Why UR?

For those who think UR is not needed, I’d suggest considering something CWCI’s Alex Swedlow said at a recent presentation…
“you know we spend all this money on police and firefighters and we still have crime and arson. Maybe we should pull the cops and fire trucks out of downtown Oakland and see what happens.”


UR – we aren’t ready to have the conversation yet

Greg Jones’ recent articles in WorkCompCentral highlight the inherent problem in the debate in California around UR; there’s little data on which to base any assessment, much less draw conclusions. Moreover, the data that is available is not consistent; there are no common definitions or consensus around what constitutes a “denial”, an initial review, a secondary review, an appeal, a reconsideration,
Here are the key take-aways from Greg’s May 21 piece:
“Jerry Azevedo, a spokesman for the Workers’ Compensation Action Network, said
between the legislative proposal and reform talk, utilization review is an important topic. It would be beneficial to the entire community to have quantifiable data to understand the real frequency at which requests for medical treatment are being denied, he said.without statistics on utilization review it’s really only possible for stakeholders to base their debate on anecdotal evidence[emphasis added], which is not the best course of action.
“In terms of operating a system and in terms of what we want regulators to do, it needs to be based on statistics and what the numbers really are,” Azevedo said.”
The result of this lack of understanding is, at the least, mass confusion. At the worst, legislators and regulators are called on to make decisions affecting workers comp based on anecdotal information, press releases, histrionic statements, and data carefully selected to represent the perspective of the presenting party.
That’s no way to run a system.
Let’s start with a basic question – what, if anything, are the benefits of UR?
Well, the last credible study I could find was published in December 2007 by Alex Swedlow and John Ireland of CWCI. The study, entitled Analysis of California Workers’ Compensation Reforms; Part 1: Medical Utilization & Reimbursement Outcomes Accident Years 2002 – 2006 Claims Experience”, analyzed the impact of California’s work comp reforms.
Here’s the key data:
“In five of the six treatment categories, the average amount paid per claim for that type of treatment during the first 2 years following the injury declined – the only exception being surgery. Among surgery claims, the average amount paid for surgery services at the two-year valuation point was about 5 percent higher in the post-reform period than in the pre-reform period.”
Okay, I know, this was based on data that is now a bit old, and we need more current information and analysis. But CWCI’s research clearly and convincingly demonstrates that the reforms did have a significant, positive impact. Utilization declined across most medical treatment categories, and since then costs have declined dramatically. Really dramatically.
CWCI will be publishing updated research on this issue later this summer.
It is abundantly clear – from Jones’ article and the confusion surrounding the costs, benefits, and outcomes of UR, that we can’t make any decisions based on the information available today. It’s not sketchy, it’s almost non-existent. And, what we do have is contradictory and unhelpful as basic data field definitions are inconsistent.
As luck would have it, my firm (Health Strategy Associates, LLC) has just begun our first annual Survey on Utilization Review in Workers Compensation. We are surveying C level execs as well as desk-level folks (claims adjusters, claims execs) for their opinions concerning and results of UR.
The On-Line Survey should take 20-25 minutes tops, and one lucky recipient will receive an iPad 2 as a token of our appreciation (make sure you include your contact info if you want a shot at the iPad).
We will be publishing the results of the Survey in June, and hope it provides additional insight into the utility of UR across the industry.


New risks in workers comp – the rise of mining

While construction is still in the dumps, there’s been a remarkable recovery in what was once thought to be a gone-forever industry – mining. While the mineral mines in Michigan, oil shale projects in North Dakota, copper mining in the southwest and oil and gas in near-shore and Arctic areas have yet to hit their full stride, the growth in employment in extractive industries has been significant – up almost sixty percent over the last ten years, with an increase of 12 percent since the beginning of 2011.
The BLS projects employment to grow by almost 25% from 2010 to 2020, and current hiring levels make that projection appear to be conservative.
Wages are also high at over $28 an hour, and the average work week is well over full-time. This is balanced by a decline in frequency for OSHA reportable injuries/illnesses, but the underlying trend is clear – the mining and extractive industries are experiencing a rebirth, one that will dramatically affect workers comp albeit in selected states.
This has already hit North Dakota, where the state’s monopolistic fund, already under fire for what can fairly be termed gross incompetence and possibly intentional negligence, is hard pressed to deal with the huge growth in oil and gas in the western part of the state. Tough to focus on business when you’re consumed with circling the wagons to hold off legal inquiries into denying injured workers benefits.
The implications for comp are obvious.
Injury rates in extractive industries are higher than average, and the types of injuries tend to be more severe.

There are fewer opportunities for transitional duty to help recovering workers get back on the (a) job.
Job sites are often located far from cities and comprehensive medical care services.
New employees may not receive adequate training in safety and loss prevention.
What does this mean for you?
Work comp executives, regulators, and service providers would be well-served to closely monitor employment projections; while these shifts will only affect certain states, the impact they will have on those states is likely to be significant.


Freedom v responsibility – another view

As our country confronts rising health care costs, it is incumbent on all of us to take responsibility for our actions and not rely on others to pay for our “freedoms”. One small way to address this is for motorcyclists who ride without helmets to buy health insurance to cover the costs of injuries.
In response to my post on that subject yesterday, I heard from Pete terHorst of the American Motorcycle Association (AMA) who took issue with my recommendation. Pete was courteous, responsive and is likely an excellent debater. He made a couple of points that I do not agree with – here’s the summary.
My central point was this: Those who seek personal freedom should bear the cost of that freedom. Simple, basic idea, right?
– medical costs for helmetless cyclists involved in crashes are substantially higher than for those riding with helmets;
– many don’t have health insurance and thus uncompensated providers, taxpayers and private insureds cover their costs;
– if states want to repeal helmet laws, then require those riding without helmets to buy medical insurance to cover all potential costs.
Not so simple, according to the AMA.
Pete’s initial comment cited some old research re the cost of motorcyclist trauma care relative to auto injury care and the percentage of riders covered v drivers. This was, in my view, not germane to my central point – so I asked Pete “do you think helmetless riders should not be required to have insurance coverage?. After some back and forthing and Pete’s diversion into discussion of helmet mandates v accident prevention, I tried to steer the conversation back to the central issue, to wit:
“It is appropriate behavior for those individuals to assume the responsibility that goes with their freedom to ride without a helmet.”
Here, are a couple of Pete’s responses:
What the AMA and its members expect is fairness. When the insurance
industry singles out and seeks additional revenue from motorcyclists
for behaviors it considers risky, the logical extension of that
mindset is that the insurance industry would do the same for other
so-called risky behavior. [I’d note that nowhere did I suggest the insurance industry single anyone out, but rather legislators pass a bill mandating medical insurance for helmetless riders] But it does not, because singling what is
risky and what is not is a very slippery slope to tread, and involves
taking on mainstream segments of society that currently represent a
significant revenue stream for insurance industry. [again, I didn’t say anything about insurance companies supporting, backing or conceiving of any such plan] Conversely,
motorcycling is not an activity that most Americans participate in,
and it is a visible and easy target for those who do not understand
its appeal. Bottom line: The AMA does not expect special treatment for
motorcyclists, it expects — and advocates for — fair treatment… The AMA doesn’t favor requiring unhelmeted motorcyclists carry additional medical insurance that is not required of other road users.
If I follow the logic, as long as others are allowed to be “free riders”, the AMA wants motorcyclists to be free riders as well.
Somehow that doesn’t seem right. Here’s a group who wants the freedom to ride without helmets but doesn’t want to pay the cost for that – unless every other participant in risky behavior is also forced to do so. That strikes me as selfish and irresponsible; “just because he gets away with it I want to get away with it too.”
Pete also argued that requiring helmetless riders to get medical coverage would somehow be unfair, and it would head us down a slippery slope – I don’t see this at all; my recommendation would be handled under traffic/motor vehicle laws, and it is abundantly clear (check the sources in the post yesterday) that riders without helmets in accidents are much more expensive to care for than helmeted riders.
What does this mean for you?
Watch our for free riders…


Motorcycle helmets, freedom and responsibility

While death rates from auto accidents have been steadily decreasing, that’s not the case for motorcycles. There were 1.7% fewer motor vehicle fatalities last year, but motorcyclist deaths didn’t drop at all.
What’s going on? Well, after states laws mandating helmet usage were repealed, death rates climbed dramatically, up 21% in Arkansas, 81% in Florida, 58% in Kentucky, 108% in Louisiana, and 31% in Texas.
So why should you care?
Well, when these freedom-loving riders smack their heads into the pavement, dying or even worse incurring a traumatic brain injury, who pays for the heroic – and very expensive – efforts to save their lives?
Turns out less than half had health insurance coverage.
If they don’t have private insurance, that would be you and me. Research indicates taxpayers pick up about 40% of the medical costs from helmetless riders; cost-shifting to private insurers is certainly high as well.
Here’s a simple solution that should be added to any bill repealing a state’s helmet law.
Those who want to ride without a helmet have to buy insurance that reflects that decision. That insurance must provide comprehensive coverage for medical care for accidents associated with the covered individual, including long term custodial care, with a really high limit – say $10 million, that is indexed to the medical CPI to account for inflation.
Upon showing proof of coverage, they get a special license plate. Insurance companies take the risk, society does not get harmed due to the adverse consequence of a personal decision, and those who want to ride with their hair blowing in the wind are free to do so.
Oh, and they should be required to be organ donors as well.


Inflation in Medicare, private insurance, and work comp

Credible research indicates health cost inflation rates will remain fairly low during this decade, driven by “greater cost-sharing in private insurance, new Medicare payment policies, slower growth in prescription drug spending, and an upcoming tax on high-cost insurance premiums.”
Note two of the primary drivers are reduced payments to providers by Medicare and Medicaid and more spending by individuals. These ‘cost-moderators’ are countered (somewhat) by the growth in Medicare eligibles.
The result is overall inflation rates will be about the same for private payers and Medicare at 5.7%. However, on a per-enrollee basis, Medicare’s trend is substantially lower (more than two points) than private insurance. Again, cuts in Medicare’s reimbursement to providers is the primary driver.
It is important to understand the difference between overall program and per-enrollee
cost inflation; it’s also important to think thru the implications for other payers – work comp and auto specifically.
With significant growth in Medicare and Medicaid enrollment coupled with low growth in the number of privately insureds, providers will see flat to declining compensation from a large chunk of their patient population. The latest figures indicate physician compensation rates have been relatively stable; given low overall inflation this is likely “acceptable”. Notably, some specialities saw increases while others dealt with reduced compensation.
However, as patient mix changes, the decline in compensation is inevitable, and will have far-reaching consequences.
What does this mean for you?
Expect utilization to increase, along with charges for services billed to all payers. Those payers without strong fee schedule or contractual controls on price will likely see significant price inflation as well.


Cost shifting to work comp – sure, go ahead!

An article in Physicians News yesterday suggested providers look to workers comp to make up revenue losses from Medicare and commercial payers’ declining reimbursement. That wasn’t stated explicitly, but you don’t have to be a code-breaker to get author Franklin Rooks’ message.
Rooks’ main point appeared to be for physicians to think carefully before agreeing to work comp PPO contracts. Can’t disagree with that, but I do take exception to the several statements which are the basis for his arguments.
As Rooks cited me in his piece, I posted a comment, which is excerpted below.
1. The article stated “Employer direction of medical care tends to erode workers compensation reimbursement to levels below the state fee schedule.” without providing any data or backup whatsoever to support this assertion. Physician News’ editors should have caught this.
In fact there is ample evidence from multiple sources that there are many factors impacting reimbursement, with market concentration of providers and the relative level of workers comp fee schedules [compared to other payers’ reimbursement amounts] chief among them.
2. The article cited the recent effort by Florida’s legislature to ban egregious over-charging for physician dispensed medications. As readers know all too well, in Florida, physician dispensing of medications to workers comp patients has increased employers’ costs by over $60 million with no benefit to injured workers. Data from several sources indicate physician dispensing adds over a billion dollars to the national workers comp tab, again with no discernible, demonstrated benefit to patients. There is, in fact, a critical issue of patient safety in the practice of physician dispensing, as work comp physicians often do not know precisely what medications the patient is taking, and therefore cannot be sure there are not potentially hazardous drug-drug interactions.
I’d also note that workers comp is NOT intended to be the payer used by physicians and other providers seeking to make up for lost revenue from other sources. Mr Rooks’ unstated but clearly intended message is for providers to seek the most reimbursement possible from comp to compensate for declines in other sources.
That is inappropriate and unethical.
Thanks to Sandy S for the head’s up.


Missouri’s resident idiot

Earlier this month a physician legislator in Missouri blocked a bill setting up a prescription drug monitoring program, making MO one of two remaining states without a PDMP.
Oh, and the Show-Me state’s death rate from drug overdose (most of which is from prescription drug abuse) is higher than the national average…
For the uninitiated, PDMPs help ensure patient safety by identifying potentially harmful drug-drug interactions; enable prescribers and dispensers to see if a patient is filling the same scrip multiple times, and inform doctors and pharmacists when a patient is getting multiple scripts from multiple docs. And they comply with all patient confidentiality requirements.
Republican Sen. Rob Schaaf, henceforth known as Missouri’s resident idiot, spent eight hours filibustering the PDMP bill, ending with this brilliant justification for not protecting patients with a PDMP: “If they overdose and kill themselves, it just removes them from the gene pool.”
And if Schaff prescribes percoset and some other doc is prescribing oxycontin and a third is prescribing a sedative and the patient dies thru no fault of their own, and their kids lose a mom, and a Scout troop loses a den mother and a school loses a teacher, all because Schaaf is an idiot, whose fault is it?
What does this mean for you?
We get the government we deserve, and we deserve it good and hard (apologies to HK Mencken)


$20,728 – your family’s 2012 health care cost

That’s the figure reported by Milliman earlier today.
Yep, almost twenty-one grand just for health insurance and out-of-pocket costs.
The good news (!) is the annual rate of increase was a paltry 6.9%, the lowest trend in a decade.
The bad news? In six years, the average family of four’s premium and out-of-pocket costs will be $31,000. That’s if the inflation rate stays the same; if it reverts to the norm, we’ll see costs pierce the thirty grand level in 2017.
Here’s hoping someone – anyone – finds a solution. We know that Massachusetts’ premium increases are among, if not the, lowest in the country; we also know Medicare’s rate of increase is lower than commercial plans’. Perhaps there is a role for big government; altho I’m hoping private insurers figure out how to control costs without the threat of price caps.
Then again, we’ve tried that – for about fifty years – with pretty poor results