By Joe Paduda, Principal, Health Strategy Associates
Last week we warned about the three cliffs – Medicaid disenrollment, COVID funding cutbacks, and the staffing crisis – all slamming hospitals and health systems at pretty much the same time.
The impact is bad now and will get increasingly worse – facilities’ costs will rise, quality will be impacted, and access limited.
Remember workers comp is generally a very good payer – even outside the worst states (Florida, we are looking at you). Facilities don’t have to worry about deductibles, care management is pretty light, bill review (in almost all cases) is way overmatched by health systems’ much-more-effective revenue cycle management (RCM), fee schedules are pretty lucrative (except in a handful of states) and PPO discounts are not what they used to be.
So…here’s what you can do:
- Ignore PPOs’ discounts and claims of “savings” – they are mostly pure BS. Instead, focus on what the care actually costs as a percentage of Medicare reimbursement (this provides a standard comparator). Florida, California, and other states have useful data…if it isn’t available, compare what you are paying to Medicare. Then identify the facilities with the most reasonable pricing, and…
- Assess their quality, patient engagement/satisfaction, clinical outcomes, and patient safety. Cost is one part of the picture, but these other metrics likely have a lot more to do with recovery and return to functionality. Next…
- Meet with the ones that meet those criteria and discuss what they want and what you need. They will likely note that comp is a tiny fraction of health system revenue, to which you can reply “sure, but we are the most profitable payer you have – by far.” Historically work comp generates more than 15% of the typical facilities margin…That is a lot of bargaining power.
- You will have to be nicer and easier to work with, perhaps reducing UR burdens and paying faster. That’s fine…in return your patients will get better care at better facilities.
Of course, not all your patients will be going to the facilities they should be. So, you’ve got to backstop this with a much more effective bill management approach. Whether you’re an employer, carrier, or claims administrator, it is highly doubtful your bill review operation has anything like the systems and software, expertise, training and effectiveness of facilities RCM departments.
Yeah, I know, your BR vendor checks for upcoding and unbundling, looks for inappropriate modifiers (remember the 59 modifier mess?), tries to tie the billed services to the body part and injury and all that stuff – but they’ve got a proverbial knife in a gun fight.
Where’s the payment integrity process? Who are they using, why, and what are the results? Are they really able to identify codes that should not be separated out from others, and how do you know that?
I could go on, but you have your day job to do. Suffice it to say you’re headed for the cliff, and unless you want to reprise Thelma and Louise, you’d best grab control of the wheel.
About Joe Paduda
A nationally recognized expert in medical management and pharmacy, Joe Paduda is the principal of Health Strategy Associates, a consulting firm that works with workers’ compensation insurers, employers, medical and pharmacy management companies, healthcare providers, government entities, and investors. He also conducts industry research and writes the thought-provoking www.ManagedCareMatters.com.
In addition, Paduda is president of CompPharma, LLC, a consulting firm dedicated to analyzing and improving pharmacy programs in workers’ compensation. He has conducted an annual survey of pharmacy benefit management for 16 years.
Before starting his consulting business in 1997, Paduda held executive positions with major insurers, including Traveler’s, United Healthcare and Liberty Mutual. He has a Master of Science degree in Health Management from the American University and earned his bachelor’s from Syracuse University.
Comp Laude recognized Paduda as Industry Leader in 2022. He is also the recipient of the IAIABC’s President’s Award for his work in identifying solutions to opioid misuse in workers’ comp. He is an advisor on a research project comparing the effectiveness of two state payer strategies to prevent unsafe opioid prescribing, which is funded by the U.S. Department of Health and Human Services’ Patient Centered Outcomes Research Institute. Paduda also serves on the Board of Directors of the Commonwealth Care Alliance, a Massachusetts-based not-for-profit healthcare organization serving individuals who are dually eligible for Medicaid and Medicare.
He can be reached at jpaduda@healthstrategyassoc.com or 203-314-2632.
About Health Strategy Associates
Based in Plainfield, New Hampshire, Health Strategy Associates consults with insurers, employers, medical management companies, health care providers, and investors. Its highly customized services encompass research and competitive analysis along with operational, marketing and sales improvements. For more information, please see www.healthstrategyassoc.com.