Category: Managed Care – Auto

May
16

Ambulatory Surgical Centers’ future

Posted by Joe Paduda on Monday, May 16th, 2005 | Comments

So-called “specialty hospitals“, facilities typically owned by for-profit firms and/or practicing physicians, have been the subject of much debate by the Centers for Medicare and Medicaid Services (CMS). Now, it looks like CMS will continue their ban on new facilities at least until the end of the year (and just possibly till 1/1/2007) while they study their impact on cost, quality, and the full service hospitals they compete with.
Specialty facilities focus on a relatively narrow branch of medicine (e.g. spine, cardiac, orthopedics, cancer), are often owned by a partnership including the physicians admitting patients and a for-profit corporation, and rarely have an Emergency Department, overnight stay capacity, or trauma units. What they do have is state-of-the-art facilities, excellent “customer service”, efficient management, and lots of profit potential for the owners.
At issue with CMS is the definition of hospital and whether the specialty facilities meet the CMS definition. This is important because reimbursement is typically better for “hospitals” than for non-hospital facilities (many of these specialty hospitals would likely be classified as ambulatory surgery centers which receive lower reimbursement).
According to Congressional Quarterly,
“The (CMS specialty hospital internal) review also could lead the agency to require some specialty facilities to add emergency departments, which “ten[d] to attract Medicaid and other low-income patients,” CQ HealthBeat reports (CQ HealthBeat, 5/12).
California HealthLine also reports “In addition, CMS is expected to adjust Medicare reimbursement rates for all providers to better reflect the severity of patients’ illnesses, which could lower reimbursement rates for some specialty services.”
Congress appears to favor allowing new specialty hospitals into the CMS provider world, with House Energy and Commerce Cmte Chair Barton (R TX) noting he considers McClellan’s action to be a reasonable compromise.
“The rise of specialty hospitals will press traditional community hospitals to become leaner, faster and better,” he said (AP/Las Vegas Sun, 5/12). Speaking in response Democrats’ concerns about physician self-referrals, Barton said, “The real fight … here is not about quality of care,” adding, “It’s about control and ownership.” He said that banning specialty hospitals goes “against everything in the American culture that says specialization is good.”
What does this mean for you?
As the Centers for Medicare and Medicaid Services (CMS) goes, so go commercial payers. The moratorium on specialty hospital construction has served to halt, or at the least reduce, the number of new facilities seeking licensure throughout the country. If CMS moves forward and allows new construction, watch for changes in reimbursement.
It is possible, and some say likely, that reimbursement levels for these facilities will be lower than for full-service hospitals. As many commercial and state (e.g. workers’ comp and auto liability) fee schedules and reimbursement contracts are based on CMS’ Medicare rates, there will likely be a significant impact on the volume of services delivered through these facilities and the price as well.

May
9

Medicaid, Round Five

Posted by Joe Paduda on Monday, May 9th, 2005 | Comments

While state legislatures and governors are moving to make significant changes in Medicaid programs, a coalition including AARP, pharmaceutical manufacturers, labor unions, pediatricians and lobbying groups are preparing to do battle for their constituents. The impetus behind this nation-wide movement is the agreement between the Bush Administration and Congress on a $10 billion cut in Federal contributions to Medicaid programs (state governments pay somewhat less than half of the costs of Medicaid, with the Federal government picking up the rest). With that historical decision now law, states have to figure out how best to implement the cuts.
Perhaps most telling, there appears to be consensus from politicians of all stripes that something has to be done. And, given the influence that states have over Medicaid decisions, we will likely see a broad array of possible solutions advanced by legislators. Options include:
— requirements for beneficiaries to share in costs through co-pays and deductibles
— cuts in reimbursement for certain providers, notably nursing homes
— “stripped-down” benefit packages, with different benefits for children, the disabled, elderly poor, and working poor
— negotiations with pharmaceutical manufacturers to reduce drug costs
— change Federal funding for long-term care to a “block grant”, whereby states receive a set amount of money and can make their own decisions as to how to allocate those funds.
This is a good thing. There is no question the US needs to address the exploding costs of Medicaid, and states are excellent “labs” to test various approaches. There is also no question this will be painful for some, with recipients, pharmas, nursing homes, and hospitals among the likely victims. But, we have no choice. Medicaid has grown significantly in recent years, primarily driven by increases in enrollment. Many of the new enrollees are the working poor; individuals who work for employers that do not offer health insurance or cannot afford the employee contribution towards the premium.
What does this mean for you?
This is getting as tiresome for me as it is for you, but prepare for cost-shifting as pharmas and providers seek to recoup lost income by increasing charges and utilization for commercial payers. Especially vulnerable are liability and auto insurers, as their “managed care” programs are in the dark ages.

Feb
25

Any willing provider law to pass in AR

Posted by Joe Paduda on Friday, February 25th, 2005 | Comments

It is highly likely that Arkansas will pass so-called “any willing provider” legislation in the very near future. For those of us who thought those days had thankfully passed, do not despair as it is unlikely this will spark a wave of similar ill-conceived moves in other jurisdictions.
The impetus for the new law was the inability of a member of Arkansas’ legislature to obtain care at his facility of choice for prostate cancer. Interesting how these things happen…
While the bill passed both the AR house and senate with overwhelming majorities, and will be signed into law by Gov. Mike Huckabee, it comes at a time when medical trend rates continue their stubborn ways, sitting at three times the overall rate of inflation. While a nice idea, practically speaking, “any willing provider” laws fly in the face of mounting evidence as to the importance and significant positive impact of the “right provider”. They also remove the “volume v. discounts” incentive used by managed care plans to convince providers to participate.

Feb
14

Concentra receives subpoena

Posted by Joe Paduda on Monday, February 14th, 2005 | Comments

Concentra (CISI) announced today that it has received a subpoena from the New York State Attorney General requesting “documents and information regarding CISI’s relationships with third party administrators and health care providers in connection with the NYAG’s review of contractual relationships in the workers’ compensation industry.”
Any speculation regarding the specific reasons for the investigation would be just that. However, some general statements can be made about business practices in the WC managed care industry that may be influencing the AG’s investigation.
1. It is common for managed care firms to pay third party administrators (TPAs) a percentage of their revenues from business referred by the TPA. Typically this is in the 5% range.
2. While most TPAs “disclose” this arrangement, it is often contained within language that makes it fairly difficult to discern the actual meaning. For example, there may be wording similar to “the TPA reserves the right to assess an administrative fee on vendors used by the client”.
3. There is a long-established tradition of gifts from managed care vendors to claims adjusters, managers, and other staff, with either an overt or subtle link between the gifts and future business. These gifts can occasionally “cross the line” into expensive territory.
4. At the very least, the “percentage of savings” method of paying for network services does incent the TPA to utilize networks that over-utilize and over-charge for savings.
This is not meant to imply that any of the above activities were or are going on at Concentra. As the largest WC managed care firm, they may just be the most apparent target.

Jan
11

Medical costs in auto claims

Posted by Joe Paduda on Tuesday, January 11th, 2005 | Comments

Medical costs for auto claims are rapidly increasing in at least three states studied by The Insurance Research Council. The highest growth was 122% in Colorado, followed by 60% in NY and 37% in FL over the 1997-2002 period. MI costs stayed flat.
Why? What’s different about these states?
–PIP claimants in the three “higher inflation” states (CO NY FL) were more than twice as likely to see a chiropractor than the Michiganders
–and when they did see a chiro, the average total charge was three times higher in CO and FL than in MI and NY (roughly $4500 v $1500)
–CO and NY claimants were twice as likely to see a PT as MI and FL claimants
One possible reason for these discrepancies is the limits on bodily injury claims – all the states EXCEPT MI have monetary thresholds that have to be exceeded before a suit can be filed. MI’s standard is verbal – “injuries that lead to serious permanent disfigurement, serious impairment of bodily function, or death.”
So, where’s the cause and effect?
It is possible (cynics say even likely) that injured parties in the dollar threshold states pile up the costs to exceed the threshold, which allows them to sue to get even more money.
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