Insight, analysis & opinion from Joe Paduda

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Friday’s catchall and catch-up

It’s been a crazy busy year for all; in the run-up to the Christmas holiday I missed a few items that well deserve mention.

First, my post about female CEOs missed a couple women in that role; Liz Haar is CEO of Accident Fund Holdings Inc.  What’s worse is AFHI has been an HSA client for some time, proving I can on occasion be dense as a rock . Artemis Emslie runs myMatrixx, one of the more innovative workers’ comp PBMs.  Deborah Pfeifle was also disappointed I forgot about her.

My apologies to you all; I’ll strive to do better in the future.

On the good news front, medical trend is at an all-time low, with inflation running 1.3 percent since 2010.  That is nothing short of amazing/incredible/mind-boggling.  As a result, CBO projections of Medicare/medicaid spending over the next six years is down $147 billion, or 0.6% of GDP.

On a more esoteric note, CMS announced they are cutting reimbursement for interventional pain procedures; epidural steroid injections will be lowered by 36%+,  fees for spinal cord stimulation and kyphoplasty will be cut as well.  Here’s the issue; interventional pain docs may decide non-work comp patients aren’t worth their time, and focus even more on work comp. Comp payers should very carefully monitor interventional pain docs and claimants treated by those docs and be alert for practice or treatment plan changes.  

(this is the letter ASIPP is requesting docs send to their representatives…)

Finally, a piece from JAMA provides sobering statistics on why health care in America is so expensive.  (thank you to Vincent Drucker for the tip, and kudos to the Incidental Economist for posting on it long before I did)

  • 84% of medical costs are for the treatment of chronic conditions
  • Price increases – not utilization – accounted for 91% of medical cost increases since 2000.  Price is driving cost, with hospitals increasing the most.
  • The aging of the population is pretty much a non-factor, while provider consolidation is a major contributor to pricing power.
  • IT is a driver as well; “investment has occurred but value is elusive.”

So what’s to make of the super-low inflation numbers while historical research indicates prices are up?  Couple things spring to mind.

First, CBO numbers are for total spend, and governmental programs have done quite well in controlling cost; commercial payers not so much (except in Mass, where average group health premiums have gone down over the last two years!)

Second, the JAMA piece includes data from the 2000 decade while CBO is just 2010 on.  Different sample set.

What does this mean for you?

Taking all these cost items together, watch out for cost-shifting!

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.



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