Jul
26

Provider consolidation – higher prices, better outcomes

Over the last few years, there’s been increasing consolidation among health care providers – hospitals buying physician practices, health care systems merging, hospitals ‘partnering with’ other hospitals. Overall, consolidation of providers has led to better health outcomes but had also increased prices.
That would be the sound bite, but like all sound bites it misses much of the context and nuance.
First, as noted above this consolidation takes many forms, and these different forms have different ‘results’. A study on provider market consolidation just released by the Robert Wood Johnson Foundation found:
increases in hospital market consolidation lead to increases in the price of hospital care. this is especially true when the consolidation occurs in already-concentrated markets where the price increase can be north of 20 percent.
– “Prices paid to hospitals by private health insurers within hospital markets vary dramatically”
– There is a “growing evidence base that competition leads to enhanced quality under administered prices.” This refers to studies of Britain’s National Health Service, which introduced competition among hospitals for patients as part of the 2006 reforms, as well as previous analyses of Medicare’s impact.
– There’s also evidence that competition improves quality where markets determines pricing, although that evidence isn’t as strong.
To date, there’s no clear evidence that physician-hospital integration improves quality. The pace of integration has increased dramatically over the last two years however this could lead to increased market power – and thus higher prices.
What does this mean for you?
We are in a very dynamic market. This is really unexplored territory, so payers would be very wise to carefully monitor pricing and quality measures in specific markets, paying close attention to those that already have high levels of provider concentration (e.g. Boston, Twin Cities)


Jul
19

Physician dispensing in comp – growth is exploding

In Illinois, physician dispensed drugs accounted for almost two-thirds of all drug costs in 2010-11. Same in Florida.
Maryland – 47%; Pennsylvania – 27%; Tennessee 25%; Michigan – 22%.
The data are from WCRI’s just-released study on Physician Dispensing in Workers Comp, and reveal growth in physician dispensing that can only be described as “explosive”.
In Illinois, physicians’ share of all prescription costs increased from 22 to 63 percent of all prescription payments over 07/08 to 10/11.
You read that right; growth tripled over three years.
Even more revealing, the volume of scripts dispensed by docs grew from 26% to 43%.
You read that right too. In Illinois, costs went up more than twice as fast than the number of scripts, which means the physicians dispensing medications raised their prices dramatically. A specific example; the price of Vicodin purchased at a retail pharmacy dropped 2 percent, while physician dispensed Vicodin went up 66% over that three-year period.
Notably, prices did not change much in Florida, perhaps as physician dispensing firms and repackagers, responding to heavy political pressure, kept a lid on pricing rather than face added scrutiny.
The study reported on physician dispensing across 23 states, representing over two-thirds of all work comp benefits in the nation.
A couple other points deserving of attention. First, proponents of physician dispensing claim lots of benefits including increased compliance, lower cost, and more rapid return to work. Note that they make these claims without a single shred of evidence to support those claims. Contrast that with the overwhelming evidence – in this and other reports from WCRI, NCCI, CWCI and other sources – that clearly demonstrate the exploding costs of this practice, costs that are borne by employers and taxpayers.
Second, these proponents assert that limiting reimbursement to the price of the non-repackaged drug will mean docs won’t dispense (and thus won’t deliver the “benefits” noted above). Not true.
California instituted price controls limiting reimbursement to the price of the non-repackaged drug several years ago; over half of all scripts California are still dispensed by physicians, just as they were pre-reform.
There’s much more in WCRI’s study; lead author Dongchun Wang points out that prescribing patterns for dispensing docs are dramatically different than non-dispensing physicians, and docs have dispensed OTC medications and charged much higher prices than retail pharmacies.
NCCI reported physician dispensed drugs accounted for 28% of all drug costs back in 2008. Now, three years later, it could well be that two-fifths of drug costs are from physician dispensed repackaged drugs.


Jul
12

PMSI’s Opioid Summit -Part Two, addiction

The first part of the report was supposed to be followed quickly by this, the second – however events overtook me, and I’ve just now come back to report on the Opioid Summit put on by PMSI last month in Sarasota.
We now turn to Dr Len Kamen’s talk on addiction – Dr Kamen is an addiction specialist practicing in Philadelphia, with extensive experience in workers comp.
Dr Kamen provided this definition of addiction: “Addiction is a primary, chronic disease of brain reward, motivation, memory and related circuitry”, that has these characteristics:
A. Inability to consistently Abstain
B. Impairment in Behavioral control
C. Craving; or increased “hunger” for drugs or rewarding experiences
D. Diminished recognition of significant problems with one’s behaviors
and interpersonal relationships
E. A dysfunctional Emotional response
Addiction refers to the loss of control over the intense urges to take the drug/substance even at the expense of adverse consequences – jail, divorce, losing custody of children, homelessness…
(The clarity brought by Dr Kamen speaks to an ongoing conversation at Mark Wall’s LinkedIn Group on this issue)
The discussion addressed the “chronic pain dilemma”, attempting to determine if the claimant is addicted to or dependent on opioids. There are three ways to think of chronic pain patients;
– Managed chronic pain patients – an opioid user on low, stable dose with return to function
– Dependent chronic pain patient – opioid user on escalating doses of long/short acting opioids, with high pain levels and low functionality
– Addicted patients – exhibits abusive and aberrant behavior, unstable with no identifiable pathology.
A session at the upcoming NWCI Conference focuses on chronic pain; moderated by Liberty Mutual National Medical Director David Deitz Md PhD, two experts on the subject will provide insights on: creating an effective pain management protocol; at what point in a treatment plan should pain management be utilized; are there effective practice parameters that have been developed to determine if a formal program of pain management is called for and if so, what types of treatments should be a part of such program.
There was a lot more to this, and I’ll be providing additional resources in the next post.


Jul
9

A few weeks ago the folks at UCDavis published a study on workers comp, asserting that WC payers – insurers, TPAs, but ultimately employers and taxpayers – are heavily subsidized by other insurers, that, in effect, work comp cost-shifts to other payers on a scale almost beyond comprehension.
To quote UCDavis’ press release, “almost 80 percent of these [occupational injury medical and associated] costs are paid by employer-provided health insurance, Medicare, Medicaid, Social Security and other disability funds, employees and other payers..this cost shifting leads to artificially low workers’ compensation premiums that should be used to cover wage replacement and medical care for employees injured on the job.”
Note – I wish I could add a lot more to this analysis, but I’ve asked UCDavis for a copy of the actual report (“Workers’ Compensation Benefits and Shifting Costs for Occupational Injury and Illness.”) twice over the last month, and have had no response whatsoever.
So, rather than wait seemingly forever for my email inbox to chime with the welcome news that Ms. Marjory Spraycar has responded to my entreaties, here’s what I make of this “study”.
First, there’s no indication that researchers Leigh and Marcin factored in settlements; those legal resolutions that result in the claimant assuming all future responsibility for medical and wage replacement issues related to their work comp claim. Simply put, if there’s a settlement, the claimant agrees that they – the claimant – will be responsible for the medical and related costs of that work comp injury going forward (this is simplistic and yes, there are variations, but generally speaking this is the way it works). Not Medicare, or Medicaid, or their Aunt Sally, or Aetna or Blue Cross – the claimant.
For Leigh and Marcin to assert that somehow work comp is “shifting cost” to Medicare et al for reported claims is just not reasonable nor accurate if Leigh and Marcin have considered settlements (which, as i’ve not been provided a copy of the report, I can only assume they have; after all Leigh and Marcin are professors at a major research institution).
Next, I don’t know if they differentiated among states with no ability to close medicals and those where medicals can be settled. If they have extrapolated data from settlement states to all states, this would be a major error.
Third, they recommend we “Link premiums with company-specific injury experience rather than industry-wide estimates, which would encourage companies to lower premiums by reducing workplace hazards.”
I thought this was what experience rating and ex-mods did; perhaps I am mistaken. or perhaps not.
Finally, there’s absolutely no question work comp pays for treatments to help the claimant get healthy enough to return to work – even when those treatments are for conditions completely unrelated to the work comp injury, and especially when the claimant does not have other health insurance thru their employer or Medicaid. I don’t know if Leigh and Marcin put those expenditures on the work comp payer side of the ledger; somehow I don’t think so. Moreover, the failure of group health payers to deal with obesity problems shifts costs to work comp in a major way, one that – again, I do not think Leigh and Marcin considered.
There were a couple other articles that referenced the study; evidently (this is hearsay) home productivity and fringe benefits were included as part of the study’s analysis of costs due to work comp not paid by the work comp industry.
This is, to be kind, rather a stretch. The ever-quotable Bob Hartwig of III noted workers comp “was never meant to be a form of business interruption insurance, which is what’s being proposed here.”
I remain hopeful I’ll hear from Ms Spraycar or one of her associates at UCDavis. Quite frankly I’m surprised by the lack of responsiveness.
Then again, this is just a blog…


Jun
27

Managed care in work comp: worth the cost?

Medical cost containment expenses in California have doubled over six years. Yet medical expenses have continued to increase, led by facility and surgery expense, and WorkCompCentral reports the combined ratio hit 122 in 2011, a substantial jump from previous years. (sub req)
Are we wasting hundreds of millions on ineffective programs, or are these programs holding costs well below what they otherwise would be?
The answer isn’t readily apparent and it isn’t straightforward – no surprise there. Let’s reach into the cost containment bucket and see what we are paying for.
Bill review accounts for about $90 million of the $384 million total (based in a cost of about $6 per bill). We will be publishing our second Survey of Bill Review next month; a preliminary review shows most respondents see a good deal of value in bill review although that value would beach higher if UR and BR were electronically and tightly connected.
Networks are a bit knottier. Most incur a percentage of savings fee; I’ve long held that this arrangement – for generalist networks – encourages higher utilization of medical services and can drive up cost. My best guess is network costs in the Golden State account for about $110 million in cost containment expense, and that’s too much by far for many networks that don’t positively affect medical outcomes. (there’s no question some smaller tighter networks can and do have a dramatic impact on outcomes, but they just aren’t used enough.)
Case management can be very useful; if used correctly (Im seeing a pattern here…). Task-based field case management and well-coordinated telephonic CM can be very helpful indeed. Identifying problems, educating the employer about RTW and non-comp-savvy docs about comp, getting the claimant to the right providers and supporting the adjuster in assessing treatment are all necessary and cost-effective. But dumping cases on case managers, or allowing CM to run up lots of hours while doing not much more than documenting the downward spiral of case happens far too often.
And let’s not forget many (but by no means all) TPAs generate additional revenue and profit by employing CM whenever and wherever possible
Utilization review has been around forever, yet it is still misunderstood and controversial. Appropriately employed, UR can help ensure the care that is delivered is the right care for the claimant in the right setting at the right time. Used indiscriminately, it can be a cost driver that infuriates physicians, delays necessary treatment, prolongs disability, and does little to improve outcomes.
I’ll have much more to report on UR next month; we’re closing our first Annual Survey of UR in Workers Comp Friday. To date we have over 150 participants; if you’d like to add your thoughts to the Survey (and get a detailed copy of the report) click here.
The net?
Some payers are doing an excellent job managing medical and managing cost containment – by focusing on outcomes. But most are not.
Paying over a hundred million dollars for network access without clear and convincing proof that they are improving outcomes is not smart.
Using case management and UR indiscriminately across all providers in all cases is a waste of money and counter-productive.

More to come.


Jun
26

Progress on opioids – Texas leads the way

There’s precious little good news on the subject of opioid overuse in work comp; NCCI and WCRI report increased usage, pill mills abound, CWCI’s research shows longer disability durations, and payers lament their inability to do much of anything to fix the problem.
The last two weeks have brought news that is welcome indeed; early indications are that Texas’ adoption of a restricted formulary has led to significant reductions in the use of opioids early on in new claims, stakeholders are focusing on preparing to address legacy claims, and there may well already be some impact on legacy claims.
For those not deep into this issue, Texas is one of the few states (and almost all the others are monopolistic WC states) that has adopted tight guidelines re the prescribing and dispensing of opioids to workers comp claimants. These guidelines were imposed on all claims occurring on or after September 1 2011. While it is still early, preliminary research indicates a significant impact on prescribing and dispensing patterns. (the changes compare claims occurring from September to November 2011 to claims in the same timeframe in 2010)
– prescription drug costs for drugs “not recommended” (N) for 2011 claims were reduced by 75 percent when compared to 2010
– the number of claims receiving “N” drugs dropped by 54 percent
– total prescription drug costs for 2011 claims declined 26 percent – about $1.4 million
– “the frequency of opioid prescriptions dispensed to injured employees decreased by 10 percent and the costs associated with opioid prescriptions decreased by 17 percent”
Word is there has also been an impact on older, legacy claims. Anecdotally, PBMs are reporting they are seeing changes in prescriptions for some claims that were incurred long before 9/1/11.
The data from Washington state is another indicator that physicians can and do change prescribing patterns when forced to by regulation. Washington saw a significant decrease in the volume and potency of opioid prescriptions after passage of legislation addressing the issue.
What does this mean for you?
Prescribing patterns can be changed. All it requires is:
a) political will; and
b) tough regulations and/or legislation.


Jun
14

PMSI’s Opioid Summit – part one

I was invited to attend PMSI’s Opioid Summit last month and speak briefly on legislative and regulatory actions focused on this issue. The Summit featured Colorado WC Medical Director Kathryn Mueller MD MPH; PMSI Medical Director Natalie Hartenbaum MD MPH; Len Kamen DO and addictionologist; and representatives from several insurance companies, all speaking on their efforts to identify and address potential overuse and misuse of opioids.
Here are a few of the highlights from the meeting. I’ll skip the discussion of the scope of the problem; it’s huge and growing, but it’s time to talk solutions.
First up, what is pain management – Dr Mueller cited the AHRQ Technical Brief on chronic non-cancer pain, noting in part “the focus is not eliminating pain but managing pain to restore physical and mental function and quality of life.”
That is a KEY issue – managing v eliminating pain. It is unrealistic to expect to eliminate pain, and attempting to do so is in large part how we got to this disastrous point.
Dr Mueller went on to review ACOEM’s recommendations for opioid use, which, when compared to what actually happens out there, are pretty remarkable.
Dr Hartenbaum discussed urine drug testing (UDT) in chronic pain and workers comp, citing the WOEMA comparison of opioid guidelines and noting there are various testing protocols;
– before starting a patient on opioids and annually up to four times a year – more if misuse is suspected.
– once per year for “low risk”, up to 4+ times per year for higher risk, high dosage (>120 MED (morphine equivalent dosage)) and/or patients exhibiting aberrant behavior. Hartenbaum cited the opioid risk tool as potentially useful in risk-scoring patients.
Her discussion of UDT was detailed, thorough, and enlightening. (disclosure, Millennium Labs is an HSA consulting client; they were not present at the meeting).
There was more, which I’ll relate tomorrow.


Jun
12

Survey of UR in work comp – initial results…

HSA’s first annual Survey on Utilization Review in Workers Compensation. is underway and we’ve got a few preliminary findings to report. (click on the link to fill out the survey)
We are surveying C level execs as well as desk-level folks (claims adjusters, claims execs) for their opinions concerning and results of UR; 80 responses so far and here are a few of the highlights.
– The vast majority of respondents utilize UM/UR to control medical costs and ensure appropriate medical treatment, while for a minority it is a revenue generator.
– Among desk-level respondents whose firms internalize UM/UR, over a third cite UM as a core competency as a key reason for performing UR in-house. 40% cite controlling UM costs, while almost half note UM is integrated with other medical management programs. This is in contrast to executives’ responses; only one in five claims UM is a core competency…
– There’s a big gap between desk level folks and execs when it comes to integration of UM with other systems, with execs twice as likely as front-line staff to report they are integrated. Interestingly, this is similar to the difference between execs and desk level staff we found in our bill review survey; most execs thought BR was integrated with UR but most desk folks did not.
There’s lots more to come, as we’re collecting a wealth of data on utilization review trends, services, vendors, costs, outcomes, and functions. Respondents receive a detailed version of the survey report; the public version is limited to highlights and major findings.
We welcome your participation in the survey. The On-Line Survey should take 20-25 minutes tops, and one lucky recipient will receive an iPad 2 as a token of our appreciation (make sure you include your contact info if you want a shot at the iPad).


Jun
6

Texas responds…

My post earlier this week about the new opioid prescriber audit program recently announced by Texas’ Department of Insurance generated a rather interesting back-and-forth with TDI staff.
First, they were “disappointed” I didn’t post their entire response to the questions I emailed to TDI. There are a couple reasons for this:
1. TDI’s email response read like boilerplate, didn’t directly answer my five questions, and only indirectly answered three (I only figured this out after reading and re-reading the response several times; it was pretty convoluted).
2. I don’t post responses as a matter of course; if they are germane and responsive, I may well do so.
3. I received inconsistent guidance from TDI re the purpose of the audit – which is more accurately described as a peer review of 15 physicians’ prescribing patterns and comparison of those to guidelines. Nothing wrong with that audit, but as I noted in the original post, TDI’s reviewers will “have a good perspective on prescribing patterns for 15 docs, but…to what end?” The language in their email led me to believe the purpose was enforcement, but I was told that the purpose was actually “quality care for injured workers” (or words to that effect) – before I was told no, it was actually enforcement (in another communication). So, with no clear guidance, it was kinda tough to figure out the purpose of the audit.
Second, Amy Lee took me to task for neglecting to mention TDI had – in fact – published system-wide research on the types and usage of drugs in Texas. Lee was correct as I should have noted TDI has published results of two studies, one in 2011 and one here – (for some reason the embedded link doesn’t work) www.tdi.texas.gov/reports/wcreg/documents/Pharmaceutical_Prese1.ppt.
There was a lot more to the back-and-forth, but there’s no point in recounting the “he-said, she-saids”.
Instead, I’d suggest there are a couple take-aways.
1. I’ll continue to work to be more careful in giving credit where credit is due.
2. I never got an answer to my questions; why limit this to 15 docs?; and why not look at docs who prescribed meds for claimants with other prescribers? I’m still wondering, as are many others.
As I noted Monday, “payers have been required to report all manner of information to Texas for several years, with rather draconian penalties for failure to report. With this wealth of data, gathered at great expense and at no small cost to employers and their payers and vendors, it should be relatively simple to provide in-depth information on prescribing patterns around the entire Lone Star State. These data could be case-mix adjusted as well, something that isn’t mentioned in the TDI announcement on the current project.”
Now THAT would be helpful, and provide policymakers and other stakeholders with a wealth of information. While TDI did publish some research, in relation to controlled substances it was limited to system-wide script types, counts, costs, and number of claimants using (or more accurately billing for claimants dispensed) those drugs. There’s so much more that could be gleaned from the data; regional- or area-specific differences, scripts by type of injury, duration of care, case-mix adjusted comparison of claimants prescribed and not prescribed controlled substances, scatter plots or line plots of physician prescribing volumes by any number of variables…you get the picture.
Which leads me to point 3.
3. This all could have been avoided if TDI had responded to my query with direct answers. If that wasn’t possible, they could have called and said, hey, thanks for the query, but for reasons A, B, and C we can’t tell you that. Trying to get media – even we lowly bloggers – to play “find the answer in the vaguely-worded boilerplate” may sound like fun but in the end this hurts a lot more than helps.
You end up with a confused and frustrated writer, where you could have had another media outlet describing your yeoman efforts to improve things in your comp system.
FWIW, my original query, followed by TDI’s response is below.

Continue reading Texas responds…


Jun
6

NCCI’s new narcotics report – the highlights

NCCI released their latest research on the use of opioids in workers comp, and the news is chilling indeed. And there’s one outstanding puzzling conclusion.
Here are a few of the key take-aways.
– Per-claim narcotic costs have increased (almost doubling from 2001 – 2009)
– Far more claimants are getting narcotics early on in the claim now than in the past
– One percent of claimants taking narcotics use 40% of all narcotics
– Initial narcotic use (how much and how potent) is a good predictor of future use
One of the more (initially) surprising findings was somewhat counter-intuitive; narcotics’ share of total WC pharmacy spend is relatively stable. How can this be? If narcotic costs are going up and usage is going up and more claimants are getting narcotics now than in the past, how is this possible?
I will speculate this is directly related to the explosive growth in physician dispensing of repackaged drugs, and the much higher cost-per-pill of these drugs. Simply put, repackaged drugs are adding about a billion dollars a year (and growing) to employers’ work comp costs. The impact of the growth in physician dispensing far outstrips that of narctoic usage.
My educated guess is physician dispensed drugs will account for a third to forty percent of all drug costs in work comp this year.
Back to the study and the implications thereof.
This is yet another wake-up call to legislators, regulators, payers, PBMs, employers, physicians and claimants and claimant advocates. There is far, far too much usage of opioids in workers comp. Most of these drugs were developed solely for treating breakthrough cancer pain, a diagnosis all but non-existent in work comp. These drugs lead to addiction and dependency while having limited impact on pain while doing next to nothing to improve functionality.
So, why are we/you allowing this to happen?