Friday catch up

Another deal goes down, more clarity around IMRs, more data on the impact of the Affordable Care Act – it’s been busy.

First up, Select Medical’s purchase of Concentra.

In what looks to have been a pre-emptive move, Select Medical announced its intent to purchase occ med clinic firm Concentra from parent Humana. (btw great reporting by BI’s Stephanie Goldberg; she has more detail than any other source.)  Concentra, which has about 300 stand-alone clinics and 240+ on-site clinics, claims it handles 14% of all occupational injuries (they refer the more complex ones to non-Concentra providers).

The acquisition makes strategic sense for Select as it adds primary care to its current portfolio of physical therapy, rehab, and long-term care operations.  It also expands Select’s geographic reach considerably, albeit in a different line of business.

We will track the integration of Concentra and Select going forward; expect to see more efforts on the part of Select to work directly with payers, and a stronger negotiating stance with networks now that they have more market clout.

ACA implementation

A big concern and one certainly noted by opponents of ACA was the purported cancellation of large number of employer-sponsored health insurance plans that failed to meet ACA coverage standards.  New data indicates less than 1% of employers surveyed reported cancellations due to coverage standards.

In contrast, somewhat less than 5% of individual policies were canceled due to coverage requirements.

A Robert Wood Johnson Foundation report (thanks to AthenaHealth) report indicates docs are not getting swamped with newly-insured patients seeking primary care.  Key findings include:

  • New patient visits to primary care providers increased from 22.6% of all appointments in 2013 to 22.9% in 2014.

  • The percentage of visits with patients with complex medical needs decreased from 8.0% of appointments in 2013 to 7.5% in 2014.

So far, doesn’t look like primary care providers are overwhelmed – HOWEVER that is national data, and things certainly vary from region-to-region.

While primary care isn’t being overloaded, the health care delivery system is undergoing wrenching changes – with small, safety-net hospitals probably the most affected. Expect to see closings, consolidation, and takeovers as these most-vulnerable providers lacking scale, resources, and brand find they can’t survive.  For a glimpse into the near-term future, track what’s happening in California.

Work comp

The California State Fund is growing, as the market hardens and rates increase in the Golden State.  California is a bit of an anomaly as the market appears to be softening somewhat in the other 49, but a 52% increase in earned premium indicates the State Fund’s moves to rationalize pricing via tiers along with other insurers pulling back from California is driving more business to the Fund.

Drugs

Finally, great piece from AIS’ Lauren Flynn Kelly on pharmacy’s biggest cost drivers - spoiler alert – the top two are Hep C drugs and compounds…

Enjoy your weekend!

ProPublica’s slanted “reporting” is a public disservice

After several attempts to get the ProPublica and NPR reporters working the work comp beat to see both sides of a very complex “system”, better understand the drivers and dynamics, and correct their errors publicly, I’m giving up.

Clearly, they don’t want to hear anything that doesn’t agree with their superficial and clearly biased view of the work comp system, are quite willing to distort and misuse industry data to support their position, and have an agenda they are determined to promote, damn the facts.

The latest screed from PP continues what is by no measure “reporting”, but rather a bald-faced advocacy effort using anecdotes in an attempt to indict an entire system, to simplistically and cynically post pictures of terribly injured workers to get readers to blame the awful insurance companies, to distort and misuse data to promote their ideological position.

I’m going to elaborate on their misuse of NCCI and NAIC data to tout the high financial “returns” of the work comp system next week; for now I’ll focus on the employer direction issue.

In the original Demolition article, reporter Michael Grabell said:

In 37 states, workers can’t pick their own doctor or are restricted to a list provided by their employers. [italics added for emphasis]

That is categorically false.  I sent a detailed explanation of why and where this is false, provided the background documents from WCRI, and followed up.

Did he correct the original article?  No.

Did he update it and note the mistake?  No.

Did he admit his initial statement was wrong, even in a private message? No.

However, in his latest polemic, he states:

37 states now restrict injured workers’ ability to choose their own doctors. Green states [citing a graphic] allow employers and insurers to choose workers’ doctors, at least initially. Blue states restrict workers to doctors approved by their employer, state, or insurer [italics added for emphasis] or to those in their employers’ managed care plans.

This isn’t a minor oversight or wordsmithing; Grabell’s reporting has been an attempt to show how the work comp system is slanted in favor of employers, and his mischaracterization of WCRI reports clearly is intended to support his position.

There’s something more insidious here.  Grabell is attempting to show that somehow workers choosing their doctors is better, that those awful employers and insurers are just out to screw the worker.

In the vast majority of cases, that’s utter bullshit. (sorry, no other way to describe it). And if Grabell had actually wanted to get the story right, and not just promote his ideological position, he would have talked with employers who are doing everything they can to identify the best docs and get their injured workers to those docs.

In emails and conversations I pointed out to Grabell that the reason employers want control is to prevent injured workers from being harmed by profit-seeking physicians, and suggested he look into physician dispensing of opioids, especially in Florida; the Drobot case where hundreds of workers reportedly received horrible care; and other examples (Illinois prison guards) where profiteering physicians have gamed the system, harmed workers, and cost employers and taxpayers millions.

And I heard…crickets.

What does this mean for you?

This isn’t reporting, it is advocacy.

37 States Now Restrict Injured Worke Ability to Choose Their Doctor

Think about this…

There’s a driverless car on the way from California to the East Coast - today.  Right now.

As of now, the computerized Audi is three days into the trek; using “four short-range radars, three vision-based cameras, six lidars, a localization system, intelligent software algorithms and a full suite of Advanced Drive Assistance Systems” to navigate safely and efficiently on city streets, highways, parking lots, and all manner of other paved surfaces.

This isn’t just a “wow that’s cool” thing.

It portends huge changes in employment in this country – and others.

Traffic accidents kill about 32,000 people a year and injure over 2 million more. Property damage is in the scores of billions of dollars.

So, the computers driving vehicles don’t have to be perfect – they just have to be better than we texting, drinking, tired, distracted, angry, dumb, oh-so-human humans.  Doesn’t sound like much of a challenge for devices that crush we humans in chess, medicine, and Jeopardy

There’s no question – none at all – that automated transport will dominate within two decades – and will be common far before then.  Here’s my superficial sense for what that means.

  • millions of jobs are going away – drivers, body shop techs, spare part manufacturers, auto adjusters, claims personnel. There are 2.4 million truck drivers…
  • some jobs will be created – programmers, radar experts, robot polishers, things I can’t even conceive of.

What does this mean for you?

What’s going to happen to those newly-unemployed? Where are they going to get new jobs?  What will those jobs pay? If a worker is about to be computerized out of a job, are they going to be more likely to file a work comp claim?

Can California’s comp system be fixed?

David Deitz, MD PhD was last up at CWCI, his task to bring it all together by asking an apparently simple and straightforward question:

What can California learn from Washington?

Or put another way, “Can California’s workers comp system be fixed?”

Possibly.

First off, there still isn’t much of a focus on quality of care in California.  Outcomes in workers comp are still worse than in group health – despite more care for many of the same conditions.  Many state systems still rely on judicial, administrative, or otherwise “non-medical” authorities to make decisions about what are essentially medical issues; fortunately California does not. Cue the IMR complaints…

That’s good news; however just by virtue of being a work comp patient, things aren’t so good. A 2005 JAMA-published analysis indicated 83% of studies (175 out of 211) found that just being a WC claimant was associated with worse outcome after surgery.

There’s a lot of research and analytics and reporting in the non-workers ‘comp medical world related to outcomes, costs, and cost effectiveness, with “a lot” especially true when compared to the paucity of such research in workers’ comp outside of L&I, CWCI, and a couple other sources.

Dr Deitz referred to a “massive number of care improvement initiatives that are going on throughout the health care system” (paraphrasing), a trend that will continue with or without, ACA. Again, this may help work comp as better care = better care for work comp too + a healthier population.

David also noted the questions we are encountering in workers comp are nowhere to be heard in the real world; there are no questions about evidence-based medicine in group health.  EBM is embedded in the very fabric of health care contracting, delivery, measurement. It is accepted fact, a core operating principle, fundamental. And the work comp systems would benefit immensely from a healthy dose of EBM.

One supporting data point is what’s happened in Texas, where they named a Medical Director and adopted guidelines, strong UR, formularies, EDI, and measurement of results.  While Texas isn’t perfect, it’s gotten a lot better.

Unfortunately along with Washington, Texas is one of only two states that has made significant progress in adopting changes that have significantly improved medical care delivered to injured workers.  However, it’s not for lack of opportunity.  Dr W Brose’s HELP Pain Medical Network is just one source of high-quality, workers’ comp-specific and relevant data on treatment outcomes.

The money quote – “workers’ comp is the most costly and inefficient way to deliver medical care that humankind has ever invented.”

And care improvement is possible in WC but requires systematic reform.

We have a system that is inefficient, very expensive, and delivers poor quality care.  That has to change.

Dr Deitz’ final point – improvements in workers’ comp medical care MUST happen.

 

 

 

Poor quality of care in work comp and the impact on SSDI and medicare

The estimable Gary Franklin MD, Medical Director of Washington Labor and Industry, weighed in with passion and precision at CWCI; Gary’s message was simple and straightforward:

Workers injured on the job get worse and worse and worse, unlike people with the same injured hurt outside employment.  Why? They become chronic pain patients.  Preventing the transition from acute and sub-acute pain management to chronic pain and the inevitable disability that accompanies chronic pain is critical; that is “secondary prevention.”

Causes of disability and more specifically causes of the decade-long increase in the duration of disability include the:

  • use of harmful treatments including spinal surgery (especially lumbar fusion) and opioids
  • creeping diagnoses that seem to evolve as claims age
  • severely damaging effects of bad providers

A key data point – a case-mix adjusted study indicates patients getting opioids for more than 7 days double their risk of disability for a year.

The takeaway is if patients receiving opioids are not showing improvements in pain and functionality, the treatment should be modified – and not with an increase in opioids.

L&I is working diligently to address the issue of secondary and tertiary disability with an eye towards intervening and re-directing claims before they head too far down the disability “curve”. There are a relatively few docs who are “bad” (perhaps some may be the high IMR filers noted in a previous post).

And that work is paying off; among L&I’s claimants, the percentage of workers receiving opioids 6-12 weeks from injury has decreased from 4.9% in 2012 to 1.1% in Q4 2013.

In contrast, a recent study by PBM Express Scripts indicated that fully have of all patients taking drugs for more than 90 days will still be on opioids in three years.

If anything Dr Franklin is even more passionate, and more compelling, when speaking about lumbar fusion and the disasters associated therewith.  Fully 64% of those getting lumbar fusion are disabled 2 years out, with many of those on SSDI. What’s scarier is California’s outcomes for spinal fusion surgery are significantly and categorically worse.

WA has been able to reduce the percentage of workers who end up on SSDI via their COHE program; clearly their focus on appropriate medical care has been the leading factor.

What does this mean for you?

Crappy medical care by crappy docs looking to make money off the easily-abused workers comp system leads to unnecessary disability, hugely damaged people and families, unknown but certainly very high societal costs.

 

 

California’s IMR program – clarity at last.

Much clarity was brought to the IMR process, costs, efficiency, and IMR filers by the next speaker, CWCI SVP and CFO Rena David.  Speaking about 2014 data, Rena noted:

  • 4.1 percent of treatment requests were “IMR eligible”
  • There were about 261,000 IMR service decisions made in 2014
  • Days from application to final determination was 134 in January 2014l that dripped to 50 in December
  • 91% of the IMR reviews upheld the UR decision, and thereby the denial was deemed as appropriate.
  • Overall, 5.4% of all treatment requests are being denied or modified

Pharmacy accounted for almost 45% of requests, with decisions upheld 92% of the time.  And;

  • 12% of IMRs were for compounds, consistent with overall figures; 98% of the time compound requests were deemed to be not medically necessary.
  • 23% of IMRs for anti-depressants overturned the UR decision, the highest percentage for any drug category.
  • Only 2 percent of anti-anxiety medication denials were overturned
  • Oftentimes, information available AFTER the original UR decision was made was used in the IMR process to overturn the UR decision.

There were ten individual providers who represented fully 15% of claims; the top two individual providers each submitted the equivalent of 10 requests a day…

A key takeaway – Rena noted that for judges and other non-medical people to be in a position to determine what medical treatments are and are not appropriate is “unfathomable”.

She also noted that “without oversight, injured workers may receive deleterious care”, citing:

  • A worker anxious abut an an epidural injection was denied propophyl
  • A complete spinal fusion was requested for a 76 year old man with evidence of arthritis.

What does this mean for you?

IMR works, and would be working a lot better if bad actors weren’t jamming the system with spurious requests for damaging, or at best inappropriate, medical services.

A quick take on the state of California work comp

One of the best places to visit on business is the SF Bay Area – great people, great wine, great food, a fun vibe, and, of course, the site of one of my favorite meetings – CWCI’s annual meeting.

The most-of-the day meeting started with State Fund Chair Vern Steiner’s quick business review, followed by CWCI Alex Swedlow’s review of the rollout and trends following the rollout of California’s most recent reform – namely SB 863.

Alex highlighted changes in Ambulatory Surgery Center fees after SB 863 implementation, perhaps the most significant change being the 29 percent decrease in amount paid.  Closely tied to the ASC cost was the notorious double-charge for surgical implants.  Once that double-charge was removed, something surprising happened.

The volume of hospital inpatient discharges has been declining overall, driven by – in large part – a rather dramatic drop in the number of discharges associated with spinal implants. CWCI estimates savings of around $60 million for 2014 alone.

Overall, spinal surgery discharges dropped by over ten percent from 2008 – 2013.

Alex also reviewed MPNs and physician networks; here are my key takeaways:

  • 81% of “first year” visits have been to network providers – and this figure has been steady since 2010.
  • That’s a big jump from about 55% back in pre-MPN days
  • However – and it’s a big “however”, is the savings attributed to care within networks in MPNs have decreased from 16% below non-network to just 3 percent.

On to a discussion of drug costs – pharma costs were 13.2% of all medical benefits in 2012, a rather dramatic increase from 6.7 percent just seven year previously.

This 13.2 percent equates to $1.2 billion in direct spend – of which 30 percent is Schedule II and III drugs – the most potent opioids.

With drug costs escalating rapidly, one has to look for answers, and one answer may be a formulary.  There’s a lot of detail here related to drugs that are within and outside formulary, how formularies are set up, and motivations thereof. That said, the potential savings are rather amazing.  To wit:

  • 96 percent of CA approved brand drugs would have been blocked by WA formulary along with 27 percent of generics
  • The total savings is somewhere north of $400 million…

Next up, a discussion of the “medical cost containment” cost change, which have climbed to $2,330 in 2012, up from $1004 in 2005.

One of the primary drivers may well be the IMR program.  Fortunately CWCI just published a research paper describing payor efficiency in complying with Division of Workers Comp UR audit standards.  This is critical, as the data show if payors are complying with requirements for content, timeliness, and correct communication regarding UR requests.

97 percent of the time payers are compliant – far above the 85 percent standard set by DWC. And this has been consistent since 2009.

Medicare doc fix – here we (don’t) go again…

The annual caterwauling about Medicare physician reimbursement has begun.

For those who just want the takeaway – there very likely won’t be any substantive, long-term “fix”, but rather another temporary – and very slight – increase in reimbursement.

The latest version of Congress is arguing back and forth about what to do to address the Sustainable Growth Rate or SGR, with the GOP sharply divided and more liberal Dems objecting to any fix that will require seniors to pay more for their Medicare.

What’s going to prevent a longer-term fix is simple; by not doing a long-term fix and thereby kicking the can down the road, Congress doesn’t have to recognize – and deal with – a big addition to the federal deficit.

Well, that and the normal inability of Congress to do anything at all.

Lest you think this is new, it has been going on for over a decade; here’s more detail - just in case you want to be the center of attention at your next cocktail party…

The Medicare SGR formula/process was first implemented in 2000, intended to establish an annual budget for Medicare’s physician expenses and thereby better control what had been steadily increasing costs. Each year, if the total amount spent on physician care by Medicare exceeded a cap, the reimbursement rate per procedure for the following year would be adjusted downward.

And for thirteen of the last fourteen years, reimbursement – according to SGR – should have been cut, but each year (except 2002) it was actually increased, albeit marginally. Because Congress didn’t fix the problem, each year the difference between what Medicare was supposed to spend on docs and what Medicare actually spent was added to an off-the-books deficit.

The result is a deficit that is now about 210 billion dollars, a deficit that we’re carrying on our books.  Don’t blame CMS, blame Congress.

The reason the deficit is still there, and still growing, is simple - fixing SGR permanently will require acknowledging the deficit and thereby adding it to the total debt.

As we discussed a while back, not fixing SGR may well be worse, as it is a fatally flawed cost containment “approach”. The SGR attempts to use price to control cost. The complete failure of the SGR approach to control cost is patently obvious as utilization continues to grow at rapid rates. This was a problem seven years ago, and its done nothing but get worse. Not only does the SGR approach contribute to cost growth, it also ‘values’ procedures – doing stuff to patients – more than primary care.

It’s not quite that straight forward, but pretty close. For those who want way more detail, read this

What does this mean for you? 

For readers in the work comp world, any change to Medicare’s fee schedule will eventually affect many state work comp fee schedules – but this is by no means straightforward.

Off to CWCI…

It’s the middle of conference season, with WCRI behind us, CWCI coming Thursday, and RIMS on the horizon.

David Deitz MD PhD will be giving the keynote at CWCI, and it is one I am eagerly anticipating.  David’s a keen observer of the workers compensation space, one of the nation’s leading experts on work comp medical issues, and the perfect choice to provide much-needed clarity on medical cost drivers, evidence-based medicine and the application thereof.

It is also particularly timely as there’s been much discussion of issues surrounding the Independent Medical Review process, the provision (or lack thereof) of medical records, and related issues.

I’m thinking not so much about IMR specifically, but rather the larger question of why the IMR process was put in place, how it has worked or not to date, and what the real issues are. And, of course, how IMR should be modified – if at all.

Unfortunately, there has been a good bit of confusion surrounding IMRs, and the latest WorkCompCentral reporting provides a good example of how complex and multi-faceted this is.  After an initial report that apparently indicated thousands of medical records had not been received on a timely basis, subsequent reports have revealed that many of these missing records likely pertained to cases that are closed.

I’d note that the furor created by the initial report was, while predictable, also premature. As with many “incidents”, both within and outside workers’ compensation, a full understanding of the background, contributing factors, processes involved, and facts of the case often result in a very different view than the original reports seem to provide.

Right now I’m in an airport listening to a Congressional inquiry into the alleged incident involving Secret Service agents, alcohol, and barriers in front of the White House.  Our elected officials are pillorying the head of the Secret Service for not firing/disciplining the alleged offenders, and the Secret Service head continues to try to impress upon our representatives that he can’t do that unless and until the investigative process is completed.

Sorry to see there’s a predilection to rush to judgment in a lot of different settings…

Should be an interesting week in California.

What does this mean for you?

Always good to wait until all the relevant facts are provided before coming up with conclusions…

 

It’s Friday…and none too soon

What a %^&*$#$* week!

Like many, I spent far too much time this week dealing with the fallout from the ProPublica/NPR series on workers’ comp.  I really need to devote more time to real work, and less to educating folks after the fact…and cleaning up the mess.

One quick point; in the original Demolition article, the authors state:

in 2013, insurers had their most profitable year in over a decade, bringing in a hefty 18 percent return.

I’m not sure how they are defining “return”; usually it implies profit, but that doesn’t seem possible. I have a query into Michael Grabell, the Demolition article’s author, and will report back if/when I hear more.  According to NCCI, work comp insurers [opens pdf] delivered a 2013 pre-tax operating gain (for private insurers) around 14% while state fund gains were about half that.

Of course, that was a pretty very good year; over the last decade, workers comp writers averaged a 7.1% return on net worth, which is another way to look at “return”. Can’t locate any other data or research that is any where close to the 18% number; will let you know if something turns up.

UPDATE

MIchael Grabell of ProPublica responded to my query this afternoon and indicated the data came from NCCI and AM Best and was also referenced in John Burton’s Workers’ Compensation Resources Research Report.

Without getting too deep in the weeds re combined ratios, whether it’s appropriate or not to include dividends, and other minutiae, I can see why someone might look at those reports and get the impression WC is wildly profitable.

In general, it is inaccurate to say insurers’ return was 18 percent as this figure does NOT represent all insurers.

  1. NCCI reports data from the states where they work; this does not include California, New York, New Jersey and eight others. 
  2. NCCI and AMBest data is only for private carriers, and does not reflect state funds; these are also insurers and their “returns” were far less than 18%.
  3. Data from monopolistic states, where insurance is purchased from the state, is also not included.  Monopolistic states include OH ND WA WY.

More to the point, if you are trying to make the point that insurers are getting fat while workers are getting screwed, it’s helpful to point to a VERY profitable year.

However, if one wants to be objective, looking at one year does not provide an accurate picture of the financial status of any industry; one could just as easily look at 2009, 2010, or 2011 where private carrier results were break even at best.

Kudos to Jill Breard of LWCC and Elessa Young of UPMC – both found far too many typos in my blogs from last week’s WCRI conference.  I won’t tell you how many Jill and Elessa found – that would be mortifying.  Thanks ladies, your diligence is much appreciated!

There’s a great piece by WorkCompCentral’s Greg Jones this am about the IMR process in California; evidently someone inadvertently sent an email – “purportedly from [IMR vendor Maximus] to WorkCompCentral..” that indicates payers have failed to send medical records within 90 days for more than 5000 cases. While the number of cases with missing records has decreased significantly over the last year, there’s no indication any fines or financial penalties have been levied against the responsible entities.

Not sure what is going on here, or why, or who is responsible.

This story will have legs…