Delivery systems and workers’ comp

There’s been quite a bit of focus on alternate health care delivery methods of late, with medical homes and Accountable Care Organizations prominently noted as ways care will be improved and costs reduced.  One source indicates there are 270 ACOs currently operating with an estimated 20 million members.

While the early evidence is somewhat mixed, in general the news is positive; a Pennsylvania ACO raised quality, and decreased infections and readmission rates, leading to a year over year decrease in medical costs.  Generally, ACOs involve facilities and providers agreeing to focus on specific quality measures and reward performance instead of paying on a fee for service basis.  In PA:

Half of hospitals and physicians’ potential earnings are based on their performance improvement in hospital-acquired infections, patient experience, readmissions, surgical care, and treatment for heart attacks, heart failure and pneumonia. The other half of the earnings are based on the providers’ ability to manage costs across inpatient care, outpatient care, ancillary care, home health services and prescription drugs.

There are problems inherent in the model; patient satisfaction is a tough metric to achieve when ER patients only want narcotics for their pain, while readmission rates are going to be higher when patients refuse to be responsible for post-discharge care. Our daughter works in an inner-city ER and this is all too common; patients KNOW these are key criteria and tell care givers they will downscore them if they don’t get their meds.

Nonetheless, it’s a far better financial model than fee for service as it doesn’t incent more care and higher intensity care.

Notably, it’s hard to find any evidence of ACOs in work comp.  I’d be most grateful if readers could point me to any reports or information related to alternative delivery systems in WC; while there are some bundled payment models, and a couple episode-of-care pilots I’m aware of, there’s just not much going on as far as I can see.

Just leave a comment here – and thanks!

WCRI and Opioids, part three – Interventions – a successful community approach

Operation UNITE’s Karen Kelly led off with some of the most disturbing data I’ve ever seen on the impact of opioids in Kentucky and the country.

  • average age of first drug use is 11.  Eleven.
  • in some counties, 50% of children are being raised with no parents in the home.
Operation UNITE is doing terrific work in Kentucky – sponsoring treatment, supporting narcotics enforcement and interdiction, buying drug lock boxes for homes, education of kids and others, sponsoring summer camps, building community coalitions, and drug-free workplace training – among many other initiatives.
And their work is paying off - there’s been a year over year decrease in dispensing of all controlled substances by 11.7% in their area.
There are a wealth of resources available on their site, from videos to educational materials  to news and updates on progress in the battle against opioid abuse.
(I’m moderating a session at the National Rx Drug Abuse Summit with Washington state’s Gary Franklin MD and Amy Lee of Texas DWC  addressing opioids in workers’ comp at their annual meeting in early April.) There are several other sessions addressing opioids, detailing what works, what doesn’t, strategies and results.


California State Fund’s great work on opioids

70 doctors are writing one-third of the scripts for opioids in California.

Most of those scripts are for conditions where opioids are NOT appropriate treatment.

Those claimants that get opioids are off work 3.6 times longer; litigation is 60 percent higher, and their claim costs are twice as high as claimants who don’t receive opioids.

Hopefully you’re not so jaded by the flood of bad news about opioids that you yawn and move on to updating your facebook status; given the ongoing flood of bad news about opioids that wouldn’t be surprising.  Most fortunately, California’s state workers comp fund (SCIF), is on this issue like white on rice.

Here’s some of what SCIF is doing:

Kudos to SCIF for their assertive stance; it is great to see a payer take this on with a comprehensive and well-designed approach.
What does this mean for you?
If SCIF can do it, so can you.  And yes, the CA rules may be different, but there are ALWAYS things payers can do to address opioid overuse.



Variations in medical care – it happens in PT, too.

There’s yet more evidence that treatment patterns vary significantly across providers.  Today’s evidence comes courtesy of two academic institutions and Medrisk, Inc. (consulting client) which reported significant differences in the type and duration of physical therapy provided to workers’ comp claimants.

The study looked at several variables contained in billing data: location of service, duration of care, type of care, and other data points; the data was case-mix adjusted.

There are several key takeaways:

  • corporate physical therapy centers billed for more visits and more units per episode than other practice settings.
  • there was a “large difference in treatment utilization between geographic regions regardless of practice setting, diagnosis, body-part treated or surgical intervention”
  • these corporate centers billed for “a lower proportion of physical agents indicating a greater use of those interventions supported by evidence-based guidelines (exercise and manual therapy) compared to other practice settings.”

These findings were consistent across diagnoses and after controlling for surgical v non-surgical cases.

Let’s look at the second takeaway.  It should come as no surprise that the type, volume, and delivery of medical care one gets varies a lot from region to region.  While one would like to think that the care we get is based on science, in many instances the care you receive depends more on where your provider was trained, the local standard of care, and the personal opinion of the treater than what has been scientifically proven to work.

That said, the final point – that treatment in line with evidence-based medical (EBM) guidelines is more common in corporate settings is…intriguing.

Increasing the use of treatments for workers comp claimants that are in line with evidence-based medical (EBM) guidelines is a primary goal of many payers, regulators, and other stakeholders; WCRI’s just-published review of state workers’ comp regulations provides ample evidence of this trend.  While there could well be reasons the use of treatments supported by EBM were more common in corporate-based settings, the discussion in the report appears to address some of the key factors; delay in initial treatment, severity, and acute v chronic status.

Let’s be sure to recognize that these findings are general, overall, and based on statistical analysis.  Undoubtedly there are clinic-based, private, facility-based, and other PT practices that are quite focused on EBM and rigorous in their application.  And, to reiterate, there may well be sound and valid reasons for the differences noted by the stdy authors.

What does this mean for you?

1.  Good to see research focused on this key area of workers’ comp; with 15 to 20 percent of medical dollars spent on physical medicine, the more we know, the better.

2.  Payers should talk to their network partners to find out what type of care their PT providers deliver.  If they don’t know, find a network that does.

Medical malpractice and physician dispensing

So, here’s a question for you.  Given the patient safety issues inherent in physician dispensing of repackaged drugs to work comp claimants, are medical malpractice liability carriers considering this issue when underwriting coverage?

If not, why not?

Here are some of the problems with physician dispensing…

  • as research from CWCI and WCRI illustrates, prescribing patterns often change when dispensing rules and reimbursement change. If a patient is harmed, and the prescribing pattern changed before that event, is there added risk for the carrier?
  • the doc often has never seen the patient before, so they don’t know what medication the patient is taking, their medical history, or situation. If they dispense meds, they have to do so without full insightinto
    • the patient’s medical history
    • current drug regimen and possibly dangerous drug-to-drug interactions
    • other treatments the patient is receiving from other providers
  • most dispensing docs only give drugs to their workers comp claimants. So, if a workers comp claimants gets meds and has a problem, and a group health patient with the same diagnosis is treated differently, the plaintiff’s lawyer is going to ask, why? what was the motivator?
  • in many states, docs can and do dispense addictive drugs – opioids particularly.  There’s obviously a financial incentive for the doc to dispense meds to a patient, and if and when one of the doc’s patients is diagnosed as an addict, the plaintiff’s lawyer may well raise the financial incentive as a possible factor.
  • if the doc is dispensing opioids to a patient, and those opioids are being diverted, is there an issue?

And that’s just what I can think of off the top of my head.  I’m guessing underwriters and risk managers can come up with a few more…


What we nerds love…

is research that helps us understand why things are the way they are.

And while we rarely get to make out with supermodels like the guy in the SuperBowl ad (word is it took 45 takes to get it “right” (good for him!!),

Bar Rafaeli and…

we do get pretty excited about great research.  Which makes today a pretty good day.  Two studies were released – one from Washington on back surgery outcomes and complications and the other from CWCI discussing the use and cost of compound medications in worker’s comp.

First, Gary Franklin MD and colleagues published a study in the February edition of Health Services Research on the safety of lumbar fusion, an all-too-common procedure in workers’ comp.  Here’s my non-clinical take on the key findings.

  1. Outcomes  - defined for this study as complications within 90 days of a fusion – for workers’ comp patients were not nearly as bad as I thought they’d be. Surprisingly, they were somewhat better than the average!
  2. However – and it’s a BIG “however”, that may be due in part to the Washington state fund (L&I)’s tough stance on authorizing fusions.  In turn, that was based on priori research that indicated fusions had generally poor outcomes.  So, L&I’s numbers for outcomes may have been better because they do a good job of winnowing out those claimants more likely to have poor outcomes.
Pretty cool, eh? Gotta love the power of the monopolistic carrier.
Well, here’s some not-so-cool news.
Eileen Auen, CEO of PMSI and Alex Swedlow and his colleagues at CWCI have co-authored a study examining the cost and trends associated with compound medications in California. (disclosure – both are friends and I was a reviewer of the draft report)
And the results are about as appealing as Ms Rafaeli’s ad-mate.
For the blissfully-unaware, compound medications are concoctions of various real and pseudo-medications fabricated by parties evidently more interested in sucking money out of employers and taxpayers than healing patients.  There is precious little evidence supporting the use of these medications for the kinds of conditions suffered by workers’ comp claimants; nonetheless they are inordinately popular among a subset of providers.
California instituted controls on the use of compound meds 1/1/2012, the thinking being these “controls”would reduce compounds in comp.
The good news is compounds dropped from 3.1 percent to 2 percent of scripts.
The bad news is while there were fewer compounds dispensed, the cost of each went up over 68 percent, so compounds’ share of drug costs increased from 11.6 percent to 12.6 percent.
That’s right – fewer compounds cost more money.
How’d that happen?
Well, compound prescribers and dispensers quickly figured out how to game the “controls” by adding more ingredients and more of each ingredient to each compound.  
There it is, another example of unintended consequences.
What does this mean for you?
Unscrupulous providers will quickly figure out how to game regulations/controls that are not well-developed and carefully considered. Better to do something right than to do it quickly.

Rapid change in California’s health system

The pace of change  - mergers, consolidations, physician/hospital affiliation, new construction and shifting of services - in California’s health care system is fast and accelerating.  Several area-specific reports just out from the California Healthcare Foundation provide a great overview of the changes in specific markets, and are well worth study for any payer working in the Golden State.

In a quick review of CHCF’s report on San Diego a few things jump out.

  • Hospital systems’ profitability is generally increasing rather substantially, this in a period when many are investing big bucks in new plant and equipment.  Margins for several systems are into the double digits.
  • Lots of investment is occurring in the wealthier (read – privately insured) areas, such as La Jolla.  No surprise that.
  • Safety net providers are benefiting from federal largesse, using funds to expand services to low-income communities and add medical home capacity as well.

For Los Angeles, the title of the report says it all “Fragmented healthcare system shows signs of coalescing.”  Whether it’s physicians aligning with health systems, hospitals joining together, or health systems merging, there’s lots of efforts to get bigger, increase service areas, and expand services themselves.

Unlike San Diego, LA is a pretty fragmented market, with too many hospital beds, no dominant systems or facilities, and many systems looking to consolidate the market.  Kaiser is the only system with a double-digit share of hospital discharges at 11.8%.  And, also unlike SD, margins for many facilities are negative to just barely above break-even.  There are exceptions; Cedars-Sinai had a 7.6% operating margin in 2010 and UCLA’s was almost twice that.

The study indicates that one driver of the relatively poor financials in LA may be an over-supply of hospital beds at 205 beds/100k people vs the state average of 181.

There’s a wealth of useful information in these studies.  Payers of any stripe doing business in California would be well-advised to read them carefully, and consider the implications for their future.  

Work comp hospital costs – what WCRI’s report says, and what it means

The good folk at WCRI have produced a very useful – and very timely – analysis of outpatient facility costs, cost drivers, regulatory mechanisms, and trends in 20 key states.  Timely because the upcoming changes to Medicare and Medicaid’s hospital reimbursement bode ill for workers’ comp, and doubly timely because payers are seeing significant increases in facility costs in many states.

There’s a lot to consider in the study, here’s what struck me.

  • States without fee schedules are way more costly than those states that have outpatient facility fee schedules based on a fixed amount (not percentage-of-charges) reimbursement methodology.
  • States with percentage-of-charges “fee schedules” are about as costly as states with no fee schedules at all.
  • Even states with fee schedules based on a fixed reimbursement can be problematic; Illinois is a great example as it has the highest costs of all 20 study states.
  • Changing or modifying fee schedules appears to drive changes in billing patterns, which are supposed to be based on actual services delivered.

What stands out most is the overall trend.  Costs went up over the study period, sometimes a lot, other times there was an initial decrease after a fee schedule change went into effect after which an upward trend resumed.  And while some methodologies seem to do a better job controlling cost inflation than others, all can be gamed.

Cap reimbursement on a per-procedure basis, and watch utilization go up.

Base reimbursement on a lower percentage-of-charges, and miraculously charges escalate dramatically.

But start with low costs, and those low costs will likely persist; the ten lowest cost states in 2006 were still in the bottom half in 2010.  Yes, some had moved a notch and others down, but no state moved more than two slots.

What does this mean for you?

Watch FS changes in your key states very carefully, but don’t hold out much hope that any big changes will dramatically impact costs over the long term.


Physician dispensers are getting desperate

Oh this is getting fun!

Earlier this week WorkCompCentral published a column ostensibly written by a physician attacking me for exposing the dangers, both physical and financial, inherent in physician dispensing of repackaged drugs.  I say ostensibly because the column reads like it was ghost-written by one of the industry’s shills, perhaps one of Ron Sachs’ interns. (Ron’s the guy physician dispensing company AHCS hired to call reporters to tell them they were suing me).

By the way, I LOVED the column.

It was an amazing combination of pronouncements from an arrogant-beyond-belief doctor, with a really nasty and personal attack on me, my motives, and my ethics.

Alas, it was so poorly done, with so many logical fallacies and nonsensical arguments based on nothing more than fact-free opinion that I can’t believe a real doctor actually wrote it.  After all, doctors are supposed to believe in science; you know, research, medical evidence, facts, logic supported by data – those kind of things.  Yet the column didn’t have any of those, instead it was a mishmash of unsupported claims based on “our experience”, and never directly addressed the key issues I raised in my piece, e.g. retail pharmacies have much more complete access to patient data, and docs who dispense don’t.

(btw, a Summit on Physician Dispensing will be held in Boston on February 25/26.  Sponsored by PMSI and Progressive Solutions, the Summit is free of charge and is held the day before WCRI’s annual conference – in the same hotel.  This is an invite-only event; there are a few slots open.  Email me at jpadudaAThealthstrategyassocDOTcom for details.

The ostensible author, one Dr Rafael Miguel, offered not a single shred of evidence to support his claims of better outcomes and enhanced quality of care. When not denigrating pharmacists, mischaracterizing my statements, and accusing me of profiting from defeating physician dispensers (more on that below), Dr Miguel/the intern hid the total lack of data supporting his claims behind the omnipotence of the god in the white coat, as if his title is proof enough and we non-physicians should meekly listen and obey.

You can tell the physician dispensing industry is in desperate straits when they use surrogates to question the motives of their opponents, fabricating reasons why anyone would dare interfere with their ability to suck money out of taxpayers and employers by charging outrageous amounts for the drugs they prescribe – and dispense – to workers’ comp claimants.

That’s known as “diversion”; when you can’t refute a critic, yell really loud about what a bad person they are.

Well, let’s look at Dr Miguel.

Dr Miguel is a dispensing physician using Rx Development Associates.  A quick check of their website reveals frequent mention of one of the key benefits of physician dispensing; additional revenue for the physician.  RxDA also touts how easy it is to sign up and use their system to generate big profits, “without interrupting or burdening staff members.”  That’s in direct conflict with Dr Miguel’s assertion that physicians “must recover the costs and time to provide this service to workers compensation patients.”

Let’s look at Dr Miguel’s scripts.  He’s dispensed fluoxetine, etodolac, omeprazole, and gabapentin, among other meds. One of those scripts, omeprazole, is commonly used for heartburn.  Omeprazole, also known as Prilosec, can be bought over the counter for about a buck a pill; Dr Miguel charged about $10  pill.  That’s not opinion or hyperbole, it’s fact.  Miguel charged about ten times more for the drug than it would have cost over the counter.

Dr Miguel/the intern contends docs can’t buy drugs for the same price retail pharmacies do, and that’s why they have to charge so much more.  Again, he offers no evidence of this.  In fact, if Dr Miguel had tried, he could have found repackaging companies clamoring to sell him drugs at very low prices.

Finally, allow me to address Dr Miguel/the intern’s questioning of my motives, and contention that my efforts to combat physician dispensing are “what can only be described as an attempt to fatten Mr. Padudas personal bottom line.”

  1. As I have noted many times, I am co-owner of CompPharma, an association of workers’ comp PBMs.  It makes no difference (financially) to me if  physician dispensing dies off, explodes, or just stumbles along. I don’t get a nickel more or less.
  2. My public battle with the industry and its advocates has cost me tens of thousands of dollars in legal fees not to mention hundreds of uncompensated hours.
  3. Yes, PBMs will benefit if physician dispensing ends, but I am not a PBM, nor do I own a PBM, nor do I get paid based in any way on their volume of business.
What Miguel/the intern can’t understand is some people just have principles, standards that they live by, ethics that require them to speak out when they see others doing wrong.
And physician dispensing of repackaged drugs is wrong.



Flu season and Tamiflu – which one’s more hyped?

It’s full-on panic mode; flu season is upon us, the media’s in a frenzy, and the world is coming to an end.  If you didn’t get your shot, you’re going to be in serious trouble, laid up for weeks with a nasty case of the horribles if not stuck in a hospital ER with tubes dangling from your appendages.

To listen/watch the media, you’d think the Mayans were right about the end of the world, if not precise with the timing or cause of earth’s demise. Then again, this is what (much of) the media does – generate eyeballs/ears by getting us all excited about something or other.  Now that the most recent fiscal crisis is a distant memory, there’s got to be something to get us riled up – so flu it is.

Unfortunately the sensationalism isn’t limited to the illness itself; the enthusiasm for Tamiflu, the equivalent of the mining-after pill for flu sufferers, is similarly hyped.

Through a combination of carefully-orchestrated clinical trials, precisely-written journal articles, and professionally-managed media placement, the makers of Tamiflu have been able to convince many of the drug’s powerful ability to moderate the effects and shorten the duration of the illness. Sounds like a no-brainer, except…

Except the reality is nowhere near as encouraging.  Turns out Tamiflu actually only shortens duration by a day or so, and while it can moderate the worst of the symptoms, isn’t going to get you up and going in no time.  Here’s what the Cochrane Collaboration, perhaps the world’s leading analysts of medical research and intervention concluded after reviewing the research behind Tamiflu:

1. The manufacturer of the drug sponsored all the trials and the reviewers found evidence of publication and reporting biases.

2. The studies did not show that Tamiflu (oseltamivir) reduced the risk of hospitalization.

3. The studies were inadequate to determine the effect of Tamiflu (oseltamivir) on complications.

4. The studies were inadequate to determine if Tamiflu (oseltamivir)  reduced transmission of the virus.

5. The use of Tamiflu (oseltamivir) did reduce the duration of symptoms by about a day.

I bring this to your attention, dear reader, not to scare you even more, but rather to encourage you to learn more about medical miracles/drugs/treatments before signing up.  If you don’t, you may well find yourself poorer, just as sick, and perhaps with a few side effects you hadn’t counted on.

Thanks to Gary Schwitzer at Health News Review for the tip; his blog is a must-read for those seeking the real story behind the mass media’s health hype of the moment.