What’s happening in the “real” health care world?

While premium increases remain at pretty low levels, employees’ share of costs is increasing.  In fact, that’s one reason premium increases are as low as they are.  Without the higher employee premium contributions, deductibles and copays, premiums would have gone up a couple more points.  According to Bloomberg, several factors are contributing:

  • the Cadillac Tax – high-cost health plans will see a tax of 40% on the cost above $10k for individuals and $27.4k for families.  This is leading some to increase deductibles and other cost sharing to keep premiums under the “Cadillac” level.
  • Increasing cost-sharing keeps premiums lower – and lower premiums are more attractive to buyers.  Deductibles now average above $1000; deductibles are up 67 percent over the last six years.
  • And higher premium contributions are also a driver; on average workers are paying more than $1000 towards their coverage.

Consolidation among health plans continues, although there’s little evidence that it will lead to lower costs or better quality.

CEOs from Aetna and Anthem testified before Congress last week, with both touting the benefits of their pending acquisitions of smaller health plans.  While it sure looks like the consolidation binge is concentrating power in the hands of a very few health plans, Anthem CEO Joseph Swedish claimed otherwise, stating: “health insurance is flush with competition…The number of health insurers increased by 26% in 2015 with 70 new entrants offering coverage.”

Not sure Mr Swedish’s claim accurately portrays the state of competition in health insurance, and the American Hospital Association and AMA certainly think it’s a bad thing.  An analysis by the AMA indicates

The combined impact of proposed mergers among four of the nation’s largest health insurance companies would exceed federal antitrust guidelines designed to preserve competition in as many as 97 metropolitan areas within 17 states

While I am VERY skeptical about any analysis by the AMA, I believe that in this case they have a point.  As one expert notes:

I’m aware of no peer-reviewed, published analyses that show that insurance mergers, on average, benefit consumers.

What does this mean for you?

Huge changes in the health care system will have far-reaching implications; watch for more battles between big provider groups and big payers, with smaller payers suffering fall out.  This “fall out” will take the form of higher medical costs due to lack of bargaining power,

Pay to Play – Just because you haven’t seen it doesn’t mean it isn’t real

Friend and colleague Bob Wilson has penned a piece essentially dismissing my claim that pay-to-play exists in the work comp services world.  Responding to my series and a great column from WorkCompCentral’s Dave DePaolo, Bob said:

my impression is that major, blatant “payola” in workers’ compensation is rare. At least it has not existed within my personal experience.

In fact, my impression has been completely the opposite.

Bob’s a lucky man, fortunate indeed to not have encountered this sleaze.

I do know of several instances where it has occurred, and Dave described one in detail. And I am convinced there’s a lot more of this than the few instances Dave and I have heard of.

The fact that someone doesn’t know about them isn’t a surprise; by their nature they are entirely secret. If and when these transgressions are discovered by the payor, there is no reason for the payor to publicize the finding and every reason to cover it up. Such is the nature of white collar crime.

I’ve had several conversations with vendors after my series of posts where they described veiled and not-so-veiled requests for services, trips, and other consideration from buyers. It’s real, it exists, and the examples I cited are from conversations with individuals with direct knowledge of these events.

Some have asked why I don’t name names.  It is NOT my responsibility to do so. The entities paying these bribes are well aware of the practice yet choose to pay. I am not going to pit my meager resources against those of corporations with hundreds of millions in revenue and legions of lawyers at their beck and call.

That’s part of my disagreement with Bob’s column.  The other is that his piece doesn’t address the far more common practice of corporate pay-to-play.

Bob didn’t address the TPA industry’s common practice of charging fees to service companies to do business. That is ubiquitous, and was the subject of a rather contentious debate between Sedgwick CEO Dave North and I at the NWCDC several years ago. At the end of that debate, Mr North a) said Sedgwick doesn’t take much in the way of fees from vendors and b) agreed to share all his vendor contracts with his customers.

I lauded Mr North from the stage and in a blog post for his willingness to publicly offer to share those contracts with customers.  I don’t know that any contracts have been shared or any fee-sharing arrangements acknowledged.  I certainly haven’t heard about any such disclosure.

To be clear, I’d reiterate a key point made in one of my pay-to-play posts:

What’s not fine is not disclosing the fee-splitting arrangements between the TPA and service providers.  Actually, let me refine that – what’s not fine is telling employers no such splitting occurs when it does.  Some TPAs tell their customers that they get paid by vendors, and aren’t going to disclose those payments.  Again, that’s OK – employers know they are paying “extra” to the TPA for claims and related services, and they know they won’t find out how much “extra” that is.  Caveat emptor.

Based on his experience, Bob notes “Are we rife with corruption, with executives on the take and intentional efforts to defraud millions?
Of course not. ”

I suppose it depends on how you define “corruption” and “intentional efforts”.

What does this mean for you?

Employers, are you absolutely, positively, 100 percent certain you know what you are paying for claim-related services?

ICD-10 codes you could not make up

Courtesy of good friend and esteemed colleague Alex Swedlow of CWCI, I give you the new diagnoses you do not want to appear on your medical chart.

(For a serious review of ICD-10 and workers comp, click here for CWCI’s analysis)

First up, the tragic Y93.D1: Accident While Knitting or Crocheting. Note, needlepoint and lace-making are separate and, well, distinct.  One wonders what kind of injury…burnt lip from ingesting overly hot Earl Gray?  

Known colloquially as the “Lincoln Diagnosis”, I give you Y92.253: Hurt at the Opera.  I know, technically not an opera, but hey, close enough!

Here’s one that doesn’t sound so fun – V97.33: Sucked into Jet Engine.  I think I saw something like that in an Indiana Jones movie…but it may have been a propeller, so…never mind! 

Among the candidates for most unlikely code ever to appear outside of a blog, I present V91.07:  Burn Due to Waterskis on Fire.

From Adam Fein, a candidate for the coveted “developed after coders read The Martian” award – V95.44 (“Spacecraft accident injuring occupant”)

Then there’s this, which makes one wonder if even the ICD-10 coding geniuses thought there could be a sequel – W56.22: Struck by Orca, Initial Encounter. 

From there to something that we kinda sorta always knew in the back of our heads was definitely a medical problem, but now we KNOW it ’cause there’s an actual code! Z63.1: Problems in Relationship with In-Laws.  

Our oldest daughter is getting married next summer…I’m hoping this isn’t prescience…

Causation and Correlation and the fallacy thereof

There’s a big difference between “causation” and “correlation”.  Just because A is around when B happens does not mean A causes B.  It could be that A’s friend C is actually the instigator, and A and C happen to hang out together a lot.  Or let’s say B is graffiti at the subway. A can only get out of school on Saturdays which is the only day B occurs because that’s when the graffiti school has their practical exercises.

Or, to be a bit more complex, when Justin Bieber was born, cholesterol scores began to decrease.  Until, that is, Facebook was invented, which reversed the decrease, thereby proving the Beebs is not as powerful as Facebook!


Did you know that the more mozzarella consumed in the US, the more civil engineering degrees that are awarded?

Did you know that the age of Miss America strongly correlates with the number of murders by steam, hot objects, or hot vapours?

And the more the US spends on science research, the higher the number of suicides by suffocation strangulation, or hanging… (damn science!)

For those consumed by marriage in Kentucky, know that the marriage rate is closely tied to the frequency of death by falling out of a fishing boat.  Perhaps a fishing honeymoon involving moonshine is a time-honored tradition in Kentucky…

Now you know…

But seriously folks, even esteemed medical journals sometimes screw this up – HealthNewsReview highlighted one such faux pas last week in the British Medical Journal of all places.

According to HNR, a BMJ piece about SSRIs and crime stated:

‘Use of selective serotonin reuptake inhibitors (SSRIs) increases the rate of violent crime among young adults.’

The piece SHOULD have said “there is a correlation between SSRIs and an increased risk of violent crime among young adults.”

See the difference?  A statistical correlation does not mean one causes the other. In fact, it could be that violent youths are more likely to be prescribed SSRIs, or the crimes studied were committed in an area where psychiatrists prescribe SSRIs a lot more often than in other areas, or any one of dozens of other reasons.

I bring this to your attention, dear reader, because there’s far too much sloppy reporting out there that confuses correlation with causation, often by folks that should know better.  

What does this mean for you?

Think critically.  Always.  

Pay to Play – who’s at “fault”?

There are plenty of candidates – work comp TPAs who solicit fees from service vendors, vendors who offer to pay fees to get on a “preferred” vendor list, individual buyers with their hands out.

But when you get right down to it, the folks that are most at fault are also the ones most affected – employers.

Employers are the ones who demand ever-lower per-claim fees from TPAs, and TPAs who want their business have to play that game.  Truth is, it is impossible for any claims organization to deliver professional, solid, responsible claims handling for $1200 per lost time claim. They have to make their money somewhere, and that “somewhere” is with more fungible, less visible, claim-specific services.

Case management, utilization review, bill review/network access are just a few of the categories that escape close scrutiny yet add up quickly.  Many of these services are categorized as medical services and thus hit the file as non-administrative.  That category is almost always all but ignored during audits or file reviews, and thus is ripe for…margin making.

Before you start yelling about the dastardly TPAs and their evil ways, stop and consider why they do this.  It’s pretty simple; if your core service is commoditized and you’re constantly under rate pressur, you’ve got to do something to stay in business.  So, you find other ways to generate the dollars needed to deliver the level of service your customers demand.

I place the blame squarely at the feet of employers and their brokers and consultants.  There’s just not enough effort to really understand how TPAs differ, why one costs more and what their value propositions are.  It’s too easy to plug all the numbers into the spreadsheet and not try to figure out why TPA A does things this way, and TPA B does it this other way.

Nope, claims is claims.

There’s another reason employers have to accept a big chunk of the blame.  Many know fee splitting occurs, but don’t have the energy/motivation/ability/professionalism to pursue it.

What does this mean for you?

Is this acceptable?

Note – I heard from more than one colleague who wants me to “name names”.  It is NOT my responsibility to do that.  I’m not harmed by nor do I benefit from the practice of fee splitting.  Moreover, don’t act like this is “new news”; this is hardly a revelation.  It has been going on for years, and everyone knows it.

I will admit to being quite frustrated with stakeholders who somehow feel I – and others – need to try to fix problems with the work comp world, problems neither of our making nor solvable by anyone other than those affected by them.

As our son’s high school lacrosse coach often said – you’re either a finger or a thumb. The finger assigns blame to someone else, while the thumb points back to you.

Are you a finger, or are you a thumb?

Pay to Play – the corporate version

Monday we discussed the sleazier side of work comp services sales – payer decision makers with their hands out and the creative ways they profit from their positions.

Today, it’s back to a topic we covered years ago – fee sharing between services companies and payers – mostly TPAs.

It is no secret that almost all TPAs profit from managed care services – some by providing those services with internal resources, others from access fees paid by external vendors for the privilege of working with the TPA, still others do both.

That’s not a problem; TPAs have to make a profit, and their per-claim fees are under constant pressure from employers and brokers looking to demonstrate their ability to negotiate ever-better deals from their TPA.

Those per-claim fees are easy to measure, negotiate, and display.  What’s much tougher to track are the costs of add-on services; bill review, network access, PBM, specialty managed care, case management, UR, litigation support, investigative services, MSAs, and on and on.

Almost all claims use some of these services, some use all.  And when they are provided by external vendors (or internal suppliers, for that matter), the employer pays more.  Again, that’s fine – these services add value (in most instances) and are needed.

What’s not fine is not disclosing the fee-splitting arrangements between the TPA and service providers.  Actually, let me refine that – what’s not fine is telling employers no such splitting occurs when it does.  Some TPAs tell their customers that they get paid by vendors, and aren’t going to disclose those payments.  Again, that’s OK – employers know they are paying “extra” to the TPA for claims and related services, and they know they won’t find out how much “extra” that is.  Caveat emptor.

And that happens – a lot more than you’d think, and in very creative ways.  There are per-service fees, IT connection fees, rebates of fees, marketing fees, you name it – all kinds of descriptions of charges that increase costs for employers.

Some TPAs tell their customers there are no such arrangements, either outright lying or dissembling by creatively avoiding the question. They do this by interpreting the question as literally as possible. Thus the TPA can say “no we don’t get paid commissions” because the vendor pays the TPA an “IT connection fee.”

Kind of like Bill Clinton and his definition of “sex”.

So, what’s an employer to do?  I’ll address that in detail later this week.


Pay to Play – yes, it’s still here.

Pay to Play – charging work comp service vendors to do business with payers – was a big part of the industry a couple decades ago.

It still is.

Way back when, bagel boys and babes looking for files to service would bring goodies to claims offices; food, trinkets, tickets to the Red Wings game, you name it. Anything transportable was fair game. Didn’t matter if they were repping drugs, DME/HHC, case management, or investigation services, the boys and babes would load up their cars each morning before heading out to do their rounds.

There was also some pretty smarmy activity back then – big parties with lots of booze and entertainment at local/regional claims meetings, even envelopes left on adjusters’ and claims managers’ desks.

Most of the really obvious activity has gone the way of the green screens. Now that work comp payers have limited access to claims offices – and many have home-based their adjusters – the “retail sales” folks have a much tougher time getting access.

Alas, pay to play persists, its just moved up the corporate ladder.  That’s not to say there weren’t unethical practices in past years – there most certainly were.  What’s changed is awareness and top-down vendor management.  There is much more control of many vended services from payer HQ, allowing payer execs more insight into what’s happening at the adjuster level.  As a result, the locus of decision making has (partially) shifted from the desk level up the corporate ladder.

Now, we see P2P occurring in two ways – overt fee sharing, where vendors pay commissions/rebates/fees to the payer, and the much-less-talked-about, but nonetheless far-too-common direct payment to decision makers.

We will discuss the payer payments later this week…for now, the focus is on the decision maker payments.  Note I’m NOT talking about social events – golf outings, dinners and the like, relationship-building events long accepted, commonly practiced, and openly acknowledged. No, this is about highly unethical if not outright illegal payments and practices, such as:

  • untraceable gift cards, bought with cash, given to payer decision makers.  One decision maker demanded cards to “help his boys with their college expenses.” He asked (and likely still does) for cards for specific retailers as the price to get a meeting with him to even discuss a vendor’s services.
  • consulting fees paid to the decision maker’s significant other.  This is happening today, with the vendor forced to keep the cash flowing to keep the referrals coming.

I don’t believe work comp is any better or any worse than any other industry – there are always going to be scummy sleazebags with their hands out, creatively enriching themselves at the expense of their company, their claimants, their employer and/or taxpayers.

I do believe we need to do a much better job ferreting this out, and payers bear a big part of the responsibility.  When a payer discovers a decision-making exec has been lining their pockets at the expense of vendors they rarely (actually never) make this discovery public.  In hiding their embarrassment, the payer abrogates their societal responsibility – and ensures they will get screwed again.  Until and unless payers prosecute and/or publicly discipline these sleazebags we aren’t going to see it stop.

In fact, given what’s been going on over the last two years, it looks like it’s more widespread than ever.

What does this mean for you?

Time to stand up to sleaze.

Friday catch-up

Here in the East summer is still in full force, no matter what the calendar says – but the work load has ramped up now that school is back in session and 2016 planning is well under way.

Two items of note that came across my virtual desk this week…

The latest data indicates premium increases for the benchmark silver plan in 13 key markets average 3.1% for those without subsidies, 1.0% for subsidized plans.  Premiums decreased in 4 markets and increased in 9.

Access to care post-reform implementation doesn’t seem to be too problematic – at least not according to primary care providers.  80 percent said their ability “to deliver high-quality care” had stayed the same or improved; 20% said it had worsened.

The connection between diet and health is clear and strong, as is the relatively poorer health status of poorer people.  A compelling piece discusses why the less-affluent have lousy diets – and it isn’t because they like Big Gulps and Cheetos.  Here’s a key excerpt:

…participants are, by virtue of their qualifications, extremely pressed for cash. They eat fewer meals as a result, and select for more caloric foods, which tend to be less healthy, in order to adjust. Starch-heavy meals, fattier fare, and sugary foods all tend to be cheaper.

Part of it, however, might also be driven by the absence of free time to cook foods which require longer prep times (often vegetables). Convenience, in other words, can be a diet killer.

Before you criticize SNAP and belittle recipients, read the article.

California will have a drug formulary within 18 months.  Expect this trend to expand pretty quickly. There are at least a half-dozen states seriously considering formularies with several others beginning to explore the concept and implementation thereof.  One is North Carolina; I’ll be speaking at the NC Industrial Commission’s annual conference next month on the topic.

One observation – expect formularies and the rules and regulations that support enforcement thereof to evolve quickly from the Y/N model to a much more sophisticated form.

Got to get back to it – September is a very busy month!

California’s going to have a work comp drug formulary

And that is good news indeed.

WorkCompCentral reported this morning that the state legislature passed the enabling bill late yesterday; the Governor will sign it.

California will join four other states that have formularies in place today, and it is highly likely others will follow suit soon.

As good as that is, please do not make the all-too-common mistake of declaring victory and moving on.  The formulary bill is just the first step.  Here’s what has to happen to make a formulary actually work for all stakeholders.

  • UR – binding utilization review processes and rules that require compliance.  Otherwise you have speed limits with no police or laws to enforce them.
  • Flexibility – enable payers and PBMs to use rule-based processes and procedures to ensure patients get the drugs they need and aren’t dispensed drugs that may be harmful or counter-productive.
  • Specificity – blanket Y/N formularies are blunt instruments – allowing percocet for all claims just isn’t good medical care.  Instead, the formulary should be disease/condition/injury specific.
  • Timing – Texas’ phased-in rollout of their formulary made a lot of sense.  Handling new claims differently from legacy claims is appropriate and sensible.
  • Assessment – Monitor, track, and report on changes in prescribing and dispensing patterns, single out potential irregularities, identify problems and publicize same.  Fortunately, California has the best state-specific reporting and analysis entity; CWCI will be instrumental in this process.

What does this mean for you?

Wait…are we seeing actual progress in workers’ comp?  Hope springs once again!