Category Archives: Fee-for-service

Healthcare CEO’s Reject Single-Payer

There are many reasons why the US is the only industrialized nation that does not have a single payer health care system.

One deep seated reason has to do with the foundational value system of the US, from the time of the early settlers whose religious convictions lined up with the rising middle class of 17th century England’s economic values (i.e., the Protestant Ethic).

But another reason — at least for the foreseeable future — as my fellow blogger, Joe Paduda wrote a while back when talking about Bernie Sanders’ plan, is that the health insurance industry will not blow up their businesses and start all over from scratch.

To prove Joe’s point, Modern Healthcare.com published an article last week that explored the opinions of healthcare CEO’s on the ACA and the subject of single-payer health care.

Here are the key takeaways from the article:

  • the nation’s top healthcare leaders overwhelmingly back the ACA
  • support its goal of pushing providers away from fee-for-service medicine and toward delivering value-based care
  • while the Republican Party and its presumptive nominee continue to stand by their “repeal and replace” slogan, the sector’s CEOs overwhelmingly reject that idea, in large part because they are unimpressed with the GOP’s attempts to articulate what it would replace it with.
  • only a small group supports moving to a single-payer system, which has been a central theme of Democratic presidential candidate Bernie Sanders
  • The overwhelming message from the survey, was that the next president and Congress should stay the course set by President Barack Obama and the ACA.
  • But healthcare leaders are also looking for the nation’s political leadership to reject complacency and look for ways to improve what they see as a far-from-perfect piece of legislation.

Here are the survey results, as published today by Don McCanne of PNHP:

The CEO Power Panel includes 110 top leaders of hospitals, insurance companies, physician groups, trade associations and other not-for-profit advocacy groups. The second-quarter survey on policy options that the next president and Congress might address attracted 86 respondents, a 78% response rate.

Future of ACA

Do you support Congress and the next president in:

Repealing and replacing the Affordable Care Act?

2.3% – Yes

67.4% – No

29.1% – It depends on the details

1.2% – No opinion

Expanding the ACA’s subsidized private insurance plan system to achieve universal coverage?

34.9% – Yes

15.1% – No

48.8% – It depends on the details

1.2% – No opinion

Scrapping private insurance in favor of expanding an enhanced Medicare to cover the entire population (single payer)?

9.3% – Yes

61.6% – No

29.1% – It depends on the details

Other insurance issues

Allowing private insurers to sell individual and family policies across state lines under national rules that preempt state rules?

52.3% – Yes

20.9% – No

24.4% – It depends on the details

2.3% – No opinion

Expanding the use of health savings accounts to pay premiums and meet costs under high-deductible plans?

74.4% – Yes

11.6% – No

12.8% – It depends on the details

1.2% – No opinion

Creating subsidized high-risk pools to cover people with preexisting conditions?

43.0% – Yes

16.3% – No

36.1% – It depends on the details

4.7% – No opinion

Medicare

Raising Medicare eligibility to age 67?

54.7% – Yes

23.3% – No

22.1% – It depends on the details

Expanding means testing within Medicare, such as higher co-pays or reduced benefits for high-income seniors?

50.0% – Yes

18.6% – No

30.2% – It depends on the details

1.2% – No opinion

Moving to a universal Medicare Advantage system with a means-tested defined contribution (premium support) for seniors?

28.2% – Yes

20.0% – No

48.2% – It depends on the details

3.5% – No opinion

Gradually expanding Medicare to cover everyone over age 55 who doesn’t have private insurance?

21.4% – Yes

48.8% – No

28.6% – It depends on the details

1.2% – No opinion

Delivery system reform

Taking aggressive measures to curb rising prescription drug prices such as allowing imports and authorizing the CMS to negotiate prices?

70.6& – Yes

9.4% – No

20.0% – It depends on the details

Repealing delivery system reforms such as value-based payment, accountable care organizations and the use of quality measures included in the Affordable Care Act?

03.5% – Yes

83.5% – No

11.8% – It depends on the details

01.2% – No opinion

So, it is apparent that as long as the health care industry continues to profit from the status quo, and supports the ACA, the likelihood of single payer will be remote at best, despite what the Sanders’ campaign seeks.

Things will only change when the entire system collapses of its own weight from complexity, waste, fraud, abuse, and excessive cost so that no CEO’s opinion will matter. People will demand a single payer system because no one will be able to afford having insurance.

The ancient Greeks, among other people, discovered the science of dialectics, or the study of change. Dialectics says that the seeds of change come from within, and that change does not happen until certain conditions are met, and change becomes inevitable. We are not yet at that point, but it is slowly moving in that direction.


 

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Transforming Workers’ Comp Blog is now viewed all over the world in over 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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New Study Confirms ACA May Shift Claims to Work Comp

The Workers’ Compensation Research Institute (WRCI) released a study today indicating that the Affordable Care Act (ACA) may shift claims into workers’ compensation.

Readers of this blog will have read by now the following posts from earlier this year that discussed at length what many in the workers’ compensation and insurance industries said would happen under the ACA.

Here are the posts:

Accountable Care Organizations May Shift Claims into Workers’ Comp

Failure to Expand Medicaid Could Lead to Cost-Shift to Work Comp

Update on Affordable Care Act’s Impact on Workers’ Comp

Challenges Remain in Physician Payment Reform

The WCRI study is quite long, so I will only give you the introduction and summary of findings. You may purchase the complete study by clicking the following link: http://www.wcrinet.org/result/will_aca_shift_wc_result.html.

The study begins by asking the question, “what is the extent to which the move to “capitated” group health arrangements under the ACA leads to cases that previously would have been paid under group health insurance to end up being paid under workers’ compensation.”

They refer to this as case-shifting, as opposed to cost-shifting, and state that if just 3% of group health cases with soft tissue injuries were shifted to workers’ comp, workers’ comp costs in a state like Pennsylvania could increase by nearly $100 million.

In California, the increase would be higher. More than $225 million, and in Iowa, the additional workers’ compensation costs would be around $25 million, or about 5% of the total benefits paid.

One mechanism the WCRI says by which cases would be shifted to work comp is the growth in the number of patients covered by “capitated” health plans.

Medical providers are reimbursed for each procedure in traditional fee-for-service medicine, which is often called, retrospective reimbursement.

Under capitated plans, the study says, medical providers receive a fixed annual payment per patient, which is often called, prospective reimbursement.

As I reported in my previous articles about cost-shifting, a patient covered by a capitated group plan presents different financial incentives about key decisions to a doctor and the health care organization they belong to, compared with a patient covered by a fee-for-service plan.

For example, if a capitated patient has back pain, the provider and the health organization do not get paid for additional care; whereas, for a patient under fee-for-service, the provider and the organization get paid for each service rendered. Workers’ compensation, the study points out, almost always reimburses on a fee-for-service basis.

Another question the study raised was, “to what extent do the financial incentives facing providers and their health care organizations that arise out of capitation influence the determination of whether or not a case is work-related?

The decision of where to send the bill, the study says, should align with the physician’s assessment of whether the cause was work-related or not. It is the amount of uncertainty about the cause of the medical condition that provides the opportunity, according to the WCRI, for the financial incentives to influence the decision.

How the ACA ties into this is apparent in my post, “Accountable Care Organizations May Shift Claims into Workers’ Comp.” According to the WCRI, the ACA promotes the growth of ACO’s, which will increasingly integrate care from all providers under one capitated payment. They will receive one fixed payment regardless of the treatment the patient receives.

This, they say, will provide strong incentives to classify injuries as workers’ comp cases where possible. To date, over 500 ACO’s have been formed since passage of the ACA.

Additionally, the Obama Administration’s proposed moving to “value-based” reimbursement systems for physicians under Medicare (see my post, “Challenges Remain in Physician Payment Reform”), is also cited in the study as another mechanism leading to case shifting.

The WCRI states that the exact definition of this system is unclear, but that it is widely understood that this would imply more prospective reimbursement.

They point to research that indicates that when Medicare changes its payment system, there is a significant price change among commercial insurers. This, too, could further induce shifting of certain cases, they report. (see “Shared Savings ACO Program reaps the most for Primary-care Physicians”)

What are the findings?

The WCRI looked at three groups of states. The first group was states where capitated plans were very common, the second group was states where capitated plans were somewhat common, and the third group was states where capitated plans were less common.

Case-shifting was only found in states where capitated plans were very common, and there was little case-shifting in the other two groups.

Case-shifting to workers’ comp, the study implies, will be expected to increase as capitation becomes more common.

Here are the key takeaways:

  • Patients covered by a capitated health plan was 11% more likely to have a soft tissue injury (back pain) called work-related than a patient covered by fee-for-service.
  • Patients with conditions for more certain causes (fractures, lacerations, contusions), there was no difference between patients covered by capitation or by fee-for-service; hence no case-shifting.
  • Case-shifting was more likely in states where a higher percentage of workers were covered by capitated plans. Two reasons for this are: more cases would be shifted if more patients were covered by such plans, and when these plans were more common, providers were more aware of the financial incentives to case-shift. In states where at least 22% of workers had capitated plans, the odds of a soft tissue injury being work-related was 31% higher than workers in fee-for-service.
  • In states where capitation was less common, there was no case-shifting. Providers were less aware of financial incentives when capitation was infrequent.

What does this mean?

This study confirms what I have been reporting on for much of the past half year, that the ACA may lead to more claims (or cases) shifted into workers’ comp, thus adding to the cost of medical care under workers’ comp, and further burdening an already burdened and broken system.

But it also confirms that there are rough times ahead for the industry, and that unless new ideas are brought forth and alternatives are seriously considered, and not outright dismissed just because someone say they should be dismissed, no matter how many years’ experience they have in workers’ comp, things will get worse.

The world is changing. Things once thought impossible are possible. Ideas once ridiculed are now accepted reality. No one can stop change, not by saying so, nor by any action on their part, so you might as well open your eyes, ears and minds to new ideas, and not shut them just because you don’t agree with them. One day soon, you will be gone, and the problems will still be there. The way forward is to embrace change now so that the future is better for all.

Clarification

Some of you may be thrown off by the title of this article as meaning that the study confirms that the ACA will lead to case-shifting. That is not what was meant. What was meant was that the study confirms what had been previously reported by others and that I had written about in the posts I referenced in my article. If there was any misconstruction on my part, I apologize.