower-income people getting most of the benefits. for Medicaid and insurance subsidies.

3. The growth of Accountable Care Organizations is quickening – but some are ACOs in name only, while most are ACO 1.0. While there’s much skepticism about the eventual ability of ACOs to control costs/improve outcomes, I’m convinced they will do both.

This from David Harlow:

“…we’re at the leading edge of a significant disruption built around the Affordable Care Act’s provisions on ACOs and related initiatives: a sea change in the way health care is conceptualized, and radical change in delivery and payment systems.  We’re ahead of the curve on these issues in Massachusetts, with a law passed this summer that will move us into ACOs for all — not just Medicare beneficiaries — and away from fee-for-service medicine, and a local Blue Cross-Blue Shield plan known as the Alternative Quality Contract that has been working on this basis — budgeted caps with quality kickers — for several years already. It’s the latest form of pay for performance, or value-based payment.”

4. The feds will charge insurers who go thru Federal Exchanges 3.5% of premiums. This is likely quite a bit more than private insurers were figuring.  If nothing else, it will increase pressure on governors who until now have rejected operating their own Exchange; expect insurers in the 21 states that have rejected exchanges to increase pressure on their governors to set up their own state-run exchanges.

5. There’s much angst in the insurer community over definitions of benefits – which are set by each state – and the cost of providing those benefits.  States with few mandates may well see costs go up significantly, especially for younger folks with individual coverage (who now must more heavily subsidize older members).

Lastly, there’s a whole lot of uncertainty surrounding implementation of Obamacare/PPACA, along with a lot of prognostication about costs, coverage, and impact on providers, employers, and taxpayers.

One thing to remember; if private insurers had controlled costs, we wouldn’t be talking about Obamacare.

Dec
6

Manufacturing’s coming back

Posted by Joe Paduda on Thursday, December 6th, 2012 | Comments

Update – And with it will come higher workers comp premium revenue.

The most comprehensive report on the resurgence of American manufacturing is in this month’s Atlantic magazine.  (Over at WorkersCompInsider, Julie Ferguson beat me to the punch on this piece – Julie has quite a bit of insight into the trend and other reports as well…

Among the many companies bringing jobs back from China, Mexico, and southeast Asia are GE (appliances), .

Manufacturing jobs are returning to America from overseas for multiple reasons (paraphrased from Atlantic and other sources) –

  • Transporting stuff in oil-powered ships is much more expensive these days; oil prices are three times higher than they were 2000
  • The natural-gas boom in the U.S. has greatly reduced US manufacturing’s energy costs; costs are much higher in Asia
  • Wages in China are rising 18 percent a year, and by 2014 wages around Shanghai will be 60% of those in Alabama.
  • American unions are changing and adapting, getting more flexible and working much more closely with management to drive “lean manufacturing.”
  • U.S. labor is getting more and more productive, reducing the percentage of manufacturing costs consumed by labor.
There’s also something much more fundamental going on here.  Manufacturers are finding out the truism that lower labor costs “win” reflects a superficial understanding of costs, and in many cases is just wrong.
Moving manufacturing overseas removed manufacturing expertise as well.  And while that didn’t seem to be much of an issue fifteen years ago, it turns out that when the people designing, building, selling, and using the appliances/machines/machine tools are in the same building or area, they can quickly figure out how to reduce materials cost, dramatically increase build quality, and streamline manufacturing, further reducing cost.  Moreover, the cycle time can be drastically shortened as well.
That’s becoming increasingly important as products’ life cycles have dropped from seven to two years.
What does this mean for you?
While manufacturing is returning, the working conditions, safety issues, injury types and risk management of all of the above won’t be the same.  There’s much more automation, much less “manual” labor, and different risks than there were back in the day.
Be ready.

 

Dec
6

Solving work comp physician dispensing, one bill at a time

Posted by Joe Paduda on Thursday, December 6th, 2012 | Comments

It’s been a week of focus on pharmacy, so forgive one last post on the subject.

Now that Illinois has joined CT MS AR SC GA and a host of other states that have addressed the outrageous practice of charging unconscionable prices for physician-dispensed repackaged drugs, what’s to be done in other states that have yet to stop the practice?

I’m talking Florida, Maryland, North Carolina, Hawaii, where some politicians have blocked fixes, or the regulatory process has yet to gain traction.

It is quite likely that dispensing companies are experiencing a significant cash flow crunch. They didn’t expect Illinois to end upcharging for repackaged drugs, and their projections of millions in revenue from the Land of Lincoln are now shattered.

An increasing number of payers are applying retail pharmacy rates to bills for physician-dispensed scripts in Florida – slashing reimbursement to a fraction of dispenser’s billed charges.

This latter approach is also being employed in Maryland and a couple other states where payers are increasingly fed up with politicians’ votes allowing dispensing of repackaged drugs.  The pols’ favoring of huge out of state contributors over taxpayers and employers has yet to cost them politically, but in the interim some payers are refusing to pay the tab, and are disputing dispensers’ bills thru adminstrative processes.

Sure, payers may well lose some disputes in some states, or perhaps many in many states, but the pressure they are bringing to bear is hurting dispensers and their enablers and owners.

The mood inside dispensing companies’ office must be very angry, extremely frustrated, and even shocked that employers and payers are finally refusing to pay their bills. If you listen carefully, you can almost hear their shrill whining…”Who do they think they are? How dare they not pay us what we want when we want?! Don’t they know they have to?!”

To which I would answer:

We are the fiduciaries responsible to our policyholders; We pay what we are legally obligated to pay; We’ll rely on the legal system to tell us what to pay, not some profiteering plunderer’s made-up bill.

Feel free to quote me.

Dec
4

So you think you know work comp claims?

Posted by Joe Paduda on Tuesday, December 4th, 2012 | Comments

Sign up for Mark Walls’ seminar and find out if you really do.

I’d especially recommend potential investors, vendors, and service providers who sell to or work with or interact with workers comp claims adjusters and organizations sign up for Mark’s presentation.

That said, understand Mark will be talking about how claims should be handled, which may – or may not – bear much resemblance to how certain claims adjusters actually handle claims.  Nonetheless, those who want to understand the role of claims, and interaction of claims and related areas (managed care, investigations, litigation, technology, providers) would be well-served to sit in.

 

Dec
3

The latest work comp fraud

Posted by Joe Paduda on Monday, December 3rd, 2012 | Comments

WorkCompCentral reported [sub req] this morning that a Pennsylvania County was defrauded by its risk manager to the tune of $490,000.  The County’s TPA (Inservco, owned by Penn National) paid $490,000 for fraudulent bills approved by Dauphin County’s risk manager.  The  County discovered the scam when the risk manager, Garry Esworthy retired and the county reviewed the bills and payments to a company he’d set up in his wife’s name.

While there’s plenty of embarrassment to go around, it appears that the scam was easy to perpetrate.  As the risk manager, Esworthy had the ability and authority to approve payments for bills processed by Inservco.  He set up a company in his wife’s name, and submitted bills to Inservco. The TPA processed the bills, then sent them to Esworthy for approval.  Once he signed off, the checks were cut and sent to his account.

The scam was discovered after he retired and a County official looked into some of the bills and became suspicious.

Evidently Inservco is not to blame in this case. WorkCompCentral’s Mike Whiteley reported that earlier this year Inservco “came under fire from New Jersey State Comptroller Matthew Boxer, who said the company failed to disclose “side agreements” with bill repricing vendors it hired as TPA for the New Jersey Sports and Exposition Authority and for a city, county, and school district in New Jersey.” (the NJ Sports and Exposition Authority is a former HSA consulting client)

Boxer released an alert indicating “New Jersey governments could be wasting taxpayer dollars if they don’t closely monitor companies they hire to administer workers’ compensation claims…”