Oct
1

There’s just not much to say, so we’ll talk about devices

About a group of people that refuses to fund the government because it objects to a law passed by both Houses, signed by the President, and upheld by the Supreme Court.

So we’ll focus on the one thing that people in both parties seem to agree on – a desire to repeal the medical device tax.

The 2.3 percent excise tax:

  • went into effect this year,
  • applies to things like catheters, MRI machines, surgical implants – but not toothbrushes and other personal care items, and
  • will raise about $29 billion over ten years, funds that will be used to offset some of the insurance subsidies enjoyed by folks who don’t make a lot of money.

Shockingly, some Rs and Ds agree that the tax should be repealed. Not shockingly these Senators and Congresspeople are from districts where big device companies operate – companies such as Medtronic, GE, Phillips.

Not surprisingly, the device industry is in full voice over the issue, claiming the tax will cost 45,000 jobs (really!), increase consumers’ costs, be hard to implement, and distort the market.  What is really happening here is the industry refused to go along with an initial request from PPACA backers to pony up some funds to help pay for the bill – a request acceded to by the insurance industry, pharma, and hospitals.  Thus the device folks were on the outside looking in in the final days of negotiations.

It’s understandable that they’d want to undo the tax – it’s also unrealistic and a bit weird.  After all, the industry is going to get a LOT more revenues from the newly-insured next year, growing their top line and increasing profits as well.  And this for an industry that already generates profits in excess of 15 percent of revenues…

The other industries that are going to benefit from PPACA are contributing to the cost, so it seems logical that the device manufacturers should too.

What does this mean for you?

It is unlikely the device tax will be repealed, as the President and Senate Majority Leader are bot adamantly opposed to a repeal.

But even if it is, it isn’t going to have much – if any – effect on consumers or payers.

 


Sep
30

Exchanges open tomorrow – what does this mean?

Come hell or high water – or even a government shutdown, the Exchanges are going to open tomorrow.  Here’s what it means.

  • Some will not be “fully operational” – Spanish language options won’t be on-line in Nevada for some weeks; Medicaid and subsidy eligibility can only be accessed via phone in some states; small businesses can’t buy coverage till November.
  • Estimates are that only about 7 percent of the population will obtain coverage thru the Exchanges – or about 23 million people.  The rest will be covered via Medicare, Medicaid, and employer plans, and other means.
  • The open enrollment period is six months; don’t expect all 23 million to sign up tomorrow, or even this time around.  This is especially true as enrollees have to pay their first month’s premium within 30 days of enrollment; I wouldn’t expect a lot of folks to sign up tomorrow and pay a month’s premium on coverage that won’t kick in for 90 days.
  • Coverage begins January 1, 2014.
  • By the end of the initial enrollment period an estimated 7 million will haver purchased coverage thru the Exchanges.

Sep
27

NCCI’s latest pharmacy report – the highlights

The good folks at NCCI just published a new study of prescription drugs in workers’ comp; here are a few highlights; the data is from 2011.

  • Narcotic usage increased significantly, from 21% of costs in 2010 to 25% in 2011.
  • Physician dispensing increased as well, along with the average cost for physician dispensed drugs.
  • NCCI estimates drugs account for 18% of all medical expenses; note that this is based on total incurred cost, or for the layperson, their estimate of what the total including already-paid and future drug costs.
  • The older the claim, the greater the percentage of total medical costs due to drugs – up to 40 percent.
  • On a cost per claim basis, NCCI indicates drug costs increased six percent in 2011.
  • Generics account for 76 percent of the scripts, but only 44 percent of the cost.

So, what does this all mean?

Couple things stand out.

First, NCCI’s numbers are based on total incurred, therefore there’s a bit of forecasting involved. I note this as the 18% figure (drug costs as a percentage of total medical spend) is significantly higher than most payers I work with; the range is around 12% – 14%.

Second, drug spend declined in 2011 according to CompPharma’s annual Survey of Prescription Drugs in Workers’ Comp.

Why the difference (NCCI indicates a 6 percent increase)?

  1. CompPharma looks at total, not per-claim cost, so claim frequency has some impact.
  2. NCCI uses incurred (there it is again), the Survey is based on actual paid amounts.
  3. CompPharma is a survey of 23 payers, all of which use PBMs.  These are generally fairly-to-very sophisticated payers.  In contrast, NCCI’s data comes from a much broader spectrum of payers, some of which don’t use PBMs, and others don’t use them effectively.

What does this mean for you?

Drug cost increases are moderating, but physician dispensing remains a big problem, and opioid usage increased almost 20% (four points) year over year.

That’s really bad.


Sep
26

The irony of Ted Cruz

In Cruz’ 21 hour infomercial he read Dr. Seuss’ Green Eggs and Ham, ostensibly to his daughters.

Cruz would have been better served to learn Seuss’ lessons himself.

His fauxlibuster was ostensibly driven by his objection to health reform and desire to eliminate funding for PPACA. 

A.  that’s not going to happen.  and

B.  the author of Green Eggs and Ham was a major supporter of health research and reform

Cruz’ choice of Suess books heaps irony on irony; Green Eggs and Ham is about trying new things, being open-minded, embracing change.

And the real Dr Seuss, Ted Geisel, was not only an unabashed liberal, he and his wife were major supporters of health research and reform.  

Dartmouth College’s medical school – now named for the couple, is a leading force in understanding health care and developing both clinical and management solutions.

“The Audrey and Theodor Geisel School of Medicine at Dartmouth strives to improve the lives of the people it serves—students, patients, and local and global communities—and to live out the Dartmouth ethos that “the world’s troubles are your troubles.”

The School includes the Dartmouth Institute for Health Policy and Clinical Practice and the first center to comprehensively examine variations in health care costs in U.S. medical practice (The Dartmouth Atlas).

Let’s hope Cruz’ daughters take a lesson from Suess, and not from dad.

 


Sep
23

Why Obamacare is truly terrifying

The actions of some of Obamacare’s opponents are outrageous, immoral, abhorrent, revolting.  And very revealing.

The latest plunge into the cesspool is courtesy of the Koch Brothers; if you haven’t seen Creepy Uncle Same, don’t. You’ve been warned.

The disgusting ad is the latest in a series of outright lies and complete fabrications perpetrated by Koch and their fellow cesspool-dwellers on the wingnut right.  Amazingly, some of their pundits seem to think this is acceptable behavior, that using a video of Uncle Sam preparing to rape a young woman is funny, appropriate, acceptable.

It is not, absolutely not.

Leave aside the minor matter that the ad is complete bullshit, and the pathological minds that would fund, create, applaud such an ad are pathetically twisted people.

Instead, ask yourself why they’d descend to such depths in an attempt to scare young people away from enrolling in health insurance.

First, it’s just stupid.  Of course everyone should have health insurance.

Second, it goes directly against a fundamental conservative principle – personal responsibility.  If young immortals don’t have insurance – for whatever reason – when they get sick or hurt you and I end up paying for them.  That’s wrong.

Third, if Obamacare/PPACA is so bad, so fundamentally flawed, so bound to fail, why do opponents have to resort to rape scares? After all, it is based on principles laid out by the Heritage Foundation, a central pillar of the conservative movement.

And therein lies the core issue.  I posit the following.

For reasons we’ve discussed here at great length, PPACA won’t “fail”, simply because it fixes the core problem with the current insurance market – Private insurers will not insure people who are likely to have health problems at anything close to affordable rates.  And they shouldn’t. The “solutions” proposed by opponents are just laughable. The basic elements of the GOP’s approach – buying insurance across state lines, tort reform, meaningless tax credits, a paltry high-risk insurance pool – do nothing to address that core problem.

When it does succeed, it will blow a very large hole in what passes for current ultra-conservative theology; government is completely incompetent.

That scares the pants off Koch and their allies, the fear that personal experiences with a government-run program will be generally pretty positive; that things will work pretty well.

Oh, the horrors.

The young woman in Koch’s Creepy ad is a metaphor for the brothers’ own reaction to Obamacare; it is going to work pretty well, people will like it, and they will then become more favorably disposed to more activist public policy.

 


Sep
19

Obamacare will not be defunded or delayed

Even if the crazies in Boehner’s House refuse to raise the debt limit.

It is not going to happen.  President Obama would never agree to it, and the Senate would never vote for a delay/defund in return for a debt limit raise.

Now, you can argue that, despite what the (conservative) Supreme Court ruled, PPACA is somehow unConstitutional.  But the highest Court in the land, the arbiter of Constitutionality, said it is.

You can hate it, abhor it, despise it, decry it, believe it is evil incarnate. But you aren’t going to get rid of it. PPACA is now the law of the land – and will be for the foreseeable future.  

Many refuse to accept this, and therefore are making business decisions thru glasses fogged by ideology.  That is a very, very dangerous way to operate a business.

I continue to be amazed that the GOP crazies are willing to go nuclear over a law based in large part on ideas promulgated by the Heritage Foundation and worthies like Senator Bob Dole, R KS.  Methinks it has something to do with the “Obamacare” name and more specifically a desire to see the current occupant of the White House embarrassed/defeated/humiliated.

What will happen (I can’t believe I’m writing this) is the crazies in the House will refuse to raise the debt limit (to pay for stuff they already voted for!), leading to all kinds of financial confusion and disruption to individuals, businesses, state and local governments, school boards…pretty much everyone and everything.

How anyone could think this is a good idea is a mystery; if the debt ceiling isn’t raised, the Treasury will only be able to pay a portion of the bills it gets every day, bills for things like Social Security; Supplemental Security Income; Medicare; Medicaid; national security needs, including military salaries, military retirement, veterans’ benefits, and defense contractors; income tax refunds; federal employee salaries and retirement; law enforcement and operation of the justice system; unemployment insurance; disaster relief; goods and services sold to the government under contracts with small and large businesses; foreign aid; the list is endless.

Eventually those crazies will come to their senses, the debt ceiling will be raised, and hopefully enough of them will be voted out so we can get back to a sensible Congress peopled with sensible people.

If not, well, we get the government we deserve.

Regardless, PPACA will continue to be the law of the land.  


Sep
18

Limited provider networks…that’s the point, folks!

There’s a good bit of hand-wringing and wailing by physicians and their support groups over healthplans limiting their networks to relatively small subsets of the entire provider community.

As if this was somehow a bad thing.

Health plans are contracting with smaller groups of providers to

  • a) drive more patient volume to those providers in return for
  • b) better financial terms and
  • c) tighter integration between the healthplan and the selected providers.

I find it darkly funny that the AMA and other groups are moaning about the potential impact on patient access to health care of these smaller networks; one of the primary reasons many don’t have health care is because physician services COST SO MUCH.

Instead of whining about the injustice of it all, the AMA – and the provider groups who aren’t part of the smaller networks – could decide to, oh, I dunno, maybe reduce their fees, agree to strict evidence-based medical guidelines, implement system-wide electronic health records and EDI for billing and encounter data…

After all, I’m quite sure the health plans with small network options would love to have bigger networks – but only if the cost of care makes the health plans’ product offerings cost-competitive.

It would be easy to miss the real significance of this tempest-in-a-teapot, and that would be this – By leveling the playing field, ACA and the Exchanges enable consumers to quickly and efficiently compare health plan offerings.

THE key decision criterion is price.

These health plans understand it, have gotten some providers to agree to help them reduce their “cost of goods sold”, and therefore are going to win more business.

Big networks work when HR people are the buyers; they don’t want to hear from employees and spouses complaining that their pediatrician or ob/gyn or cardiologist is not in-network.  When consumers and small business people are doing the buying, they are much less likely to be concerned about every Dr Tom, Dr Dick, and Dr Mary being in-network; they are choosing between a plan they can afford and one they can’t.

What does this mean for you?

You can have a huge network or a reasonably priced health plan, but you can’t have both.


Sep
17

Workers’ comp claim frequency is down, will it stay there?

Claim frequency dropped another 5% in 2012, continuing a 25-year trend of ever-decreasing frequency…well, except for that one-year uptick during the recession.

More tellingly, NCCI data indicates frequency has been steadily declining across all industry groups.  However, this has been partially offset by a small but steady rise in medical costs.  Although medical costs  increased at an average rate of 5.7% from 2002 – 2011, NCCI reports trend over the last three years was substantially below that figure.

I must admit to being somewhat puzzled by this, as several clients are reporting higher increases. It could be that NCCI uses paid and estimated future medical expense (“developed to ultimate”) while the payers I work with look at paid data (when we project medical costs).  Nevertheless, we are seeing medical trend rates in the mid to upper single digits, driven by facility costs.  

One area of interest is the oil and gas industry, where employment has been steadily increasing over the last five years. Yet the frequency trend has been down in all but one segment of this industry, mirroring overall trends.  Overall, payroll is up 16% in that time, while frequency declined over 20 percent; notably severity increases more than outweighed the positive effect of the drop in frequency, as costs were up 22%.

So, what does this mean?

First, frequency is continuing its decline, however I’d expect the rate of decline to decrease over the next couple years.  Second, severity – NCCI estimates are it is in the low single digits, while I see it as significantly higher.  I think the key is in the methodology.  NCCI bases severity on a projection of what today’s claims will ultimately cost while my admittedly-anecdotal information is based on what’s actually been paid.

The net – as employment trends up (if the morons in Congress don’t find some principled-but-stupid reason to refuse to increase the debt ceiling) the number of claims will too, partially or completely off-setting the frequency drop.  And medical costs are going to increase.  


Sep
16

Buy this book

WCRI’s just published a comprehensive guide to physician dispensing in workers’ comp, complete with cost trends, state regulations and legislation, individual drug price differentials, and a wealth of other great information.

Here is the key take-away.

  • in four states – IL MD FL CA – physician dispensing accounts for more than 55 percent of all drug spend.
  • In four more – CT PA TN GA – it accounts for more than 30%.
  • and it continues to grow across the board.

What’s notable is that after regulations to limit upcharging for repackaged drugs were put in place in California, the percentage of scripts dispensed by docs didn’t change appreciably.  

With other states, e.g. GA IL MI CT all taking similar action, we will know more about the impact of price controls on dispensing.  My sense is the controls will not significantly reduce physician dispensing.

That is too bad, as CWCI research proves physician dispensing increases medical costs over and above the higher cost of the drugs – while extending disability duration and total claims cost.

All to enrich a few docs and their dispensing company allies.

What does this mean for you?

Higher costs.  Worse outcomes.