May
29

Health care cost trends – a new tool

With 18% of the economy driven by health care, cost inflation rates are vitally important. A just-released white paper reviews a new approach to measuring health cost inflation rates that will help employers, health plans, and workers comp payers assess overall trends, compare their experience to a benchmark, and forecast where things are headed.

The research, conducted by S&P/Dow Jones uses a series of indices to break out various cost areas.  The white paper is available for free here; while the statisticians amongst us (that does not include your faithful author) will find much to geek out over, this amateur’s take is:

  • the methodology is sound and carefully constructed;
  • it uses payment data from commercial health plans representing about 40% of all enrollees;
  • the data is from fee-for-service plans;
  • it is state- and in many cases area-specific; and
  • it provides details on medical, inpatient, outpatient, pharmacy (brand and generic).

Any input from real analysts on the indices would be more than welcome.

Here are a few of the key highlights from the initial edition, which includes data from Feb 2010 to April 2013.

  • Overall trend has been at or below 5 percent since August of 2010
  • Trend as of April 2013 was about 4.3 percent
  • Drug trend has been bouncing between 0 percent (!) and 2 percent since October 2010, with brand cost showing much less fluctuation while generic inflation was at 15 percent when last measured.
  • Hospital trend is consistently 3 to 4 points higher than professional services trend
  • There’s a LOT of interstate variation; for example as of February 2013, IL trend was around 1 percent while Texas’ was about 4.75 percent.

What does this mean for you?

All in all, a very valuable addition to the toolset available for regulators, businesses, and health plans.


May
27

Post-Memorial Day catch up

Like everyone else, I was in a hurry to get stuff wrapped up last week and neglected more than a couple important news items.  Here’s a quick update…

Two California counties are suing opioid manufacturers Purdue, Cephalon, Endo, Teva, Johnson&Johnson, and Activis for for actual damages (plus punitive damages) relating to alleged false and misleading advertising and business practices, unfair competition, and a variety of other civil charges.  Go get ’em!

(Steven Feinberg MD was kind enough to send the tip)

From WorkCompCentral came the news that a spinal surgery patient is suing Michael Drobot, Pacific Hospital of Long Beach, and her surgeon, David H Payne (now there’s a rather unfortunate name) for damages resulting from the alleged use of defective hardware, an unnecessary surgery, and related allegations.

Somehow I doubt this is the last of the suits; here’s hoping the applicant attorneys take on other claims – and soon.

As health care provider consolidation continues, a recent piece in Health Affairs finds:

an increase in the market share of hospitals with the tightest vertically integrated relationship with physicians—ownership of physician practices—was associated with higher hospital prices and spending. We found that an increase in contractual integration reduced the frequency of hospital admissions, but this effect was relatively small. Taken together, our results provide a mixed, although somewhat negative, picture of vertical integration from the perspective of the privately insured. [emphasis added]

Another piece from Bruce Vladeck has a somewhat different view on the issue; Vladeck’s take is that consolidation is generally positive as it leads to innovation, reduced costs, and more efficiency (my words not his)

many of the factors fueling increased provider concentration are widely believed to be desirable, or practically unavoidable. Meanwhile, health care prices are increasing at historically low levels. Thus, there appears to be a contradiction between efforts to contain health care prices and the fact that aggressive policies aimed at reducing provider concentration might be ineffective and could even have the unintended effect of stunting positive developments.

Finally, I’m in an on-and-off conversation with a good friend and colleague on matters related to bill review in workers’ comp, specifically how to benchmark savings, clear away confusion when comparing different vendors/savings rates, and get to an objective assessment of performance.

Will be posting on this soon – thanks G.


May
22

Medical marijuana in work comp – take a deep breath, folks…

Sorry, no pun intended.  Not suggesting you inhale, but rather take a step back before you get all excited about a single court case.

Finally, there’s an actual real live bona fide true factual documented report of medical marijuana (MM) paid for by work comp.  To date, there’s been much speculation, a lot of pixels published, and way too much hot air – but now we have our first – and as far as I can tell only – time a work comp payer has been told to pay for MM.

Let the floodgates open.

Or perhaps not.

Our industry loves to hyperventilate endlessly on newly-emerging-highly-unlikely-but-really-scary cost drivers.  Medical marijuana, obesity, an aging population have had their day in the virtual sun, and although the latter two are worth discussing, the reality is the research indicates they just aren’t that much of a factor.

But now, a court in New Mexico has said an insurer has to pay for marijuana.  Thanks to the pros at WorkCompCentral, the case, Vialpando v. Ben’s Automotive Service and Redwood Fire & Casualty, is now on the tip of everyone’s tongue.  The claimant’s attorney is telling insurers to contract with marijuana dispensaries (!), others are opining the “floodgates” will open, and friend Mark Pew is advising employers to implement drug-free workplaces.

Before we spend a lot of time and energy on this, let’s consider the real world.

There is little credible research indicating medical marijuana is an effective treatment for pain.  Yes, there is some evidence that in relatively small populations MM has been beneficial, however they aren’t large enough, nor objective enough, to provide convincing proof.  Notably, it is difficult for researchers to study a Schedule I drug, and that has undoubtedly hampered the process.  Despite that limitation, over 40 studies have been conducted, and according to Medscape; “The majority of the studies showed an improvement in pain relief in comparison to a placebo or to other traditional pain medications. About a quarter of the studies showed no improvement.”

When one digs into the research, there’s quite a bit of variation in the study design, the pain type, duration, measurement methodology and assessment process making it difficult if not impossible to come up with an overall sense of efficacy or effectiveness. Some research even indicates THC can increase sensitivity to some types of pain.

THC – the most studied active ingredient in marijuana – has been studied extensively, with mixed results.  In a relativecly-small study of advanced-stage cancer patients, some subjects become highly agitated and anxious after ingesting THC orally.  Others reacted differently, and to varying degrees.

All that said, I could not locate any large-scale, double-blind randomized control studies addressing the effect of MM on pain.  The studies tend to be small, deal with discrete groups of volunteers (hey, want to get paid to get high?), and focus on one specific type of pain (neuropathic the most common, where the effect of MM seems to be pretty significant).

Does MM offer a possibly-better-alternative to opioids?  Absolutely.  Does it come with its own set of problems?  Absolutely: about 10 percent of users may become “addicted”; others experience very high anxiety levels; it certainly can be diverted.

What does this mean for you?

Until and unless there is credible research and a clear understanding of the risks and potential benefits of medical marijuana, we won’t see widespread – or even very little – use in workers’ comp.  Schedule I status, problematic side effects, social stigma, and legal issues are all major barriers – and will remain so.

Okay, let’s get back to real issues.

BTW, kudos to WCC; the article is comprehensive, well-researched, and provides a solid background on the overall issue as well as an explanation of the legal situation in New Mexico and other states.


May
19

Big data in work comp – no panacea

There’s so much excitement about big data and the potential for it in work comp that it would be all to easy to forget some basics.

The law of small numbers chief among them.

Work comp accounts for a tad more than one percent of US medical spend – $30 billion in comp medical vs $2.8 trillion in total medical spend in 2012.

Many docs treat just a couple of work comp claims a year, and those who do handle a lot of WC claims see a wide range of injuries: knees, ankles, backs, shoulders, hands damaged by cuts, sprains strains and severe trauma.  When looking to compare providers – or procedures for that matter – researchers need enough data points to develop a statistically-valid sample set.  In most cases, no single provider has enough claims to enable clear-cut evaluation.  And, if they do, there aren’t any other providers in their service area with the necessary volume, making comparisons nigh-on-impossible.

The issue is statistical validity and statistical accuracy. Simply put, is the measurement procedure capable of measuring what it is supposed to measure. Without enough data, there just isn’t enough information to accurately assess performance.

That’s not to say researchers can’t do very meaningful and helpful analyses; the one just published on opioid prescribing by physicians dispensing docs to work comp claimants is a perfect example; the ongoing research by CWCI, WCRI, and NCCI provide plenty of additional examples.

The problem occurs when consultants, payers or managed care firms try to make definitive statements about individual providers based on inadequate data.  In my experience, provider rankings are often – but not always – based on little more than reimbursement or “savings” figures, and in no way account for “quality” measured by return to work, disability duration, cost-per-claim.  There isn’t enough data to case-mix adjust, not enough data to make comparisons, or really “rate” docs.

I would note that some payers, most often state funds, and some managed care firms, notably MedRisk (HSA consulting client) have a wealth of data and can (and do) make valid comparisons.

What does this mean for you?

Beware of rankings, ratings, and comparisons of individual providers.  Unless the underlying data is robust.


May
16

Friday catch-up – Obamacare rollout and WC Rx

Another week on the road, and looking forward to a whole week of NO TRAVEL…oh, the luxury of it!

Enough whining – on to the news of import from the last few days.

First up, a quick synopsis of the top news re PPACA rollout:

  • there’s been a great deal of publicity about employers cutting jobs and hours due to health reform and the costs thereof; now comes news from a Harris Survey that 28% of employers surveyed plan to add workers compared to 15% who will cut staff. Also, 10% are going to cut benefits for dependents but 9% are going to add coverage for dependents.
  • Premium increases will be a big driver; VERY early indicators are that they will be all over the place, with some increases tiny and others well into the double digits.  Before anyone gets too excited, remember health plans have almost no data on which to base rate increases – enrollment lagged in some states due to the well-documented problems with the federal exchange, as a result there’s precious little utilization data on which to forecast future costs.
  • states that have not expanded Medicaid are shooting themselves in the wallet.  Medicaid rolls increased by 550,000 in 17 states that did not expand Medicaid; these so-called “woodwork” people included 99,000 in GA and 58,000 in NC.  Of note, the non-expansion states are NOT going to benefit from the Feds’ payment for the increase unlike other states, which won’t be paying a dime until 2017 – and then only 10 cents on the dollar.
  • Ready for a pity party?
    Looks like at least one big health plan is whining about the increased competition due to the Exchanges and new health plans coming into some markets. UnitedHealthcare is moaning about the prices offered by competitors in New York, a huge market for UHC. Execs are claiming other health plans are underpricing UHC’s offerings... (With the news that UHC is the least trusted health plan among hospitals, a little less whining and a bit more introspection might be warranted…)

WCRI’s latest intel on opioid usage in work comp is mostly bad news; the overuse (my word) of the highly addictive drugs did not decline over the study period, which ended in March of 2012. Sure, some states saw slight decreases (yay MA and CT) but others had similar increases (boo MI). Get a copy of the study here.

On the other coast, CWCI reported there’s not been much change in opioid usage in California either.  Their synopsis is:

the use of these drugs has remained at record levels since 2010, that virtually the same 3% of high-volume Schedule II opioid prescribing doctors continue to write more than half of the prescriptions, and that nearly half of the prescriptions are for minor injuries where medical evidence does not clearly support Schedule II opioid use. [emphasis added]

The fine folks in Minnesota are pushing science into the art of pain management; WorkCompCentral reports Minnesota is tightening rules re pain pumps and spinal cord stimulators. Three cheers for L&I…

Of note, several work comp PBMs have released their annual drug trend surveys; I’m reviewing them and will report back early next week.

Finally, our friends at IAIABC are hosting a free webinar on compound medications in work comp May 29 from 1-2 CST; I’m emceeing; the real experts presenting Phil Walls of myMatrixx and Sarah Randolph of Express Scripts.

 


May
15

Yet more evidence doc dispensing is a disaster

There is NO reason, no rationale, no logic behind docs dispensing drugs to workers comp claimants.  

Proponents claim it is better care, leading to speedier recovery and lower costs.

We long suspected the opposite is true; that is, claimants getting drugs from docs get more treatment, incur higher medical costs, are out of work longer and run up bigger claim costs than claimants with the exact same injury who don’t get pills from their physicians.

Thanks to CWCI, we know that’s the real impact of doc dispensing.

Now, we know even more – we know that dispensing docs prescribe more opioids for longer times, thereby increasing the risk of addiction and drug diversion and overdoses and death.  Thanks to a research paper authored by Johns Hopkins University Medical School and Accident Fund, there’s clear and convincing proof that doc dispensing is a highly risky, very dangerous, and very expensive proposition.

Here is the money quote:

“we found 39% higher medical costs, 27% higher indemnity costs, and 34% higher frequency of lost-time days associated with physician-dispensed versus pharmacy-dispensed medication. We found even more striking differences related to physician-dispensed opioids versus pharmacy dispensed opioids. The effect was nearly doubled and revealed 78% higher medical costs, 57% higher indemnity costs, and 85% higher frequency of lost-time days associated with physician-dispensed versus pharmacy-dispensed medication. [emphasis added]

And yes, the analysis was case-mix adjusted.

It’s not about convenience; Claimants get drugs for free and quickly thanks to PBMs and pharmacies who are only too happy to fill their scripts.

It’s not as if the drugs they dispense – NSAIDs, antibiotics, pain meds, stomach acid treatments – MUST be consumed within nanoseconds or the claimant dies.  None of the top 50 doc-dispensed drugs are deemed time-critical.

It’s about docs sucking more money out of employers’ and taxpayers’ wallets.  While dispensing more opioids, and keeping patients out of work longer.

Which brings up a question:

Why in hell are regulators and legislators not banning physician dispensing?


May
13

SAIF’s firing of its CEO – something just isn’t right here.

Got an email from a reader late yesterday about the sudden (as in instant) firing of SAIF’s new CEO.  On the job for three months, John Plotkin got a call Saturday (after he and the VP of Legal Affairs returned from a business trip) from the Board Chair telling him he had till 3 pm the next day to resign.  

Plotkin was given no reason for the decision, however we have learned there were a series of employee complaints that he had made “inappropriate comments” to several employees.  Among the “inappropriate comments” was a statement encouraging an employee to “speak English, not actuary.”  Several complaints referenced his dog, evidently brought to the office on April Fool’s Day as part of “bring your dog to work day”, a corporate April Fool’s event.

Ok, this is weird.  A phone call  – on a Saturday – telling you you’ve got 24 hours to quit or else, and you aren’t told why.  Later you find out the decision bas based on comments encouraging people to talk in language people can understand, and references to one’s canine.  You’re never given a copy of the complaints or been allowed to respond to them.

It gets even stranger.  Evidently SAIF employees are none too happy about the decision.  Several hundred showed up at a Board meeting last Wednesday to voice their displeasure about the firing – after an initial Board meeting earlier in the week was cancelled when a hundred showed up.

Clearly SAIF’s employees like the guy, even if he does have a bulldog and wants actuaries to speak English (so non-actuaries can understand them).

Then it comes out that none (as in zero) of the complaints were ever investigated.  And, HR processes were never followed.  And, you’d been told just two weeks earlier by the Board Chair you were DOING ALL THE RIGHT THINGS AND THAT YOU WERE SO PLEASED THAT THE BOARD HAD MADE THE RIGHT DECISION (from Plotkin’s address to the Board meeting).

I don’t know Plotkin, or SAIF, or much about this series of events, but what I do know is appalling.

There’s much more to this story and we can only hope it comes out quickly and fully.  Unfortunately, SAIF’s employees, policyholders, and claimants are going to be hurt by a precipitate decision based on innuendo and rumor.

What does this mean to you?

If a headhunter calls about the SAIF CEO job, RUN AWAY.

 


May
12

Medicare Set-Asides – current data says…

At the closing session at NCCI, Barry Lipton reported on their research on MSAs, research based in large part on 2200 files provided by Gould & Lamb. In 2011, CMS approved $1.1 billion of MSAs…

Key findings

  • MSA dollars account for 40% of the average proposed settlement
  • half of the MSA dollars are for prescription drugs
  • the differences between proposed and CMS-accepted MSA settlement are largely due to drugs”
  • only 20% of submissions are for claimants <50
  • 29% of submissions are for more than $300,000;
  • but, most submissions are for much lower amounts;
  • so 62% of costs are for the 29% that are for more than $200k.
  • The highest initial submission approval rate was about t50% before 12/12; during 12/12, the approval rate zoomed up to 92%.  this happened to be the same month where processing vendors changed…
  • median processing time has dropped dramatically to 41 days in Q4 2013
  • Median MSA approved amounts have been very stable at around $42,000 over the last four years.
  • recall CMS doesn’t cover off-label use of drugs, so any non-cancer claims with opioids are going to require full funding of future projected spend

The net – from my perspective, if you have an addicted claimant, CMS is going to want a lot of dollars set aside.


May
9

Work comp’ declining frequency rate – will it continue?

The geekiest part of NCCI is the research workshop that takes place after lunch on the second day – you know the people attending are committed if they are in Orlando on a Friday afternoon listening to economists…

Harry Shuford discussed the “mystery of declining claim frequency”, an oft-described trend that some believe will end at some point while others think it may continue ad infinitum.

While there has been a cynical pattern over the last 90 years, the overall decline has persisted since 1926 (using manufacturing claim rates, the only ones that go back that far).  That said, the decline steepened after 1990 and has continued to this day, and it is consisted across all states, industries, occupations, demographics, affected body parts…

Why?

Harry and his colleagues looked at a lot of factors to determine their correlation with injury rates and similar data points.  The correlation isn’t due to the decline in manufacturing in the US; the decline has happened globally and across all sectors of the economy, not just manufacturing.  

Harry then showed a graph of international work-related fatalities (across 120+ countries) which showed a similar decline trend, with a bit of leveling in the late eighties followed by a steeper decline till 2006  and an even more rapid drop after that.  On average, there’s been a 4.3% annual decline over the last 30 years.

The death rate decline also mirrored the increase in per-capita income, albeit at a lower rate (3.6%).

And it was, if not entirely consistent, at least similar across geographic regions.

Net – two drivers: time, perhaps driven by pressures to improve productivity; and as a country gets wealthier, there’s a decline in the injury rate.

The takeaway – the trend has been in place for 80 years (at least) and will very likely continue into the future.

What does this mean for you?

Frequency will continue to decline.