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!


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]


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.


  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.



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. 


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.


Florida’s solution to hospitals’ financial mess is…

To hear hospital lobbyists talk, you’d think Florida’s taxpayers and employers should subsidize hospital losses by paying exorbitant amounts for hospital care.

Yesterday’s virtual meeting of the State’s Three Member Panel (TMP) featured several hospital lobbyists and officials waxing poetic over proposed changes to workers’ comp facility reimbursement, citing the changes’ “fairness”, describing the TMP’s proposal as a “win-win” and the proposed changes as “reasonable”.


After Hoovering hundreds of millions out of taxpayers’ and employers’ wallets for years, some hospitals want to continue forcing those taxpayers and employers to pay rates that are often 8 to 12 times what Medicare pays.  They cited an NCCI analysis that purported to show big system savings.

Unfortunately the analysis itself appears to be a state secret as it hasn’t been shared…so no one except NCCI and the Three Member Panel know what data was used, what time period it covered, the methodology employed, or anything else. That’s unfair to NCCI and to every stakeholder, unwise politically, and unhelpful as parties who like the finding can’t cite specifics, and parties that don’t like it can dismiss it outright.

What these hospital advocates didn’t discuss was the basic unfairness of Florida’s work comp physician reimbursement. WCRI data indicates the State’s docs, PTs, OTs, chiros, and other clinicians get paid less than their colleagues in every other state in WCRI’s report. The changes proposed by the TMP would increase providers’ reimbursement by a whopping 0.9%.

As WorkCompCentral’s Will Rabb reported in an excellent summary of the call,  the TMP is somewhat limited by statute, a challenge noted several times by Ass’t Director, Dept of Workers’ Comp Andrew Sabolic. However, Mr Sabolic’s words to the effect that it isn’t possible to define or determine “reasonable” (a statutory criterion for determining reimbursement) are puzzling. I’d suggest an analogy might be helpful (wish I’d thought of this while testifying on the call yesterday…)

Think of it this way; you pull into a gas station – which doesn’t post gas prices – in your personal car, fill up, and only after you’re done do you find out what you have to pay.

If you pulled into an HCA station, you’re going to pay about 8 times what the driver in front of you who filled up their government-issue car pays.

Under the per-diem plus outlier scheme that is kind of/sort of in place today (although many payers are basing reimbursement on a Court ruling essentially eliminating outlier payments) HCA – and some other mostly for-profit hospitals and health systems – get paid 8+ times Medicare rates.  And that was based on data from 2016; I’d suggest that it is highly likely you are paying even more today.

By any “reasonable” definition that is wildly “unreasonable”.

(A detailed discussion of this is here and here is an excellent report by Johns Hopkins researchers on Florida facility costs (non-subscribers to HealthAffairs have to buy it, but the summary is free)

I won’t get into the bizarre multiplier scheme proposal; suffice it to say that it is unique, hasn’t been used in any other state, is not based at all on what it actually costs a hospital to deliver services, and is completely game-able; any hospital can increase their reimbursement by a factor of 5 just by increasing their charges.

I will note that many hospitals don’t wildly overcharge work comp payers; many – but not all – not for profit facilities get paid less than 3 times Medicare.

What does this mean for you?

How is this “reasonable”?

If you want more info on why some hospitals are supporting this scheme, see here.

The TMP will meet December 17 to discuss implementing the changes; you can register here.


Making tele-health work.

It’s easy to dismiss tele-health as unsuccessful – and far too many have done that. That view is simplistic, and wrong.

There are two closely-related considerations that will drive tele-health’s growth.

As with any new technology-driven service, tele-health 1.0 is deeply flawed as it is based on developers’ guesses about what will work. 

Developers got some things right, and a lot of things wrong. User access to technology, internet connection speed, privacy concerns, health literacy, language and translation needs, and basic human fears and communication needs all drive adoption and usefulness.  Too often we don’t think about Maria Gonzalez, the working single mother with two kids living in rural California. Everyone has a smart phone, fast and reliable internet, a high level of comfort with medical providers and excellent English skills…so…we don’t need to deeply and thoroughly think through the what-ifs.

We are learning a lot and quickly. Those who listen, seek to understand, experiment, and keep an open mind will succeed.

Second, I purposely use a hyphenated label as it encompasses all things tele-health. Diagnosis, rehab, follow-up visits, medication checks, remote surgical consults, behavioral health – all are included in “tele-health”.

And all are different, likely require somewhat different approaches, technological support, documentation capabilities, and patient experience considerations.

Recent research indicates there’s lots we can learn – and some are learning – about early use of tele-health.

There’s another factor, one which makes tele-health potentially more helpful than in-office visits.

Clinicians can view the patient’s home, worksite, environment, their kitchen, bathing facilities, and exercise equipment. They can observe their patient exercising, taking meds, measuring their blood pressure or oxygen levels. They can help care-givers learn how to change dressings, administer medications, lift and move the patient.

This is far better than sending the patient home with barely-readable instructions, perhaps written in uninterpretable language, expecting the patient will follow those instructions to the letter with no mistakes.

Tele-health will be one of the topics discussed by workers’ comp program managers in a webinar tomorrow at 1 pm eastern. Registration here is free, courtesy of MTIAmerica.





It’s not a good time to be a hospital.

Lots happening this week, much of which was lost in the pre-election madness.

From Becker’s, a list of the 16 rural hospitals that shut their doors this year; over the last decade 133 have closed.  Most are in the South.

States that didn’t expand Medicaid figure prominently, accounting for 12 of the 16 closures. More than two dozen hospitals in Kentucky are at risk; the state’s decision to expand Medicaid took effect in June of this year, but the years of financial hardship will prove to be too much of a burden for some.

Expect more closures in the coming months.

One small contributor; now that PPE manufacturing is moving stateside, facilities’ costs will increase. That adds another straw to the camel’s back.

What does this mean for you?

Longer drives to get care if you live in a rural area, and hospitals looking everywhere for revenue to make up for losses.


More hospital consolidation = higher prices

The only demonstrable impact of facility consolidation is higher prices.

There’s also solid evidence that more concentrated health care markets are associated with lower health care quality.

While the number of deals dropped by about 21% in the first half of this year as everyone’s attention focused on COVID and the impact thereof, a number of transactions still took place.  Conversely, several deals in process totaling around $23 billion were abandoned, victims of a variety of challenges.

Consolidation may actually accelerate as facilities hammered by the financial impact of COVID19 seek safe harbors.

The latest consolidation is in the north-central part of the nation, with 2 not for profit systems working on an a deal driven in large part of a desire to help the systems expand their footprint.

I’d expect more, although the increasing number of facility closures may well put a damper on deals as some run out of time.

This is particularly damaging in rural areas, where over a hundred hospitals have shut their doors over the last decade.

From Bob Shepard, UAB

What does this mean for you?

There will be fewer hospitals tomorrow than today, which likely means higher prices.


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.


  • 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.




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.