Category: Providers

Sep
22

The hospital shakeout

Posted by Joe Paduda on Thursday, September 22nd, 2022 | Comments

Is well underway.  Likely impacts include:

  • more hospitals shutting down their inpatient operations
  • a decline (!!) in hospital employment
  • even more aggressive land-grab efforts by rival health systems seeking highly profitable commercially insured patients (that’s you, dear reader)
  • doubling down on “revenue maximization” (that’s you, work comp payor)

(Kudos to the estimable Merrill Goozner for his cogent discussion of the issue)

What’s happening…

  • hospital admissions dropped precipitously last year – despite the major impact of COVID admissions. As I noted a while back, COVID patients aren’t very profitable; they rarely get surgeries or other procedures which generate big dollars for hospitals…
  • meanwhile expenses are climbing – driven mostly by labor costs (up $86 billion this year)
  • more than half of all hospitals are going to lose money…before COVID, the money-losing facilities amounted to only a third of the total.

Why this is happening…

  • states that didn’t expand Medicaid are getting hammered as the other safety net payment programs mostly stopped helping hospitals make up revenue shortfalls.
  • care has largely shifted to outpatient facilities which are way less costly – and generate way less revenue per admit – than inpatient stays
  • it’s really hard to find staff – many are way past burnout, driven by overwork and abusive patients.

What does this mean for you?

Facility costs will go up.

Quality likely won’t.

Aug
9

Amazon, Kaiser, and primary care

Posted by Joe Paduda on Tuesday, August 9th, 2022 | Comments

Two seemingly-unrelated new items hit my news feed – Kaiser Permanente lost over a billion dollars last quarter, and Amazon paid $3.9 billion to buy One Medical, a primary care company.

Amazon is betting it can make primary care “work”, yet one of the best healthcare systems hasn’t been able to translate excellent primary care into lower costs.

Reality is, in the US primary care is (mostly) a money-loser.

One Medical, Amazon’s new purchase, has consistently lost money – a lot of money. That’s because reimbursement for primary care remains pretty low – despite Medicare’s move to increase pay.

We spend twice as much on healthcare as other developed countries, yet our outcomes, well…suck. One driver is likely access to primary care:

  • High income countries spend 2 to 3 times more on primary care services than we do; United States as a proportion of their (14% of total health care expenditures vs. the US’ 5% to 8%)
  • In those other countries primary care providers (PCPs) account for a substantially higher proportion of all practicing physicians; almost half of French physicians and a quarter of docs in the UK are PCPs compared to just one out of 8 in the United States.
  • that last data point may be due to pay; family practice docs make less than half what orthopedic docs do.

Good primary care saves big bucks by reducing the need for specialty care – an economic impact that isn’t reflected in primary care reimbursement in the US. At least not in most reimbursement schemes; risk-taking, ACOs, risk share, and other variations are among the models that attempt to reward PCPs for effectively managing patient health.

Amazon’s move to buy One Medical comes on the heels of lots of other investments in primary care; what’s notable is how few have resulted in profits.

Can Amazon “fix” primary care?

Well, they’ll  have to be a lot better than Kaiser Permanente.

KP is one of – if not the best – health care systems in the world, with excellent primary care and provider compensation that better reflects the value of primary care.

Yet KP lost over a billion dollars last quarter – and over $2 billion for the first half of 2022. Yes, a big chunk of the Q2 loss was due to investments, and there are extraneous factors – COVID-related mostly; Kaiser also has to pay orthopedic surgeons and other specialists a lot (increasing KP’s overall cost of care) because those docs could make much more outside KP.

Still, when one considers that Kaiser Permanente’s operating margins are generally pretty thin and certainly KP is less profitable than other health plans (UnitedHealth Group’s Q2 profits were up 19%) it shows just how difficult it is to make primary care “pay.”

What does this mean for you?

Pay more for primary care. 

Aug
1

Just the facts, ma’am…

Posted by Joe Paduda on Monday, August 1st, 2022 | Comments

Today we’re doing a very quick recap of stuff we learned over the last couple of weeks…no opinion here (yeah that was really hard for me…)

Extra credit for identifying the man in the picture…

But first, for those of us perennially mad at ourselves because, well, we screw up and aren’t perfect, read this. Short take – perfectionism…

“…makes for a thin life, lived for what it isn’t rather than what it is. If you’re forever trying to make your life what you want it to be, you’re not really living the life you have.”

Drug prices

Make for great politics…even when all the caterwauling is wrong. The issue is what we – the consumer – pay is NOT what insurers, PBMs, and other payers pay.

That’s due to the “gross-to-net bubble”, a term popularized by the estimable Adam Fein Ph.D.

When rebates and discounts were factored in, brand-name drug prices declined—or grew slowly—in 2021.

So…you getting those rebate checks?

COVID’s origins

Remember the theory that COVID came from a Chinese lab? It is looking increasingly sketchy.

A comprehensive, detailed, and multi-factor analysis by scientists from four continents found

the emergence of SARS-CoV-2 occurred via the live wildlife trade in China, and show that the Huanan market was the epicenter of the COVID-19 pandemic.

The peer-reviewed research published in the journal Science covered molecular epidemiology and spatial and environmental analyses.

Investors and physician practices

Private equity investment in physician practices varies a lot by specialty and region. Quick takes…

  • about 5% of physicians were in private equity-acquired practices
  • The highest percentage was in D.C. (18.2%)
  • More than one in ten docs in AZ, CT, FL, MD, and FL were in PE-acquired practices

The researchers wrote…

“Because some private equity acquisitions consolidate physician practices into larger organizations, geographic concentration of private equity penetration may be associated with reduced physician competition, which could lead to increased prices, [emphasis added]

An interactive map and the research report are here.

Gun violence

Gun makers earned over 1 Billion (with a B) dollars from sales of military-style assault weapons over the last decade. A report to Congress found:

  • gun makers marketed to young men by claiming their weapons will put them “at the top of the testosterone food chain”…
  • the weapons were described as an “apex predator”
  • some ads for these weapons “mimic first-person shooter video games popular with children.”

source here

The AR-15 is the most common of these weapons…the NRA named it “American’s Rifle” back in 2016. (and here I always thought it was Davy Crockett’s flintlock rifle…)

(disclosure – I hunt and have several rifles – none are semi-auto like the AR-15)

Workers’ comp physician fee schedules

…are all over the place…Louise Esola at Business Insurance reported on a recent WCRI analysis that found:

About one-quarter of the fee schedule states established their rates for office visits near the Medicare level or below, while about the same number of states set their fees for major surgery at triple the Medicare rates or more in each state…

The study – authored by Olesya Fomenko and Te-Chun Liu and up to date as of this spring – is here. (sorry for misspelling of Dr Fomenko’s  name in  earlier version…darn spellcheck!)

Clearly politics trumps policy…unless someone can tell us why it makes sense for Florida to pay docs below Medicare, while paying hospitals many times Medicare… I’ll stick to politics, campaign contributions, lazy legislators and hand-cuffed or ineffective regulators as the main driver of work comp fee schedules. (oops opinion inserted into post…just can’t stop myself)

Happy August!

Jun
7

Those damn facility fees

Posted by Joe Paduda on Tuesday, June 7th, 2022 | Comments

If you are a work comp payer, you don’t have to pay those ridiculous facility fees when care is delivered outside the hospital – at least not in Pennsylvania.

That’s the decision rendered by the Pennsylvania Bureau of Workers’ Compensation in a case dating back to 2017. The case arose when a hospital (which I promised not to identify) tried to get reimbursed for care delivered by an affiliated provider, which was NOT “located within XXX hospital”.

The details

The hospital, a “Part A provider and billing entity” didn’t provide the billed services, rather a

“part B provider whose clinic [was] not located with[in] XXX hospital performed, billed, and was reimbursed for services.  XXX hospital is not entitled to payment as XXX hospital provided no medical services…”

The actual provider – a “part B provider” affiliate of XXX hospital, delivered the services, submitted a bill and supporting documentation, and was reimbursed.

The hospital also submitted a bill along with documentation that the treating provider had a professional services agreement (PSA) in place with the hospital.

Notably, the PSA “designates that all care and treatment is rendered by [the affiliate’s] personnel, therefore the payer’s attorney questioned exactly what XXX hospital was “providing.”

There’s a LOT more to this; location codes, provider details, Medicare regulations, bill types and the like are all important. The knowledge level required to correctly reimburse and successfully uphold a denial of payment for facility fees in PA is quite impressive; the entity providing that expertise has a wealth of experience and expertise in the Keystone State.

The cost reduction is equally impressive .

What does this mean for you?

  1. If you are paying facility fees for care delivered outside of a hospital (Part A) provider, you better get your act together.
  2. Expertise is way more important than price or throughput.
May
13

Medical cost drivers in work comp – NCCI’s take

Posted by Joe Paduda on Friday, May 13th, 2022 | Comments

Sean Cooper and Raji Chadarevian delivered perhaps the most useful presentation I’ve seen at any NCCI Conference…There’s a LOT 0f important – and very timely – information in their presentation, so I strongly encourage you to watch it  – or watch it again here.

Let’s start with the top line – facilities and physicians (which includes physical medicine as well as MD costs) are by far the biggest chunk of spend. Note that NCCI reports annual drug spend is down to 7% of total spend. This aligns closely with what I’ve been reporting for some time.

The key takeaways…

The discussion focused on medical prices – which are the single biggest driver of total US healthcare inflation (see here for more details on this) – and utilization. Disaggregating cost increases provides/ed the audience with a deeper understanding of drivers – well done.

We are approaching network saturation.

Fully 75% of Physician services were delivered in-network – and, as in-network prices grew much more slowly than non-network, this helped reduce overall medical inflation.

Physical medicine is increasing…which is good.

The cost of physical medicine has been increasing while costs for surgery costs have not. What’s driving PM costs is mostly more utilization – indicated by the light green shading below. That is NOT necessarily – or even likely – a bad thing…A course of PT is way less expensive than the costs associated with a surgical episode. 

Facilities

Sean noted facility costs have been “the biggest driver of increased medical costs in workers comp” – increasing twice as fast as physician services. (Long-time readers will recall I’ve been banging on this drum ad nauseam.)

There are a host of reasons for this – led by consolidation in the healthcare services industry (also covered in detail here at MCM). Net is when a hospital or health system buys physician practices, it gets to add a facility charge to the what used to be just a physician office bill.

Voila!  Instant profit simply by changing the “place of service”. That’s why private equity firms, large health care systems, UnitedHealthGroup, and dominant hospitals have been snapping up physician groups – they are gaming the system.

There’s more to unpack here – which I’ll do early next week.

What does this mean for you?

It’s facility costs.

Apr
4

Facility costs…more bad news

Posted by Joe Paduda on Monday, April 4th, 2022 | Comments

Here’s two things which will likely increase facility costs.

Becker’s reported last week that so far this year hospital and health system margins (with some very notable exceptions) are pretty crappy – down almost 12 percent month over month in February, and a whopping 42% below February 2020 (jsut before COVID).

My bet is significantly higher staffing costs are a major contributor; the giant Henry Ford system said labor costs were up 8% in February over the same month in 2021; Providence’s increase was even higher at 10%.

Couple that with a steep drop-off in health insurance coverage as COVID-related medicaid coverage ends, and you can expect facility costs to jump.

That’s because we’re going to see a lot more uninsureds seeking care at hospitals.

Medicaid is likely the single largest payer today, with about one out of every four of us covered by Medicaid.

The problem will be especially acute in states that have not expanded Medicaid – if your members/insureds/injured workers are in the orange states, you’ve already been paying a hidden tax to help pay for uninsured care delivered by hospitals.

Since states can pretty much determine who gets Medicaid, the problem is even worse in places like Mississippi that have long restricted Medicaid coverage to a very thin slice of the poor.

If you make more than 27% of the federal poverty level, you’re too rich to get Medicaid in Mississippi – which is both the poorest and sickest state in the nation.  (kudos to Louise Norris for her intel on the issue)

What does this mean for you?

Success favors the prepared. If you think you’ve got an answer to this you’re likely wrong. 

Mar
31

a patient dies, a nurse is blamed, a prosecutor’s behavior is amoral, and a hospital escapes blame.

Posted by Joe Paduda on Thursday, March 31st, 2022 | Comments

A nurse was convicted of “reckless homicide and impaired adult abuse” after she inadvertently – and unintentionally – injected a patient with the wrong drug. RaDonda Vaught faces six years in prison

I’m pretty angry about this – and that anger is NOT directed at Ms Vaught, but rather at a grandstanding prosecutor, a negligent hospital, and a healthcare delivery system that is far less than honest with its workers and patients.

The death occurred when Ms Vaught gave Ms Murphey vecuronium instead of Versed. Sources tell me that vecuronium (a medication used as part of general anesthesia to provide skeletal muscle relaxation during surgery) is a significantly more powerful relaxant than Versed (a benzodiazepine, similar to Valium).

Okay, here’s the reality.

  1.  Medications are accessed via a secure cabinet which requires multiple steps to dispense a drug. Omnicell – the cabinet used by Vanderbilt did not have some controls that would – in all likelihood – have prevented the error.
  2. There’s no question Vaught overrode system controls – but she did so because she did not know that the drug prescribed – Versed – was only available in the generic form – midazolam – from the Omnicell cabinet. Vaught also did not know that midazolam was the generic form of Versed.
  3. Instead Vaught typed “Ve” in the cabinet’s search function – and the cabinet’s electronic system responded with vecuronium. Vaught then selected vecuronium and administered it to Murphey.
  4. The prosecutor said Vaught’s decision to override the control was central to obtaining an indictment.

In fact thousands of nurses do this – override an automated dispensing cabinet’s built-in controls – hundreds of thousands of times every year. Vaught is one of thousands who have to make decisions when the doctor’s orders aren’t easily followed – or followed to the letter. Instead they have to use their judgment.

From the Institute for Safe Medication Practices:

The hospital where RaDonda worked allowed nurses to remove certain medications via override, and it is highly likely that, prior to this event, midazolam and vecuronium had been removed from an ADC via override in this hospital. Also, it is unlikely that nurses, including RaDonda, perceived a significant or unjustifiable risk with obtaining medications via override. In fact, removing certain medications from an ADC via override is an accepted risk in healthcare and one that many practitioners take to provide care to their patients. [emphasis added]

Vaught reported the error – as is common practice – with the understanding that doing so would not result in legal action against her.

Again the ISMP:

Criminal prosecution has worrisome implications for safety. It can inhibit error reporting, contribute to a culture of blame, undermine the creation of a culture of safety, accelerate the exodus of practitioners from clinical practice, exacerbate the shortage of healthcare providers, perpetuate the myth that perfect performance is achievable, and impede system improvements.11 [emphasis added]

Vanderbilt University Medical Center selected and installed and trained staff on the Omnicell cabinet – a decision that was directly responsible for Murphey’s death. From KHN:

A lead investigator in the criminal case against former Tennessee nurse RaDonda Vaught testified Wednesday that state investigators found Vanderbilt University Medical Center had a “heavy burden of responsibility” for a grievous drug error that killed a patient in 2017, but pursued penalties and criminal charges only against the nurse and not the hospital itself

Vanderbilt took several actions that resulted in the medication error not being disclosed to the government or the public, according to county, state, and federal records related to the death. Vanderbilt did not report the error to state or federal regulators as required by law, a federal investigation report states. The hospital told the local medical examiner’s office that Murphey died of “natural” causes, with no mention of vecuronium,

Reality is Vanderbilt avoided criminal responsibility and Vaught gets the blame.

If you object to this, please sign a petition to ask the court to grant RaDonda clemency. (Thanks SW for the head’s up)

From Hospital Watchdog

Finally, there’s this.

Prosecutor Brittani Flatt’s closing argument included this reprehensible statement:

“RaDonda Vaught probably did not intend to kill Ms. Murphey, but she made a knowing choice,” [emphasis added]

What absolutely ignorant and inflammatory bullshit.

Flatt’s statement implied that Vaught might have intended to kill Charlene Murphey, a statement that has no basis in fact, was completely contradicted by everyone involved, and is incredibly insulting to Vaught. Flatt should disciplined for her egregious statement.

Moreover, there’s no evidence Vaught made a “knowing choice”, in fact just the opposite – unless the “knowing choice” she made was to circumvent controls built into the drug cabinet, a “choice” she and thousands of her fellow nurses make every day.

What does this mean for you?

Medical professionals will be a LOT less likely to report errors.

Another clear sign that our health care system needs major overhaul.

Don’t go to Vanderbilt University Medical Center.

reminder – tomorrow is April First.

 

Mar
25

WCRI #4 – Provider consolidation’s impact on workers’ comp

Posted by Joe Paduda on Friday, March 25th, 2022 | Comments

Is Not Good.

that’s the primary takeaway from Bogdan Savych PhD’s presentation at WCRI’s annual conference– and a lot of other work I’ve done on the topic.

Consolidation eliminates competition – although I’d posit there’s little true competition in health care services. [I’ve written a LOT about  consolidation and the impact thereof]

There’s solid evidence that consolidation actually leads to increased prices and some research indicating it leads to decreased quality.

So how has healthcare evolved – well, primary care docs shifted from mostly solo practice to employment by health systems or group practices. Note this data is from 2018; consolidation has accelerated since then.

Of course, like everything else in healthcare, it’s local…orthopedic practices in Wisconsin are much more likely to be owned by health systems than those in Delaware.

Dr Savych’s research hit on a critical issue – exactly how many workers’ comp patients do primary care docs see? – the answer is most see almost none – with just one out of every ten physicians seeing more than 10 WC patients per year. Of course orthos see more – but still not many; only about a third see more than 10 claimants per year.

There are a whole host of issues with this which we’ll get into in a future post. For now, the net is researchers have to identify the specific physician responsible for the care of and outcomes for specific patients – which is fiendishly difficult especially when that physician moves from a group practice to employment by a health system. Provider identification is the main challenge – but by no means the only one.

Case mix adjusting – the art of comparing patients with similar diagnoses (often primary, secondary, and tertiary) over time – is as or almost as hard to get consistently right.

All that said, Dr Savych noted that cost increases are due more to a shift in the volume and type of procedures than higher prices for individual services.

The initial takeaway (there’s a LOT more research and analysis to do) is vertical integration (physician practices absorbed but health systems) leads to docs providing more expensive services.

What does this mean for you?

Consolidation raises work comp medical costs.

The best way to think about this is on a state-specific basis; understand where there’s more consolidation and watch the type of services delivered to your patients like a hawk.

Mar
9

Work comp’s moving to electronic payments…

Posted by Joe Paduda on Wednesday, March 9th, 2022 | Comments

When was the last time you wrote a check?

When was the last time you manually deposited a paycheck?

When was the last time you bought stamps?

The world is switching to electronic payments – they are wholly secure, incredibly cheap, and super efficient. Yet some work comp payers are still writing checks and mailing them to providers, while others that have begun the journey are still mailing thousands of checks and EOBs every week.

Given work comp’s top challenges – declining premiums and fewer dollars and fewer resources for administration, and the ease of adopting e-payments – makes zero sense.

Paying providers is one of those “have to get it right” things that suck up resources and staff time. The challenges are many –

  • ensuring the provider’s banking info is exactly right
  • fraud prevention
  • postal challenges
  • tying the EOB to the payment
  • producing and delivering 1099s
  • answering provider questions about payments

In group health and governmental programs, electronic payments are fast becoming mandatory.

Aetna, United Healthcare and other giant payers are mandating electronic payments for their providers…as work comp accounts for less than 1% of total US healthcare payments, payers that don’t/can’t pay electronically  will find their costs going up and provider relations suffering.

Join me next Friday March 18 for a webinar on electronic payments and work comp – free registration is here; California CLE and claims credits are available. Hosted by WorkCompCentral, Change Healthcare’s Bill Barbato and I will dive into:

  • how to evaluate the impact of e-payments on costs and margins,
  • what you should expect from your e-payment vendor;
  • how e-payments get implemented;
  • why providers want e-payments, and
  • how paying providers can generate revenue.

Change Healthcare – formerly Emdeon – is the industry leader in electronic payments…

What does this mean for you?

With declining premiums adding pressure to admin expenses, electronic payments are a must-do.

Change is an HSA consulting client.

 

Feb
28

This one works…COVID, facility cost drivers, employment – don’t miss WCRI’s annual confab

Posted by Joe Paduda on Monday, February 28th, 2022 | Comments

My apologies for the previous attempt to post this…a picture in the post somehow blocked the view of the body of the post.

What’s the deal with long-term COVID?

Why are facility costs increasing and where?

How will labor market disruptions affect work comp?

These and other questions will be addressed in Boston March 16 and 17 at WCRI’s Issues and Research Conference. I caught up with WCRI CEO John Ruser and Communications Director Andrew Kenneally to get the scoop.

remember these days…?

[Register here…don’t put it off as this often sells out]

COVID

26 months into the COVID era we know a lot more about the short-term health impacts of COVID (and associated medical costs and duration) but we’re only starting to understand how COVID infections affect us – and may impact work comp – over the long term. Dr Ruser noted the:

“majority of COVID claims are short duration and most don’t have medical expense, things that are going to surprise us may well be long covid associated (issues)…(we are) doing studies on covid claims and persistence in terms of services provided that WC payers are covering”

Denise Algire, Dan Allen, and Craig Ross DO are the panelists for a discussion of the workplace “after” COVID; mandates, return to worksites, and medical care are all on the docket. [I’m not sure there will ever be an “after” COVID; more likely we’re entering a “COVID era.”]

Facility costs

WCRI’s members have identified facility costs (inpatient and outpatient hospital and ambulatory surgery facility) as a key concern; one of the biggest drivers is provider consolidation.  Dr Bogdan Savych and Dr Sebastian Negrusa will discuss their research into the effect of provider consolidation on workers’ comp medical payments; Dr Ruser:

“WCRI’s stakeholders raised this as a top issue…there will be some eyebrows raised as there hasn’t been research on the impact of vertical and horizontal integration’s effect on workers comp. We will discuss the implications for costs from both vertical integration and the acquisition of Primary care practices by larger health systems.“

More on this issue here here and here.

Employment

The estimable Dr Bob Hartwig will educate and engage as only he can. Somehow Dr Hartwig manages to make the densest of topics relevant and entertaining. With employment a key driver of all things workers’ comp;

“disruptions in labor markets are going to have lasting impacts on the way we work and on workers’ comp claims. Bob Hartwig is coming to talk about these disruptions and their implications for workers’ comp”

What does this mean for you?
All in all, a festival of facts, a cornucopia of content,  await us in Boston…along with a most-needed opportunity to see old friends and, dare I say…shake hands?