Author: Joe Paduda

Mar
12

WCRI – health reform explained

Posted by Joe Paduda on Wednesday, March 12th, 2014 | Comments

Today starts off with a discussion of the impact of health care reform on the health care system – there’s another talk tomorrow morning on the impact of ACA; here’s the first of a nine part series I penned last summer…will be interesting to see the panelists’ views.

The first presentation was by MIT’s Dr Jonathan Gruber on health care reform.  Gruber noted that a government-run program is never going to happen, but each time we tried to do this in the past and failed, a chunk of the underserved got some form of relief – Medicaid, Medicare, Part D, S-CHIP, etc.

RomneyCare, seen by many as the basis of PPACA, is a combination of left- and right-favored ideas, including community rating reforms, an individual mandate, and subsidies for those who couldn’t afford insurance on their own.  This went into place in 2006.

The uninisurance rate in Mass. is now 3% (compared to the national rate of about 16%), premiums in the individual market fell by about 50%, and premium trend rates for small employers have been flat for the last couple of years.  However, Mass’ reform was subsidized to the tune of a half-billion dollars.  This too has become part of the basis for PPACA, along with the individual mandate, subsidies for low-income families and expanded Medicaid, and rating reforms.

Lots of nonsense has been dumped on the ACA – the death panels being only one of the most blatantly false.  Gruber highlighted the impossibility due to political issues  – there were just too many forces – political, industry, lobbyists – blocking meaningful cost reduction.  There are, however, five cost control mechanisms.

  1. Cap the taxable benefit of employee health benefits – currently the tax-free status of benefits reduces taxes by $250 billion. The “Cadillac plan” tax cap is intended to address this, albeit in a bass-ackwards way; this will reduce costs by not by much.
  2. Health insurance exchanges – introduced more competition and lowered cost of sale. (in my view the leveling of the playing field coupled with universal coverage will force health plans to compete on the basis of outcomes and cost – and this is going to have a very large, and very positive, effect on long-term cost inflation)
  3. IPAB – independent payment advisory board – which can affect Medicare health reimbursement by forcing Congress to save money or agree to use IPAB’s recommendations.
  4. Research on Comparative Effectiveness
  5. ACO and other experiments; medical homes, bundled payments, and other mechanisms aimed at coordinating care and reducing cost especially for chronic conditions.

In response to a question about freedom, Gruber noted that there are more health plans available now thru the exchanges than there were prior to reform.

Insurance prices for exchange plans for 2014 were about 15% below predictions, however this pricing was more of a guess than an actuarial projection based on past data.  We will know much more at this time next year when the 2015 rates are in place.

I loved Gruber’s characterization of states’ failure to expand Medicaid as political malpractice…

 

Mar
11

We are so screwed.

Posted by Joe Paduda on Tuesday, March 11th, 2014 | Comments

That’s the conclusion I’ve reached partway thru a quick-and-dirty survey of a handful of savvy, connected brokers.

The people who buy workers’ comp insurance and or claims and/or medical management are, mostly, clueless.  

They succumb to spreadsheets when comparing TPAs.  Because they have no idea how to separate out the good ones, they go for the cheapest per-claim fee, then are surprised when their ALAE costs are thru the roof.  But hey, that’s “claim-related” so they’re safe.

They bitch at their insurer when their claims costs go up, but won’t direct to good docs, or educate their employees before injuries, or hold management accountable.

They think bigger networks are better networks, that deeper discounts deliver big savings, that case management is the “state of the art.”  Many are quite ignorant of evidence-based medicine – which to my mind is the ONLY way we’re ever going to deliver quality care at reasonable prices.

Providers who pitch outcomes and return to work get some traction with a few of the bigger employers, but nowhere near enough to change the managed care business model.

To be fair, some large employers – think Lowe’s, Costco, Safeway – are doing really great stuff, and I’m sure there are lots of others who are innovating and improving and demanding performance.

The only thing that’s protecting these “buyers” is the up-and-down insurance cycle, a driver that has a disproportionate effect on the price and availability of work comp insurance and claims services.  Those that think they are safe may want to consider what’s coming.  PPACA has and will dramatically affect provider behavior, provider access, and the type and quantity of care delivered.

What does this mean for you?

To paraphrase HL Mencken, you get the work comp results you deserve, and you deserve to get them good and hard.

Mar
10

Friday’s (delayed) catch-up and fast facts

Posted by Joe Paduda on Monday, March 10th, 2014 | Comments

Apologies all – too much work last week and not enough time to get this out.

Here’s what I missed reporting last week.

WCRI’s annual meeting is starting Wednesday – there’s a ton on the agenda, attendance looks high, and I’ll be “live blogging” throughout.

There’s increasing evidence that health care cost trends have continued to moderate.  However, people – employees, individuals, moms and dads – are seeing higher cost-sharing and contributing more to their premiums.  Thus the “good news” is mainly “good” for policy wonks and not for real people.

On the Obamacare issue, a poll released Friday indicated 55 percent of the currently-uninsured respondents will get coverage rather than pay a fine. The same poll indicated the uninsuranace rate has decreased 1.2 points since the end of 2013.

Meanwhile, those zany, madcap House Republicans are at it again! Yes, they are trying to hold up O-care, this time by tying a fix to the Medicare physician reimbursement rate to delaying the mandate for a couple-or-ten years.  What will they think of next?

In the wild world of work comp, the big news last week was – there was only one private equity deal! Fairpay Solutions was sold by Riverside to Mitchell International in a transaction that sources indicated made the Riverside folks happy but not ecstatic.

That’s it for last week.  Gotta save up my pixels for the forthcoming blog-o-thon aka WCRI.

 

 

Mar
6

The revenge of the nerds

Posted by Joe Paduda on Thursday, March 6th, 2014 | Comments

It’s about understanding medical care, cost drivers, and components thereof.

Several years ago (ok, more like ten) I was in a client CEO’s office discussing medical care cost drivers, competitors, and possible differentiation strategies.  He stepped out for a few minutes to take a call, and, finding myself with nothing to do, I pulled out the latest Health Affairs to catch up on the latest and greatest in health policy research.

Upon this august gentleman’s return to his office, he asked me if I actually read Health Affair. When I said I did, he said something to the effect of “no one reads that, they just carry it around to look smart.”

And therein lies the problem.

And no, it’s not that I don’t need all the help I can get to look smart.

It is a lack of attention to the underlying drivers, influencers, issues.  It is a failure to think about how Medicare’s physician reimbursement affects commercial rates, how Medicaid enrollment drives provider behavior, how Part D enrollment influences drug pricing, how the lack of coverage among certain populations increases facility costs to commercially-insureds, how low adoption of evidence-based medicine makes for poor outcomes, how productivity is affected by insurance coverage status, how payment reform will affect workers’ compensation medical expense ratios.

There’s also a predilection on the part of some to ignore, or more commonly discount, information that runs counter to their worldview.  I see this all the time with workers’ comp execs when discussing Obamacare; they allow their political blinders to affect their business decisions.

There is so much happening in health care delivery and financing and reimbursement and evaluation and coverage that no one can possibly keep up.

What does this mean for you?

The ones who take the time to read and listen objectively, to think about import and impact are going to be more prepared, more aware, and better equipped than those that, for ideological or other reasons, have tunnel vision.

And thus more successful.

 

Mar
5

Obamacare’s success is NOT about enrollment

Posted by Joe Paduda on Wednesday, March 5th, 2014 | Comments

At least not ONLY about enrollment.

What’s missing from the reporting on and discussions about how many and who and where they signed up for health insurance is a much more important issue – what are the health plans doing to improve health and control cost?

You wouldn’t know that from the press or pundits.

The are fighting the proverbial last war, and are not thinking about what it will take to succeed in this one. Amidst all the back-and-forth about young invincibles and risk corridors and subsidies is this reality; the basis for health plans’ financial success has changed – dramatically.

Health plans will no longer succeed by underwriting; that’s dead.  Yes, pricing is critical, but it can’t be used to drive demographics and enrollment, and neither can benefit design.

These tools – benefit design and underwriting – had been the fundamental business drivers for decades.  Now, they no longer exist.

They have been replaced by population health management.

Going forward, health plans’ success will be driven by much-improved, streamlined, integrated health care delivery systems focusing on population health management.

This means identifying those members with chronic health conditions and reaching out – assertively and proactively – to those members.  It means keeping them healthy; the annual cost of an asthmatic that has an acute episode is 20x more than one who doesn’t. Hypertension, diabetes, depression, COPD are all major contributors to health costs, and those health plans that get their members to higher health status will win.

They will have lower total medical costs, and will be able to offer lower premiums, which will drive more enrollment, including enrollment of younger, healthier (that means cheaper) members.

The “how” to do this is incredibly complex, requiring multiple stakeholders to completely change their thinking and success criteria and financial orientation.  To wit:

  • Docs will no longer be motivated to admit/treat/prescribe, but rather to work with patients to get those patients to “do the right thing”
  • Hospitals will want fewer transplants/surgeries/ER admits
  • Medical people will run insurers and health plans
  • In some markets, health plans all become appendages of delivery systems, while the big national players will continue their efforts to partner with local health care delivery systems.
  • Expect much faster and deeper adoption of evidence-based medical guidelines as health plans and their provider partners rely on science to drive improved outcomes.
  • Some smart health plans may actually figure out how to market themselves.  Seriously, it is possible!  Yep, after many, many years of underinvesting in marketing, branding, positioning, health plans are going to spend tens of millions in an effort to brand themselves and achieve “mind share” among consumers.
  • Employer involvement in arranging for employee health benefits will diminish – a lot.

This is already happening – it isn’t pretty, there are lots of starts, stops, and dead-ends, plans will fail and providers go belly-up, but the market will determine the winners. Notably, this wouldn’t have happened without guaranteed enrollment and pre-set benefit plans.

What does this mean for you?

The current flattening of health care trend will continue due to this transformation.

With clear boundaries set by Obamacare, health plans will succeed – or not – based on their ability to do what they should have been doing all along – deliver the best outcomes for the lowest cost.

 

Mar
3

Are Narrow Networks Bad or Are There Bad Narrow Networks?

Posted by Joe Paduda on Monday, March 3rd, 2014 | Comments

This is a guest post from Tom Barrett of BBG, a highly-regarded employee benefits consulting firm with deep expertise in flexible spending programs and medical management.

The title above plays off of an old adage wisely employed by a very sharp and highly respected colleague.

Here’s one take on narrow provider networks as seen from the trenches.  While it’s mostly informal and unscientific it is cast with an experienced eye when it comes to networks:

Many of the narrow networks offered prior to 2014 placed a more discerning emphasis on contracting with higher performing providers.  We think these networks at least leaned more toward striking the combination of higher quality and lower cost.

Some (“some” emphasized) of the new narrow networks, especially those created primarily for the exchanges, appear almost exclusively aimed at low cost.  In fact, during the run-up to 2014 some carriers indicated that on the exchanges especially, low cost would win. Period. They indicated that network contracts comprised of low fee schedules was the way to get there.  New networks were developed with the key goal of being on the “first page” (lowest cost, think airfare searches, rental cars, hotels, etc.,) when plans were shopped.

Describing how carriers built these new networks, one highly respected industry insider indicated that contracts containing these low fee-schedules were mailed out to the provider community.  Carriers then waited to see which of the providers would accept the low fee schedules and sign-up.  The new networks were then built accordingly.

Probably not surprisingly, some of these new narrow nets bear a striking resemblance to Medicaid networks and are comprised mainly of providers willing to accept Medicaid-like fee-schedules.  We think that it’s safe to say that the quality and outcome side of the equation did not rule the day in the development of these networks.

So what’s the “net” for all of us?

Caveat emptor.  We’re not suggesting it’s necessary or even wise to shy away from all the narrow nets.

Rather, make darn sure you do your homework before building or selecting a plan that’s associated with one.

We don’t expect this to go away and expect provider and network evaluation to continue to grow in importance for everyone going forward, most especially for individuals and small and mid-size businesses ……….

Feb
28

Friday fast facts, catch-up, and debunking

Posted by Joe Paduda on Friday, February 28th, 2014 | Comments

Today we begin with a plea for…research.

Can someone please provide evidence – that’s solid, well-documented, and not just opinion based on…common knowledge that employees file lots of claims under work comp that SHOULD be considered non-occ?

Or that Obamacare will lead to MORE claim-shifting to work comp?

because that’s what two recent analyses of Obamacare’s impact on P&C/work comp say.  One, from Marsh, says “Employers have long been concerned that injuries from non-work-related causes will be shifted to workers’ compensation.”  Why? Is there any basis for this “concern”? Any research? Science? Data?  Not disagreeing with Marsh’s conclusions, rather challenging what passes for “accepted wisdom” in our industry.

Another “analysis” of Obamacare and P&C, by the Insurance Research Council, reads “In some cases, the [workers’ comp] claim may be legitimate, but would have been previously filed as a health-insurance claim…While increased cost-sharing may decrease health insurer outlays, it also may encourage individuals with health insurance to assert coverage for injuries under property-casualty insurance where the opportunity is present to do so.”

Again, since when is idle speculation “research”? And the assertion that there is “increased cost-sharing” is just ludicrous. In fact, there is LESS cost-sharing in many plans due to lower deductibles and co-pays under PPACA plans than employees’ previous health insurance coverage. Research indicates that if the annual out-of-pocket caps had been in place in 2011, the 15 million people who exceeded the cap would have saved $25 billion.

Truth be told, I too “knew” employees abused work comp, until it turned out the research indicated it wasn’t.

Then again, I’m not a “research council”…I am, however, a big believer in credible research and analytics and science.

Narrow networks

A guest post on Monday will dig in to this deeply, so here’s the teaser.  A Kaiser Health Tracking poll just released finds “those who are most likely to be customers in the Affordable Care Act (ACA)’s new insurance exchanges (the uninsured and those who purchase their own coverage) are more likely [54% to 34%] to prefer less costly plans with narrow networks over more expensive plans with broader networks.” (emphasis added).

Not surprising; those who have to pay the entire cost are more price-sensitive than those whose employers’ subsidize their premiums.

Hospital inpatient volume is declining

And has been for five years, due to fewer elective admissions, tighter controls by health plans, more use of outpatient rather than inpatient facilities, and the structural shift towards “fee-for-value away from fee-for-service” due to more emphasis on prevention and practice care.

Sounds good right? Sure, unless you are a P&C payer – as patient census counts from governmental and private insurers declines, those smart hospital execs are going to look for ways to make up that shortfall.

Federal deficit

Then again, it’s not bad news for we taxpayers, as the decline has reduced Medicare spend below projections, which has helped give us the smallest deficit since 2008.

Always good to end on a high note!

 

 

 

Feb
27

The real cost of rejecting Obamacare

Posted by Joe Paduda on Thursday, February 27th, 2014 | Comments

“When one person suffers it is a tragedy, when millions do, it is a statistic.”

As abhorrent as quoting Josef Stalin might be, the monster was right.

Opponents of Obamacare love to cite specific examples of people “harmed” by PPACA. As we’ve seen, while their “examples” are false, wildly distorted, and/or fake, they are also powerful as few bother to read the follow-up debunking stories.

Amidst all the complaints about Obamacare from individuals “suffering” under their new policies, it is easy to miss out on the big picture..

From a reader (thank you JR) came this – 4 million people with mental health issues will not gain coverage under Obamacare.  They will not have access to Medicaid, because the state legislators and/or governors don’t want to accept federal dollars to expand Medicaid.

These are real people – boys, girls, moms, dads, grandparents, friends, neighbors, sisters, brothers, wives, husbands, classmates.

They are suffering from bi-polar disorders, deep depression, addiction, autism, severe anxiety and panic disorders.  We are talking about seriously ill people, some with disorders similar to the perpetrators of the Newtown Connecticut and Navy Yard shootings; others who, without treatment, will never become productive, fulfilled, tax-paying members of society.  Instead they will be a burden on us all.

There are 11 southern states that have, for reasons of their own have refused to expand Medicaid as of now.  According to the piece in Insurance Broadcasting, “More than 1.1 million uninsured people who have serious mental health and substance abuse conditions live in just two states — Texas (625,000) and Florida (535,000).”

What does this mean for you?

The next time someone tells you what a great country we live in, ask them if this is how great countries treat their most vulnerable citizens.

When state politicians cut their own social support budgets while refusing to help those desperate for help, we become a smaller, meaner, and less-civilized society.

The full report is here.

 

Feb
26

Exchange enrollment – the big picture

Posted by Joe Paduda on Wednesday, February 26th, 2014 | Comments

Looks like the glitches, gremlins, and guffaws are just about over; CMS reported today that enrollment via the exchanges is up to 4 million, an increase of some 700,000 over the last few weeks. That despite the ongoing efforts in some states to hinder enrollment, efforts which include outlawing “Navigators”, refusing to expand Medicaid, and prohibiting or barring various forms of consumer education.

Of course, there have been many, many stories of citizens disappointed/angered/furious with their new health plans.

There’s the one about the Michigan woman with cancer who has to pay more.  Oh, wait, she actually doesn’t; her new plan through Blue Cross Blue Shield cut her monthly premiums almost in half, from $1,100 to $571; that plus the annual-max-out-of-pocket pretty much assures her she’s fine after all.

Whew!

Well, then there’s the woman who claimed “Obamacare raped her future”!  Wow, such inflammatory language!  Especially for one so…uninformed.  Ashley Dionne said her costs would go up by a factor of four, but she didn’t realize she’d likely qualify for Medicaid, which would have cut her monthly premium to, well, nothing.

And who could forget Bette from Spokane! She was socked with a $700-a-month increase!  Uh, well, not…exactly.

Oops.  Turns out Bette never checked the exchange, could have got a much lower price, and the price she was quoted was for a waaaay better plan than the cheap one she had – and that’s why it was more costly.

Huh.  Well, what about those folks in Texas?  You know the one Maggie Mahar wrote about, the poor woman (why are they always women?  why don’t we men get to be victims?) with MS who had her policy canceled and the new one cost – gasp – $1000 a month! The couple with a $20,000 deductible! OUTRAGEOUS!!!

Well, that was not true.  First, no policy for a 27 year old will cost that much.  Next, there are NO $20,000 deductibles.  Finally, the paper that printed this crap never fact-checked the piece, and didn’t print a correction, and the reporter assigned the story was told to “To find people who [had insurance policies that] were cancelled – and having some difficulty.”

There are more horror stories.  But please, before you read and repeat, think.  Does it make sense?  Is it objective?  Who printed/produced it?

What does this mean for you?

Yes, there will be horror stories.

But none as horrible as 50 million of our fellow Americans not covered by insurance.

None as horrible as a loved one with breast cancer who can’t get care.

Now that’s horrible.