Jun
19

Roads to stability

After eight days with family in Tuscany, it’s back to work.

Before we dive into the mundane, an observation from my travels.

This is a road built by the Romans about 2000 years ago. It’s still pretty functional, as were most of the ones we rode on in the hills and valleys of Tuscany. Sure, it could be smoother and a bit less steep (or a LOT less steep) in places, but it’s still there.

The Romans built these by hand, with nothing but human and animal power, with no electronics or computers or drones or satellite or engineering apps, no internal combustion or hydraulics or steam- or coal- powered machines. And they’re still here.

The Romans built these roads to speed communications, trade, and security. The labor that built these roads was drawn from the poor in the cities, local farms and landowners.

Somehow, that bumpy, narrow road of stones buried in the dirt eons ago felt a lot more…reliable.

All those opioid bills in Congress

Now we know why Congress can’t get anything done – At last count there were about 30 opioid-related bills in various stages in the House or Senate – over 20 have actually been passed by the House. One of the bills that addresses the Institutions for Mental Diseases is pretty contentious.

According to the Washington Post, the “IMD exclusion”  prohibits federal Medicaid reimbursements for inpatient treatment centers with more than 16 beds whose patients are mainly suffering from severe mental illness. The House bill would lift the exclusion for treatment of opioid addiction- but ONLY opioid addiction.

This ignores the very real and pervasive nature of other-substance addiction that has long plagued poor rural, minority and inner-city populations – crystal meth is just one example.

Why we’d pass a bill that doesn’t address crystal meth, which is a disaster in many rural communities from Maine to Arizona, is beyond me.

But there’s another issue here that’s even more troubling; this bill ignores the real problem; community-based treatment has always been starved for funds, unable to help millions of people who endlessly wait their turn for treatment.

Experts believe we need north of $10 billion per year to make a real impact on substance abuse disorder

Fact is, many with substance abuse disorder want to get treatment – there just isn’t any available. And allowing Medicaid to spend billions on care delivered in large institutions sounds a lot like a hand-out of taxpayer dollars to big business-owned “treatment” centers.

The IMD exclusion repeal is just window-dressing, a way for politicians to claim they’re doing something while handing billions to an industry with really good lobbying.

What does this mean for you?

The Romans built very expensive and very solid, stable, and durable roads that led to the long-term survival and success of the Empire.

We give truckloads of taxpayer dollars to big business while ignoring the devastation of the rural and inner-city poor.

Where will our decision lead us?

 


Jun
6

What do these acquisitions mean?

Two just-announced acquisitions are an indicator of where things are in today’s work comp services world.

Tech firm Mitchell (recently bought by Stone Point (!) thanks for correcting me JT!) will acquire IME and peer review firm MCN.  Based in Seattle, privately-held MCN is one of the larger independent firms in that space, has a national network of 13,000 physician reviewers and a solid customer list. Brian Grant MD founded the company 30+ years ago and built it into a firm serving the auto, comp, and disability insurance industries.

This deal adds depth to Mitchell’s already-extensive utilization review/peer review offering, and adds cross-selling opportunities that should help the company compete with Examworks.

Strategically, the acquisition both broadens Mitchell’s non-bill review business and strengthens its offerings outside the auto casualty space, changes that lessen Mitchell’s reliance on auto and work comp review.  Given the long-term uncertainty about those businesses, the transaction makes sense – especially if the company focuses on disability, a space not subject to the impact of autonomous vehicles and the structural decline in work comp claim frequency.

One source indicates the price was in the 12x earnings range; that could not be independently verified.

In an unrelated transaction, TPA SUNZ bought case management firm Ascential Care in a deal announced on WorkCompWire this morning.  SUNZ sells high-deductible work comp plans to professional employer organizations (PEOs), staffing companies and larger employers.

I’d expect Ascential’s case management to be more tightly integrated with SUNZ’ claims management processes. Employers with loss-sensitive plans almost always buy into proactive, rapid use of clinical staff when claims arise. Getting case managers involved – when appropriate – can avoid problems and help patients feel like their employer is working to help them recover.

Ascential CEO Rich Leonardo is staying on and will continue to lead the business and SUNZ is investing in more staff to meet client needs.

Takeaway

For the umpteenth time time, workers’ comp is a very mature industry (as is auto).  Service companies looking to grow have to either:

  • take share from competitors;
  • buy other, similar businesses;
  • buy related businesses; or
  • expand into other markets.

Mitchell is growing by acquisition, adding more depth to its current medical management operation.  SUNZ is capturing more of the services delivered to current customers, thereby keeping those dollars inhouse.

What does this mean for you?

If you want to grow, see above. If that’s going to be hard to do, think about who may want to buy you.


Jun
5

BWC Ohio picks a new Pharmacy Benefit Manager

Several weeks ago Ohio’s state work comp fund – the Bureau of Workers’ Compensation – selected a new PBM to replace OptumRx.

This has me thinking more broadly about the vendor-customer relationship and how that’s evolving.

First, buyers are getting smarter. BWC’s former and current pharmacy directors (John Hanna and Nicholas Trego respectively) are not just pharmacists, they have become expert in pricing, auditing PBM transactions, understanding contracting language, and negotiations.

According to WorkCompCentral’s William Rabb, BWC learned it was paying OptumRx millions more than it should have after conducting an audit earlier this year.  Quoting Rabb:

an audit showed that the current PBM, OptumRx, failed to keep drug prices below the maximum allowable cost as required.

The audit is here.

Without getting too deep in the weeds here, allegedly OptumRx was supposed to keep generic drug prices at or below a Maximum Allowable Cost, or MAC. However, the audit indicated OptumRx failed to do that, resulting in BWC paying about $5.7 million more for generics than it should have.

Seems straightforward, but this can be hard to figure out as the list of drugs subject to MAC list pricing is often not disclosed.  That is, the PBM has a “proprietary” MAC list which it does NOT have to share with its customer.

Obviously this makes it hard for the customer to figure out if it is paying what it should.

Second, major issues don’t just pop up out of thin air; its unlikely BWC first expressed concerns a few months ago.

Moving an $84 million pharmacy program – or any big service – is no easy task; there’s a ton of systems programming to be done and tested; patients to be switched from one PBM to the new one; adjusters and case managers to train; financial arrangements to be agreed upon; pharmacies and employers to educate; and myriad other tasks.

Payers do NOT make changes unless they have no other choice due to the switching cost, potential business and patient care disruption, and internal stress involved in moving to a new PBM (or any other service type).

Service providers need to ensure that their senior managers and front-line staff understand their customer’s situation, concerns, needs, and plans.  Equally important, senior management must empower their client-facing staff, giving those staff the ability to fix problems, highlight issues, and marshal resources needed to meet clients’ needs. (I’d note that Optum’s work comp PBM recently brought Kaye Lewis back on board to run account management; Kaye is universally well-regarded and one of the best in the business; I had mistakenly said Kaye was working with OptumRx which focuses on the broader health marketplace. I regret the error. )

Third, vendors need to own up to and deliver on their commitments to all involved.  Quibbling over contractual terms, arguing over this clause or that, or word-stretching to avoid doing what the customer or the customer’s advocates need done reflects short-term, myopic thinking.

Sure, you may be “right”, but you’ll win that battle and lose the war.

What does this mean for you?

These days customers are harder and harder to come by, so when you get one, make darn sure you keep them. Listen, anticipate, deliver, and be flexible.

And most of all, meet their needs.


Jun
4

Drug rebates, technology, and what’s next

Two years ago, brand drug manufacturers paid out $127 billion in rebates and other discounts and fees.

That, dear reader, is a ship-load of dollars, and shows just how distorted brand-drug pricing has become.  Huge increases jack up list prices and in many instances consumers’ costs, while those fees flow to payers, PBMs, and other entities in the pharma distribution.

Most consumers’ costs are based on the total price of the drugs they buy, not the net price after rebates etc. As a result, consumers may be paying an inflated price while their insurer gets the rebate dollars. I’d note that in some benefit plans consumers do receive a share of the rebates in the form of discounted drugs or lower up-front costs. Two big PBMs indicate they give about 90% of rebate dollars to their clients. 

Who hopefully pass those dollars along to their members.

Evidently, rebate contractual terms can be opaque, confusing, and subject to misinterpretation, a rather scary possibility given the billions at stake.

I recently spoke with the CEO of a company that’s deep into the rebate management process. Quantivus uses technology to help payers and pharma track all those clauses, heretofores, and whereas-es in rebate contracts to be sure the right dollars are paid for the right drugs to the right entities.

Quantivus’ solution helps stakeholders standardize terms and definitions, allowing them to ensure that they are comparing apples to apples when considering rival drugs – or rival payers. It does other stuff as well, and the company is working on a related service that will tie the negotiated contract to operational systems, helping to standardize reporting of rebate financials for manufacturers and payers.

It’s interesting in a couple of geeky ways; evidently these contracts are so complex and convoluted that they can be mis-interpreted or misunderstood, potentially costing the pharma company or its customer millions. Which there are plenty of.

It’s also interesting in that CEO Lisa Bair and her team have figured out a software solution to a problem that seems to get more complicated and more financially important by the minute.

If I was an attorney focused on rebate contracts, I’d be just a bit concerned that I could be replaced by Bair’s technology.

 

 

 


May
31

Thursday catch-up

Lots going on out there – here’s what you may have missed…

Opioids

The awful people at Purdue Pharma knew damn well their opioids were being misused, repeatedly denied it, and kept pushing their pills on doctors and patients. They lied to investigators, manipulated data, and are directly responsible for today’s opioid disaster. This from Barry Meier’s piece:

credit NYTimes

But the Feds aren’t blameless; in 2007 the US Justice Department allowed Purdue officials and the company to plead guilty to misdemeanor charges.

Think of that – misdemeanor charges for those most responsible for the opioid epidemic. Street corner drug dealers go to jail for years, and these fat cat execs with their lavish lifestyles and fancy lawyers pay a small fine.

I cannot put into words how much I hate these bastards, and how furious we all should be about a Justice Department that let them get away with it..

Breathe…

WCRI is hosting a webinar on the impact of opioids on disability duration on Thursday June 21 at 1pm eastern. Bogdan Savych PhD will address the following questions:

  • Do opioid prescriptions increase duration of temporary disability benefits?
  • Do longer-term opioid prescriptions increase duration of temporary disability benefits?
  • What role do local prescribing patterns play in determining whether injured workers received opioid prescriptions?

The study examines the effect of opioid prescriptions on the duration of temporary disability benefits among workers with work-related low back injuries using data from 28 states, for injuries between 2008 and 2013.

Register here…free for WCRI members, a nominal fee for others.

If you’re wondering why Congress isn’t doing more to attack the opioid crisis – and it isn’t doing much at all – blame the lobbyists, including those working for the AMA, the seventh highest lobbying spender in 2017, with $21.5 million spent.

The AMA is fighting 3-day opioid script limits, mandatory use of Prescription Drug Monitoring Programs, and mandatory opioid education for prescribers.

WTF??!!!

Twisting words to blame the victim

Poor people are less healthy than people who aren’t poor. That’s because their diets aren’t as good, they have poor access to care, their lives are far more stressful, substance abuse is more prevalent, and they are more often victims of crime.

These factors have long been known as “social determinants of health”, the idea that just being poor means moms, kids, dads are going to be less healthy than you and me.

The “work for Medicaid” crowd is attempting to steal the term “social determinants” by using it to claim that forcing people to work for Medicaid is good for them.

That’s just not true. In fact, forcing Medicaid recipients to go thru a maze of paperwork and administrative hurdles to prove they can’t work  – and if that recipient messes up the paperwork, fails to submit it on time, or isn’t able to accurately document their disability,

BOOM! they lose Medicaid coverage.

And they get sicker, and we end up paying for their care in the ER.

And the data shows folks who HAVE Medicaid are better able to find work! From the HealthAffairs piece:

illness and disability are among the primary reasons working-age adults are not employed and this problem is exacerbated when people lack access to the health coverage they need get care for their health problems. Enrollment in health coverage has been shown to be a significant factor in helping individuals find jobs, with over 75 percent of unemployed Medicaid enrollees in Ohio reporting that gaining access to health coverage made their job search easier.

Oh, and at least one state’s policies is blatantly racist.

There’s more, but I have to get to work.

 


May
30

King v CompPartners and the Duty of Care

To what extent are utilization reviewers care providers?

That was NOT the central question argued yesterday in the King v CompPartners case before the California Supreme Court.

The case appears straightforward; the plaintiff was prescribed Kolonopin, which was denied after going through the UR and IMR process. When he stopped taking the drug, he suffered several grand mal seizures which led to additional injury. The plaintiffs are arguing the UR physician who wrote the final denial should have authorized or otherwise recommended a gradual withdrawal, as seizures are not uncommon when patients suddenly stop taking Klonopin (Mr King had been taking it for two years).  In the view of the plaintiffs, failing to do that amounted to medical malpractice .

The central legal issue in this case is the exclusive remedy nature of workers’ comp, with the defendant arguing that he cannot be charged with malpractice as the UR determination and related processes took place within the workers’ comp system. While that’s the central issue, it’s not my focus.

Rather, I’m interested in the “duty of care” issue. I’ll leave the exclusive remedy issue to the lawyers; the health of the patient – and who is responsible for that – is what’s important to me.

There’s some pertinent case law in California that speaks to the “duty of care”, a phrase that infers the physician doing the review  is responsible  – to some degree – for the medical treatment and results thereof associated with his/her UR determination. In fact, the first court ruling verified that the UR physician owed the patient a duty of care.

The question seems to be, how broad and deep was the duty owed the patient?

The case went to appeal, and the court asserted that the UR physician did have a duty of care. From my reading, it based that assertion on the court’s view that a UR physician is implicitly acting as a medical provider.

However – and this is where it gets sticky – the duty of care varies depending on the patient’s specific situation.  

There’s a legal and an ethical issue here. First, that “standard” is pretty nebulous, ripe for disagreement and litigation.

Ethically it’s more clear. The UR entity should always consider the implications of its decision, the potential negative health consequences, as well as the narrower workers’ comp medical considerations of relatedness, appropriateness, and causation.

Because at the end of the day, it’s about doing the right thing for the patient.

Here’s where the reality that is California’s work comp screws things up; payers often base their decisions on which UR vendor to use largely on price.  UR is seen as a commodity, a necessary evil, especially in California where medical management costs account for way too much of the claims dollar.

Payers are looking to get the cheapest UR they can, while some providers and their legal/lobbying supporters scream about high administrative expenses, inferring those dollars should be spent on patients.

What does this mean for you?

What patients need is careful, thorough UR by physicians with the time and training to foresee and speak to potential consequences of their determinations. And that costs money.

Both payers and their adversaries would be well served to acknowledge that fact.

Note – I haven’t read the UR/IMR determination itself, so I don’t know if or to what degree the UR physician delved into the Klonopin withdrawal issue, nor do I know if that was discussed with the treating physician.

Rather my perspective is how these things should be handled and what the primary consideration should be.

 

 


May
25

Health insurance status and workers’ comp

The headlines were comforting – not much change in the number of Americans without health insurance.

Before you breathe that sigh of relief, you’d be well-advised to dig a bit deeper, because there’s plenty of bad news just under the headline.

While the national number of uninsured stayed about the same, that’s irrelevant to you – because healthcare is local. Here’s what I’d be worried about.

  • Young adults are almost twice as likely as older adults to be uninsured – about one in six younger adults don’t have coverage.
    Takeaway – no health insurance = more incentive to file work comp claims 
  • Over a quarter of working-age Texans don’t have coverage. Georgia, Florida, and North Carolina are not far behind

    Takeaway – no health insurance = poorer health status, more comorbidities, more charity care for providers thus more incentive to cost- and claim-shift.

  • 44% of working-age adults were covered by high-deductible plans – but more than half of them don’t have health savings accounts needed to fund those high deductibles

Takeaway – “High” deductible healthplans aren’t much different than no insurance at all if the patient can’t afford the deductible – and over half can’t. So, more incentive to cost- and claim-shift.

What does this mean for you?

Workers’ comp will be affected by the Administration’s ongoing behind-the-scene effort to hollow out the ACA and cut funding for Medicare and Medicaid.

 


May
23

Hartwig on the economy and workers’ comp

Dr Bob Hartwig of the University of South Carolina gave his annual whirlwind tour of all things economic. The net – his talk was an exuberant paean to the US economy – and the impact of that economy on workers comp.

My view –

  • the data doesn’t indicate the economy has noticeably strengthened over the last year or so;
  • consumer and small business confidence levels are notoriously fickle; and
  • there are lots of warning signs out there that merit close attention; warning signs that weren’t adequately addressed in the talk.

While he briefly noted several potential issues with the economy, overall Bob painted a picture of businesses investing, consumers spending, profits abounding, and sunshine and happiness all around.

I’m not so sure.

For example, he cited as one reason for the nation’s positivity this datapoint; GDP growth was north of 3 percent for two quarters last year. Well, that’s true. However…

He chose two quarters where growth was over 3 percent – but in reality annual growth was 2.6% last year.

And 2.3 percent for the first quarter of 2018.

And last year’s 2 quarters paled in comparison to the 3.5 percent growth in 4 out of 5 quarters we saw in 2013-2014.

A 2.6 percent annual increase is solid, but by no means a boom.  Bob did cite the high consumer confidence index, small business confidence, and a variety of other factors as support for his overall very positive outlook.

While people may be “confident”, confidence is a state of mind that can change really quickly…and there are dark clouds on the horizon.

For example – wages remain low; consumer debt levels are at historic highs (26% of earnings); the Federal debt and deficit is going to soar, driving up interest rates; and there’s a real risk of trade wars.

If consumers feel strapped and stop buying, things will get ugly. Given the record levels of consumer debt, I don’t see how the buying surge can keep going unless wages increase and interest rates stay low – which isn’t happening.

Bob briefly noted the issue of wage stagnation, but did not discuss the impact of this – and the fact that this is a chronic problem for consumers and businesses. In fact, the financial gains are not going to workers, but to investors and owners…who are less likely to use their newly-gotten tax gains and profits to buy pickups and groceries and movie tickets.

He talked about job openings, specifically the 6 million job openings today – perhaps those jobs are open because employers aren’t willing to pay enough to get people who have left the workforce back in the job market.

He did address the the long-term unemployed, sort of.  Hartwig stated that the number of folks not looking for work is not going to change due to a number of factors (citing the U-6 unemployment rate, which includes those not actively looking for work – slide 17).

Got to admit this was confusing… the overall labor force participation rate, which has been pretty flat since 2014, was often cited by Obama critics as proof that the “recovery” was no recovery at all.  Now we hear that the unemployment rate – which is the inverse of the labor force participation rate – isn’t likely to change. [I emailed Dr Hartwig Monday asking for clarification; haven’t heard back yet but will update the post if I do]

Well, which one is it – will people return to the workforce or not?

Here’s a detailed discussion of labor force participation rates; note that the rate today is exactly what it was in January 2017 – 62.9%. And here’s why labor force participation is viewed as a better measure than unemployment.  Here too.

Clouds on the horizon

Hartwig did note a few potential issues…

  • the possibility of trade wars affecting employment; those industries most at risk – aircraft, electrical equipment, fabricated metals are among the top potential victims,
  • infrastructure improvements likely won’t have much of an effect.
  • the pending huge increase in the Federal debt  – Bob said that interest rates “may” have to increase.

May???

Not only will interest rates go up (for businesses and the Feds), but a much larger percentage of Federal spending will go to debt service. In fact, we can expect the Fed to increase rates this year.

What does this mean for you?

The data points cited by Dr Hartwig don’t indicate the economy has strengthened appreciably over the last 18 months. Yes, consumer and small business confidence indicators are strong, but they appear to be based not on real economic conditions but on emotion.

Emotions can change fast.


May
22

Swedlow on work comp networks…they are NOT equal

The best was saved for last at NCCI’s Annual Issues Symposium. After Gen (ret) Colin Powell warmed up the crowd, NCCI’s Barry Lipton and CWCI’s Alex Swedlow took to the stage to educate us on networks and outcomes.

First, California. Average medical costs have gone up 4.3x in CA since 1990; while there have been lots of regulatory and legislative efforts to add guidelines, enable managed care, and increase network usage, ultimate medical costs now are over $37k.

Network penetration in CA is now around 84% for physician services – where it looks like it has peaked.  Along with this increase has come an increase in administrative expenses.  WC Admin expense in CA now accounts for 53% of work comp costs, more than twice the average across the nation.

41% of those costs are for med management (31% for defense attorney expense). Bill review and network account for 47% of those medical management costs, UR is the remainder. (these percentages have been pretty static over the last decade).

So, what are you getting for all your millions?

Fortunately, CWCI’s done a lot of work to evaluate that very question. And they dug really deep. The slide below describes the data points CWCI used in their network evaluation.

Swedlow et al then looked at individual networks, comparing 11 different networks’ outcomes for claims (case mix adjusted, incurred between 2011-2014, developed thru 2017). Lots of takeways that will be published in a few weeks after final editing.

But here’s a spoiler –

There’s a huge amount of variation between networks, and some are delivering excellent results while others are worse than no network at all.   I direct your attention to the right side of the picture; note that average case-mix-adjusted cost per claim varied by 82 percent.

If you used the MPNs on the left side of the graph, your medical loss costs per claim would be over $11,000 lower than if you used the MPNs on the right.

And, your patients would get back to work two months earlier.

My takeaway is this – there are two types of MPNs; the State Fund and Kaiser Permanente On-The-Job type that is outcome-based, highly selective, and focused on care. This Outcome-based MPN, Or O-MPN is on the left of the screen.

And the revenue-based, that are focused on generating dollars off savings below fee schedule and other meaningless standards. On the right of the screen, the revenue-based MPN, or R-MPN, is huge, includes every provider in the book and some who haven’t been in the book for some time, is completely unmanaged, and generates beaucoup bucks for the payers that use it.

Lots of other great insights in the session which I missed – I had to run to get to the airport.

What does this mean for you?

Depends…Is your MPN an R-MPN or an O-MPN?  

 

 


May
21

Risk Managers and work comp outcomes

Walt Disney, Darden, and Publix’ risk managers gave their views on a variety of topics at last week’s NCCI AIS – including provider networks and outcomes.

Walt Disney direct contracts with providers, evaluates outcomes, and monitors those providers on an ongoing basis. The company also administers its own claims, has its own medical management staff, and tightly coordinates with it’s PBM – myMatrixx/Express Scripts.

Got to say, I’m pretty impressed with this approach, the depth of understanding of real costs drivers it shows, and the investment made by Disney.  Kudos to Risk Management VP Michele Adams and her colleagues.

That said, Disney has a major advantage over other employers – tens of thousands of workers located in one place equals huge buying power. I heard from several risk managers at the break that Disney’s situation is unique and one that doesn’t really apply to them.

My take – there is ALWAYS something you can learn from well-run programs. Instead of focusing on what you can’t do, focus on how you can adopt principles of successful programs in your situation. For example, buying power is a function of dollars per provider; the fewer dollars you have, the fewer providers you need.

Allocate your dollars to a few providers and you will get their attention. And yes, you can soft channel in so-called “non-direction” states.

Publix’ Marc Salm reported that his workers sometimes complain about specific providers they use, and those providers are often the ones with poorer outcomes.  Salm also seemed to infer that most large employers are focused on outcomes, and select providers based in large part on that criterion.

Marc may talk with different folks than I do; suffice it to say I haven’t encountered more than a handful of large employers that are engaged to any measurable degree in provider selection or network evaluation, much less outcomes.

My sense is this is the primary reason outcomes-based networks haven’t taken off; there just isn’t the demand.

That said, there are several companies – Albertsons’ being one – that rely on Kaiser Permanente On-the-Job (KPOJ) for all or a large chunk occupational care.  They’ve made the decision to work exclusively with KPOJ because the care model works, the providers’ incentives are appropriate, and most importantly, the outcomes are superior. So, perhaps Marc and I are talking with the same folks – at least in California.

Darden outsources network selection and pretty much all managed care functions to its claim administrator.