Why be a crook when you can be a dispensing doc?

WCRI’s latest report on physician dispensing confirms what we weary soldiers have known for years; the physician dispensing industry is way better at figuring out how to screw employers and taxpayers than workers’ comp payers and regulators are at stopping them.

We’ve tried eliminating the upcharge for repackaged drugs; they came up with custom-manufactured medications.


Here’s the summary from WCRI:

the mechanism involves the creation of an opportunity to assign a much higher AWP to these new-strength and new-formulation products. Consider cyclobenzaprine HCL (a muscle relaxant), for which the most common strengths are 5 milligrams and 10 milligrams. If a new strength of 7.5 milligrams comes to market and the original manufacturer of that new strength sets a new AWP, this AWP could be much higher than the AWPs set by the original manufacturers for the existing 5- and 10-milligram strengths. These new strengths and formulation, almost all dispensed by physicians, are labeled as drugs made by generic manufacturers, not repackagers, and therefore, are not subject to the new reimbursement rules targeting physician-dispensed repackaged drugs.

Shockingly, Florida and California, two states that have attempted to control doc-dispensed drug costs with a repackaged drug cost cap have seen these “new” drugs become the most popular versions of the drug – and the most costly, with an average price of $3.01 per pill compared to $0.38 for the “regular” formulations.

Why has this 7.5mg version become so popular?

Is it better than 5mg or 10mg versions?

Of course not.

Make no mistake, these dispensing docs – and the industry that supports them, are quite clear about the money.

Proof.  More proof. And even more proof.

WCRI used data from 2 years ago; if anything it’s way worse now.

The solution is both simple in concept and difficult in execution.  Enable employer direction to pharmacies, a situation that currently exists in NY and MN (and in some cases in CA as well).

Yes, limiting doc dispensing to the first few days helps – legislation in IN and PA has been quite helpful in limiting the shameless profiteering of corrupt docs. However, the dispensing industry is quite creative in coming up with ways to circumvent regulations; don’t be surprised if:

  • docs rent a corner of their office to a “pharmacy”, and/or
  • docs get ownership in a pharmacy down the hall, and/or
  • companies are setting up vending machine-like dispensaries in medical office buildings

In fact, these all – and likely other maneuvers – are already operating in many states.  As I noted a year ago, these bad actors “will find any loophole, whether in a states’ pharmacy licensing process, medical board regulation, work comp statute or scope of practice to find a way to continue screwing employers and taxpayers.”

Because that is precisely what they are doing.

What does this mean for you?

It is long past time to stop playing nice.

Obama, Pew, Landers and Paduda

Headed to Atlanta for Operation Unite’s fifth Rx Drug Abuse Summit, an event I’ve been privileged to participate in every year (this year Mark Pew of Prium, Michelle Landers of KEMI, and I are going to discuss formularies in work comp, an issue near and dear to my heart).

This year, President Obama is also speaking.

Think about that.

The leader of the free world is taking a day to fly down, talk, and fly back.  It’s not like the guy has nothing else on his plate – the Middle East, Apple v FBI, global warming, Congress, SCOTUS nomination of Merrick Garland, Pakistan, Iranian cyber attacks, China, trade policy…

and yet Pres. Obama a) decides to go to Atlanta; b) does the prep work necessary to speak on a panel about opioid policy, the FDA, drug approvals, law enforcement, heroin, treatment v incarceration; c) make the trip with all that entails; and d) speak on the panel.

While I’m pumped he decided to make the trip, I’m equal parts disheartened that the President of the United States has to do this.  Moreover, there’s a really impressive list of speakers; Governors, Congresspeople, the US Surgeon General, head of the FDA, Senators, head of the DEA, the CDC Director…

Those of us who’ve been up to our eyeballs in the crisis for a decade are gratified indeed to see the level of attention focused on the issue, and sad beyond measure that this has risen to the level that the President is devoting this amount of time to opioids.

What does this mean for you?

I’d suggest we focus on the positive here, as the negative is just emotionally crushing.

Gov. Baker gets it right on opioids, we got it wrong on crack

On opioids, Massachusetts Governor Charlie Baker (R) has been in the forefront, working with the Democratic-led legislature on intelligent, comprehensive legislation designed to save lives, assign accountability, and reduce costs. The passage and adoption of HB4056 shows what can be done – and what should be done – by every state.

Yet there’s something unsettling about this – for me and for many others.  More on that in a minute.

Friend and colleague David Deitz MD, also a member of the Mass Healthcare Services Board, was involved in this process; here’s his take:

Gov. Baker and his administration have shown real leadership in addressing this issue, and it’s important to note that other groups within the Commonwealth, notably the Department of Industrial Accidents and the Massachusetts Medical Society, have also acted in concert to address problematic opioid prescribing.  The MA Healthcare Services Boards’ guidelines have been updated to reflect the new legislation so there are no inconsistencies.  Much work remains to be done, but this is a good step forward that puts important protections in place for injured workers, in particular.”

Key components of the bill include:

  • a seven-day limit on first-time opioid prescriptions,
  • new efforts to evaluate patients within 24 hours after an overdose,
  • addiction screening for middle and high school students.
  • requires doctors to check a state Prescription Monitoring Program each time they prescribe an addictive opioid to prevent someone from getting prescriptions from multiple doctors;
  • incorporates education about opioid addiction into high school sports training; and
  • establishes a drug stewardship program to dispose of unneeded drugs.

The other 49 states would do well to consider similar legislation.

What bothers me about my/our focus on opioids is that the victims of opioids are generally white, with many middle-class.  Did we – me, you, the powers-that-be, legislators, governors – handle this differently than the crack or “pre-opioid” heroin crisis?

Yes.  And that’s just wrong.

Back when crack and heroin were predominantly a poor and minority issue, it was a crime problem.  Policing, criminal prosecutions and jail time were the approach.  Just contrast the sentencing guidelines passed by Congress and signed into law in the eighties with the legislation pending before Congress today. Crack sentences were 100 times longer than those for powder cocaine.  Today, the bills are all about naloxone, buprenorphine, and addiction treatment, brought to our attention by weeping elected officials.  Back then, it was quite a bit different.

Now that it’s affecting a wealthier and whiter population, the solution is education, prevention, compassion, a disease model of addiction.  Abusers are victims, not criminals.

What does this mean for you?

There are lessons to be learned here, some of them uncomfortable indeed.


The Opioid Pendulum Swings

The CDC guidelines are out, and that’s a very, very good thing.

Yes, there’s an apparently-reasonable argument that the guidelines’ basis is not sufficiently evidence-based to stand up to the most rigorous standards.  There are two reasons that argument fails.

First, opioid advocates, manufacturers, and most prescribers did not worry about “evidence” when pills by the bucketful were prescribed and dispensed to anyone who presented with a sore back.  For advocates to caterwaul about science, evidence, and a lack of randomized controlled trials lasting more than 12 months is unfair at best.

Second, opioids kill more than 24,000 people a year – likely a lot more.  Mothers, daughters, sons, brothers, fathers are dying every day, causing destitution, devastated families, and disaster for communities. The time for half-measures is long past.

I understand this may lead to a few folks who ostensibly “need” opioids not getting their pills quickly or in the volume they desire.

Ask yourself this – how does this “need” stack up against the deaths, ruined communities, and parent-less children caused by rampant overuse of opioids?

I’d imagine the parents, siblings, and friends of those killed by opioids would be only too happy to wait a while or take another drug or try exercise or…


Physician dispensing, opiods and efforts to control same

The last session at WCRI focused on my least favorite topics – doc dispensed drugs and opioids. note findings are preliminary and subject to change.

From Dongchun Wang, doc dispensing.

My takeaways.

Price-focused controls don’t work to control physician dispensing.  Sure, they work over the short term, but the dispensing industry quickly circumvents those price controls by coming up with novel new drugs, increasing the volume, or finding higher base-cost drugs to dispense to their patients.

In fact, prices for doc dispensed drugs-actually INCREASE quarter by quarter post-implementation of price-based controls.

For those of us who’ve been stuck fighting a barely even battle against the profiteering crappy docs and their supporters who do this, this is NOT new news.

Perhaps the to-be-released study will energize payers and employers to finally ban doc dispensing, and/or drive adoption of pharmacy direction (this last is the only real solution), we’ve seen doc dispensing rise even in states that technically ban or severely restrict doc dispensing


Opioids.  Vennela Thumula PhD talked about opioids.  Double Argh.

Okay, the good news is the amount of opioids per claim has decreased somewhat over the last few years, with almost every state seeing a drop (except WI).

  • About 30% of patients that get opioids only get one script – which is fine.  Acute injury, quick treatment, all good…
  • but 70% of so get more than one – and therein lies the issue.
  • NY LA and PA have much higher opioid usage than the average, with NY and LA patients getting well over 3000 MEDs per claim. THIS IS INSANE.
  • the average worker in Louisiana got 7 scripts, due largely to the large percentage of workers who used opioids for more than six months.
  • A significant percentage of opioid-taking claimants were also dispensed benzodiazepines.  WTF are these people thinking?

Drug testing has increased over the last few years – which is fine, except that the top 5% of claimants in LA are getting tested 11 times for 12 substances per test – and the average test costs just under $1200.

This is almost certainly driven by physician-owned labs, which have proliferated over the last few years.  (full disclosure – Millennium Health is a consulting client).

What does this mean for you?

We have a very, very long way to go.

A mass murderer brought to justice.

A California doctor, convicted of second-degree murder was just sentenced to 30 years-to-life in prison for overprescribing opioids that resulted in the deaths of 3 “patients”.

Dr Lisa Tseng’s apparent willingness to hand out scripts to anyone with cash was going on for years and reportedly resulted in the deaths of at least a dozen patients.  Worse, she knew her patients were dying; according to news reports the County Coroner called her office at least monthly to let her know one of her patients had died.

At least a dozen of her patients died of overdoses.

Let’s call her what she is – a mass murderer.

While her motives – apparently purely financial – may have been different than the Ted Bundys, John Wayne Gacys, and Jeffrey Dahmers, her death list is not.  Nor is the impact on the families and friends of her victims.

Her defense attorney complained that the verdict was already affecting other doctors’ behavior.  I should hope so.

Another physician bemoaned the verdict, saying:

“When you use the word ‘murder,’” said Dr. Peter Staats, president of the American Society of Interventional Pain Physicians, “of course it’s going to have a chilling effect.”

Staats said he believes an aggressive medical board — not prosecutors — should go after reckless doctors. But, he added, any doctor who is prescribing pills knowing that they are being abused or diverted shouldn’t be called a doctor.

Let’s understand what’s going on here.  Some in the medical community are totally missing the point.  Over a three-year period, this “doctor” wrote some 27,000 scripts for opioids and other very dangerous drugs.  That’s about 25 each day. 

Instead of whining about “chilling effects” and the impact on doctors, these protesters should be asking themselves why 28,000 people died as a result of “accidental poisoning” due to overdoses.

They should ask themselves why heroin use has exploded.

And why it came to this.

Fortunately, the Tseng case seems to be sparking some much-needed conversation in the pain physician community.  Here’s hoping it results in a lot more caution and far fewer opioid scripts.

Thanks to good friend and colleague Sandy Blunt of Medata for the heads’ up.

The Super Bowl of Drugs

Warning – rant follows…

The two main takeaways from last night’s SuperBowl are:

  • A really good defense and great defensive plan can beat a really good young quarterback.
  • Drugs are where the money is.

I’ll leave the first point to those more expert in football analysis and focus on the second for a minute or two.

In a sign of the imminent arrival of the Apocalypse, there were three ads for drugs shockingly none for life-threatening conditions.  Nope, we Americans must have way bigger concerns than diabetes and cancer – namely the coming open-toe shoe season and the inner workings of our lower digestive tracts.

Yup, there was an ad for a toenail fungus cure, (TOENAIL FUNGUS?!). another for diarrhea (DIARRHEA?!) and one for Opioid-Induced Constipation.  The cheapo fungus ad cost a mere $5 million for 30 seconds; the animated intestine discussing bowel movements graced our screens for a full minute; so did Astra Zeneca’s solution for the opposite problem.

The toenail fungus AND intestine ads came courtesy of Valeant, a name you may recall from news stories about Federal investigations into its pricing practices.  Over the last few years, Valeant has bought up the rights to at least four drugs – then jacked up the drugs’ prices by a factor of 10. (this is getting to be a common practice)

And opioid-induced constipation?

Okay, that’s a problem, but WhyTF are we taking so many opioids that pharma gets to make more hundreds of millions of dollars on a problem pharma created?

What a brilliant business plan; let’s create a drug that makes people feel really good AND is highly addictive, encourage doctors to prescribe it for everything from a sore back to cancer, then, when we have saturated the market so that there’s enough pills sold to give every American a month’s supply every year, let’s charge them three hundred bucks a month so they can poop.

When you watched those ads, did you think about all the zeros on your health insurance bill this month, realize that your family deductible is about equal to what you paid for your first decent car, and see that your choice of providers is best described as “few and far between?”

We are seeing a free market system running wild.

What does this mean for you?

If we stay on this path, we’re bankrupt.




Workers’ comp is leading the way on opioids

Welcome to the war, everyone.

Okay, so work comp is not the most progressive industry. We are – often justifiably – seen as slow-moving, overly conservative, reluctant to adopt change and averse to innovation.

Except when it comes to opioids, where work comp has been far in front – and continues to lead.  By advocating for treatment guidelines, restrictions of physician dispensing of opioids, formularies tied tightly to UR, analytics and clinical intervention, work comp has long been very active in a crisis that is only now getting real attention in the “real world”.

In a shocking statistic, opioid-related deaths in this country hit 28,647 in 2014, a 9% increase over 2013,

On the “What in hell took you so long”, it is wonderful to see the President call for $1.1 billion in funds to address the opioid crisis. The mainstream media is (finally) all over the issue.  Congresspeople are strident and passionate, finally joining Rep. Hal Rodgers R KY who has long been a leader, calling for action action action.  Presidential candidates are speaking out about the crisis.  It is an acknoledged public health emergency.  The CDC is promulgating guidelines.  Meanwhile, the opioid industry and their supporters are employing all their usual tactics in an effort to keep their profits flowing – expect them to spend whatever they need to.

For those of us in work comp who have been desperately working on the issue for years, this is welcome indeed.  We’ve been fighting this battle for at least ten years, thanks to research by CompPharmaCWCI, NCCI, and WCRI. Innovative efforts by a few insurers. Passionate and vocal leadership from pharmacists and medical directors. Washington State fund L&I’s Gary Franklin MD has been the industry’s leading voice on this issue for a decade, and the progress L&I has made under his direction (kudos to Jaymie Mai, PharmD as well) has been enormous.

The American Insurance Association’s Bruce Wood has been a forceful voice for common-sense, practical solutions, tirelessly bringing this issue to the attention of legislators, regulators, comp executives, and other stakeholders

A special shout out to PBMs, where diligent, targeted, persistent effort by execs, case managers, medical directors, clinical pharmacists, data analysts and account execs have actually led to a decrease in new claims with opioids for the last two years.

Think about that.   Working with payers, PBMs have been cutting opioid scripts for new claims by 5-7 percent per year for the last two years, likely significantly reducing adverse consequences – addiction, misuse, diversion, death.

PBMs make their money when patients are prescribed and dispensed drugs.  Yet PBMs, and their payer customers, have been working tirelessly to reduce the number of pills their patients take.

I’d be remiss if I didn’t acknowledge PBMs’ customers – adjusters and execs alike – have been a key part of the solution.  I recall a terrific program instituted by OneBeacon a decade ago that rewarded adjusters for identifying claimants on opioids and referring those claimants to a physician for review and treatment modification efforts.

Somehow the uninformed and unwilling-to-be-informed out there have not seen fit to allocate credit where credit is due.

Yes, work comp can be archaic, byzantine, frustrating, and even stupid.  And yes claimants can be mis-served for any number of reasons.

But what you’ve done about opioids is truly remarkable. Yeah, we still have a long way to go.  But we are well ahead of the rest of the world.

Note – I am president of work comp PBM consortium CompPharma.


Friday catch up

Made it home from warm and sunny Baton Rouge yesterday just in time to escape the travel disaster unfolding across the east coast.  Hope you and yours are warm and snug and home.

The big news-that-wasn’t was the completion of the acquisition of work comp PBM and specialty services firm Helios by OptumRx, United Healthcare’s PBM and ancillary business entity.  If you were looking for an announcement, there wasn’t one.  Although the deal was likely in the $1.5 billion range, Optum alone generated $67 billion in revenue last year, while the entire company totaled $157 billion in sales. Helios might be a blockbuster deal for work comp folks; it is not for United.

I was honored to speak at the Louisiana Workers’ Comp conference earlier this week, focusing on formularies and other tools payers use to ensure patients get the right drugs and don’t get the wrong drugs.  The audience was engaged, very knowledgeable, and had lots to say.  Good people looking to do the right thing despite what can be a very challenging environment.

Health care evolution

The canary-in-the-coal-mine that is California provides more insight into what will happen in your market – rapid and deep consolidation of health care providers into vertically-integrated delivery systems.  One market – the greater San Francisco Bay area – provides a view into the future for others.

This is especially important because these huge provider networks are critical to health care delivery, financing, access and cost and quality improvement.  Which raises the question – are they getting so big they are “too big to fail?”

Not surprisingly, a conservative view is the government is behind this, and the risk is high. The logic of that argument, while superficially valid, fails in the face of understanding.  What the author fails to note is the Co-Ops were established precisely to foster competition in a market dominated by hundred-billion dollar plus organizations.  More importantly, market consolidation has been going on for years – and while the ACA has likely sped up the process, this is an inevitable result of a maturing market.  This isn’t a government thing, this is a business thing.

Of course, if Sen Rubio et al hadn’t strangled the Co-Ops by cutting off their risk payments, there would be more competition…


Interesting research published by the Pharmacy Benefit Management Institute, detailing the state of the PBM world over the last couple of years.  Not only does it have a cool picture of a women’s eight at the catch (that’s rowing talk), the pub has a wealth of information on what’s happening in the real world of pharmacy management. A few highlights:

  • driven by a near-20 percent jump in specialty med costs, overall trend was up over 10 percent.
  • most of the cost control efforts appear to be financial, with more payers adopting multi-level tiers for copays and the expansion of deductibles and other cost-sharing approaches.
  • the top goal across all respondents was managing the cost of specialty meds.
  • “The generic dispensing rate at retail pharmacies in 2002 was only 40%; today it is 78%”

Costs are going up at double digit rates despite more aggressive cost-sharing and a doubling of generic dispensing.

Work comp

NCCI is working on research aimed at tracking potential impacts of ACA on work ; their work includes monitoring time-to-treatment for comp claimants.  Kudos to Barry Lipton et al for this needed research.

Back at it next week – hope your team wins this weekend!

The Millennium Health settlement

Some weeks back, the Feds announced they’d reached a settlement with Millennium Health on allegations that drug toxicology firm Millennium Health was involved in illegal practices (my characterization, not theirs).

More recently, Millennium has been working through a reorganization wherein the company’s debtors will assume control of Millennium. This reorg (currently held up by legal wrangling) was driven in large part by a $256 million settlement Millennium agreed to pay to resolve allegations of improprieties.

Note: Millennium is a consulting client, has been for almost four years, and will continue to be a client for the foreseeable future.

A bit more detail on my relationship with Millennium.

I’ve worked very closely with Millennium to design and promote a work comp-specific program.  This program – a flat fee covering all drugs and metabolites tested by Millennium, coupled with a payer-specific outreach program and supported by clinical liaison personnel – has been widely accepted by and dramatically slashed drug testing costs for many payers. Everyone I’ve worked with at Millennium – their clinicians, researchers, operations, finance, executive, sales and account management staff – has been professional, highly ethical, and committed to their customers.  Over the last four years, I never encountered anything that remotely indicated a possible ethical transgression.

The drug testing program now being considered by Medicare – a flat fee for an entire panel of tests – is what Millennium has been offering work comp payers for over three years.

After extensive research into the allegations and legal wrangling among and between the parties, there appear to be two primary issues described in the DoJ statement referenced above – giving testing cups to physicians, and promoting/allowing physicians to have “standing orders” for drug tests.

Millennium was accused of violating Stark laws by giving docs test cups that the docs would use to collect urine specimens and send those specimens to Millennium for quantitative testing if further testing was required.  Millennium was also accused of inappropriately billing Medicare for drug tests by promoting custom “panels” wherein physicians would always request the same panel of drug tests for each payment.

First, the cups – and this is where things get a little confusing.  According to  Health Law Attorney Blog, 

Millennium initiated the practice of entering into “cup agreements” with physicians under which Millennium agreed to provide POCT [point of care testing] cups to physicians free of charge if the physicians agreed: (i) not to bill any insurer for the urine testing service; and, if further testing was required, (ii) to return each test cup to Millennium for lab testing of the urine specimen. If the physicians failed to comply with these requirements, then Millennium would charge them for the price of the cups.

There’s an illuminating discussion of the cup issue here.  It looks to me like the key issue is the government’s contention that by giving docs cups with immunoassay test strips attached, Millennium violated Stark laws.  If the cups did NOT have those test strips, this would not have been an issue.  I’m not clear as to how MH could have violated the Stark laws if the docs did not bill any payer for those cups and thus did not receive any remuneration, but it is clear that this was indeed a violation.   As the above-reference Blog notes:

quoting the government here – “whenever a laboratory offers or gives to a source of referrals anything of value not paid for at fair market value, the inference may be made that the thing of value is offered to induce the referral of business.” With that statement, the government clarifies its position that the fact the physician does not bill for the item or service does not, by itself, negate this inference.

So, just giving the cups away, even while requiring the docs to not bill for them, was a violation.

Now, the panels.  Drug test are supposed to be specific to a patient; the allegation against Millennium was that physicians and/or Millennium created custom panels of drugs and metabolites, specific to individual physician, panels that would be tested for every patient.  Here’s how the Department of Justice described this:

Millennium caused physicians to order excessive numbers of urine drug tests, in part through the promotion of “custom profiles,” which, instead of being tailored to individual patients, were in effect standing orders that caused physicians to order large number of tests without an individualized assessment of each patient’s needs. [emphasis added]

The DoJ also notes the agreement settles allegations that Millennium inappropriately billed Medicare for genetic testing.

Clearly, these were very significant issues. They have resulted in major changes at Millennium including an overhaul of the Board and significant changes to management and ownership.  There’s also a requirement that Millennium operate under a “corporate integrity agreement” overseen by HHS for five years.

The $256 million settlement addresses the Feds’ allegations, and there has been no determination of liability.  That said, some may well infer that Millennium’s decision to settle the case and essentially turn the company over to its creditors indicates the company was not confident it would prevail if things progressed to trial.

It’s been an ugly, messy, and at times repugnant story.  Here’s hoping the legal wrangling ends soon.  In the meantime, I will continue to work with Millennium to help them deliver on their commitments to the work comp industry.

Note: Millennium Health has not provided any information to me regarding this matter other than what is publicly available on their website.  Millennium has been aware of my intention to write a post on this topic once the legalities were resolved.  MIllennium has not reviewed, seen, edited, or otherwise been involved in this post.