Insight, analysis & opinion from Joe Paduda

< Back to Home


Quick catch-up on the events of the week

Hard as it is to believe, the world kept turning while MCM was on vacation, with nary a wobble to mark our hiatus.

Here’s a quick summary of things that happened while we were away…

Medicare physician reimbursement

Congress may – at long last – kill the oft-derided and pretty-much-useless Medicare physician payment update methodology knows as the Sustainable Growth Rate.  Useless because Congress overrides it on an annual basis, as SGR requires cuts in reimbursement to keep Medicare’s doc costs under control.  A bill advancing in the GOP-controlled House of Representatives seeks to replace SGR with an annual increase of 0.5%, ending in 2018 with a to-be-developed methodology based on quality and performance.

In the work comp world, almost all provider fee schedules are based – to one degree or another – on Medicare’s RBRVS. This change will directly impact reimbursement in a few states, and indirectly in all as the unforeseen consequences of price management become apparent. (An excellent source for information on state fee schedules is available from WCRI.)

The latest edition of Health Affairs has a great piece about CalPERS’ use of reference pricing to influence their members’ choice of hospitals…

in response to a fivefold variation in prices it paid on behalf of members who underwent knee and hip replacement surgery. Under this benefit design, an insurer places limits on the amount it will pay for a procedure, with employees paying the difference if they select a higher-price hospital. Based on first-year results from forty-one hospitals identified as value-based purchas- ing design facilities, surgical volumes for CalPERS members increased by 21.2 percent at low-price facilities and decreased by 34.3 percent at high-price hospitals. [emphasis added]

Gotta love the effective use of the power of information.

There is more information coming out – seemingly every day – on rates filed for the health insurance Exchanges.  Another piece in Health Affairs explores why there’s wide variation in rates in some states – and very little variation in others.  One clue – “In contrast to the 34 states where the federal government is operating the exchange as a clearinghouse that will accept all insurers who meet minimum standards, Covered California negotiated rates with each insurer with the implicit threat that the Exchange would exclude any insurer who did not come up with an acceptable rate. ” California’s rates showed the least amount of variation…

Obesity has been classified as a disease by the AMA, a change that may well impact work comp claims, claims management, costs, and therefore system costs. CWCI research found:

“average benefit payments on indemnity claims with the obesity co-morbidity were $116,437, or 81.4 percent more than those without; and that these claims averaged nearly 35 weeks of lost time, or 80% more than the average of 19 weeks for claims without the obesity co-morbidity.”

There’s a lot more brewing out there with deals-aplenty, but I’ve got to catch up on emails and calls and stuff that didn’t get done last week, so they’ll have to wait till tomorrow.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



© Joe Paduda 2021. We encourage links to any material on this page. Fair use excerpts of material written by Joe Paduda may be used with attribution to Joe Paduda, Managed Care Matters.

Note: Some material on this page may be excerpted from other sources. In such cases, copyright is retained by the respective authors of those sources.