Sep
20

Montana’s making progress

In Montana this week to deliver the keynote at the annual Governor’s Workers Comp Conference and get in a good bit of hiking in the mountains around Big Sky as well.

Truth be told, I hadn’t been tracking goings-on in the Big Sky state’s workers comp system, but in prepping for the conference, I learned a good deal.

MT has some state-specific challenges; doctors can be few and far between in many areas, making direction of care a significant challenge.  The culture is very labor-friendly which can lead to courts confusing over-treatment with good care. The growth in the energy sector in eastern Montana is adding jobs with potential for higher-severity injuries.

Then there are the similarities; the over-prescribing of opioids is likely as big a problem here as in most states.

Over the last couple years, a lot of progress has been made:

– hired a Medical Director for the Department of Labor and Industry’s Workplace Relations Division (equivalent to the work comp division in other states)

developed and implemented medical treatment guidelines based on a combination of Colorado and ACOEM

– enabled employer direction of injured workers to specific physicians

– allowed payers to close some claims after sixty months (there’s a lot of detail here, but suffice it to say this was a big problem in MT)

While it is still too early to fully understand the impact of these changes, there’s no doubt these reforms will help improve care while reducing employers’ and taxpayers’ costs.

And Montana has been smart enough to ban physician dispensing of drugs to patients, a prescient stance that has protected injured workers, employers, and taxpayers from the “let’s see how we can soak employers for as much money as possible while pretending we’re all about patient care” set.


Sep
18

Upcoding for medical care – it’s everywhere

“Thousands of doctors and other medical professionals have steadily billed higher rates for treating elderly patients on Medicare over the last decade — adding $11 billion or more to their fees and signaling a possible rise in medical billing abuse.”

That’s a statement from a study of Medicare billing and coding practices released by the Center for Public Integrity, and is the lead on a lengthy and well-documented article detailing the dramatic increase in higher-complexity medical codes billed to Medicare over the last decade.

The implications for taxpayers, private insurers, workers comp and auto payers are obvious.  If docs and their billing departments are upcoding for Medicare office visits, they almost certainly are doing the same for all patients.

Interestingly, the increasing use of electronic medical record systems by many physician practices may be a contributing factor, as the systems “make it easy to create detailed patient files with just a few mouse clicks.”  These details are essential to demonstrating and documenting the level of work and time commitment involved in specific office visits.

That said, just because a doc has mostly higher-level office visits doesn’t mean they are doing anything wrong. Some providers’ patients are just sicker (“higher acuity”) than others’, requiring more time and effort.

What does this mean for you?

It is highly likely your mix of E&M codes has trended towards the more complex over time.  You may well want to identify those docs where the mix has swung dramatically at some point as that may indicate inappropriate billing.


Sep
17

The RIMS Conference and workers comp

While the annual Risk Insurance Management Society Conference is among the largest property and casualty conventions, if you’re looking for the latest information re workers’ comp you will have to go elsewhere.

[disclosure – I’ve keynoted the two main WC conferences over the last year, and was heavily involved in programming for one of them]

I’ve come to this conclusion after attending a dozen or more RIMS shows over the years and working with several entities submitting conference sessions; almost all were rejected.  This year, the Conference planners rejected a session entitled “Attacking the Opioid Crisis in Workers’ Compensation”. This “thanks but no thanks” led me to conclude RIMS just isn’t that interested in, focused on, or perhaps aware of issues relevant to workers’ comp. [more disclosure – I was one of the speakers proposed for the opioid session]

There is no issue more salient, timely, or significant than the opioid crisis, and exposing risk managers and industry executives to this issue would have helped them understand just how critical the situation is.

Reports from the major research institutions linking opioid use to increased medical costs, longer disability duration, and poor outcomes have certainly raised the profile of this issue; The Workers Compensation Institute had several sessions on the topic; the New York Times has seen fit to publish a major article on the impact of opioids on claimants and payers; the National Workers’ Comp and Disability Conference has an entire track on opioids; the American Insurance Association has made addressing the issue a top priority; NCOIL had a lengthy session on the issue at their last meeting and is doing the same at their next get-together.

That’s not to say RIMS doesn’t have some quality sessions – this year’s overview of health reform was well done- but in general WC sessions are few and tend to be basic.

That may well be intentional; RIMS’ audience tends to be less-work-comp-specific than the attendees at the other major conferences cited above.

That said, opioids’ impact on workers’ comp is a topic worthy of attention by the leading P&C industry conference.


Sep
14

Aetna CFO on workers’ comp

Aetna’s presentation at an investor conference addressed the acquisition of Coventry and provided just a bit of insight into their plans for workers comp

Here’s what CFO Joe Zubretsky  – who some have said is “no fan of workers’ comp) said…

“The second point I would make — so there is specialty revenue. The second point I would make is, and we didn’t count this as well, but I’m quite excited about it, because it’s been a vision of ours for many, many years, to unlock the value of workforce optimization by combining the skills of long-term disability, health care, and workers compensation. And when you think about it, all of those three lines of business and coverages intersect with the healthcare system, and somebody is not at their desk every day.

They have the best and largest workers compensation platform in the industry. We have dabbled in that industry over the years, but we’ve never been able to unlock its secret of profitable growth. So now that we have a fantastic long-term disability platform, what we think is the industry-leading healthcare platform, and now with the world’s or the US’s largest worker’s compensation platform, we believe we will be able to embark upon a strategy of workforce optimization, presenteeism that has not been seen before. But that’s probably out a ways and may be a futuristic view, but we think there is value there.”

[emphases added, thanks to theStreet.com for transcript]


Sep
14

Managed Care Matters – new and improved

With this morning’s post, we’ve moved to WordPress as the publishing platform.  We’ve also updated the look and feel of MCM to make it a bit “sleeker”, easier to navigate, and more user-friendly.  Julie Ferguson and Chris Miller (boss at Artefact Design) have done all the work; I just write the checks (and the posts).

MCM has been around for eight years now, a lifetime in the brave new world of social media.  Over those years, we’ve published 2471 posts, all accessible via the search function on the home page (yup, kept my unfortunately wrong ones too; Rob Gelb you haven’t been forgotten).

We’re up to 3471 subscribers (after cleaning up the list a bit) and average around 1700 readers a day (with pretty wide swings).

Couple things worth noting

What is ‘publishable’

Folks either are a) eager to get their name/company/new product-customer-idea published in MCM or b) anything but.  Many of my conversations with industry execs start with “this is confidential, right?”  The answer is always “Yes”.  I could not survive in the consulting world if my clients feared they’d appear on MCM (without their express approval).

At the other end of the spectrum, I am often approached by people eager to use MCM to get some publicity.  Mostly, I gracefully decline (ok, sometimes not so gracefully).  Occasionally the approach is professional enough, and the ‘thing’ topical enough, that it merits publication.

MCM ‘attitude’
Every now and then I get myself into a bit of hot water (sometimes an ocean’s worth) over a post, a characterization within a post, or an honest mistake. I’ll continue to retract and apologize for errors. I will also continue to opine assertively when I think the issue merits assertive opining. When I hear something that’s newsworthy, I’ll post it (after verifying thru at least two sources). And of course you can always rely on MCM to debunk stories, press releases, and flat out BS, with the tone and histrionics directly in proportion to my level of outrage.

Comment policy
You would not believe the spam comments I get – over a hundred a day, and sometimes two hundred. We’ve tried everything to ensure your comments get thru (even ones I take issue with) while blocking spam; for now I have to review all comments before they go thru. Hopefully this new platform will help.

As always, rants and comments disagreeing with me will not be posted unless opinions are backed by sources cited accurately. That’s not to say I won’t post different opinions; always have and always will.

What’s coming up.

The election season – also known as the Silly Season – is upon us (painful sigh).  My politics are well known (sometimes to my detriment) but I won’t hide my views.  If you don’t like my stance, I’m happy to hear from you – keep it professional and courteous.  If you are tempted to insult, I’d suggest you consider this.

About a year ago, I received a particularly nasty string of emails from someone on the opposite end of the political spectrum calling me, among other things, a commie, socialist, leftist, idiot, liar.  This person’s boss’s boss is also a subscriber and has become a friend – even though he’s also very conservative. He offered to discuss the issue with my antagonist; I declined.

The internet is forever, folks.  Be smart, be professional, be respectful.

 

 


Sep
13

Football!

That’s the theme of Louise’s edition of Health Wonk Review – she has a terrific lineup and calls them like she sees them – with all the attention on health care after the recent conventions, the post provides an excellent review of the parties’ competing positions.
it is refreshing to read real journalism again!


Sep
12

The case for Aetna’s sale of Coventry’s workers comp business

I’ve heard from several folks contending that Aetna will sell Coventry’s workers comp business, all making essentially the same points.
1. Aetna already has exited comp twice – once when they sold their workers comp insurance business to the Travelers, and then when they shut down AWCA, their comp PPO and PBM.
– True. However what this has to do with future plans is unknown.
2. Aetna bought Coventry for reasons other than work comp.
– True – that doesn’t mean they don’t like the $250 million in free cash flow from the comp business.
3. The CFO at Aetna doesn’t want anything to do with comp.
– Not having knowledge of the CFO’s perspective I can’t address this. I’d hazard a guess that the cash flow is kinda nice.
4. Comp revenues at <$800 million annually are small potatoes.
– But cash flow of $250 million is anything but.
5. Comp is a potential distraction.
– As are dental, life, disability, PPOs…
6. Aetna needs the cash from a sale to pay down Coventry’s debt.
– I don’t see it. With debt service costs at an historical low (and likely to decrease with Aetna’s lower interest rates, and Aetna needing cash to pay for preparations for health reform, selling an asset and using the cash to pay down debt doesn’t make sense.
Finally, as I said yesterday, despite my carefully reasoned arguments to the contrary, Aetna may want to sell the work comp business. To do that, they would have to uncouple the workers’ comp provider contracts in such a way that the buyer would get perpetual access to those providers at current discount rates.
That’s just not going to happen. No provider is going to agree to that.
And without the network, the value of the business goes way, way down.
I’d be remiss if I didn’t make the following statement (thanks to a heads up from a confidential source). Despite losing the ACE/ESIS business early this year, Coventry WC’s top line only decreased $2.2 million for the first half of 2012, driven by increased sales to new and existing customers.


Sep
11

Health reform, comparing Romney and Obama

There’s no question this election presents voters with a stark choice in candidates, and nowhere is that more obvious than health care.
Colleague Bob Laszewski has written an authoritative piece delineating the differences between Obama and Romney’s plans for health reform; here are a few excerpts. I encourage you to read the entire post, it is well worth careful consideration. (emphases added)
“On his first day in office, Mitt Romney will issue an executive order that paves the way for the federal government to issue Obamacare waivers to all fifty states. He will then work with Congress to repeal the full legislation as quickly as possible.”
The Affordable Care Act (ACA) does give the President power to issue states waivers from the Democratic health plan legislation. But, not before 2017 and only if the state can demonstrate that it can cover as many people as the Democratic health care law is covering in the state… If Romney tried this, I would have to believe advocates for the ACA would quickly be in federal court.”
“…it looks like their [Republicans’] health care priorities will be to pass their Medicare and Medicaid reforms and leave dealing with the uninsured to the states.”
Romney places a lot of trust in competition in the market for solutions…
Romney would empower individuals and small businesses to form purchasing pools. I have actually run such pools–association health plans. It is perfectly legal to start one today. In all of my years running these pools, I never saw them save money–actually they tended to cost more when compared to small group plans…”
Romney would allow consumers to purchase insurance across state lines. The problem he is trying to address is that states have lots of coverage mandates…I have no doubt that some states have fewer mandates and lower individual health insurance prices. However, I know of no state that has truly affordable health insurance. It is hard to see this as any real solution.
If this provision were ever to become law it could have a very negative impact on current state individual insurance markets. Many, and many in the health insurance business, believe this provision will take us back to the days of cherry picking in risk selection. Predatory insurance companies could use this provision to offer a stripped down policy in a state with more mandates. That policy would be cheaper and cover less–and therefore attract more healthy consumers. That would leave a sicker population in the existing state risk pool with rates having to ratchet up for those who need more coverage.”
Bob’s views, as always, are on point.
I’d add that the reason health reform is so complicated, and the bill so long, is to address these – and the myriad other issues that must all be considered if we are to ‘reform’ the health care and health insurance system(s).


Sep
10

What will Aetna do with Coventry’s work comp business?

That’s a question I’ve been asked a couple dozen times over the last two weeks.
For several reasons I don’t see Aetna selling the Coventry workers comp business.
1. It generates a ton of cash.
While the financials are a bit murky, the workers comp business almost certainly generates more than a quarter billion dollars in cash flow. Cash is king in the run-up to 2014, as health plans desperately need funds to prepare for the post-reform world. Acquisitions, investments in IT and care management, and free funds to deploy in as-yet-unknown areas are all going to require plans have lots of cash on hand.
2. It requires no time energy or thought
While senior management at Aetna is focused on reform, the work comp business requires little attention. President David Young and his staff have shown themselves quite capable of keeping things moving along, despite almost no investment into the business. While it is unlikely they’ll be able to keep all their clients without that investment, for now the WC business is the epitome of low maintenance.
3. They can’t sell the most profitable piece – the network
The network generates the lion’s share of the margin; if Aetna wanted to sell the WC business it is hard to see how it could transfer the network’s provider contracts to the new owner as most are a combined WC/group/governmental contract. Sure, Aetna could guarantee access to their contracts going forward for some period certain, but given Aetna’s history with workers comp, any buyer would be very reluctant to bet the future of their investment on that guarantee.
4. Coventry’s WC business has been losing customers
With ACE/ESIS the latest to move from Coventry to other entities for most managed care services (Progressive Medical for PBM, ACS/CompIQ for bill review, multiple networks for PPO), a sale would likely not generate near enough cash to make the transaction worthwhile (compared to the ongoing cash flow). Yes, it’s possible Aetna would want to sell it before more customers depart, but the multiple would likely be insufficient as any buyer would discount future earnings based on projected customer losses.
(while I’m no fan of Coventry WC, there’s no question the lack of investment on the part of Coventry WC’s parent company has made it quite difficult for management to continue improving services and product offerings)
That said, it is possible Aetna will explore selling the unit off – and given the private equity industry’s newfound passion for workers comp services, it is certain Aetna CEO Mark Bertolini’s voice mail is stuffed with friendly just-touching-base messages from PE execs.
Those PE execs will likely be waiting a long while for a return call.
What does this mean for you?
Business as usual for Coventry WC.


Sep
6

ScripNet’s been sold – yet ANOTHER deal in workers’ comp

Healthcare Solutions announced yesterday that it will acquire work comp PBM ScripNet, a transaction that will add significant share to HCS’ Cypress Care PBM business. ScripNet is particularly strong in the ‘central southwest’ market, with substantial share in the governmental entity market in Texas as well as a long-term relationship with Texas Mutual, the dominant insurer in the Lone Star State.
The deal will push HCS’ annual revenue above $400 million which includes pharmacy, ancillary services, networks, and other operations.
Both companies use the same pharmacy processing platform (SXC) and sources indicate there will be some significant “synergies” that will make the combined entity more profitable. ScripNet’s current customers will greatly benefit from Cypress Care’s strong in-house clinical management programs. (full disclosure; although I helped develop Cypress’ clinical program years ago, that program has been significantly enhanced since then)
HCS joins several other companies in the workers’ comp services business with revenues above that level:
– Coventry’s WC unit
– OneCall/MSC
– PMSI
– Express Scripts
– ExamWorks
– Concentra
– Progressive Medical/Stone River
I’d expect others to join the $400 million club. The workers’ comp services business is consolidating: smaller companies are being snapped up by their larger competitors and private equity firms and multiples look to be edging up (which will drive more privately-held companies to test the market).
Broadly speaking, there are a couple different models emerging here. The ‘vertical model’ is one in which a company seeks to add share in their current space. ESI’s purchase of MSC’s pharmacy business some years back is one example of a company seeking additional share in one sector – in this case pharmacy.
The ‘horizontal model’ is the one employed by Odyssey Investments, current owner of OneCall/MSC. They are putting together an entity with a broad product offering, delivering imaging, DME/HHC, dental, and transportation/translation services (with others likely to follow).
There are pros and cons with each approach; on balance I’m more a believer in the vertical strategy (as my consulting clients hear on a regular, if not continuous basis).
That said, any strategy can succeed – if it is executed well.
What does this mean for you?
Fewer options for services, likely better systems and reporting, opportunities for innovators to exploit slower-moving larger competitors.