Risk Managers

As I’ve been reporting for several months, Congressional Democrats and the President are working hard to increase reimbursement for cognitive services by up to 10%.

This would go a long way towards fixing what is perceived to be a core problem with US health care – overly generous compensation for procedures (surgery, imaging, etc) leads to over-utilization of those procedures, while under-reimbursement for office visits and other ‘primary care’ services results in a shortage of physicians willing to do primary care.

This morning’s New York Times features a headline story about the conflict in Washington, noting that the Obama Administration is very concerned about the shortage of primary care docs. The solution being discussed in DC is to get more applications into med schools.

Wrong answer.

The ‘right’ answer is staring us in the face – there are too many specialists, physicians who have already graduated from medical school and have lots of experience and training. It would be far easier, faster, and cheaper to re-train these physicians to take on more primary care responsibilities, albeit primary care with an orientation towards their specialty. Would this be difficult, and expensive, and meet with strong resistance from those docs?

Absolutely. But on balance it would be much easier, and faster, than waiting at least eight years for the supply of primary care docs to begin to meet anticipated demand.

Compensating docs more for primary care would potentially have another effect; it might reduce the volume of procedures performed, as specialists would also benefit from the higher compensation for evaluation and management services. I wouldn’t bet too much on this, as docs – like the rest of us – won’t change dramatically overnight. That said, increasing compensation for primary care service codes (the 99xxx CPTs) would help take a bit of the sting out of reduced reimbursement for surgery etc.

What does this mean for you?

A lot.

Most network contracts are based on Medicare’s RBRVS; if the Feds change, your provider compensation will too. Think about the potential impact, and think deeply. The trickle-down will likely cause specialists to seek higher network reimbursement for two reasons – first the base from which their reimbursement (RBRVS) has declined, and second, they’ll want to make up their lost revenue from Medicare by increasing reimbursement from private payers.

As the biennial Texas legislative session nears its end, it looks like the legislature may pass a bill that would have a dramatic effect on workers comp PPO networks.

According to WorkCompCentral (subscription required):

“HB 223 would regulate “discount brokers” that are engaged in (for money or other consideration) “disclosing or transferring a contracted discounted fee of physician or health care provider.” hb223

A broker could not transfer a physician’s or health care provider’s contracted discounted fee or any other contractual
obligation unless the transfer is authorized by a contractual agreement that complies with the provisions of the bill.

Those provisions include notifying each physician and provider of “the identity of the payers and discount brokers authorized to access a contracted discounted fee of the physician or provider.”

The notice must be provided at least every 45 days through “electronic mail, after provision by the affected physician or health care provider of a current electronic mail address” and posting of a list on a secure Internet website.”

Now that’s a huge change, one that would effectively stop much of the rental network business cold. The dirty secret of the work comp PPO business (well, one of the dirty secrets) is that networks don’t have direct contracts with providers in all states – every ‘national’ PPO uses another network’s contracts in at least a few jurisdictions.

Docs sign contracts in return for direction – they are trading a discount for the promise of more volume. Yet few networks actually drive any significant volume to the vast majority of their contracted physicians.

We’ve been seeing a rapid rise in the volume of litigation from providers contesting reduced reimbursement due to PPO contracts, with three payer clients reporting a significant upsurge in the last twelve months.

What does this mean for yuo?

Find a better, and more sustainable, way to reduce medical expense. The days of cutting costs by slashing provider reimbursement on the basis of some flimsy network contract are rapidly ending.

Editor’s Note: This was written by Joe Paduda

The Brownsville Independent School District is seeking competitive proposals for group health insurance – Specifications will be posted soon on: http://www.bisd.us/PURCHASING/bids_for_vendors.htm

To the best of our knowledge, 100% of Texas school districts self-fund their group medical plans (TRS ActiveCare is a self-funded plan), yet 100% of Texas schools fully-insure their athletic insurance. We are wondering why. If districts save money through self-funding their medical plans, why cant they save money on student accident plans as well?

Basic student athletic insurance offers limited benefits. In addition to this basic cover, many districts purchase catastrophic cover starting at $25,000. It seems to us that it makes perfect economic sense to self-insure the limited benefits portion of the program and purchase stop-loss cover with a $25,000 retention. We have identified several carriers that will offer specific stop loss for student accident plans.

Districts can partner with area medical providers for the best cover at the lowest cost. After all, medical providers in the community are school district taxpayers too.  They would support such a partnership.

One possibility to consider would be to fund an athletic insurance program through a captive with more than one school district participating through an interlocal agreement. Participating districts would then be able to participate in underwriting profits and maintain control of plan benefits and costs. An interlocal agreement would preclude districts from bidding out their student accident insurance every year.

An agent solicitation from a major health insurance carrier, sent out this week to agents throughout the United States, announces a $20,000 cash bonus to those agents who sell 20 group health insurance cases between April 1, 2009 and December 31, 2009. And, if the agent sells only 10 groups, the bonus is $10,000.

This is a powerful incentive to place business with this carrier, over another carrier wherein little or no bonus is offered. A broker, supposedly representing the client with whom he works for, may not disclose this arrangement. A conflict of interest would be apparent it would seem.

Acorn will surely get wind of this and organize a bus tour  to homes of participating agents and brokers.

Congress began “debate” yesterday on health care. Pundits predict a Bill will be crafted by no later than June 1 upon which Congress will act.  We predict passage of a sweeping national health care scheme that will bring this country firmly into an expanded welfare state.

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