Friday catch-up – Obamacare rollout and WC Rx

Another week on the road, and looking forward to a whole week of NO TRAVEL…oh, the luxury of it!

Enough whining – on to the news of import from the last few days.

First up, a quick synopsis of the top news re PPACA rollout:

  • there’s been a great deal of publicity about employers cutting jobs and hours due to health reform and the costs thereof; now comes news from a Harris Survey that 28% of employers surveyed plan to add workers compared to 15% who will cut staff. Also, 10% are going to cut benefits for dependents but 9% are going to add coverage for dependents.
  • Premium increases will be a big driver; VERY early indicators are that they will be all over the place, with some increases tiny and others well into the double digits.  Before anyone gets too excited, remember health plans have almost no data on which to base rate increases – enrollment lagged in some states due to the well-documented problems with the federal exchange, as a result there’s precious little utilization data on which to forecast future costs.
  • states that have not expanded Medicaid are shooting themselves in the wallet.  Medicaid rolls increased by 550,000 in 17 states that did not expand Medicaid; these so-called “woodwork” people included 99,000 in GA and 58,000 in NC.  Of note, the non-expansion states are NOT going to benefit from the Feds’ payment for the increase unlike other states, which won’t be paying a dime until 2017 – and then only 10 cents on the dollar.
  • Ready for a pity party?
    Looks like at least one big health plan is whining about the increased competition due to the Exchanges and new health plans coming into some markets. UnitedHealthcare is moaning about the prices offered by competitors in New York, a huge market for UHC. Execs are claiming other health plans are underpricing UHC’s offerings... (With the news that UHC is the least trusted health plan among hospitals, a little less whining and a bit more introspection might be warranted…)

WCRI’s latest intel on opioid usage in work comp is mostly bad news; the overuse (my word) of the highly addictive drugs did not decline over the study period, which ended in March of 2012. Sure, some states saw slight decreases (yay MA and CT) but others had similar increases (boo MI). Get a copy of the study here.

On the other coast, CWCI reported there’s not been much change in opioid usage in California either.  Their synopsis is:

the use of these drugs has remained at record levels since 2010, that virtually the same 3% of high-volume Schedule II opioid prescribing doctors continue to write more than half of the prescriptions, and that nearly half of the prescriptions are for minor injuries where medical evidence does not clearly support Schedule II opioid use. [emphasis added]

The fine folks in Minnesota are pushing science into the art of pain management; WorkCompCentral reports Minnesota is tightening rules re pain pumps and spinal cord stimulators. Three cheers for L&I…

Of note, several work comp PBMs have released their annual drug trend surveys; I’m reviewing them and will report back early next week.

Finally, our friends at IAIABC are hosting a free webinar on compound medications in work comp May 29 from 1-2 CST; I’m emceeing; the real experts presenting Phil Walls of myMatrixx and Sarah Randolph of Express Scripts.



Insurance saves lives and costs money – and we’re surprised?

That’s the finding of a massive study of the impact of health reform on mortality rates in Massachusetts.  The death rate declined by 3 percent after universal coverage went into effect in 2006, and the carefully-constructed study found that the decline was mostly among the poor.

By any measure, that’s a huge win.

For the green-eyeshade folks, a decline in death rates means more productive years for more people leading to more economic production, altho they’d balance that against the costs of caring for those folks. For those of us who are a bit more “human”, it is even better – longer lives for more people means more time with our loved ones.

Juxtaposed against that finding is the increasing evidence that health care costs are going up.  That’s no surprise; a lot more people have coverage and they are using health care services.  The early indicator comes from pharmacy utilization; giant PBM Express Scripts reports there are more scripts going out these days and some of this MAY be due to more coverage, altho this is expected coming out of a recession as well. There appear to be more hospital admissions as well (again not surprising; people who didn’t have insurance couldn’t get knee/hip replacements and now that they have insurance they’re lining up to get those things fixed).

Notably, utilization, not prices, is by far the biggest inflation driver.

In total the VERY EARLY data suggests consumer purchases of health services was up almost 10 percent in Q1 2014.

That said, it would be hard to find anyone  – at least anyone who gets math – who didn’t think health care costs would go up as more folks are covered.  In fact, projections way back in 2009 called for just such a bump.

So there you have it.  People who get insurance who didn’t have it use a lot of health care services.  Longer lives are associated with higher health care costs.

At least for now.

I’d hazard a guess that health plans are working their collective fannies off to hold down costs and thereby remain competitive in the battle for members.  A safe guess, as all the news I’ve seen indicates this is precisely what’s happening.

What does this mean for you?

The free market – a well- and intelligently-regulated one – will deliver better outcomes at lower cost.  And that’s exactly what PPACA is supposed to do.




When it comes to understanding how the ACA will affect your business, you have to separate the politics from the practical.

In this case, remember that “Politics are national; health care is local.”

The pundits (and I’d have to include myself in this category at times, altho I’m an amateur at best) use the national enrollment numbers to declare victory or defeat. That’s fine for a parlor exercise, but practically, the national data matters not one whit for health plans, providers, and work comp payers.

No, for business folks, what matters is what’s happened/happening in their state, and more precisely their operating area. In some states (Vermont – 280% of projections, California, Michigan, North Carolina – 155%), enrollment is robust.  In others (Ohio, Arkansas, West Virginia) enrollment is well under projections.

Medicaid expansion, state-based exchange success or failure, and the political environment greatly affected enrollment; politicians in some states actively discouraged/tried to prevent ACA enrollment while in others the exchange was a mess (e.g. Oregon).

Regardless, the higher the enrollment, the more likely you will see ACA impact;

  • the health care provider community,
  • adoption of different care delivery and reimbursement models,
  • more or less incentive to cost shift to work comp,
  • and access to key specialists.

Current state-specific enrollment data is here.

What does this mean for you?

Depends on where you do business…


Friday catch up and idle speculation

Lots of big info out this week, and a few tidbits about pending deals in the workers’ comp services space too.  Here are the highlights…(for the latest on deals in the work comp space, scroll down)

There’s a lot of confusion about the Obamacare signups; I’ll cover this in detail next week, but here are the facts as of today…

  • more than 7.1 million signed up via the federal and state exchanges (we won’t know the total for a week or so as some state exchanges haven’t posted final March numbers)
  • a lot more – i’d guess a million to two million – bought insurance via the private exchanges
  • about 20 percent won’t pay the premium and there’s some duplication between all the exchanges and other enrollment methods for reasons we’ll discuss next week
  • more than 5 million MORE Americans have insurance today than at the end of 2013.

The net – Obamacare has increased coverage substantially; the uninsurance rate has dropped by 2.7 points.

Meanwhile, Fitch reports the P&C industry is doing just grand, thank you.  Profits are up, loss ratios declined, underwriting margins are improving, and revenue is too.  Thank the continued hard market and expanding economy.

Work comp is doing better as well, altho there’s still a negative underwriting margin.  It remains to be seen if pricing discipline holds, or if some big carriers cross the stupid line.

The “doc fix” is in; Congress passed and the President signed a bill that will increase Medicare reimbursement for physicians by 0.5% for the next 12 months. The bill also:

  • delays implementation of ICD-10 for a year till October 2015 – for an excellent discussion of how this will affect workers’ comp, read Sandy Blunt’s piece at workers
  • and does some other stuff which you probably don’t care about and I won’t bore you with.

Work comp services Coventry is trying to sell their marginallyprofitable work comp service business lines – we’re talking CM, UM, MSA, peer review, and likely pharmacy. They will NOT be selling the jewels – bill review and the network, because a) they make huge profits; b) bill review really isn’t sellable as the application is quite dated and would require the buyer to transition to a different platform likely resulting in customer defections; and c) they can’t sell the network.

Coincidentally, another large case management firm is also for sale; word is Apax/OneCallCareManagement is currently the leading contender; most likely they will add the asset to their ever-growing list of companies.

And I’d be remiss if I didn’t speculate that Apax is looking hard at the Coventry assets as well. OCCM CEO Joe Delaney has certainly proved himself a competent manager, but methinks the thought of adding these two to the portfolio would give even the best of execs pause…

Enjoy the weekend, watch some baseball, get out in the gardens, and ride your bike.


HWR is up

As the March 31 “deadline” for enrollment in insurance approaches, the good folks at Health Affairs have put together the best health policy blog posts of the last two weeks and present them to you for your edification.

And managed to do this while keeping up on March Madness too – Christopher Fleming is one impressive guy…

In these days of less and less insight from the mass media, we’re fortunate indeed to have very smart – and very good writers – working for you – and for cheap, too!


ACA rollout – how’s California doing?

If there’s a state that’s key to the success of the ACA, it is California.  Peter Lee, Exec Dir of Covered California (the Golden State’s exchange) gave a status update.

Lee reported enrollment in insurers via CC is right about a million people – and this doesn’t include the Medicaid expansion. Looks like about 20,000 are signing up per day of late. 

Here are the highlights.

– success is predicated on providing affordable health plans – and there are several plans available in each area, with some having a dozen or more options.

– about 26% of enrollees are in the 18-34 demographic; Lee sees this as a work-in-progress, and considers them the “Young Convincibles”.

– CA is an “active purchaser”, which means they carefully oversaw the health plan bidding process to ensure the plans available on the exchange were comprehensive, affordable, and many.

– about 2 million will get subsidies to buy health insurance

– LOTS of marketing, outreach, advertising, partnering with agencies.  But the most effective part has been via community organizations.

– enrollment has been greatly aided by facilitators.

– a lot of analysis will continue to assess outcomes, access, and disparities by different demographic group, and Covered California will move past the enrollment phase and into the improvement phase over time.



ACA – how California’s health plans are adapting

I’m honored to be speaking at Keenan & Associates’ annual Summit today, and they’ve graciously allowed me to live blog from the Summit.

The day begins with a panel of California health care executives discussing how their companies are adapting to ACA.  Representatives from Kaiser Permanente, Aetna, Anthem, HealthNet, United Healthcare, and Blue Shield of California answered questions from Keenan’s Henry Loubet and the audience.  Here are a few highlights.

First, the pace of innovation, the investments these companies are making, the focus on smart disease state management, and the effort to get closer and closer to the member are all striking.  There is a LOT going on and I got the sense that these companies are working feverishly to adapt and build and innovate.

A big area of focus was on ACOs/tailored/narrow/high quality networks, which evidently have been a big part of most health plans’ strategies. Loubet wrote about this recently here.  The companies represented seem to be fully invested in ACOs, with several working with multiple ACOs.  They are measuring results, and according to Blue Shield, the metrics are looking quite positive.

ACOs are not monolithic or identical across companies, rather they are highly customized with geographic areas, populations, reimbursement models, and state regs all influencing design and structure.  Simply put, they are akin to the old HMOs, where the focus is on an integrated health care delivery system and consistent, high quality care management.

Working with docs to identify and assertively manage patients with specific disease states is also a big focus, and several of the speakers discussed how they are using technology – smartphones, apps, on-line video consults with a doc, and electronic medical records – to do this.

Someone asked about the integration of WC and group health, and the speakers seemed to agree that ACA’s data integration may help move this closer however there’s so much focus on addressing ACA implementation that tying group and work comp together won’t happen any time soon.  

Finally when asked about possible changes to ACA going forward, the panelists’ comments included; a delay in implementing the small employer mandate; allow consumers to keep their current plan for longer; and possibly postpone fees and taxes (which ones weren’t identified).


Reality vs magical thinking

Too many workers’ comp execs are allowing their political viewpoints to cloud their business thinking. They can’t abide the notion of PPACA/Obamacare, and along with the majority party in the House of Repesentatives, want it repealed or blown up or completely emasculated.

This is magical thinking.

And magical thinking will not help those execs, or their companies, prepare for or deal with the implications of Obamacare.

Look, as an proud socially-liberal Democrat (as if that’s any new news to you, dear reader), I had to suffer thru 8 long, painful, miserable, agonizing, soul-destroying years of George Bush.  For those of you on the other side of the political spectrum, I feel your pain.  Really.  Even if the current resident of 1600 Pennsylvania Ave is pretty far from a liberal (sorry, had to slip that in!).

That said, it’s time to accept reality.

PPACA/Obamacare is the law of the land, it is not going to be repealed, substantially delayed, or emasculated. It is here, and it is going to stay.

Despise it you might (as I despise Medicare Part D and the Medicare Modernization Act of 2003, and the Iraq war) but accept it you must.  If you spend your work time focused on what you don’t like about health reform, you’re not spending your time thinking about reform’s implications for workers’ comp – how you can mitigate any problems, leverage any advantages, and monitor and measure ways reform affects your business.

What does this mean for you?

Those who do focus on the business implications are going to be better prepared, and therefore more likely to be successful, than those who dwell on uncontrollables.


Obamacare’s success is NOT about enrollment

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.



Are Narrow Networks Bad or Are There Bad Narrow Networks?

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 ……….