Tag Archives: Hospitals

CMS Greenlights Outpatient Total Knee Replacement: What it Could Mean for Medical Travel

According to an article in MedCityNews.com, the Center for Medicare and Medicaid Services (CMS) removed total knee arthroplasty (TKA) from the Inpatient-only list in November.

This will effectively allow eligible Medicare patients to have the surgery in outpatient departments of local hospitals beginning this month.

The article also mentioned that CMS did not add TKA’s to its list of payable procedures at ambulatory surgical centers (ASCs).

This will give hospitals an important head start on a growing outpatient competitor lobbying hard for the agency’s blessing, the article stated.

CMS will continue to review ASCs safety and feasibility of total joint replacement, which is a signal that change is coming. If it does so, it will pose a threat to hospital revenue.

What this may mean for medical travel is that if the cost savings are significant from allowing outpatient, and eventually ASC total knee replacement, then outbound medical travel facilities catering to such clients will see a drop in patients choosing to go abroad for such surgeries.

To that end, the industry must monitor CMS’ position on ASCs and knee replacement, as well as determine if domestic hospitals are drawing away customers because the procedure can be done on an outpatient basis.

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GOP Tax Reform: Say Goodbye to the Middle Class

As a student of American Social history, I am acutely aware that for much of the 241 years of the Republic, the majority of the American people were not what we today would call “Middle Class.”

In fact, they were cash poor, dirt farmers, tradesmen, owning very little except what they could carry on a horse, mule, or in a wagon as they migrated west in search of better opportunities.

Until the New Deal, the Middle Class as we know it did not exist in such great numbers. True, there was a middle class in the cities and towns of the East Coast and Midwest, but most of them were descendants of immigrants from the 17th and 18th centuries, and rose steadily into the middle class as the nation’s economy shifted from a mercantile to an industrial economy in the first half of the 19th century.

Consider the following quotes from three US presidents regarding the power of money and corporations. You will notice that none of them are wild-eyed radicals in the least.

“I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country.”

Thomas Jefferson

“Mischief springs from the power which the moneyed interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges… which are employed altogether for their benefit.”

Andrew Jackson

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption in high places will follow, and the money-power of the country will endeavor to prolong it’s reign by working upon the prejudices of the people until the wealth is aggregated in a few hands and the Republic is destroyed.”

Abraham Lincoln

So it is no surprise that the Republican Party is ramming down the throats of the American middle class, a tax reform bill that will effectively wipe out the remaining members of the middle class, and redistribute the wealth to those making over $75,000 and those at the very top, the oft-mentioned 1%.

My fellow blogger, and unsuccessful Democratic candidate for County Legislator in upstate New York, Joe Paduda, wrote a very potent analysis of the GOP tax scam legislation. Yes, I did call it a scam, but that is not my word. Others have used it in the past few days in an effort to derail and stop it from passing.

Besides destroying the middle class, it will as Joe points out, bankrupt the health care system. Then we will have to go all the way to a single-payer system just to get the whole thing working again.

Here is Joe’s piece in its entirety:

The tax bill’s impact on healthcare or; If you like your cancer care, you can’t keep it.

        

The GOP “tax reform” bill will directly and significantly affect healthcare. Here’s how.

It removes the individual mandate, but still requires insurers to cover anyone who applies for insurance. So, millions will drop coverage knowing they can sign up if they get sick.

How does that make any sense?

Here’s the high-level impact of the “tax bill that is really a healthcare bill”:

The net – healthcare providers are going to get hammered, and they’re going to look to insured patients to cover their costs.

The real net – The folks most hurt by this are those in deep-red areas where there is little choice in healthcare plans, lots of struggling rural hospitals, and no other safety net.  Alaskans, Nebraskans, Iowans, Wyoming residents are among those who are going to lose access to healthcare – and lose health care providers.

Here are the details.

According to the Commonwealth Fund, “repeal would save the federal government $338 billion between 2018 and 2027, resulting from lower federal costs for premium tax credits and Medicaid. By 2027, 13 million fewer people will have health insurance, either because they decide against buying coverage or can no longer afford it.”

Most of those who drop coverage will be healthier than average, forcing insurers in the individual market to raise prices to cover care for a sicker population. This is how “death spirals” start, an event we’ve seen dozens of times in state markets, and one that is inevitable without a mandate and subsidies.

For example, older Americans would see higher increases than younger folks. Here’s how much your premiums would increase if you are in the individual marketplace.

So, what’s the impact on you?

Those 13 million who drop insurance, which include older, poorer, sicker people, will need coverage – and they’ll get it from at most expensive and least effective place – your local ER. Which you will pay for in part due to cost-shifting.

ACA provided a huge increase in funding for emergency care services – folks who didn’t have coverage before were able to get insurance from Medicaid or private insurers, insurance that paid for their emergency care.

From The Hill:

[after ACA passage] there were 41 percent fewer uninsured drug overdoses, 25 percent fewer uninsured heart attacks, and over 32 percent fewer uninsured appendectomies in 2015 compared to 2013. The total percent reduction in inpatient uninsured hospitalizations across all conditions was 28 percent lower in 2015 than in 2013. Between 2013 and 2015, Arizona saw a 25 percent reduction in state uninsured hospitalizations, Nevada a 75 percent reduction, Tennessee a 17 percent drop, and West Virginia an 86 percent decline.

If the GOP “tax bill” passes, hospital and health system charges to insureds (yes, you work comp payer) are going to increase – and/or those hospitals and health systems will go bankrupt.

What does this mean?

It means we of the middle class had a very good run, but the ruling class has spoken, and they want us to disappear, or at least shrink to the point that we become unimportant to their pursuit of greater wealth. Why else would the donor class of the Republican Party, the Koch Brothers, the Mercer family, Sheldon Adelson, and the rest of their donors threaten members of Congress with no more funds for their re-election if they fail to pass this bill?

There is a word for that, it’s called Extortion. And we are the sacrificial lambs.

Foreign Patients Get Liver Transplants in US Hospitals First

ProPublica, those lovely folks who published several articles some time back on workers’ comp, are at it again.

This time, they are focusing their ire on how foreign patients are getting liver transplants at some US hospitals ahead of Americans waiting for such transplants.

The story, published yesterday, was co-published with a local Fox station in New Orleans.

From 2013 to 2016, New York-Presbyterian Hospital gave 20 livers to foreign nationals who came to the US solely for a transplant, essentially exporting the organs and removing them from the pool of available livers to New Yorkers.

Dr. Herbert Pardes (I was familiar with his name from living in NY), wrote that, “Patients in equal need of a liver transplant should not have to wait and suffer differently because of the U.S. state where they reside.”

Dr, Pardes was the former chief executive, and is now the executive vice president of the board at New York-Presbyterian.

Yet, according to the story, Dr. Pardes left out NY-P’s contribution to the shortage, as stated above from 2013 to 2016.

These 20 livers represent 5.2 percent of the hospital’s liver transplants during that time, which was one of the highest ratios in the country.

ProPublica reported that unknown to the public, or to sick patients and their families, organs donated domestically are sometimes given to patients flying in from other countries, who often pay a premium. Some hospitals even seek them out.

A company from Saudi Arabia said it signed an agreement with Ochsner Medical Center in New Orleans in 2015.

The practice is legal, according to the story, and foreign nationals must wait their turn in the same way as domestic patients. The transplant centers justify this on medical and humanitarian grounds, but at a time when we have an Administration touting “America First”, this may run counter to the national mood.

The  director of the transplant institute at the Mount Sinai Hospital in New York, Dr. Sander Florman, said he struggles with “in essence, selling the organs we do have to foreign nationals with bushels of money.”

Between 2013 and 2016, 252 foreigners came to the US purely to receive livers at American hospitals. In 2016, the most recent year for which there is data, the majority of foreign recipients were from countries in the Middle East, including Saudi Arabia, Kuwait, Israel and the UAE. Another 100 foreigners staying in the US as non-residents also received livers.

At the same time, more than 14,000 people, nearly all Americans, are waiting for livers, a figure that has remained very high for decades, they report. By comparison, fewer than 8,000 liver transplants were performed last year in the US, an all-time high. National median wait time is more than 14 months, and in NY, the time is longer.

In 2016. more than 2.600 patients were removed from waiting lists nationally, either because they died or were too sick to receive a liver transplant.

All this is happening at a time when the party in power is seeking to take health care away from those who recently received care for the first time in a long time from the ACA, and at a time when the medical travel industry is focused not on transplant surgeries, but on boutique treatments and surgeries for wealthy or upper middle class Americans to go abroad for bariatric, plastic or reconstructive surgery, knee surgery, dental care, etc.

And yet, when the very idea of medical travel is broached in the medical community, it is disparaged and discouraged by physicians and others as unsafe, impractical, and not worth the effort, Obviously, it is well worth the effort on the part of foreign patients to come here and take organs meant for Americans, so why not allow Americans to take their organs?

Is it because the hospitals that supply these organs to foreign patients are making huge sums of money, and the poor schnook American with liver disease (or kidney disease, as in the case of yours truly) must die so that an American hospital can improve its bottom line?

It is high time to cut the crap and promote medical travel the right way and for the right reasons, not only for those who can afford it, but those who need transplants and can’t get them here.

That is the true nature of the globalization of healthcare…a two-way street.

 

Regulation Strangulation

The American Hospital Association (AHA) released a report that stated that there is too much regulation that is impacting patient care.

The report, Regulatory Overload Assessing the Regulatory Burden on Health Systems, Hospitals, and Post-acute Care Providers, concludes with the following assessment:

Health systems, hospitals and PAC providers are besieged by federal regulatory requirements promulgated by CMS, OIG, OCR and ONC, many of which are duplicative and cumbersome and do not improve patient care. In addition to the regulatory burden put forth by those agencies, health systems, hospitals and PAC providers are subject to regulation by additional federal agencies, such as the Department of Labor, the Drug Enforcement Administration, the Food and Drug Administration and by state licensing and regulatory agencies. They also operate under stringent contract requirements imposed by payers, such as Medicare Advantage, Medicaid Managed Care plans and commercial payers, which also require reporting data in different ways through different systems. States and payers contribute to burden through, for example, documentation, quality reporting and billing procedures layered on top of the federal requirements.
Regulatory reform aimed at reducing administrative burden must not approach the regulatory environment in a vacuum — evaluating the impact of a single regulation or requirements of a single program — but instead must look at the larger picture of the regulatory framework and identify where requirements can be streamlined or eliminated to release resources to be allocated to patient care.
In a previous post, Models, Models, Have We Got Models!, I said that from the beginning of my foray into the health administration world, I noticed that there were too many models, programs, and schemes dedicated to lowering costs and improving quality of care, that only raised the cost of health care and did not improve quality of care.
This is what I said then about all the models, programs, and rules promulgated by CMS over decades that have not made things better:
The answer was simple. Too many models, programs, rules, and so on that only gum up the works and make real reform not only impossible, but even more remote a possibility as more of these inane models are added to what is already a broken system.
So it seems that I was right even then, and now the AHA has proved it so. Why not scrap these models, programs, and rules and institute real reform…Medicare for All and be done with it?

A Deeper Dive into Medical Cost Rising for Lost-Time Claims

It is said, a picture is worth a thousand words, and I have ten pictures, courtesy of NCCI’s Barry Lipton’s presentation on that subject.

It was brought to my attention by my fellow blogger, James Moore, of J&L Risk Management Consultants. I met James back in February at the NCCI 2017 Data Education Program in West Palm Beach.

Mr. Lipton is the Senior Actuary and Practice Leader, and his presentation was called, “Medical Cost Trends Then and Now.

Yesterday’s posts regarding the slight increase in the average medical costs for lost-time claims only scratched the surface of the subject. I hope this post will dive deeper into it, so that we can see the whole picture.

In my first post from yesterday, “Slight Increase in Average Medical Costs for Lost-Time Claims, Part 1”, I discussed how physician costs and prescription drug costs impacted medical costs for lost-time claims.

On the issue of physician costs, Mr. Lipton showed that there was a decline in the 2015 medical payments per claim due to physician costs, but as the following chart proves, despite this decline, physician costs contribute a larger share of the total costs.

Chart 1.

Chart 6.

Source: NCCI Annual Issues Symposium 2017

According to James, the main reason for the reduction in costs is the physician utilization per claim. Even though it is only a3% reduction, it is significant, James says, in a time of upward spiraling medical costs. Chart 2 bears this out.

Chart 2.

Chart 7.

Source: NCCI Annual Issues Symposium 2017

The second part of my post yesterday, “Slight Increase in Average Medical Costs for Lost-Time Claims, Part 2”, looked at the steady rise of the average medical cost for lost-time claim.

If we compare the chart from yesterday’s post to the one Mr. Lipton presented, we will see that his chart does show increases and decreases over time in the average medical costs per lost-time claim, but my chart indicates that ever since 1995, it has been rising steady.

Both charts, do show that the average medical cost per lost-time claim is hovering around $30,000, and if the numbers are consistent with ones for earlier years, represents almost 60% of the total claims cost.

My Chart.

Chart 2.

Chart 3.

Chart 4.

Source: NCCI Annual Issues Symposium 2017

To examine this in greater detail, Mr. Lipton broke down the Accident Years into three separate periods and slides, to show the change in medical cost per lost-time claim. He compared the change in Personal Health Care (PHC) Spending per Capita with the Medical Cost per Lost-Time Claim.

In the period, 1995-2002, the average growth rate (AGR) for WC was 9%, and the AGR for PHC was 6%. In the next period, 2002-2009, WC AGR was 6%; PHC AGR was 5%, and finally, in the last period, 2009-2015, the WC AGR was 1%, while the PHC AGR was 3%, as seen in chart 4.

Chart 4.

Chart 10.

Source: NCCI Annual Issues Symposium 2017

To understand what was driving the decline in Accident Year 2015, Mr. Lipton identified six different drivers, as indicated in chart 5.

Chart 5.

Chart 8.

Source: NCCI Annual Issues Symposium 2017

Finally, Mr. Lipton discussed how hospital costs contributed to medical cost per lost-time claims by highlighting the difference between inpatient and outpatient costs, which are rising.

The following chart looks at the four years prior to the 2016 Accident Year, 2012-2015.

Chart 6.

Chart 9.

Source: NCCI Annual Issues Symposium 2017

In 2012, Hospital Inpatient Paid per Stay amounted to $19,514, in 2013, it rose to $22,944 (18% increase), in 2014, it was $24,558, or a 7% increase, and last, in 2015, it was $25,320, or 3% increase over the previous year.

As for Hospital Outpatient Paid per Visit, the number are considerably lower for each year when compared to Inpatient Stays, but nonetheless have been rising.

So perhaps this, at the end is why the average medical cost per lost-time claim has been rising over a period of over twenty years, from 1995 to 2015.

I wrote to James last night when I saw his recent posts on this presentation, and he responded that we are both correct in our analysis, but looking at it from different points of view.

My conclusion after reading this presentation and my discussion with James suggests to me that there are two things going on here. One, when a worker is injured and receives medical care, unless and until he or she goes to a hospital, the best way to lower costs is through what James calls one of his six keys to reducing workers’ comp costs. One of those keys is medical control by the employer, which James said reduced cost by 75%.

But I also realized that when an injured worker goes to the ER or an Ambulatory Service Center as an Outpatient, has an Inpatient stay, that this is where the medical costs go up.

Naturally, Workers’ Comp medical spending is only a fraction of the overall health care spend of the US, and as costs for health care in general rise, so too does costs in workers’ comp.

So, while many have argued or shown that they can lower costs on the front end, from time of injury to return to work for most claims where no surgery is required, one of the largest reasons for the steady rise in the average medical cost per lost-time claims is hospital costs.

On this, both James and I agree. However, it is important that many in the industry see this as well. Keep thinking that it will change by doing this or that has not worked, the numbers prove that. Maybe it is time for something out of the box.

Slight Increase in Average Medical Costs for Lost-Time Claims, Part 1

It’s that time of the year again, the time when I review the NCCI State of the Line Report.

As an added feature this year, I am including a look at the Medical Cost data, a new subject which I heard about back in February, when I attended NCCI’s 2017 Data Education Program.

First up is the distribution of medical costs by category. NCCI supports regulatory and legislative initiatives by providing State Medical Data Reports using data from their Medical Data Call.

For Service Year 2015, the distribution of payments across the various categories is based on data for all jurisdiction where NCCI provides ratemaking services, except Texas.

The key takeaway, as the following table will show, is that in 2015, physician costs were almost 40% (38%) of total medical costs, combined inpatient and outpatient hospital costs were approximately 30% (31%), and prescription drug costs were about 11%.

Table 1.

Table 1.

Source: NCCI’s State Medical Data Reports

Drilling down further, the distribution of physician costs for Service Year 2015, indicates that the bulk of the costs were associated with physical medicine, 30%, and surgery was associated with 24%, 10% associated with radiology, as shown in Table 2.

Table 2.

Table 2.

Source: NCI’s State Medical Data Reports

Getting even further, the next area the report covered was prescription drug payment changes over time.

The key takeaways here are the following:

  • In 2011, generic equivalents represented 47% of payments for all drugs prescribed. This increased to 58% by 2015, and driven largely by brand-name drugs.
  • Repackaged drugs now represent a small portion of overall drug payments because several states have implemented regulation on reimbursement.

Table 3.

Table 3.

Source: NCCI’s Medical Data Reports

NCCI analyzed the impact of prescription drug fee schedules on the cost of drugs by classifying states into one of four categories. States that had fee schedules were classified as Low, Medium, or High, based on the size of the Average Wholesale Price (AWP). The fourth category were states without a schedule.

The key takeaways here are:

  • Transitioning from not having a schedule to a low-fee schedule significantly reduces prices for WC prescriptions
  • Moving from no schedule to a high-fee schedule may increase drug costs, as shown in the following chart.

Chart 1.

Chart 1.

Source: NCCI’s Medical Data Reports

NCCI also looked at physician payments as a percentage of the Medicare reimbursement rate. In most states, they said, WC physician services are subject to fee schedules, just like the ones in group health and Medicare.

One way to measure physician costs across the states is to compare WC payments to the Medicare reimbursement rate.

The key takeaway from this is:

  • Prices paid relative to Medicare vary widely, from about 100% (Florida – 101%) to over 250%
  • Of the five jurisdictions with the largest percentage, all but Alaska (263%) are currently operating without a fee schedule
  • Countrywide the average is 150%

What does this mean for you?

While there are some positives in these numbers, especially with the cost savings from going to a low fee schedule for drugs, and an increase in the use of generic over brand-name drugs, and a decline in the percentage of repackaged drugs, medical costs are still very high for workers’ comp.

In the next post, I will look at the medical lost-time claim severity.

H-1B Visa Order To Limit Number of Foreign-Born Doctors

Before most of the Risk Management and Workers’ Comp industry goes to Philadelphia for next week’s Risk and Insurance Management Society (RIMS) annual conference, I want to share an article on Kaiser Health News about what the recent executive order on H1-B visas will have on healthcare, and by extension, workers’ comp.

I wrote about this two weeks ago when I said that the travel ban will affect the physician shortage in the United States.

According to Kaiser, limiting the number of foreign doctors who can practice in the US could have a significant impact on certain hospitals and states that rely on them.

A study in JAMA found that more that 2,100 US employers were certified to fill nearly 10,500 physician jobs nationwide in 2016, representing 1.4% of physician workforce overall.

States such as New York, Michigan, and Illinois account for most of the H1-B visa applications for foreign physicians. a third of the total.

North Dakota, on the other hand, had the most applicants as a percentage of its workforce, or 4.7%.

While the focus of the executive order was to clamp down on the loopholes in the program that allowed tech companies to hire foreign workers for high skilled jobs that Americans could take, it will also have a negative effect on how patients will receive care in some US hospitals.

And coupled with the fact that the process of getting to practice here without an executive order is difficult and time-consuming, means that both general health care and workers’ comp patients may not be able to get necessary treatment due to the predicted physician shortage.

So while general healthcare can offer an alternative in the form of medical travel, it is high time that work comp does the same.

Or do you really want your claimant patients to wait months before getting needed surgery or other medical procedures?