Category Archives: Cost Shifiting

ACA Repeal Opens Up Medical Travel: A Second Look

Note: Here is Laura’s second article on repeal of the ACA and its’ impact on medical travel. She breaks the article down by areas of the healthcare industry that will be affected by repeal and that might benefit from medical travel.

Repeal of Affordable Care Act Impacts International Medical Travel
by Laura Carabello

wphealthcarenews.com- The repeal of the Affordable Care Act (ACA) has been met with considerable market uncertainty. As the transition gets underway, many Americans will be scrambling to access affordable, quality care.

Fortunately, the international medical travel industry -“Travel for Treatment” – may finally gain the attention it deserves from the American public and U.S. employers. Experts predict that the number of Americans traveling abroad for medical care or episodes of treatment is expected to increase 25 percent annually over the next decade.

Medical travelers are likely to come from every market sector: the growing ranks of uninsured individuals, self-insured employers facing higher healthcare expenditures, disenfranchised Medicaid beneficiaries, as well as Medicare enrollees with high out-of-pocket expenditures and the loss of coverage for preventive care.

Individual Consumers
Once “minimum essential healthcare coverage” is no longer mandated, the burden of payment will transfer onto healthcare providers and systems that will be forced to continue cost shifting onto the backs of paying customers.

Fewer insurance companies will be willing to underwrite coverage in the exchanges. In fact, many will leave the individual marketplaces altogether because of the potential loss of federal subsidies for both beneficiaries and insurance companies themselves.

Burdened by hefty cost-shifting, more Americans will be forced to pay out of their own pockets for surgeries or treatments in the U.S. Those who can afford a plane ticket will find it increasingly attractive to travel outside the country for quality, affordable options, such as joint replacement, cardio-thoracic surgery, oncology, bariatrics, and a host of other medical procedures, including treatment for Hepatitis C.

Low-Income (Medicaid) and Seniors (Medicare)
For Medicaid beneficiaries who remained optimistic that their home state would offer expanded coverage, their prospects look dim. The unraveling of the ACA will leave millions of the poorest and sickest Americans without insurance. Many states may either abandon Medicaid expansion or be forced to significantly redesign their programs to ensure that individuals below 400 percent of the federal poverty level can receive affordable healthcare coverage and services.

While these low-income families may not have cash reserves to fund expensive care in the U.S., they might be able to gather the resources to access needed surgeries overseas – and pay less than half of the US rates. Those who have emigrated from Latin American countries, in particular, will take advantage of opportunities to travel to their homelands to gain access to care that is substantially less expensive, and in a familiar setting.

The 57 million senior citizens and disabled Americans enrolled in Medicare could also benefit from accessing international medical travel. Under a full repeal of the ACA, seniors face higher deductibles and co-payments for their Part A, which covers hospital stays, and higher premiums and deductibles for Part B, which pays for doctor visits and other services. Medicare enrollees may also lose some of their free preventative benefits, such as screenings for breast and colorectal cancer, heart disease and diabetes. The opportunity to access quality care at lower costs – plus prescription drugs that are sold at far lower price points outside the US – present attractive options.

Employers
Healthcare will continue to be driven through employers, and cost pressures will push high-deductible plans, risk-based contracting and consumerism. In the United States today, even a negotiated, discounted rate for a total knee replacement at a local hospital may well exceed $45,000, $60,000, or more. The bottom line for self-insured employers – the coverage model that now dominates the marketplace: even after factoring in the cost of travel and accommodations for the patient and the companion, as well as waiving deductibles and co-pays as incentives to program adoption, the savings on surgical procedures such as joint replacement are significant.

Employers will also be more likely to send workers to emerging COEs outside the country in light of the many partnerships that are underway between US providers and foreign hospitals. These collaborative programs are bringing American ingenuity, sophisticated technology and advanced levels of care to institutions throughout the world.

Quality and safety standards at many institutions are now equal to or exceed US benchmarks. Many foreign hospitals are accredited by Joint Commission International, an extension of the US-based Joint Commission. Select hospitals outside the country adhere to US clinical protocols.

In fact, one organization that serves self-insured employers – North American Specialty Hospital in Cancun – even offers U.S. surgeons with US malpractice insurance who perform pre- and post-operative care in the US and then travel to Cancun for surgery. This ensures continuous engagement and continuity of care.

Hospitals
The ACA has contributed to hospitals experiencing higher volumes of insured patients, but those volumes would drop with the law’s repeal. It could also cause fewer people to keep prescription coverage, which would be modestly negative for the pharmaceutical industry.

Experts believe the majority of primary care physicians are open to changes in the law but overwhelmingly oppose full repeal, according to a survey published in The New England Journal of Medicine.

Insurance coverage for the 20 million people who obtained insurance from the exchanges sparked growth in patient numbers for hospitals, which offset lower payments. Without this, hospitals can expect deepening economic problems. This could lead to higher prices, and greater impetus among individuals to seek medical care outside of the U.S.

Key Destinations for International Medical Travel
With the growing ranks of uninsured, medical travel options are likely to emerge as a critical solution to healthcare cost woes. Hospitals and providers in nearby locations such as Latin America – known as the LAC Region – are likely to become destinations of choice: less expensive travel expenses, reduced language barriers, and cultural familiarity. Individuals and employers will require guidance in terms of choosing the right providers and determining costs to overcome the challenges that lie ahead.

To view the original article, click here.

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“Florida, We Have a Problem”

Tuesday, Judge David Langham, Deputy Chief Judge of Compensation Claims for the Florida Office of Judges of Compensation Claims and Division of Administrative Hearings, wrote a rather lengthy post about the differences between cost-shifting and case-shifting in workers’ comp.

Much of what the Judge wrote were subjects that I already discussed in a number of previous posts about cost-shifting and case-shifting, so I won’t go into it here. I am only focusing on the parts that relate to Florida workers’ comp. You can read the entire article yourselves.

But what caught my attention was what he said about Florida and what the Workers’ Compensation Research Institute (WCRI) reported in some of their studies on these issues.

As Judge Langham wrote this week, he wrote a post two years ago that asked the question “Why Does Surgery Cost Double in Workers’ Compensation?”

Judge Langham noted in that post that Florida employers have been documented paying almost double for shoulder or knee surgery that is paid for under workers’ compensation, compared to group health costs.

The implication of case-shifting in Florida, he says, could arguably be a doubling of cost.

He cited a WCRI report released earlier this year that suggests however that case-shifting is perhaps not as likely in Florida.

According to the report, Judge Langham continues, “as of July 2011, six states had workers’ comp medical fee schedules with rates within 15% of Medicare rates. They were California, Massachusetts, Florida, North Carolina, New York and Hawaii.”

However, Judge Langham pointed out that the WCRI concluded that case-shifting is more likely in states where the workers’ compensation fee schedule is 20% or more above the group health rates, and not in Florida.

Judge Langham stated that this analysis of workers’ compensation fee schedules does not appear to include analysis of the reimbursement rates for hospitals, and that It also seems contradictory to the assertions that Florida workers’ compensation costs for various surgeries have been documented as roughly double the group health rates (100% higher, not 15% higher).

Injured workers who missed work in the Florida workers’ compensation system could be compensated in 2016 at a rate as high as $862.51 per week, the “maximum compensation rate.”

So, if recovery from such a “soft-tissue” injury required ten weeks off-work, he wrote, the case-shifting to workers’ compensation might add another four to nine thousand dollars to the already doubled cost of surgical repair under workers’ compensation.

This could be directly borne by the employer if the employer is self-insured for workers’ compensation; or, if the employer has purchased workers’ compensation insurance, the effect on the employer would be indirect in the form of potentially increased premium costs for workers’ compensation following such events and payments, Judge Langham states.

According to WCRI, the Judge quotes, “policymakers have always focused on the impact (workers’ compensation) fee schedules have on access to care as well as utilization of services.

This has been a two-part analysis, he says:

First, fee schedules have to be sufficient such that physicians are willing to provide care in the workers’ compensation system; and second, the reimbursement cannot be too high, or perhaps overutilization is encouraged.

Lastly, Judge Langham points out that the disparity between costs has also been noted in discussions of “medical tourism.”

The last question he posits is this, “might medical decision makers direct care to more efficient providers, across town, across state lines?”

What about national borders?


I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

I am also looking for a partner who shares my vision of global health care for injured workers.

I am also willing to work with any health care provider, medical tourism facilitator or facility to help you take advantage of a market segment treating workers injured on the job. Workers’ compensation is going through dramatic changes, and may one day be folded into general health care. Injured workers needing surgery for compensable injuries will need to seek alternatives that provide quality medical care at lower cost to their employers. Caribbean and Latin America region preferred.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com.

Will accept invitations to speak or attend conferences.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com.

Transforming Workers’ Blog is now viewed all over the world in 250 countries and political entities. I have published nearly 300 articles, many of them re-published in newsletters and other blogs.

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Fee Schedules May Increase Number of Work Comp Claims

The Workers’ Compensation Research Institute (WCRI) published a new study that examined whether fee schedules increase the number of workers’ compensation claims.

In previous reports, the WCRI found that in many states, workers’ compensation pays higher prices than group health.

Another study they issued, found that in some states, workers’ compensation prices were two to four times higher than group health prices.

Moreover, in most states, WCRI found, the workers’ compensation systems rely heavily on the treating physician to determine whether a specific patient’s injury is work-related or not.

Dr. Olesya Fomenko, the author of the report and an economist at WCRI, said that, “Policymakers have always focused on the impact fee schedules have on access to care as well as utilization of services. This study shines a light on an issue that policymakers and other system stakeholders might not be thinking of, which is that physicians may call an injury work-related in order to receive a higher reimbursement for care he or she provides to the patient.”

Two of the findings from the study are as follows:

  • If the cause of injury is not straightforward (e.g., soft tissue conditions), case-shifting is more common in the states with higher workers’ compensation reimbursement rates. In particular, the study estimated that a 20 percent growth in workers’ compensation payments for physician services provided during an office visit increases the number of soft tissue injuries being called work-related by 6 percent.
  • There was no evidence of case-shifting from group health to workers’ compensation for patients with conditions for which causation is more certain (e.g., fractures, lacerations, and contusions).

What does this mean?

It means that physicians seeking higher reimbursements are classifying some injuries as work-related, and that there is no evidence of case-shifting from group health where the cause is more determinable.

What it also means is that no matter what the industry tries to do to lower medical costs, there is always a way for physicians and other stakeholders to do the opposite for their own benefit.

And given that, you have to wonder why the industry is deaf, dumb and blind to alternatives that apply basic economic laws to saving money. If you can get a good or service at the same or better quality, and at lower cost, no matter where that is, you go there.

It works that way when buying cars in one state, when the buyer lives in another state, and it should work that way with medical care, particularly regarding surgery.

The industry should not listen to certain individuals who dismiss this idea, and call the locations where better or equal care can be obtained at lower cost, “Turkishmaninacanstans“.

It demeans the hard work and dedication of medical professionals and business people who have spent years and money on building a business to provide health care that is affordable and of the highest quality.

It insults the education and training of doctors, nurses, and medical technicians in those countries who otherwise might not be working in such a highly respect profession as medicine.

It only proves that the author of that canard is a coward, a racist, and dead wrong.

 

Workers’ Comp Opt-Out Goes Under US Microscope

Laws that allow employers in Texas and Oklahoma to opt out of the states’ workers comp systems could be subject to federal oversight, according to an article today in Business Insurance.com,  amid concerns about their effect on injured workers’ access to benefits and care and potential discrimination against employees who report workplace injuries and illnesses.

The article by Gloria Gonzalez, stated that last October, several Congressmen  wrote to the U.S. Department of Labor asking for a report on how it would re-institute oversight of state workers comp systems.

The department annually tracked states’ compliance with recommended federal standards from 1972 to 2004, following an investigation by ProPublica Inc. and National Public Radio into state workers comp programs, the article reported. (Both ProPublica and NPR reports were previously cited by myself and others in earlier posts)

Ms. Gonzalez wrote that the letter also asked whether the department needed additional authority to protect injured workers’ rights and prevent cost shifting to taxpayers via programs such as Social Security.

Chris Mandel, senior vice president of strategic solutions at Sedgwick Claims Management Services Inc. in Nashville, was quoted as asking, “Is that a prelude to federalization?”

His question came Tuesday at the Business Insurance Rick Management Summit, and his reply to his own question was, “Who knows?  But let’s just say they’re not happy with what they see.”

What does this mean to you?

It means Uncle Sam is watching, and he does not like what he sees going on with the expansion of opt-out legislation. Some of us already don’t like it and have not drunk the kool-aid just yet.

Let’s hope for the sake of injured workers that the feds do take a look under the microscope at the promises of opt-out and they find bacteria that can bring down the entire system, leaving injured workers where their great-grandfathers were before workers’ comp existed…out in the cold and out of luck if they got hurt.

Trouble Ahead for Workers’ Comp

The Denver Business Journal today published an article by Steve Doss, VP of Commercial Lines at CCIG.

Here are the key takeaways from Conning, a Connecticut-based investment management company for the insurance industry:

  • Accident frequency has increased. A stronger U.S. economy has meant more inexperienced workers have joined the workforce, so high-hazard occupations like transportation and construction have seen increases in work-related injuries since 2012. For example, non-fatal work-related construction injuries jumped 9.5 percent from 2012 to 2013. Also, as older employees work longer, the number of accidents among those 65 and older rose 18.5 percent from 2012 to 2013.
  • Accident severity is rising. The Bureau of Labor Statistics reports that construction fatalities rose 5.6 percent from 2013 to 2015, and manufacturing fatalities rose 9.3 percent from 2013 to 2014. In addition, hospital and drug costs – the biggest expenses associated with workers’ compensation claims – are rising faster than inflation.
  • Evidence of cost-shifting. The Affordable Care Act may be driving physicians and hospitals to “leak” group health cases into the workers’ compensation system, where they can charge more for the same services than under a group health contract, according to Conning.

For those of you not familiar with workers’ compensation, and those of you who are, what each of the bullet points mean, in simple terms is this:

  • More accidents,
  • Degree of accident injury increasing and,
  • Cost-shifting is occurring.

Isn’t time to stop and realize that whatever programs are implemented, whatever analytical or predictive modeling techniques are utilized, whatever the so-called “experts” say is the cause of this or that problem, whatever so-called “reform” or work comp alternative is attempted, wouldn’t it be prudent to think outside the box, and outside the borders of your limited minds?

Schopenhauer said the following:

“Every man takes the limits of his field of vision for the limits of the world”

Those of you who will not listen to other ideas, no matter how far-fetched they may be, have limited your field of vision and taken them as the limit of the world. The world is globalizing, health care included.

Aerospace technology will very soon allow us to travel to any part of the world in under four hours. Don’t believe me? Ask Boeing why they are running commercials that tout that very same possibility.

Those who cite judges as saying no to medical travel must ask yourselves this question: Do doctors sentence people to death? (By that I mean execution, not natural death from disease or incompetence)

Those who say the laws won’t allow it, should know that laws can be changed, and laws written in the era of the horse and buggy should not dictate to the post-modern, jet-age, and soon-to-be sub-orbital space plane age. Would you like to live under the laws of Caesar or Charlemagne?

And finally, those who say the injured workers won’t go abroad to get better medical care, have you ever asked them, or are you just putting your words in their mouths?

Methinks you all doth protest a bit too much for the sake of injured workers and myself. Look in the mirror and ask yourselves why workers’ comp is failing. The answer is staring right back at you.

WCRI – Day One, Part One

Day One of the WCRI’s annual conference began with WCRI’s Chairman, Vincent Armentano, of The Travelers Companies, introducing new President and CEO John Ruser. He presented the first s…

Source: WCRI – Day One, Part One

Trends and Issues in Workers’ Comp for 2016

From the ‘What’s happening now in workers’ comp’ department comes two articles written earlier this month by Jacquelyn Connelly in Independent Agent magazine.

The first, written on February 1, talks about new health care trends driving change for workers’ comp. The second, written a week later, deals with the top three regulatory issues to watch for in workers’ comp in 2016.

Let’s start with the first article.

As Ms. Connelly writes, medical now represents on average, 60% of the benefit dollar paid to injured workers, according to Peter Burton, senior division executive for state relations at NCCI (National Council on Compensation Insurance).

Burton said that, “if you went back 25 years ago, it would have been about 40%,” and he went on to say that, “medical is the largest component in most states of the benefit given to injured workers. If you looked at the amount of legislative pricing requested of NCCI during last year, the majority of the requests were medical-related.”

In my White Paper, I cited that “medical costs in 2008 were 58% of all total claims.”

One explanation Ms. Connelly gives is rising and shifting medical costs.  According to Donna Urben, vice president and workers’ compensation product manager at Erie Insurance, “the rise in medical costs, we’ve all seen it on typical health plans and we’ve also seen it on workers’ comp.” She goes further to say that, “what helps with the control of the increase in medical costs are those states that actually are able to direct medical care.”

Some state workers’ comp laws state that injured workers must go to panel physician established by the employer for a timeframe that is mandated by state guidelines, according to Ms. Urben.

If the injured workers receives medical care that fits the injury,” says Ms. Urben, “that ultimately gets them back to pre-injury status and enables them to return to work more quickly,”…”this explains why in some states that permit direction of care, employers are able to see a reduction in the claim cost on the medical claims side, versus those states that don’t permit direction of care, employers see a greater volatility in the medical costs from a workers’ compensation claim.

Another reason given by Ms. Connelly for the rise of medical costs is the duration of treatment.

Medical costs could also transform under the ACA, says Yvonne Hobson, vice president of corporate underwriting at Amerisure, and could cause some cost-shifting in workers’ comp insurance, by authorizing the use of capitation models that designate a set amount for each enrolled plan member, regardless of whether they take medical during that time.

This is not the first time we have seen this issue of cost-shifting and the ACA come up, as I and others have written about it last year.

Hobson explains that, “there are some injuries, such as soft tissue injures or back or knee or shoulder pain, where the cause of the injury isn’t readily apparent if it happened on the job or outside of work.” There is some discretion on the part of the doctors, Ms. Hobson states, when determining if the injury is work-related or not.

On the other hand, Matt Lyon, of Foremost Insurance Group, cited some predictions that the ACA could reduce the frequency of “Monday morning claims”, where someone gets hurt on the weekend, they don’t have health insurance, and come into work on Monday and file a workers’ comp claim, Ms. Connelly writes.

Mr. Lyon noted that some preliminary studies suggest a slight correlation between the ACA and a decline in fraudulent comp claims.

Ms. Hobson concurs, and stated that, “the challenge with cost-shifting is that the research and the data on it is new, so only time is going to be able to tell us how it’s going to ultimately be impacting workers’ compensation costs.

The final trend, Ms. Connelly mentions is the misuse and abuse of opioids and medical marijuana. I have discussed the opioid abuse issue before, so I will not go into that here, and the other trend is medical marijuana, as well as recreational use.

States such as Alaska, Colorado, Oregon and Washington have allowed recreational use, and 23 states and Washington, D.C. have legalized medical marijuana.

In her second article, Ms. Connelly identifies three regulatory issues. These issues are:

  1. Opt-out laws. Currently, as I have written about, opt-out is only in Texas and Oklahoma, but it was reported recently that the legislation in Tennessee has not passed this year, and maybe voted on again next year. Other states proposed for this legislation are Arkansas, North and South Carolina and West Virginia. The group behind the writing of this legislation is called “A-rock” (ARAWC).
  2. Reform efforts. Peter Burton, cited by Ms. Connelly in the last article, said that insurance agents need to be wary of the “attack on the exclusive remedy”. I have also written about this; yet, my research for this article has found that the ALEC (American Legislative Exchange Council), a right-wing, non-profit organization partly funded by the Castor and Pollux of right-wing, libertarianism, the Koch Brothers has drawn up a bill defending exclusive remedy, which I find puzzling, because I would have thought that they would want to let workers try to sue their employers, which is what happened before the enactment of workers’ comp laws.
  3. Independent contractor classification. The Department of Labor’s Administrator’s interpretation sought to classify most independent contractors as employees.

What does this mean?

For workers’ comp, it means that there are challenges ahead that the industry needs to be aware of, but it also means that business as usual will no longer suffice, nor will doing the same things over and over again, and expecting different results.

As we have seen in Ms. Connelly’s first article, medical costs are rising for workers’ comp claims. She does not mention whether or not this includes expensive surgeries, or is just confined to the immediate treatment of the injury and the subsequent process of returning the injured worker to their pre-injury state.

Some employers have seen reductions in medical costs, but overall, the medical costs keep rising, as evidenced by my White Paper that stated that in 2008, the percentage was 58%. Two percentage points in seven years.

Obviously, something or some things are not working. But as long as the industry ignores alternatives, as long as some people suggest that judges won’t order surgery out of the country (do doctors order executions, I wonder?), as long as these same individuals believe that no injured workers (especially Latino workers) will want to or will accept going abroad for surgery, and as long as the “old men” of the industry cling to xenophobia, racism and American Exceptionalism, holding back the workers’ compensation industry from joining the globalization of health care, comp included, then nothing will change, and costs will continue to rise.

Lastly, it is state laws themselves that need to be changed, modified or outright discarded so that employers across the country can realize huge cost savings in their medical claim costs, when their employees need surgery.

To say this will never happen is like saying Man will never fly, go to the Moon, or any of a thousand other “impossible” things we humans have accomplished. Are you saying that going to the Moon or flying is easier than going to another country to get surgery? Or are you just being xenophobic, racist, and delusional that American health care is the best?

You decide, but while you do, the meter is running on medical costs, and the other issues, such as opt-out, reform and job classification are making workers’ comp challenging now and for the future. But it does not have to be that way.