Category Archives: Research

NCCI’s regulatory and legislative update

Posted by on | Link to this post | Comments (1)

Day One is concluding with a discussion of legislative and regulatory trends, a panel of legislators and then your devoted author discussing “Thieves, Profiteers, and Enablers”; the bad actors infesting workers comp.

Peter Burton led off with his discussion of what’s happening nationally on workers comp reform/evolution/changes.  He led with medical cost containment initiatives; Peter sees this as the dominant theme in the regulatory world.  The Sandy Hook shootings are leading to legislative initiatives around expanding compensability of medical injuries (SB 823); there’s some concern that Connecticut’s workers’ comp costs, already ranked second highest in the nation in the Oregon premium rate ranking study, will increase if SB 823 becomes law.

Maryland’s privatization of IWIF (to be called Chesapeake Employers) which will likely happen in a few years did not make much progress this year; an effort to control pricing for physician dispensing of repackaged drugs was not successful.  Alas.

Much discussion of Florida; the resolution of the four-year-long repackaged drug problem; rate increases (6.9% this year, third straight year of increases), and the final resolution of a key court battle will have an impact on work comp in the Sunshine State.

Tennessee is looking or comprehensive reform, moving to an administrative from a court-based system (SB 200) which will be effective 7/1/2014; there will be benefit adjustments as well.

Some parties in Illinois are looking to potentially create a competitive state fund, while employes want to strengthen the industry causation standard.  No word on when – or more likely if – these or other possible changes will come co fruition.

Oklahoma’s the biggest mover, with opt-out passed and the state fund moving to a mutual model as the most visible changes; however other moves will result in a 14 percent reduction in work comp costs.

Bob Hartwig on macro factors – drinking from the firehose

Posted by on | Link to this post | Reply

More discussion over macro factors driving workers comp – the always energetic Bob Hartwig Ph.D. followed Dennis Mealy.  Hartwig was his typically rapid-fire self, dispensing insights, quick takes on economic data, the impact of catastrophes and myriad other topics faster than I could record them.

You can get his presentation slides here shortly.

Overall, Hartwig was pretty optimistic, especially about the recovering economy; private sector employment was up 6.74 million jobs since 2009, while governmental employment declined more than 600,000 jobs.  Hartwig forecast unemployment to dip below 7 percent in the last quarter of 2014 – or perhaps earlier.  As payroll is a main driver of workers’ comp premiums, this is good news indeed.

Overall, the larger employment picture has returned to a level we haven’t seen since just before the recession; mass layoffs are way down, hours worked has moved back up, and hourly wages, while not all the way back, are up significantly.   The overall economy has been – and continues to be – dragged down by the sequestration to the tune of about a half-point of GDP growth.  Fortunately private housing starts are accelerating, driving up construction employment which has partially offset the impact of the political impasse. Manufacturing employment is also up by more than a half million jobs. 

Amongst all that good news is the number of discouraged workers – those who have stopped looking for work – has declined by some 14 percent, but is still quite high relative to historical levels.  More troubling yet is the growth in Social Security disability rolls, which has gone up dramatically over the last two decades.  SSDI claim frequency is up nearly 30% since 1996 – while WC lost time frequency has dropped by almost 50 percent.  (more on this here)

Hartwig made a major point of the P&C industry’s continued ability to pay claims, contrasting that ability with other financial institutions’ less-than-robust stability – evidenced by the 500 banks that failed post-recession.  However, the continued lower-than-low interest rates available in the bond market will require better underwriting results – a lot better – if workers comp payers are going to stay even, much less generate a bit more margin.

 

 

Work comp frequency and severity – Mealy reports on 2012

Posted by on | Link to this post | Comments (1)

Part 2 of The NCCI State o’ the Line; aka the Dennis Mealy farewell tour.

There was a good bit of discussion re frequency in his SoL report, with Mealy noting there was a sharp decline in relatively low-cost claims early in 2008/9, but little change in the number of high cost claims. This is consistent with other research indicating employees are reluctant to file claims in a recession for fear of losing their jobs; however those with major injuries really have to file.

Indemnity severity (cost for wage replacement) was up just a point over 2011; not surprising given the continued tough employment situation – wages weren’t up, so wage replacement costs weren’t either.

Medical severity was up 3 percent, overall “not bad” according to Mr Mealy.  Recall workers’ comp is just 2 percent of total national health spend, thus we are more affected by external factors than in control of our own destiny.  There are structural changes working their way thru the medical community, driven in large part by efforts to prepare for PPACA implementation in 2014 that are likely having a significant impact.

Somewhat surprisingly, the medical CPI is actually running a full point higher than lost time medical severity – only the second time in memory this has happened.

There was a bit of discussion about the impact of health reform on workers’ comp; I remain convinced the overall impact will be quite positive; I was puzzled by some comments that ACA might increase cost shifting.  As ACA will ensure somewhere around 20 – 30 million more Americans have health insurance, there’s no question there will be LESS need for providers to cost shift post-ACA than there is today.  

Those uninsured are getting free care today, and that care will be reimbursed tomorrow. Even if that reimbursement is at Medicaid levels, that’s a heckuva lot better than zero reimbursement.

That said, I’d also note access to key specialties – think orthopedics – is going to be very tight this time next year as pent-up demand meets insurance coverage.

Opioids in workers’ comp – problems with long-term usage and what to do about it

Posted by on | Link to this post | Comments (1)

WCRI hosted a webinar yesterday to discuss WCRI’s latest research into long term users of opioids, policy options and recommendations.  The event topped the list of best-attended webinars – the problems associated with opioids and potential solutions thereto is a critical issue facing all workers’ comp payers.

Dr Dongchun Wang started with a review of WCRI’s new information – with a focus on longer-term usage – lost time, musculoskeletal-related injuries without surgery who received opioids more than 6 months after injury. Here are a few of Dr Wang’s highlights:

  • In Louisiana, one in six claimants who received opioids early on were long term users, in other states it is one in ten.
  • The use of other treatment modalities in conjunction with opioids was quite low – 24% of claimants from 2009 – 2011 were receiving drug testing – ten points higher than the two previous years – whoever range was from 18% – 30%.
  • This was far better than psych evals – which were in the mid-single digits.  Very few claimants are evaluated on the front end for psych issues, or get psych treatment.

Dr Kathryn Mueller followed up with a discussion of the global pain problem and attendant issues with opioid over-prescribing and abuse.  Claimant MEDs (morphine equivalent dosage) varied by a factor of four across the study states.  This despite consistent guidance from all sources recommending limited use of opioids. ACOEM calls for limiting opioids to 3-10 days while all guidelines re CNCP (chronic non-cancer pain) essentially include the same treatment for pain – limited opioids, use of NSAIDs, manage not end pain, use CBT (cognitive behavioral therapy, 6-10 visits typically).  Opioid therapy is a very small part of pain therapy, which should also require documentation of functional improvement and change. Dr Mueller also:

  • recommended accessing PDMsP.
  • recommended including weaning language in all opioid agreements.
  • noted there are no studies that show long acting opioids are preferred or have better outcomes than short acting – and no evidence for or against a specific drug.
  • noted CO has a drug monitoring payment code to encourage payment for physicians managing opioids
  • said re urine drug monitoring, that physicians need confirmatory testing of metabolites and not just in-office screening

Dr Dean Hashimoto finished up; we will review his comments in a later post.

 

Workers’ comp drug trends – good news at last, Part 2

Posted by on | Link to this post | Reply

Workers’ comp pharmacy benefit management firms devote significant resources to research, much of which is published in their annual drug trend reports.  Today we focus on PMSI’s just-released report…

The big news - narcotic utilization in the first year of the claim was down 7 percent from 2010 to 2012.  There was an increase in NSAIDs, indicating physician prescribers were substituting NSAIDs for narcotics, a major step in the right direct.  For all claims, narcotic utilization declined 3.2%, an indication that there was less of a decrease among older claimants. Nonetheless, the top drug by spend continued to be Oxycodone at 9.1%

PMSI’s 2013 Annual Drug Trends Report covers three years of in-network transactions totaling just under $1 billion in spend spread over 5.7 million transactions.  Their researchers use cost per day and average days supply to level set for changes; for 2012, cost per day was up 2.8% while utilization declined 2.7% for essentially no change in cost year over year.  This was driven in part by converting more claimants from retail to mail order and associated 21% lower price per day supply. (mail order meds are a lot cheaper)

The report also cites the key role of generic conversion – PMSI clients’ cost for generics was 75% less than for brand ($2.83 v $11.09).  Overall, both generic efficiency and generic fill rates were up; however this varies by age of claim as rates decreased as claims age.

The report includes several excellent charts and maps detailing various regulatory and legislative issues – physician dispensing regs, repackaging reimbursement limits and the like.  There’s also an excellent graphic showing how carisoprodol dispensed by a physician can cost more than ten times the retail pharmacy’s cost ($138.60 v $11.03 – p 10)

One item of interest – the cost per physician-dispensed pill in HI was $4.71 v $1.68 for pharmacy in 2012…

Finally, the big PBM’s clients saw good results from their acetaminophen program as it cut number of claimants taking more than recommended dose by 40%.

Considering this report and Progressive Solutions’, it appears that PBMs have been able to make some progress in reducing the use of narcotics on new claims.  It may also be that physician prescribing patterns are changing; I’m looking into that through a couple of sources to see if we can discern any overall pattern.

More to come.

 

 

Workers’ comp drug trends – good news at last – Part 1

Posted by on | Link to this post | Comments (3)

There are three workers’ comp drug trend reports out this week; we’ll look at each one (in order I received them).  A cautionary note; it is difficult to compare PBMs’ performance on the basis of their reports; the metrics and basis for those metrics varies, their books of business are different (some have lots of very old claims, others have more state funds than national clients and there are also other differences in payer mix with some payers much more aggressive and willing to work with their PBM on specific issues).

First up is Progressive Solutions’ version. The big PBM saw an average reduction in spend per claim of 0.5 percent, driven by a combination of fewer days’ supply per script and fewer scripts per claim.  Progressive has invested heavily in predictive analytics; the payoff has been a significant drop in opioid usage for targeted claims (15% decrease in morphine equivalents).  The data shared in their report parses out the various factors driving claim cost and risk, with “pharmacy behavior”(number of prescribers, number of pharmacies, medications) becoming increasingly significant as a claim ages.

Progressive’s clients are seeing a reduction in opioids as well, with both long- and short-acting opioid script volume down. This has cut per-claim costs for opioids by 4.2 percent.

The report has an extensive and accessible section on legislative and regulatory trends, with discussions of state regs on repackaging, compounds, and physician dispensing.

The takeaways are this:

  • Analytics and modeling can drive much better results by focusing resources on the big problems. The PBM and WC industries need to continue to up their game, and get smarter about where, when, and how to address cost drivers – generic, one-size-fits-all approaches are costly, inefficient, administratively burdensome, and annoy claimants and physicians.
  • The impact of regulations and legislation on WC pharmacy, and thus workers’ comp costs and outcomes, is increasingly important.  Physician dispensing and compounding are two of the biggest profit-creators for those interested in sucking money out of the comp system.  It behooves all stakeholders to thoroughly understand these issues and get involved.
  • Opioids are being addressed – there’s much to do but a strong focus and assertive programs can and do deliver results.

Finally, Progressive’s report is well-designed and well-written.  Kudos to the folks who actually took all that research and translated it into language the rest of us can understand.

 

 

Opioids’ long term impact on workers’ comp – WCRI reports

Posted by on | Link to this post | Comments (4)

Opioids will be the biggest problem the workers’ comp industry faces over the next few years.  WCRI’s hosting a webinar on the issue later this month, and I’d encourage you to sign up (do it fast, there’s a limit on attendees).

For those unaware of recent research on the issue, here are a few of the issues:

  • there’s huge variation among and between the states; according to WCRI’s latest research,  17% of Louisiana claimants who started using opioids were still using them 3-6 months later, compared to about 3 percent in Arizona.  Clearly the risk of addiction/dependency in LA is much higher than in AZ.
  • Less than a quarter of all long-term opioid users were tested for drugs via urine drug screening.  When you factor in drug testing data that indicates a substantial percentage of claimants prescribed opioids don’t have evidence they’re taking them, it is clear employers and insurers are paying millions for opioids that may not be used for the intended purpose (to be generous).
  • In California, claimants prescribed 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.

If opioids aren’t on your radar, they soon will be.

If not, you must be in Arizona.

What does this mean for you?

Sign up for the webinar

“Disability” is increasing…why?

Posted by on | Link to this post | Comments (8)

Are we suffering traumatic injuries from falling trees, collapsing scaffolds, dangerous industrial machines?

Is it because so many of us work at jobs requiring intense physical labor, and we are working long hours long past middle age?  Conversely, is it the very sedentary nature of many jobs that saps energy and wastes muscle?

Could it be we are just living longer than we ever have, and our bodies, programmed by evolution to live long enough to procreate, just aren’t built to stay strong, flexible, and resilient for decades?

Or are we way too fat, get far too little exercise, eat lousy food, and blame everyone but ourselves for the consequences?

Is it the continuing high unemployment rate and dearth of good-paying jobs?

And/Or – and here’s the scary thought – is it the definition of “disabled” that’s changed – both the public one and the way some view themselves?

This is becoming an increasingly critical question – as the number of Americans on Social Security for “disability” has increased rather dramatically – doubling from 1985 to 2005. In 1984 2.2% of the working-age population was receiving Social Security Disability Insurance (SSDI); 4.1% was in 2005.  This increase was, according to a paper published by the National Bureau of Economic Research, driven by a change in the definition of disability:

The most important factor is the liberalization of the DI screening process that occurred due to a 1984 law. This law directed the Social Security Administration to place more weight on ap-plicants’ reported pain and discomfort, relax its screening of mental illness, consider applicants with multiple non-severe ailments, and give more credence to medical evidence provided by the applicant’s doctor.

These changes had the effect of both increasing the number of new DI awards and shifting their composition towards claimants with low-mortality disorders. For example, the share of awards for a primary impairment of mental illness rose from 16 percent in 1983 to 25 percent in 2003, while the share for a primary impairment of musculoskeletal disorders (primarily back pain) rose from 13 per-cent in 1983 to 26 percent in 2003.

The number of working-age folks receiving SSDI reached 8.8 million at the end of last year.  That’s about 4.4 percent of the working age (18-64) population, an increase of 0.3 percent over the last seven years.

There’s been an increasing amount of attention paid to this issue; that’s both warranted and appropriate.

Yet I’m reminded of something Jennifer Christian MD told me years ago; “there’s no condition so disabling that there isn’t someone in the US with that condition working full time today.”

So, what is it?

My sense is it is all of the above. Some are really hurting or unable to work at jobs they can perform, others lazy, some dispirited, some enabled by physicians, many just getting older and wearing down, many unable to find good-paying jobs.

What does this mean for you?

Big, knotty problems aren’t fixed by simple answers or assignment of blame.  They are fixed by understanding drivers and the various moving parts needed to assemble solutions. 

 

Wrapping up the workers’ comp week

Posted by on | Link to this post | Reply

Here’s the highlights from the week after the annual WCRI meeting and Physician Dispensing Summit…

The incontrovertible proof that physician dispensing of repackaged drugs extends disability and increases claims costs has raised the stakes in Maryland, Hawai’i, and Pennsylvania, states that are all working on legislation or regulations addressing physician dispensing.  The key takeaway – dispensing extends disability and raises medical costs – over and above the cost of the drugs.

It’s no longer about controlling the cost of the repackaged drugs, it’s now about the impact of dispensing on employers and taxpayers.

I’ve heard from multiple sources – including folks in Hawai’i –  that the new new thing in the repackaging/physician dispensing world is SpeedGel...developed and sold by the wonderful folks at Gensco Labs.  SpeedGel is currently available in both OTC and prescription strengths, but word is the over-the-counter version will no longer be available (amazing what you can learn when you talk to their sales reps).  Evidently some payers have been reimbursing the prescription version at the OTC price, and we can’t have that!!

As you can see from the link, Gensco isn’t resting on their laurels.  Nope, they’ve been busy filing trademarks for new and wonderful topical medications that are sure to solve myriad problems – to date Randy M Goldberg has filed for 43! Coincidentally, there’s a gentleman with the same name who’s affiliated with Automated Healthcare Solutions…

They sure are busy down there in Miramar, Florida!

Don’t worry about the disclaimer on their site…the one that reads “The products and the claims made about specific products on or through this site have not been evaluated by the United States Food and Drug Administration (FDA) and are not approved to diagnose, treat, cure or prevent disease.”

Finally, I’m going to be on holiday all next week in Italy.  See you in ten days.

 

WCRI’s research wrap-up

Posted by on | Link to this post | Reply

Only the thoroughly nerdy (and yes that includes your intrepid reporter) stuck around for the final session, a WCRI research sampler based on their CompScope research database for lost time claims from 2008-2011.

It’s not just medical benefits that vary wildly – indemnity benefits per claim ranged from almost $10,000 per claim in IN to $28,000 in NC.  The researchers broke this down into the various components and sub-components; temporary and permanent disability benefits.

This is NOT my area of expertise – so be warned.

One study looked at the Michigan workers’ employment after a lump-sum settlement of their claim.  19% of those claimants who didn’t have a job at the time of settlement found one within a year, most took their time.

Among those claimants who were working at their “pre-injury” employer, 41% left their job and were no longer employed a year later.  For those who had found a job at a new employer after their original injury, 75% kept that job.

About a third who had a job at time of settlement quit and weren’t employed a year after that settlement.

That’s it for me – time to get back get back to work.