May
21

Hospitals and medical practices are losing billions.

And that has big implications for private insurance and workers’ comp.

An insightful piece by Milbank Fund President Chris Koller details the carnage (Chris and I serve on Commonwealth Care Alliance’s Board of Directors).

Total healthcare spending in March was more than 5% lower than the same month in 2019.

From Altarum’s report:

This decline was led by the two largest spending categories: hospital spending, which showed an 8.7% decline, and spending on physician and clinical services, which declined by a huge 19.3%, year over year.

In late April, outpatient office visits were down more than 60%. Visit counts have rebounded in the last few weeks, but are still quite low – especially for surgical and orthopedic specialties.  (From the Commonwealth Foundation)

The financial impact on healthcare providers is devastating.  To date, big health systems have already lost about $400 million – each.

80% of New York doctors have lost more than half of their income, and providers in other states haven’t fared much better. Not surprisingly the ones hardest hit are those that do procedures – especially surgery. While primary care docs and behavioral specialists have been able to switch some patient visits to tele-services, that isn’t possible for proceduralists.

Implications.

  • Some practices will not survive. New practices, those without strong referral sources, and those with high debt are most at risk.
  • Provider consolidation will ramp up and the number of smaller practices will shrink as the big get bigger – and more powerful. Big practices and healthcare systems are getting more than their share of relief dollars, and are better equipped to make it through months of financial losses. They’ll be snapping up physician practices for pennies on the dollar.
  • Near term, proceduralists are going to favor profitable payers as they open up. Expect provider billing and collection practices to get a lot more aggressive.

Workers’ comp bill review systems, logic, and rules are woefully inadequate and payers using those systems will suffer the consequences.

Private insurers are significantly better off due to much more sophisticated systems…but over the longer term they can expect provider groups will push hard for increased reimbursement.

What does this mean for you?

Workers’ comp payers and private insurers are making a lot of money these days. That will not last.

They would be well-advised to invest now in reimbursement systems, expertise, and tools.

 

 


May
20

Clarification, chronic pain treatment, COVID’s impact, and camel pee

First, a clarification.

Last week’s post re NCCI’s virtual Annual Issues Symposium needs clarification.

Before I published the post I asked NCCI to comment on the lack of any reference to COVID claims counts in the presentation, saying “Any early data would have been quite helpful; any comment?” I received a response and published it in the post. NCCI’s response did not indicate that it did not yet have any Q1 data.
After the post was published, NCCI wrote me to clarify, stating they won’t receive any data on Q1 claims until October, 2020 at the earliest.
NCCI CEO Bill Donnell wrote me as well; here’s the relevant part of that email:
I wanted to respond to what I would label a policy issue. The post includes a sentence…”I can understand why NCCI-and other research organizations don’t want to provide any data that might encourage politicians to look to WC to cover the costs of Covid-19.” I take issue with this because it implies that we would withhold data for political reasons (my interpretation).

Fair point.

If I had known NCCI didn’t have Q1 data, I would not have made that statement. However, Bill’s concern is valid and I should have been more careful with my choice of words – and will be in the future.

Workers’ comp has made remarkable progress preventing overprescribing of opioids to new patients – but there’s much to be done to address chronic pain and long-term opioid use.

One therapy that must be considered is medication-assisted therapy. From HealthAffairs comes new research indicating the long-term use of buprenorphine shows significantly better outcomes than short courses of treatment do.

Research estimates that 28 million surgeries have been postponed or will not be done over a 12 weeks period due to COVID. That’s a major reason US health systems are in dire financial straits…to date, average losses are $400 million. 

Colleague Peter Rousmaniere is having a very productive “retirement”; his latest post at Working Immigrants includes these findings:

  • Nationwide, one quarter of practicing doctors are foreign born [emphasis mine]
  • 23% of all science and engineering workers are foreign born (40% in California)

COVID will alter the US healthcare system – experts opine on 9 potentially significant changes.

One potential change will likely NOT include ingesting camel urine to cure COVID…despite a claim that drinking a glass of the elixir three times a day for three days will do just that. (btw, camels are notoriously cranky…one wonders how amenable they are when a urine collector involves himself in a very personal process… and would any injury be compensable?)

There is one bright spot…unlike some other unproven cures, ungulate urine won’t cause heart attacks.

What does this mean for you?

Be careful with assumptions, thank your immigrant healthcare worker, support medication-assisted therapy…and keep your sense of humor.


Apr
27

We don’t know &^%$*(

Research published in HealthAffairs a study estimating COVID19 will cost somewhere between $164 billion and $654 billion.

Insurance industry trade group AHIP’s financial analysts calculate private insurers will pay between $56 to $556 billion for COVID19-related costs.

Kaiser Permanente in northern California – a plan with 11% market share – had a grand total of 377 hospital admissions for COVID19 in March.

According to the WCIRB, COVID will cost California’s work comp system between $2.2 billion and $33.6 billion.

Private conversations with work comp executives show something much different; COVID19 costs for a major insurer with significant exposure in the healthcare sector total about $1 million incurred to date.  A major state fund has seen less then a couple dozen cases. Multiple insurers have less than 40 cases that have incurred any costs to date.

What’s going on here?  

In a nutshell, researchers are either being forced (in WCIRB’s case) or otherwise decided to come up with analyses based on really skimpy, incomplete, and not-very-helpful data. For example, we

a) don’t know the real infection rate as we aren’t testing anywhere near enough people;

b) we don’t know the real death rate for a bunch of reasons;

c) different areas have been affected very differently. This has been a disaster in Albany GA and NYC…and not even close in most of California, or Alaska. Louisiana has been hit very hard, but neighboring Arkansas hasn’t.

d) different areas have responded very differently; California and Washington shut down early and broadly; New York did not.

e) different areas are different; NYC is very crowded, even California’s most populous cities are a lot more spread out.

f) but even in smaller cities that are more spread out, one infected person can expose a lot of people, resulting in a rapid increase in cases (Albany FGA).

I bring this to your attention just to point out that estimates are pretty useless, that COVID19’s impact is going to be massive in some places and a minor inconvenience in others,

So, look for data that’s specifically relevant to your geographic area and covered population. Figure out if that area is testing enough folks, is complying with common-sense prevention techniques (social distancing, for example), and is reporting data accurately.

And then don’t be surprised if you are really surprised. Because there are so many confounding factors and different things that can affect the numbers, as of now anyone who is projecting is doing this…

What does this mean for you?

Making decisions based on current data is as dangerous as standing near a guy throwing darts blindfolded. 


Mar
6

WCRI Day two quick takes

Your faithful reporter braincramped and left his laptop charger at home, so most of the session coverage will come next week after I translate my scribbling to pixels.

for now, posting via smartphone

Friday’s quick takes

– Inpatient facility costs average about 17% of total medical costs

– the average increase in inpatient payments was 7.2%; WI, VA, and IA’s increases were significantly greater

– the percentage of claims that had inpatient costs declined from 2012 to 2017, driven mostly by a reduction in surgical cases

– great talk on reoperation and readmission rates for lumbar surgery patients from Rebecca Yang PhD; the total 30 day readmit/reop rate is about 18%; Strikes me as very high…oh and you are paying for the re-dos.

more to come Monday.

 

 


Sep
20

Research Roundup

Trying a new idea out today – a post that is

a) a quick overview of the latest research on stuff that’s important (at least to me) and

b) my thoughts on what it means to you.

Disability

A new report documents the results of a very robust study of work comp patients done in Washington State. It found that “reorganizing the delivery of occupational health care to support effective secondary prevention in the first 3 months following injury” reduced long term disability by 30%.

Briefly, patients treated in the State Centers for Occupational Health and Education were significantly less likely to become permanently disabled than those treated outside the COHE system.

This means – find out what the COHEs are doing, and replicate it.

Hat tip tp Gary Franklin MD MPH, Medical Director of Washington L&I

Employment

We’ll need all those workers back on the job, if the World Economic Forum’s forecast that automation will create millions more jobs than it will destroy. The report claims there will be 58 million more new jobs than lost jobs as companies shift to more automation – and this is within 5 years.

HOWEVER – these jobs will go unfilled if trained and capable workers aren’t around to staff them.

This means – companies best invest in training for tomorrow’s jobs. And integrating this with return-to-work would be pretty damn brilliant.

Monday Claims

More in the string of great stuff from NCCI, this week the Boca brainiacs released a study of “Monday morning claims.” The news is..there’s no news. The implementation of the ACA (THANK YOU for not mis-calling this “Obamacare”) did not change the percentage of claims that were reported on Monday, even in those states that had the largest decrease in the uninsured population post-ACA.

This means – we need to stop talking about Monday morning claims – which aren’t a thing.

More to come next week


May
1

Do laws directing injured workers to providers matter?

It’s about the details.

Anyone reading the quick headline from WCRI’s just-published analysis of employer direction may well draw the conclusion that there’s no difference in costs between states where the employee or the employer has the ability to choose the treating physician – a conclusion that would superficially right – but actually wrong.

A summary of the study notes it addresses “injuries that occurred mostly between 2007 and 2010 across 25 states in which either employers or workers control the choice of provider. It excludes states where workers can choose a provider within their employers’ established network.”

(I’m not sure if we’d see a difference if more current claims data were used as after 1/1/2014, full implementation of ACA may have affected claim allocation to work comp or non-work comp insurance.)

Note the nuance here; WCRI is careful to describe the “direction” metric as one dividing states into those where employers or employees have the MOST control. The “line” between employer-choice and employee-choice is really not a line at all, but rather a shading of white to black, with many permutations of grey.

For example, there are states where the employer can direct the patient to a specific doctor, others where the patient can choose from a panel, and still others where direction is only allowed if the employer has some sort of state certification.

Then there’s the ability of the patient to “opt out” for a course of treatment (Illinois) or change physician to another one, perhaps inside the panel or maybe completely outside the employer panel – after some defined period of time.

And let us not forget that employers can suggest, soft-channel, encourage, provide transportation to, or otherwise get an injured worker to a particular doc or facility in almost every state without violating the law – they just can’t FORCE the employee to go to a doc or choose from a panel of docs.

Or, as authors David Neumark and Bogdan Savych state; “it is common for employees to choose the medical provider when policies give employers control over provider choice, and for employers to choose the provider when workers have the right to direct this choice.”

A key statement: states that give “workers the most control over the choice of provider were associated with higher medical and indemnity costs among the small share of the most expensive back-related injuries…” In other words, claims that are harder to diagnose and where there is less unanimity in agreement on preferred treatment tend to be more expensive in employee-choice states. 

What does this mean for you?

My main takeaway is as it’s been for years – employers should do their damndest to get their employees to high quality physicians who know and understand workers comp.  And then get out of their way.


Mar
3

WCRI – will value based care come to workers’ comp?

Value-based care is growing rapidly in the real world outside workers’ comp.  An excellent session asked if VBC will come to work comp.

Work comp care management today is really fee and utilization management using discounted networks and external vendors.

VBC involves bundled payments and is focused on the patient’s experience and results. Simply put, Value = Quality divided by Cost. That requires evidence based medicine, clinical practice guidelines, measuring outcomes, and monitoring and ensuring use of all these tools.

While VBC is complicated to implement in the real world outside work comp, the additional complexities inherent in work comp make it even more complex.  Dr Page noted there are few active VBC initiatives in workers’ comp.  While several states appear to support pilots, they are few, far between, and there doesn’t seem to be any results available just yet.

Dr Page sees objective measurement of outcomes – from the patient’s perspective – as key to the adoption of VBC in work comp.  She identified a sustained return to work as the desired end point.  While that’s true, as we learned yesterday – and undoubtedly you were well aware of this – there are any number of factors driving RTW that have nothing to do with medical care.  Employee-employer relations, psycho-social issues, the availability of employment are just three.  That being the case, I’m a little skeptical about the utility of RTW as the outcome point.

Other barriers to implementing VBC are

  • the need for accurate, consistent, and comprehensive data;
  • comfort and trust between the parties (alert!),
  • and the inherent complexity of designing payment formulae that consider outliers, risk adjustment, comorbidities, and specific state laws favoring or limiting opportunities to direct patients to use and stay with specific providers.

So, while VBC has a lot of promise, my sense is we aren’t going to see any widespread use for a very long time.

Dr David Deitz noted that one challenge is the lack of ability for or interest among orthopedic surgeons in sharing risk around RTW may be a significant obstacle to surgical bundles.

What does this mean for you?

VBC is an idea whose time has come in the real world, and likely won’t ever come in workers’ comp.


Dec
21

ACA Deathwatch: Hospitals, bankruptcy, and chicken-killing dogs

For those wondering why the GOP appears to be walking back its promise to “rip out Obamacare root and branch”, here’s why this is a whole lot harder than one might think.

And why the political realities make this picture far too real for the incoming Congress.

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The GOP has long prided itself as the party of fiscal responsibility; Speaker Ryan and Majority Leader McConnell have assailed ACA as unaffordable and a budget-breaker. However, among the myriad issues inherent in healthcare reform is this – repealing ACA would bankrupt Medicare’s hospital insurance fund next year.

(It would also alienate many who voted for Trump...but that’s another story.)

When ACA was passed, there were financial trade-offs put in place to address winners and loses in an attempt to make the law as budget neutral as possible.

Insurance companies, drug companies, device manufacturers, and hospitals paid higher taxes or got lower reimbursement because they were going to get a whole lot more business as millions more people got insurance. Specifically, hospitals’ Medicare reimbursement has been changed – in part to eliminate payment for medical mistakes and re-admissions, and in part by altering reimbursement mechanisms and formulas.

ACA also included a 0.9 percent payroll tax on the wealthy individuals earning more than $200k or couples making more than $250k.  This raised $63 billion, which went to fund Medicare’s Hospital Trust Fund.

The combination of lower total reimbursement and more revenue extended Medicare’s solvency by 11 years. Without ACA, the Trust Fund is bankrupt next year.

If the GOP repeals the ACA or eliminates the 0.9 percent tax on the very wealthy, Medicare Part A is technically bankrupt.

The incoming President, Congress, and HHS Secretary are facing the very same tradeoffs and complexities their predecessors faced in 2010 – health care is horrendously complex and inter-related.  There are no simple, easy answers.

What does the GOP do?

From here, it looks like they have a couple options.

  1. Repeal it, pass their own health care reform legislation that makes major changes, and claim success.  
    As noted above, and as we’ve seen over the last five years, changing the US healthcare system is brutally hard, there are way more unintended consequences than anyone could predict, and there are no simple answers. There is just no way they can cobble together legislation anytime soon that will address ACA’s issues and not result in a gigantic clustermess.
  2. Repeal ACA in two or three years, with the promise they’ll come up with a replacement in a year or two.
    Without a credible replacement, insurers and healthcare providers are going to panic. Expect insurers to exit the individual and small group health insurance markets in droves. Democrats will use Medicare’s pending insolvency to bludgeon Republicans in the mid-term elections.
  3. Rebrand ACA as TrumpCare, make a couple tweaks around the edges, declare victory, and go home.
    This gets my vote as most likely, primarily for the reasons noted above. Now that the GOP owns health reform and Medicare solvency, Democrats are going to tie the issue around their necks like a dead chicken.

For a more detailed discussion of the issue, here’s a good synopsis from Politico.

Later – Hospitals and Medicaid – it’s pretty scary. 

What does this mean for you?

Don’t be lazy. Healthcare reform is hugely complicated, and for those of us – that means you – invested in the industry, what’s about to happen is far too important for you to ignore it or pay it little heed.


Nov
17

Telerehab’s coming fast

Regardless of what happens to health reform on the national level, the healthcare industry is relentlessly and rapidly adopting technology that will revolutionize patient care.  Big players are seeking out new tech devices, platforms, and applications, buying start-ups and rapidly pushing their products and services into their distribution pipeline.

One example is Zimmer’s recent acquisition of RespondWell, a start-up delivering comprehensive at-home telerehab intended to improve patient compliance with PT and deliver better outcomes. I recently interviewed RespondWell CEO Ted Spooner.  Spooner has a long history in developing tech that delivers services faster/better/cheaper with far less human intervention.  He and his team have taken that experience and used it to build a home-based rehab solution.

The quick backstory – Medicare and other payers are bundling payments for surgical procedures, forcing providers to assume responsibility for any procedure-related care for 90 days post-surgery. In this model, a health care system might get $37,000 to do a total knee replacement; out of that fee, around $5,000 would go to physical therapy.

But there’s a problem – in some places, there’s more demand for PT than there is supply of PTs.  As a result, some patients are on a waiting list – and as a result of that, surgeons, operating rooms, and related staff are not working to full efficiency.

There’s another issue here, one that gets at an uncomfortable reality – many services can be delivered in ways that don’t require nearly as much human intervention.

Telerehab provider RespondWell has come up with a solution, one that uses existing technology, platforms, and communications to “create accessibility and convenience for therapy to patients and give providers visibility to patients to adherence to therapy. Kaiser is one of the early adopters of the Therapy@Home solution.  To date almost all customers are healthcare providers, but Spooner expects payers to be in the mix quickly.

Briefly, Therapy@Home is set up for each patient recovering from surgery; the provider prescribes a therapy plan which is “loaded” into the App. The patient sees a web-based on-screen virtual therapist that helps them perform exercises correctly, while allowing the care team to monitor patient performance and compliance via the internet-connected device’s web camera.

Sessions and communications are recorded and stored for provider access if and when needed.

Here’s one key takeaway; about 60% of in-person PT visits can be eliminated using Therapy@Home.

Considering most total knee patients are older folks, I challenged Spooner on adoption and usage by senior citizens.  He noted that the over 55 population is adopting technology very quickly, driven by easy-to-use smartphones and apps that allow them to connect easily with friends and family.

While RespondWell is focusing on bundled payment-driven care today, this technology/service model (I’m not sure exactly how to describe it) is absolutely transferrable to other types of care – both within PT and in other service areas.

What does this mean for you?

Be a disruptor. Or be disrupted.


May
24

Workers’ comp – for hospitals, it’s where the money is

Two recent articles in Health Affairs highlight a growing issue for employers and taxpayers; some hospitals are increasingly looking to work comp as a profit maker.

Depending on the state, facility costs can account for anywhere from around 32 – 40% of total work comp medical expenses (different states classify locations-of-service differently).

Ge Bai and Gerard Anderson examined the fifty US hospitals with the highest charge-to-cost ratios and found their markups over Medicare-allowable costs were three times higher than the average hospital.

This is critical in work comp because state work comp regulations often base facility reimbursement on charges – despite NO evidence or requirement that those charges have any basis in reality.

Fully 20 of the fifty hospitals are in one state – Florida – that uses a percent-of-charges reimbursement methodology for hospital outpatient services (manual is here).

Bai and Anderson’s latest work provides a deeper dive into hospital profitability.  A few key quotes:

  • Hospitals with for-profit status, higher markups, system affiliation, or regional power, as well as those located in states with price regulation, tended to be more profitable than other hospitals.
  • Hospitals that treated a higher proportion of Medicare patients, had higher expenditures per adjusted discharge, were located in counties with a high proportion of uninsured patients, or were located in states with a dominant insurer or greater health maintenance organization (HMO) penetration had lower profitability than hospitals that did not have these characteristics.

The methodology used by Bai and Anderson is somewhat different from that used by other researchers in that it excluded income from non-patient care services. I infer that they did this to focus specifically on the actual care delivery cost and not factor in other revenues from services such as parking, gift shops, investment income, etc.

So, what are the implications?

  • Work comp is a soft target for facilities in many states
  • The percentage-of-charges methodology is a license to…profit
  • More profitable facilities have likely already figured out how to make the most revenue possible from every source – including workers comp
  • Less profitable hospitals are going to learn from their more profitable competitors