Controlling work comp medical – Swedlow and Victor weigh in

The capstone to an excellent NCCI AIS was provided by WCRI Exec Dir Dr. Rick Victor and his counterpart at CWCI, Alex Swedlow.

Rick led off with my LEAST favorite topic – physician dispensing of drugs to work comp claimants.  The usually-very-circumspect Dr Victor said that “the evidence is pretty clear in terms of costs and likely benefits of physician dispensing.”

All the evidence indicates:

  • physician dispensing is common in big states
  • prices are higher than for the same drugs in retail pharmacies
  • even after reforms, prices are about 30% higher
  • docs write scripts for OTC meds when they dispense those meds
  • dispensing docs prescribe unnecessary opioids 
  • the price focused reforms – eliminating the upcharge for repackaged drugs – will not deliver long term results.

As great as it was to see Dr Victor and NCCI focus so much time on an issue that I’ve been harping on/screaming about for about 8 years, I – as undoubtedly you – are sick to death of this subject. It’s time to kill the beast – ban physician dispensing and docs profiting from dispensing.

CWCI’s Alex Swedlow jumped full force into a quick review of utilization review in California.

The key takeaway is the decline in medical trend observed recently – which is leading to a reduction in rates – is very good news indeed.

Pharmacy is the fastest growing component of California’s work comp medical expense, now totaling 13.2% measured at 24 months maturity, or $1.2 billion. This despite two fee schedule reforms, implementation of chronic pain guidelines, and shortly opioid-specific guidelines and perhaps a formulary via legislation now under consideration. Yet 45% of UR involves drugs, and 45% of medical reviews do as well.

BTW doc dispensed drugs account for over half of drug spend in the Golden State.

Despite all that effort 29% of pharmacy spend is for Schedule II and II drugs.

That’s just appalling.

Which led Alex to the key question – why is California’s WC medical so much harder to manage?

Alex’ take – a fundamental lack of shared risk – no supply/demand controls, no contractual language that limits care, and a dispute process that features very high levels of litigation.

Which leads to the Independent Medical Review (IMR) process – intended to speed dispute resolution while increasing consistency.  CWCI has done quite a bit of research into this area, most of which is available on their website.

Briefly – 95% of ALL treatment requests are approved.  There is NO wholesale denial of care occurring in California.

Despite what you may have heard, the IMR process is working pretty well.

CWCI’s research (on their website) indicated that the average audit score for timeliness etc was 97%.  And, IMR isn’t nearly as cumbersome as some would like to portray.  

Here’s the real data…

75% of requests for initial treatment are immediately approved.

77% of the 25% that aren’t approved initially are approved after going thru UR. – that equates to 94.1% of all treatment requests are approved initially or after UR.

91.4% of IMRs agreed with UR that the UR-denied treatment was in fact not consistent with evidence-based medical guidelines.

44.7% of services going to IMR were for drugs; those decisions were upheld 92% of the time.  And a lot of the IMR challenges are coming from one area – Los Angeles.  Similarly, the top 1% of docs generated 44% of the letters; only 10 docs were responsible for 11% of ALL IMRs.

What does this mean for you?

Drugs are a big problem, and a relatively few docs are the ones contributing to this problem. 

The IMR process is working pretty well – and would be much better if a very few docs weren’t flooding the system.


Is ACA affecting work comp medical waiting times?

Research to date says no.

Equian’s Glen Boyle shared some research with me that indicates there doesn’t seem to be any delays in claimants getting physician appointments.  Glen was following up on my post on NCCI’s research report at last week‘s AIS which also didn’t find any ACA-related delays.

Here’s Glen:

I tracked 10,000 claims for [an insurer client] (2012-2013 – matured 24 months with a minimum of 6 months maturity).  

The study focuses on Indiana, Iowa, Minnesota, Illinois, and Wisconsin.

The claims were placed into agreed benchmark categories and we are measuring dozens of data elements. Aside from DOI to first medical visit (and the time between subsequent visits), we are tracking the time to first major surgical service, the time to first PT (and the time between subsequent visits), and the time from the first medical treatment to the last medical treatment.  

 The 10,000 claims created our “foundational benchmarks”, and we just completed our first comparison of claims from the 1st quarter of 2014 (post ACA) with maturity through 9/30/14. We’ve also just completed another data pull with two additional quarters of new data, while updating the claims already in the mix. We were able to take our first look at some post-ACA benchmarks – many are still VERY immature, but DOI to first DOS develops immediately (FYI we show no delays to first office visit in any of the jurisdictions). [emphasis added] You had pointed me to the Robert Wood Johnson report and that seems to indicate that newly insured patients are NOT flooding into waiting rooms – so you wouldn’t expect any delays from that perspective.  

(this references a previous post on the RWJ study; excerpt below)

A Robert Wood Johnson Foundation report (thanks to AthenaHealth) report indicates docs are not getting swamped with newly-insured patients seeking primary care.  Key findings include:

  • New patient visits to primary care providers increased from 22.6% of all appointments in 2013 to 22.9% in 2014.
  • The percentage of visits with patients with complex medical needs decreased from 8.0% of appointments in 2013 to 7.5% in 2014.

So far, doesn’t look like primary care providers are overwhelmed – HOWEVER that is national data, and things certainly vary from region-to-region.

While primary care isn’t being overloaded, the health care delivery system is undergoing wrenching changes – with small, safety-net hospitals probably the most affected. Expect to see closings, consolidation, and takeovers as these most-vulnerable providers lacking scale, resources, and brand find they can’t survive.  For a glimpse into the near-term future, track what’s happening in California.

What does this mean for you?

17 months into full ACA implementation, there’s no indication that WC claimants are seeing delays in getting medical care.

Where’s the economy going?

In MCM’s ongoing effort to help you, dear reader, know things that will likely greatly affect your work world, here’s a quick review of economic predictions and implications thereof.

Moody Analytics is pretty optimistic about the future of hiring, employment, wage growth and the economy in general.

However that optimism is somewhat dampened by concerns overseas as key players in Europe and the BRICs are entering or going thru recession.

One key data point is the “quits rate”, which is simply the rate at which people are leaving jobs.  This is tracking higher, indicating people are moving among employers – according to Moody’s Adam Kamins this presages higher wages as employers have to increase compensation to attract and keep good workers.

Housing starts are a very big part of the recovery, and part of the reason things haven’t gotten better faster. There’s a good bit of pent-up demand, driven in part by millennials living with their parents at historically high rates. Obviously, houses can’t be built without construction workers (at least until 3-D printing of buildings gets a lot more prevalent – which it will…). According to Kamins, we are about 40% below the level we should be for housing construction – which equates to perhaps a couple million workers.

Expect this to be most heavily felt in the west and south, where construction permits have moved up nicely over the last few quarters.  Not surprisingly, the west has led in job creation for several years, with the south catching up over the last year.

Internationally, China’s economy is slowing – which isn’t surprising as it has been growing at a breakneck pace for several years.  Interestingly, Kamins said (I’m somewhat paraphrasing here) “Fortunately, the Chinese government has pretty tight control over the economy.”  With other countries’ economies in a bit of trouble, the dollar is strengthening leading to problems with trade – our stuff is really expensive, while their’s is cheap.  In turn this could hurt domestic manufacturing as demand for US goods drops off.

The dollar’s strength hurts tourism too; it’s really cheap to travel abroad for us but the US is a pretty pricey destination for Europeans and Asians these days.

NCCI’s PM sessions – hard core research geeks only

NCCI, with the assistance of payer medical directors (shout out to Employers’ Dwight Robertson MD and David Deitz MD among others) presented on 4 research topic areas late Thursday afternoon.

After a long day of great talks (this NCCI has been the best I’ve been to in a dozen plus years) it was time for the real dense, pithy stuff.  I’ll summarize so you don’t have to write your own notes…There’s some really good stuff here.

Joint injuries

Barry Lipton discussed an analysis of knee surgery across six states; you may be surprised to hear costs, even after correcting for price variations, ranged rather dramatically across the six – by around 60 percent.  What’s a lot more surprising is the variation in diagnoses, particularly among strains.  The percentage of knee injuries that were attributed to strains varied by somewhere around 20 points from highest to lowest state.

Shoulders exhibited differences as well, however there were similarities between the two joints.  Namely, the variation in utilization for both was driven by surgery and physical medicine.  A question from the audience asked why there is such variation when treatment should be uniform…

Therein lies the issue.  According to the handout, “Utilization differences across our selected states are driven more by differences in the treatment for given diagnoses than to the mix of diagnoses.”

There was quite a bit more to Barry’s presentation; check out NCCI for more.

Next up, Drug Fee Schedules

NCCI looked at differences in the prices paid for drugs in an effort to assess the effect of fee schedules [FS] on prices paid.  Some quick highlights from Natasha Moore’s talk…

  • Just because states have similar fee schedules doesn’t mean the prices paid for drugs will be similar.
  • Prices in high FS states are generally higher than states without fee schedules
  • There’s quite a bit of variation in prices paid even a) after correcting for drug mix and b) among states with similar fee schedule levels.
  • However, lower fee schedules are correlated with lower prices paid.
  • Brand drugs are 22% of scripts, but 56% of cost

Time from injury to treatment – preliminary results

NCCI is workign on a long term study on the impact of the Affordable Care Act; their first effort focuses on time from injury to treatment.  Highlights are from data between 7/1/2010 – 12/31/2012:

  • 85% of trauma cases are treated within 3 days from date of injury
  • there are longer “delays” in seeing some specialists in some states

My view is this is not likely to bear much fruit; looking at time to treatment by specialist as a way to somehow evaluate the impact of ACA is likely to be confounded by multiple issues, including:

  • practice pattern variation
  • supply of various provider specialties
  • expansion of Medicaid – or not
  • state support of ACA enrollment e.g. California vs those antipathetic to ACA e.g. Texas

Perhaps an analysis holding provider populations level and using the uninsured rate would be more illuminating.

Impact of report lag on claim severity

Following on the ground-breaking work by the Hartford’s Glen Pitruzzello fifteen years back, NCCI looked at the impact of claim reporting lag on claim severity.

There’s a wealth of data shared; the net is the longer the delay, the more likely the claim will cost more – HOWEVER, the correlation is by no means linear and varies by type of injury (e.g. the most expensive fractures are those reported on the actual date of injury, next is during the first week).

A long day indeed…

First up at NCCI – Work comp is looking better…

Workers’ comp net written premiums for funds and insurers were up substantially – 6 percent – over 2013, making for the 4th consecutive year of premium growth.

Meanwhile, the combined ratio for private carriers improved as well – down 4 points to 98, driven by a drop in loss adjustment expense, underwriting expense and loss costs.  State funds saw their combined stay flat at 115.

And yes, the industry returned a pre-tax operating gain  of 14% – NOT to be confused with “profits” or “return” – more on that in a later post.

This was driven in part by a decline in claim frequency – a continuation of a two-decade-plus downward trend in frequency.

This was the introduction to NCCI’s 2015 AIS provided by President and CEO Steve Klingel.  Klingel noted that the industry is rarely able to sustain profitability for very long; factors that may drive changes include the Feds’ moves on interest rates, employment growth, and changes in what defines “employee” and “employer”.

Noting the March OSHA document – essentially an indictment of workers’ comp, legal challenges in FL and OK, and press reports about individuals apparently mis-served by the work comp system (likely referring to the ProPublica/NPR series, much of which has been challenged here and elsewhere), Klingel’s sense is there may well be storm clouds in the near future for work comp.

Next up – the State of the Line…


Work comp in North Carolina – lessons learned

WCRI has done it again.

Carol Telles‘ just-published report on the North Carolina work comp system should be required reading for anyone looking to understand why and how costs and care change in response to regulations.

A couple of items make the point…

  • Hospital costs were “among the highest of the states we studied” – despite fee schedule and other changes in 2009 and 2013. There was an 11% drop in 2013 in outpatient surgery payments however whether that’s sustainable is questionable (my interpretation, not Ms Telles’.)
  • NC’s work comp claimants receive the highest income benefit payments among all 17 CompScope states – because settlements are higher and disability durations are longer. (there were reforms in 2011, but we don’t know the impact yet)
  • From 2009/10 to 2013/14, total costs/claim didn’t change much at all – in contrast to 8% annual increases seed in the prior 6 years.
  • There has been substantial reform over the fast six years…

There’s a lot more detail in the report, including the finding that the main reason medical costs haven’t moved much since ’09 is a reduction in utilization – primarily for outpatient hospital services per claim.

One other notable finding; there was a dramatic increase – 21% – in reimbursement for evaluation and management services in 2013.  My take is paying docs to actually talk with and “evaluate” patients may help hold down medical costs, and help reduce the longer-than-average disability duration seen in the Tar Heel State as well.

What does this mean for you?

Reform can effectively mitigate cost drivers IF that reform targets specific factors influencing costs.  

Work comp pharmacy – it’s getting complicated

That’s the one-word takeaway from a read of Healthcare Solutions latest Drug Trends report.

A decade ago work comp pharmacy was driven overwhelmingly by utilization; ever-increasing volumes of pills prescribed and dispensed to claimants was the primary cost driver.

Now, price and drug mix have become the main concern.

Healthcare Solutions reported drug price inflation rate exceeded 8.6%; 12.4% for brands and 7.9% for generics. Overall, drug costs were up about 4%, indicating efforts to control the type and volume of drugs counterbalanced a good chunk of the industry’s price increase.

In particular, utilization decreased by 3.1%, a result that would have been unthinkable just a few years ago.

In part that was driven by a 1.4% drop in utilization of opioids, led in turn by a 2.1% decrease in usage of hydrocodone/acetaminophen, the most commonly-used opioid.

For those not steeped in the details of drug pricing and work comp, it’s important to understand that what work comp pays is based in large part on prices set by drug manufacturers; these manufacturers do NOT have prices specific to workers’ comp. Essentially all states with fee schedules for work comp drugs base those fee schedules on AWP (which is set by the manufacturer). And, PBMs’ contracts with pharmacies are based to a large extent on AWP; MAC (maximum allowable cost) is also used extensively for some generics)

A great example of price’s impact is the recent introduction of several wildly expensive Hepatitis C drugs; according to HCS, these drugs, “while not common in workers’ compensation, can be significant to a client’s overall drug spend if they do have a claim.  This is especially troublesome for healthcare clients [e.g. hospitals, emergency services].  Treatment can be upwards of $100,000.”

Another notable cost driver was the higher volume and prices for compound drugs; this is consistent with other payers’ experience.

I’d note that Healthcare Solutions’ clinical programs are quite good; I’ve audited those programs twice in the last few years and both the programs and results are excellent.

What does this mean for you?

Managing drug usage requires a lot more expertise, analysis, and intelligence than it used to.  It also requires payors listen to and work closely with their PBM.

California’s workers’ comp UR process is working.

CWCI’s just-released analysis of the Independent Medical Review program’s 2013-2014 results indicate it is working well – despite being flooded with requests from a relatively small group of docs.

Let’s stipulate that the IMR process is not fool-proof.  There’s no question errors have been made and it is likely some patients’ care has been adversely affected.  More on that below…

Here are the key data points:

  • 94.1% of all medical service requests are approved
  • 36% of requests were from the Los Angeles area but only 24% of WC claims
  • Of the requests that are NOT approved;
    • 45% are for drugs (29% for opioids, 12% for compounds)
    • 10% for DME
    • 9% for PT
  • 1 out of 17 medical service requests are modified (the treating doc agrees with the reviewer to do something different) or denied
  • review encompassed 260,889 medical services requested for 76,718 patients
  • 75% of reviewers’ guideline summaries cited the CA Medical Treatment Utilization Schedule; 80% of those cited either MTUS alone or MTUS and non-MTUS guidelines (there’s a lot of additional info in the report on pp 19-21 re guideline usage)

Okay, that’s the data, big-picture stuff.  What’s perhaps even more revealing is what some docs wanted to do to patients.  For example;

  • one wanted to administer Propofol to a patient getting a steroid injection because the patient gets “anxious”.  recall Propofol killed Michael Jackson, and is by no means appropriate for an ESI.
  • another wanted to fuse “every vertebra from the pelvis to the middle back in a 76-year old patient”, despite no documentation of a lesion, neural compromise, or “other clinical finding supporting the procedure”
  • I’ve also heard from a credible source (not in the report) that aspirin was denied to a patient because that patient was already on blood thinners…

What’s abundantly clear is the UR/IMR process has undoubtedly prevented medical catastrophes; opioid addiction, failed back surgeries, adverse drug reactions.

As noted above, we can also stipulate that the process is by no means perfect, however the reasons for those errors are by no means clear.  It certainly appears that the huge volume of IMR requests (the top 1% of docs accounted for 44% of all requests; 10 physicians alone accounted for one out of every seven requests!) overwhelmed the system initially, altho of late requests are being processed on a much more timely basis.

The exhaustive, 24-page review concluded with this statement:

The Workers’ Compensation Insurance Rating Bureau of California recently announced a significant decrease in medical benefit development coupled with a significant increase in expenses related to the delivery of medical benefits. IMR is likely to be associated with both trends. [emphasis added]

What does this mean for you?

Evidence-based medical guidelines backed up by a tight UR process prevents a lot of crappy medical care.  It can also be cumbersome, and is by no means perfect.

Work comp drug trends

Helios has just released their drug trend report covering spend, trends, and influencers for 2013 and 2014.  As the largest – and oldest – WC PBM, Helios has perhaps the broadest and “longest” perspective, able to draw on several decades of data to identify, parse, and analyze trends.

The PBM also has quite the stable of researchers, PharmDs, and technical writers who have combined to produce a report that is both readable and relevant.

A few key takeaways:

  • Drug costs on a per-claim basis are going up, driven by increases in AWP pricing.  The impact of manufacturers’ price increases is dramatic;
    • Generic AWP was up 10 percent in 2014
    • Brand increased 12.5 percent
  • Opioid utilization is trending downwards by almost every measure; fewer claimants are prescribed opioids; the average Morphine Equivalent Dosage has declined; and the number of MEDs per claimant has dropped as well.
  • Meanwhile, compounds now account for 5.6 percent of spend, an increase of almost 37 percent over 2013.

There is a wealth of additional information in the hundred-odd pages from updates on legislative and regulatory initiatives to an explanation of future cost drivers and external factors influencing utilization.

I’d also note that the Report in and of itself is revealing; the professionalism, graphics, attention to detail and broad coverage of all things work comp pharmacy show just how much work comp PBMs have matured.  While the first drug trend reports from a decade ago were helpful, there’s just no comparison.

Kudos to Helios.

Poor quality of care in work comp and the impact on SSDI and medicare

The estimable Gary Franklin MD, Medical Director of Washington Labor and Industry, weighed in with passion and precision at CWCI; Gary’s message was simple and straightforward:

Workers injured on the job get worse and worse and worse, unlike people with the same injured hurt outside employment.  Why? They become chronic pain patients.  Preventing the transition from acute and sub-acute pain management to chronic pain and the inevitable disability that accompanies chronic pain is critical; that is “secondary prevention.”

Causes of disability and more specifically causes of the decade-long increase in the duration of disability include the:

  • use of harmful treatments including spinal surgery (especially lumbar fusion) and opioids
  • creeping diagnoses that seem to evolve as claims age
  • severely damaging effects of bad providers

A key data point – a case-mix adjusted study indicates patients getting opioids for more than 7 days double their risk of disability for a year.

The takeaway is if patients receiving opioids are not showing improvements in pain and functionality, the treatment should be modified – and not with an increase in opioids.

L&I is working diligently to address the issue of secondary and tertiary disability with an eye towards intervening and re-directing claims before they head too far down the disability “curve”. There are a relatively few docs who are “bad” (perhaps some may be the high IMR filers noted in a previous post).

And that work is paying off; among L&I’s claimants, the percentage of workers receiving opioids 6-12 weeks from injury has decreased from 4.9% in 2012 to 1.1% in Q4 2013.

In contrast, a recent study by PBM Express Scripts indicated that fully have of all patients taking drugs for more than 90 days will still be on opioids in three years.

If anything Dr Franklin is even more passionate, and more compelling, when speaking about lumbar fusion and the disasters associated therewith.  Fully 64% of those getting lumbar fusion are disabled 2 years out, with many of those on SSDI. What’s scarier is California’s outcomes for spinal fusion surgery are significantly and categorically worse.

WA has been able to reduce the percentage of workers who end up on SSDI via their COHE program; clearly their focus on appropriate medical care has been the leading factor.

What does this mean for you?

Crappy medical care by crappy docs looking to make money off the easily-abused workers comp system leads to unnecessary disability, hugely damaged people and families, unknown but certainly very high societal costs.