Insight, analysis & opinion from Joe Paduda


Let’s call it what it is.

Opioid prescriptions continue to drop, down 22% from 2013 – 2017. That’s great news indeed…but there are still far too many. The press release from the AMA calls for more Medication-Assisted Therapy, expanded treatment and access to that treatment  – all needed.

One statement in the AMA release really bothers me:

Physicians and other stakeholders accept that bold action is needed. We go where the evidence leads us.


Reality is, too many prescribers went where the marketers led them, rarely asking the right questions, accepting at face-value claims of smiling detailers, mindlessly mis-citing “Porter & Jick” as rationale for ever-escalating doses of opioids.

If the AMA’s statement was true, we never would have had the opioid crisis in the first place. We all know NOW that the “research studies”, “evidence”, and “literature” used to get docs to prescribe mountains of pills was incredibly weak, completely mis-characterized, and/or non-existent.

We all make mistakes…in this case prescribers made a monumental one. If the AMA accepted some level of responsibility for the opioid crisis and spent a lot less time lobbying against mandatory Prescription Drug Monitoring Programs and quibbling over dosage levels I’d be a little less angry.

I’ve long pilloried many for their role in the opioid crisis, and many readers have as well. It’s long past time the AMA and their fellow travelers acknowledge the harm they caused – and continue to cause – by NOT “going where the evidence leads them.”

Then, and only then, will they will be a credible part of the solution.

What does this mean for you?

Taking responsibility is rarely easy, often painful, and always needed.


The State Fund is solving opioids

I’ve lauded the Ohio Bureau of Workers’ Comp for their great successes reducing opioid usage. But, I’ve heard from many stakeholders that Ohio’s got a unique advantage; BWC is both the regulator AND the payor, so they get to do whatever they think makes sense, and providers, patients, and pharmacies have to do what they’re told.

Fair point.

The implication is this – it’s way harder when you’re:

A) not a monopolistic state fund;

B) you don’t have the power to implement formularies, UR, pre-cert, and other care controls; and

C) you don’t have the full focus and influence of a state’s governor behind you.

Well, the State Fund of California is delivering stellar results without any of the inherent advantages listed above – in a state that is highly litigious, without a formulary (until this year), and where a subset of providers spends every waking hour thinking up new ways to screw the State Fund, insurers, employers, and taxpayers by gaming the system. (CA Gov. Jerry Brown is fully supportive of the State Fund).

(btw love the campaign…)

From 2014 to 2017, the State Fund delivered:

  • A 60% reduction in total opioid prescriptions to injured workers covered by State Fund
  • A 74% reduction in opioid spend
  • Across-the-board Morphine Equivalency Dosage (MED) reductions:
    • 80% percent reduction in the number people above 50 MEDs
    • 83% percent reduction in the number people above 80 MEDs
    • 87% percent reduction in the number people above 120 MEDs

As a result, opioids now represent 16.9% of the State Fund’s total prescriptions, down 31% since 2014.

A couple more data points then we’ll dig into how they did this.  There were 1458 patients prescribed 120 or more MED in 2014, today there are 186 cases.

Results for those patients prescribed 50 or more MEDs were almost as good; the number of patients declined by more than 80%, from 5000 to 994.

How’d they do this?

There are two primary foci; reduce initial opioid usage, and help long-term patients wean off of opioids; we’ll focus on the latter in this post.

Recall that these results occurred before the new formulary was implemented, so that did not have an affect on these results.

The State Fund’s long-term opioid reduction program begins with the adjuster, who remains involved in the claim throughout the process. The program involves multiple vendors, a variety of approaches, an openness to innovative treatment, and a lot of communication. There is no “canned” approach: Cognitive Behavioral Therapy, acupuncture, counseling, physical therapy and exercise programs, and Functional Restoration Programs have all been employed. Medication-assisted therapy, or MAT, has been used in selected cases but for the most part the State Fund is trying to stay away from using opioids to solve opioid problems (my wording, not their’s).

Key to the long-term issue has been using vendors to conduct peer to peer conversations with the prescribing physician(s). According to State Fund Medical Director Dinesh Govindarao MD MPh, this peer-to-peer education of prescribing physicians has been instrumental in the success of the program, as many treating providers don’t have adequate training on pain management and opioid prescribing.

For those patients with significant chronic pain, the State Fund developed a program specifically aimed at helping those patients cope with their condition.  Patients willing to participate were enrolled in this program.

Going forward, the State Fund and Dr Govindarao are working to set up a more defined process to triage patients, one that will have different approaches and process flows for different types of patients. They will be looking at commonalities in patient groups to see if they can flow them through consistent treatment approaches.

What does this mean for you?

You can dramatically reduce long-term opioid usage through a well-designed, carefully-managed, patient-centric approach overseen by a very competent medical director.

And when you do, you can save scores of lives, hundreds of families, and millions of dollars for policyholders and taxpayers.

One last comment – these results were produced by a state entity and state workers focused on doing the right thing, the right way.


When are you going to sue the opioid industry?

States, cities, counties, school districts, and individuals all have sued the opioid industry.  A lot of these have been consolidated in one suit in Federal District Court in Cleveland under what is known as Multidistrict Litigation or MDL. The judge in that case has ordered trials to begin in 2019.

Courts and law enforcement go after penny-ante street dealers, narcos, and their supply chain, and now they are going after guys like this…

This is Arthur Sackler MD of Purdue Pharma, courtesy Wikipedia.

In Cleveland, Judge Polster has ordered the DEA to turn over voluminous records of opioid transactions next week. The records, for a handful of states for 2006 – 2014, will be used to identify what drugs were shipped where by whom.

While hundreds of cases have been consolidated into this one, the Judge, Dan Aaron Polster, has no jurisdiction over many more suits that have been filed independently by individuals, employers, providers, estates, and others.

But the MDL case overseen by Judge Polster is instructive, as he is focused on not only resolving the case, but finding long-term answers to what will certainly be a decades-long struggle to deal with the harm caused by the opioid industry. His intent appears to be to help identify financial resources to help pay for that work.

From the LaCrosse Tribune:

The judge’s ultimate goal is to “dramatically reduce the number of the pills that are out there and make sure that the pills that are out there are being used properly.

“The court observes that the vast oversupply of opioid drugs in the United States has caused a plague on its citizens and their local and State governments. Plaintiffs’ request for the … data, which will allow Plaintiffs to discover how and where the virus grew, is a reasonable step toward defeating the disease,” the judge wrote in an order.

Estimates of the harm already caused and the bills that will come due are in the hundred billion dollar plus range, this for an industry that sold almost $10 billion in opioids in one year, 2015.

So, back to my question.

When is the workers’ compensation industry, a group that buys way more than 10% of the opioids sold every year, going to sue the opioid manufacturers and marketers? 

We are waiting…


Everything you need to know about WC managed care regs

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

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

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

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

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


Taxes, tariffs, trade wars and workers’ comp

There are several potential implications of the latest national policy changes for workers’ comp.

First, if wages and hiring increase due to the tax cuts – as promised by the President – premiums will rise.

So far, that isn’t happening. The vast majority of the windfall is being spent on stock buybacks.  While this is inflating stock prices it isn’t going to have any material effect on wages or hiring, so no joy for work comp.

With the added focus on deporting undocumented workers, industries that demand low-skilled workers for high-stress jobs such as meatpacking are often struggling to find enough workers. Jobs are usually filled with first-generation immigrants – as those jobs always have been.

And many low-skill jobs are going to disappear – including burger-flipping. 

And healthcare administrative jobs.

So, we could well see injuries increase if untrained workers are hired to replace people with long experience in those risky jobs.

Now add the tariffs on steel and aluminum, which will really hurt manufacturers that use those materials, and add transportation to the industries affected by tariffs and NAFTA redos and we may see a reduction in commerce – which will affect employment and wages.

credit – CNN

One industry that’s been hit again is agriculture.  Cash crop farmers, especially soybean producers, are justifiably alarmed by China’s retaliatory tariffs on soybeans and other ag products.  Here in upstate NY, our next door neighbor has hundreds of acres in soybeans; farmers in the midwest are also heavily reliant on soybeans.

So, it is possible hiring will increase, altho the latest numbers aren’t encouraging. Wages could go up, altho again, the most recent data doesn’t show a significant bump.

It may well be more likely that employment and wages take a hit due to trade wars and tariff fights. If that happens, work comp premiums will be affected, but we may see a bump in claims from workers concerned about layoffs.

What does this mean for you?

Watch the reports on trade wars carefully.


Compounds – the stench of corruption

There’s a bill in the US House of Representatives that would greatly expand compounding, drastically reduce the FDA’s ability to oversee compounding, and eliminate many of the desperately-needed controls on this occasionally-deadly and often-abused practice.

Why anyone thinks this is good idea is beyond me, but someone convinced Rep. H Morgan Griffith (R VA) to write a bill and introduce it in Congress, and Rep Henry Cuellar (D TX) and others to co-sponsor Griffith’s bill.

That “someone” may have deep pockets.

Griffith has received over $100,000 in donations from “health professionals” and pharma entities; Cuellar got money too.

Griffith also got more money from the “International Academy of Compounding Pharmacists” than any other candidate for any Federal office.  The IACP has spent millions lobbying Congress to strip the FDA of authority and eliminate controls over compounding.

The IACP and other organizations are seeking to rewrite regulations issued after the New England Compounding disaster, a tragedy that saw hundreds of people sickened and scores killed by contaminated compounded medications. These medications were prepared and shipped by the NECC, a business in Massachusetts that happened to be located right next to a recycling center owned by the same family.

(This is relevant because ventilation systems were one of the problems identified by investigators looking into the causes of contamination in NECC’s products.)

The regulations were issued to implement a law passed by Congress in response to a Congressional inquiry into the disaster.

From wikipedia:

In a congressional hearing the FDA Commissioner was asked why regulators at the FDA and the Massachusetts Board of Pharmacy did not take action against the pharmacy years earlier. The legislators were told that the agency was obligated to defer to Massachusetts authorities, who had more direct oversight over pharmacies.

Yet Griffith’s bill would overturn many of the desperately-needed controls now in place:

The bill exempts from interstate distribution limits the dispensing of a compounded drug from the facility where it is compounded to a patient or health facility.

The scope of Food and Drug Administration (FDA) inspections of compounding pharmacies is limited to pertinent equipment, materials, containers, and labeling, which is the same scope as inspections of pharmacies. (Currently, the scope of inspections of compounding pharmacies is the same scope as inspections of drug manufacturers.)

The bill eliminates the requirement for compounding pharmacies to register with the FDA as drug manufacturers.

As a side note, we’re seeing a dramatic decrease in compounds in workers’ comp, driven by payers’ refusal to pay outrageous charges for “medications” with no proven efficacy. In our annual Survey of Prescription Drug Management in Work Comp, respondents are reporting they paid for far fewer compounds last year than the year before.

That decrease could reverse if Griffith’s bill is passed, and we could well see a return to the days of poorly-regulated profit mills masquerading as compounding pharmacies.

What does this mean for you?

Elections have consequences, and campaign finance laws are killing us.


Brian Downs – one of work comp’s best

Brian Downs runs claims and medical management for the Work Comp Trust of Connecticut. He’s the best claims exec you’ve never heard of.

The Trust serves the healthcare industry in Connecticut with both insurance and administrative services. It may be the best-run payer in the nation; with very strong financial results, results which would be the envy of any payer, big or small, a complete and total focus on claims handling excellence, and provider relationships that are core to the Trust’s success.

Those financial results are driven by management’s single-minded focus on it’s customers and patients. Everything revolves around what’s best for policyholders and patients; preventing injuries and illnesses, and delivering the best possible medical care to patients drives the company.

I’ve never heard Brian or CEO Diane Ritucci talk about discounts or savings; those metrics just doesn’t exist. This in a state with among the highest provider fee schedules in the nation.

I met Brian over a decade ago when I was asked to audit the Trust’s medical management program. The more I learned, the more impressed I was. For a small insurer with few resources working in one small state, the Trust was remarkably effective.

The audit found a claims culture focused entirely on outcomes. A medical management approach rooted in partnering with the right providers, with a proprietary network of constantly-evaluated physicians. Results that would be the envy of any payer, large or small.

  • Combined ratio hovering around 90% for years
  • A large and growing fund balance
  • Consistent record of premium returns amounting to about 10% of premiums this year

Before anyone starts saying how easy it is for a small payer working in one state, let’s talk resources.

This payer’s IT budget is a tiny fraction of the big boys’. The staff is equally small, with many folks wearing multiple hats. It competes in a market that’s home to many other payers, ranging from the Hartford and the Travelers to Sedgwick and other trusts. It serves a market – healthcare – with high frequency and occasionally high severity.

Yet despite these challenges, the Trust is nimble, focused, and innovative. Brian meets regularly with individual physicians, groups of docs, employers and other stakeholders. He’s out and about listening and learning, while letting those providers know what the Trust expects of them. The Trust invests heavily in customer outreach, product innovation, network refinement, and staff education.

Brian is the epitome of an effective leader and manager. He has no ego, is constantly looking for ways to get better, to deliver more, to innovate. I’ve never heard Brian sound satisfied or content, he’s always asking, questioning, pushing to improve. Quiet and unassuming, engaged and calm, you’d be hard-pressed to pick him out of a crowd.

I’m lucky indeed to count him as a friend and colleague, and the Trust’s customers have benefited greatly from his competence and professionalism.

Brian Downs is one of work comp’s best.




Federalization of work comp; death by DOL?

Who thought the much-feared Federalization of workers comp would result in this.

A new regulation finalized by the US Department of Labor on April 1 overturns state requirements for workers’ compensation, while limiting employers’ liability for occupational injuries or illnesses. President Trump alluded to the pending change in his speech in Ohio earlier in the week.

The speech was supposed to focus on infrastructure, but it appears Trump had the new DOL regulation in mind when he noted the maze of workers’ comp laws makes it very hard for businesses to operate across state lines. Removing these “burdensome” constraints would “unleash all American businesses.”

One newspaper account noted

“a key part of his plan, he said, is to reduce a burdensome regulatory approval waiting time from as long as a dozen years to a year, by establishing one federal point of contact for a yes or no answer on a project.”

While there have been many far-reaching cutbacks in regulations directly or nominally affecting employers, this latest is undoubtedly the most significant seen to date.

According to a statement from Acting Associate Deputy Secretary for Policy Aprille Pfuehle; “The regulation essentially sets a Federal Maximum Standard for coverage and benefits for occupational illnesses and injuries. Employers with workers in any state with benefits greater than a to-be-determined Federal Maximum Standard can opt to be regulated by DOL and not that state.”

Employers who choose DOL regulation evidently will have additional protection from liability as well. While I’m no employment law expert, it appears the Trump Administration is relying on ERISA pre-emption as the lever to dis-engage occupational coverage from state regulation.

The regulation was reportedly developed and written by DOL’s Office of Congressional and Intergovernmental Affairs, under the direction of the Assistant Secretary; no other information was provided as to the rationale behind this.

No details on what entity is going to develop the Federal Maximum Standards were provided, nor was there any timeframe given. Given the magnitude of this change, we can expect it will take months to make any progress, and any change will certainly result in legal challenges.

Part of the Trump Administration’s ongoing effort to reduce the impact of ‘unnecessary regulations” on businesses, this follows earlier moves to delay or eliminate a host of workplace safety regulations, including beryllium exposure standards, medical benefits for US Energy Department workers exposed to radiation, and cutbacks on enforcement of wage/hour regulations.

While we knew the Trump Administration has been very business-friendly, this latest goes much further than these earlier efforts.








Cirillo takes over at myMatrixx

myMatrixx, Express Scripts’ workers’ comp PBM brand, will name Mike Cirillo President on Monday April 2.

Cirillo most recently led Injured Workers’ Pharmacy’s effort to enter the PBM space. He has deep experience in work comp claims from his days at the Hartford’s SRS TPA, along with 5 years’ pharmacy experience at IWP.

He will replace myMatrixx CEO Artemis Emslie, who, as we’ve noted previously, announced her decision to step down at the end of last year. Those are some big shoes to fill, as Artemis is universally well-liked and well-regarded for her depth of knowledge and long experience in work comp pharmacy and related businesses.

The changeover comes at a critical time. Currently there are multiple payers deep into the RFP process, more so than I’ve seen at any one time in recent years.  Several are seriously evaluating switching PBMs.

IWP’s effort to launch a new work comp PBM started just over a year ago. The PBM, branded SpecialtySolutionsRx, did not gain much traction, perhaps due to payers’ views of IWP as part of the problem, not part of the solution to work comp drug issues. There is no current information available about Specialty Solutions on IWP’s site.

It is likely SSRx is in a holding pattern for the time being.


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

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

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

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

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


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

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

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

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

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

What does this mean for you?

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

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

Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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