Year: 2015

Jan
6

2015 health care predictions

Posted by Joe Paduda on Tuesday, January 6th, 2015 | Comments

I’ve decided to split my predictions into work comp stuff (where I do most of my work) and health care stuff not directly related to work comp.  Here’s my health care predictions…

1.  Health care cost inflation will remain low.  After five years of growth at or below 4 percent, health care costs remain relatively stable at 17.4 percent of GDP.  It is possible that health care costs for 2014 will come in below that benchmark due to increasing productivity and stable health care costs.  In the interest of setting a metric, I’ll predict costs remain at 17.4% of GDP…

2.  ACA will be less of a story.  The healthcare.gov website appears to be working well – at least on the front (enrollment/consumer) end.  Work on the back end (communications with internal governmental programs and agencies, financial links, and ties to health plans) continues but seems to be proceeding apace.  We’ll base evaluation on the volume of news stories this year vs 2014.

3.  Employer take-up of health insurance will remain stable; if it drops it won’t do so by more than a percentage point. Despite the hysteria from ACA opponents claiming employers would drop insurance en masse, it hasn’t happened.  And it won’t.

4.  Expect 11 million plus enrolled via the Exchanges this year (federal and state).  Initial enrollment in late 2013 was strong in key states, and the outreach efforts are paying off.

5.  More ACOs will close down or suspend operations, while others will grow and expand. Net is we will see more lives covered via ACO-type models.  For those of us old enough to remember the halcyon days of HMOs this is hardly surprising. The number of HMOs reached 640+ in the late eighties before market forces led to consolidation via merger/acquisition, failure of some, and expansion of the successful ones into new markets.  This is how it works – a decreasing number of ACOs is not an indication that the model doesn’t work.

6.  More hospitals will close as the reduction in Medicare and private pay reimbursement hits those unable to adapt.  While there will be pain in affected local communities, this is inevitable as a sixth of our economy goes thru restructuring.  It happened in the oil industry in Pennsylvania in the 1940s, shipbuilding in the 1960s, textiles, clothing, clothing, furniture, automobiles…

7.  More doctors will work for very large multi-specialty groups and health systems.  Currently about three-fifths of physicians are employed; expect that to bump up by a couple percent.

8.  Care extenders will get more care authority.  This is going to be contentious, at times nasty, politically charged. It is also inevitable.  PTs can do a lot of things orthopods currently do; nurse practitioners are already delivering a lot of primary care, and nurse midwives are increasing their scope of practice in many areas.

9.  Specialty drugs will continue their meteoric rise in cost and prevalence.  I know, an easy one, but absolutely worthy of note as they will become an even larger portion of medical spend, forcing payers and policymakers to make some very hard decisions about coverage.

10.  Ebola will disappear from American mass media.  If it’s not here, we don’t care, and it won’t be here. Yet another example of the American public and American media’s obsession with really bad things only when they directly affect us.

 

Jan
5

Predictions for work comp in 2015

Posted by Joe Paduda on Monday, January 5th, 2015 | Comments

Once again I’ll head out on a limb with saw firmly in hand…

1.  Aetna will NOT be able to sell the Coventry work comp services division.  I’ll double down on last year’s prediction: even if the giant health plan wants to dump work comp, the network – which is where all the profit is – isn’t sellable.  The rest of the operation isn’t worth much; the bill review business continues to deteriorate (and CWCS is looking for a replacement BR application) , competitors are picking off key staff, and customers continue to switch out services and network states.

2.  Work comp premiums will grow nicely, driven by continued improvement in employment and gradually increasing wages coupled with increases in premium rates in key states (we’re talking about you, California).

3.  Additional research will be published showing just how costly, ill-advised, and expensive physician dispensing of drugs to workers’ comp patients is. Following on the excellent work done by CWCI and Accident Fund/Johns Hopkins, we can expect to learn more about the damage done to patients, employers, insurers, and taxpayers by docs looking to Hoover dollars out of employers’ pocketbooks.

4.  Expect more mergers and acquisitions; there will be several $250 million+ transactions in the work comp services space, with more deals won by private equity firms.  Of late, most transactions have been “strategics” where one company buys another; the financials of these have been such that private equity firms couldn’t match the prices paid.

I’d expect that will change somewhat in 2015 as  “platform” companies come on the market.

5.  A bill renewing TRIA will be passed; the new GOP majorities want to show they can “govern” and this has bipartisan support.

6.  Liberty Mutual will continue to de-emphasize workers’ comp. The company’s continued focus on personal lines and property and liability coverage stands in stark contrast to the changes in work comp.  The sale of Summit, management shifts, and the financial structuring of legacy work comp claims portend more change to come. Recent financial results show the wisdom of this strategy…

7.  After a pretty busy 2014, regulators will be even more active on the medical management front.  Work comp regulators in several more states will adopt drug formularies and/or allow payers/PBMs to more tightly restrict the use of Scheduled drugs via evidence-based medical guidelines and utilization review.  While the former is easy, the latter is better, as it enables payers and PBMs to more precisely focus their clinical management on the individual patient.

Expect more restrictions on physician dispensing and compounding, increased adoption of medical guidelines and UR, along with incremental changes in several key states (California we hope) to “fix” past reform efforts.

8. There will be at least two new work comp medical management companies with significant mindshare by the end of 2015. These firms, pretty much unknown today, are going to be broadly known amongst decision-makers within the year.  While they will not generate much revenue this year, they will be attracting a lot of attention.

9. Outcomes-based networks will continue to produce much heat and little real activity.  After predicting for years that small, expert-physician networks will gain significant share, I’m throwing in the virtual towel. There’s just too much money being made by managed care firms, insurers, and TPAs on today’s percentage-of-savings, huge generalist network/bill review business model.  Yes, there will be press releases and articles and speeches; No, there won’t be more than a very few real implementations.

10.  Medical marijuana will be a non-event.  Amidst all the discussion of medical marijuana among workers’ comp professionals, there’s very few (as in no) documented instances of prescribing/dispensing of marijuana for comp claimants. Yes, there will likely be a few breathless reports about specific claims, but just a few.  And yes, there may also be a few instances of individuals under the influence of medical marijuana incurring work comp claims, but these will be few indeed.

There you have it – here’s hoping I’m more prescient this year than I was last.