Sep
26

Watch out for gabapentin…

The CDC recently reported gabapentin was involved in one out of every ten fatal overdose deaths in reporting states.

Similar to opioids, gabapentin can cause severe breathing difficulties  – which are exacerbated when the drug is combined with other central nervous system depressants (CNS) (e.g. opioids, antidepressants, antianxiety meds).

Illicit use of gabapentin appears to be on the rise…from JAMA:

Gabapentin can produce feelings of euphoria and intoxication and can potentiate opioids’ effects. Individuals who misused the drug reported multiple reasons in a 2019 study, including a desire to enhance the effects of opioids; to achieve a “high” when preferred substances were unavailable, such as when they were living in a treatment facility or were incarcerated; or to self-treat withdrawal or pain. [emphasis added]

Gabapentin is a non-scheduled drug which became much more widely prescribed as opioid scripts declined.  Back in 2018 one out of five chronic pain patients were prescribed gabapentin (or its cousin, pregabalin). There’s some evidence that misuse of gabapentin – which is almost always prescribed off-label – often occurs after the consumer had a prescription for the drug.

And, Parke-Davis, manufacturer of Neurontin – the brand name version of gabapentin – pleaded guilty to promoting off-label use and paid a $430 million fine.

So, what to do?

First – learn more.  Start here – myMatrixx’ Shanea McKinney, PharmD penned an excellent overview way back in 2019.

Then…

  • Dig into your data – what’s been happening with gabapentin?
  • When and where possible, require prior authorization for gabapentin and similar drugs.
  • Educate patients and caregivers about potential risks of the drug.
  • Pay special attention to patients prescribed gabapentin off-label and in combination of other CNS depressants.
  • Consider recommending urine drug testing for gabapentin patients and include it in  the drug test panel.

What does this mean for you?

This looks awfully familiar. 

 


Sep
9

If only Florida was like California

If only Florida (‘s commitment to patient safety and responsible prescribing and good workers’ comp medical care) was like California.

But…no.

The Sunshine State’s work comp regulators and legislators don’t seem to care about patient safety or employer/taxpayer costs – at least not when it comes to drugs.

 

If they did, payers wouldn’t have to:

  • pay an upcharge for physician-dispensed drugs,
  • argue that physicians aren’t pharmacists (yes, really),
  • argue that drugs dispensed by physicians should be evaluated for patient safety

Kudos to myMatrixx for weighing in on this and attempting to get insurers and employers involved. Alas if history is any indication, the vast majority of insurers won’t.

Neither will most employers.

I get workers’ comp premiums will continue to decline, leaving fewer and fewer dollars for administrative tasks, like, you know, government affairs.

I get workers’ comp is hugely profitable.

I also get that this will change – and when it does those insurers will be looking for nickels in the couch cushions – nickels (and dimes and dollars) they ignored when things were going great.

Right now, payers and employers need to weigh in and tell Florida regulators that Physicians are NOT pharmacies – and therefore patients don’t get to pick a physician to be their pharmacy.

This is a major patient safety issue; physician-dispensed drugs aren’t subject to many of the electronic edits that pharmacy-dispensed drugs are.

So, physicians are almost certainly giving patients drugs that:

  • duplicate patients’ other scripts
  • conflict with patients’ other scripts
  • aren’t appropriate for that patient.

What does this mean for you.

Fight your own battles. I’m not going to do it for you.

From a post way back in 2014…

There is NO reason, no rationale, no logic behind docs dispensing drugs to workers comp claimants.  

Proponents claim it is better care, leading to speedier recovery and lower costs.

We long suspected the opposite is true; that is, claimants getting drugs from docs get more treatment, incur higher medical costs, are out of work longer and run up bigger claim costs than claimants with the exact same injury who don’t get pills from their physicians.

Thanks to CWCI, we know that’s the real impact of doc dispensing.

Now, we know even more – we know that dispensing docs prescribe more opioids for longer times, thereby increasing the risk of addiction and drug diversion and overdoses and death.  Thanks to a research paper authored by Johns Hopkins University Medical School and Accident Fund, there’s clear and convincing proof that doc dispensing is a highly risky, very dangerous, and very expensive proposition.

Here is the money quote:

“we found 39% higher medical costs, 27% higher indemnity costs, and 34% higher frequency of lost-time days associated with physician-dispensed versus pharmacy-dispensed medication. We found even more striking differences related to physician-dispensed opioids versus pharmacy dispensed opioids. The effect was nearly doubled and revealed 78% higher medical costs, 57% higher indemnity costs, and 85% higher frequency of lost-time days associated with physician-dispensed versus pharmacy-dispensed medication. [emphasis added]


Sep
7

Work Comp Pharmacy Week – #2

Yesterday we kicked off Workers’ comp pharmacy week with a quick review of WCRI’s latest research.

Today we’ll focus on our annual Survey of Pharmacy Benefit Management in Workers’ Compensation. We’ve been doing this for (gulp!) 19 years, and I’m (belatedly) ready to begin the 2022 Survey. Past public versions of the Survey are available here; there’s no cost and no registration necessary.

Respondents receive a more detailed version to reflect their contribution to the effort.

Top takeaways from last year’s report included:

  • Total work comp drug spend for 2020 was about $3 billion, or about 10% of total medical spend.
    • The percentage decrease from 2019 to 2020 was 12.3%
  • That’s down from $4.8 billion a decade ago.
  • Opioid spend declined 19.3% from 2019 to 2020; Opioids accounted for 17% of total drug spend across all respondents.
  • Pharmacy management remains important despite these decreases, primarily due to respondents’ view that drugs have a disproportionate influence on claim outcomes and disability duration.

Over the next few days we’ll be reaching out to past participants; if you are a payer and would like to participate in the Survey (and get the detailed report) please leave a comment below with your contact information (it won’t be published).

All responses are confidential, are only used in the aggregate or are de-identified to protect confidentiality.

 


Sep
6

Work comp pharmacy week!

There’s been a lot of news around work comp pharmacy of late – time to dive into what’s happening, why, and the implications thereof.

No better place to start than WCRI’s just-published study on the latest in drug trends across 28 states. (register here for the no-cost webinar – September 29 at 2 pm eastern). The research looked at trends over the three years from Q1 2018 to Q1 2021 (kudos to WCRI for getting this very recent info out quickly)

Key takeaways from Dongchun Wang, Vennela Thumula, Te-Chun Liu’s research include:

  • Rx payments (all figures are per claim) dropped 15% or more in almost 2/3rds of the 28 states..but went UP in:
    • Connecticut (+22%), Florida (+17%), and Pennsylvania (+14%)(hmmmmm…)
    • notably a major driver of the increase in those states was dermatological agents…driven by physician dispensing and/or mail order pharmacy dispensed drugs in those three states (and others)
  • COVID is a non-factor; COVID claims account for <2% of total Rx costs in most states
  • Other good news – opioids continued to decline in all 28 states – A LOT. As in a decrease of 56% in the median state
  • The biggest drop in spend occurred in New York – a 43% decrease driven by the adoption of a formulary in early 2020.
  • The range in spend is really striking; as of Q1 2021, the lowest state spend for claims with any medical spend was $22 (MA, MN, WI); the highest was almost 10 times higher in – you guessed it – Florida at $201.

So…takeaways

  • States that enable/allow/don’t prevent abusive prescribing and dispensing – looking at you, Connecticut, Georgia, Florida, Louisiana, Pennsylvania, South Carolina – and others – are allowing grifters and thieves to steal money from employers and taxpayers while over-treating patients. 
  • Lotions aka dermatological agents are almost entirely a (pick your term) enabled and perpetrated by physician dispensers and some mail order pharmacies…and the lack of aggressive and useful action by employers and insurers and their lobbyists.

Forecast

Insurers and employers and taxpayers in those states are going to get hammered by these bad actors. Costs for dermatological agents rose more than 50% in PA, CT, SC, FL, GA, VA, NC and MI.

Given the lack of an effective response by payers, their lobbyists and government affairs entities, you can expect more of the same.

What does this mean for you?

  1. Great work on the opioid front – although just slashing opioids is not THE solution to pain – this requires a multi-pronged approach.
  2. re dermatological agents – Do you like getting screwed by profiteers?

Aug
8

The Inflation Reduction Act’s biggest loser

For the first time in about forever, big pharma lost.

One can’t overstate the impact of the-about-to-become-law Inflation Reduction Act on pharma. The most powerful lobbying force in Washington got steamrolled – with one major exception.

Medicare will now be able to negotiate drug prices, a change that will lead to massive savings for seniors (a group I will join next year) and taxpayers alike. This didn’t come without a last-ditch effort by a horde of suits invading the Senate and House…but for once, the invasion was turned back.

Medicare part D was a huge taxpayer gift to big pharma as it covered seniors’ drugs while not allowing Medicare to negotiate prices. This was a giant boondoggle; Christmas, birthdays, anniversary and graduation presents all rolled into one 20 year giveaway. (historians will note this was entirely driven by Republicans – and added $9.4 trillion to the ultimate Federal deficit)

Imagine if you could a) add a huge new market for your services/products and b) set your own prices…why…you could buy that baseball team you always wanted!

Well, at least the insulin manufacturers won. Republican senators blocked a provision which would have capped diabetics’ monthly insulin costs at $35. 

1 out of 7 Americans that need insulin spend more than 40% of their income after food and housing on the drug.

What does this mean for you?

Just when you thought Washington couldn’t do anything – it does something really big and really important. 


Aug
1

Just the facts, ma’am…

Today we’re doing a very quick recap of stuff we learned over the last couple of weeks…no opinion here (yeah that was really hard for me…)

Extra credit for identifying the man in the picture…

But first, for those of us perennially mad at ourselves because, well, we screw up and aren’t perfect, read this. Short take – perfectionism…

“…makes for a thin life, lived for what it isn’t rather than what it is. If you’re forever trying to make your life what you want it to be, you’re not really living the life you have.”

Drug prices

Make for great politics…even when all the caterwauling is wrong. The issue is what we – the consumer – pay is NOT what insurers, PBMs, and other payers pay.

That’s due to the “gross-to-net bubble”, a term popularized by the estimable Adam Fein Ph.D.

When rebates and discounts were factored in, brand-name drug prices declined—or grew slowly—in 2021.

So…you getting those rebate checks?

COVID’s origins

Remember the theory that COVID came from a Chinese lab? It is looking increasingly sketchy.

comprehensive, detailed, and multi-factor analysis by scientists from four continents found

the emergence of SARS-CoV-2 occurred via the live wildlife trade in China, and show that the Huanan market was the epicenter of the COVID-19 pandemic.

The peer-reviewed research published in the journal Science covered molecular epidemiology and spatial and environmental analyses.

Investors and physician practices

Private equity investment in physician practices varies a lot by specialty and region. Quick takes…

  • about 5% of physicians were in private equity-acquired practices
  • The highest percentage was in D.C. (18.2%)
  • More than one in ten docs in AZ, CT, FL, MD, and FL were in PE-acquired practices

The researchers wrote…

“Because some private equity acquisitions consolidate physician practices into larger organizations, geographic concentration of private equity penetration may be associated with reduced physician competition, which could lead to increased prices, [emphasis added]

An interactive map and the research report are here.

Gun violence

Gun makers earned over 1 Billion (with a B) dollars from sales of military-style assault weapons over the last decade. A report to Congress found:

  • gun makers marketed to young men by claiming their weapons will put them “at the top of the testosterone food chain”…
  • the weapons were described as an “apex predator”
  • some ads for these weapons “mimic first-person shooter video games popular with children.”

source here

The AR-15 is the most common of these weapons…the NRA named it “American’s Rifle” back in 2016. (and here I always thought it was Davy Crockett’s flintlock rifle…)

(disclosure – I hunt and have several rifles – none are semi-auto like the AR-15)

Workers’ comp physician fee schedules

…are all over the place…Louise Esola at Business Insurance reported on a recent WCRI analysis that found:

About one-quarter of the fee schedule states established their rates for office visits near the Medicare level or below, while about the same number of states set their fees for major surgery at triple the Medicare rates or more in each state…

The study – authored by Olesya Fomenko and Te-Chun Liu and up to date as of this spring – is here. (sorry for misspelling of Dr Fomenko’s  name in  earlier version…darn spellcheck!)

Clearly politics trumps policy…unless someone can tell us why it makes sense for Florida to pay docs below Medicare, while paying hospitals many times Medicare… I’ll stick to politics, campaign contributions, lazy legislators and hand-cuffed or ineffective regulators as the main driver of work comp fee schedules. (oops opinion inserted into post…just can’t stop myself)

Happy August!


Jul
25

A creative way to generate work comp PBM revenue.

The work comp Pharmacy Benefit Management business has become hyper-competitive; total drug spend has dropped 6 of the last 7 years, there’s been massive consolidation of PBMs, margins are declining…all signs of a very mature industry.

Sounds like a not-very-attractive-business…right?

Well, due to accounting rules, PBMs are still wildly popular among work comp service companies.

They love PBMs because the companies get to count the cost of the drugs as well as their margins as top-line revenues – which makes those service companies look bigger than they really are.

The problem is…once you buy a PBM, you get a big one-time increase in revenue. But – and it’s a BIG but, unless you figure out how to grow that PBM revenue in a business that is declining, your top line flat-lines.

If you’re looking to sell your work comp service company, or otherwise tout strong financial performance, that is not a good look. Which brings me to a creative way a PBM is generating script volume without adding new payer customers.

Occ med clinic giant Concentra’s providers are writing scripts that direct the pharmacy filling the script to send it to Mitchell Pharmacy Solutions for administration.  (I looked for a company link, but couldn’t locate any mention of Concentra’s OccuScript program on their website)

According to Concentra, the OccuScript program:

  • has been in place for quite some time;
  • is mostly – but by no means exclusively – used in states where physician dispensing is not allowed (e.g. Texas);
  • appears to primarily address initial prescription fills which are mostly generics prescribed for a limited time;
  • about one of every nine scripts written in the company’s 520 clinics and 120 onsite centers flows through the program. Mitchell is the current administrator, providing network access and the claim adjudication platform. To be clear, Mitchell does not use its own pharmacy network…they contract with Script Care.

Injured workers treated at this clinic may be – or more likely are not – covered by a payer that contracts with Mitchell. (Mitchell is one of several work comp PBMs  – and far from the largest.) If it’s a Mitchell-contracted payer this form/process is helpful indeed.

In an email conversation with Concentra, the company noted “OccuScript supports medication compliance which is fundamental to evidence-based care delivery and positive patient outcomes.”  (note Concentra stated in an email “We have national employer customers whose injured workers are never processed through the OccuScript program…(some payers instruct Concentra on how to process scripts for their injured workers.))

Medication compliance is important indeed, but there are several potential issues/concerns/problems if the injured worker is NOT covered by a Mitchell-contracted payer.

  1. The payer gets a bill from a non-contracted billing entity which adds a lot of work for claims adjusters who have to figure out what to do with it.
  2. Unlike scripts processed by the PBM contracted by the injured worker’s employer/insurer/TPA, the payer finds out about the script AFTER it is dispensed. The drug(s) actually dispensed may – or may not – be:
    1. duplicates of other scripts,
    2. contra-indicated due to other drugs prescribed for the injured worker (while prescribers are supposed to ask about other meds, many patients aren’t able to recall drugs they are taking), and/or
    3. an expensive version of the prescribed drug (there are literally dozens of companies making ibuprofen, many at different prices for the same pill; contracted PBMs control for this with MAC lists.)
  3. The injured worker’s payer/employer/insurer is usually billed at a rate that is higher than their contracted PBM price – sometimes MUCH higher…driving up the employer’s/insurer’s/taxpayer’s work comp costs.
  4. Concentra’s OccuScript contracts with Mitchell who in turn contracts with Script Care…
    1. all of whom have to get paid,
    2. and adding communication challenges as issues have to pass through several entities.

So what to do?

Concentra avers it is ready and willing to work with payers and employers to route scripts to their PBM. It is also interested in working with PBMs. Sure, most “first fills” are “one and done”…but many are not. Getting on the claim as quickly as possible is an industry-wide best practice.

Note – Concentra execs were quite responsive to my queries about the program; kudos to CEO Keith Newton and Charles Bavier – who runs Concentra’s OccuScript program – for jumping on this.

What does this mean for you?

If you aren’t a Mitchell Pharmacy Solutions customer, get with Concentra ASAP to get those scripts routed to your PBM.

For those unfamiliar with this space…Insurers and TPAs hire Pharmacy Benefit Managers (PBMs) to ensure injured workers get the medications they need to recover and return to work. PBMs contract with pharmacies, operate call centers and employ pharmacists – all in an effort to deliver the right drug at the lowest possible price.


May
17

NCCI’s take on medical cost drivers, part 2

Last week I posted on Raji Chadarevian and Sean Cooper’s excellent presentation at AIS.

Here’s my what-this-means-for-you takeaways.

Drug spend decline

While NCCI’s reporting that dollars for drugs now account for 7 percent of annual isn’t too much of a surprise, there are a couple other factors at play here. First, the older claims are, the higher the drug costs.

During the 18-24 COVID months that were generally pretty awful, a lot of high-severity, higher-frequency jobs disappeared. Along with those jobs went a significant number. of high cost and cat claims (fewer workers; fewer claims). In what could best be described as a mirror image of the snake swallowing the pig (you know, the big slug of stuff/incidents/whatever works its way through the system), we’re going to see a long-term decrease in drug spend due to a decrease of X% in long-term claims incurred during COVID.

Obviously this will eventually work its way through the system…that said, it’s just one more bite out of pharmacy spend.

Similarly, rehab care and skilled nursing dollars will also decline along with home health care.

Peak network

With around 75% of physician and other treater dollars going through networks, we are at – or darn near at – peak network penetration. Some states – NY being a good example – are just not going to get there due to regulations on direction and very strong provider lobbying plus employers and insurers just aren’t pushing changes.

To be precise, that refers to overall network penetration – almost all work comp networks/PPOs have carve outs for specialty services.

I make the distinction because specialty network penetration will increase – at the expense of declining PPO penetration in specialty areas (PM, Imaging, DME/Home Health etc.). This will happen because those service areas lend themselves to more active management, often involve proactive scheduling, and  benefit from focused clinical management.

But, again that’s just one reason PPOs aren’t a growth thing – claims counts are declining and medical costs are flat too…

Oh, and big healthcare systems have A) figured out work comp is the golden goose, and B) are increasingly stingy with their discounts.

So, the average net discount after network fees (!!) is significantly lower than it was even five years ago.

 

 


Mar
24

Optum vs the Massachusetts Attorney General

Several weeks ago Massachusetts’ Attorney General’s office put out a press release noting work comp PBM Optum had settled a civil case by paying $5.8 million and agreeing to “implement additional procedures to prevent overcharges in the future under the workers’ compensation insurance system. Optum Rx has also agreed to cooperate with the AG’s Office regarding monitoring of future regulatory compliance.”

Several clients contacted me to get my take, and as I’m involved in audits of multiple pharmacy programs any insights into the issue might be helpful.

The net – Massachusetts’ work comp RX fee schedules’ regulations are ridiculously difficult/impossible to implement, and Optum was treated unfairly by the AG’s office.

[note I’ve spent way too much time digging into this, and it is entirely possible I don’t have the full story – largely because the AG’s office chose to be unhelpful.]

I reached out to the AG’s contact multiple times in an effort to better understand the issue; when I finally got a return call, it was, well, less than useful. The attorney told me he couldn’t say anything beyond the press release due to the involvement of a confidential informant. [that’s a pretty universal excuse for not engaging and one I found less than helpful; I wasn’t asking how the AG learned about this, but rather specifically what Optum allegedly did wrong]

here’s the key section of the AG’s press release:

The settlement, filed in Suffolk Superior Court, resolves allegations that Optum Rx, in some circumstances, failed to apply various regulatory benchmarks – like the Federal Upper Limit for Medicare and the Massachusetts Maximum Allowable Cost – to its pricing determinations for certain workers’ compensation insurance prescription drug charges.[emphasis added]

After some back and forth, in which I explained the release wasn’t clear, he informed me [paraphrasing here] that “anyone who knows the Mass work comp pharmacy fee schedule understands the significance of the ACA FUL and Mass MAC…”

I got a bit huffy with his borderline rude retort, and informed the gentleman that in fact:

  • A) I did “know” the Mass WC Rx fee schedule;
  • B) I have a pretty solid understanding of pharmacy fee schedules and reimbursement in general; and
  • C) if I couldn’t understand it, then I’m pretty sure most work comp payers and other stakeholders couldn’t either.

So, I called contacts at Optum to get their side of the story.

The net is, according to Optum – and other PBMs I’ve spoken with – the fee schedule wording is unclear, subject to interpretation, neigh on impossible to implement and therefore highly problematic.

From Optum:

  • Defining and Implementing the Commonwealth’s “Usual & Customary” definition – The provision as written is unclear and guidance on interpretation/implementation was not supplied in a manner that allowed all stakeholders to be successful.
    • 101 CMR 331.02  – “Usual and Customary Charge. The lowest price that a provider charges or accepts from any payer for the same quantity of a drug on the same date of service, in Massachusetts, including but not limited to the shelf price, sale price, or advertised price for any drug including an over-the-counter drug. If an insurer and the provider have a contract that specifies that the insurer will pay an average or similarly computed fixed amount for multiple therapeutic categories of drugs with different acquisition costs, the fixed amount will not be the provider’s usual and customary charge.”

      My take
      this is nonsensical and impossible to manage – for a whole host of reasons.
      Taking this literally, a PBM would have to A) know the amount accepted for reimbursement for B) each and every drug at C) each and every retail pharmacy. Note that the Commonwealth’s definition of U&C specifies the “lowest price that a provider…accepts from any payer…” As PBMs and other payers don’t instantly adjudicate claims and don’t know what amount a retail pharmacy ultimately “accepts” for a particular script, there is no way to comply with this requirement. [retail pharmacy bills are rarely paid on the day the script is dispensed, but paid in accordance with each PBM contract – it could be weekly, biweekly, monthly, or at another time.]Example – an Optum patient goes to Walgreens on Tuesday, gets her script for 30 tabs of 800mg ibuprofen. Did Walgreens know and transmit to Optum the lowest price it accepted for that drug on that day at that pharmacy?
      Of course not.

       

  • Understanding of contracts between the traditional triad of pharmacy/PBM/comp payor – The Commonwealth’s interpretation of how payment agreements (within the specific context of MGL c. 152, Section 13) should run between those entities is, frankly, unique in relation to how other jurisdictions operate.
    In English, what Optum is saying is the Commonwealth thinks contracts should be three-way – PBM, pharmacy, and payer/PBM customer.
    That is patently impossible; there are tens of thousands of employers and other entities contracted with PBMs, which in turn contract with thousands of pharmacies.

From the AG press release:

“Our workers’ compensation insurance system has specific processes in place to help ensure drug pricing is handled fairly, maintains transparency, and keeps costs down,” AG Healey said.

My view – well, no.

If I read this interpretation right, Massachusetts wants something no other state does to solve a problem that no other state seems to think exists.

I suspect the AG’s office is also pursuing similar litigation against other PBMs – and more’s the pity, because from what I have been able to learn, the AG did NOT handle this “fairly”.

If that’s a misinterpretation, it’s due to a lack of responsiveness and clarity from the gentleman from the AG’s office who chose to NOT be “transparent”.

What does this mean for you?

If you’re a PBM, make sure you’re on top of this.

[note – Optum is not a client, and we’ve actually crossed swords several times of late. Regardless, from what I can tell Optum did NOT attempt to drive “up costs and…unlawfully profit.”]

note 2 – happy to re-engage with the AG’s office at any time.


Jan
4

2021 predictions – How’d I do?

It’s time once again to see how I did on my 2021 predictions for workers’ comp.

Today we’ll dive into the first 5 and finish up with the last 5 tomorrow.

  1.  Total premiums will stay low.
    As employment, payroll, and injury rates all remain under pressure, total premiums will remain significantly lower than we’d expect in a non-COVID, non-recession environment. We are also on the tail end of the opioid cost bubble, with actuarial projections still over-compensating for what was rampant overuse of opioids.
    Unemployment will persist at least thru the first half of 2021 – and likely the first three-quarters – helping to keep premiums lower. There are some predictions that employment will ramp up towards the end of the year; let’s hope so.
    Implications abound.

    Verdict – True. Wages did increase significantly (Good news indeed for hospitality, leisure, construction, logistics, healthcare and retail workers!) but premiums and rates mostly dropped. Florida, California, and other states saw decreases, continuing a decade (or so) long decline in rates and premiums.
    Note – Actuary Mark Priven – and I – both believe rates are still too high.

  2. Facility costs will spike.

Hospitals are in dire financial straits, with 2021 bringing no respite from the cash crunch experienced by the entire industry when people avoided facilities, put off elective procedures, or weren’t able to get care due to facility restrictions.
As desperate financial managers look high and low for any and all revenue sources, you can bet your house they’ll be focused on workers’ comp. Payers have:

    • few effective price or utilization controls;
    • an often-lackadaisical approach to cost management;
    • bill review programs and processes hopelessly outclassed by sophisticated revenue maximization technology; and
    • management that doesn’t know that it doesn’t know;

thus payers are going to see facility costs – already the largest part of medical spend – jump.

Verdict – too early to tell. We won’t know until we get 2021 data, which will be sometime in mid-Q2 for most states. I’ll go out on a limb and double-down on my prediction; facility costs – as a percentage of total spend – have increased significantly in 2021

3. Consolidation
Seems I’ve been forecasting increased industry consolidation for years…it’s not a prediction but more acknowledgment of reality. Workers’ comp is a declining industry with shrinking claim counts and flat expenses – and that isn’t going to change.

COVID has accelerated the process dramatically; with claim counts down 15-20%, there are fewer claims to adjust, fewer services to medically manage, fewer bills to pay, fewer dollars to compete for.
Because there will be fewer revenue and premium dollars next year than this, more consolidation is inevitable.
I expect this to be most pronounced among medical management firms and TPAs, and the big to get bigger. Genex/Mitchell/Coventry, Sedgwick, Concentra are all likely consolidators. Not sure about Paradigm.

Verdict – True. Paradigm has bought HomeCareConnect; Enlyte (Mitchell/Genex/Coventry) acquired QualCare (and reports indicate Enlyte is for sale); and Sedgwick is buying up tangential businesses (JND Legal Administration, Temporary Accommodations, Managed Care Advisors, and several other firms).

4.  Drugs will re-emerge as a significant problem
After several years of declines in opioid prescription volumes, it looks like things headed in the wrong direction last year.
Prior Auth requirements were relaxed, refills extended, and states loosened restrictions on prescribing. Add to that patients weren’t able to get to their PT visits and surgeries were postponed. The result – I expect we’ll see drug costs in 2020 flattened out, and opioid usage actually increased (We will know a lot more in mid-late March when I complete my Survey of Drug Management in WC).
That was last year; as COVID is returning with a vengeance, expect to see continued increases in 2021.

Verdict – False. Drug costs continued to drop in 2020 and reports from multiple industry contacts indicate that continued into 2021.

5. COVID claims aren’t going to be costly.

Despite all the caterwauling we heard back in 2020, COVID costs have been minimal. That will not change. Yes there will be long-haulers, but those will be very few indeed. Yes there will be more claims, but most will cost just a few thousand dollars.

Verdict – True. All credible research and reporting indicates COVID claim costs have been pretty low. Not surprising to those who actually have a grasp of healthcare cost drivers and treatment expenses.
More on costs here, here, and here.

The Net – 3 True, 1 False, and 1 pending.

What does this mean for me?
I’ve got to relook at my thinking re drugs and drug costs. I know as much about drugs in workers comp as anyone, and I clearly got this one wrong.