Aug
12

Hypocrisy and Hippocrates

A physician posting on MedPage blamed many of the problems in healthcare on private equity…and for-profit insurers.

That takes some…[insert anatomical reference here]. While his assault on Private Equity does have some merit, I can’t let his assertion that the profiteers are insurance companies stand.  What makes me nuts is Liu’s mindless and demonstrably false assertion, coupled with his complete inability to see that he is part of US healthcare’s cost problem.

Dr Mitchel Liu stated “For-profit insurance companies have long been regarded as the ultimate offenders in medical profiteering.”
Wow. Coming from a physician, who make more than docs in any other country, that is ballsy indeed.
Reality is physician compensation is a key driver of healthcare costs, and one of the reasons our healthcare costs are so much more expensive than other countries’. For-profit healthplans do make billions…but their margins are tiny compared to healthcare providers.
Liu also says:
“It’s time for medicine, including individuals and professional societies, to restore the integrity of the physician-patient relationship by taking a strong stand against all forms of corporate greed.”
Well, docs are often partners in Ambulatory Surgical Centers and hospital outpatient surgery centers.  Many docs belong to big multi-specialty groups that are quite profitable.  And, docs make a lot of money.
What does this mean for you, Dr Liu?
How about taking a stand against physician greed, Dr Liu?

Jul
27

that giant sucking sound…

Is coming from hospital trauma centers vacuuming thousands out of your wallet.

Trauma centers are supposed to handle the worst trauma cases – those from major car accidents, gunshots, airplane crashes, building collapses – you get the picture. Smelling gold, some hospital systems – including HCA – figured out that “activating” trauma centers lets them charge fees up to$50,000 per patient – even if that “trauma center” never actually treats the patient.

The fact that HCA has opened trauma centers in 90 of its 179 hospitals – many in close proximity to other trauma centers – indicates it is not a pubic health need as that “need” is already being met.

Shockingly, Florida is once again the poster child for what look to be abusive billing practices.  From Kaiser Health News:

In Florida alone, where the number of trauma centers has exploded, hospitals charged such fees more than 13,000 times in 2019 even though the patient went home the same day,

Florida trauma activation cases without an admission rose from 22% in 2012 to 27% last year, according to the data. At one Florida facility, Broward Health Medical Center, there were 1,285 trauma activation cases in 2019 with no admission — almost equal to the number that led to admissions. [emphasis added]

Work comp and auto alert…

Peter Johnson penned a deep dive into the explosive growth of trauma centers in the latest edition of Health Plan Weekly [subscription required]. In his article, Peter reported the number of Level I and II trauma centers almost doubled from 2008 to 2020, going from 305 to 567.

From his piece (Peter was quoting me):

It is abundantly clear this [the growth in the number of trauma centers] is not due to a years- or even months-long dramatic increase in apartment building fires, accidents, gun fights, or multi-car crashes.

Trauma used to be defined as high-acuity, emergent cases involving severe injury. Not any more at some of these facilities. Reports abound of patients with minor injuries requiring stitches, cold compresses, and even just a baby bottle and a nap billed for trauma activation.

What does this mean for you?

Any facility bill with a trauma center charge must be subjected to very careful and thorough review. Especially in states that allow higher payments for so-called “outliers”.

Auto insurers – pay attention!!


Jul
22

The hospital war is ramping up.

The Biden administration is clamping down on hospital mergers and ramping up enforcement of surprise billing laws. 

Meanwhile, most hospitals are pretty much ignoring the requirement that they post prices. and are going to the mattresses to fight over mergers. (going to the mattresses is what Mafioso did back in the day during major turf battles)

I’ve written extensively about the impact of mergers on cost – it goes up, a lot – and quality – no evidence that it improves. But this isn’t just about hospitals, it is about the entire healthcare system and where it is headed.

Hospitals accounted for $1.2 TRILLION in spending back in 2018

Price is the reason healthcare is so damn expensive here compared to other developed countries; and price is driven more and more by hospitals. Pricing power is how hospitals and health systems generate ever margins, pricing power is what they get when hospitals merge and reduce competition in markets.

This from Cooper and Gaynor:

A number of studies have examined individual hospital mergers and found price increases of greater than 20% (e.g., Town and Vistnes 2001, Krishnan 2001, Vita and Sacher 2001, Gaynor and Vogt 2003, Capps et al. 2003, Capps and Dranove 2004, Dafny 2009, Thompson 2011, Tenn 2011, Gowrisankaran et al. 2015).

The FTC has conducted a series of merger retrospectives. These analyses have found price increases of 20% to 50% (Haas-Wilson and Garmon 2011, Tenn 2011, Thompson 2011).

There has also been work analyzing “cross-market mergers” of hospitals that are not geographically proximate competitors (Dafny, Ho, and Lee 2019, Lewis and Pflum 2017). These studies have observed cross-market merger effects that raised prices between 10% and 17%.

That’s how Tenet reported record profits last quarter, it’s why Michigan’s two largest systems are merging.

The merger thing has gone on so long that 4 out of 5 hospital market areas are “highly consolidated” – meaning the locally-dominant health systems have pricing power, and can use that to dictate prices to payers of all kinds. Mergers peaked several years ago – not because they are losing popularity, but rather because there just aren’t that many merger targets any more.

Because hospitals thrive on profitable services, we’re seeing cutbacks in less-profitable lines, cutbacks that are limiting the availability of services especially in rural and under-served areas. 

What does this mean for you?

We have got to get control of the hospital beast before it eats us alive.


Jun
17

Thursday catch-up

Doing my best to avoid work on Fridays…so moving this occasional catch-up post to Thursdays…

COVID

Promising news on the effectiveness of a drug to help infected patients fight off the virus was reported by the Economist. The good news – Regen-Cov:

saved the lives of many of those unable to make their own antibodies in response to SARS-CoV-2. Such “seronegative” individuals constituted about a third of the 9,785 hospital patients in the study…compared to a control group given standard treatment … 20% more patients survived

The bad news – it’s stupid expensive, and supply chain issues are hampering production.

A study conducted by the National Institutes of Health indicates COVID may have been in circulation earlier than originally thought. Blood samples from Illinois, MassachusettsMississippi, Pennsylvania and Wisconsin indicate the virus was in those states in December 2019. An earlier CDC study found similar evidence in California, Oregon, and Washington.

These findings indicate a better and more thorough process to identify disease outbreaks may well be warranted.

Comp drugs

WCRI is hosting a timely webinar on Interstate Variations and Trends in WC Drug Payments on June 24. Register here. Gotta say I’m darn impressed by the researchers’ ability to obtain, analyze, and report on payments as recent as Q2 2020. This makes WCRI’s information much more actionable for regulators, clinicians, and payers alike.

Dr. Vennela Thumula and Dongchun Wang of WCRI will be guiding us thru their findings; the webinar is free.

I am finishing up the latest Annual Survey of PBM in WC which will have 2020 and 2019 data; last chance to participate and receive a detailed, respondent-only version of the report. If you want to participate let us know in the comment section below (there’s no cost to participants).

Couple interesting – and very preliminary – takeaways…

  • growing interest in transparency, along with an increased awareness that this isn’t a simple issue.
  • spend continues to decrease, with respondents attributing some of the decrease to COVID.
  • opioid spend continues to drop, but most respondents are still struggling to help chronic pain patients/long-time users of opioids reduce usage.
  • there’s a growing awareness that the PBM pricing model needs to change. With spend declining and a push for transparency, knowledgeable payers understand that paying PBMs less year after year is not sustainable.

Previous public versions of the Survey Report are available here for download at no cost.

 

 

 

 

 

 

 

Hospital pricing

Hospitals are supposed to be publishing their prices – at least Federal regulations require them to. But those smart, sneaky administrators are figuring out all kinds of ways to avoid telling you how much it will cost for that MRI, drug, band-aid, or lung transplant.

From JAMA:

hospitals must publish discounted cash prices (applicable to uninsured patients) and payer-specific negotiated rates. Second, hospitals must display price data, including expected out-of-pocket costs, for “shoppable services” that can be scheduled in advance (eg, office visits) in a consumer-friendly manner that facilitates service-specific comparisons across hospitals (eg, price estimator tools). [emphasis added]

As of early March, only 17 of 100 randomly selected hospitals were complying with the regulations. The penalty for non-compliance is…wait for it…

$300 a day.

Perhaps if the Feds charged hospitals the same way hospitals they charge us, we’d have a bit more compliance. 

How about…the Feds tell the hospitals after the fact what the cost will be, based on a “compliance chargemaster” that takes into account the hospital’s margin, quality scores, number of collection suits it has filed, and medical error rate.

Thanks to the estimable David Deitz MD PhD for the head’s up.

Wellness works

Finally, HealthAffairs reports wellness programs don’t really improve population health, reduce healthcare spending, or improve employment outcomes. 

Almost 40 years ago, I was halfway through a Master’s of Science in Health/Fitness Management when it became obvious this was NOT going to be a lucrative career…quite the opposite. Not saying I was prescient, just that employers sensed this was a nice-to-have and not a got-to-have, and that lack of importance showed in salaries.

Dodged that bullet.

And really finally, congratulations to my favorite baseball team – the White Sox have the best record in baseball after taking 2 of 3 from Tampa Bay. I

know my friends in the Bay area will be heckling me when the Rays surge again…hey, you gotta take advantage of good news when it comes!


May
24

Bipartisanship at last!

An excellent article by Washington Monthly’s Eric Cortellessa described a Senate antitrust hearing focused on hospital and health care system consolidation.

Believe it or not, the problems created by hospital consolidation have brought bipartisanship to the Senate, with arch-conservative Josh Hawley and liberal icon Richard Blumenthal agreeing that consolidation is bad.

Hawley opined”private equity and their [sic] intervention here is actually helping drive consolidation in a way that is unhealthy in this industry and can be particularly harmful for rural communities…”

Blumenthal: “incentives and self-interest of the private equity funds drive the finances rather than respect and care for the patients who are there or the professional staff who ensure quality care.”

It’s not just private equity – most consolidation is driven by massive health care systems looking to dominate markets and thereby control pricing. And that’s exactly what happens.  According to chair Amy Klobuchar, “hospital prices are 12 percent higher in monopoly markets compared to those with four or more competing hospitals.”

That’s one reason profits are zooming for hospital companies Tenet, UHS, HCA and CHS.

What does this mean for you?

Nothing good.

 


May
19

It’s the price – and the network penetration – that drives cost.

That’s the conclusion I reached after reviewing WCRI’s latest treasure trove of research on medical prices paid for professional services in workers’ comp. [report is free to download] Sure utilization is a very important driver, but the biggest difference in medical costs across states is price.

Rebecca Yang PhD and Olesya Fomenko PhD  have outdone themselves with this edition, cementing their reputation as two of the most knowledgeable experts in the nation on medical costs in workers’ comp.

Kudos to WCRI for including data from the first half of 2020 in their report…the fine folk in Boston have done a great job speeding up data collection and analysis to the point where we have data that is less than a year old. This is helpful indeed for anyone trying to understand what’s happening and why and what to do about it.

Takeaways

  • Wisconsin’s professional services (MD, PT, etc) are darned expensive. WI has a very provider-friendly
  • While prices paid in non-FS [fee schedule] states generally increased more than in FS states, NJ is an exception. WCRI noted that NJ saw a pretty significant increase in network penetration during the study period; I’d suggest NJ’s employer direction laws directly contributed to lower price increases.
  • Network participation varies widely, and generally the more the growth in network penetration, the lower the increase in prices paid.  However, in some cases (PA), it doesn’t.
  • Finally, there’s a VERY useful chart on p 39 providing network penetration rates for each of the 36 states studied. 

What does this mean for you?

This is extremely useful information, with many nuggets buried in the 190 page report.  IF you aren’t a WCRI member – join now!


Mar
29

Facilities, fee schedules, and what should be your takeaway

Perhaps the most practical presentation at this year’s WCRI conference focused on outpatient facility costs. While the content itself was excellent, what was more valuable were the implications for medical spend management.

Rebecca Yang PhD provided a wealth of information about outpatient fee schedules, Medicare reimbursement, and the impact of Medicare’s changes on workers’ comp fee schedules. Note that as the slides indicate, findings are preliminary so subject to change.

First, the findings.

Dr Yang noted that outpatient hospital and Ambulatory Surgical Center costs  [outpatient costs] represent about 15% of total medical spend across the 18 study states, with Louisiana the outlier at 28% of spend.

There are lots of different ways to manage spend via fee schedules; one can base reimbursement on a fixed amount, % of charges, cost to charge, Medicare or some hybrid mechanism.

All have strengths and weaknesses, issues and challenges, but – with one very big exception – in general it is better to have a fee schedule than not – except when the fee schedule is easily gamed (we’re looking at you, Florida).

That exception is cost-to-charge, a term describing the ratio between a hospital’s expenses and what they charge. As we’ve discussed here ad nauseam, all hospitals in C-t-C states have to do to make bank is jack up their charges. 

I won’t dive deep into details about how Medicare’s changes to reimbursement affect workers’ comp except to note that when the dog wags the tail, the flea on the end (that’s workers’ comp) gets whipped about.

Okay, maybe a little detail…

The Peach State adopted Medicare as the basis for the WC FS back in 2013.  Essentially, the change followed Medicare FS changes, except excluded device reimbursement and (if I heard this right) some associated charges.

Medicare made changes to its reimbursement in 2016 and 2017 which drove  reimbursement declines for some knee surgeries; others were unaffected.

The point of this is to note that basing a fee schedule on a third party’s reimbursement demands payers really deeply fully understand the underlying third party’s reimbursement policies, practices, requirements and nuances.

Most workers’ comp entities don’t. The result is they are unable to ensure medical bills and accompanying documents support reimbursement – or don’t. Far too often, bill review entities just assume everything is in order (if the surgery was pre-approved) and authorize payment for all billed services. Reality is it’s pretty common that some of those billed services should have been bundled into the overall surgical fee.

What does this mean for you?

This isn’t unique to Georgia, or knee surgeries. If your BR operation doesn’t know this stuff at a granular level, you’re probably overypaying. 

(WCRI published an excellent summary of outpatient reimbursement and drivers last year).

Oh, and don’t forget my annual Aril Fool’s post is coming up Thursday. Don’t be fooled!


Mar
2

The CDC’s Opioids for Chronic Pain Guidelines; Myths and facts

After my posts last week it is clear there’s a lot of misinformation and misunderstanding about the CDC’s opioid and chronic pain guidelines. At MCM we take the old-school approach to these things; we focus on the facts.

So, here they are.

The CDC’s guidelines mandate strict limits on dosage and require tapering  for patients on long-term opioids.

False.  As Dr Beth Darnall of Stanford University noted recently;

some health care organizations and states have wrongly cited the 2016 CDC Guideline as a basis to substantiate prescribing “dose-based limits” or to mandate that physicians and prescribers taper patients taking long-term opioids to specific thresholds (eg, < 90 mg, or < 50 mg). Such dose-based opioid prescribing policies are neither supported by the CDC, nor do they account for the medical circumstances of the individual patient. [emphasis added]

Further;

The CDC [issued] a clarifying statement that derided the misapplication of the opioid guideline and discouraged the dose-based policies and practices that fall outside of its scope, as well as use of the guideline to substantiate tapering.

The Guidelines for Prescribing Opioids for Chronic Pain were developed in secret.

False.  The process fully complied with CDC and AHRQ requirements and standards, and the results were shared with the public and public comment sought prior to promulgation of the final guidelines in 2016.

The Guidelines aren’t working; look at all the opioid-related deaths.

False.

  1. The big increase in drug poisonings (technical term for overdosing) is driven by a rapid increase in the use of synthetic opioids, both prescription and non-prescription. The synthetic opioid death rate increased over 1000% from 2013 to 2019, with the biggest increase in the western US. Fentanyl and Tramadol are examples of synthetic opioids
  2.  There’s been a small but measurable decrease in the death rate (4.4 to 4.2) from prescription opioids that correlates with the guidelines’ publication date.  Of course, correlation is not causation, but clearly the guidelines have been impactful.

3.  Further, when you count the deaths due solely to prescription opioids, the drop in the prescription opioid death rate is even more remarkable. The bold line is prescription opioid-only; the guidelines were introduced in 2016.

The net is those who claim the guidelines are somehow “failing” are conflating law enforcement issues with public health issues, and are ignoring the very real post-guideline decline in deaths from prescription opioids.

The guidelines are killing people.

The guidelines are just that – guidelines.

The guidelines do NOT require or mandate dosage restrictions or tapering. Blaming the guidelines – and those who developed the guidelines – for physicians not following the guideline’s explicit recommendations is wrong, and does nothing to solve the problem of bad legislation and poor physician behavior.

Here’s what the CDC actually said:

Clinicians should evaluate benefits and harms of continued therapy with patients every 3 months or more frequently. If benefits do not outweigh harms of continued opioid therapy, clinicians should optimize other therapies and work with patients to taper opioids to lower dosages or to taper and discontinue opioids. [emphasis added]

There are a lot of anecdotal reports of patients unable to get prescriptions renewed or otherwise forced off their opioid regimen, many with awful consequences. Yes, the guidelines did suggest/encourage/support these tools in certain circumstances, but – as you can read above – these are NOT requirements and require clinicians to evaluate and balance risk and harm.

What does this mean for you?

The real problem with Opioid Guidelines is states, insurers, and other entities – as well as prescribing physicians – failing to use the guidelines as intended.

reminder to commenters – valid email addresses are required, and disagreements are welcome as long as they are supported with credible citations.

 


Feb
25

Worker comp payers – hold on to your purses and wallets

Two news items hit the virtual desk this morning; hospitals will lose more than $50 billion this year, and consolidation among hospitals and health systems is continuing, isn’t improving quality, and is increasing health systems’ leverage over payers.

The bad awful financial picture for hospitals comes after a pretty bad 2020, a year in which operating margins were slashed in half.

Of course financial problems are the main driver behind consolidation as health systems with stronger balance sheets take over struggling competitors. Physician practices hammered with revenue declines driven by far fewer patient visits, fewer elective surgeries, and more uninsured patients are also being acquired by health systems.

For payers – especially for workers’ comp payers – the balance of power has shifted to providers. With control over many hospitals and thousands of physicians, systems like Sutter Health in California can dictate terms to huge group health buyers.

I find it ironic indeed that the online ads next to the reporting on the consolidation problem in general and Sutter Health in specific include this one. Payers’ ability to control costs in consolidated health care markets is…challenging at best.

What does this mean for you?

If you operate in Alabama, Florida, Louisiana, Arkansas, Kansas and a bunch of other states, your facility costs are going up. 


Feb
10

Hospitals got hammered in 2020

2020 was a really awful year for hospitals.

The median operating margin dropped 16.6% –  and the median facility just barely broke even.

And that was AFTER the billions hospitals received from you and me courtesy of the CARES Act.

Without our largesse, hospital margins dropped…wait for it…55.6%.

Another key datapoint is the use of operating rooms. Usage was down by over 10%; as that’s where hospitals make their money, it’s not surprising that margins dropped even more than operating room usage did.

What does this mean for you?

Nothing good.