Tag Archives: Medical Tourism

The Fork in the Road in Medical Travel

Returning to the main theme of this blog, I came across the following insightful article by Ruben Toral last week that posed the question, “Is Medical Tourism Dying a Slow Death?”

As someone who has been interested in opportunities in Medical Travel for some time, and  disappointed in not being able to elicit interest in my idea for Medical Travel, I was interested in seeing what Ruben had to say, and to see if it measured up to my views of the industry, as I know it.

According to Ruben, the industry exhibits the traits of a typical product/business cycle, whereby the first and fast movers establish leadership by developing and commercializing the concept, then late adopters pile in to get in on the action.

He goes on to decry the same speakers at every medical tourism event around the world talking about the same things, which is enough to hit the snooze button and go back to sleep.

He also laments the lack of innovation, and says that key players are just trying to manage the slow growth rather than investing in the next wave.

VC investors, Ruben says, talk of getting burned on medical tourism investments that simply cannot scale like other businesses, because, as they quickly learn, healthcare is a different animal than retail and you burn through a lot of cash fast trying to buy eyeballs and audience.

And investment analysts ask the same question after pouring through hospital financial reports and see how hospitals are managing and protecting profit margins: “Where’s the growth?” And even large meeting and events companies are not “flogging medical tourism” because attendance and interest is way down.

So, is this the beginning of the end or the inflection point for medical tourism?, Ruben asks. For his part, he does not know, but if it is not the beginning of the end, or an inflection point, it is most certainly a fork in the road.

Where it goes from here is as good a guess as mine and Ruben’s, but it is up to those who are serious and dedicated to growing the industry to regroup and start again to build interest and enthusiasm for medical travel, and to address some of the glaring issues facing the industry.

But that won’t happen until there are changes within and without the industry…in technology and in strategy.

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Workers’ Comp Medical Benefits Represent More Than Half of Employer Costs

The National Academy of Social Insurance (NASI) recently issued its 20th annual report on Workers’ Compensation: Benefits, Coverage, and Costs. The study provides estimates of workers’ compensation payments—cash and medical—for all 50 states, the District of Columbia, and federal programs providing workers’ compensation.

Much of the study, as reported today by Workers Comp Insider.com, deals with the decrease in benefits as a percentage of payroll, an issue outside the purview of this blog.

But I was intrigued by the graphic at the bottom, which stated that thirty-three states spent more than half their workers’ compensation benefits on medical costs for injured workers.

And the share of total costs of workers’ comp benefits that are medical costs rose from 1980 to 2015, from 29% to 50%.

WC Benefits

While the study does not provide any insight into what that 50% represents, it is conceivable to assume that a good part of it involves surgery to repair the injury the worker suffered.

So, if this study is right, then the only way to begin to bring down the medical costs in workers’ comp is to look at alternatives that as of yet have not been tried because of lack of will, or a belief that alternatives are not realistic, or because we still cling to the notion that our healthcare system is the best in the world. and no one else comes close.

As Puck said, “Lord, what fools these mortals be.”

Follow-up to Insurers Jacking Up Premiums Ahead of End of CSR’s

Health Affairs blog posted the following stating that if the Administration terminates cost-sharing reduction payments (CSR’s), the states can use 1332 waivers to fund their own.

Here is the article in full by Steven Chen:

One of the main causes of instability in the Affordable Care Act (ACA) health exchanges, aside from the constant stream of repeal-and-replace efforts, is the uncertainty over the future of the cost-sharing reduction (CSR) payments. CSR and the advanced premium tax credits (APTC) are subsidies created by the ACA to enhance the affordability of the qualified health plans sold on the health exchanges. Whereas the APTC reduces the cost of premiums to beneficiaries with incomes between 100 and 400 percent of the federal poverty level, CSR lowers the out-of-pocket expenses of beneficiaries with incomes between 100 and 250 percent of the federal poverty level.

Unlike the APTC, whose legal status is not in question, the U.S. House of Representatives had challenged the appropriation status of the CSR payments by filing a lawsuit against the Obama administration, thereby creating doubts about CSR’s future. In addition to the said litigation, the current administration has compounded the uncertainty by often withholding the CSR payments until the 11th hour and threatening to terminate the payments completely.

This uncertainty comes at a cost. Some insurers have cited the uncertainty as one of the reasons for their exodus from the health exchanges while others have referenced the uncertainty as a source for their 2018 premium hikes. While the extent of the premium increase is yet to be determined, a study by the Kaiser Family Foundation estimated that without CSR payments, the insurers would need to raise silver plan premiums by about 19 percent.

Can States Step In?

What can States do if the administration follows through on its threat to terminate the CSR payments? A simple solution is for the States to provide the CSR payments themselves. In addition to making health insurance affordable, CSR payments are cost effective: The provision of CSR payments by the Federal government lowers the silver plan premiums offered on the health exchanges because the insurers are compensated for the reduced cost-sharing they are required to provide. Without the CSR payments, insurers will raise silver plan premiums—including the premiums for the benchmark silver plans—to offset their losses, which leads to higher APTC for all eligible beneficiaries, ultimately resulting in greater overall Federal expenditure. The aforementioned Kaiser Family Foundation study quantified this effect by demonstrating that if CSR payments were terminated in 2018, although the Federal government would save $10 billion from not making the CSR payments, it would have to pay an additional $12.3 billion in APTC, thus increasing overall Federal expenditure by $2.3 billion.

Creating a State-administered CSR mechanism will undoubtedly require expenditure from the State. While some will argue that the limited resources available in State budgets would render the idea all but theoretical, it would be beneficial to examine how States can use Section 1332 of the ACA to fund—and potentially profit from—providing CSR.

The California Example

The intricacies of a Section 1332 State Innovation Waiver (1332 Waiver) have been explained in depth elsewhere, but on a fundamental level, Section 1332 of the ACA permits a State to apply for a waiver to modify or waive certain provisions of the ACA, such as the individual mandate and the establishment of health exchanges, among others. The waiver application must satisfy four statutory constraints—comprehensiveness, affordability, scope of coverage, and will not increase the Federal deficit—but should an application meet all the criteria, the State is eligible to receive any APTC or CSR that the State would have otherwise received without the 1332 Waiver. In layman terms, if a State can create a system that meets the Federal standard at a cost that is the same or less than the existing Federal model, the State gets to keep the money the Federal government would have otherwise spent.

Using California as an example, Covered California showed that the termination of CSR payments by the Federal government would cause insurance premiums for silver plans in the individual market to increase by 16.6 percent in 2018. The study also showed an inverse relationship between CSR and APTC: The Federal government paid $750 million in CSR payments in 2016, but if it were to defund CSR payments, not only would it not receive any savings, it would incur an additional $976 million in APTC spending. Using these figures as illustration, if the Federal government had terminated CSR payments in 2016 and if California had provided CSR payments through a 1332 Waiver, under this scenario California would have to pay $750 million in CSR payments, but it would receive $976 million from the Federal government in lost APTC payments—payments California would have otherwise received without waiver—ending up with a total net profit of $226 million! California could use the profit to create a reinsurance program to bolster its health exchange, to increase payments to providers, or it could spend the excess on non-health related projects like fixing potholes and infrastructure because there is no restriction on the usage of the excess pass-through funding.

Even without a lengthy legal analysis, it is obvious this waiver satisfies all the statutory constraints: (1) since the waiver does not modify the Essential Health Benefits or any coverage requirements, it meets the comprehensiveness test; (2) since the waiver would lower premiums and out-of-pocket costs, it would actually improve affordability; (3) since the waiver would improve affordability, it is expected to increase scope of coverage; and finally (4) the numbers show that the waiver will not increase the Federal deficit. In fact, it should be intuitive why this proposal would meet the requirements of the ACA — it was built to be part of the ACA to begin with.

While the Administration isn’t obligated to approve any waiver applications, a 1332 Waiver application that creates a State-operated CSR payment mechanism—and uses the excess pass-through funding to finance a State reinsurance program—is conceptually consistent with the Administration’s emphasis on enhanced State flexibility and empowerment. The first executive order by the Administration, for example, promised to provide greater flexibility to the States under the ACA. Moreover, the Secretary of Health and Human Services recently sent a letter to State governors encouraging the application of 1332 Waivers and even provided a checklist to help expedite the process.

Given the cost-saving advantages of CSR payments, it is puzzling that the Federal government would consider terminating this effective subsidy. In addition to the money the Federal government would save, forcing States to spend the time and expense to develop and administer separate CSR operations also argue against ending Federal CSR payments. Indeed, even Republican members of Congress have begun to warm to the idea of continuing CSR payments. However, should the Federal government decide against it, States have a viable, and potentially profitable, means of administering CSR payments to stabilize their insurance markets.

 

Cross-Border Dental Care in Mexico

On Sunday, NBC Nightly News ran a video report on dental care in Los Algodones, Mexico, south of the border from Arizona, and west of Yuma.

According to the report, during the winter months, up to 7,000 Americans travel to Los Algodones for dental care.

Los Algodones, also known as “Molar City”, is the self-proclaimed dental capital of the world. While that sounds like hype, I can tell you from personal experience that it is not the only town on the border where one can find dozens of dental offices.

When I presented at the 5th Mexico Medical Tourism and Wellness Business Summit in 2014, I visited a town east of Reynosa called Nuevo Progresso where I saw some of the dental offices, along with some of the other attendees.

Here is the video from NBC.

http://www.nbcnews.com/widget/video-embed/1018704963518

And here are some pictures from Nuevo Progresso.

I took these pictures in a small medical center on the main street of Nuevo Progresso, just over the border from Texas. To the left of the picture on the left, is the bridge crossing the Rio Grande (Rio Bravo) into the US.

And the people I saw on the street were not Mexicans, they were Americans.

Still think medical travel is a stupid and ridiculous idea? Try telling it to the thousands who go across the border.

Trumpcare and Medical Travel: What Will Happen

The following infographic shows what will happen to the US healthcare system when the Senate rams the ACHA down our throats, as many are indicating will occur because McConnell and a group of GOP Men are hiding behind closed doors and won’t even tell their own party what’s in the bill they are writing.

What this will mean for medical travel is not hard to figure out. For some, it will offer an opportunity to seek lower cost medical care due to premiums that will increase and costs rising as well.

This will be especially true for self-insured employers who will want to save money by offering this to their employees.

Here is the infographic:

fa97feb3-c0f5-4fdb-9c79-6cfe82add29e-original

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.

Infographic on Mobile Health

Here’s an infographic courtesy of URAC. What will this mean for workers’ comp, health care and medical travel?

Millennials and Mobile.png