Apr
10

Everything you need to know about WC managed care regs

Is now available from WCRI with their latest compendium of Cost Containment Initiatives.

The annual report is a must-have for anyone working in the business in any capacity.

A few interesting notes for those not already immersed in the intricacies of comp regs…

  • Only five states don’t have non-facility provider fee schedules.
  • The vast majority of these fee schedules are RBRVS (Medicare) based
  • There is wide variation among the states – a  lot of this variation appears to be based on factors other than logic or reason.
  • Eight states do NOT have fee schedules for drugs; most are AWP-based but several are U&C; California uses Medicaid.
  • While most states have pretty tight inpatient fee schedules, outpatient is a different story. There’s wide variation and many look to be rather…flexible. Same is true – but even more so – for ambulatory surgical centers.
  • The description of employer/employee choice of treating physician is comprehensive and detailed.  Suffice it to say that the old saying “when you’ve seen one state, you’ve seen one state” is accurate indeed.

Kudos to WCRI’s Ramona Tanabe and Karen Rothkin for doing the work to put this together – so we don’t have to!


Mar
28

919,400 people aren’t working because of opioid use

My best guess is about a quarter of those are work comp patients.

Opioid use disorder (OUD) drains the workforce of qualified, experienced workers, costing our economy $40 billion.

Healthcare costs for OUD alone were $28 billion in 2015 – and all but $2 billion of that was paid by insurance – mostly Medicaid (which is taxpayer funded).

If you are 50 or younger, you’re more likely to die from opioid use than anything else – not a car accident, not cancer, not a heart attack, not diabetes.

Solutions

Medication-assisted therapy (MAT)- using methadone, buprenorphine, vivitrol to help victims get off and stay off opioids – is, for most folks, a key part of recovery. Yet most states have far too few MAT facilities, and many facilities only provide one or two of those medications (not surprisingly, different people seem to do better on different therapies).

Yet there are far too few providers trained and able to provide MAT.  From Inflexxion:

Data shows that less than half of privately funded treatment programs offer any form of medication-assisted treatment. That number falls to 23% in publicly funded programs. According to the 2013 National Survey on Drug Use and Health, of the 2.5 million opioid-dependent or opioid abusing Americans, fewer than 1 million received MAT.

MAT, coupled with counseling and patient-centric, individualized treatment plan can be quite effective.  A solid study found over well over half of patients using MAT were not using the illicit drugs 18 months into treatment – a remarkable success.

However workers’ comp payers are often unable to find MAT facilities, lack the understanding needed to develop a comprehensive, long-term treatment approach, and are loathe to go down that path, as they’re afraid it will make the employer liable for all manner of additional services.

What does this mean for you?

States can and should come up with novel ways of encouraging treatment while limiting future liability.

This will save thousands of lives and billions of dollars for employers and taxpayers.


Mar
26

Value-based care in Work Comp

Randy Lea MD of the Dartmouth Institute (one of the nation’s leading healthcare research organizations, and my personal favorite) just completed research on value-based care (VBC) in work comp – a timely and much-needed project. Dr Lea presented at last week’s WCRI Conference.

Here are my takeaways.

Spoiler alert – value-based care is not getting much traction – and I don’t think it will.

First, the research was more of a survey of what stakeholders want, expect, can do, and think is necessary to bring VBC than a detailed description of what actually exists today. In that way, it’s helpful as it indicates what factors may/will lead to more VBC in work comp.

As much as I respect the Dartmouth Institute and appreciate Dr Lea’s insights, I found the presentation hard to follow. There was just too much information crammed into too little time.

Stakeholder readiness

Providers – only one engaged in a WC VBC pilot program; many were prepared and waiting, but “there’s no opportunity for them to engage at this time.”

Payers – only one is doing VBC – and that is bundled payments. Payers were more focused on high-performing networks, not real VBC. Also doubt the model will be sustainable.

Regulators – again, only one doing VBS, that one has seen positive results, and is ready to expand. access, quality, and are coordination. Not much going on, but many are at least thinking about it.

Now into the meat – their thinking about how VBC might actually occur in workers’ comp.

Conditions that were popular for inclusion in a VBC model included spine, shoulder, knee, CTS, and co-morbidities plus the condition.

First, we need a regulatory environment that is favorable to VBC. No surprise here, although all recommended employer direction, mandated medical treatment guidelines, reduced fee schedules (?!), reduced UR.

Second, providers need enough patients.

Third, there was a lot of concern around RTW, causation, and impairment and who is involved and how decisions around those key issues will be made and on what basis.

Development guidelines

  1. Need a set of values that are shared by the stakeholders that guide development
  2. Rewards for good performing providers
  3. Transparency across all stakeholders
  4. Outcomes focused, not discount-driven
  5. Adaptability to current programs and regulatory conditions
  6. Fair and quick reimbursement of providers
  7. Reimbursement based on guidelines and compliance w MTG
  8. Eliminate fee schedules
  9. Need real steerage of patients
  10. Tight definition of outcomes is mandatory, need real specificity around things like RTW.

Payment types – participants reviewed a variety of types of reimbursement, with most payers looking for bundled payments  – no surprise.

 

I also have to note that my main takeaway was thiswork comp is a couple of decades behind the rest of the world – and it isn’t catching up. If anything, we’re falling further behind.

I say this because this is some pretty basic stuff compared to what we see in Medicaid or Medicare.

My view is there are any number of reasons VBC is not going to happen in WC.

  1. There are not enough cases; providers won’t be interested in risk-taking if there aren’t enough cases to spread the risk.
  2. Providers don’t have to take risk; in many states there’s no or limited employer direction, so no guarantee they’ll get a minimum number of cases.
  3. Litigation – providers may have to provide documentation and perhaps testify, something no one wants to risk.
  4. Payers are far too wedded to the percentage of savings profit machine.

What does this mean for you?

Bundled payments aren’t really value-based care. And even those are few and far between, for good reason.


Mar
23

When people use cannabis do they stop using other drugs?

There’s been some good research into this – which may be THE key question when it comes to medical marijuana.

The answer appears to be – some do stop using other drugs. And, even better, fewer people die.

Key findings using Medicare data:

  • States with medical marijuana laws saw about 10% fewer daily doses of opioids than those without those laws.
  • States with dispensaries only (no home cultivation) saw a 14% decrease in opioid doses
  • Total savings to Medicare and Medicaid would be about $3.4 billion if all states adopted Medical Marijuana Laws – but the folks buying the marijuana would pay for their cannabis out of their own pockets.

Studies using Medicaid data saw somewhat greater reductions in opioid usage.

Couple observations – there have been massive changes in PDMPs, increases in naloxone usage, tighter state laws and federal guidance on opioids (CDC et al), which may well have had some impact on death rates and lower opioid usage overall (Brian Allen of Mitchell made this point just after I wrote this). Dr Bradford noted that their analysis considered these possible confounding issues.

My big takeaway – there’s a significant reduction in the number of deaths due to opioids when states have access to cannabis. Like a 25% reduction.

Dr David Bradford of the University of Georgia presented this information; he and Ashley Bradford published much of this in a piece in HealthAffairs two years ago; they used Medicare and Medicaid data.

Dr Bradford noted he and Ms Bradford hope to be working with WCRI on a workers’ comp-specific study soon.


Mar
23

WCRI on Physical Medicine

Physical medicine – chiropractic, occupational and physical therapy – accounts for about one out of every six dollars of workers comp medical spend.

Key takeaways from DR Rebecca Yang’s discussion of the latest CompScope(tm) report:

The location of PM services has shifted from hospital outpatient to non-hospital locations since 2003.

PM accounted for almost 18% of WC medical costs, with non-hospital totaling 14.6%.

Part of the reason is likely reimbursement; non-hospital care averages $41 per unit, while hospital is almost 50% more expensive at $60; this varies quite a bit by state.

Anecdotally, several payer clients have told me their PM costs have been increasing; some are concerned and others see this as likely – and not unwelcome. This latter group sees PM as a replacement or substitute for more invasive/riskier and expensive care – specifically surgery and opioids.

Don’t have any data to support these anecdotes, but hope to hear from anyone who’s looked into this.

What does this mean for you?

Increasing physical medicine costs may well be a good thing.


Mar
13

Opioids – bad news and good

Patients taking opioids over the long term don’t go back to work, yet many long-term opioid patients can be weaned off opioids within two years.

Those are the quick takeaways from two studies that came out last week.

First, a study from WCRI validates earlier research, finding:

  • patients with multiple opioid scripts are out of work three times longer than patients with no opioid scripts, and
  • patients who lived in places where providers prescribe a lot of long term opioids…are more likely to get opioids for longer periods than individuals who lived elsewhere.

This is the first study that looked at ALL lost-time claims with a diagnosis of low back pain in a very large area – 28 states that represent 80% of claims – over a five-year period. This is important because it shows  cause-and-effect independent of so-called “severity” measures, which often use cost, treatment, or prescriptions to indicate medical severity, instead of actual clinical indicators. By looking at ALL low back claims with lost time, claims, it is clear that the driver of disability is long-term prescribing of opioids.

The takeaway is this – chronic use of opioids extends disability, and you can figure out where you need to focus your efforts by looking at publicly-available prescribing data.

California is one state with way too much experience in dealing with opioids in work comp; the graph below shows both the overuse, and the progress made in the Golden State since it got serious about reducing opioid usage.

source – WCIRB

Which brings us to the good news: weaning works, as research from California’s Workers’ Compensation Insurance Rating Bureau shows: 

47% of the injured workers demonstrating chronic opioid usage weaned off of opioids completely within the 24-month Study period. Injured workers who did not wean off completely over the Study period still reduced opioid dosage by an average of 52%.

The research included all patients with more than 50 morphine equivalents over at least 3 months within 24 months of the date of injury.

Yes, it is difficult, expensive, requires a lot of assistance from trained professionals, and does not always work. All that said, given the finding that patients taking opioids for longer periods are out of work a lot longer, it is well worth the time and effort to help these patients reduce or end their use of opioids.


Jan
8

Monday catch-up

Lots has been happening, here are a few items that caught my attention.

WCRI’s been diving deep into hospital reimbursement. This is an issue I’ve been tracking closely – and I’d suggest you should too. I see hospital/facility costs and utilization as a major cost driver; hear from Carol Telles in a webinar Thursday January 18 at 1 eastern.

As we’ve noted here previously, work comp payers would do well to pay close attention to facility reimbursement and utilization; expect work comp, auto, and other P&C lines to become even more attractive to hospitals seeking revenues and margins.

Healthcare spending inflation actually slowed significantly last yearAn analysis by Kaiser Health News indicates trend in 2016 was 4.3 percent, higher than the overall 2.8 percent inflation rate, but a 1.5 point drop from 2015’s rate.  Notably, drug cost inflation was just above 1 percent (although that’s a lot higher than the double-digit drop we’ve seen in workers’ comp).

Key point – this slowdown in the rate of growth occurred after ACA implementation.  Not surprising that costs went up; we insured millions more people, most of which had pent-up demand for services they couldn’t get or couldn’t afford.

While costs continue to grow, life expectancy declines. We have the most expensive healthcare in the world – by far – yet our life expectancy has dropped two years in a row. As a result, we rank 26th out of 37 developed countries for life expectancy.

Here’s why – we’re paying hundreds of billions for low-value care…

An excellent piece on how to make analytics actually work from Harvard Business Review.  Key points:

  • attach an ROI to the analytics unit itself
  • hire experts from OUTSIDE your industry…

Enjoy your week.


Nov
20

Post vacation update

Back from a much-needed family trip to Sedona AZ where the mountain biking was phenomenal.

(son Cal and son-in-law Keith plus the old guy)

Here’s what happened while I was in the land of the vortices…

WCRI’s annual conference in March 2018 will be kicked off by the former head of the Bureau of Labor Statistics, Dr Erica Groshen.  Always a must-do; sign up soon or risk being wait-listed for the March 22/23 event in Boston.

The latest from the brainiacs from Boston is a report on California’s work comp medical benchmarks.

Colleague and good friend Frank Pennachio of Oceanus Partners will be opining on misaligned incentives in work comp at NWCDC in Vegas next month.  Frank’s terrific delivery, vast experience and deep knowledge of how things really work in work comp will make this one of the most valuable sessions for employers.

Climate change’s effects are being felt everywhere – and the insurance industry may be the industry most affected. An excellent Harvard Business Review article illustrates the major, if not central role P&C Insurance is playing in forcing us to acknowledge the reality of human-caused climate change.

Differential pricing for high-risk areas (we’re talking about you, south Florida, and you, coastal areas) and Catastrophe bonds are just two of the ways the insurance industry is forcing businesses, governments, and individuals to deal with climate change.

Finally, NCCI’s out with it’s assessment of the 2015 decline in work comp medical costs; key takeaways (note California and New York were not included):

  • a drop in utilization of physician services was the key driver
  • inpatient facility costs increased 6 points, driven by a huge increase in very expensive inpatient stays 
  • there was LOTS of intrastate variation…

Good to be back at work – enjoy the short holiday week.


Sep
15

Friday catch-up

Hurricane recovery

Thanks to NCCI for a very timely article by Chief Actuary Kathy Antonello on evaluating construction contractors based on information on experience modification rates.

Key takeaway – “It’s not appropriate to use E-mods to compare the relative safety of employers.”

Very interesting take on efficiency in construction; the Economist notes that the construction industry has become LESS efficient over the last few decades. While this may well be about to change, for those rebuilding in hurricane-ravaged areas, costs will be much higher, reconstruction take longer, and preparation to deal with the obvious impacts of climate change may not keep up with the speed of that change.

Blockchain continues to work its way into the insurance industry. An excellent piece in the Harvard Business Review notes that insurance is especially suited for blockchain. Both are predicated on spreading information, and in the case of insurance, that information deals with risk. Blockchain is uniquely suited to spreading risk as at its core it is a “trust and efficiency engine.”

Key takeaway…

it will require uncomfortable transparency [from established insurers] and price corrections in their business models. This will be toughest on the portions of the industry that are the least differentiated, where consumers often decide based on price: auto, life, and homeowner’s insurance. [emphasis added]

And there’s this telling point, which identifies a key reason insurers should be worried…

trust in business institutions, and the financial services sector in particular, is at an all-time low. While the large banks are at the center of this trust vacuum — with a seemingly steady stream of scandals, such as the recent Wells Fargo account rigging debacle — the erosion of trust is bad for everyone

Ignore at your peril.


Sep
13

Motivating sales people

Is a question asked over and over by pretty much everyone in this and other businesses, but it is especially important in workers’ comp services, where companies and sales people are fighting over what’s been a shrinking pie for years.

And, except in Florida and Texas, that pie will continue to shrink.

New research provides pretty compelling insights into what works, what doesn’t, and why.

Caution – this is ONE study, in a very different culture, of a in a company selling tangible products.

The high-level takeaway…Sales force compensation is a tricky issue, requiring decisions based less on intuition and conventional “wisdom,” and more on hard, quantitative data.

Details (paraphrasing here…)

Salespeople were assigned to groups each with different compensation arrangements. Some people received unconditional bonuses, which were given irrespective of their sales performance. Some received “conditional” bonuses, where compensation was tied to sales quotas under three different treatments: standard, punitive, and real-punitive. In the standard treatment, a salesperson was paid a bonus after achieving a weekly sales quota that was set 20% higher than what that individual had previously sold. The punitive treatment was identical except for the framing: We told salespeople that failing to receive a bonus was a penalty for failing to achieve their quotas. And in the real-punitive treatment, a draw system was used, where payments were made at the start of the week but then withdrawn for those who didn’t meet their quotas.

For the unconditional bonuses, the thinking was these would encourage reciprocity; Salespeople would work harder in appreciation for the firm rewarding them with higher pay. These bonuses were awarded under two different treatments: delayed and immediate. In the delayed treatment the bonuses were communicated to the salespeople at the beginning of the week, and payment made at the end of the week. In the immediate treatment salespeople were simultaneously informed of and awarded the bonus at the start of the week.

Perhaps not surprisingly, the conditional bonuses were, on average, more than twice as effective as the unconditional bonuses… they increased sales by an average of 24%.

But it’s not that simple.

The researchers found that a conditional bonus could potentially demotivate salespeople over time: Salespeople’s performance was higher during weeks of a bonus treatment but lower in weeks after a bonus treatment. This result is consistent with past behavioral research that has found that too much extrinsic motivation may actually lead to a decrease in intrinsic motivation.

Unconditional bonuses tended to be more effective for salespeople with a higher base performance, which supports the idea that high performers generally have more goodwill toward the company and thus are more likely to reciprocate by increasing their selling effort.

Conditional bonuses were equally effective across all types of performers.

What does this mean for you?

Experiment with different approaches.  Avoid basing decisions on your gut; rely instead on data.