Physician dispensing in work comp; two victories!

I know, you are as tired of reading about physician dispensing in work comp as I am writing about it.  At last, there’s some very good news.

Quick refresher – docs dispensing drugs adds about a billion dollars in excess drug costs – plus increases disability duration by 10 percent, medical costs, and total claims costs.  Dispensing docs also prescribe more opioids to more claimants.

Benefits?  None, except huge profits to dispensing docs, dispensing companies, and their owners – we’re talking about you, ABRY. (investment firm that owns dispensing “technology” firm Automated Healthcare Solutions)

First up, a court case in Louisiana found in favor of the employer, as the 3rd Circuit upheld a workers’ compensation judge’s determination that a claimant would not be reimbursed for drugs dispensed by a third party pharmacy, in this case Injured Workers’ Pharmacy, when the employer had provided access to other pharmacies and otherwise complied with regulations. According to Troy Prevot, Executive Director of LCTA Workers’ Comp -  “The result of this decision will allow us to continue to use retail pharmacies to control pharmacy cost by negotiating lower pricing thru PBMs” instead of paying much higher prices for doctor dispensed or third-party mail order drugs.  

I’d add that LCTA’s victory will enable all other employers in Louisiana to ensure the clinical management of pharmacy is handled correctly by one entity.

Big news from Pennsylvania too – a bill (HB 1846) limiting physician dispensing duration and cost, and specifically targeting opioid dispensing, will become law (there’s some technical stuff going on, but it will happen). Among other things, the law will:

There has been much heavy lifting here – kudos to AIA, the Insurance Federation of Pennsylvania (the leader of the effort) PCI, the PA Chamber and CompPharma’s member PBMs (full disclosure I am president of CompPharma; the PBMs did the work).

This follows the good results in North Carolina – but all is not rosy, as Maryland and Hawaii employers and taxpayers are still stuck paying far too much for drugs and the crappy outcomes they deliver.

What does this mean for you?

Better outcomes for claimants, lower costs for employers and taxpayers!

Monday catch up

Quick and clean – here’s what else was going on last week.

First, hands OFF the Ebola panic button.  Yes, a nurse who treated the Liberian man in Dallas has reportedly been diagnosed with the disease.  That makes TWO people in this country – out of 320 million.  By way of comparison, more left-handed redheads with Lynryd Skynryd tattoos have been bitten by sharks wearing dentures than have contracted Ebola…

Hank Stern has a post wondering why some treatments for autism aren’t covered for people over 21. Kaiser Health News spoke to an expert who thinks these treatments will be covered as soon as someone initiates a legal challenge; the key is the Mental Health Parity law, which prohibits discrimination based on “quantitative” measures – age is one.

Work comp

Kudos to Arizona for pushing forward on opioid and pain management guidelines.  The guidelines and the draft rules to implement them are slated to be completed by the end of this year – and it’s obvious there’s been a lot of thought put in to implementation. Greg Jones has the details at WorkCompCentral.  [subscription required]

WCC’s Joey Berlin has the news that Tennessee is also working on opioid/pain guidelines, and his sources appear to be very well tuned in to issues related to comp – such as workers prescribed opioids who are still on the job.

This is very, very good news.  And, with this am’s WorkCompCentral reporting three other southeastern states are exploring adopting guidelines it is clear that the powers-that-can in many states are rapidly moving to address the issue.  Side note – the folks interviewed for the WCC article have a high level of understanding of guidelines and differentiation amongst different types – good news indeed.

The good folk in Oregon have released their biannual report comparing states’ workers’ comp premiums; California has the highest rates, followed by three northeastern states – Connecticut New York and New Jersey. Kudos to Jay Dotter and Mike Manley for their work – which is always eagerly anticipated as it is the only survey of its kind.

Texas’ work comp research folks published their annual report – WorkCompWire has the info here.

WCRI’s webinar on research into predictors of worker outcomes has been heavily subscribed, so capacity for the webinar has been doubled.  Sign up here.

Don’t miss Dr Jake Lazarovic’s article on Accountable Care Organizations and work comp.  The Medical Director for Broadspire has penned a solid piece on what ACOs are, how they operate, and how they may affect workers comp.

Finally, don’t forget to sign up for the Women in Worker’s Comp confab in Vegas just before the NWCDC.  Kudos to Healthcare Solutions for putting this together…

UPDATE – Lots of health policy stuff, all right here!

This biweekly edition of Health Wonk Review brings the best writing about health care, policy, and the impacts thereof direct to your eyeballs – with NO effort on your part!

Apologies to Hank Stern – somehow I missed his contribution for this edition.  The ever-prolific Mr Stern asks why coverage for some autism treatment ends at 21.  Good question.

Roy Poses leads us off with his intel on the rollout of the Sunshine Act - the part of PPACA requiring much more disclosure of financial relationships between doctors and suppliers.  Dr Poses opines that the beginning has been anything but smooth - but far better to have a rocky rollout than continued ignorance.

Our friends at Wing of Zock have a great post from Steve Lipstein, CEO of BJC Healthcare.  Steve has a much-needed outsider’s perspective on the Wilensky-Berwick committee’s recommendations on graduate medical education. His take is that re-vamping higher ed is going to be affected far more by operating models and the economic models in each physician specialty area than by pronouncements on high.

The problem in the diagnosis of Thomas Duncan, the Dallas Ebola patient, reflects the promises and pitfalls inherent in electronic health records, and Peggy Salvatore’s synopsis of the situation and lessons learned is a very high-value read.

From Health Insurance Colorado we get intel on how things are looking in Colorado – the state Exchange is doing very well; the uninsurance rate dropped by six points and enrollment in private plans via the Exchange has almost hit the 150,000 mark. That said, improvements can still be made.

If are ever going to get better quality and lower costs, it will happen because payers and providers work together to tie value much closer to payment.  Health Affairs brings us an update on progress to date – which is considerable – while warning that continued progress is not assured.  Here’s the Holy Smoke! headline – 40% of commercial insurers’ payments to doctors and hospitals now “flow thru value-based payment methods”, up from 11% in 2013.  See Suzane DelBanco’s take on value-based purchasing here…

A great companion piece is Jason Shafrin’s review of the recent national survey of ACOs, noting that there’s a lot of variation amongst and betweenst (my new word) ACOs – which is all to the good as the variability means we’ll learn a lot about what models work and what doesn’t.

There’s good news for those who like their current non-ACA compliant health plans; many will be “grand mothered”.  Louise Norris tells us “Grandmothered – or transitional – plans are those that are not grandfathered but were effective prior to 2014.”  Simply put, grand mothered plans must have some aspects of ACA-compliant plans while grandfathered plans don’t – unless they are changed significantly.  

Pharmacists are one of the more-often-taken-for-granted clinical professions, and Brad Flansbaum is here to update us on the state of the profession. In a phrase; “over-staffed”.  There are far more graduates of PharmD programs that jobs, with one pundit predicting 20% of graduates will not find jobs in 2018…

David Williams gets us up to speed on Apple’s health application plans and prognosticates on its market position – think “one of” and not “THE” health apps.  As always, David’s knowledge and experience make his view well worth consideration.

Starting in January, employers’ OSHA reporting requirements will change – while this may seem esoteric, it would behoove risk managers and their colleagues to make sure they are complying – Julie Ferguson gives us the skinny at WorkCompInsider...

Good friend and colleague Sandy Blunt reminds us that a lot of what drives success is the simple stuff – blocking and tackling.  While fancy moves and tricky plays are entertaining, they don’t deliver like the basics do…

Richard Krasner contributes his piece on poor actors and poor actions in work comp with a focus on an employer in Florida where over a hundred undocumented workers were accused of work comp fraud. Richard details other transgressions wherein workers were penalized/ due to transgressions that sure look to be endorsed, if not authorized by employers. Hat tip to David DePaolo for his original work on the FL case…noting that Florida CFO Jeff Atwater busted the FL workers for fraud, even though only a handful had filed work comp claims…as David said; 105 workers get arrested for immigration and documentation fraud under a workers’ compensation statute, even though most did not file any injury claims…”

I round out the work comp section with my take on the current non-sale of Aetna’s Coventry Workers’ Comp Services unit to APAX; while it may not be a dead duck, it looks to be on life support.

Thanks to all – see you in two weeks.

Ebola and workers’ comp

Spoiler alert – no news here, and there won’t be.

Sure, there may well be a lot of hysterical nonsense about the potential problems for health care workers and first responders, flight attendants and TSA screeners.  But there won’t be a crisis, a disaster, or even a problem.

And no, hordes of Ebola-infected suicide germ-bombers aren’t going to invade over our “porous” borders. An idea so preposterous, so far-fetched, so un-doable that only the most naive, nutty, or non-sensical would give it more than a nano-second’s thought. The debunk is here.

Ebola is quite hard to transmit – it requires direct contact with bodily fluids from an individual exhibiting symptoms. This isn’t some airborne germ spreadable by sneezes or aerosol.  The US healthcare system is already quite focused on germ control – ever seen an ER staffer not gowned and gloved for any contact at all?  And if they even think there’s an infection risk, it’s full Hazmat time.

BTW, “direct contact” isn’t touching someone skin-to-skin. It occurs, according to the CDC, when “body fluids (blood, saliva, mucus, vomit, urine, or feces) from an infected person (alive or dead) have touched someone’s eyes, nose, or mouth or an open cut, wound, or abrasion.”

What does this mean for you?

Get back to worrying about motor vehicle accidents, flu, and silicosis.  Nothing to see here.

 

Drug formularies – much needed in workers comp

Controlling drug usage in workers’ comp is – far too often – the proverbial pushing on the rope.

Sure, PBMs and payers have done a remarkable job constraining costs and reducing the initial inappropriate use of opioids. Virtually all payers use PBMs and benefit greatly from PBMs’ clinical management and pricing that is almost always significantly lower than the state fee schedule or retail price.

However…the explosive growth of compounding, the fact that a quarter of drug costs are for opioids and a third for physician-dispensed drugs, the inability of clinical staff to get many prescribing physicians to discuss potential alternative treatments, and the frustration experienced by adjusters and employers unable to resolve claims due to long-term, highly-dangerous, and counterproductive use of drugs all argue for more regulatory help.

There are two valuable and too-little used tools in the box; evidence-based guidelines backed up by strong UR and formularies. While many jurisdictions dabble in guidelines, the litigious nature of comp coupled with the imprecise and nebulous wording of regulations often results in more problems, less clarity, and more delays.

In contrast, formularies established in regulation, whether the very tight version used in Washington State or the loose one in Texas, are clear, precise, and incontrovertible.  Drugs are either allowed or not.

CWCI’s just-released study analyzes the potential impact on work comp of those two formularies.  By comparing the drugs dispensed in the Golden State to what would have been allowed by Texas or Washington, Swedlow et al have determined that employers and taxpayers are overpaying somewhere between $102 million and $541 million annually – with no negative effects.

Before some naysayer starts screaming about the unfairness of payers influencing doctors’ treatment decisions, that naysayer should understand that formularies are in place in every group health, Medicare, Medicaid, and individual health plan.  Moreover, said naysayer should READ the CWCI study, and note that a “formulary” may be “set” to require dispensing of the drug that is the lowest-cost but otherwise identical drug instead of a higher-priced-but-otherwise-identical medication – or use any one of several other “levels” to establish a somewhat more restrictive formulary.

Formularies provide better care and tighter control without compromising.  And, a major benefit would be the huge reduction in the contentious and generally pointless UR dealing with drugs…a third of California’s IMRs are for drugs.

An excellent review is in this am’s WorkCompCentral – Greg Jones has penned a thorough, detailed, and well-researched piece that should be required reading.

A very busy week…

And only one post…clearly I’ve been slacking.  Time to catch up!

Workers Comp

There’s been much discussion of the implications of the demise of the APAX-Coventry Work Comp Services deal; CWCS staff seem to have mixed views, but most are concerned that parent Aetna will continue its non-investment “strategy”, allowing the business to slowly fade.

It would be a mistake to attribute this to some nefarious plan and dark-hearted souls.

Work comp is – at best – tangential to Aetna’s Medicare, Medicaid, group and individual health businesses.  Any time spent focusing on WC is time not invested in much more important things.

Conversely, Coventry is anything but “tangential” to many work comp payers.  For many, CWCS is the integrator, bill processor, document manager, provider network, case manager or some combination thereof.  With medical expense accounting for 3/5ths of claims costs, payers with close ties to CWCS will be watching developments very, very closely.

While we’ve been focused on the Coventry-APAX deal, we haven’t been hearing about other transactions.  There are a couple other potentials out there, but if anything the deal flow has been markedly slower, partially because there just aren’t that many more deals to be done.  We may well see activity pick up again now that there’s more clarity around what would have been a blockbuster transaction.

Lots of good news this Friday – thanks to lots of good people…

While many of us have been focused elsewhere, two organizations have been doing their part to secure the future of work comp.  IAIABC just announced grants to two women to help them continue their workers’ compensation studies - congratulations to Chamila Adhihetty of Toronto, Ontario and Suzette Carlisle of St. Louis, Missouri – and to IAIABC for their foresight.

Coincidentally, Healthcare Solutions will be hosting the inaugural Women in Workers’ Comp Forum on Tuesday, November 18 just before the NWCD Conference in Las Vegas. Registration is free, and the event is proving to be quite popular. Sign up soon here. Kudos to HCS’ SVP Elaine Vega for the idea, and to CEO Joe Boures for enthusiastically supporting it.

WorkCompCentral is focusing on the top performers in California’s comp system – physicians, attorneys, expert, employer, claimant, regulator - with their Comp Laude(tm) Awards.  Nominate your pick here.

One of the finest people in this business is Chris Brigham, MD.  Chris has just released a most excellent book – Living Abled.  He wrote the book to help those dealing with potentially disabling conditions navigate the system, find and use resources, and take charge of their injury or illness.  While individuals can order the book themselves, payers may well want to consider giving it to every claimant. Disability is more about attitude than physical limitations, and Living Abled will help people think clearly about what they can do.

The good folk at WCRI have been marching along, publishing even more research on issues critical to the industry.  A webinar on predictors of worker outcomes is coming up on October 16; sign up here now as there are only 100 slots…

Also just out is a study of what’s happened in Georgia since the Peach State imposed pricing controls on physician-dispensed drugs (spoiler alert – prices dropped significantly after the reform, but doc-dispensed drugs are still much more expensive than the same pills purchased at a drug store).

Why?

My view is the dispensing profiteers seek out drugs from suppliers who inflate the pills’ AWP (the basis for the fee schedule), then turn around and sell them to the docs at a deep discount below AWP – thereby making millions for docs and dispensing companies, and costing employers and taxpayers those same millions.

Read the study and come to your own conclusions.

Broadspire Medical Director Jake Lazarovic M.D. just published an interesting paper on Accountable Care Organizations and Workers’ Comp. Download it and read it on your next flight; it’s an excellent synopsis and poses intriguing questions.

Enjoy the weekend – and remember to 

A – turn off the work email.

B – Put your “away” message on work voice mail.

C – Enjoy the fall weather!

Aetna’s sale of Coventry Work Comp Services…

Is off.

The latest intel from several folks in the know is consistent; APAX will not be buying Aetna’s Coventry Workers’ Comp business.

While its possible Aetna will look for another buyer, that is doubtful; the issues that reportedly led to the collapse of the APAX deal are real, material, and not going to resolve themselves. In fact, the key asset – the PPO network – continues to deteriorate. Aetna has a declining-value asset on its hands, one that, as time goes on, becomes ever less valuable.

According to reports, the biggest sticking point was APAX’ concern that the Coventry network will take at least 2 years to rebuild; when that onerous task is completed it will be nowhere near as valuable as it is today.

That’s far from surprising; I’ve discussed the network contracting issue ad nauseum. Fact is, without the real, committed, and ongoing support of a major group health/Medicaid/Medicare payer, providers aren’t going to give much of a discount to a work comp network.

Workers comp accounts for a bit over 1 percent of total US medical spend. Even if Coventry’s successor could claim 100 percent market share, their influence on a provider – outside of a relative handful – is never going to be appreciable.

But it wasn’t just the network. Sources indicated there were concerns in other business lines as well. Chalk this up to chronic under-investment in the business by Coventry pre-Aetna and the lack of focus on worker’s comp by Aetna since they bought Coventry’s parent company.

With earlier reports indicating Aetna wanted $1.5 billion for a business throwing off more than $200 million in free cash flow annually, a 7x multiple seemed reasonable. However, with no guarantee that the cash would keep flowing, I’d imagine APAX dropped the amount of their bid to account for the lowered expectations.

I’m sure there is much more to the story, but the net is APAX wasn’t willing to pay the price Aetna wanted, and Aetna wouldn’t accept APAX’ lowered bid.

What’s next?

Work comp represents just over 1 percent of Aetna’s revenue.  The company has a few other priorities on its hands at the moment – and as a $50 billion company, well it should.

Guessing here…but if I were at Aetna, I’d think about:

  • Working to keep the PPO network as functional as possible as long as possible without screwing up any of my other – much more important – business lines;
  • Selling off PBM First Script, an asset that should generate a very nice offer;
  • Replacing the bill review platform (BR 4.0) with one of the third party applications currently available. This would allow Coventry WCS to continue its very profitable bill review/PPO outsource business.
  • Leaving current management in place.  Art Lynch is running the show, and he’s the perfect person to do so.  He has strong relationships with current customers, is universally well-liked, and is just the kind of low-key, steady exec WCS needs now.

What does this mean for you?

Don’t delete Plan B - you’re still going to need it.

Friday catch up – Pennsylvania’s drug problem and other news

Today’s catch up leads off with some pretty grim news.  Pennsylvania’s drug problem is getting worse.

WCRI’s just-released report on physician dispensing drugs to work comp claimants in Pennsylvania provides a clear warning to the Keystone State’s employers and taxpayers – costs are going up and they are getting screwed.

Without effective controls on the practice of dispensing, PA saw physician dispensed medications increase from 17% of total drug costs to almost half within four years, due mostly to a huge markup in prices.  In one of the more egregious examples, doctors were paid $7.89 per pill for generic Prilosec, compared to $0.67 per pill at Walgreens.

That’s 1178% of the retail price.

For a medication that probably isn’t needed in the first place.

There’s legislation pending in PA that would go a long way to fixing the problem, legislation backed by labor, the Chamber of Commerce, insurers, and the Pennsylvania Medical Society. The only opponent is – ostensibly – the PA Orthopedic Society.  My bet is the real opposition is backed by the dispensing companies who are making ungodly profits and contributing some of their ill-gotten gains to the effort.

And those dispensing companies are backed by investors - one of if not the major player here is dispensing “technology” company Automated Healthcare Solutions – which is owned by giant private equity company ABRY Partners.

As a good friend in the private equity world once told me, there are two types of investors in work compthose who look to do well by reducing costs, and those who look to do well by increasing costs.

ABRY is the latter. Perhaps PA employers should send ABRY’s Hilary Grove – an AHCS board member – an email to get her thoughtshgrove@abry.com

Other news of import…

Another hat tip to WCRI for their excellent webinar on recent developments dealing with opioids in work comp.  The underlying reports on long-term opioid usage and multi-state comparisons of narcotics in work comp are well worth the read. Notably dispensing docs profit from prescribing and dispensing opioids…perhaps Ms Grove can address this as well… (hat tip to BI’s Stephanie Goldberg)

From Sandy Blunt comes this basic lesson – more than anything, business success is about getting the basics right.  Really understand the fundamentals, handle the work efficiently and correctly, and respond to customer service needs.

From a colleague comes this on compounding-

Not sure if you heard about physician compounding bypassing the pharmacist.  I attended PAINWeek and visited a booth by AbbyJenn.  They are a marketing organization that will set up compounding within a physician’s practice (just buy 3 pieces of equipment or we can arrange a lease) and use staff or hire a pharmacy tech (they will train in 30 minutes) so compounds can be produced and delivered in 10 minutes and the doc can make the profit.

They provided a sheet with one prescriber’s business in August, and compounds are going out the door paid by ins at $1400.  They also offer a formulary of typical topical mixtures to “maximize revenues,” will bill insurance & WC with “immediate claim adjudications” (and may get preapproval, but I am not clear on this point), and call the patient directly when it’s time for a refill!

OK, that’s all I can deal with today.  Keep fighting the good fight.

MSAs – another perspective

In follow up to my posts on MSAs, I had the chance to interview Peter Foley of the American Insurance Association yesterday. Peter is quite knowledgeable about MSAs, the Medicare Secondary Payer Act, CMS’ perspectives, and how this affects payers. He’d be the first to say he is not an “expert”, but in my view he is certainly one of them.

Here is our conversation – and I hope I got it right.

What payers are affected by MSP Act?

All payers – group, Self-Insured (SI) and non group health plans, workers comp auto general liability etc. – including claims where no medicals have been or can be paid. (E.g a claim on an accountant’s E&O insurance)

Does any payer have to file an MSA w CMS?

No. It is not statutorily required and never has been, it has been recommended but not required.

Why do payers send MSAs to CMS?

The payer thinking is in some way they can use a submission as a defense against Medicare coming back to them and say the payer did not take Medicare’s interest into account when settling the claim. While it does not definitively protect the payer from future action but does show that at that point in time they made an effort to protect Medicare’s interest.

If a company stops sending in MSAs, they may be concerned that CMS would think there’s a problem and perhaps subject them to more scrutiny.

Is there a “safe harbor” in regards to MSAs?

There is no safe harbor.

After an MSA is established and set aside does the payer have any protection from future action from CMS?

No. One can’t prevent the federal government from asserting its perceived rights if it so chooses.

It appears the backlog has come down, but other sources indicate it has not. What do you see?

Medicare doesn’t make available what is submitted or processing times they simply capture how many MSAs they have approved for how much in what time frame. The only data available is what individual companies report on their own.

There is no available comprehensive data on turnaround time – MSA companies have repeatedly asked CMS to bring more transparency to the process; my interpretation of transparency is data on the number of submissions, timeframes, and financial data. The problem that CMS has is they only capture numbers of MSAs approved, the date they are approved, and value of those set asides. We and they don’t know when or if the settlements have been finalized or indeed if the claim was settled at all. CMS does not report submission and approval dates, just approval date – what has been made available is just that.

There is no consistent reporting from CMS on those data points, much of the information available required a specific request to CMS, or may have come from congressional testimony.

The information currently available is limited and sporadic and not generalizable to the entire MSA population.

MCM – There’s some hope that legislation currently pending in Congress will provide some relief. There are two bills, a House and Senate version, which appear to be pretty similar.

The bill will be scored (to assess its impact on the budget and deficit) while the Senate and House are out for election and will score favorably. The hope is it will be attached to a bill and considered in the lame duck session. The American Bar Association endorsed it yesterday joining a broad coalition that includes the plaintiff bar, self-insured employers, AIA, and the Property Casualty Insurance Ass’n. More on this from Jennifer Jordan here.

Key elements of the bill:

  • Requires federal govt to adhere to state WC laws
  • Codifies current procedures which otherwise could be changed at any time without prior notification.
  • Allows for parties to submit funds directly to CMS if mutually agreed upon
  • Also includes a separate appeals process on the MSA determination.

Peter – “We are asking for transparency and clarity, and insurers, plaintiffs bar, and self insured employers are all supporting this bill.”

Thanks to Peter for his time, and to AIA for allowing a pseudo-journalist to interview one of their staff for the record.

From my admittedly uneducated perspective, CMS’s position, stance, and requirements border on the ludicrous.

Insurers and self-insured entities will be required to send data on essentially ALL claims to CMS, where the data will likely sit for eons, hopefully untouched unless some hacker gets in and steals all the personal health information, SSNs, and other data, an event that is only possible because CMS requires payers to send it to CMS.

What does this mean to you?

While I applaud the thinking behind the Medicare Secondary Payer Act (taxpayers shouldn’t have to pay for services that an insurer or employer should be liable for), the powers that be at CMS have taken that thinking and turned it into an expensive, ridiculously burdensome, wholly-unnecessary, potentially dangerous and likely pointless exercise.