Off to NCCI…

The annual NCCI Annual Issues Symposium starts later this week in Orlando, where we will learn:

  • how the industry performed last year, thanks to Chief Actuary Kathy Antonello ;
  • what will drive workers’ comp in the coming years from several guest speakers;
  • how many slides the estimable Bob Hartwig can cram into an hour, yet remain both entertaining and informative;
  • whether ProPublica and NPR will attend to find out what is really happening in workers’ comp
  • what works – and what doesn’t – in containing costs from Rick Victor and Alex Swedlow

Along with NWCDC, CWCI, and WCRI’s annual events, the AIS is one of the four-fecta of must-go-tos for those looking to find out what’s really happening in workers’ comp.

I – and others – will be live-blogging from AIS, so get ready for a flood of feeds.

There will also be a good bit of live tweeting and probably myriad other social media feeds emanating from Orlando – but it just isn’t the same as being there on-site.

Medicaid and Workers’ Comp

21 states have not (yet) chosen to expand Medicaid; one can (and I have) argued that this is nonsensical at best, as

  • the Feds are paying for ALL of the additional cost for another two plus years, and
  • the vast majority of the cost (90% +) thereafter; and
  • the savings to the states for uncompensated care would be anywhere from $4 to $9 billion;
  • health care providers in non-expansion states are in dire straits due in large part to the “non-expansion.”

My sense is the non-expansion states will eventually decide to accept the Medicaid deal as the financial cost to hospitals and health systems will force them to. And, the Feds will work with the states to create different models that will be ideologically palatable, providing cover to those politicians obsessed with such things.

But until – and unless – Texas, Florida, Virginia, Wisconsin and the rest expand Medicaid, there’s a raft of problems created by their principled if (in my view) wrong-headed position.

Mostly, these problems are due to two things.  Over the short term, the cost pressure placed on facilities and health systems and the fallout therefrom will lead to increased pressure to cost shift – and yep, work comp is a pretty soft target.

And long term, the 6.4 million adults who remain uninsured will be less healthy, have more incentive to get care under workers’ comp, and heal more slowly with more complications if they do get injured on the job.

What does this mean for you?

For work comp payers, nothing good.

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.

May Day catch-up

It’s a big day for we commie socialists; hope your International Workers’ Day is filled with tributes to the proletariat…

Workers’ comp

While the world was at RIMS, I was otherwise engaged. Heard from several folks that the MedRisk event was just incredible; a terrific party followed by a police-escorted parade thru the French Quarter complete with bands, jugglers, and all manner of entertainment. Kudos to MedRisk Marketing VP Rommy Blum and her stellar team; by all reports this was THE event at RIMS {and yes, MedRisk is a consulting client].

And thanks to Bob Wilson, Jonathan Mast, and Jen Jordan for the shout-out from RIMS; I know, I’m a loser for not coming…

Another research study indicates “Persons with non–cancer-related pain have an increased risk of fatal and nonfatal drug overdose related to treatment with opioid analgesics.”  [emphasis added] A great piece in Business Insurance by Sheena Harrison and Bill Keneally explains why this study should cause prescribers – and payers – to think even more carefully before prescribing/approving opioids for long-term users.

Coincidentally, CMS has released a huge database of prescriber information; accessible to anyone, the database provides:

For each prescriber and drug, the dataset includes the total number of prescriptions that were dispensed, which include original prescriptions and any refills, and the total drug cost.  The total drug cost includes the ingredient cost of the medication, dispensing fees, sales tax, and any applicable administration fees and is based on the amount paid by the Part D plan, Medicare beneficiary, government subsidies, and any other third-party payors.

For work comp payors, I could see analysts looking to see if physician prescribing patterns for Medicare are consistent – or inconsistent – with work comp prescribing patterns.

Found this item in WorkCompWire; according to an Align Networks exec, the “top challenge” Align is working on this year is education of nurse case managers and adjusters.  I guess the whole 59 modifier thing isn’t that big a deal…

Lockton’s Keith Rosenblum is referenced in another WorkCompWire story about mis-diagnoses and bad medical treatment.  Why mis-diagnosis occurs and the consequences thereof is laid out in a white paper available here.

I neglected to inform you, dear reader, of a brief-and-excellent take on ProPublica’s recent “reporting” on work comp by the estimable Mark Walls.  Next time someone confronts you with PP’s “reporting”, send them to Mark’s column.

Implementing health reform

In what is an amazingly timely follow on to my post earlier this week about the snake-bitten Florida Legislature, turns out hospitals in states that expanded Medicaid are doing a LOT better than facilities in states that haven’t.  If you’re wondering why Florida’s hospitals are screaming so loudly, there’s this:

Hospitals in non-expansion states actually saw a 9.4 percent decline in Medicaid revenue…

That’s a shipload of dollars.

Unsurprisingly, new research indicates the PPACA non-insurance penalty may be too low to drive much more enrollment.

Oops, gotta run! time to don my red kerchief and head down to the gathering area for today’s celebration of the working wo/man.  Hope to see you there!

Florida’s conundrum

Florida’s legislature can’t decide if it does or doesn’t want federal money.  That’s the policy question; it’s discussed in some detail below.

A quicker explanation by way of metaphor was conveniently provided by a native Floridian; Austin Hatfield adopted a pet water moccasin, one of the most aggressive and poisonous snakes in this Hemisphere.  He liked it.  Then it bit him in the face when he kissed it.  Now he’s in critical condition.


Kinda like what’s about to happen to Florida’s health care system.

While Florida’s Senate wants to expand Medicaid, the state house has said NO to Medicaid expansion under PPACA, but wants the billion dollars of federal money that has been supporting struggling hospitals; these dollars will disappear at the end of June.

Governor Rick Scott (former CEO of HCA, which paid a $1.7 billion fine for Medicare and Medicaid fraud, and involved in at least one more company alleged to have committed Medicare fraud) is outraged that Florida can’t get the money that no longer exists, even if the Sunshine State doesn’t want to expand Medicare.

The reason the hospital dollars were cut is simple; by expanding ALL coverage, hospitals would have far fewer uninsured patients and thus wouldn’t need federal taxpayer dollars to cover their costs.

What Florida’s House and Governor are saying is they don’t want Medicaid, but do want the “lost” dollars replaced.

I don’t get it.

Remember the Feds are paying ALL of the Medicaid expansion costs thru 2017, then their support ratchets down gradually until they are paying 90% of the costs.

Ninety percent…

For some reason that doesn’t make sense to the House; but they DO want the billion plus dollars for hospitals, dollars that no other state gets. Of course, the legislators didn’t THINK about this when they adopted their principled stand against federal largesse, but quickly changed their tune – somewhat – when hospitals screamed about the financial disaster the House’ position would bring upon them.

To their credit, the Florida House and Senate seem to have figured out they have adopted a water moccasin, and it is about to bite them in the face.  Now, they want the Feds to defang their beloved friend before it kills them.

I was at a Florida Chamber meeting a couple years back when Scott and an Orlando hospital system CEO talked about the need to expand Medicaid; At that point the unindicted former CEO of the company convicted of the biggest Medicare/aid fraud in history was kinda sorta in favor of Medicaid expansion.  The business people in the room got it; the ideologues didn’t.

Hidden in this mess is the damage caused to the 800,000 or so lower-income Floridians who won’t get coverage. [sub req].  Orlando Sentinel columnist Scott Maxwell said it very well:

…the feds are basically saying: We’re giving you the money to provide citizens cheaper, preventive health care. If you won’t give them that, we’re not going to clean up your mess by spending tax dollars on costlier ER care.

This is what fiscal conservatives should want.

It’s like offering to pay for your daughter’s insurance plan and having her say: No thanks, Dad. I’d rather you just pay for my ER bills instead.

You’d tell her: No way. Well, Rick Scott is that defiant daughter, suing federal taxpayers to keep welfare-for-hospital-ER’s going.

What does this mean for you?

Either you want federal taxpayers to subsidize your health care system, or you don’t.

And if you don’t, you can’t complain when your head blows up to the size of a prize watermelon.

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.

Friday catch-up from the (still) frozen northland…

Hello all!

Well, (or rather, HELL!) it’s snowing in upstate New York…hopefully it’s a bit brighter where you are. Lots happened this week, so here we go.

First, this really needs a series of posts, but it’s so important that better fast than thorough. There is yet more evidence that the earning power of the vast lower-middle class (and poorer folks too) has been steadily declining.  And that’s a major issue for workers’ comp. Here’s the money quote from Neil Irwin’s piece in the NYTimes:

there really is a shift away from the sectors where less-educated workers can earn a decent living. [emphasis added] In 1990, 40 percent of the prime-age male workers without a high school degree worked as operators and laborers, a number that declined to 34 percent in 2013. Jobs in food service, cleaning and groundskeeping nearly doubled in the same span, to 21 percent from 11 percent. But it wasn’t an even trade: Pay for operators and labors was $25,500 in 2013, compared with $20,400 for the food, cleaning and groundskeeping category.

You’re not imagining it. The jobs that are being created for less-educated workers really do pay less than the ones that are being lost. [emphasis added]

What does this mean for work comp?   A few things come to mind.

  • if good-paying jobs continue to disappear, it is going to be increasingly hard to re-employ injured workers in positions where they earn the same pay they did pre-injury
  • comp premiums may decline slightly due to lowered covered payroll
  • we may see more longevity and less movement among workers currently in those jobs, meaning there are fewer opportunities for experienced workers to get re-employed
  • it’s theoretically possible that people working at jobs that are disappearing may see workers’ comp as a safety net

The net is the work comp system is going to be dramatically affected by this economic trend.  We need to be talking about it now, thinking about the potential implications, and seeking solutions – now.

The Catamaran acquisition of Healthcare Solutions was followed almost immediately by United Healthcare’s announcement that the company is going to buy Catamaran. Personally, I think HCS was the linchpin of the Catamaran – Optum deal; HCS’ unique position in the WC PBM, bill review, network, and related businesses made Catamaran so darn attractive UNH ponied up $14 billion just to get in the WC game.

Well, maybe not.  More seriously, UNH will own the third largest PBM, trailing only CVS/Caremark and Express Scripts, Inc.  The combination of OptumRx and Catamaran will fill about a billion scripts this year.  Catamaran itself was a relatively small player a decade ago; it grew rapidly via acquisition and diversification (along with ESI it is the only PBM active in the work comp and auto sectors).

With this transaction, UNH continues to diversify; the chart on page 2 provides a rather striking view into just how diversified this former HMO company has become.  For some, $14 billion seems like a lot of cash.  Not to UNH; this is a company with revenues that will likely hit close to $150 billion this year.  For you work comp folks, that is about 180% of total US WC premiums. 

(full disclosure – I owned a tiny bit of equity in HCS from a prior role on the Advisory Board of predecessor Cypress Care)

The good folks at Washington Labor & Industry (and other state agencies) are asking for public comment on their revised Prescribing Guidelines for Opioids. The pdf briefly summarizes changes from current guidelines, and is well worth your perusal.  Kudos to the Agency Medical Directors’ Group; they continue to lead the way for the rest of the country.

There’s a rather troubling piece in the latest Health Affairs about the cost and implications of over-diagnosis and over-treatment of breast cancer.  As one who is somewhat troubled by the proliferation of pink everything everywhere (cue the calls for my summary execution as insensitive and uncaring), I see this as evidence of a movement in danger of running amok.  From the article:

The average expenditures for each false-positive mammogram, invasive breast cancer, and ductal carcinoma in situ in the twelve months following diagnosis were $852, $51,837 and $12,369, respectively. This translates to a national cost of $4 billion each year. The costs associated with false-positive mammograms and breast cancer overdiagnoses appear to be much higher than previously documented. Screening has the potential to save lives. However, the economic impact of false-positive mammography results and breast cancer overdiagnoses must be considered in the debate about the appropriate populations for screening. [emphasis added]

Is breast cancer a major problem? Yes. As a major killer of women, and a disfigurer that does deep psychological damage, breast cancer is one of the major public health issues nationally.  That said, telling women who DON’T have breast cancer they do, and treating them for it, is awful indeed.

Finally, Darrell Bruga of LifeTEAM asked me if there is any technology platform already being utilized in workers’ compensation that is designed with the end user being the INJURED WORKER? Does anything like that exist where the claims examiner, caae manager, etc interacts with the injured worker digitally to communicate, provide information, provide health information, etc.

I don’t know of any such app; if you do please let me know – email at jpadudaAThealthstrategyassocDOTcom or just comment below.

The Everything-PPACA edition of Health Wonk Review

The ongoing rollout of the Affordable Care Act is the primary subject of this edition of Health Wonk Review – but there’s much more from the best of the health policy blogosphere – all summarized here for your reading pleasure!

PPACA rollout

Brad Flansbaum has written a thoughtful and compelling perspective on the impact of reimbursement changes on physician compensation, posing tough questions and seeming to come down on the side of longer/harder/tougher/knottier vs slam-dunk.

The coverage gap (wherein folks  have to pay a penalty if they go without insurance coverage) is covered by Louise Norris at Colorado Health Insurance Insider – in fact she’s more on the ball than any of the other sources folks normally turn to.  One key – if “your gap in coverage includes three or more months, you’ll be assessed a penalty for the entire period without health insurance; ” so being covered sometime during the fourth month doesn’t meet the test.

BTW, the IRS will assess a penalty for those going without coverage – and Louise has the skinny on those details too.

Bob Laszewski highlights the low consumer ratings of Covered California and the massive dollars poured into the site by the Feds.  Bob notes coverage expansion has been far below estimates, while costs have been far above.  Ouch.

Friend and colleague Hank Stern continues his merciless coverage of PPACA rollout with InsureBlog’s entry this biweek – a quick summary of notable news about the “ObamaTax”.  Double Ouch…

Another coverage gap is addressed by Anthony Wright of Health Access California.  Anthony reports on efforts by CA legislators to expand coverage to include undocumented workers in the Golden State.  Pending changes in immigration may well increase the number of people eligible for coverage under PPACA.

Some want to kill PPACA; others, more politically savvy, want to replace it. Writing in Health Affairs’ blog, Tim Jost discusses the various ideas/thoughts/concepts circulating among GOP Senators and Congresspeople, concluding that it isn’t really possible – given the GOP’s antipathy for the core goals of PPACA – to “replace” it.  And, most of the ideas floated to date won’t do much to increase coverage or reduce cost.

From MCM I submit a brief post detailing the cost trends for private health insurance, Medicare, and Medicaid.  Notably, the “Ms” have lower trend rates than private insurers.

SGR is dead!

Pigs will fly.  Lions and lambs will lie together.  The Cubs will win the World Series (well, that may be a stretch).  Those are events as equally unlikely as Congress agreeing on a bipartisan fix to Medicare physician reimbursement. Writing in, the estimable Louise Norris contributes another worthy piece dissecting the implications of the replacement of the much-reviled SGR with small, but predictable increases in physician pay.  Of note, there are also incentives to improve quality, extension of some niche health plans, and continued emphasis on increasing transparency.  All good things, which just shows things can get done on Capitol Hill...

Our favorite health care economist, Jason Shafrin, contributes a quick take on the passage of a Medicare reimbursement “doc fix” – a fix that, while it adds $141 billion in additional cost over the next ten years, also simplifies other programs intended to reward top-performing docs.

Stuff you need to know

Julie Ferguson has a sobering piece on workplace suicides, noting law enforcement, farming, and auto repair are the industries most affected. Julie teases out the common factors, provides additional insight into specific industry risks, and focuses on the need for mental health support for family farmers.  A great piece.

Returning from the annual HIMSS conference, contributor John Lynn shares his thoughts on what’s going to happen to Health IT in the near future; with implications for new entrants, entrenched old-line vendors, and the mid-tier outfits alike.

This biweek’s “hey, I didn’t know that! that’s pretty cool” moment comes from Jaan Sidorov MD, who reports that:

persons of low socioeconomic status are more likely to have smart phones vs. the “banked” population. They may not have a checking account, but, compared to other segments of the population, they are more able to use these devices to access and manage their “e”care. [emphasis added]

HWR veteran Roy Poses MD has a tough piece on hospital CIO’s perspectives that they, the CIO, “own” patient engagement.  Roy’s take is this is part of the problem with health care; generic managers who don’t actually deliver care think they “own” it.  Well worth a read.

Finally, One Happy Nurse reveals why a 7 hour wait in the ER isn’t so bad…and she should know – she’s been working in an inner-city Level II trauma center ER for more than two years.

Whew…after almost ten years of HWR, it’s great to see the best keep getting better!

The latest “innovations’ in physician dispensing

Despite overwhelming evidence that physician dispensing in workers’ comp leads to extended disability, higher medical costs, and higher indemnity expense, doc dispensing continues to expand.

Here’s why this is such a tough nut.

Back in the day, almost all physician-dispensed drugs were repackaged medications; since WC drug fee schedules were based on AWP, and repackagers could set their own AWP, it was child’s play to make millions by stuffing a few pills into a bottle,dispense to an unwitting claimant, and pocket the several hundred dollars.

In response, many states passed laws or implemented regulations eliminating the repackaged drug upcharge by basing reimbursement on the non-repackaged drug.

The dispensing industry quickly adapted by identifying and buying their drugs from “contract” manufacturers; drug companies that “manufactured” their own drugs, and therefore could set their own AWP.  Not surprisingly, these prices were far higher than comparable drugs from mainstream manufacturers; however, payers had no choice but to pay the price as required under statute or regulation.

Another wrinkle came out of the creative minds of those seeking to suck dollars out of employers and taxpayers; “novel” drugs.  These new creations were very slight tweaks of long-accepted formulations, tweaks such as increasing or decreasing the milligrams of one active ingredient by a negligible amount, thereby creating a “new” drug that could be sold thru dispensing docs.  At a price that was far higher than the “non-tweaked” drugs these variations mimicked.

In response, some states (IN, PA) have moved to ban or significantly restrict physician dispensing.  Others have attempted to do so only to find their efforts thwarted by the unbelievably well-funded doc dispensing lobby.  (Remember they are using the hundreds of millions they’ve sucked out of employers and taxpayers to pay their high-priced lobbyists and curry favor with medical societies; they are using your money to fight you)

At one time, I thought this was the right move as it would end the practice. As one who’s been fighting this battle for almost a decade, I still believe banning physician dispensing is a necessary and appropriate strategy, one every state should implement immediately.

However.  As we’ve seen, the doc dispensing industry’s creative minds are always at least three steps ahead of regulators, legislators, and payors.  So, while one would think banning doc dispensing – or significantly restricting it – would be the final answer, I’m not so sure.

Without getting too deep in the weeds here, my concern comes from years of watching these shameless profiteers outmaneuver us pretty successfully.  They will find any loophole, whether in a states’ pharmacy licensing process, medical board regulation, work comp statute or scope of practice to find a way to continue screwing employers and taxpayers.

For example:

  • docs are leasing space in their offices, at astronomical prices for just a couple of square feet to “pharmacies” which are nothing more than drug storage cabinets.
  • “pharmacies” are opening up actual locations next door to doctors’ offices and clinics; we have no way of knowing what, if any, financial relationships exist between the prescriber and dispensers.
  • dispensing docs are flying in to Hawaii, setting up shop in a clinic and seeing work comp patients for a day or two and dispensing drugs to those patients.
  • automated drug dispensing machines are appearing in medical office buildings; these buildings are often partly owned by the docs working there, and the machines’ owners are leasing space.
  • similar machines – totally automated, handling dispensing, billing, and record keeping – are being leased to docs in California and other states.

So, what’s the work comp industry to do?

  1. Ban physician dispensing, with tight language prohibiting physicians from profiting from or sharing in the revenues from dispensing.
  2. Include clauses in network contracts prohibiting dispensing by physicians.
  3. Refuse to pay for doc-dispensed medications unless evidence of clear medical necessity for immediate dispensing is provided. (I know, this is a thorny one, but it’s either that or continue to get screwed)