Less “Managed care” for Washington surgeons

Surgeons who are top performers in Washington’s Department of Labor and Industries (L&I, i.e. workers comp) program will no longer be subjected to utilization review hassles. 111 physicians have been identified as providing all necessary documentation to the state’s UR program, and all of the surgeries they recommended were approved. The result – they won’t have to ask permission anymore.
The UR program is run by Qualis Health, and focused on carpal tunnel, shoulder, and knee surgeries performed over a two year period. According to the report in Insurance Journal, the 111 surgeons’ results will be monitored over the next year.
“If it is determined that the number of unnecessary surgeries doesn’t rise as a result of less oversight, L&I likely will expand the program to train and include additional physicians.
L&I-funded studies, conducted by the University of Washington, show that injured workers who get prompt and appropriate medical treatment tend to recover and get back to work more quickly. That results in lower workers’ compensation claim costs and less missed work. One obstacle to receiving timely treatment is unnecessary delays in authorizing procedures.”
No kidding.
While it is gratifying to see that physicians who perform well get treated differently by managed care overseers, it is indeed frustrating to recognize that this is one of the few programs of its type, and managed care in the form of precert has been around for more than two decades.
Here’s hoping this is just the first of many intelligent decisions to identify the good docs and leave them alone.
What does this mean for you?
If you are a physician, perhaps a little hope. For managed care firms and folk who contract with them, get with the program. Stop monitoring everyone and start using that huge amount of data resident on your systems to identify the good docs.


Pay for Performance – Medicare initiative

Pay for performance is likely to get a big boost from the Federal government. A bill linking physician pay under Medicare to reporting quality data will be introduced in the Senate before the end of the year, the first step towards a pay for performance model.
Sen. Chuck Grassley (D IA) is the protagonist; as Chair of the Senate Finance Committee Grassley has both jurisdiction and significant influence over the Medicare program.
According to California HealthLine;
“The legislation would allow the HHS secretary to reward providers first when they report quality data and later when they improve quality or meet certain quality thresholds. The legislation would establish a “value-based purchasing” system for providers — such as hospitals, physicians, Medicare Advantage plans, home health agencies and skilled nursing facilities. Under the bill, physicians who report quality data would receive the full update to Medicare reimbursements allowable under current law in 2007 and those who do not report quality data would have their updates reduced by 2%.”
Currently, physician reimbursement under Medicate is slated to drop by 4.3% on 1/1/2006. This decrease is part of past legislation, and has been rescinded in recent years. However, it does require Congress to act or the decrease becomes effective. In this case, it appears Grassley is using it to promote the “P4P” initiative.
What does this mean for you?
Pay for performance is likely to become a reality. You can choose to fight the very concept, or engage and contribute to the dialogue. As Congress is especially adept at the “blunt instrument” style of reform, physicians will be better served engaging rather than avoiding.


Insurer – Physician communication

One of the most important benefits of the internet is improved communication among and between folk who otherwise would likely not interact. And blogs add immeasurably to that improvement. For some time I have been reading and occasionally cross-posting to and commenting on several providers’ blogs, and more specifically two blogs written by thoughtful, highly intelligent, and obviously concerned physicians. The latest discussion is on DB’s Medical Rants and concerns pay for performance.
Another excellent physician blog is Health Care Renewal.
As one of the few “payer-side” bloggers, I have also received (or perhaps been subjected to) many comments from folk on the provider side. While the discussions can be contentious at times, they are direct, insightful, and helpful in advancing understanding.


Medical malpractice – what crisis?

While medical malpractice premiums were climbing dramatically from 2000 to 2004, claims did not increase at all. The finding from a study by the Center for Justice and Democracy reported in the New York Times, examined the premium and claim histories of the 15 largest med mal carriers and found that while premiums escalated 120%, claims were flat while the insurers’ incurred loss ratios (ratio of claims to premiums collected) improved by almost 25% to 51.4%.
What gives? Does this mean the “med mal crisis” of a few months ago was a myth? Depends on who you listen to. The Times article notes:
“According to Connecticut Attorney General Richard Blumenthal (D), the results of the study “have the potential to alter the debate fundamentally from seeming to cast the rapacious personal injury lawyers as the complete culprits and the insurers as innocent bystanders with doctors as victims to the insurers as equally responsible, if not more so.” He does like to turn a phrase…


Physicians in workers compensation

There are several signs that indicate a growing awareness of the importance of the physician in managing workers comp injuries. While many in the industry have paid lip service to the treating physician, their actions have been louder than words. Utilization review requirements, onerous communications protocols, invasive medical management procedures, requirements that physicians provide care at a discount to an already-low fee schedule are representative of the way physicians have been treated by the community.
Now, that is starting to change. Here’s the evidence.
–a major workers comp insurer is considering using a PPO network that includes physicians paid above the workers comp fee schedule. This despite their long-held and loudly trumpeted historical attachment to large discount-drive networks.
–another carrier is closely examining its data to identify the physicians with the best outcomes. The plan is to pursue a contractual relationship with those physicians that is predicated not on discounts but on results.
–large employers such as Supervalu have been working directly with certain providers in specific locations that they deem to deliver excellent care. Again, outcomes, not discounts, are the measure of quality.
–a large Longshore-Harbor Workers insurer has arrangements with many physicians where they pay a negotiated rate that is typically above the fee schedule. This gets them prompt, effective treatment, speeds communications, etc.
Choice Medical Management, the fastest growing workers comp care management firm in the Southeast (also a client) has been recognizing the physicians of the year for several years. This year the number of physicians nominated and the volume of nominations have been significantly higher than in years past, forcing the company to adopt a more streamlined method of evaluating nominees.
This is great news, but a few items do not a trend make. The encouraging sign is that this growing recognition appears in large carriers and small carriers, in TPAs and at employers, among adjusters and execs.
What does this mean for you?
If you don’t have a physician-centric approach to managed care, it is time to start thinking about how you are working with the people who have the most influence over your claimants.


workers comp in Iraq, Ambulatory Surgery Centers, and other topics

Workers’ Comp Insider has a fascinating post on workers comp in Iraq. Jon Coppelman discusses safety issues, premium rates (as high as $80 per $100 of payroll, for people making $100k a year!), the “competitive bidding” situation between AIG and ACE, and other intriguing points.
I highly recommend it.
Another interesting post discusses the costs and benefits of Ambulatory Surgery Centers, with particular attention paid to safety issues. An issue not covered in the post or resources on the post is the issue of ASCs siphoning off the profitable, private pay patients from hospitals, leaving hospitals with sicker, poorer patients. The result, hospitals’ outcomes go down, costs go up, and profits disappear.
Another post in Medpundit lead me to a great article about an American’s experience in the British health system. One quote from the article (originally in the Wall Street Journal) in the Medpundit post is particularly telling:
“There is much better teamwork among doctors, nurses and physical therapists in Britain. In fact, once a week at Queen’s Square, all the hospital’s health workers–from high to low–would assemble for an open forum on each patient in the ward. That way each level knows what the other level is up to, something glaringly absent from U.S. hospital management.”


Surgeons and carpenters

A very interesting post from a surgeon defending his profession from an attack by someone stating that surgeons are no different from carpenters plumbers and engineers.
Those of us on the payer side of the table would do well to remember that there are passionate, highly intelligent, motivated and great people on the “other” side. Perhaps we should make that table round instead of rectangular?
What does this mean to you?
We are in this together, and insulting comments, intended or not, damage our mutual desire to deliver for our mutual customers.


Emergency department usage increases

There has been a substantial increase in the use of emergency departments in recent years. A new report from the Centers for Disease Control indicates the number of ED visits reached an all-time high of 114 million in 2003.
The increase was attributed to adults, and more specifically Medicaid recipients who used EDs four times as often as those with private insurance. One of the report’s editors noted that the ED has become the provider “of first resort” for many of the poor and uninsured.
With the present political wrangling over the future of Medicaid and the uninsured, this report points out one of the most troubling aspects of the “delivery systems” used by the poor. Care delivered through the ED is typically more expensive, time-consuming, and less coordinated than care delivered through a primary care provider. Tests and imaging are often duplicated, there are often problems with continuity of care, and patients with chronic conditions seek care for acute episodes in the ED rather than through their primary doc.
It is impossible to calculate exactly how much money is wasted in this process, but it is certainly in the billions of dollars.
Clearly the industry needs to do a better job of directing patients to appropriate levels and locations of care. Having been involved (albeit years ago) in a state Medicaid reform effort, I have some understanding of the problems involved. However, it is clear that the quality of care delivered is too low and the cost of that care is too high when it is provided at an emergency department.
What does this mean for you?
Redouble efforts to direct patients to primary care. Work with providers to set up streamlined primary care access next to the ED. Yes this is a big problem with lots of issues, but we can’t afford to not address it.


HMO profits up 33%

Although health plan profits were up substantially in the first 9 months of 2004, only five companies were responsible for over half of those profits. Weiss Ratings’ (along with Fitch, my favorite rating firm) analysis excluded Kaiser, which had gains of $1.2 billion primarily from a regulatory change.
Four of the top five were HMOs owned by Blues plans, with the leader Blue Cross of California posting over $400 million in profits for the period.
Even more notable was the overall improvement in the industry’s financial condition, Weiss upgraded 65 HMOs and only downgraded 3. This improvement was driven by a 33.6 percent increase in profitability.
Other reports indicate the decline in the rate of medical inflation coupled with increased premiums have been largely responsible for the improvements. United HealthGroup, Coventry, Aetna, and others have all reported this “decrease in the rate of increase”.
Good times never last; consolidation in the industry has led to its’ present oligopolistic condition. Thus, health plans have three choices if they are to grow – take market share by cutting price; acquire other health plans; or seek other sources of revenue. Actually, there is a fourth – seek to reduce “cost of goods sold” by reducing reimbursement to providers, but this is highly unlikely to succeed.
The pace of acquisition will likely slow for the simple reason that there are fewer health plans to acquire. Potential candidates include Coventry, but their high-flying stock price likely precludes any move in the near future.
Plans are actively and aggressively, seeking new sources of revenue. The move into workers comp network rental by Aetna and Wellpoint are but two examples. However, it is highly unlikely that there is enough revenue in the ancillary lines to please the Street’s demands for ever-increasing growth.
That leaves price cutting. Yes, all will claim they will never repeat the mistakes of the past, and most will do so anyway. Good times never last, especially in the insurance industry.
What does this mean for you?
Three things.
1. If you are a provider, watch the new contract offers carefully.
2. If you are a workers comp payer, lock these new entrants into long term contracts with significant exit penalties – their interest will likely wane when they figure out how little money there is in workers comp, leaving you high and dry.
3. If you are an analyst, monitor pricing and medical inflation, especially the components of inflation (frequency and utilization) more than unit price. That is where renewed inflation will first appear.


Generalists v specialists

Roy Poses MD has posted an insightful, brief, and trenchant look at the trend for new physicians to select specialties other than internal medicine, family practice and the like.
To quote Dr. Poses,
“However, as demonstrated by the issues discussed on this blog, not only are generalists at the bottom of the economic pecking order, they seem particularly impacted by the huge rise in health care bureaucracy, and particularly vulnerable to challenges to physicians’ professional values instigated by large organizations lead by leaders with conflicting interests. They will need more than new “chronic care models” to survive these threats.”
The continued trend to more highly compensate specialists is driving physicians to select specialties. The root of this is compensation, followed closely by the hassles inherent in today’s managed care bureaucracy.
What does this mean for you?
For once, this is simple – the more specialists, the more specialty care, the more expensive the care, the higher the medical expense.