No, I'm not obsessed. At least not with the Concentra-FirstHealth merger. But information keeps popping up about various aspects of the deal that a few readers actually find very interesting.

The latest concerns the IME business.

In November, 2001 Concentra bought NHR, a big provider of Independent Medical Exams in the work comp world. An IME is an exam of a work comp claimant by an independent physician, with the objective being an objective determination of causality, treatment progress, suitability for work, and/or myriad other issues.

After the NHR acquisition, Concentra's IME business had $92 million in annual revenue. Sources indicate it is now about $28 million.

That represents a 69% decline in revenue over a five year period.

Sources indicate that among the remaining $28 million are several blocks of business that may move to other vendors in the near term. And, Concentra has at least one large IME customer (auto insurance in MA) that they want to keep out of the deal.

Posted by at 9:22 AM | Permalink | Comments (5)

The fine may be a million bucks, but the PR damage is much worse.

WellPoint's fine is for cancelling insurance policies for members who filed claims; the cancelled members alleged that WellPoint went thru their applications with a very fine toothed comb, looking for any discrepancies, errors, or misstatements. The objective was to find ways to cancel insurance policies.

The state of California has found this business policy to be reprehensible and illegal.

It's also stupid.

WellPoint may not have noticed, but the entire country is talking about health care reform. That includes regulators, policymakers, lobbyists, and voters. Many are arguing against single payer, claiming that the private market will serve much better than a government bureaucracy.

WellPoint's behavior puts the lie to that argument, and plays right into the hands of the single payer advocates.

And this is not an isolated incident. Regulators looked at 90 cancelled policies, and in every case found that WellPoint violated state regulations banning cancellations for inadvertent misstatements. Moreover, this is not just WellPoint; other insurers are also under the regulatory microscope.

Correction. This is not stupid.

It is amazingly, incredibly stupid.

Posted by at 7:00 AM | Permalink | Comments (1)

California workers comp rates are likely to drop again. Clearly, the WC reform initiatives are starting to pay off.

That's good. Sort of.

When rates drop, employers' costs go down, leaving more money for investment, profits, higher wages, and perhaps even health insurance.

That's the good news.

The bad news is an 11% drop in premiums means an 11% cut in administrative fees. While there are undoubtedly opportunities for belt-tightening and cost reduction, this will also mean less money for managed care and fewer dollars for claims handling and loss prevention.

TPAs can expect to be hit hardest by the double whammy of reductions in fee income (for the claims they handle for insurance companies) and a loss in business as their self-insured clients reduce their costs and risk by buying workers comp insurance.

And this will flow downhill - among other things, fewer dollars mean cuts in managed care pricing and higher case loads for adjusters. Next, expect to see claims handling performance slip.

To be followed inevitably by higher claims costs and a bounce at the bottom of the cycle.

Posted by at 9:08 AM | Permalink

Coventry has hired a new medical director for their workers comp managed care business. Dwight Robertson has long experience in the business (starting in the late eighties); knowledge of the provider, payer, and managed care industries (USHealth Works, Zenith, Crawford, AIG, UnitedHealthcare, Conservco); and a frank, open, and direct style.

He also has recent experience as a First Health customer, a perspective that may help focus his new company on the customer.

Dr. Robertson will be reporting to Jim McGarry, who is going to head up the combined First Health-Concentra entity at Coventry.

The acquisition of Concentra's managed care operations by Coventry, slated to close on Monday April 2, has passed Federal scrutiny (one wonders how much 'scrutiny' has actually occurred, as the new entity will dominate the bill review and network business). Reports indicate there are a couple of customer contractual issues yet to be resolved; these are not likely to significantly delay signing.

What does this mean for you?

If Coventry listens to Dr. Robertson, the new entity may improve its customer service, defined as listening to, working with, and accomodating customer needs.

Posted by at 6:50 AM | Permalink

You're swamped. I'm swamped. Work, kids, parents, sports, Iraq, vacation plans, tax season, Anna Nicole - there are hundreds of urgently important things filling your time, demanding your attention.

Health care reform is too complicated, too big, too partisan, too much to think about.

It's also going to affect you, your family, your income, our economy and quality of life more than any other issue on the table today.

Health care reform is the biggest, most influential issue facing America today.

Make no mistake, we are going to have health care reform.

It may be small and incremental, it may be huge and wrenching. But it's going to happen. If we're aware, and alert, and thoughtful, and proactive we can participate in the debate and influence the direction. Even if you don't participate in the debate, you'd better know what's going on.

Health care is 16% of our economy. The cost burden is dragging down our manufacturing and commercial base, hurting our ability to compete in the global economy. That affects your job, no matter what you do. Health care costs are a major driver of local property taxes as well as state and federal income taxes. Employment-based health insurance is slipping away, especially for people working at small businesses.

Meanwhile lobbyists for physicians, small business, hospitals, drug companies, unions and the Fortune 500 are flooding the halls of the Capitol and your state buildings. Some of them may have your interests at heart, most don't.

If you want to base your opinions on ideology, fine. If you're more pragmatic, that's fine too. Read, watch, listen. Form an opinion, base it on logic and reason, discuss it at home, at work, on the train and while standing around watching kids sports.

Because it will affect you more than anything else going on in the US today.

Posted by at 6:13 AM | Permalink | Comments (1)

Sources indicate Fiserv has terminated its efforts to sell third party biller Third Party Solutions thru Bank of America. This despite Fiserv's interest in shedding non-core assets, begun under CEO Jeff Yabuki. While Fiserv may still entertain offers, it is unlikely any will approach the rumored goal of $275 million Fiserv was asking for TPS.

While more than a few private equity/venture firms assessed TPS, evidently no term sheets approached the desired valuation. Issues may have included concern about TPS' "complicated" A/R situation.

Meanwhile, competitor WorkingRx is still for sale...

What does this mean for you?

A temporary continuation of the current awkward third party biller-pharmacy-PBM-payer struggle/business relationship.

Posted by at 9:13 AM | Permalink

The short answer - elimination of a major network and bill review competitor, acquisition of a PBM and case management operator, and an annual revenue increase for Coventry's specialty division of about $320 million.

The annual revenue increase is equivalent to 150% of Coventry WC sub First Health's annual revenue, pushing the WC fee business at Coventry up over the half-billion dollar mark (annual revenues). Considering that this business is inordinately profitable, the financial rationale is clear.

Now, the longer answer.

Case Management - I've discussed this earlier

An IME network - Independent Medical Exams are performed by physicians on injured workers when there is a disagreement or lack of clarity about the appropriate medical treatment or prognosis or causality. Concentra has a large IME network, a service that can be sold right alongside case management.

A Pharmacy Benefit Manager, or PBM. Evidently one of the more attractive assets was Concentra's FirstScript. FirstScript has been around for years, but only recently has the company been investing significant resources in the PBM space.

A really large PPO network, albeit one with a wart or two. Concentra's FOCUS network (acquired from United Healthcare about eleven years ago) is very large, consisting of both direct contracted providers and agreements with other networks allowing FOCUS clients access to those networks' providers. Sources indicate about half of FOCUS' providers are contracted directly, with the rest coming in via other networks such as Aetna, Rockport, and Interplan.

The "warts" are related to recently-resolved legal issues. Concentra settled a couple of painful and long-running lawsuits, one in Louisiana and another in Pennsylvania, with providers who alleged that the company had engaged in selling "silent PPOs" to payers, as well as arbitrarily slashing bills without 'due process' (my words, not their's). The settlements cost Concentra upwards of $25 million, and required the company to hire more staff, communicate more clearly, and require their customers to actively direct injured workers to participating providers.

What Coventry is NOT getting are the group health and auto managed care businesses and the 310 Concentra clinics, which generated almost a billion in revenue last year.

The deal is scheduled to close the first week of April.

Posted by at 6:11 AM | Permalink

The state of Washington is a monopolistic workers comp state; unless an employer is large enough to be self-insured, it has to buy workers comp insurance from the state itself.

As a monopolistic state, the regulators have even more power than in the highly regulated but non-monopolistic states. One area of particular interest is how the state deals with the WC drug formulary, which specifically excludes Actiq and Lyrica.

Washington's Health Dept. just released new guidelines on the use of narcotic opioids; the guidelines, their development process, and the impact of same should be watched carefully by regulators, insurers, managed care firms and most of all prescribing physicians.

Focussed on chronic pain treatment, the guidelines call for a maximum daily dosage of 120 mg. of morphine or its equivalent

The guidelines were inspired in part by research indicating five injured workers were dying each year from overdoses of narcotics in the state. The state has made several tools available via the web for physicians looking to assess their prescriptions' compliance with the new guidelines.

The use of high cost and high impact narcotics continues to plague the workers comp world. Costs are rapidly increasing, and the impact of these drugs on claimants can be devastating. The US death rate from opioids is higher than the death rate from cocaine and heroin.

What does this mean for you?
While Washington's guidelines will not eliminate inappropriate prescribing, they will certainly affect prescribing patterns, and likely lead many physicians to more carefully consider the drugs they prescribe.

Posted by at 7:14 AM | Permalink

Two timely topics are in the news; the likelihood of cuts in the additional payments for Medicare Advantage programs and reductions in Medicare reimbursement rates for physicians.

The juxtaposition is just too...obvious to pass without comment.

Medicare Advantage (MA) programs are paid 12% more than regular-old-fee-for-service Medicare (and this excess payment goes to "managed care" plans??!!). The rationale is to encourage the private sector to become engaged in medicare programs, with the ultimate goal of demonstrating the private plans will reduce costs compared to the FFS system. That has not happened. That is one of the reasons Congress is very likely to slash MA payments, with the reduction amounting to about $65 billion over five years.

Meanwhile, we're entering the annual 'Medicare cuts physician reimbursement' discussion period, with Pres. Bush's health care proposals cutting $79 billion in health care funding, primarily by reducing provider reimbursement. Physicians look to be the hardest hit, with physician payments scheduled to drop by a whopping 8% at the beginning of 2008

Notably, the Bush budget proposal did not reduce funding for Medicare Advantage.

Politically, this is about as likely as a Bill Clinton memorial in Crawford Texas. And practically it makes even less sense. Physician incomes have been on a steady decline for several years, while health plan profits have enjoyed the opposite trajectory.

Now, there's lots of hand-wringing and pleas of poverty from the MA plan sponsors, noting they have already suffered from previous cuts. While I can sympathize wiith their plight, I'm not sure I get the logic of their arguments. If MA plans are supposed to be a viable alternative to FFS, why have only 17% of eligible recipients enrolled, and why do they need a subsidy?

What does this mean for you?

MA is an attempt to demonstrate how effectively the private sector can manage health care.

So far, it has not been impressive.

Posted by at 4:05 PM | Permalink | Comments (2)

Matthew Holt isi hosting this week's edition - click thru for the latest and greatest.

Posted by at 1:34 PM | Permalink

A study just released by the Commonwealth Fund supports my contention that in comparison to the other health care reform measures now in Congress, Pres. Bush's health care reform plan would have minimal impact on health care costs and the number of uninsured..

On the positive side, Sen Ron Wyden's Healthy Americans Act and the Stark/Kennedy/Dingell expansion of Medicare look pretty good.

Politically, I don't see how either the Bush plan or the expansion of Medicare are going to be palatable to the majority of Congresspeople. One is too much big government (Americare) and the other (Bush) is just a tax break masquerading as health care reform.

The Wyden plan preserves a healthy (no pun intended) role for private health insurers, maintains competition and the marketplace, yet covers everyone and removes much of the burden from employers who are hard-pressed to compete in the international economy with a health care burden double that in other countries.

What's not to like?

Posted by at 5:08 AM | Permalink | Comments (3)

The Bush health care reform (his words, not mine) package was supposed to be revenue neutral. Then, it was going to result in an increase in Federal tax revenue of half a trillion dollars over ten years. Now, it looks like the increase will be a third of a billion.

What gives and who cares and why should they?

If you just want the net, skip to the bottom. Policy geeks, revel in the detail below.

First, a quick review. Bush promoted his plan as a way to incent people to buy health insurance by giving them a tax break. Missing from his logic was the fact that essentially everyone with employer-sponsored health insurance already has that tax break. The rest of employment-aged folks either are too poor to afford insurance and too rich to get Medicaid, or buy it in the form of individual health insurance. The tax break was to help those folks who buy individual insurance coverage. Except that market is broken, dysfunctional, and does not provide coverage for anyone with a pre-existing condition.

So, Pres. Bush's solution relies on an insurance mechanism that for many just does not exist.

Bush's Treasury Dept. estimated the plan would be revenue neutral. That is, the tax break would be offset by increased taxes on health insurance premiums over $15,000 for families and $7,500 for individuals.

That estimate turned out to be, well, invalid; the next estimate by the Joint Committee on Taxation indicated that the Bush plan would raise tax revenue by a bit over $500 billion over ten years. (Tax increases are anathema to the conservative set, which may be why the original Treasury Dept. estimate was what it was.)

What gives?
The JCT revised its figures last week, reducing the tax increase to $333 billion. The revision is likely due in part to a difference in the projected rate of increase in health care premiums; if the trend rate pushes premiums above the $15,000/$7500 threshold sooner, more tax dollars come in, if the trend rate is lower, premiums stay under the threshold longer and tax revenues are lower as well.

Who cares?

Besides the Wall Street Journal's editorial board, very few folks, because the Bush plan is DoA. Besides the President's lack of political capital, the larger problem with the plan is it does nothing to address the core problem in health care - costs. It is tax policy writ large, not health care reform.

But, and it is a big but, the different revenue projections illustrate how tough it may be for policymakers to agree on the numbers.

The net.
It is highly likely that the health care reform program that is eventually adopted will have implications for employer and income taxes. The futzing around with the figures shows how fungible the tax income numbers are - we're talking a difference of a half-trillion dollars between the President's initial estimate and the JCT's.

Cost and revenue projections are going to be critical to health care reform, almost as critical as consensus regarding those figures. The confusion about the revenue impact of the President's plan demonstrates how tough it will be to gain that consensus.

Posted by at 7:50 AM | Permalink

The two major third party billers have been on the block for a few months. The first round of queries went out to financial buyers and lately they've opened the process up to potential strategic buyers as well. Why?

Asking prices and account receivable and business model concerns. We'll take them in order.

Word is that the DirectCompRx/TPS (Third Party Solutions) combination has an asking price of $275 million+. That's pretty steep for any asset, especially one with significant questions about accounts receivable. While WorkingRx is significantly less expensive, the asking price is purportedly in the $40 - $50 million range.

The valuations appear to reflect the sellers' attempt to position themselves as transaction companies. That's fine, except they are really factors.

And valuations for factors are about half those for transaction firms.

Interest may also be sketchy due to A/R concerns. Third party billers have seen their average receivables age significantly over the last couple of years, to the point that a significant portion of the receivables still on the books could be many months in arrears. Financial investors look very closely at the basics, and A/R is about as basic as it gets.

Now that the initial round has passed without success, the companies are now wooing potential strategic buyers. These were avoided in the initial round due to concerns about sharing market intelligence and potential competitive issues. Those concerns appear to have gone by the board in the quest for financial reward.

Meanhwhile, payers are getting increasingly tough with the TPBs. Some are rejecting inflated bills outright, others are refusing to pay TPBs, remitting payment instead to the dispensing pharmacy, and still others are just slashing bills to what they believe is an appropriate level and cutting the check.

What does this mean for you?

The days of "just pay them to make them go away" are dissappearing. This will continue as more payers realize the overpayments to TPBs are not responsible from a fiduciary perspective.

Posted by at 10:16 AM | Permalink | Comments (2)

First Health and Concentra (the managed care part, not the clinic part) have been out talking wiith customers and prospects, and information is starting to bubble up from other sources as well. At this point, no final decisions have been made (as the deal is not final that's no surprise), but there are some clear directions.

Concentra processes a bit over 10 million bills a year through the Ingenix PowerTrak system, which is ultimately licensed from United HealthGroup. Don't expect the merged company to continue to use PowerTrak. First, that would mean FH's parent company, Coventry, would have to cut a check each month to UHG. Not likely.

Second, FH already has a bill review system that processes more than twice as many bills that is essentially owned by FH. Adding 50% more volume further reduces the fixed costs associated with that system, while providing much needed cash to continue to improve "4.0"(the internal name for FH's bill review system)

Reports indicate FH will be consolidating the network contracts sooner rather than later. The addition of Concentra will add some much-needed strength in NY and TX, two markets where, to date, FH has been an also-ran.

Finally, left behind at Concentra are the clinics, Concentra's bill negotiation entity CPS, and group health network Beech Street. I'd expect to see Beech and CPS sold off before too much longer.

Posted by at 7:30 AM | Permalink | Comments (6)

Actions, or lack thereof, speak louder than State of the Union addresses.

From California HealthLine comes the news that the Administration has failed to comply with its legal obligation to respond to the Citizen's Health Care Working Group.

The Group was created by the 2003 Medicare Part D legislation and tasked with creating a national public debate on universal coverage to high quality care. It also produced an action plan that the Congress and President are supposed to consider in their legislative efforts. The President is required by law to respond to the report within 45 days; the deadline passed over four months ago.

So far, Pres. Bush's response has been to delegate his responsibility to HHS Sec. Mike Leavitt.

The Working Group's recommendations are pretty straight-forward - they include (among other recommendations):

- Establish public policy that all Americans have affordable health care.

- Guarantee financial protection against very high health care costs.

- Defining the core benefits and services that will be assured to all Americans.

I'm going to speculate that the reason the Bush Administration has not been able to respond as of yet is related to politics - I know, that's a "duh" comment. Hear me out.

Note that two of these recommendations are different ways of saying "universal access" regardless of ability to pay. That's expensive, and for an Administration that has little budgetary room to do much of anything, adding another really expensive program to the camel's burden will flatten the poor beast.

By not responding, the Administration is protecting itself from deficit hawks, who will scream if another un-affordable health care plan is promoted (can you spell "Part D"?). And avoiding a battle over health care, an issue where the opposition has much more traction.

The ball has been kicked down the road, perhaps into 2009, where someone else will have to deal with even higher budget deficits, more uninsured Americans, and a health care system even more broken.

Where's the "Decider" when you need him? (requires QuickTime 7)

Posted by at 7:42 AM | Permalink | Comments (3)

Return with us once again to the enlightened pens (ok, keyboards) of the policy wonks as they pass on their pragmatic, practical, and perspicacious prose to you, dear reader, in this publication of HWR.

We'll start with an entry from the august journal Health Affairs., where Sarah Dine provides some political background on the state health insurance program for kids (SCHIP), the funding of which is the subject of current debate among governors, Senate Finance and Budget committees, and the administration.

My favorite health care economist, Jason Shafrin did us all a favor. He attended the Eastern Economic Conference so we didn't have to (sorry, Jason, couldn't resist) - check out his post for a summary of three intriguing topics.

Michael Cannon is one guy with whom I rarely agree; that's not the case today. His entry for this edition of HWR makes an excellent point about limitations on para-professionals in the health care field.

HealthBlawg's David Harlow brings to your attention some not-well-publicized happenings at the federal regulatory level. It seems OMB is concerned that certain federal agencies have been off the reservation when it comes to sub-regulatory guidance, and is reining them in a bit. Recent case in point: CMS guidance on IDTFs (independent diagnostic testing facilities) that went way beyond implementation of the regs and off into new rulemaking territory without all the process; it was quietly withdrawn once folks had a chance to read it.

The smartest man in health policy, Bob Laszewski, has been telling us for over a year that Part D is a financial boondoggle. Now comes word that the US' Comptroller General agrees.

Staying in the governmental health policy milieu we now turn to the northeast, where Richard Eskow provides his usual trenchant analysis of health care data, this time of the Massachusetts reform initiative, to illustrate his lack of confidence in the single payer system.

Can't leave the Commonwealth just yet, as Tom Lynch of Workers Comp Insider examines the reasons why Massachusetts is one of the lowest cost workers compensation states in America for employers while it continues to rank among the top 5 in terms of benefits awarded to injured workers. A success story worth study by such WC disasters as NY.

Continuing the smooth segues, Julie Ferguson of Workers Comp Insider looks at the emerging health literacy crisis and its implications for workers comp.

Hank Stern of InsureBlog is always informative - always fresh, Hank's position in this post is contrary to the conventional wisdom is that Health Savings Accounts benefit only "the healthy and wealthy.

Not sure I agree with Hank, but I do know that some aspects of consumerism in health care do make sense. That said, the crude nature of today's CDHP programs likely do more harm than good.

The Wal-mart discount drug model has generated a bit of press, none more insightful than the entry from David Williams of the Health Business blog.

An edition of HWR requires a solid leavening of tech talk. We'll lead with Matthew Holt, who went to HIMSS; here's the HWR co-founder's "gonzo mash-up" assessment of what he saw. (Sounds like Matt's been channeling Ken Kesey...)

Matt is joined by Tim Gee in today's tech talk section. Tim's taken a look at the different strategies of tech companies Microsoft and RedHat, as they confront the industry's pressures to improve patient safety and reduce costs, pressures which continue to rage as health care vendors struggle to respond but not really change anything.

Roy Poses of Healthcare Renewal truly is the conscience of medical education. In his entry, Roy discusses a medical school dean criticized for signing up for the board of directors of PepsiAmerica. But she seemed to think that her role would be to advise the company about health policy issues, not to take fiduciary responsibility for the operations of the company. Could the apparent mini-epidemic of academic health care leaders who have signed up to be directors of big health care corporations be based on this sort of misunderstanding or rationalization of the role of a corporate director?

Illustrating why the blogosphere is home to research and writing that just can't be found in the mass media, last year, Fard Johnmar published an eight-part series focusing on race and medicine on his blog Envisioning 2.0. The series featured commentary from NitoMed, the makers of the African American cardiovascular medication BiDil, and host of scientists, epidemiologists and physicians and others. Recently, the series has attracted attention from medical students at the University of New Mexico. They are currently debating the usefulness of using race as a proxy for identifying and treating illness, the health policy implications of race-based medicine and other related subjects.

Rita Schwab is always timely and topical; her entry concerning a recent court decision could be described as a lesson in unintended consequences. This is an interesting case on two levels - one the physician won his West Virginia Supreme Court case granting him the right to be self-insured, and secondly, the court opened hospital Governing Board and Medical Staff Executive Committee meetings to the public under West Virginia law. Should make for some interesting meetings!

And finally, a newbie to HWR has a great post about signs in doctor's waiting rooms complaining about personal injury attorneys and tort reform. Well done Eric!

Sorry to leave you, dear reader, pleading for more, praying for the next HWR with pent-up pleas for more health care plans, whether they be problematic or polished, positive or pusillanimous, but practical matters of a pecuniary persuasion await your polemicist.

Posted by at 5:43 PM | Permalink | Comments (2)

Consumers will price shop for some medical services, and won't for others. And the times they are most likely to shop are when services are after a diagnosis has been made, the services sought are relatively simple and elective, and the consumer's insurance plan motivates shopping.

Those are the key points in Paul Ginsburg's MarketWatch piece in Health Affairs' most recent Web edition. (full access requires a subscription to HA)

Here's the breakdown of factors influencing price-shopping behavior.

Complexity - services such as pharmacy, imaging, and preventive services including mammography are more likely to be price-shopped than other, more complex services.

Urgency - Almost no one is gong to price shop for emergent services. And, these services do not lend themselves to price shopping because the patient does not know what services will berequired.

Pre- or post-diagnosis - until the patient knows what's wrong, it's just not feasible to price shop. Ginsburg uses the example of low back pain, which could be due to myriad factors, and thus could require a wide range of services such as medication, therapy, imaging, surgery, acupuncture, and/or rest.

Bundled services - anyone who has been treated in a hospital knows that they are going to get bills from the facility, each physician who came near tham and some that did not. As medical treatment comes from a variety of independent suppliers, it is not possible to price shop each and every one.

Benefit design - the structure and amount of patient cost-sharing has a significant impact on their price sensitivity. One of the points I have repeatedly made is that for the relatively small number of consumers who consume the majority of health care services, a large deductible is meaningless as it is exceeded early in the year. And after that deductible is exceeded, there is very little to no price sensitivity on the part of the consumer.

Paul's article is a carefully considered and thoughtful piece - anyone interested in consumerism and price/quality shopping should read it.

Posted by at 6:46 AM | Permalink | Comments (1)

Workers comp reform is moving thru Albany at blinding speed. The state Senate and Assembly both passed the reform bill unanimously, a previously unheard-of accomplishment for an issue that has been so contentious.

The key parts of the bill are an increase in the maximum and minimum weekly indemnity payments, stronger enforcement provisions, the termination of the Second Injury Fund, and a limit on duration of TTD benefits.

My sense is some of the less-publicized elements may end up having just as much impact. For example, the bill calls for premium credits for employers utilizing loss prevention programs, return to work programs, and/or alcohol and drug prevention. Many injuries, especially involving motor vehicles, involve substance abuse, so the latter provision may result in a significant payoff.

Left a bit up in the air are details surrounding the use of medical guidelines and a provision ensuring claimants have more access to imaging services. Diagnostic imaging has been one of the only bright spots in applying managed care in the state; we'll be looking closely to see if this is actually a set back.

A panel has been tasked with identifying medical guidelines by the end of the year; this could be a major win in a state where the treating physician seems to be accorded all-knowing status.

Posted by at 8:00 AM | Permalink

I'm on a bit of a tear these days on the work comp drug thing; the more I talk with knowledgeable people the crazier it gets. Several recent conversations concerned the factors driving up costs: here's what a few industry experts believe.

When you net it out, costs go up due to two factors - the price per pill and the number of pills. Yes, this is simplistic, but it provides a good starting point.

Price increases last year were primarly due to two factors - manufacturers taking advantage of Part D enrollment to tack on a few extra points across the board and Cephalon dramatically increasing prices for Actiq before it went off patent at the end of the year.

Both factors probably contributed 6-8 points of price inflation.

Utilization of pain meds continues to ramp up, especially for meds that are not specifically for pain. This category includes ant-convulsants and nerve pain meds.

AWP is going away soon. And good riddance.

The sooner Workers Comp payers stop thinking about the price per pill and start thinking about the cost of drugs on a per-claim basis, the better off they will be.

Posted by at 10:34 PM | Permalink | Comments (2)

Big changes are coming to Medicare, changes that are going to dramatically effect health plans, providers, PBMs, and pharma.

Medicare Advantage's "bonus" payments are going to be cut significantly, Part D sponsors will likely see reductions in their payments from the Feds, and the planned 10% reduction in Medicare's physician reimbursement is not going to happen.

So why isn't the stock market reacting?

The big health insurers have been experiencing high valuations of late, and recent news about pending state and Federal health care reform initiatives have done nothing but increase market cap. United Health Group, the largest health plan publicly traded, actually has seen its stock price bump up recently. This despite its position as one of the largest participants in Part D.

Health care (provider and manufacturer) stocks' recent decline has paralleled the S&P's drop; the market doesn't look to be more concerned about health care than about the overall economic picture.

Perhaps analysts and investors don't think the Democratic majorities are going to slash MedAdvantage payments, address Part D overpayments, or keep paying docs.

If that's the case, they are likely wrong.

Posted by at 6:59 AM | Permalink | Comments (1)

Jim Andrews of Cypress Care (a consulting client and WC PBM) gave a talk yesterday about some of the differences between drug spend in WC and group health. Here are a few of the main points I picked up.

The drugs that consume the most dollars in WC are rarely in the health world's top 50. Examples include Skelaxin, duragesic patches, Lyrica, and Actiq.

Pain drugs account for the vast majority of WC scripts. The list of pain drugs includes narcotic opioids, NSAIDS, and anticonvulsants.

The amount of fentanyl (a powerful narcotic opioid) prescribed is just stunning. And the physicians responsible for most of it are typically PM&R docs and anesthesiologists.

By the effective use of data mining to identify off-label usage of drugs and peer review to intervene where appropriate, fully two-thirds of the patients on Actiq can be converted to a less powerful, less addictive, much less expensive drug. (Actiq scripts typically run $2500 per month)

Fentora is essentially a new formulation of Actiq, with a new patent protection period and a cheaper price (actually not much cheaper, especially considering Actiq's price went up 100% last year). In its first three months of sales, Fentora racked up almost $30 million.

What does this mean for you?

Managing drugs in workers comp is much much different than in the group health or Part D worlds. If you are using a PBM that focuses on group health...

Posted by at 5:47 AM | Permalink | Comments (1)