Author: Joe Paduda

Aug
19

Drug formularies and workers’ comp

Posted by Joe Paduda on Wednesday, August 19th, 2015 | Comments

There’s a LOT of activity around the country related to drug formularies.  Four states (OH OK TX and WA) have implemented formularies and at least 4 more are considering doing so (CA, ME, MT, TN). (AR was scheduled to do so this year but pulled back)

The “Why?” is obvious; the proliferation of opioids, inappropriate prescribing of other drugs (Soma(r)), exploding volume of compounding, and rampant off-label use of drugs is seen as a major problem in work comp.

The “What”, as in, what formulary to use, is demonstrably not obvious.

There are (roughly speaking) three varieties of formularies;

  • Open – pretty much any drug is available to anyone
  • Closed – a binary, or yes/no formulary that is drug-centric
  • Disease state/Condition-specific – formulary based on the underlying diagnosis and disease state (e.g. acute v chronic)

The closed formulary has some advantages – it is very simple and easy to understand, and from a regulatory perspective, administer and evaluate.

The closed formulary also has some rather significant issues.

  1. it starts with the drug, not the patient’s medical condition.  This strikes me as backwards; guidelines should ALWAYS begin with the diagnosis.
  2. problems arise when “Y” drugs are dispensed, paid by the PBM, then the payer determines the drug is for an unrelated condition. Think antihypertensives, insulin replacements or asthma meds.
  3. it does not differentiate between acute and chronic stages of a disease or condition; treatment can be quite different for these different stages.

What does this mean for you?

While the closed formulary is easy to explain, it’s a lot tougher to manage on the back end for payers, PBMs, and prescribers alike.

And, while I’m no clinician, allowing antihypertensives and duragesic patches without a prior auth no matter the diagnosis, while requiring a PA for benadryl does seem problematic. 

Aug
12

Integrated services vs Choice – how do you want to buy work comp medical management services?

Posted by Joe Paduda on Wednesday, August 12th, 2015 | Comments

A prominent issue for many work comp payer execs is the continued consolidation in the medical management space; as the big get huge, there are fewer and fewer choices for payers to turn to.

The big, multi-product/multi-service companies tout the benefits of buying everything from them; cheaper, better coordination among various services, easier for adjusters, easier to connect IT systems.

Their competitors offering one or a couple different services have a different view.  Their position is a narrow, “hedgehog” focus allows them to be the best-in-breed.  Because they  only do one or two things, they are really, really good at those one or two things.

That’s the vendor viewpoint – but what about buyers?

My sense is buyers generally come down on the “choice” side.  That is, they don’t want to get everything – or even just one service – exclusively from one vendor.  Not that they don’t see the benefits of single-sourcing services – they clearly understand the potential for lower administrative burdens, less hassle for all their staff, fewer IT connections, and perhaps lower pricing.

As one of my coaches told me years ago, “son, you’ve got potential.  That means you haven’t done anything yet.”

Therein lies the issue – or more accurately, one of the core issues with the integrated/comprehensive approach.

To date, it just hasn’t delivered lower costs, lower hassle, better outcomes.

But even if it does, many payers will be leery of single-sourcing.  The concerns include:

  • complacency on the part of the vendor
  • difficult to break up and move the business
  • lack of control over referral processes
  • desire to give front-line staff control over specific service decisions e.g. IME
  • potentially mis-matched priorities and incentives

Each of these deserves its own post, but you get the drift – in one word, payers don’t like to lose “control”.  That happened years ago when Coventry bought Concentra, and payers have not forgotten what that felt like.

I spoke with a very experienced, very knowledgeable work comp executive recently; she said it well: “we tried the integrated approach years ago, and we saw how well that worked…it didn’t.”

What does this mean for you?

That’s not to say a work comp services company can’t deliver on the promises of integrated, comprehensive services. Like all young athletes, they do have “potential“.

Aug
10

Where was “Obamacare”?

Posted by Joe Paduda on Monday, August 10th, 2015 | Comments

In the GOP Presidential candidate debate last week, there were fewer mentions of Obamacare than there were candidates on stage.

Over the two hour debate, the biggest change to the American health care system in fifty years was mentioned 8 times.

Abortion, Planned Parenthood, ISIS, immigration, Mexico, Russia all garnered more time than health reform.

If there was any doubt whether the Affordable Care Act is here to stay, the lack of attention paid to PPACA by the moderators and candidates should lay that to rest.  That’s not to say all is bright and cheery in health reform land; rates are going up (albeit at much lower rates than predicted); there are still millions of Americans without coverage; and the wrenching changes in our health care delivery system (some – but by no means all – resulting from PPACA) are being felt far and wide.

While almost all of the 17 GOP candidates have positions on health care, health reform, and PPACA, health care reform is no longer an issue worthy of debate.

Perhaps the most telling evidence that PPACA is here to stay is this: Sen. Marco Rubio purchased health insurance thru the D.C. Exchange (and took advantage of a $10k federal subsidy), a decision that seems stunning but wasn’t worthy of mention by any of the moderators or fellow candidates.

What does this mean for you?

PPACA is here to stay.

Aug
4

PDMPs – what they are and why you should care.

Posted by Joe Paduda on Tuesday, August 4th, 2015 | Comments

Prescription Drug Monitoring Programs are state-based databases containing patient, prescriber, and pharmacy-specific information on controlled substances.

49 states have PDMPs; the lone holdout is Missouri, due to a whack job legislator who’s totally unfounded worries about privacy are preventing the Show Me State from showing dangerous prescribing and dispensing.

There is little consistency among and between the states.  Some require docs and pharmacies to access the PDMP before prescribing/dispensing drugs while most do not.  Some have data on all controlled substances, others do not. Some are relatively easy to use, many are not.

As a result, while 72% of docs know about their state’s PDMP, only half regularly access it.

Fortunately, at long last the AMA has gotten behind PDMPs, and is promoting best practices (after it determines for itself what those best practices are).

The AMA’s committee members would be well served to immediately and extensively collaborate with Brandeis University’s PDMP Center for Excellence. The CoE is the nation’s leading authority on PDMPs, and recently recommended payers have access to prescribing and dispensing databases.

For those looking for information on practical experience with PDMPs, a session at the most recent Rx Drug Abuse Summit provided a solid overview of current limits and best practices.  These include:

  • PDMPs should include data on all controlled substances
  • prescribers and dispensers of controlled substances should check the PDMP before prescribing or dispensing these drugs.
  • PDMPs should push information to prescribers/dispensers when there is solid evidence of high-risk behavior
  • payers and PBMs should be able to access PDMPs as they are responsible for authorizing and processing scripts.
  • PDMPs should be “interoperable”; that is, they should share data across state lines.

The reason we need PDMPs is blindingly obvious – abuse is rampant and deadly.  Extensive research shows effective PDMPs are implemented, opioid abuse – and use – declines, and the adverse impact of opioids does too.

After hundreds of thousands of deaths from opioids; billions and billions of dollars wasted on drugs that, in many cases, do far more harm than good; and the unspeakable tragedy inflicted on families and society, we now know that opioid manufacturers’ insatiable drive for profits led some companies to outright lie about the consequences and costs.

Here’s a brief but chilling film using Purdue Pharma’s own video to damn the company.  

Later this week, I’ll report on how PDMPs can be made much easier to use, cheaper to implement, and far more effective.

What doe this mean for you?

If anyone asks if payers should have access to PDMP data, the answer is yes.

Jul
31

Catching up…

Posted by Joe Paduda on Friday, July 31st, 2015 | Comments

Summer is supposed to be slow down time – this one is proving to be anything but.

Worker’s comp

There are several acquisitions likely to be announced over the next few weeks, one relatively small one as early as today.  When I get confirmation I’ll post.  A couple are  “tuck-ins”, additions that are seen as meshing well with existing businesses and/or add a strategic benefit.

Chris Brigham M.D.’s book Living Abled is getting considerable traction; employers would be well-advised to consider giving copies to injured workers.  Another target market would be treating providers, and I’d strongly encourage case management firms to make sure each of their staff gets and reads the book.

The feds have a great effort underway to get input on the best ways to establish work – employment – as a health “outcome” measured by health plans, exchanges, and other stakeholders. This is both long-overdue and very welcome.  Sign up and tell ’em what you think!

 

Exchange enrollment, Health insurance prices, and access to care

Renewals via Exchanges are proceeding apace, with an update from several large states indicating

  • enrollee retention is pretty high
  • enrollees are doing a lot of shopping around for price, coverage, benefits and networks
  • re-determining subsidy eligibility and levels is a challenge as it is based on income data and other information

In California, rates are up by 4% on average, a slight decrease from last year’s 4.2% bump.  About 2% of enrollees will have to switch plans if they don’t want an increase of 15% or more; in contrast 20% get good news; their rates all drop. 

Overall, folks who shop around will be able to find a plan – in the same tier – for about 4.5% less than they are paying today.

One datapoint on access comes from Michigan, where availability of appointments for Medicaid recipients actually increased after Medicaid expansion. I was surprised to learn that privately insured patients’ access decreased albeit by a very small margin.

Enjoy the weekend, and before you slather on that sunscreen, read this –  all that sunblock and sun protection may be doing harm too – it can lead to chronic Vitamin D deficiency, a very bad thing.

Jul
30

So what’s up with health care costs?

Posted by Joe Paduda on Thursday, July 30th, 2015 | Comments

Actuaries are projecting health care costs will increase 5.8% annually over the next 9 years. Others think that increases will be significantly smaller.

While the 5.8% is a bit higher than we’ve seen of late, it is a heckuva lot lower than the average for the last three decades.

Currently health care is responsible for 17.4% of US GDP; if the inflation rate prediction holds true and other economic sectors also grow as projected, health care will account for one out of every five dollars in ten years (19.6% to be precise).

We do know that the prediction will prove to be somewhat wrong, and economic growth for the next quarter is hard enough to predict, making a ten-year projection the proverbial dartboard in a dark room.  So, what’s with the discrepancy between predictions?

The actuaries responsible for the 5.8% figure believe the soft economy over the last few years has been the primary driver of low health care cost inflation.  Their thinking is that now the the economy is back to steady and significant growth, demand and prices will both heat up.

The counter-argument attributes the recent happy days of low medical cost inflation to structural changes in the health care delivery system. Their view is these changes, while overwhelmed somewhat by the big increase in the insured population due to PPACA, will help keep cost growth low as they become increasingly commonplace.

At this point, we just don’t know; there is anecdotal evidence that medical homes work and don’t; that ACOs are a success and a failure; that behavioral changes are working and are non-existent. That is far from surprising; we are still pretty early into this process, a process which is massively changing almost one-fifth of our nation’s economy.

What does this mean for you?

The key message is costs will continue to increase, with health insurance cost increases somewhat mitigated by higher deductibles and copays.

What’s also very clear is the health plans that are able to deliver lower costs and sufficient outcomes will do very well.

 

 

Jul
28

Maryland’s innovative approach to hospital care – and implications for work comp

Posted by Joe Paduda on Tuesday, July 28th, 2015 | Comments

Maryland has long been a leader in intelligent approaches to managing the cost of health care.  The state has had one of the few effective Certificate of Need programs limiting the medical arms race and employs an all-payer fee schedule for facility care.

In partnership with CMS, Maryland will be shifting payment to hospitals from fee-for-service to an outcomes-based reimbursement scheme.

According to Health Affairs;

a Maryland hospital is no longer paid on a per-admission basis but instead receives a global payment based on the number of Maryland beneficiaries cared for by the hospital. Patients and payers are still charged on the basis of services provided, but overall growth of per capita hospital payments by all payers is limited to 3.58 percent by diagnosis related groups, and the Medicare-specific growth rate will be held to 0.5 percent less than the annual national average. [emphasis added]

Couple quick observations;

a) this doesn’t address physician reimbursement, and as docs are the ones who are ordering the care, that should be addressed.  However, as more and more docs are employed by facilities, that may not be as much of an issue as it was historically.  Also, the authors of th HA piece have other recommendations re addressing this issue that make sense.

b) reimbursement for care delivered to patients not covered by the new scheme will likely remain fee-for-service.  This creates a potential conflict that may hamper development of more effective treatment protocols and pathways. More troubling, different financial terms may incent providers to think differently about care based on who’s paying.  While it may be unlikely docs will change their treatment patterns based on what they get paid, the folks that do the billing will almost certainly take payor status into consideration.

What does this mean for workers’ comp?

  • It’s not just about Maryland; while this is more systemic and organized, we can learn a lot by observing what happens in the Old Line State.
  • a fundamental shift in medical care is occurring, one that will have a dramatic impact on how patients are evaluated and monitored and incentivized to pursue health, what care is delivered via what method (telemedicine, care extenders, wearable technology).  This will dramatically affect workers’ comp – patients will be healthier but the bifurcated payment system will cause headaches.
  • Some providers will seek to gain as much revenue as possible from non-core payers such as worker’s comp.  Revenue maximization efforts will become more sophisticated, targeted, and effective.
Jul
24

Consolidation in the real world – implications for workers’ comp

Posted by Joe Paduda on Friday, July 24th, 2015 | Comments

There’s been a lot of mergers and acquisitions in the work comp arena, and certainly more to come.

But the activity in our little corner is minor indeed compared to what’s happening in the “real world” – group health, Medicaid, and Medicare. Make no mistake, these transactions will affect work comp.

You’ve probably heard of some of the activity among payers;

When these deals are completed, there will be three giant health insurers; United, Anthem, and Aetna.  All will have major operations in the Health Exchanges, Medicaid, Medicare, and employer-sponsored health insurance. Anthem, which owns many Blues plans, will have more local dominance in specific markets while Aetna and UHG are bigger players in the employer marketplace.

What you may not be tracking is the provider consolidation – which is equally frantic.  Just a few examples from the last few months:

The ongoing seesaw of market power is playing out nationally and locally – but the local scene is much more relevant for workers comp payers.  Local health systems negotiate with these big payers, with both sides coming to the table from positions of strength.  If Aetna wants coverage in southeastern PA, UPenn-Lancaster must be in their network.  For UHC to compete for employer and/or exchange business in New Jersey, they’ve got to have access to facilities and docs controlled by the two entities listed above.

The bruising battle over access, rates, and exclusivity is what’s driving the move to narrow networks. Health plans have to deliver more patients to specific health systems or those systems will not negotiate on price.

The best way to ensure increased patient volume is to make a deal exclusive – and we will see more and more narrowing of networks as competition heats up among the big three health insurers.

What does this mean for workers comp?

Work comp is incidental to Medicaid/Medicare/group/Exchange business. Health systems are going to get squeezed in these deals. Health plan execs will look to several reimbursement sources to make up margins; out-of-network care being most important but workers comp will be considered quite attractive as well. Comp is quite profitable, particularly as it drives orthopedic and ancillary revenue, services which have traditionally high margins for hospitals.

The other consideration is the care that is delivered via a health system or facility is billed under a hospital fee schedule. And, there can be a facility charge in addition to the physician fee. 

The net is work comp will be seen as a great source of very profitable patients.

Jul
23

It’s another done deal in work comp services…

Posted by Joe Paduda on Thursday, July 23rd, 2015 | Comments

Another deal is official; One Call Care Management has announced its acquisition of MedFocus.  This had been rumored for some weeks, OCCM has been notifying their clients it is now official.  This knocks out another potential imagining vendor, further consolidating One Call’s stranglehold on the market.

MedFocus has about $50 million in revenue, reportedly divided equally between work comp and non-occ payers.

Let’s talk for just a minute about this.

OneCall historically has had a dominant position in this sector, built on great customer service and a relentless focus on “leakage”. The last involved many processes including getting their payer customers to provide OneCall with data about ALL imaging billing, data OneCall used to recruit new centers, identify gaps in coverage, and work with payers to get their field folks to direct claimants to use OneCall’s scheduling process (and thereby capture the bill).

The number of competitors has dropped over the years; truth be told OneCall’s imaging business really hasn’t had a competitor worthy of the name for over a decade.    There’s also Spreemo, but it is pretty small as well, and a couple others that are owned by payers or are relatively small product lines for bigger managed care businesses.  MedRisk, a consulting client, owns a very small imaging company too.

OneCall is unique in the work comp services business in that it is by far the dominant player; in no other sector does one vendor have even half of the market, a position OneCall surpassed a loooong time ago.  They’ve gotten there by doing, by most accounts, a very good job historically.

Continuing to deliver will be key to continued dominance.

What does this mean for you?

Depends…do you like choice?

Jul
22

Work comp services: the wholesale sale and the retail sale

Posted by Joe Paduda on Wednesday, July 22nd, 2015 | Comments

There’s a lot of confusion on the part of some execs new to the work comp space about what it takes to generate revenue from work comp payers. I’ll leave aside the obvious answers such as: build a great product or service; deliver great customer service; find an unmet need and meet it; build relationships and value them and the like.

No, this is about the wholesale sale vs the retail sale.

RFPs come out from TPAs and insurers requesting all manner of services, requiring all kinds of assurances and guarantees and specific service agreements, along with a price that would render many a vendor bankrupt (alert – slight exaggeration).  After all the proposal wordsmithing and presenting and negotiating and schmoozing and conceding and guaranteeing is done, the successful vendor thinks they are going to get all the ancillary/IME/network/case management/etc. business from MultiHuge InsCo (MHIC); accountants start projecting revenues and profits, sales reps commissions, and owners earnings multiples.

A year later, only a fraction of the dearly-won revenue has appeared, and the accountants, owners, sales reps are all bewildered.

They forgot about the retail sale.

Long-term work comp services people know that the big national contract is just a “license to hunt”, that the signature is just the start of the real heavy lifting.  This involves finding out how the REAL decision makers – the front-line folks – work, what they want and don’t want, like and don’t like, how they are evaluated, assessed, and bounced, what’s important to their bosses, how their IT systems and applications and security works and interfaces/doesn’t interface with the vendor’s systems/apps/security. Sure, every vendor thinks about this and works at it, but relatively few really work it.

There can also be conflict, obvious or not, between the execs at MHIC and what is important to them, and the field folks who deal with the actual work day in and day out.  The managed care folks likely get evaluated based on network penetration, some usually not-terribly-meaningful savings metric(s), perhaps a few outcomes, and the reduction in administrative fees or costs or ALAE.

The field folks have quite a few other priorities – claim opening, reserving, case closure rates, litigation, state compliance, communications standards, documentation, diary compliance; the list is big and gets bigger every day.

For services vendors to translate that national contract to actual revenue, account management, implementation, and IT staff have to thoroughly understand the IT, claims handling, and operating environment then, usually with little support from the payer, come up with a plan to make the adjuster/case manager’s job easier by using the vendor’s services.

That’s a very heavy lift.

What does this mean for you?

Success comes from taking work off the adjuster/case manager’s desk.