Ebola and workers’ comp

Spoiler alert – no news here, and there won’t be.

Sure, there may well be a lot of hysterical nonsense about the potential problems for health care workers and first responders, flight attendants and TSA screeners.  But there won’t be a crisis, a disaster, or even a problem.

And no, hordes of Ebola-infected suicide germ-bombers aren’t going to invade over our “porous” borders. An idea so preposterous, so far-fetched, so un-doable that only the most naive, nutty, or non-sensical would give it more than a nano-second’s thought. The debunk is here.

Ebola is quite hard to transmit – it requires direct contact with bodily fluids from an individual exhibiting symptoms. This isn’t some airborne germ spreadable by sneezes or aerosol.  The US healthcare system is already quite focused on germ control – ever seen an ER staffer not gowned and gloved for any contact at all?  And if they even think there’s an infection risk, it’s full Hazmat time.

BTW, “direct contact” isn’t touching someone skin-to-skin. It occurs, according to the CDC, when “body fluids (blood, saliva, mucus, vomit, urine, or feces) from an infected person (alive or dead) have touched someone’s eyes, nose, or mouth or an open cut, wound, or abrasion.”

What does this mean for you?

Get back to worrying about motor vehicle accidents, flu, and silicosis.  Nothing to see here.

 

Drug formularies – much needed in workers comp

Controlling drug usage in workers’ comp is – far too often – the proverbial pushing on the rope.

Sure, PBMs and payers have done a remarkable job constraining costs and reducing the initial inappropriate use of opioids. Virtually all payers use PBMs and benefit greatly from PBMs’ clinical management and pricing that is almost always significantly lower than the state fee schedule or retail price.

However…the explosive growth of compounding, the fact that a quarter of drug costs are for opioids and a third for physician-dispensed drugs, the inability of clinical staff to get many prescribing physicians to discuss potential alternative treatments, and the frustration experienced by adjusters and employers unable to resolve claims due to long-term, highly-dangerous, and counterproductive use of drugs all argue for more regulatory help.

There are two valuable and too-little used tools in the box; evidence-based guidelines backed up by strong UR and formularies. While many jurisdictions dabble in guidelines, the litigious nature of comp coupled with the imprecise and nebulous wording of regulations often results in more problems, less clarity, and more delays.

In contrast, formularies established in regulation, whether the very tight version used in Washington State or the loose one in Texas, are clear, precise, and incontrovertible.  Drugs are either allowed or not.

CWCI’s just-released study analyzes the potential impact on work comp of those two formularies.  By comparing the drugs dispensed in the Golden State to what would have been allowed by Texas or Washington, Swedlow et al have determined that employers and taxpayers are overpaying somewhere between $102 million and $541 million annually – with no negative effects.

Before some naysayer starts screaming about the unfairness of payers influencing doctors’ treatment decisions, that naysayer should understand that formularies are in place in every group health, Medicare, Medicaid, and individual health plan.  Moreover, said naysayer should READ the CWCI study, and note that a “formulary” may be “set” to require dispensing of the drug that is the lowest-cost but otherwise identical drug instead of a higher-priced-but-otherwise-identical medication – or use any one of several other “levels” to establish a somewhat more restrictive formulary.

Formularies provide better care and tighter control without compromising.  And, a major benefit would be the huge reduction in the contentious and generally pointless UR dealing with drugs…a third of California’s IMRs are for drugs.

An excellent review is in this am’s WorkCompCentral – Greg Jones has penned a thorough, detailed, and well-researched piece that should be required reading.

A very busy week…

And only one post…clearly I’ve been slacking.  Time to catch up!

Workers Comp

There’s been much discussion of the implications of the demise of the APAX-Coventry Work Comp Services deal; CWCS staff seem to have mixed views, but most are concerned that parent Aetna will continue its non-investment “strategy”, allowing the business to slowly fade.

It would be a mistake to attribute this to some nefarious plan and dark-hearted souls.

Work comp is – at best – tangential to Aetna’s Medicare, Medicaid, group and individual health businesses.  Any time spent focusing on WC is time not invested in much more important things.

Conversely, Coventry is anything but “tangential” to many work comp payers.  For many, CWCS is the integrator, bill processor, document manager, provider network, case manager or some combination thereof.  With medical expense accounting for 3/5ths of claims costs, payers with close ties to CWCS will be watching developments very, very closely.

While we’ve been focused on the Coventry-APAX deal, we haven’t been hearing about other transactions.  There are a couple other potentials out there, but if anything the deal flow has been markedly slower, partially because there just aren’t that many more deals to be done.  We may well see activity pick up again now that there’s more clarity around what would have been a blockbuster transaction.

Lots of good news this Friday – thanks to lots of good people…

While many of us have been focused elsewhere, two organizations have been doing their part to secure the future of work comp.  IAIABC just announced grants to two women to help them continue their workers’ compensation studies - congratulations to Chamila Adhihetty of Toronto, Ontario and Suzette Carlisle of St. Louis, Missouri – and to IAIABC for their foresight.

Coincidentally, Healthcare Solutions will be hosting the inaugural Women in Workers’ Comp Forum on Tuesday, November 18 just before the NWCD Conference in Las Vegas. Registration is free, and the event is proving to be quite popular. Sign up soon here. Kudos to HCS’ SVP Elaine Vega for the idea, and to CEO Joe Boures for enthusiastically supporting it.

WorkCompCentral is focusing on the top performers in California’s comp system – physicians, attorneys, expert, employer, claimant, regulator - with their Comp Laude(tm) Awards.  Nominate your pick here.

One of the finest people in this business is Chris Brigham, MD.  Chris has just released a most excellent book – Living Abled.  He wrote the book to help those dealing with potentially disabling conditions navigate the system, find and use resources, and take charge of their injury or illness.  While individuals can order the book themselves, payers may well want to consider giving it to every claimant. Disability is more about attitude than physical limitations, and Living Abled will help people think clearly about what they can do.

The good folk at WCRI have been marching along, publishing even more research on issues critical to the industry.  A webinar on predictors of worker outcomes is coming up on October 16; sign up here now as there are only 100 slots…

Also just out is a study of what’s happened in Georgia since the Peach State imposed pricing controls on physician-dispensed drugs (spoiler alert – prices dropped significantly after the reform, but doc-dispensed drugs are still much more expensive than the same pills purchased at a drug store).

Why?

My view is the dispensing profiteers seek out drugs from suppliers who inflate the pills’ AWP (the basis for the fee schedule), then turn around and sell them to the docs at a deep discount below AWP – thereby making millions for docs and dispensing companies, and costing employers and taxpayers those same millions.

Read the study and come to your own conclusions.

Broadspire Medical Director Jake Lazarovic M.D. just published an interesting paper on Accountable Care Organizations and Workers’ Comp. Download it and read it on your next flight; it’s an excellent synopsis and poses intriguing questions.

Enjoy the weekend – and remember to 

A – turn off the work email.

B – Put your “away” message on work voice mail.

C – Enjoy the fall weather!

Aetna’s sale of Coventry Work Comp Services…

Is off.

The latest intel from several folks in the know is consistent; APAX will not be buying Aetna’s Coventry Workers’ Comp business.

While its possible Aetna will look for another buyer, that is doubtful; the issues that reportedly led to the collapse of the APAX deal are real, material, and not going to resolve themselves. In fact, the key asset – the PPO network – continues to deteriorate. Aetna has a declining-value asset on its hands, one that, as time goes on, becomes ever less valuable.

According to reports, the biggest sticking point was APAX’ concern that the Coventry network will take at least 2 years to rebuild; when that onerous task is completed it will be nowhere near as valuable as it is today.

That’s far from surprising; I’ve discussed the network contracting issue ad nauseum. Fact is, without the real, committed, and ongoing support of a major group health/Medicaid/Medicare payer, providers aren’t going to give much of a discount to a work comp network.

Workers comp accounts for a bit over 1 percent of total US medical spend. Even if Coventry’s successor could claim 100 percent market share, their influence on a provider – outside of a relative handful – is never going to be appreciable.

But it wasn’t just the network. Sources indicated there were concerns in other business lines as well. Chalk this up to chronic under-investment in the business by Coventry pre-Aetna and the lack of focus on worker’s comp by Aetna since they bought Coventry’s parent company.

With earlier reports indicating Aetna wanted $1.5 billion for a business throwing off more than $200 million in free cash flow annually, a 7x multiple seemed reasonable. However, with no guarantee that the cash would keep flowing, I’d imagine APAX dropped the amount of their bid to account for the lowered expectations.

I’m sure there is much more to the story, but the net is APAX wasn’t willing to pay the price Aetna wanted, and Aetna wouldn’t accept APAX’ lowered bid.

What’s next?

Work comp represents just over 1 percent of Aetna’s revenue.  The company has a few other priorities on its hands at the moment – and as a $50 billion company, well it should.

Guessing here…but if I were at Aetna, I’d think about:

  • Working to keep the PPO network as functional as possible as long as possible without screwing up any of my other – much more important – business lines;
  • Selling off PBM First Script, an asset that should generate a very nice offer;
  • Replacing the bill review platform (BR 4.0) with one of the third party applications currently available. This would allow Coventry WCS to continue its very profitable bill review/PPO outsource business.
  • Leaving current management in place.  Art Lynch is running the show, and he’s the perfect person to do so.  He has strong relationships with current customers, is universally well-liked, and is just the kind of low-key, steady exec WCS needs now.

What does this mean for you?

Don’t delete Plan B - you’re still going to need it.

Friday catch up – Pennsylvania’s drug problem and other news

Today’s catch up leads off with some pretty grim news.  Pennsylvania’s drug problem is getting worse.

WCRI’s just-released report on physician dispensing drugs to work comp claimants in Pennsylvania provides a clear warning to the Keystone State’s employers and taxpayers – costs are going up and they are getting screwed.

Without effective controls on the practice of dispensing, PA saw physician dispensed medications increase from 17% of total drug costs to almost half within four years, due mostly to a huge markup in prices.  In one of the more egregious examples, doctors were paid $7.89 per pill for generic Prilosec, compared to $0.67 per pill at Walgreens.

That’s 1178% of the retail price.

For a medication that probably isn’t needed in the first place.

There’s legislation pending in PA that would go a long way to fixing the problem, legislation backed by labor, the Chamber of Commerce, insurers, and the Pennsylvania Medical Society. The only opponent is – ostensibly – the PA Orthopedic Society.  My bet is the real opposition is backed by the dispensing companies who are making ungodly profits and contributing some of their ill-gotten gains to the effort.

And those dispensing companies are backed by investors - one of if not the major player here is dispensing “technology” company Automated Healthcare Solutions – which is owned by giant private equity company ABRY Partners.

As a good friend in the private equity world once told me, there are two types of investors in work compthose who look to do well by reducing costs, and those who look to do well by increasing costs.

ABRY is the latter. Perhaps PA employers should send ABRY’s Hilary Grove – an AHCS board member – an email to get her thoughtshgrove@abry.com

Other news of import…

Another hat tip to WCRI for their excellent webinar on recent developments dealing with opioids in work comp.  The underlying reports on long-term opioid usage and multi-state comparisons of narcotics in work comp are well worth the read. Notably dispensing docs profit from prescribing and dispensing opioids…perhaps Ms Grove can address this as well… (hat tip to BI’s Stephanie Goldberg)

From Sandy Blunt comes this basic lesson – more than anything, business success is about getting the basics right.  Really understand the fundamentals, handle the work efficiently and correctly, and respond to customer service needs.

From a colleague comes this on compounding-

Not sure if you heard about physician compounding bypassing the pharmacist.  I attended PAINWeek and visited a booth by AbbyJenn.  They are a marketing organization that will set up compounding within a physician’s practice (just buy 3 pieces of equipment or we can arrange a lease) and use staff or hire a pharmacy tech (they will train in 30 minutes) so compounds can be produced and delivered in 10 minutes and the doc can make the profit.

They provided a sheet with one prescriber’s business in August, and compounds are going out the door paid by ins at $1400.  They also offer a formulary of typical topical mixtures to “maximize revenues,” will bill insurance & WC with “immediate claim adjudications” (and may get preapproval, but I am not clear on this point), and call the patient directly when it’s time for a refill!

OK, that’s all I can deal with today.  Keep fighting the good fight.

MSAs – another perspective

In follow up to my posts on MSAs, I had the chance to interview Peter Foley of the American Insurance Association yesterday. Peter is quite knowledgeable about MSAs, the Medicare Secondary Payer Act, CMS’ perspectives, and how this affects payers. He’d be the first to say he is not an “expert”, but in my view he is certainly one of them.

Here is our conversation – and I hope I got it right.

What payers are affected by MSP Act?

All payers – group, Self-Insured (SI) and non group health plans, workers comp auto general liability etc. – including claims where no medicals have been or can be paid. (E.g a claim on an accountant’s E&O insurance)

Does any payer have to file an MSA w CMS?

No. It is not statutorily required and never has been, it has been recommended but not required.

Why do payers send MSAs to CMS?

The payer thinking is in some way they can use a submission as a defense against Medicare coming back to them and say the payer did not take Medicare’s interest into account when settling the claim. While it does not definitively protect the payer from future action but does show that at that point in time they made an effort to protect Medicare’s interest.

If a company stops sending in MSAs, they may be concerned that CMS would think there’s a problem and perhaps subject them to more scrutiny.

Is there a “safe harbor” in regards to MSAs?

There is no safe harbor.

After an MSA is established and set aside does the payer have any protection from future action from CMS?

No. One can’t prevent the federal government from asserting its perceived rights if it so chooses.

It appears the backlog has come down, but other sources indicate it has not. What do you see?

Medicare doesn’t make available what is submitted or processing times they simply capture how many MSAs they have approved for how much in what time frame. The only data available is what individual companies report on their own.

There is no available comprehensive data on turnaround time – MSA companies have repeatedly asked CMS to bring more transparency to the process; my interpretation of transparency is data on the number of submissions, timeframes, and financial data. The problem that CMS has is they only capture numbers of MSAs approved, the date they are approved, and value of those set asides. We and they don’t know when or if the settlements have been finalized or indeed if the claim was settled at all. CMS does not report submission and approval dates, just approval date – what has been made available is just that.

There is no consistent reporting from CMS on those data points, much of the information available required a specific request to CMS, or may have come from congressional testimony.

The information currently available is limited and sporadic and not generalizable to the entire MSA population.

MCM – There’s some hope that legislation currently pending in Congress will provide some relief. There are two bills, a House and Senate version, which appear to be pretty similar.

The bill will be scored (to assess its impact on the budget and deficit) while the Senate and House are out for election and will score favorably. The hope is it will be attached to a bill and considered in the lame duck session. The American Bar Association endorsed it yesterday joining a broad coalition that includes the plaintiff bar, self-insured employers, AIA, and the Property Casualty Insurance Ass’n. More on this from Jennifer Jordan here.

Key elements of the bill:

  • Requires federal govt to adhere to state WC laws
  • Codifies current procedures which otherwise could be changed at any time without prior notification.
  • Allows for parties to submit funds directly to CMS if mutually agreed upon
  • Also includes a separate appeals process on the MSA determination.

Peter – “We are asking for transparency and clarity, and insurers, plaintiffs bar, and self insured employers are all supporting this bill.”

Thanks to Peter for his time, and to AIA for allowing a pseudo-journalist to interview one of their staff for the record.

From my admittedly uneducated perspective, CMS’s position, stance, and requirements border on the ludicrous.

Insurers and self-insured entities will be required to send data on essentially ALL claims to CMS, where the data will likely sit for eons, hopefully untouched unless some hacker gets in and steals all the personal health information, SSNs, and other data, an event that is only possible because CMS requires payers to send it to CMS.

What does this mean to you?

While I applaud the thinking behind the Medicare Secondary Payer Act (taxpayers shouldn’t have to pay for services that an insurer or employer should be liable for), the powers that be at CMS have taken that thinking and turned it into an expensive, ridiculously burdensome, wholly-unnecessary, potentially dangerous and likely pointless exercise.

 

MSAs – there’s more to the story

A bit more information on my least-favorite subject – Medicare Set-Asides.  After my post last week on NCCI’s recent report on MSAs, I heard from a couple folks seeking to clarify/educate/help me understand that there’s a bit more to the picture, and just before I was about to go to virtual print, along comes this excellent post featuring Jennifer Jordan Esq. of MedVal.

A couple key points.  First, as noted in last week’s post, the NCCI report was based on data from the NCCI data call and Gould and Lamb.  What I SHOULD have been more clear on was that this data “set” may not be representative of the entire universe.  To that point, a couple colleagues suggested there is a lot more nuance here.

First, a word on sources.  As Colleague A noted, many companies don’t send their MSAs to CMS period, and some just send those over X dollars.  Some payers (the Hartford being the largest I’m aware of) handle their MSAs in-house.  And, there are lots of other outfits out there that do MSAs, that have somewhat different perspectives based on their workflow and client base.

Second, unbeknownst to be, the change in vendors handling MSAs may well have had a big impact on the mass approval that occurred last December (thank you Colleague B).  Evidently the prior vendor did not have to continue handling those that were “in process”, and the new vendor wasn’t contractually obligated to handle them either. Somehow, the new vendor did end up handling them – with the result that almost all were processed in a short period, and the vast majority were approved as is.

Third, Jen Jordan knows way more about this than I ever will, so I’d encourage you to read her take on the NCCI report.  Among the key takeaways -

  • juris drives a lot – in some states you can’t settle medicals, while others have convoluted settlement regulations.
  • some MSA companies build high cost MSAs as they want them all to go thru the first time, while others are much more conservative, leading to lower total costs.
  • It may well be that turnaround times aren’t getting much better these days
  • Jen notes that the percentage of MSA dollars allocated to drugs is actually bifurcated, with drugs accounting for about three-quarters of the cost in a big chunk of MSAs and relatively little of the total cost in another chunk.  That said, she notes  “Drugs are and forever will be the major cost driver in the majority of MSAs”

What does this man for you?

Listen to the experts, and I’ll redouble my efforts to avoid writing about MSAs and direct readers to those who actually understand this stuff.

 

Friday catch-up

Today most of the news is about PPACA enrollment, prices, and issues related thereto.

First up, paid enrollment as of mid-August was about 7.3 million via the Exchanges. That’s a pretty big number, and substantially above initial goals (and below the President’s late spring estimate). To be fair, the President’ estimate was for those that signed up, not those who paid, and as those of us who’ve been in the insurance business know all too well, there are always enrollees who don’t pay their initial premiums.  A 9 percent non-pay is pretty good, actually.

Among those who got coverage via the Exchanges, most are generally happy. According to California Healthline;

  • 71% expressed confidence they would receive high-quality care;
  • 70% expressed confidence they could afford needed care;
  • 68% rated their plans as good, very good or excellent

While many (including me) thought we’d see a spike in health care costs as the previously uninsured got coverage and sought care, the overall cost increase has actually been pretty modest.  From Kaiser Health News:

health and social spending as measured by the Census Bureau grew by only 3.7 percent from the second quarter of 2013 to the same quarter of 2014. Hospital revenue increased 4.9 percent during the same period. Revenue for physician offices barely budged, growing by only 0.6 percent. Medical lab revenue rose 1.9 percent.

Amongst all the positive news let’s not forget there are still a bunch of hurdles to overcome, starting with the next enrollment process, and extending through the expiration of the feds’ backstop insurance plan for Exchange insurers.  There’s a long way to go before we know how PPACA really turns out…

Finally, there’s been a good deal of intellectual arguments back-and-forth about the validity and utility of the Dartmouth Atlas, with critics claiming it is inaccurate and presents a false picture of practice pattern variation, and supporters (of which I am one) taking issue with the critics’ complaints.  The best synopsis I’ve seen comes from Sarah Kliff writing at VOX.

 

Hope your teams win this weekend…

It’s the diagnosis…

If the diagnosis isn’t right, there’s a pretty good chance the treatment won’t be right.

A while back I had an interesting conversation with folks from Best Doctors about this issue, and they provided some interesting statistics about the incidence of misdiagnosis.

  • The American Journal of Medicine reported that at least 15% of all medical cases in developed countries are misdiagnosed.
  • Even doctors are not immune to misdiagnosis:  According to The New England Journal of Medicine, 35% of doctors have reported errors in their own care or that of a family member.
  • A July 2012 BMJ [British Medical Journal] Quality & Safety paper found that of 5,863 autopsies studied, 28% had at least one misdiagnosis.
  • A study in Mayo Clinic Proceedings of 100 autopsies found 26 of 100 patients who died in the hospital had been misdiagnosed. Same study also found “The number of missed major diagnoses remains high, and despite the introduction of more modern diagnostic techniques and of intensive and invasive monitoring, the number of missed major diagnoses has not essentially changed over the past 20 to 30 years.”
  • Review of pathology resulted in changes in interpretation in 29% of breast cancer cases, while in 34% of cases, a change in surgical management was recommended.  A second evaluation of patients referred to a multidisciplinary tumor board led to changes in the recommendations for surgical management in 77 of 149 of those patients studied (52%) (University of Michigan Comprehensive Cancer Center.)

Best Doctors’ own data for US-based cases in 2013 indicated they corrected or refined diagnoses in 37% of cases, and corrected or improved treatment in 75% of cases. 

Of course, BD’s cases are more likely to have a misdiagnosis; their clients send them claims that look problematic.

With that said, there’s no question diagnosticians can get it wrong; in fairness, it can be pretty difficult to pinpoint the specific physiological or anatomical issue that is causing a patient’s symptoms.  As an example, identifying the cause of back pain is notoriously difficult, especially when an MRI indicates an abnormality.  Liberty Mutual’s recently-published research spoke to this issue directly:

Claims in which MRI was performed either within the first 30 days of pain onset or when there was no specific medical condition justifying the MRI yielded significantly higher medical costs, even after controlling for severity. The study found these early or non-indicated MRIs led to a cascade of medical services in the six-month period post-MRI that included electromyography, nerve conduction testing, advanced imaging, injections or surgery. These procedures often occurred soon after the MRI and were 17 to nearly 55 times more likely to occur than in similar claims without MRI.

“Being a highly sensitive test, MRI will quite often reveal common age-related changes that have no correlation to the anatomical source of the lower back pain,” said Glenn S. Pransky, MD, MOccH, Center for Disability Research.

What does this mean for you?

The lesson here is clear – too much reliance on technology can be counter-productive.  And patients who demand MRIs are not helping themselves.