Year: 2010

Jan
7

Trends in Work Comp drug management

Posted by Joe Paduda on Thursday, January 7th, 2010 | Comments

The five year downward trend in drug cost inflation appears to be over, driven by excessive utilization, pain management, and price increases on a couple key drugs. But not all payers are experiencing increased costs; some actually saw costs decline in 2008, due to strong clinical management, a solid understanding of underlying cost drivers, and a willingness to engage with treating physicians.
Those are among the findings of the Sixth Annual Survey of Prescription Drug Management in Workers Comp, completed late last year.
In partnership with the good people at WorkCompCentral, I’ll be providing an overview of the most recent findings from the in a webinar scheduled for Tuesday, January 12 from 1:00 – 2:00 pm eastern. The cost for the webinar is $149.
Webinar registrants will receive a copy of the Survey results, to register click here and enter the code ‘Hsarx’.

Jan
7

If you read one Health Wonk Review this year, read this one

Posted by Joe Paduda on Thursday, January 7th, 2010 | Comments

Brian Klepper has exercised his editorial authority and tightly focused this biweek’s edition of HWR on the fading promise of health reform. Whether you agree with his perspective or not, Brian’s work is thought provoking at the very least.
I’d be remiss if I didn’t note that other bloggers, and in particular Maggie Mahar, have a much more positive view of reform. Her take provides a worthy counterpoint to those of us less sanguine about the impact of reform.

Jan
7

Health reform reconciliation – What’s on the table

Posted by Joe Paduda on Thursday, January 7th, 2010 | Comments

The finish line is in sight, but it’s uphill and the path is icy.
The Senate and House conference committee will be working overtime to try to get to a health reform bill acceptable to 218 Representatives and 60 Senators by the end of the month. There are three main issues that will generate lots of outrage/posturing/excitement; abortion, funding, and the public option.
The cost of the two bills is also a major difference, with the House version priced at about $150 billion more over ten years (leaving aside the many criticisms, some justified, about the pricing process and methodology, at least it provides comparative differences). The difference is not as significant as it seems at first blush; according to the CBO, both bills would result in a net reduction in future federal deficits.
However, neither addresses the real problem – the coming battle over Medicare physician reimbursement. If this is resolved in favor of docs, we’re looking at the addition of a quarter trillion dollars to the deficit. That’s big money, even in Washington…
Public option
Deader than dead. There’s been so much hype from both sides on this issue, for reasons I still cannot fathom, when we could have been talking about and perhaps even addressing underlying cost drivers. The public option would not have materially hurt private insurers, nor would it have solved the cost/access problem. Downright amazing how much political capital and press has been expended on something so insignificant.
Funding
There are significant differences between the two bills on funding; the House version has a 5.4% income surtax on individuals earning more than $500,000 and couples earning more than $1 million; the Senate version uses two sources, an excise tax on so-called ‘Cadillac’ insurance policies along with higher Medicare payroll taxes for individuals earning more than $200,000 and couples earning more than $250,000. House Dems (and others) protest that the ‘cadillac’ tax unfairly charges some for living in high-medical-cost areas, such as Boston and New York, while those with richer benefits that live in cheaper areas get a break. There are other taxes, such as an excise tax on medical devices that will likely be on the table as well.
Expect the ‘cadillac’ tax to be modified in reconciliation.
Abortion
For the life of me I can’t see the logic in the arguments against using taxpayer dollars to pay for a legal procedure. This country is ostensibly a democracy where majority rules, a nation ruled by law and not by men and women. Except when it comes to abortion. I understand some people are vehemently opposed to abortion, some are opposed to abortion in certain instances, and others believe it is none of the government’s business. Regardless, abortion is the only issue where politicians have been able to prevent the use of taxpayer dollars to fund something that is entirely legal.
Jehovah’s Witnesses’ tax dollars pay for medical services, pacifists’ taxes fund the military, vegans pay taxes that promote US pork production and export, all expenditures that are anathema to those groups of individuals. Yet somehow abortion is different. If Sen Nelson, Rep Stupak et al are successful in maintaining the bastardized health benefit plan constructed to meet their demands, they will be building a case for every other group to protest the use of their dollars for things they don’t like. In addition to increasing the administrative expense load for health plans in the same legislation that establishes legal limits on those expenses.
Alas, it isn’t for me to understand. Given the political sensitivity of the issue and the need for every vote, there’s little doubt some version of the Stupak/Nelson amendments will become the law of the land.
There are several other key issues that may well determine the effectiveness of the bill in controlling cost and expanding coverage. I’ll address those tomorrow.
What does this mean for you?
Another trip to the sausage factory.

Jan
6

If this could happen to him, it could happen to you

Posted by Joe Paduda on Wednesday, January 6th, 2010 | Comments

Sandy Blunt was the victim of prosecutorial misconduct on the part of a North Dakota state prosecutor, accused and convicted of ‘crimes’ that the prosecutor knew – in advance – were not crimes.
That’s the conclusion of an article authored by Peter Rousmaniere in today’s Risk and Insurance magazine.
Here’s an excerpt from Rousmaniere’s article:
“

In late 2006, state prosecutor Cynthia Feland began to investigate Blunt. In April 2007, she charged him with criminal misapplication of entrusted property. Virtually all of the evidence was trivial, such as the $320 the fund spent on lunches at an employee summit and others sums for gift certificates, flowers and small employee bonuses.
Blunt was also charged with misusing an employee’s license plate number in trying to identify who had leaked WSI’s payroll data to reporters.
Blunt, no stranger to public bureaucracies, responded that this spending was normal even for public enterprises and consistent with prior WSI practices. He also said that neither he nor his advisors knew the expenses were illegal.
In August 2007 a district court threw the case out as lacking merit. The prosecutor won a reversal from the North Dakota Supreme Court. In December 2007, the state fund board, under political pressure, terminated Blunt.
Blunt’s criminal trial took place in December 2008. Feland, lacking a respectable case, tarted up the criminal count with three more heavier-looking allegations, one of which the judge threw one out (claiming that Blunt had improperly awarded a grant to a volunteer firefighter association).
The two remaining new charges dealt with Blunt’s handling of an employee he had recruited, then forced out. Supposedly, Blunt had allowed the departing employee to earn his unused sick leave and also did not seek repayment of relocation expenses incurred when the person came onboard.
After Blunt was convicted, it came to light that neither the prosecutor nor the state auditor’s office had disclosed in discovery or in court testimony a state auditor’s memo that exonerated Blunt of error relating to the forced-out employee. [emphasis added]”

You read that correctly. Blunt was not only convicted on the basis of charges that the prosecutor knew were not criminal, but the prosecutor failed to provide that information to Blunt before the trial, a clear violation of the law.
Blunt’s case is currently on appeal, and he is waiting to hear on a decision from the North Dakota Supreme Court. If and when, the Court does the right thing and throws out his conviction, Blunt should sue the prosecutor and her accomplices for every dime they have and ever will have. Their behavior was that egregious.
What the state of North Dakota has done to Sandy Blunt is reprehensible.
What does this mean for you?
If this could happen to a person as above-board and completely honest as Sandy Blunt, it could happen to you.

Jan
5

What does the future hold for IntraCorp?

Posted by Joe Paduda on Tuesday, January 5th, 2010 | Comments

CIGNA has a new CEO, David Cordani, who is planning on growing the company internationally.
Which may, or may not, have implications for CIGNA’s IntraCorp subsidiary.
IntraCorp, the managed care subsidiary of insurance company CIGNA, was perhaps one of the first ‘managed care’ firms, and certainly was the first major work comp managed care company. In business for almost forty years, the company evolved from a field case management vendor to a supplier of bill review, networks, case management, physician peer review, and ancillary service to the work comp market.
While it is still one of the larger case management vendors, IntraCorp lost considerable business over the last decade as ESIS and other large clients moved their bill review business elsewhere, claims frequency declined (reducing the need for case management and UR), and competitors aggressively pursued IntraCorp’s core case management, UR, and peer review business.
Although several investors reportedly inquired about the possibility of buying IntraCorp from CIGNA, former CEO Ed Hanway reportedly refused to consider a sale. Hanway’s lack of interest may have been driven at least in part by IntraCorp’s contribution to CIGNA’s corporate overhead. While CIGNA could have sold the subsidiary any number of times, by doing so it would have to find some other entity to absorb overhead expenses on an ongoing basis, a move that would have led to changes in financial reporting and expense allocation.
Now that Hanway has retired, Cordani may revisit the question. With his stated desire to expand CIGNA internationally, the new CEO is going to have to find capital to fund that growth. While IntraCorp is no longer the preeminent company in the work comp managed care space it has a strong brand, good management, and a wealth of data that could be used for any number of purposes (picking good docs, identifying appropriate patterns of care based on diagnoses…).
That and the renewed interest on the part of private equity firms in the comp managed care business may be a confluence of factors that results in CIGNA revisiting the long-term role of IntraCorp.
What does this mean for you?
More change (possibly) in the what’s becoming an increasingly dynamic business equals more opportunity.

Jan
4

Health insurance and workers comp claim frequency

Posted by Joe Paduda on Monday, January 4th, 2010 | Comments

A recent dialogue on the LinkedIn WC group got me to dive back into the question of what, if any, influence does the presence of health insurance have on work comp claim frequency? The data aren’t conclusive, but the answer appears to be ‘There is a trend, but not in the direction you’d think.’
Commonly accepted thinking holds that workers without health insurance will claim off the job injuries under work comp so the medical bills get paid. (That’s what I thought too.) Turns out that the opposite appears to be the case; workers who have health insurance are more likely to file WC claims than those who don’t.
It isn’t quite that straightforward, so don’t just read this and take it at face value; there are significant complicating factors.
The seminal study on the health insurance: WC claims relationship was done by RAND and published in 2005 . If anything, it appears to indicate that workers with health insurance are more likely to file WC claims, however the driver is not the presence of health insurance but rather the nature of the employer.
From the study abstract:

…uninsured and more vulnerable workers are less likely to file claims than the insured. We study this relationship and find that it emerges as the result of employer characteristics. Workers at firms who offer health insurance to employees are more likely to file workers’ compensation claims: the characteristics of the firm are more important than the insurance status of workers themselves; [emphasis added] moreover, even repeat injury sufferers are more likely to file during episodes in which their employer offers health insurance. This suggests that the workplace environment and employer incentives may have a significant impact on the utilization of the workers’ compensation system.

Key highlights from the study itself:
– injured workers without health insurance are about 15% less likely to file a WC claim than workers with health insurance
– workers in firms that offer health insurance are twenty-one points more likely to file a claim than those in firms that don’t offer health insurance
RAND’s conclusion that the workplace environment is the key factor affecting claim rates and frequency was supported by several recent reports indicating injured low wage workers are particularly unlikely to file work comp claims. One of the more intriguing studies was done under the auspices of the National Employment Law Project which focused on the problems faced by low-wage workers when they are injured on the job. The study looked at a population that accounts for fifteen percent of all workers in just three cities; Chicago, New York, and Los Angeles. Extrapolating the numbers out in just those three cities indicates that 75,446 workers comp injuries were not reported.
Nationally, that works out to about a million claims unreported.
The study reported 92% of low-wage workers don’t file work comp claims for injuries that require medical attention.
Fully half of the workers with on the job injuries “experienced an illegal employer reaction”, including firing the worker, calling immigration authorities, or telling the worker not to file a comp claim.
What does this mean for you?
With health reform with some form of mandate looking increasingly likely, some, steeped in conventional wisdom, will expect claims frequency to decline. Others will expect it to increase now that more workers will have coverage.
The latter group’s view will be more correct than the former’s; or more accurately ‘less wrong’. Bad employers will remain bad employers regardless of whether or not they offer health insurance, therefore, after the mandate is in place, injury reporting behavior may increase somewhat but probably not by much.
(kudos to Mark Walls for starting and managing the LinkedIn group)