Insight, analysis & opinion from Joe Paduda
As a public service, I’ve put together a (partial) list of firms that repackage drugs for physician dispensing. This is primarily a workers comp issue, as comp insurers and TPAs are increasingly concerned about the cost of drugs dispensed by physicians. In some circumstances, the billed and payable amount can be several times higher than the cost for the same type of drug dispensed through a pharmacy.
It’s happening. Actually, it has been happening for years, albeit not very often. Frustrated with increasing premiums and no real solutions from the health insurance industry, large employers are investing in direct contracts with health care providers to deliver health care services to their employees and their dependents.
The practice got its start before WWI, when lumber mills in Tacoma Washington contracted with the Western Clinic to provide health care services for their employees. Leland Kaiser built health care facilities and hired staff to provide services to workers on the Grand Coulee Dam in the nineteen-thirties, a project that was the beginning of today’s Kaiser Permanente.
While there are no statistics on the number of lives covered under direct-contract arrangements, the total number is probably tiny. Unless there is a “magic” combination of a large employer and a dominant health care provider group with extensive facilities in a relatively small geographical area, direct contracting will just be too complicated and difficult to pull off.
But when those conditions do exist, expect more employers to seriously consider the move. Employers that are likely to consider direct contracts include large municipalities, school boards, manufacturing concerns, transportation hubs and entertainment companies.
What does this mean for you?
A business opportunity for providers, another challenge for health plans, and another way to tackle the problem of access and cost.
Some “quality” awards are based on rather shaky ground. And the Mercury Awards, which used to be handed out by HCIA (now Solucient) appear to fit that category.
According to the website for the North Ohio Heart Center (a cardiology practice in Elyria Ohio), “EMH Regional Medical Center had the top score for quality of care in Cardiology. According to the award, “It had the lowest complication rate and the most efficient length of stay. Its Patient Services score was boosted by its staff ratio and broad offering of cardiac services.”
That’s great, and if you were looking for a place to get your ticker checked, this impressive award may influence your decision. But the basis for the award should get anyone thinking, and at the very least asking a few pointed questions.
For example, the center had “the lowest complication rate”. That could be because the cardiologists are really great. Or it could be because they perform a lot of procedures on low risk patients , patients that are likely to require relatively short lengths of stay and experience low complication rates.
Evidence indicates that the latter may be reality. In fact, compared to national averages, there are four times as many angioplasties performed by the docs at EMH than in the rest of the country. More procedures = more experienced docs; more experienced docs doing procedures on low risk patients = good outcome scores, lower complication rates, shorter lengths of stay.
This looks more like an award for doing too many procedures including procedures on patients that may not have needed them in the first place, resulting in lots of income for both the docs and the hospital.
And the money ain’t bad either. (reg. req.)
In what appears to be straight out of alternative papers’ “News of the Weird” column, several private equity firms are looking to buy HCA and take it private. These are really smart people who make lots of money finding gold where others only see dross; they must see something here that I (and lots of others) don’t.
Pro, demographics favor the deal; older folks need more hospital care. Con, there is a growing recognition that end-of-life care is too expensive, and hospitals are the most expensive place to deliver this care. Expect to see a push to relocate terminal patients from hospitals to hospices and other less-intensive facilities.
Pro, hospitals’ profitability has been improving. Con, legislators and regulators are looking to reduce hospital costs.
Pro, hospitals have been investing heavily in profitable lines, e.g. cardiology and orthopedics. Con, in some areas ambulatory surgical centers partially owned by physicians (where that’s possible) have been capturing a significant number of profitable cases, leaving the hospitals to handle the more severe and less profitable patients.
The deal has passed the FTC approval process, and now is closer to reality. However, don’t expect this to be the first of many deals; the private equity community does not seem enamored with the industry, but rather sees HCA as the best bet in a troubled business.
Two recent articles highlight the massive inefficiencies in the US health care system. In Philadelphia, five hospitals now have heart transplant programs, even though there are only enough patients for two. The result? Hospitals will not perform enough to gain the experience needed to improve safety and efficiency while lowering variable costs.
A few hundred miles away, a (reg req)group of cardiologists in Elyria Ohio have evidently decided that their Medicare patients need angioplasties four times more frequently than the national average. I wonder if it’s the fried dough at the Elyria fair?
Three workers comp physicians and one medical practice were recognized as the best comp providers in Florida at the fourth annual Florida Choice Awards for Workers Compensation banquet last night in Otlando. Sponsored by Choice Medical Management (a consulting client), the awards are one of the few, if not the only, attempt to recognize the second-most important player in workers compensation, the physician.
These are the folks who diagnose the injury, assess causality and relatedness (is the injury work-related and to what extent is work responsible) write the scripts, encourage the patient, talk with the employer about alternate duty, fill out the innnumberable forms, develop treatment plans, and deliver the care.
The Choice awards represent the right way to work with comp docs – respect them, recognize them, reward them.
They are also in marked contrast to the way other networks, payers, and insurers think about and act towards physicians. For example, the head of claims for a large work comp insurer, speaking at the Florida Work Comp Institute conference (host of the Choice Awards) noted in his speech that driving greater network penetration and “savings” was key to reducing work comp expense. That mis-prioritization is largely responsible for the explosion in medical expense in work comp.
And physicians are beginning to reject the discount-oriented “managed care” approach employed by many work comp payers. Sources indicate that the Florida chapter of the American College of Occupational and Environmental Medicine (the professional association of occupational medicine physicians) will be forming a committee to develop a position statement related to managed care networks.
Here’s hoping it is direct, definitive, and blunt.
According to several providers in Florida, Aetna is recruiting physicians for its workers comp network while requesting discounts that are quite aggressive.
I’m attending the Florida Workers Compensation Institute annual conference in Orlando, and spent much of Sunday moderating a session for physicians. I caught up with several providers after the meeting, and the conversation turned to work comp networks (in my opening comments at the physician seminar, I posed the question “why are you, the acknowledged experts in treating WC patients, providing care at a discount?).
Several of the providers had been recruited by Aetna for participation in their AWCA workers comp network; all were already participating in Aetna’s group health and other arrangements. According to these providers, Aetna’s letter, which was sent regular mail and was thus no different from the dozens of letters they get each week from managed care firms, stated that unless the provider informed Aetna that they did NOT want to be part of their WC network, they were going to be listed as a participating provider.
That runs counter to what I have been hearing from Aetna, so perhaps there is some confusion on the part of these providers. Or perhaps Aetna is assuming that because the providers are already in their group network, this is all they have to do to enroll them in the WC version. If that is the assumption, Aetna may want to rethink their strategy.
(virtual Sidebar – I’m not an Aetna basher, and believe that on balance Aetna is one of the better mega-healthplans. My sense is their people really try to do the right thing, their leadership is smart and thoughtful, and their “brand” of health care is much preferred over that of their major competitors.
But no one is perfect.
(Back to the main post)
There was no confusion regarding the reimbursement offered by Aetna, which ranged from 30% off the work comp fee schedule to 20% off to 20% below Medicare. These were seasoned, intelligent veterans of the managed care world, well-versed in contract negotiations and reimbursement, and all agreed that the proffered rates were, to say the least, inadequate.
Perhaps that is why Aetna is having a bit of trouble launching a FL workers comp network.
I’d also note that the providers were quite clear in describing the contents of the letter, and the requirement that they inform Aetna if they declined to participate.
Discounting key providers is not the way to reduce workers comp costs. And if Aetna is requiring its group health docs to inform them if they do not want to participate in the group health network, it is setting itself up for major confusion on the part of the physicians, anger on the part of injured workers, and frustration on the part of WC claims adjusters.
For the reality is most practices will either not read the letters, understand the contents, and respond in a timely fashion.
What does this mean for you?
A likely delay in implementing in FL, and potential problems when you do.
Assuaging concerns about quality, treatment standards, and outcomes is one of the biggest challenges facing off-shore medical facilities eager to extract a fraction of US health care dollars. That and figuring out how to make a Mumbai hospital look and feel like the one just down the street from the medical tourist’s neighborhood.
Into this business opportunity (the former, not the latter) has stepped an Australian certification body, the Australian Council on Healthcare Standards. Working with two Indian groups, the Quality Council of India (QCI) and the National Accreditation Board for Hospitals and Healthcare Providers (NABH), the Aussies will help revise national credentialing and standards for Indian health care facilities.
The standards are likely to closely parallel those developed by another body, the ISQua, The International Society for Quality in Health Care. ISQua includes board members from URAC, JCAHO, and accrediting organizations from other countries, and is operational in 70 nations.
As healthcare goes global, and American companies and individuals seek to reduce expenses while assuring quality, expect that we’ll hear more about health plans that include first-dollar coverage for services rendered at ISQua certified facilities.
What does this mean for you?
The world is getting smaller, flatter (thanks Tom Friedman) and more competitive, and providers who ignore competition from overseas do so at their peril.
A colleague working in the managed care industry purchased a HSA plan through United Healthcare/Golden Rule. This colleague, a highly experienced and very knowledgeable industry veteran with extensive expertise in assessing physician outcomes and inpatient and outpatient hospital costs and quality, and several years’ experience in provider network development and operation, was confident in his/her ability to effectively reduce costs while obtaining care for the family.
Not so.
Continue reading United Healthcare – the fine print that’s not there
Kevin at Kevin MD posted a quick piece on the contention by researchers at Dartmouth College that there are too many providers, and he struck a nerve or three. And one appears to be the sciatic, for the amount of pain it has created amongst Kevin’s readers.
The study, which was published in my-favorite-journal Health Affairs, contends that there are presently enough physicians in the US to provide all of us with adequate care. Moreover, the lead researcher opines that spending additional money to increase the number of physicians will divert funds from more critical needs.
If you agree w the study’s results, it looks like we will soon have too many docs. And the more docs we have, the more procedures are performed, and the more bills generated. I’m also dubious about a return on that investment, as the health status of the average American will likely remain unchanged..