Halloween catch up

Off to New Orleans for client meetings; should be interesting spending Halloween evening downtown.

A couple tems of note that deserve mention.

Over the weekend 178 GOP and 1 Dem representative called on CMS to stop with all the value-based stuff. Claiming the agency is overstepping its bounds, a letter signed by these worthies evidently wants Medicare to return to fee for service.

In a word, this is dumb. FFS is a big reason health care costs are out of control while quality is spotty at best. Fiscal prudence would seem to demand rapid adoption of value-based care. I know taxpayers will be far better served when more care is based on what actually works, not on what providers can bill for.

CompPharma’s annual Survey of Prescription Drug Management in Workers Comp will be out tomorrow at CompPharma.com. Big news is respondents’ drug costs dropped 8.7% in 2015. Opioids are still the biggest concern and compounds the top emerging issue.

Finally it looks like occupational injuries declined yet again; the Department of Labor reported the injury rate dropped from 3.2/100 to 3.0.

That is good news indeed – especially for those workers who didn’t get hurt.

Hope your week is most excellent.

Note- sorry about no URL links; posting from my phone which makes that really complicated.

What the latest work comp drug spend means

NCCI released a study yesterday indicating drug spend for active claims increased 6 percent in 2014, driven by higher prices. That’s consistent with the finding from CompPharma’s Annual Survey of Prescription Drug Management in Workers’ Compensation, however more recent data indicates drug spend in 2015 dropped precipitously.

The chart below is from CompPharma’s to-be-released-momentarily 2016 Drug Survey; for the 30 payers surveyed (combined they account for just under a quarter of total work comp drug spend), drug costs dropped 8.7 percent in 2015.

drug-cost-trend

Two observations.

Work comp PBMs are Unicorns; incredibly rare and completely unique, their business model is based on reducing their revenue.  In a very small, totally mature industry, PBMs compete for payers’ business by showing how they will reduce drug costs, and especially reduce overuse of opioids.

What other business does that?

In addition, work comp PBMs do this without the economic levers of deductibles, copays, coinsurance, and tiered formularies that group health and Medicare PBM programs use.  In fact, non-work comp PBMs can’t fathom how they do this.

“How they do this” is thru a deep understanding of drivers, a willingness on the part of the PBM to eat the cost of drugs that a payer decides aren’t compensable or related, a lot of analytics to identify potential issues and problems, many well-trained people dealing with patients, prescribers, pharmacists, adjusters, case managers, attorneys, sophisticated clinical management programs.  All this is necessary, highly effective, and expensive indeed.

I bring this to your attention, dear reader, for a couple reasons.

First, on a per-pill basis, work comp drugs tend to cost more.  That’s because it costs a LOT more to manage work comp pharmacy than to manage group, Medicare, or Medicaid.

Second, slashing fee schedules to Medicaid reimbursement means PBMs can’t afford to keep driving down costs and reducing opioid usage.

What does this mean for you?

PBMs and payers are doing great work addressing a major driver of work comp costs and disability; below-break-even fee schedules will force them to become pure transaction processors, something employers, taxpayers, and patients can ill afford.

Note – I am president of CompPharma.

What its like fighting the opioid industry

I’m struggling to find an analogy that fits how one-sided this fight is.

it’s not a knife-to-a-gunfight thing; at least you could throw a knife and have a chance of injuring your adversary – then run away.

it’s not a David v Goliath thing, because big pharma is VERY aware of “David’s” capabilities and vulnerabilities.

The best I could come up with is an ant vs. a boot.

ant

A couple recent articles highlight how bad our collective butt is getting kicked (thanks to Steve Feinberg, MD – a colleague and pain management doc in CA).

While publicly vowing to help roll back opioid usage, the opioid industry is spending millions to convince state legislators to slow-walk efforts to reduce opioid prescribing, weaken PDMP usage requirements.  One telling datapoint; Pharma spent $880 million on lobbying and contributions from 2006 – 2015, anti-opioid groups spent $4 million on contributions to state political campaigns AND lobbying from 2006 – 2015.

In New Mexico, efforts to curb opioid prescribing have been defeated, thanks to an overwhelming push by big pharma.  The opioid pushers hired 15 lobbyists, contributed to most members of the key Committee working on the bill, and got what they paid for.

And it’s not just overt lobbying by pharma; these bastards are funding “patient advocacy” groups like the Cancer Network, creating their own “astro-turf” patient groups, even stuffing wikipedia with opioid advocacy crap and changing entries to delete negative information about opioids.

What does this mean for you?

This…

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Pre-vacation catch-up

Headed out on a much-needed vacation; MCM will be on hiatus till the middle of next week.

Here’s a few items of note that came across the virtual wire over the last few days.

Mylan’s EpiPen Disaster.

In the story-that-will-not-die, EpiPen manufacturer Mylan continues to dig its hole deeper and deeper.  The latest news – the actual cost to make and fill an EpiPen is less than 10% of the product’s actual price.  And may be as low as four bucks – for a $300 injector.

Of course, when you need an EpiPen, you really, really need one – and could not care less what it costs. (it is used to reverse the most dangerous symptom of anaphylactic shock – asphyxiation)

But there are so many hands out in the EpiPen distribution chain, all making a margin as the product works its way down to the end user.  Most striking is the rebate Mylan likely pays to the insurer – one estimated by the estimable Adam Fein at around 40% of the product’s list price.

Now Mylan CEO Heather Bresch is providing all of us a lesson in how NOT to respond when confronted by reporters asking about price increases and huge compensation packages.  Bresch said, and I quote: “No one’s more frustrated than me.”

That takes some balls – and a whole lot of cluelessness.

The parents who can’t afford to replace their kids’ EpiPens every year when they expire and have high-deductible plans so they pay the $600 out of pocket might be a touch more “frustrated” than Ms. $19-million-a-year Bresch.

Beyond that, there’s a nastier, uglier, and way bigger problem here.  Health care in this country is a for-profit business, and Mylan is operating in the best interests of its stockholders.

And no, the “free market” won’t solve this issue – markets don’t care about people.

Provider consolidation continues

CMS’ changes in reimbursement are driving adoption of IT systems designed to track and report patient encounters with a focus on quality metrics.  These systems are expensive, difficult to implement, and require ongoing updating and maintenance.

More consolidation does not mean more efficiency or cost-effectiveness…in fact some data indicates costs go up.

Implication – more sophistication in billing, electronic medical records (EMR), coding and contracting means payers will find smarter and more knowledgeable negotiators across the table, and more sophisticated billing.

Work comp rates keep coming down

California, North Carolina, Kentucky, Tennessee all are joining the states that have announced decreased work comp rates.  I know Florida’s getting all Sunshine-y for plaintiff attorneys, and payers are in a justifiable uproar about that, but that’s an anomaly.

Implications – good news for employers and taxpayers, bad news for opt-out.

Which remains a “solution” (and a pretty poor one at that” to a problem that doesn’t exist.

Okay, gotta run.  see you next week!

Opioids – you have no idea.

Two people very close to me are on the front lines of the opioid disaster.  Working in ERs and ambulances in the northeast, they see – multiple times every day – how bad it is.

You have no idea.

The toll this is taking is wide, deep, and devastating.  Some public safety workers are burning out, beyond frustration and anger to a place of fatalism.

Yesterday an unconscious woman was admitted after her kids told their dad she was taking a nap on the kitchen floor.  The nap was induced by a very heavy dose of benzos on top of heroin; when dad came home from work – he’s a public safety worker too – she was unresponsive.

Revived with a hefty dose of Narcan, the woman “justified” her dosage as needed due to some unspecified mental trauma.

This one example is playing out multiple times every day for every ambulance crew, in every ER, in every neighborhood.  NPR’s morning news greeted me with a piece about elephant-tranquilizer Carfentanil, a made-in-China chemical that is exponentially more powerful than fentanyl, which is exponentially more powerful than heroin.  Now spreading rapidly thru Ohio, Florida, and the midwest, carfentanil will soon find its way into your town.

If you think I’m being alarmist, you’re wrong.

Here’s how this is impacting us today.

  • parents are dying in front of their kids.  who’s going to take care of those kids, and prevent them from following in their parents’ tragic footsteps?
  • To some public safety workers, Narcan is NOT saving lives, it is a Get-Out-Of Jail-Free card, allowing users to “safely” push the limits of dosing in their quest to get ever higher ever longer.
  • opioids may soon be replaced by drugs such as carfentanil.  Why grow poppies when you can just order this pill from a chemical factory in China?
  • Public safety workers are at the end of their ropes.  How can they not be white-hot with anger at users when confronted several times a day with parents “justifying” their using after being revived with Narcan.

This started with legitimate “prescription” drugs pushed by pharma companies making billions.  Make no mistake, these bastards are the ones who started the ball rolling, a ball that has gotten ever-larger and is crushing more and more of us as it picks up momentum.

The great late David DePaolo penned a piece on Purdue just days before he died.  It’s well worth reading, and remembering.

But the disaster unleashed by Purdue and their ilk is way beyond what any of us thought it would become.  As powerful and necessary as the Surgeon General’s letter to physicians is, it is so, so late.

Will this epidemic be solved by public health measures far greater than anything we’ve thought of or funded to date, or, like smallpox among Native Americans or the Plague in Europe, is it fated to burn out only after it kills most users, leaving no one else to infect?

Have a great weekend.

REAL innovation in healthcare

What do these have in common?

Duexisis.

Valent.

Martin Shkreli

Mylan.

Answer – they are all on the leading edge of healthcare innovation.

More precisely, these examples show there’s no need to create really new products, develop new medicines, figure out how to keep people healthier longer, when you can just raise prices on your current product.  A lot.

Duexisis is just ibuprofen combined with an acid reducer, creating a brand medication that sells for about 50 times what it should.  Yep, you can just buy Advil and Pepcid instead of breaking your bank enriching Horizon Pharmaceuticals.

Valeant has made a business out of buying generic manufacturers and other pharma companies and jacking up the price of their medications, a practice that has earned the company the attention of the Department of Justice, presidential candidate Hillary Clinton, and the US House of Representatives.  Oh, its stock price has gotten hammered of late due to some of these issues.

Shkreli is the brilliant and totally tone-deaf former hedge fund exec who discovered it’s a lot easier to make billions by buying little-used drugs made by one company than raising the price by, oh, say 6000 percent.

Mylan makes Epi-pens, the life-saving devices used to prevent deadly allergic reactions. Altho late to the “let’s just increase the price by a gazillion dollars for our poorly designed device cuz people who need it HAVE to buy it” game, they’re making up time quickly. Mylan raised the price by 6 to 9 times recently, causing problems for paramedics, families with kids with deadly allergies while jacking up their profits.

There are many, many more examples, but you get the point.

For anyone looking to assign blame for our ludicrously high cost of health insurance and pathetically poor outcomes, there are plenty of convenient culprits; HMO executive salaries, mandated benefits under ACA, specialty physician income, device manufacturers, hospital inefficiency, stupid and counterproductive HHS regulations, legislators who bow before the PHARMA lobby, physicians who refuse to wash their hands.

But it all gets back to this – the US health care “system” is based on a capitalist ethos, one where the shareholder and profits are God.

These companies and people do this stuff for a very simple reason – because they can, and they are rewarded for doing so.  There’s no reason to spend millions innovating when you can make billions just by raising prices for your product or service.

What does this mean for you?

Reality sucks.

Help me understand…

How an investment firm can own a physician dispensing company and a work comp program administrator.

ABRY has acquired a controlling interest in NSM, an insurance program administrator focused on, among other things, selling work comp to smaller employers.

Yawn, right?

Not if you are one of NSM’s insurance companies or insureds.

ABRY – which now controls NSM, also owns Automated Healthcare Solutions, the physician dispensing “technology” company that makes big dollars by sucking dollars out of work comp carriers, employers, and taxpayers.

So, if you’re ABRY, what’s going thru your corporate mind? You know – better than perhaps anyone in the country – how lucrative the doc dispensing business is (that may be a key reason ABRY has held on to AHCS for 6 years, way longer than most investors hold on to companies).

And you know the dollars are coming (mostly) from workers’ comp – which means insurers, employers, taxpayers.  And you know that all credible research indicates physician dispensing increases medical and indemnity costs – plus the higher cost per pill inherent in the doc dispensing model.

Now you own a controlling interest in a company that – and this is importantadministers worker’s comp programs but does not insure those programs.

So help me understand why this is not inherently a conflict of interest. As an owner, ABRY makes money when AHCS makes money from workers’ comp payors, but does not lose money when a company it owns pays AHCS’ bills.

I reached out to ABRY’s Brent Stone and NSM CEO Geof Mckernan early this morning in an effort to get their perspectives.  Here’s what I asked Mr Mckernan:

Given that NSM’s insureds and carriers expect NSM to effectively manage their workers’ compensation programs, how does that square with the business model of AHCS, which is based on generating the highest possible fees for physician dispensed drugs?

There is a conflict of interest inherent in owning a company that manages workers’ comp claims and one that profits by generating the highest possible revenues from workers’ comp claims.  How will this be addressed by NSM?

Specifically:

  1. How will NSM work to mitigate the additional costs including extended disability duration and medical expenses inherent in physician dispensing?
  2. Will ABRY keep AHCS and NSM entirely separate from an investment management perspective?
  3. When conflicts arise between AHCS seeking reimbursement and NSM’s claims function (both internal and via YorkRSG), how will those conflicts be addressed?
  4. Given the well-documented problems inherent in physician dispensing, how will NSM assure it’s carriers and insureds it is taking all possible steps to mitigate those risks?

I’ll keep you posted if I hear anything…

and thanks to WorkCompCentral for the tip!

Opioids – the cost of the drug isn’t the problem.

Opioid Dependence Leads To ‘Tsunami’ Of Medical Services, Study Finds

That’s the headline for a study that you – dear reader – need to read.

Here’s why – “Medical services for people with opioid dependence diagnoses skyrocketed more than 3,000 percent between 2007 and 2014.”

And that’s for privately insured people.  Based on research covering 150 million insureds, the report indicates the problem is particularly severe for younger men (19 – 35 year olds in particular).

We’ve all hypersensitive to the societal and personal cost of opioids, the Fair Health research is proof positive that the dollar cost of the drug itself is the least of the cost issues; dependency is strongly associated with much higher utilization of drug testing, overdose treatment, office visits and (my assumption) higher usage of other drugs intended to address side effects of opioids.

What does this mean for you?

Three thousand percent means you can’t afford to NOT address opioid addiction and dependency.

 

Work comp drug spend is going down

On average payers’ drug spend dropped 6.5% from 2014 to 2015.

And the bigger payers saw bigger reductions, with several cutting spend by double digits.

Those are the results for 30 large and mid-sized work comp payers I surveyed for CompPharma’s annual Prescription Benefit Management in Workers’ Compensation Survey.  State funds, large and mid-sized insurers, TPAs, self-insured trusts, and very large employers all participated in this, the 13th annual Survey.

The big question is – why?

Before we jump into that, allow me to address a potential criticism of payers’ drug management efforts.  This reduction is NOT because payers want to prevent their patients from getting the care they need.  Rather, payers – and their PBM partners – are focusing on ensuring patients get the drugs they need quickly and with minimal hassle, while blocking potentially problematic drugs.

This effort has paid off in the near term in lower costs for employers and taxpayers, and will almost certainly result in quicker healing and return to functionality; patients who don’t get unnecessary opioids get better a lot faster than patients prescribed these dangerous and often-misused drugs.

The Survey report, which will be out in August, will have details.  At this point in our analysis, several drivers seem to be at play here.

By far the most significant is the depth and breadth of pharmacy clinical management programs now in place at most payers.  The vast majority of payers rely on their PBM partners for most clinical management functions, with responsibility delegated to PBMs for some/most/all functions including:

  • patient enrollment
  • formulary development and management
  • prior authorization
  • pharmacist review of claims
  • prescriber outreach and follow-up
  • peer review and interaction
  • reporting
  • high cost claim assessment and intervention

This is somewhat unique in the work comp medical management world.  Unlike surgery, hospitalization, and other service types, most payers have delegated pharmacy management to PBMs.  There are several reasons for this.

  • Unlike other medical services, pharmacy is highly automated, requiring a unique electronic communication capability and expertise to accept, approve, process, and pay for the service.
  • Few payers want to invest the funds and management resources necessary to effectively manage pharmacy.  With the continued focus on reducing administrative expenses, overhead is an evil word at most insurers, so outsourcing it just makes financial sense.
  • PBMs have a lot more knowledge about pharmacy management as this is their core business.  Insurers, TPAs, and state funds have many other priorities on their collective plate, priorities that most view as more central to their core business.  They are insurers and claims handlers, not pharmacists.

That said, a handful of large payers have internalized pharmacy management – hiring pharmacists and nurses, instituting workflows specific to drug authorization, focusing on long-term opioid users, and tightening up drug formularies and approval processes.  These entities are also seeing solid payback on that investment, with costs dropping by double digits for these big payers too.

A final point that bears consideration.

Work comp PBMs, most of which are members of CompPharma (I am president of CompPharma), are doing a really good job and thereby reducing their income and profits.

They do this because this is how they win additional business; their value proposition is to ensure patients get the right medications and don’t get the wrong ones.

What does this mean for you?

PBMs are getting it done.

Work comp pharmacy – different indeed

The US spent $322 billion on outpatient drugs in 2015 – an 8.1% increase over the year before. (subscription required)

Over the next decade, CMS expects drug spending increases to outpace overall health care inflation by a significant margin at an average annual jump of 6.7%.

Things look remarkably different in the work comp world.

I’ve been surveying workers’ comp payers (insurers, state funds, TPAs, and large employers) for 13 years and the latest data indicates most are seeing a year-over-year decrease in drug spend.  I haven’t finished aggregating the data and checking the details, but this year looks like a continuation of the decreasing drug cost trend we’ve seen over the last several years (past Surveys available here).

More than 2/3rds of payers surveyed reported a drop in drug costs in 2015, and those that saw increases usually cited unique situations as primary drivers for those increases. Conversely, payers with decreases generally attributed their success to the same factors:

  • a strong focus on clinical management 
  • particular attention paid to opioid usage
  • ongoing, concerted effort to drive generic utilization

One other key driver – payers that work closely with PBMs on a variety of programs – retail network penetration, high risk patient identification, peer review, and outlier-prescriber outreach are seeing significantly better results.

I would note that work comp PBMs are spending a lot of money and resources to cut their revenues.  [I am president of CompPharma, a consortium of worker’s comp PBMs]

While there’s no question work comp can learn a lot from group health and other payers, the remarkable success workers comp payers have had in reducing the utilization of opioids shows that Medicaid and group health could and should carefully study what we’ve been doing.

What does this mean for you?

We are making progress, and work comp PBMs are leading the way.