Now that health reform is the law of the land, the focus has turned to implementing the law itself. As anyone knows, the real work, and the real impact, is in the details, the definitions, the requirements and operating guidelines.

And that's what this edition of HWR is all about.

Fundamentals
Let's begin this edition of HWR with a quick review of the fundamentals - starting with Tinker Ready's reminder that "All health care is local." Actually she's channelling Atul Gawande in her report on his talk at the National Quality Colloquium this week. Gawande's summary of why that's the case is a very helpful reminder as we contemplate implementing reform.

My contribution to this edition asks the rather uncomfortable question "Managing health care costs - whose job is it?" WIth health plan associations whining about the lack of cost controls in the reform bill, one has to ask - exactly what function do health plans perform? If they're asking the government to control costs, what is their purpose?

Friend and colleague Gary Anderberg is guest-posting over at Workers Comp Insider this biweek; Gary's post is similar to Tinker's in that his focuses on health insurance, and the services covered by insurance, are really 'risk management tools' to help maximize productivity. True True True, and a wonder more don't think the same way...

On the "Good News' front,"Congratulations If You Were Born Between 1952 and 1964" takes a look at the recently released report that shows health reform just extended the financial solvency of the Medicare Part A Trust Fund by 12 years. Brad Wright also stresses that we're not out of the woods with the cost problem--2029 isn't that far away--and we need to realize that this isn't a problem we can solve, as much as it's a tension that we have to figure out how to navigate.

In that vein, the always-insightful Jason Shafrin tells us the real story re the impact of reform on state budgets - not too good, but not too bad, either.

Reactions to reform
The opposition to reform continues to make its case; Anthony Wright documents the ongoing efforts by Anthem Blue Cross of California to stop California's health insurance exchange. Anthony opines Anthem's actions "should be a clarion call for California consumers about why we need to advance these bills, this year."

In a related post, Roy Poses digs deep into Wellpoint's rate increases, and finds out that the employee tasked with announcing the increases had serious concerns, concerns that may have led to her termination. As always, Roy finds the truth and does some of the best reporting in the blogosphere.

These last two stories are particularly important, because as Aaron Carroll warns us, insurance companies are very good at what they do. Which in this instance is risk selection. Talking in this case about Medicare HMO enrollment, Carroll elaborates:

"Somehow the private insurance HMOs figured out a way to get the healthy people to jump ship out of the another plan into theirs!

Not only that, but people who left the (private) HMOs and went back to the (public) Medicare used 180% more care after leaving than the people who stayed. Somehow the private insurance HMOs figured out a way to convince the sicker people to jump ship back to the public plans."

Jaan Sidorov notes that "the odds against prevailing against a Presidential veto are..questionable and the waste of political energy would be atrocious." But Jaan does think that the bill can be improved, and offers serious ways opponents should move.

The always -informed and -informing Maggie Mahar thinks the liberals/progressives who are hoping the anti-reform folks succeed (as it will usher in a single payer system) are basing their hopes on faulty assumptions, namely that Americans will like a Medicare-for-all plan. Maggie notes "A great many Americans have employer-based insurance that they like--particularly if they work for large companies. They don't want to give it up for an unknown government plan."

Maggie adds: "we're all lucky that large companies are covering so many people with benefits that are, on average, rich and comprehensive."

EHR, benefits, and babies
One of the keys to health reform is widespread adoption of Electronic Health Records; David Blumenthal and Dr Don Berwick (yes, the same Don Berwick who runs CMS) document the significant progress being made in that direction, emphasizing the new regs on 'meaningful use'. Anyone remotely involved in EHR should read their post...

But before we adopt those EHRs, make sure to shred the patient records - or suffer the consequences described by David Harlow.

Implementation is all about the details - and there are bazillions of them, all critically important to those directly impacted. Jay talks about maternity coverage, and the absence of clarity about same in Colorado - even though all plans are supposed to provide coverage as of 1/1/2011...

Ryan opines that health plans authorized by the Feds should cover birth control, but only because we own the consequences if we don't.

All carrot and no stick - Innovation in insurance - oxymoronic to some, just plan moronic to others (sorry, couldn't resist). Our old friend and colleage David Williams writes about the problems realizing the potential of Value-Based insurance Design, noting "in practice most VBID programs encourage the use of high value services but don't discourage the use of low value services."

Important in their own way
Kinda-but-not-really related is this piece from Adam Fein of DrugChannels, who broke the story about CMS's quest for a vendor to survey retail prices, payment, and utilization rates for pharmacy - as well as wholesale pricing. Could this lead to a substitute for AWP? Dare we hope?

Joanne Kenen reminds us why the ER is no place for palliative care, providing insights into what happens there - and more importantly - why.

John Goodman calls Medicaid "the most abusive health plan of all" in his post. Goodman bases his claim on states revising Medicaid enrollment and eligibility requirements, calling them 'rescissions'. Ed. note - the reason most of these folks lost their coverage is the states where they lived ran out of money to fund Medicaid. Tax increases would've solved that 'problem'...

Finally, over at InsureBlog, Mike Feehan says health plans should keep their reserves, no matter what Consumers' Union thinks.

Posted by at 6:59 AM | Permalink | Comments (2)

The good folks at CWCI just published a research report (The Cost and Utilization of Compound Drugs, Convenience Packs and Medical Foods in California WC) documenting the rise in spend on medical foods, repackaged drugs, and compound drugs from 2006 - 2009; the highlight is these categories accounted for almost 12% of drug spend in California in Q1 2009.

A couple of the findings that jumped out at me...

- the average amount paid per compound drug as $728 in Q1 2009.

- medical food reimbursement hit $233 per script that quarter

- a new category, 'co-packs' has emerged as a significant therapy; these are combinations of drugs with medical foods dispensed as a single unit.

The story of drug costs and attempts to address same in California is fascinating, with lessons aplenty for regulators and payers.

- A drastic reduction in the fee schedule was followed by explosive growth in repackaged drugs.

- Regulatory changes finally addressed that issue, but meanwhile the use of narcotic opioids increased six-fold, likely negatively impacting disability duration as well as increasing cost.

- New entrants into the therapeutic armamentarium, entrants that are foreign to many adjusters, case managers, and work comp execs alike, are growing in importance, requiring regulators and payers alike to understand their impact and develop policies for coverage and reimbursement.

The list of medical foods includes Theramine, Gabadone, Sentra, Apptrim, Trepadone, and others, with Theramine (pain) and Sentra (sleep aid) accounting for over half of the volume in California. Medical foods are pretty new to me; according to the Orphan Drug Act (1988 Amendment), a medical food is "a food which is formulated to be consumed or administered enterally (orally) under the supervision of a physician, and which is intended for specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation."

I'm no pharmacist or clinician, and am certainly not able to comment on the efficacy of medical foods or specific medications. For a primer on medical foods, click here.

There does appear to be evidence supporting the use of medical foods for treatment of pain, osteoarthritis, and other conditions, with one medical food, Limbrel, the subject of large, double-blind, placebo-controlled clinical studies in the United States and Japan. According to one source, "Limbrel administration has resulted in statistically significant improvement in all primary clinical endpoints (functional mobility, functional stiffness and functional joint discomfort)."

What does this mean for you?

If your P&T; Committee hasn't looked at medical foods yet, you may want to add it to the agenda for the next meeting. It is highly likely we're going to see more of these scripts, and far better to be ready than to have your adjusters making decisions completely unprepared.

Posted by at 6:36 AM | Permalink | Comments (0)

A new report documents the impact of the recession on the health care system, and for many Americans, the news is proof of what they know all too well - higher deductibles and copays are reducing their ability to access care.

The report [fee req] does not document whether the forgone care would have been necessary/appropriate/supported by evidence-based guidelines, and it is likely some of the forgone care was unnecessary. That said, it's only 'some', and it is highly likely Americans with slimmer benefits, or no benefits at all, are skipping visits, medications, therapies, and operations that will over the long term will have very serious implications.

According to a piece in the NYTimes, the researchers reported "We find strong evidence that the economic crisis -- manifested in job and wealth losses -- has led to reductions in the use of routine medical care." 26.5 percent of respondents reported reducing their use of routine medical care since the start of the global economic crisis in 2007.

The report adds more weight to the increasing evidence that the recession, coupled with the unique American health insurance system, has had a significant impact on Americans' ability to access care.

The importance of primary care in prevention is well documented; [opens pdf] timely use of primary care tends to reduce the need for interventional procedures such as CABG, thereby reducing cost and improving long term quality of life. Delaying or forgoing primary care will likely have the opposite effect, increasing future health care costs.

Impact on workers comp

Over the short term, this 'side effect' of the recession will likely increase work comp costs and extend disability duration, as more injured workers will have poor health status due to forgone care. If diabetics aren't controlling their blood sugar, asthma sufferers have more acute episodes, and hypertensives are taking their meds every other day, it is going to be more difficult, costly, and time-consuming to help these claimants recover functionality.

Over the long term, health reform will reduce work comp costs as many more individuals will have coverage. But until 2015 (or so), we won't see this positive influence.

Posted by at 7:12 AM | Permalink | Comments (1)

We're learning a lot from Massachusett's experiment in universal coverage - and some of the lessons are rather enlightening.

Take this one.

According to Bestwire, Lora Pellegrini, president of the Massachusetts Association of Health Plans, said something along the lines of "That's the problem with the new U.S. health care reform law... it offers millions of uninsured Americans access to health insurance but doesn't address underlying medical costs, which are contributing to costly premiums." [not a direct quote]

Wait.

If health plans rely on the government to help control costs, exactly what value do they deliver?

In fairness, Ms Pelligrini noted the market share of some provider groups is a significant factor in insurers' inability to negotiate favorable rates. There's no question negotiating power has shifted back towards providers, and that shift is contributing to higher costs for health plans.

Doesn't seem to be hurting profits, though; the industry is enjoying a stellar 17.4% return on equity after seven publicly traded health plans reported earnings above expectations.

Try as I might to sympathize with insurers, their complaints are besides the point.

Suppliers in any business seek to maximize profits. Smart buyers will figure out how to find more cost-effective suppliers, develop alternative supply chains, or in very tight supply markets even resort to vertical integration, setting up their own suppliers.

I see no reason health plans can't do the same. There's far too much 'old thinking' among health plans; they remain overly concerned with the size of their network directory, believing large provider networks are essential to success.

Clearly, nothing could be further from the case. Some health plans are beginning to experiment with smaller, more exclusive networks, and I have no doubt the lower costs will make them much more attractive than the 'old school' huge networks with high costs due to broad access. No, success will come to those payers who creatively figure out how to work closely with selected providers, establishing partnerships, paying fairly, sharing information, and providing feedback.

Otherwise they're just administrators, and not very efficient ones at that. If health plans are going to rely on the government to control costs, what, precisely, are health plans for?

Posted by at 6:39 AM | Permalink | Comments (1)

Mark Farrah and Associates' latest report indicates health plans enjoyed a nice bump in enrollment in Q1 2010 from the previous quarter, with the entire increase coming from ASO (large, administrative-services only plans that are sold to larger employers) business.

In fact, risk-based insurance plans (more commonly purchased by smaller employers) saw a significant decline in enrollment in Q1 of 0.6%, or 890,000 members. According to MFA's report, " WellPoint added 565,000 new ASO members in 1Q10, but lost 400,000 fully insured members. UnitedHealth saw gains in both segments."

What's happening here?

It's no surprise that the economy has hammered employers small and large, but smaller employers are more 'flexible' when it comes to benefit plans. They can choose to drop or add coverage much more quickly and with fewer repercussions than big firms. In fact, large employers almost never drop their coverage, while the percentage of smaller employers offering health insurance has been shrinking steadily for years.

The actual decrease in employer coverage (at least as it appears in MFA's highlights) is masked somewhat by increases in Medicare Advantage PFFS plans, which grew significantly for CIGNA; there's much of the Medicare PFFS story still to be written as Coventry completes its exit and other health plans work thru their respective strategies.

Year over year, Medicare Advantage plans have seen significant growth, with membership up by 600,000 members, despite a drop in the number of insurers offering MA options.

Meanwhile, medical trend numbers are looking better, contributing significantly to the jump in profits enjoyed by most of the major health plans. Contributing to the increase in 2009 was a drop in pharmacy expense, which was somewhat offset by a 1.2 point increase in the percentage of medical expense paid to hospitals.

Ok, so net it out.

That hard work is changing from a risk selection to care and cost management business.

Posted by at 8:53 AM | Permalink | Comments (2)

California's Senate will be considering AB 2779 today, a bill that would (among other things) require Prior Authorization of compound medications for work comp claimants. While there's no question compound meds are a big issue, the bill would do nothing to solve the Golden State's larger problem - out of control drug utilization.

(thanks to WorkCompCentral for the heads up)

Here's the issue.

The work comp drug fee schedule in California is pegged to Medi-Cal, resulting in the lowest reimbursement for drugs in the nation (with the possible exception of WA).

Pharmacy Benefit Managers (PBMs) operate on the difference between what they pay the pharmacy and what their customers pay them. In California, that delta is tiny, if not negative. If PBMs don't have any operating margin, they can't afford to allocate clinical resources to deal with prior auth requirements; they'll lose even more money in an effort to help their clients. That's neither appropriate nor good for the long term health of the comp business in California.

To those who claim the low fee schedule hasn't caused any problems, I'd suggest a thorough read of CWCI's excellent discussion of the explosive growth of narcotic opioids among comp claimants. Here's the brief takeaway - California slashed the work comp pharmacy fee schedule just about in half six years ago. Since that time, the number of scripts per claimant has increased 25% and costs per claimant are up 31% (CWCI stats). And that's not the worst of it. Schedule II narcotics have gone from less than one percent of scripts to almost six percent, a six-fold increase.

But what does that have to do with a bill designed to attack one of the emerging cost drivers - compound meds? Isn't the proverbial half a loaf better than no loaf at all?

No. While the bill enables payers to deny compound meds for medical necessity (a relatively easy call, as I don't know of any evidence-based guidelines that recommend compounded medications, PBMs simply can't afford to develop the workflows, do the research, hire the clinical staff, and manage and monitor the intake/referral to the adjuster/approval-denial/appeal processes. This is a lot of work, requires careful planning and implementation, and must include clinical staffing - nurses, pharmacists, and in some cases perhaps physicians.

We've seen the impact of the low fee schedule on total costs - they've gone up. What we haven't seen is the impact on injured workers - many more are now on narcotic opioids, with some undoubtedly suffering from all the complications linked to these potentially debilitating and addictive drugs.

AB 2779 piles more work on top of an already overburdened industry, while doing nothing to address the underlying problem.

A major step in the right direction would be for California to de-link the comp fee schedule from Medicaid. That would give PBMs the pricing stability they need to help their clients regain control over drug costs.

For a detailed discussion of Medicaid's suitability for work comp drug pricing, click here.

Posted by at 9:06 AM | Permalink | Comments (1)

In the almost six years I've been publishing MCM I've never strayed this far off topic. Except for the annual April Fool's day fun (consider yourself warned), this is all about stuff somehow related to managed care, health policy, insurance...

Try as I might, I just can't come up with a link here. Except for the very very distant possibility of a workers comp claim.

So here's what's got my attention.

Just a few minutes ago, a flight attendant, fed up with a &^@&*(?! of a passenger, ran to the exit door, pulled the emergency escape hatch, inflated the slide, and jumped out of the plane.

Yes, the plane was on time, and no, it hadn't been sitting on the tarmac broiling in the sun with backed up potties.

Fortunately, JetBlue 1052 was on the ground in New York [scroll to the bottom and read the comments; some are hilarious] when Steven Slater, the flight attendant in question, pulled the cord.

Wait, this gets better...

Turns out Mr Slater was reacting to a passenger who had jumped up just after the plane had landed, started to get his bag out (you've undoubtedly been on a plane with one of these jerks), refused to stop when Slater asked him to. In fact, the passenger's bag fell out of the overhead and smacked Slater on his head.

Slater didn't go nuts then - he actually asked the passenger for an apology. Instead of doing the right thing, the guy (ok, it might have been a woman, but we all know it wasn't) cussed Slater out. Whereupon Slater got on the PA, screamed a few choice words (reportedly "To the passenger who called me a m---f--er, f--- you!...I've been in the business 28 years. I've had it. That's it") over the squawk box, and exited the craft.

I kid you not.

Perhaps Mr Slater can claim work comp from an injury that discombobulated his sense of propriety...

Posted by at 4:22 PM | Permalink | Comments (4)

Just in case you thought the problems with abuse of powerful prescription drugs have been overstated, here's a wake-up call.

The CDC's Director is taking this very seriously, saying: "Overdose with prescription drugs is one of the most serious and fastest-growing problems in this country."

The problem is showing up in a doubling of Emergency Room admissions due to prescription drug abuse, driven primarily by oxycodone, methadone, and hydrocodone.

Narcotic use is rampant in workers compensation as well. Studies by NCCI and CWCI point to the frequent use of narcotic opioids for workers comp claimants, with the explosive growth in California particularly troubling.

One of the issues in comp is that unlike group, most Medicare Part D plans, and to a lesser extent Medicaid, claimant copays are nonexistent. There's no financial skin in the game, as medications are free.

Another potential contributor is the potential street value of these drugs; while there isn't conclusive documentation of the percentage of scripts that are diverted, the 'sense of the industry' is that diversion is not uncommon. Add to that the desire on the part of some states to reduce the work comp drug fee schedule to match Medicaid, and there's no surprise use is exploding (if PBMs can't afford to manage utilization, utilization isn't managed).

Here's what some of these drugs are reportedly worth on the street.

The estimated street value of one 40-milligram OxyContin pill is about $40; another report indicates an 80mg dose is going for $30 in the northeast.

Actiq runs about $25 a dose.

Duragesic patches range from $20-$75 depending on brand, location, and dosage.

So, narcotics are ripe for abuse, there's a big - and very profitable - secondary market for them, and use is growing. That's one side of the story.

The other is the inability of many legitimate pain sufferers to get adequate treatment.

Research published by Oregon State University indicates "at least 30 percent of patients with moderate chronic pain and over 50 percent of those with severe chronic pain fail to achieve adequate pain relief."

Some think the inability of those with chronic pain to get treatment thru standard channels is a big component of the overall narcotic diversion issue.

What does this mean for you?

Like so much else in health care, there are no clear problems or easy solutions. This is more evidence of the complexity of one small part of the challenge.

Posted by at 8:31 AM | Permalink | Comments (1)

That's what Jaan Sidorov wants to know as he hosts the latest ed of Health Wonk Review.

Jaan's keen commentary on the best of the last biweek's health wonkery is well worth the read - even if you're not stuck in O'Hare while thunderboomers roll thru.

Posted by at 8:32 AM | Permalink | Comments (0)

There's been a lot of 'under the radar' activity in the work comp space of late, with much of it coming from the Medicare Set Aside sector. As 'unique' as the workers comp services sector may be, there's no niche as...fascinating as the MSA business.

It is brutally competitive; rife with personal, public attacks; and abounding in claims, counter-claims, and counter-counter-claims. Here's a quick tour of some of the news.

Coventry sales chief Ken Loffredo will be leaving CVTY after over a decade to take an equity role at Med-Allocators. The departure isn't imminent, as he and Work Comp Division boss David Young are working together to find a successor, looking at both internal and external candidates.

Coventry isn't doing much in the MSA business these days, and reports indicate management probably wished it didn't do anything with MSAs in the past.

Gould and Lamb and (former CEO) John Williams have parted ways, reportedly because Mr Williams 'wants to spend more time with his family'; evidently G&L;'s owners are fully supportive of that desire. No announcement yet on a replacement.

The book on G&L; has been out for some time; no word on whether the company is still looking for a sale or additional investment. The costs associated with preparing for CMS reporting, and challenges thereof, may be a factor

Despite some competitors' statements (public(!)) to the contrary, PMSI is not contemplating, thinking about, planning to, or even preliminarily exploring a sale of the company's MSA division. Don't know how that got started, but there's nothing to it

Those are just the highlights.

The rough-and-tumble MSA industry reminds me of the oil and gas business of a hundred years ago. So far no John D Rockefeller has made an appearance, but the industry is ripe for consolidation. Lots of folks are trying, but no one's looking like a clear leader.

Posted by at 7:18 AM | Permalink | Comments (1)

I spent a good part of the morning in a meeting discussing recent research into societal cost of prescription drug abuse. Here are a couple of stats that got my attention.

Prescription drugs are now the most abused drug, surpassing marijuana among young people.

70% of the prescription drugs abused were obtained directly or from a family member (I may have this slightly misquoted, will correct if necessary).

Emergency room admissions for prescription drug abuse doubled from 2004 to 2008.

Now let's consider a few other factoids.

Narcotic opioid use in California's work comp system increased dramatically between 2002 and 2008, with several times more claimants receiving these potent, potentially-addictive medications.

Medical severity is also increasing in the Golden State; I'm not saying there's a cause:effect relationship here but rather drug costs and usage changes may be contributing to the problem.

OxyContin accounts for just under ten percent of comp drug costs. This drug has been widely associated with abuse; it can be ground up and eaten, inhaled, smoked, or dissolved and injected.

Sorry to ruin your day.

Posted by at 3:04 PM | Permalink | Comments (0)

Data from several sources, including Farrah and Associates (got to love a company that is located in Maine) indicates group insurers were able to reduce medical trend to 4.9% last year. That's the best result, in, well, further back than I can remember.

Coventry's recent Q2 2010 earnings call indicated their results were comparable, and med loss trends were pretty close.

Aetna's numbers are comparable, as are the reasons for the improvement. According to a WSJ piece, "Aetna and its peers are reporting lower utilization of medical services this year. [President Mark] Bertolini attributed the trend to the weak economy, a less severe flu season, harsh weather in the first quarter and some wearing off of Cobra coverage for people who were laid off their jobs."

How'd they do it? Can you do what they did?

First, let's deconstruct the reasons for the happy news.

The flu season wasn't a) as bad as predicted and b) insurers, burned by the previous flu season, probably over-reserved.

Members covered by Cobra are notoriously expensive; people don't sign up for Cobra unless they think they'll need it, and in most cases they are right. Loss ratios for Cobra tend to be well above 125%; thus the expiration of Cobra helps dump unprofitable business. Expect this to continue to aid MLRs for several quarters to come.

Many health plans now have higher deductibles and copays, cost-sharing arrangements that may well be causing members to avoid seeking care. (research suggests the care avoided may be necessary or unnecessary). Coventry Allen Wise mentioned this in his earnings call as a possible contributor.

From a purely speculative perspective, it is possible that employers who were faced with high premiums due to poor experience rating, older populations, or other factors, have dropped their coverage at a higher rate than in the past. This might contribute to lower utilization. I'd also note that rate increases may have the opposite effect; employers that really need coverage will hold their noses and pay up, while employers who don't think it's worth it (read - don't expect to need insurance) drop out.

We're left with results driven by benefit design, demographic changes, and one-time events.

Don't get me wrong, the numbers are good, but the drivers aren't what we need to really gain control over costs over the long term.

Fortunately, some health plans are already taking steps to do just that with smaller, tighter networks and limited access out of network.

If you are a workers comp payer in California, chances are your results were a whole lot worse, as medical costs are once again back up to pre-reform levels. According to this piece in Risk and Insurance;

"...looking at first-year payments on lost time claims, researchers found that since hitting their post-reform lows, average amounts paid per claim for treatment have increased 41 percent; average amounts paid for pharmaceuticals and durable medical equipment are up 69 percent; [emphasis added] average amounts paid for med-legal reports are up 79 percent; and average amounts paid for medical cost containment are up 86 percent."

Of course, this simply means reform cut costs dramatically over the last few years, and only now, several years after reform's implementation, have costs returned to the levels seen in 2004.

That said, comp payers can't fiddle with benefit design, out of network contribution differentials, cost sharing, and the like.

What does this mean for you?

b) for comp payers, the recent moves to smaller networks should be a big wakeup call.

Posted by at 8:50 AM | Permalink | Comments (2)

Coventry earnings call this morning was notable in at least two ways - more discussion about underlying cost drivers, utilization trends and management thereof, and the growing importance of low cost delivery systems from management.

And more evidence that (most) financial analysts don't understand this business.

Here's my view on the takeaways from the call.

The per-share earnings charge of $1.18 (from work comp PPO litigation in Louisiana) was the subject of a good deal of discussion during Coventry's Q2 2010 earnings call this morning, but has to be considered in the context of the overall solid performance of the company.

Coventry actually increased guidance for the full year, marking another improvement in financials for the company that has been on a steady upward trend since CEO/Chair Allen Wise resumed his post a year and a half ago.

Commercial group membership grew nicely, while MLR (medical loss ratio) guidance decreased for the entire year. Coventry expects medical costs to increase in the second half of 2010, consistent with past experience.

In the prepared remarks part of the call, management diiscussed the implications of health reform, asserting the company's recent results show it is well prepared for reform as it is able to control MLR while maintaining membership and expanding the company's footprint in selected markets (the Mercy deal is an example)

The company's statement noted Wise's enthusiasm for results and performance of the company's clinical management programs.

Clarity around MLR regulations was the first question - unsurprisingly, given the new regulations regarding limits on insurers' administrative and other fees. Wise noted that the cost structure in one market in particular was going to improve by shrinking the company's network, selecting more cost effective delivery systems/health systems. This marked a significant change from calls as recently as last year at this time. Coventry is clearly seeking to partner with more cost efficient health systems; as Wise put it, 'we need to stop fighting over nickels and focus on overall costs'. [paraphrasing]

This was followed by a question about health plan utilization trends - overall utilization appears to have tapered off industry-wide, the question is why? Wise admitted Coventry doesn't know, although they've spent a lot of time looking at this and their preliminary conclusion is the high deductibles and copays are leading to lower utilization, coupled with expiring COBRA benefits for some employees laid off quite a while ago.

Going forward, Wise sees the market as getting more competitive, making customer service and managing the little things critical to survival and success.

Wise thinks the group health product pendulum has swung back to mid-eighties model where networks are smaller, there's less choice, and better control over cost and utilization. Coventry's going to offer products with smaller networks based on provider systems with documented better outcomes and lower costs. They will preferentially look to buy provider-owned plans as they tend to have better cost structures than non-provider-owned plans. The analyst who asked the question wasn't particularly interested in what Coventry was doing, but rather focused on pricing implications given the MLF regs coming out shortly.

That's another example of how most of the analysts following this business are out of their depth. The real issue, the key to success, for Coventry and every other health plan, is how they are going to compete in a post-reform world. Price is a result of cost structure, and the failure of the analysts to focus on cost and cost drivers shows how disconnected the analysts are.

Another analyst asked if other health plans are pursuing similar acquisition strategies. Wise noted that there just aren't that many potential acquisition targets that have good cost structures, fit geographically, and are provider-owned.

The company will be revamping its individual health product offering - in response to a question, Wise noted that the company's distribution, IT, and benefit design are all works in progress, and there's still a ways to go.

More to come after I review the transcript

Posted by at 9:27 AM | Permalink | Comments (1)

Today's Kaiser Health Tracking Poll contains interesting data about support for health reform (steady positives, declining negatives), what's much more telling is the extent of seniors' a) ignorance of basic facts about health reform and b) widespread belief that reform includes death panels and cuts Medicare benefits.

Yikes.

According to Kaiser, "Half of seniors (50%) say the law will cut benefits that were previously provided to all people on Medicare, and more than a third (36%) incorrectly believe the law will "allow a government panel to make decisions about end-of-life care for people on Medicare."

These are both factually incorrect.

Moreover, "Despite the fact that Medicare's actuaries predict the health reform law will extend the life of the Medicare Part A Trust Fund by 12 years (from 2017 to 2029), only 14 percent of seniors know this and nearly half (45%) of seniors think the health reform law will weaken the financial condition of the fund.
"

There are several ways to look at this.

The power of the anti-reform noise machine is truly impressive; death panel myth promoters are clearly effective in getting people to believe their claims, despite widespread debunking of the claim by multiple independent organizations. (One well-respected organization, Politifact.com (run by the St Pete Times, a terrific newspaper, called it "pants on fire false).

Then again, it's hard to underestimate the ignorance of the American public; we're talking about a country where 43% of the population doesn't believe in human evolution...

Seniors tend to vote in higher percentages than the rest of the population, so their concerns about reform, based at least in part on ignorance of the actual reform bill and its provisions, may well have a disproportionate impact on the election this fall.

Closer to home, health plans and insurers have to take note of these poll numbers and consider the impact on their own members.

As health plans increasingly emphasize provider network selection based on quality and outcomes data; rigorously employ evidence-based medical guidelines; and get tougher on experimental and unproven medical procedures and therapies, they are going to be exposed to the same type of fear-mongering from idiots using the public's ignorance and fear to gain notoriety.

What does this mean for you?

Health plans must - and I mean must - develop and implement programs to stay on top of the public's perception and opinions about them. Call it opinion monitoring, social network monitoring, complaint management, whatever, but do it. But this will only work if you proactively educate members and the markets about what you're doing and why. Otherwise it's purely defensive, will appear so, and will be little help when the stuff hits the fan.

Which it always does.

Posted by at 9:32 AM | Permalink | Comments (8)

The recess appointment of Dr Donald Berwick as head of CMS has incited a furor among politicians outraged at what they claim are his advocacy for rationing and fondness for Britain's National Health Service.

To support their claims, these politicians are using Berwick's own words, in a way eerily reminiscent of the recent Shirley Sherrod debacle.

It started with Glenn Beck, master of the one-word quote, and then slipped over into more mainstream politicians.

What's really troubling about all this, in addition to the blatant political motivation, is Berwick is pretty closely aligned with core conservative values.

Don Berwick is now, and has always been, a patient-centric, consumer-oriented 'radical' who's concept for the ideal system is one that is almost entirely patient-focused. Here's Berwick's ideal health plan from a piece by Ezra Klein:

"(1) Hospitals would have no restrictions on visiting -- no restrictions of place or time or person, except restrictions chosen by and under the control of each individual patient.

(2) Patients would determine what food they eat and what clothes they wear in hospitals (to the extent that health status allows).

(3) Patients and family members would participate in rounds.

(4) Patients and families would participate in the design of health care processes and services.

(5) Medical records would belong to patients. Clinicians, rather than patients, would need to have permission to gain access to them.

(6) Shared decision-making technologies would be used universally.

(7) Operating room schedules would conform to ideal queuing theory designs aimed at minimizing waiting time, rather than to the convenience of clinicians.

(8) Patients physically capable of self-care would, in all situations, have the option to do it.

"I suggest that we should without equivocation make patient-centeredness a primary quality dimension all its own, even when it does not contribute to the technical safety and effectiveness of care," he says."

Pretty radical, indeed - returning power to the patient, from the practitioner.

If Berwick's opponents just took a minute to read what the guy really stands for, they'd discover he's pretty much aligned with many 'conservative' principles - self responsibility, ownership, consumer-centered policies and practices.

Unfortunately, they just don't care about who Berwick really is - they've decided he's the stick they're going to use to beat this Administration, regardless of whether he's good, bad, or indifferent.

As Maggie Mahar noted in HealthBeat, "Thomas Scully, who led the CMS under President George W. Bush [said of Berwick] : "He's universally regarded and a thoughtful guy who is not partisan. I think it's more about ... the health care bill. You could nominate Gandhi to be head of CMS and that would be controversial right now."

Here's hoping the recent Shirley Sherrod disaster has stiffened the backbone of the Administration and caused the wingnut media to think a little more deeply before throwing bombs.

And yes, I believe in the Easter Bunny too.

Posted by at 6:21 AM | Permalink | Comments (8)

As I reported Saturday, the prosecutor who charged former North Dakota state fund CEO Sandy Blunt with felony 'theft of services' is herself under investigation for allegedly withholding exculpatory evidence from Blunt's defense attorney.

Cynthia Feland's case has been heard by the ND Supreme Court's Inquiry Board, who found enough evidence to convene a Disciplinary Board. From the ND Supreme Court website - "Formal proceedings are begun when there is probable cause to believe that misconduct has occurred that deserves a public reprimand, suspension, or disbarment." [emphasis added]

This isn't a routine, 'happens all the time' thing. Far from it. although to hear Feland tell it, this is no big deal - according to the Bismarck Tribute, Feland "said it is not uncommon for people to file complaints against prosecutors."

Well, Cynthia, let's look at the numbers, shall we?

Last year there were 349 cases that went thru the Disciplinary Board program.

192 were dismissed or the attorney was referred to an assistance program and 123 are still pending. That leaves 34 cases where there was some kind of final ruling. 17 went to a Panel Hearing. That's where Feland is headed. And the odds aren't good.

Only 2 cases were dismissed. Of the remaining cases, the Panel reprimanded the attorney in 6, the Supreme Court suspended the attorney in seven, and disbarred the offender in 2.

So Feland has a much better chance of being disciplined, or having her license to practice suspended, than she does of acquittal.

If she's not reprimanded or suspended, it's even odds if she's acquitted or disbarred.

And she has the temerity, the unmitigated gall, to pooh pooh this? A sitting prosecutor, looking at a hearing where she has just over a one-in-ten chance of escaping unscathed? And a 60% chance of losing her license, at least temporarily?

I find it hard to believe that the Inquiry Panel would find probable cause where none exists, particularly in a case where a sitting prosecutor is accused of withholding evidence from a defendant.

As a prosecutor, I'm sure Feland would love those kind of odds.

Interestingly, none of the other media outlets in the state picked this up; neither did the local AP writer (who happens to be a facebook friend of Feland's).

I'm vastly unimpressed with the media in NoDak; here's a case of potential wide-ranging import, one where a prosector is charged not only with withholding evidence, but also suborning perjury, yet it's not worthy of coverage.

Nope, not when the state fair parade's in town, by golly!

Posted by at 6:03 PM | Permalink | Comments (0)