Coventry’s pending acquisition of First Health passed a key milestone with the Feds’ approval of the merger. This is now a “done deal”, not that there was much doubt it was going to happen.
News from sources familiar with First Health indicate that Pat Dills, Lee Dickerson, and Ed Wristen (FH senior leadership) will be departing the organization in the (very) near future. Art Lynch, present head of sales for FH, will remain on board, and will likely assume additional responsibilities.
One interesting tidbit related to this is the pending issues resulting from Coventry’s ability to access HealthNet contracts. Huh? Read on…
FH acquired the WC assets of HealthNet earlier this year. As part of the deal, FH received access to HealthNet’s WC contracts with their providers – this was perhaps the most attractive piece of the deal to FH, which had long been under pressure to improve California network results. Well, sources indicate that the FH-HealthNet contract does NOT include any change in control language, leaving HealthNet contracts (at least in theory) accessible by Coventry.
If these sources are correct, one has to wonder what HealthNet was thinking…rumors had abounded earlier this year about FH’s shaky future.
Tom Lynch’s WorkComp Insider has a great synopsis of the weekend’s WC blogging activity.
The Agency for Healthcare Reseach and Quality (AHRQ), recently published a study examining hospital admission patterns. The study indicates that a significant percentage of admits could have been eliminated if the patient had received appropriate care earlier.
It will be no surprise to faithful readers that there is significant variation across geography, with rates highest in the west. AHRQ theorizes that this is due at least in part to the greater distances people in rural areas have to travel to seek care; thus preventing them from receiving care earlier in the disease process.
Poverty, rural locations, and diagnosis are also key variables influencing the “avoidable admit” rate. There was much more variation for chronic than for acute conditions:
“Among the 10 chronic conditions, differences in admission rates between the lowest and highest income communities range from 76 to 278 percent.”
The report notes significant cost implications –
“Potentially preventable hospitalizations are a significant issue with regard to both quality and cost. During the year 2000, nearly 5 million admissions to U.S. hospitals involved treatment for 1 or more of these conditions; the resulting cost was more than $26.5 billion.1 While some hospitalizations were likely inevitable, many might have been prevented if individuals had received high quality primary and preventive care. Identifying and reducing such avoidable hospitalizations could help alleviate the economic burden placed on the U.S. health care system. Assuming an average cost of $5,300 per admission, even a 5 percent decrease in the rate of potentially avoidable hospitalizations could result in a cost savings of more than $1.3 billion.”
Robert Vonada, a judge in the Pennsylvania WC Office of Adjudication, publishes a blog on all things PA WC related. The topics tend to focus on legal and statute interpretation matters, as one would expect from a judge dealing with these issues on a daily basis.
Judge Vonada also notes developments in areas as diverse as back pain, WCRI reports on PA. If your job includes any responsibility for PA WC, put this blog on your favorites list.
As goes California, so goes the nation. Particularly bad news if the trend one is watching is health care. California’s health care premiums have just passed the $10,000 per family threshold, a level some experts think will finally lead to calls for significant change.
Don’t bet on it.
The frightening thing about this increase is it reflects a lower than expected trend rate of 11.4%…2003 costs were up a whopping 15.8%. When 11.4% is good news, you know we’re in trouble.
The study, sponsored by the California HealthCare Foundation and Kaiser Family Foundation, also covers national health care premium trends. And those numbers aren’t a beam of sunshine either.
The national health care trend rate is 11.2%. Since 2000, health care premiums are up 61%.
For those who are interested, a summary of the report presents the highlights, including employer contribution rates and trends, specific plan trend rates, and future cost projections. Make sure you are sitting down when you read this.
Risk and Insurance magazine, an industry publication focussed primarily on the property and casualty industry, has an interesting interview with Marsh CEO Michael Cherkasky. Cherkasky, a relative newcomer to Marsh who joined the organization when they acquired Kroll (investigations and security firm), was perhaps the best stroke of luck Marsh could have had.
Cherkasky worked with NY Attorney General Spitzer at the state level, and they know each other well. His appointment to CEO will go far to deflect Spitzer’s attacks, as their relationship appears to be positive.
The interview details Marsh’s plans for the future, and is required reading for any risk manager, broker, or regulator wondering what the impact of the contingency commission-sham bidding scandal will be on brokers.
One excerpt is particularly telling…
(Risk and Insurance editor Jack Roberts) “Do you think that if other competitors don’t accept that model-that all sides of the transaction ought to be transparent-that that will give Marsh a competitive edge?
(Cherkasky) – “We absolutely do. The attitude of caveat emptor-let the buyer beware-that’s not going to be our attitude. We think that will be a competitive edge and that we will be very tough to compete with if you don’t do it that way. But that’s up to the marketplace. We’re going to adopt that because that’s what we believe is going to be effective in the 21st century under this regulatory environment and we’re confident it’s going to make a fair return for our shareholders.”
That competitive return will likely be considerably less than it was pre-Spitzer, but better lower returns than none at all.
Medpundit, a blog published by a practicing MD has an excellent and brief summary of the recent Celebrex news. The net is celebrex increases the risk of cardiovascular events significantly; and the higher the dose, the greater the risk increase.
While we can blame the FDA, the big pharmas, consumers, physicians, and the big bad wolf, our time will be much better spent learning from this fiasco.
Early lesson – stick with the proven meds, which in this case are Tylenol et al, and ibuprofen et al. They have the benefit of much lower cost, very similar outcomes, and a much longer track record.
The FDA announced today that Pfizer’s Celebrex significantly increases the risk of cardiovascular problems. What does this have to do with Workers’ Comp?
Celebrex, approved by the FDA for treatment of arthritis, has been one of the most popular drugs for treatment of musculo-skeletal injuries common in workers’ comp. Now, those patients who have been treated with Celebrex for a workers comp condition may find themselves with a heart condition, and that heart condition may be due in part to Celebrex.
While attorneys, researchers, and others argue over the causality issues, adjusters, insurers, and reinsurers will find themselves faced with claims for heart problems from patients with bad knees. Unfortunately, there does seem to be a strong linkage between Celebrex and cardiovascular problems, and these problems may not be limited to Celebrex and Vioxx…
“”We do have great concern about this product and the class of products,” said acting FDA Commissioner Lester Crawford. “ Commissioner Crawford’s concerns arise from the FDA’s analysis of the study, which indicates:
“800 milligrams of Celebrex had 3.4 times greater risk of cardiovascular problems compared to a placebo. For patients in the trial taking 400 milligrams the risk was 2.5 times greater.”
The good news is the marginally better outcomes delivered by these medications was far outweighed by their additional cost. Now, physicians can return to prescribing naproxyn, Tylenol, and ibuprofen for these conditions. Leaving aside the point that the docs should have been doing this all along, perhaps the tragedy (financial and personal) that has been and will be caused by these two over-hyped and under-researched drugs will lead doctors to practice more conservative prescribing behavior.
After all, the docs who wrote the scripts may have some liability as well…
The recent disclosures related to Vioxx’ impact on cardiovascular disease should be raising some big concerns amongst financial folk at WC payers. Here’s why.
Vioxx was commonly used to treat musculoskeletal injuries – sprains, strains, and the like. These happen to be very common WC injuries, and thus lots of WC claimants received scripts for Vioxx.
The law in most states holds that WC is liable for treatments for conditions arising from occupational illness or injury. This has been consistently intrepreted to include liability for conditions arising from the treatment itself – whether that be pain meds after surgery, PT after surgery, Viagra to combat the ill effects of other meds, etc.
The implications of Vioxx for WC are thus obvious. WC payers are potentially liable for cardiovascular conditions for WC claimants who have incurred cardiovascular conditions, and especially those claimants who had CVD prior to receiving Vioxx.
While WC payers have the right to subrogate those claims back against Merck (manufacturer of Vioxx), this will be a long, messy, and expensive process.
A very good discussion of the contentious relationship between (and among) hospitals, employers, and insurers can be found on healthsignals new york.
The article refers to recent developments in the Denver market that are worth reflecting upon.