Friday catch up and idle speculation

Lots of big info out this week, and a few tidbits about pending deals in the workers’ comp services space too.  Here are the highlights…(for the latest on deals in the work comp space, scroll down)

There’s a lot of confusion about the Obamacare signups; I’ll cover this in detail next week, but here are the facts as of today…

  • more than 7.1 million signed up via the federal and state exchanges (we won’t know the total for a week or so as some state exchanges haven’t posted final March numbers)
  • a lot more – i’d guess a million to two million – bought insurance via the private exchanges
  • about 20 percent won’t pay the premium and there’s some duplication between all the exchanges and other enrollment methods for reasons we’ll discuss next week
  • more than 5 million MORE Americans have insurance today than at the end of 2013.

The net – Obamacare has increased coverage substantially; the uninsurance rate has dropped by 2.7 points.

Meanwhile, Fitch reports the P&C industry is doing just grand, thank you.  Profits are up, loss ratios declined, underwriting margins are improving, and revenue is too.  Thank the continued hard market and expanding economy.

Work comp is doing better as well, altho there’s still a negative underwriting margin.  It remains to be seen if pricing discipline holds, or if some big carriers cross the stupid line.

The “doc fix” is in; Congress passed and the President signed a bill that will increase Medicare reimbursement for physicians by 0.5% for the next 12 months. The bill also:

  • delays implementation of ICD-10 for a year till October 2015 – for an excellent discussion of how this will affect workers’ comp, read Sandy Blunt’s piece at workers
  • and does some other stuff which you probably don’t care about and I won’t bore you with.

Work comp services Coventry is trying to sell their marginally-profitable work comp service business lines - we’re talking CM, UM, MSA, peer review, and likely pharmacy. They will NOT be selling the jewels – bill review and the network, because a) they make huge profits; b) bill review really isn’t sellable as the application is quite dated and would require the buyer to transition to a different platform likely resulting in customer defections; and c) they can’t sell the network.

Coincidentally, another large case management firm is also for sale; word is Apax/OneCallCareManagement is currently the leading contender; most likely they will add the asset to their ever-growing list of companies.

And I’d be remiss if I didn’t speculate that Apax is looking hard at the Coventry assets as well. OCCM CEO Joe Delaney has certainly proved himself a competent manager, but methinks the thought of adding these two to the portfolio would give even the best of execs pause…

Enjoy the weekend, watch some baseball, get out in the gardens, and ride your bike.

Sorry about that…

well, not really.

I’m referring to yesterday’s annual April Fool’s Day post, in which I “reported” Obamacare would include a single-payer federal workers’ comp system for small employers.  While some chalk it up to my sophomoric attempt at humor, (and they would be right), there’s another, more important takeaway, one that is particularly relevant in the work comp industry.

There’s a lot of mis-information out there, much in the form of reports, statistics, metrics, findings, research, and it often goes unchallenged.  Here are a couple examples.

“Research” published by benefits giant AFLAC claims companies that set up voluntary disability programs saw reductions in work comp claims.  Except the “research” is not credible, isn’t reproducible, is based on nothing more than opinion, and therefore is just marketing BS. (hat tip to Mark Larsen of WorkCompCentral for the info)

The key here is don’t believe “research” unless it is credible, which means there was a solid methodology (asking people their opinion then drawing a statistical conclusion from those opinions is NOT a solid methodology).

Vendor claims that they can “save” X% more than your current vendor on pharmacy/medical bills/provider costs/whatever are often – but not always – pure speculation.  Fact is, unless the vendor making the claim really, really understands what your current program/vendor is doing, how they are doing it, the methodology they are using to calculate results, and reviews the bill/provider/script data, their claims are suspect at best.

That’s not to say that some programs don’t deliver measurably better performance, but unless the vendor pitching you can provide a detailed analysis of why and how they can do better, they’re just blowing smoke.  How can you figure this out?  Simple – ask lots of questions – starting with how, when, who, how much, where.  Dig deep and do not be satisfied with generic marketing-speak answers.

You will find some vendors are only too happy to get into the details, while others get really uncomfortable.  And that tells you a lot about their REAL ability to deliver.

Finally, the April Fool’s post caught more than a few readers, so if you were one, you’re in pretty good company (there were several clients and a few regulators – all shall remain nameless – who fell for it).

What does this mean for you?

Don’t be an April – or any other month – fool.


Compounding drugs – myth v reality

There’s a lot of nonsense circulating about the wonders of compounded medications, almost all of it promulgated by companies and people in the compounding industry.

What’s notable about all of their claims is the complete lack of scientific research supporting their claims that more people need compounds, that compounds work, are safe, and deliver better results than non-compounded medications.

Turns out the reason these advocates don’t cite research is – the research doesn’t support the use of compounds for more than a very few patients.

That’s the key takeaway from CompPharma’s just-released research paper; Compounding is Confounding Worker’s Compensation.  You can download it here.

Here are a few of the findings:

  • Compounds have not been proven to be more effective than commercially available, manufactured drugs that have been approved by the U.S. Food and Drug Administration (FDA) in similar classes. In fact, efficacy data in general are non-existent for the types of compounds seen in workers’ compensation claims.
  • Using compounds poses risks to patients
  • Compounds are often not medically necessary
  • Compounds are expensive

Despite reports of outrageous cost inflation, dozens of deaths due to faulty processes and poor quality control, and little progress in improving oversight, compounding continues to plague work comp.

What does this mean for you?

Time to develop and implement a policy for approving and reimbursing for compounds – one based on science, and not marketing nonsense.

Note – I am president of CompPharma, altho I had little to do with the actual research paper; credit for that goes to the pharmacists and government affairs people from CompPharma’s member PBMs.  They did a terrific job.

WCRI’s annual confab – a month away

Held again in Boston, WCRI’s annual meeting is one of the better research-focused events on the annual calendar.

It always includes a timely topic as well as a deep dive into key issues explored by the geniuses at WCRI; we can also expect insights into the impact of the economy on comp, updates on WCRI’s Benchmarks analyses, and the always-terrific Alex Swedlow will educate on medical dispute resolution.

This year the focus is on the impact of Affordable Care on work comp, a subject near and dear.  I’m a bit surprised about the timing as PPACA has been the law of the land since 2010; payers who haven’t done their homework and prepared for tighter access, potentially more cost-shifting, revised hospital coding, and strengthened subro efforts by group payers are going to be far behind.

There was much that work comp payers could – and should – have been doing to prepare for PPACA over the last four years; those who have not are way behind. Fortunately, they can gain some insights from the several presentations on the subject at WCRI.

(Here’s a link to a nine-part series on Obamacare and WC; dozens of other posts are here.)

As always, I’ll be reporting from Boston, but won’t be nearly as prolific this time around…if you want to hear the good stuff, see you there.

UR in California’s a BIG problem…or not

The California Applicant Attorney’s Association says there’s a BIG problem with UR in California, and a recent analysis by CWCI is flawed and inaccurate.

I don’t see it.

Greg Jones’ piece in yesterday’s edition of WorkCompCentral digs deep into the issue; here’s the brevitzed version of the disagreement.

CWCI analysis indicates about 75% of ALL treatment requests are approved by the adjuster or surrogate referring 25% on to an elevated physician-based UR process.

Elevated UR denies or modifies 23% of the treatment requests for an overall denial/modification rate of about 6% (.25 x .23 = 6%). The denial rate falls even further to less than 5% for claims that go through the state’s new medical dispute resolution process, independent medical review (IMR).    CAAA’s consultant argues that the denial rate is higher, by:

  • citing different studies from different years with different samples, thereby comparing apples to oranges;
  • asserting that there’s a lot of variation in denial rates among payers, as if this was a bad thing or even meaningful (different employer types, different locations, different medical management strategies);
  • claiming that CWCI’s analysis was in error because their study included medical-only and not just indemnity claims, as if a standard of care or UR should or could somehow be different for claims with lost time. Guidelines are guidelines; they apply to all injured workers and don’t vary by type of claim.

Moreover, the premise of CAAA’s argument – to the extent there is one – is fatally flawed.  

A denial rate of 5% is hardly a catastrophe – especially when one considers where California was before the 2004 reforms – known as the physician’s presumption of correctness. Treating docs decided what treatment was appropriate, based almost exclusively on their personal opinion, or for a relative few, how they could generate the most revenue.  Payers had few opportunities to challenge a treatment plan. Treatment costs exploded to over $12 billion a year.

Would anyone allow a vendor to completely determine what services they were going to provide at what cost to whom? 

Of course not. This is completely at odds with every other payer system’s medical management methodology/process, because it is wildly illogical.   Yet that appears to be the motivation behind CAAA’s “analysis”.

Today, about 5% of treatment requests are denied or modified, medical costs are half what they were and employer premiums are way down as well.

Let’s look a little deeper at the results.

CWCI found that 43% of elevated UR and a third of the IMR reviews were for drugs. About half of those RX reviews are for opioids and compound drugs. Most likely a relatively few docs have a disproportionate percentage of challenged treatments.

The key is what are they doing and why – if they are prescribing Oxys to patients not supported by medical evidence, that’s wrong.  And, the current IMR process has begun to fix that problem.

Yes there are workflow problems, problems that will be resolved. Yes the process needs to get a LOT more efficient and less expensive. Yes guidelines need to be constantly updated.

And No, we don’t need to go back to the days of never ending treatment at the whim of the treating doc and bankrupt insurers.


Opioid guidelines are about to get a whole lot better

In about ten days, providers and payers struggling with opioids will get a big hand up.

ACOEM will be releasing their just-completed Opioid Guidelines; they are comprehensive, extremely well-researched and well-documented, and desperately needed.

I learned about the guidelines from a presentation delivered by Kurt Hegmann MD MPH, Professor at the University of Utah and Chair of the Occ Med Division at the University of Utah’s Compensable Disabilty Forum.  In his spare time, Kurt is also responsible for ACOEM’s guidelines as the Editor-in-Chief, a role he’s filled for eight years.

Affable and engaging, Dr Hegmann walked the audience through the development process (quite rigorous, involving 26 professionals with NO conflicts of interest using the Institute of Medicine methodology), the research and (960) references behind the guidelines and the ranking/categorization of individual guidelines.

Here are a couple of takeaways.

  • Of the 220 pages, the vast majority are tables of evidence – some practitioners may peruse them, but most will focus on the couple dozen pages specific to individual treatments
  • The guidelines address acute and chronic treatment, with chronic defined as > 3 months
  • The detail, specificity, and depth of research and their application to guidelines are impressive indeed.  What these guidelines add to our understanding of what works, why, and what doesn’t is impressive by itself; how they blow apart pre-conceived notions of “appropriate” care and challenge long-held conventional wisdom was – at least for me – rather jarring.

    For example;

  • Other guidelines say it is Ok to be on safety sensitive jobs and take opioids – that is NOT supported by the research
  • The researchers found NO link between opioids and improved function – studies that show there is a link almost always use self-reported data.
  • No trials indicate opioids are superior for acute pain than NSAIDs.
  • The MAXIMUM dosage recommended is 50 MEDs (morphine equivalent dosage), significantly lower than most guidelines which use 100-120.  The reason is the research – there is a much lower risk at this level, with the data indicating a sharply higher risk profile for higher dosage.
  • Drug testing is recommended with a baseline and random tests 2-4x a year; the higher the dosage – more screening
  • Pain rating scales are all but useless as data points as lots of patients indicate their pain is a 10 and yet are working full time.  This is not possible, and indicates the uselessness of subjective ratings/scores/data.

Are they perfect?  No.  But that’s due to the lack of research on specific issues, and not to the diligence and perseverance of the developers.  If the research is solid, it is in the guidelines.

What does this mean for you?

A lot of confidence in the guidelines, and hope that we can begin to gain control of the epidemic of opioid overprescribing.

Did Illinois’ work comp costs go down after reform?

Yes – at least medical prices did, but the drop wasn’t as much as the reduction in the fee schedule, and it was a LOT less for expensive procedures.  Those are the quick takeaways from WCRI’s report (published yesterday).

The reforms brought a 30 percent reduction in the medical fee schedule as of September 2011, yet:

  • Professional service prices dropped 24 percent, with the 6 percent difference driven by lower provider participation in networks (thus fewer providers delivering care at a discount) and higher prices from in-network providers.
  • Radiology prices dropped 13 percent for MRIs and 22 percent for X-Rays, and ER services also only dropped by 18 percent; other than that, most service groups saw prices decrease somewhere in the mid-twenty-percent range.
  • Utilization appears to be on the increase, as WCRI’s research found “more complex office visits with higher prices were billed more frequently in Illinois.”
  • Surgeries are still waaaay more expensive in IL than in the median study state 2 1/2 times to be precise.  That’s 242 percent more than employers pay in Michigan...

What does this mean for you?

1.  Reducing prices does not lead to a corresponding decrease in costs as providers figure out how to make up for lost revenue by doing more, and more expensive, services.

2.  Kudos to WCRI for getting this info out so quickly; in the past it has taken much longer, so they’ve upped their game considerably. This makes the information much more actionable for payers and regulators alike who can figure out where potential issues lie and take steps to mitigate problems.


Are California’s work comp claimants denied necessary care?

One study published in the Spine Journal says no.

In fact, the opposite may well be the case; compared to Washington State, workers’ comp back patients in California get way too much unnecessary surgery, leading to higher costs and worse outcomes – including more wound infections, life-threatening complications, and device complications.  

The study used a case-mix adjusted of patients undergoing an inpatient lumbar fusion for degenerative disease in 2008 – 09, and produced the following results:

  • the rate of lumbar fusions in CA was 47% higher than in WA.
  • the complexity of procedures was much higher in CA.
  • CA costs were more than 20% higher in CA than WA.
  • CA costs were influenced by the (since fixed) double payment for surgical devices and coverage for bone growth enhancers (which have decidedly mixed reviews)

So, we have too many and too complex procedures performed on too many patients at too high a cost, with worse outcomes.


Well, the limits on lumbar fusion in WA are pretty tight, for very good reason.  In contrast, CA only required a second opinion to approve the procedure.

The financial incentive inherent in CA’s high payments for the procedure may (!) have had something to do with it.

What does this mean for you?

More surgery is often not better care, and in many instances means worse care – and a pretty crappy life for the patient.


How is California’s IMR process working out?

To date, 94 percent of medical treatment requests are approved after initial/internal UR and elevated physician-based UR.

At most, 4.7 percent of all medical treatment requests are denied.

At most.

Those are the headlines from CWCI’s just released analysis of all completed IMR decisions (see 1/8/14 report), an exhaustive and precise project that involved a manual review of each of those requests and resolution thereof.

CWCI’s summary indicates “IMR agrees with approximately 79 percent of the elevated physician-based UR decisions.”

What does this mean?

There are two main takeaways.  First, there’s no widespread denial of care to injured workers, far from it.  The research clearly demonstrates that while the vast majority of treatment requests are approved, the vast majority of the IMR decisions uphold the UR determination to deny or modify treatment. (Update)

Which leads to takeaway two.  Do not assume this means the IMR process - or UR itself is unnecessary or superfluous.  While a cursory review of the results would lead an uniformed reader to draw that conclusion, the report provides insight into the potential downside of ending UR.  The authors reviewed a study conducted by the Washington state work comp fund, known as L&I. Back in 2000, L&I stopped requiring UR for MRIs, as almost all were approved. A few years later, they looked at the volume of MRIs conducted had jumped dramatically.

Here’s what they concluded:

L&I reviewed the effect that the elimination of UR had on MRI use and found a 54 percent increase in spinal MRI scans and a 72 percent increase in lower extremity MRI scans following the elimination of utilization review, and the reviewers were unable to identify any variable other than the removal of the UR requirement that accounted for the increase in MRI utilization. [emphasis added]

Other research into California-specific utilization further emphasizes the risk of ending UR, you can find it in the report at the link above.

That said, there’s no question the volume of IMR requests is much higher than anticipated; word is the State is considering various ways to address the volume including adding other  vendors.  But focusing on results to date, it is also clear the process is working as intended – as an exception management process.

As stakeholders gain more experience with UR and IMR, I’d expect the volume of requests to decrease.

What does this mean for you?

We know now that the IMR process is not a “medical treatment denial scheme” perpetrated by carriers looking to deny care.

Far from it.