Monthly Archives: December 2012

Rising Hospital Costs: What they mean for Workers’ Compensation and Medical Tourism

Thanks again to Joe Paduda for today’s blog post topic.

In Joe’s post, workers’ compensation carriers are noticing their bills and payments to hospitals for inpatient and outpatient services increasing significantly faster than other costs. He predicts that all indications lead to further increases in these increases.

He cites a report from the Workers’ Compensation Research Institute (WCRI) that shows that facility costs are up in several states, including Indiana, which was the focus of the report. The WCRI reported that Indiana’s costs were substantially higher than the median states WCRI mentioned in the report. This increase was driven by prices. Indiana, which does not have a fee schedule for facilities, Paduda says, means hospitals can raise prices whenever they want, and are doing so.

The WCRI also reported that overall hospital payments per stay increased 12% per year from April 2005 to September 2010. Paduda predicted that at that rate, workers’ compensation carrier’s costs will double every six years.

Paduda also points to an article in the New York Times yesterday (December 18th, 2012) that stated that hospitals are likely to get huge cuts from the fiscal cliff deal, and that Medicare cuts will target hospital reimbursements.

What this all means for workers’ compensation payors and the medical tourism industry is this. Facility costs are going to increase when the cuts are announced. In Indiana and other similar states, these increases will be driven by a combination of higher prices and more services per episode. In states that have fee schedules, there will be increases in utilization, which translates into more and higher-intensity services per stay. For the medical tourism industry as a whole, the increase in costs for outpatient services is not a factor, since it will be more expensive to provide outpatient services in medical tourism destinations if airfare, hotel and cost of treatment are packaged, as is the norm, than with the increases here in the US.

One respondent to Joe’s post commented that cost shifting to workers’ compensation will be more attractive to financially strapped hospitals, which will be another reason why payors will seek out lower cost alternatives.

Where medical tourism, and more specifically, medical tourism destinations and the hospitals that serve them can benefit, is in the inpatient services. Rising US hospital costs may force US workers’ compensation carriers to look for lower cost, better quality health care services for their insured’s injured employees, something which medical tourism is already offering the private insurance market in the US.

The Stars Aligned: Mexico as a medical tourism destination for Mexican-born, US workers under Workers’ Compensation

Sometimes, the stars align, and a writer such as myself, finds a topic to write about. This is what happened to me this week. The topic I found was Mexican workers getting medical treatment in Mexico for work-related injuries. The topic presented itself when I received a new blog post from Joe Paduda. This was the first star to align. Joe’s post was about the end of workers’ compensation as a statutory benefit. In it, he discusses a recently released study by Peter Rousmaniere, one of my LinkedIn connections who writes about issues in workers’ compensation. Peter’s study, entitled, Workers’ Compensation Opt-Out: Can Privatization Work?, looks at the Texas experience with an employer opt-out model of workers’ compensation, and the proposal that failed in the Oklahoma legislature earlier this year. Under the Texas model, employers have three choices. They can stay in the statutory system maintained by the state, they can opt-out of the statutory system and create their own “non-subscriber” program, or they can opt-out altogether and risk legal liability.

The second star that aligned was an article written by Martha R. Gore, a freelance writer in national politics whose article was originally published In The article was then published in Medical Travel Today, a medical tourism newsletter. The article was titled, Medical tourism in Mexico an answer to Obamacare restrictions for Americans?, and highlighted some of the factors that might make Americans consider traveling to Mexico to get medical services that Obamacare may restrict. These services include heart surgery, dental work, cosmetic surgery, orthopedic treatments and weight loss surgery. Gore pointed out that the Medical Tourism Corporation stated that some new Mexican hospitals are state-of-the art and can be compared to the best in the world, with a recent boom in small clinics and surgery centers, as well as high-quality hospitals.

According to the MTC, Gore states, Mexican doctors often have more experience than American doctors, because either the procedure has not been approved by the FDA, or was recently approved. She also mentioned a study by UCLA researchers and colleagues that reported that almost a million California residents travel to Mexico each year for medical treatment and surgery. This was expected to increase, due to limitations under Obamacare. Gore’s article also mentioned three hospitals that the MTC listed in their report.

The third star aligned when I read an interview in Medical Travel Today in their SPOTLIGHT section with Maria Todd, founder and CEO of The Mercury Healthcare Companies. Maria is also a LinkedIn connection of mine, and is an expert in the medical tourism industry. This interview was prompted by several press releases from Mercury about their work in Nigeria and in Mexico, where they were involved with the development of a cancer center. The interview also pointed out that they recently conducted several audits in Guadalajara as part of their work with healthcare clusters.

It then occurred to me that I should write about Mexican workers in the US going back to Mexico for work-related injuries because much of what I had received this week was about Mexico, and even though Peter’s study is more involved with Insurance, rather than medical tourism, the fact that Texas and Oklahoma are Southwestern states, and many of the workers there are Mexican, this was a perfect topic to write about. Add to that the fact of the recent election where states like Colorado, Nevada, New Mexico gave Barack Obama a large percentage of the Latino vote, and that Texas and other Southern states may follow suit in the next cycles, the likelihood that more Mexican workers will need medical treatment either under Obamacare once the immigration issue is settled, or under workers’ compensation, will no doubt be a reality in the next few years.

So this is when the stars aligned. Peter commented to me in one of our email conversations that Mexican workers may be more receptive to medical advice and instructions if delivered by a Mexican clinician. I told him that this was a good point, and then recalled that I mentioned something like this in one of my earlier posts where I created a fictional case study of a self-funded employer for both health care and workers’ compensation that offered medical tourism to their employees from Latin American and the Caribbean as an option. In that post, I mentioned something someone else told me about the employee having better self-esteem, knowing that their families and friends back home could visit them, and that they would be able speak the same language as the hospital staff, be in a familiar culture and have the same food he would have, all of which would translate into a better outcome and a faster recovery and return to work.

As more US states follow Texas’ example and allow employers to opt-out of statutory workers’ compensation, the possibility that medical tourism can become a part of their “non-subscriber” program increases. While many of the services mentioned in the Gore article are not generally covered by workers’ compensation, there are rare cases where cosmetic surgery, dental work, and even weight loss surgery would be covered. Weight loss, especially since NCCI recently released a report on co-morbidities in workers’ compensation. Even orthopedic treatments such as spinal fusion, knee and hip replacement or repair, which is covered under workers’ compensation would be lower cost and have better quality in Mexico compared with the US. So the future of medical treatment in Mexico for workers’ compensation looks promising once more Mexican workers here, both documented and undocumented get health care coverage or is given an opportunity to gain citizenship under immigration reform. This would be a boon for medical tourism.

Hey! New York Employers, “86” that Code Rule 60

Recently, I read about the New York Department of Labor’s Workplace Safety and Loss Prevention Program, or Code Rule 60, in a blog about workers’ compensation called, Workers’ Comp Insider, a blog created by Lynch Ryan, a management consulting firm specializing in workers’ compensation cost containment. In the article entitled, A Modest Proposal for New York, the author, Tom Lynch, explains how the Code Rule 60, which was intended to allow employers to have safer workplaces, and eventually lower costs, actually is so bureaucratic, that in Lynch’s words, “it would be easier for a New York employer to find his way through a dense maze of thorns, blindfolded, than to negotiate the journey to Code Rule 60 certification.”

Lynch points out that New York’s vested interests, i.e., lawyers, doctors, insurers, unions, the Legislature, employers, and others, will not come to any grand bargain soon. He describes how the program is supposed to work by having the Department of Labor certify employers for establishing safety, return to work, and drug and alcohol programs, for which they will get premium credits of varying percentages, from 4% for safety and return to work programs, to 2% for drug and alcohol prevention programs. The 4% credits drop to 2% in the second and third years of a three-year period. And this program only applies to employers with experience modifiers of less than 1.3.

While establishing safety, return to work, and drug and alcohol prevention programs are a must for all employers, certainly more can be done to lower costs for employers, especially in regard to serious injuries that require expensive surgery and rehabilitation, as well as a speedy return to employment. One such way employers can help lower costs of expensive workers’ compensation claims that require surgery and treatment that cost thousands of dollars, is to implement medical tourism into workers’ compensation, as an option for their employees to choose when expensive surgery and treatment is ordered by a physician.

For many of the common surgeries performed in the US in workers’ compensation cases, the costs of those surgeries are lower or half the cost abroad, as they are at home, with the same or better quality at hospitals that have the latest equipment and technology. And with physicians trained in the US or other Western countries, plus accreditation from the Joint Commission International (JCI), it is no wonder more employers are utilizing medical tourism for their group health care plans.

Employees, many of whom come from Latin American, Central American or Caribbean nations will benefit from having treatment in familiar surroundings, with no language or cultural barriers, and will even have the psychological satisfaction of knowing that they are being treated in the best hospitals of their home countries, which will speed their recovery and lead to a more happy and productive employee when he returns to active work. His friends and family will take pride in knowing that he chose the best care possible, in a hospital that many of his fellow countrymen could never go to, and that will help raise his self-esteem.

For a New York employer to not take advantage of this opportunity, would be just as bad as finding their way through the bureaucratic maze called Code Rule 60.

Does the boom in US Manufacturing mean more Medical Tourism Opportunities for Workers’ Compensation?

I received a blog post the other day from a blog I subscribe to called “Managed Care Matters”, published by Joseph Paduda. The post referenced a report in December’s Atlantic Magazine, entitled, “The Insourcing Boom”. In the report, and the posting by Paduda, a number of US companies are bringing jobs back to the US from China, Mexico, and Southeast Asia.

The reasons for this insourcing range from oil prices for transporting good by ship are higher now than they were twelve years ago, energy costs in the US due to the natural-gas boom have reduced energy costs for manufacturing, Chinese wages rising, adaption of American unions and American labor becoming more productive, reducing cost of manufacturing.

Paduda also mentions that since much of the manufacturing today is more automated than in the past, the working conditions, issues of safety, types of injuries, and risk management are not the same. What that means is there will be fewer accidents to fingers and limbs, but more injuries caused by repetitive action, which may present conditions for implementing medical tourism into workers’ compensation to surgically correct problems from repetitive motion injuries to the wrist, the back, etc.

Workers’ Compensation benefits for loss of fingers and limbs, especially the forearm and hands, are generally determined by what is called, Schedule Loss of Use awards, to claimants, and the surgical procedures are paid according to the individual state’s fee schedule for those procedures. For repetitive motion injuries, even those paid under a fee schedule, the cost of the procedure abroad may still be cheaper, and at the same and better quality of care available in US hospitals, so back injuries, carpal tunnel injuries and similar injuries would be cheaper in many medical tourism destinations.

The boom in manufacturing in the US may portend a boom in medical tourism opportunities in workers’ compensation as well.