Year: 2014

Feb
12

How much do docs pay for repackaged drugs?

Posted by Joe Paduda on Wednesday, February 12th, 2014 | Comments

In Maryland and Hawai’i, docs are claiming that they pay much more for drugs than retail pharmacies, therefore they are justified in getting paid a lot more than retail pharmacies.

Bullshit.

Now that I’ve got your attention, here’s the truth.

This is just one page from a document was included in All State v Prescription Partners, a lawsuit filed by the big insurer in Federal court last summer.  It is described as “the drug list included in the “sales pitch” of AHCS…”

It is pretty much self-explanatory. 
 All State v. Prescription Partners_34

 What does this mean for you?

Two things.

1.  Legislators should demand proof from dispensing advocates that their costs are higher and justify their outrageous prices.

Clearly they are not, and dispensing advocates testifying that their costs justify their prices are misleading/uninformed/duplicitous.

2.  More evidence of the ongoing effort by profiteers looking to suck money out of employers and taxpayers.  

Feb
11

UR in California’s a BIG problem…or not

Posted by Joe Paduda on Tuesday, February 11th, 2014 | Comments

The California Applicant Attorney’s Association says there’s a BIG problem with UR in California, and a recent analysis by CWCI is flawed and inaccurate.

I don’t see it.

Greg Jones’ piece in yesterday’s edition of WorkCompCentral digs deep into the issue; here’s the brevitzed version of the disagreement.

CWCI analysis indicates about 75% of ALL treatment requests are approved by the adjuster or surrogate referring 25% on to an elevated physician-based UR process.

Elevated UR denies or modifies 23% of the treatment requests for an overall denial/modification rate of about 6% (.25 x .23 = 6%). The denial rate falls even further to less than 5% for claims that go through the state’s new medical dispute resolution process, independent medical review (IMR).    CAAA’s consultant argues that the denial rate is higher, by:

  • citing different studies from different years with different samples, thereby comparing apples to oranges;
  • asserting that there’s a lot of variation in denial rates among payers, as if this was a bad thing or even meaningful (different employer types, different locations, different medical management strategies);
  • claiming that CWCI’s analysis was in error because their study included medical-only and not just indemnity claims, as if a standard of care or UR should or could somehow be different for claims with lost time. Guidelines are guidelines; they apply to all injured workers and don’t vary by type of claim.

Moreover, the premise of CAAA’s argument – to the extent there is one – is fatally flawed.  

A denial rate of 5% is hardly a catastrophe – especially when one considers where California was before the 2004 reforms – known as the physician’s presumption of correctness. Treating docs decided what treatment was appropriate, based almost exclusively on their personal opinion, or for a relative few, how they could generate the most revenue.  Payers had few opportunities to challenge a treatment plan. Treatment costs exploded to over $12 billion a year.

Would anyone allow a vendor to completely determine what services they were going to provide at what cost to whom? 

Of course not. This is completely at odds with every other payer system’s medical management methodology/process, because it is wildly illogical.   Yet that appears to be the motivation behind CAAA’s “analysis”.

Today, about 5% of treatment requests are denied or modified, medical costs are half what they were and employer premiums are way down as well.

Let’s look a little deeper at the results.

CWCI found that 43% of elevated UR and a third of the IMR reviews were for drugs. About half of those RX reviews are for opioids and compound drugs. Most likely a relatively few docs have a disproportionate percentage of challenged treatments.

The key is what are they doing and why – if they are prescribing Oxys to patients not supported by medical evidence, that’s wrong.  And, the current IMR process has begun to fix that problem.

Yes there are workflow problems, problems that will be resolved. Yes the process needs to get a LOT more efficient and less expensive. Yes guidelines need to be constantly updated.

And No, we don’t need to go back to the days of never ending treatment at the whim of the treating doc and bankrupt insurers.

 

Feb
10

Can you sell a workers’ comp network?

Posted by Joe Paduda on Monday, February 10th, 2014 | Comments

On the off chance that an entity that owns a workers’ comp PPO ever thinks about selling it, here are a few things one may want to consider.

  1. Who owns the provider contracts?
    If the provider contracts are tied to a group health insurer/health plan, then that’s how they get leverage with providers to get discounts for work comp care.
  2. What happens to the provider contracts if the group health plan sells the network?
    Over time, the contracts’ value will deteriorate, and that “time” may not be very long.  As contracts come up for renewal, the discounts offered by providers will decrease if not disappear.
  3. But what if the group health insurer/plan agrees to continue to manage the contracts?
    Sounds good in a contract, but won’t work out in practice.  The health plan’s provider relations staff will be evaluated on their ability to get contracts at acceptable rates for the health plan’s core products – group health, individual health, Medicare and perhaps Medicaid.  About 98% of medical dollars are spent by those payers, leaving about 2% for work comp.
    Where would you spend your time?

There’s obviously a lot more to this, but I’m swamped and you are too.

This isn’t idle speculation.  I was directly involved in a deal wherein a large national group health plan sold a work comp network, contractually agreeing to maintain the contracts for a time certain.  Things were fine for a year and in some states a bit longer, but the deterioration of both effective discounts and network size then accelerated rapidly.

What does this mean for you?

If you’re selling, don’t commit to things you can’t deliver.

If you’re buying, caveat emptor.  

Feb
5

yet ANOTHER work comp service company’s been sold

Posted by Joe Paduda on Wednesday, February 5th, 2014 | Comments

This time it is MSA firm Gould and Lamb.  The purchaser is IME firm Examworks, and according to WorkCompWire, the price is $75 million, or about 7.9 times earnings.

Back in the day, this would have been considered a pretty healthy price – but things have changed – big time.  With PMSI/Progressive going for 10x+, Align for 17x, OCCM for 13x, and other deals mostly in the double digits, this may be a reflection of the rather muddy forecast for the IME business.

And I’m not sure I see the strategic link between IMEs and MSAs.  Sure, there’s some “relatedness”, but it’s a bit of a stretch to see how 1 + 1 = 3 with this deal.

Feb
4

The GOP’s Alternative to Obamacare

Posted by Joe Paduda on Tuesday, February 4th, 2014 | Comments

Three republican senators have proposed a bill – the Patient CARE Act – to replace PPACA aka Obamacare.

Kudos to Senators Burr Coburn and Hatch for their efforts – and for staying away from the useless ideas of selling insurance across state lines, high-risk pools which are never adequately funded, and that favorite non-solution, tort reform.

In a nutshell, the GOP bill does away with most PPACA regulations including the mandate, reduces the tax break on employer-sponsored insurance, does away with Medicaid expansion, and gives low income folks tax credits to buy insurance.  There’s not a lot of detail, and it’s clear this is a work in progress.  I would note the GOP’s claim that their bill expands coverage without increasing taxes is sophistry;  according to many in their party, eliminating a tax break IS raising taxes.

There is no mechanism or approach or tools that would reduce health care costs, no assurance that those with pre-existing conditions will get coverage (unless they constantly maintain insurance, something that many folks don’t do), no control over benefit design (which is skillfully employed by insurers to discourage the unhealthy from signing up)

While a home-team analysis indicates the GOP bill will reduce uninsurance by about the same amount as Obamacare, the analysis isn’t credible.  For one thing, the “coverage” provided under the GOP bill would be a LOT thinner than that provided under Obamacare – they’d have to be, as the maximum credit for young singles would be $1,560, hardly enough to pay for anything but the skimpiest of catastrophic coverage.  This may be “insurance” but it certainly isn’t “coverage” .  In addition, doing away with the Medicaid expansion would dump millions of just-covered folks back on the safety net, aka emergency rooms, charity care, and community health centers that have been hammered by budget cutbacks.

 

Finally, the provider, payer, information technology, supplier and health system communities have all been working feverishly to prepare for and implement Obamacare.  This train left the station four years ago, and Burr, Coburn, and Hatch are just now showing up trackside with a revised itinerary.

Moreover, the passengers on this train – the middle class, health care providers, and older folks – are going to be adamantly opposed to the GOP plan as it:

  • raises taxes on the middle class;
  • undoes Medicaid expansion thereby harming health care providers; and
  • increases insurance costs for older people.

Politically brilliant it’s not.

As Jonathon Cohn notes; “It would have been a lot more productive if these three senators, or any other Republicans, had been similarly constructive back in 2009…”

He also thinks it is better late than never – I disagree.

Obamacare is the law of the land.  It is not going to be repealed.  The triad would have better spent their time working on something more productive; say immigration reform or revamping the tax code.  Alas, this is an election year, and the GOP bill is a political ploy.

But it’s not a very smart one.

What does this mean for you?

Not much.

 

 

Feb
3

Opioid guidelines are about to get a whole lot better

Posted by Joe Paduda on Monday, February 3rd, 2014 | Comments

In about ten days, providers and payers struggling with opioids will get a big hand up.

ACOEM will be releasing their just-completed Opioid Guidelines; they are comprehensive, extremely well-researched and well-documented, and desperately needed.

I learned about the guidelines from a presentation delivered by Kurt Hegmann MD MPH, Professor at the University of Utah and Chair of the Occ Med Division at the University of Utah’s Compensable Disabilty Forum.  In his spare time, Kurt is also responsible for ACOEM’s guidelines as the Editor-in-Chief, a role he’s filled for eight years.

Affable and engaging, Dr Hegmann walked the audience through the development process (quite rigorous, involving 26 professionals with NO conflicts of interest using the Institute of Medicine methodology), the research and (960) references behind the guidelines and the ranking/categorization of individual guidelines.

Here are a couple of takeaways.

  • Of the 220 pages, the vast majority are tables of evidence – some practitioners may peruse them, but most will focus on the couple dozen pages specific to individual treatments
  • The guidelines address acute and chronic treatment, with chronic defined as > 3 months
  • The detail, specificity, and depth of research and their application to guidelines are impressive indeed.  What these guidelines add to our understanding of what works, why, and what doesn’t is impressive by itself; how they blow apart pre-conceived notions of “appropriate” care and challenge long-held conventional wisdom was – at least for me – rather jarring.

    For example;

  • Other guidelines say it is Ok to be on safety sensitive jobs and take opioids – that is NOT supported by the research
  • The researchers found NO link between opioids and improved function – studies that show there is a link almost always use self-reported data.
  • No trials indicate opioids are superior for acute pain than NSAIDs.
  • The MAXIMUM dosage recommended is 50 MEDs (morphine equivalent dosage), significantly lower than most guidelines which use 100-120.  The reason is the research – there is a much lower risk at this level, with the data indicating a sharply higher risk profile for higher dosage.
  • Drug testing is recommended with a baseline and random tests 2-4x a year; the higher the dosage – more screening
  • Pain rating scales are all but useless as data points as lots of patients indicate their pain is a 10 and yet are working full time.  This is not possible, and indicates the uselessness of subjective ratings/scores/data.

Are they perfect?  No.  But that’s due to the lack of research on specific issues, and not to the diligence and perseverance of the developers.  If the research is solid, it is in the guidelines.

What does this mean for you?

A lot of confidence in the guidelines, and hope that we can begin to gain control of the epidemic of opioid overprescribing.

Jan
31

Friday’s catch up and quick takes

Posted by Joe Paduda on Friday, January 31st, 2014 | Comments

The week flew by, so I’m running to catch up on things I should’ve posted on earlier.

Looks like mother Aetna is getting her arms around Coventry work comp; reports indicate about three dozen Coventry work comp IT folks were laid off earlier this week, including most of the staff supporting BR 4.0, their bill review application.  This will come as no surprise to current clients and loyal readers; under the former ownership, there was little investment in the application over the past several years.

The question is – what happens to those current clients?  

First, indications are Coventry will not be doing bill review either on an application or service basis. If this the case, ALL Coventry BR clients will have to transition to a new provider.

Some payers have been planning for years to move to a competitor; expect Medata and Stratacare to pick up a couple of very big payers.  Mitchell will likely be very active, and MCMC is well-positioned to take on business too.  I would not expect ACS-CompIQ to be much of a factor as contacts indicate their service and performance levels of late have been less than acceptable.

Coventry WC may do a “renewal rights” deal with one of the other BR companies to transition clients, private-label one of the four competitors’ application, or – least likely – tell current BR 4.0 clients they are on their own.  As all Coventry BR clients will have to implement a new application, expect a lot of focus on this in the coming year.

Which may delay other critical IT upgrades/implementations/projects for some time…

Health reform

On the subject of health reform, looks like the trickle of uninsureds signing up for coverage thru the exchanges is going to increase.  A just-released Gallup poll indicates 56 percent of uninsureds who are going to get coverage will do so via the exchanges. Of all uninsureds, 53 percent are planning to buy insurance and 38 percent say they will pay the fine…

One of the less-well-known components of PPACA, outcomes research, has continued to make major progress.  The latest from the Patient Centered Outcomes Research Institute lists key initiatives and reviews the current process.  Of interest to work comp folks;

  1. Strategies for preventing the progression of episodic acute back pain into chronic back pain
  2. Compare the effectiveness of innovative strategies for enhancing patients’ adherence to medication regimens. Studies should take into account the needs of patients with chronic conditions who are prescribed medications for short- and/or long-term indications.
  3. Compare the effectiveness of specific features of health insurance on access to care, use of care, and other outcomes that are especially important to patients.
  4. Treatment options for people with opioid substance abuse

This is truly important work.

A good piece on working with work comp PBMs appeared in Claims Management. Authored by Jeffrey Austin White and Cathy Whitford of the Accident Fund, it includes some very helpful suggestions on how to get the most out of your PBM.

Jan
29

How Texas Mutual is successfully addressing opioids

Posted by Joe Paduda on Wednesday, January 29th, 2014 | Comments

A few states – very few – are getting some measure of control over the overuse of opioids in workers’ comp.  I’ve been speaking to folks in these states, and will report on those conversations, what is working, what isn’t, and what we can learn.

We’ll start with Texas, where Kim Haugaard of Texas Mutual has been working closely with TM’s Medical Director Nick Tsourmas MD – and pretty much everyone else at TM and in the provider community on this issue for years.  Notably, Texas has the advantage of a strong regulatory environment with clinical guidelines and strong UR rules.  While this combination makes it somewhat easier to address opioid overuse, the regs are only good if they are fully embraced.  That, Texas Mutual has done.

Here’s part of our conversation.

MCM – What was a key factor motivating TM to address opioids and drugs?

Kim – We are meeting with our actuaries constantly, monitoring the trend lines, average paid per claim and other data points.  We separate out claims with and without opioids.  [From those analyses, we learned] The longer claims were open, the higher the chance there were drugs involved, and drugs were the driving cost factor.  Once you address the drugs, you reduce length of disability.

MCM – What are the results of your efforts to date?

Kim – We have had a lot of success addressing opioids and all drug overuse, probably more than any other company. Our drug costs have seen a steep drop since Q1 2010.

Overall opioid usage is down by over 40%. I can tell you that of the 1,249 claims no longer receiving “N Drugs”, 46% of those injured workers are receiving no drugs whatsoever. The other ones have moved away from the N-status drugs to Y-status drugs. 

You may remember at AASCIF, Dr. Tsourmas presented the findings on a program that I implemented several years ago. For the top 400 most costly Rx claims, the average Rx cost per claim per year was $14,700. After our program – outreach for doctor-to-doctor, average cost per claim was $3300, average savings of $11,400 per claim.

MCM – What’s the key to your success?

Kim – You have to attack the drug issue from all angles, this is a team effort, involving prescribing doctors, and various carrier stakeholders, including, front-line staff, actuary, medical operations staff, medical director, legal, and the PBM.

MCM – You noted this is a team effort – who else is on your “team”?

Kim – We are working very closely with the Texas Medical Society and Pain Society, we’ve spoken at their conferences and met with physicians and physician leaders individually.  Some physicians we had issues with are now collaborating closely to address the opioid issue.

On drug testing, we are working with Millennium Labs on developing a “best practices” program, setting up testing protocols based on patient risk scores.

MCM – How do you focus your efforts?

Kim – In everything we do, we focus on outliers – reward the high performers and analyze and address the low performers.

What does this mean for you?

Yes, you can dramatically impact opioid overuse.  

While strong regulations are a big help, a) you have to use them effectively, and b) much of what Texas Mutual has done can be done anywhere – perhaps with a bit less success, but success nonetheless.

Jan
27

Sedgwick under KKR – quick takes

Posted by Joe Paduda on Monday, January 27th, 2014 | Comments

Talked with several folks in the industry about this deal, including Sedgwick CEO Dave North.  Couple points worth highlighting.

This has nothing to do with Mitchell International and there will not be any combination of the companies.  

For some reason a few folks are advancing the theory that there is some grand strategy at KKR involving buying up some/most/all work comp service firms (I exaggerate, I know) to build some Mega-Corp that will own the industry.

Please disabuse yourself of this notion.  Of course, KKR sees work comp services/P&C services as an attractive market, but that does NOT mean they are looking to mush a bunch of disparate entities together.  According to North, he “hasn’t had a word with anyone from Mitchell and there is nothing that is part of this deal that contemplates Mitchell as part of the scenario.”

I believe him.

As a side note, Stone Point (current owner of Sedgwick) owns/has owned several other work comp services businesses including Cunningham Lindsay and Genex.  There was very little communication between these entities, and a lot of competition.

Moreover, investment companies aren’t monolithic; they manage different internal investment funds, with different outside investors in those funds.  It is highly likely the investors in Mitchell are NOT the same as those buying into Sedgwick.

Sedgwick management is sticking around; many have also invested in the company going forward. That’s from several internal sources.

Finally, while management is staying, the same business model will be followed, and Sedgwick will remain Sedgwick, there will be changes – as North noted, “any time you have the backing of a company like KKR there should be opportunities for change that didn’t exist in the past.”

KKR is huge, has tremendous resources, and may well decide to deploy some of them to further enhance their new asset.  But they certainly wouldn’t have bought Sedgwick with the assumption they would make big changes.

You don’t pay a multiple in the double digits for a company that needs major changes.