WSI’s legal folks are going around their own Medical Director to outside, part-time, contract medical directors when they want a certain opinion.

Thanks to Tony, I learned of the dispute between the North Dakota state fund’s medical director and that august entity’s legal department early today (hat tip to WorkCompCentral’s Peter Mantius); it took me quite a bit longer to get the back story on this mess.

And it is a mess.

Here’s the issue.  When the claims and legal departments want a specific answer about a medical issue on certain claims they DON’T ask WSI’s Medical Director.  No, they send it to one of two outside reviewers and skip routing it to, or even involving their in-house, full-time, employed Medical Director.  By all accounts the Medical Director, a Dr Luis Vilella, is widely respected, known to be a “team player”, and interested in nothing more than ensuring the claimant gets the right medical treatment and the correct medical determination.

Evidently some claims and legal folks at WSI don’t like it when their view of a claim is inconsistent with that of Dr V, which is why they avoid involving the good doctor on specific claims.  This has been going on for some months, until finally Dr V sent a letter about the issue to WSI’s director, the famous ex-state-trooper-now-workers’comp-CEO Bryan Klipfel. (the letter was obtained by the local paper in a freedom of information request)

In part, Vilella’s letter read: “How can WSI impartially adjudicate a medical claim when its own Director of Legal Services, Attorney Green, disregards litigation support that WSI’s Medical Director offers on matters of disease and injury causation?”

It would be bad enough if this was only on one claim – but it most definitely isn’t.  In fact, sources indicate this has been happening for several years, including at least two incidents where WSI managers tried to alter his medical opinions.  In addition, Vilella is being marginalized within WSI; excluded from meetings focused on medical topics, prevented from meeting with Sedgwick’s on-site auditors; and pushed three levels down below Klipfel in the reporting structure.

So we have the Medical Director in a work comp insurer – and a relatively tiny one at that – who reports up to a guy who reports up to another guy who reports up to a third guy who THEN reports to the top guy.  In Klipfel’s defense, he recently decided to fix that really stupid reporting structure, and Dr V will be reporting directly to him.

That said, Klipfel knew legal and claims were marginalizing Dr V ever since former boss Sandy Blunt was run out of town on a rail.   With Sandy’s departure, it appears as if the legal geniuses at WSI decided they were not only brilliant legal minds, but they were more suited to make medical decisions than a medical doctor.

After all, why would a state experiencing an explosive growth in workers’ comp claims, many of them complex, difficult, and traumatic, ever want to have a medical director in a position of authority?  In actuality, the treatment of Vilella reflects something much more troubling than just a series of blatantly stupid decisions by claims and legal.

It is prima facie evidence of Klipfel’s – and the WSI Board’s – complete lack of understanding of the primary importance of medical in workers’ comp claims.  Medical drives well over half of direct claims costs, and heavily influences the indemnity portion.  Yet the acknowledged expert in medical was multiple levels below the CEO – who, by the way, had ZERO experience in work comp, or business for that matter, until he was appointed to the top job.

I don’t know Vilella, but I do know several other folks at WSI. The ones I know are good people, doing the best job they can in very trying circumstances.  They really truly want to help injured workers.

It is too bad they are being “led” by idiots.

Alex Swedlow, a certified rock star in the world of work comp analytics, held forth on medical dispute resolution as it exists in California.

MDR covers conflicts around the cost, utilization, and “standard of care”, these are evaluated against regulations, guidelines, fee schedules, and refereed by a judge, peer review doc, or some panel of designated experts.

California bill SB 863’s impacts were addressed, and include the following:

• 3 million liens processed over ten years, but the re-enactment of a fee to file liens in 2013 has cut lien filing fee by over 80%
• 90% of 2011-2012 liens came from a ten-mile radius in LA – but only 25% of WC claims
• change to reimbursement for ASCs dropped 28% after a 31% drop in the relevant fee schedule

Now on to the most fun part of 863 – the Independent Medical Review (IMR) “program”.  As Alex said, “boy has IMR been proven popular.”

Volume is 12x the expected volume and runs above 12,000 per MONTH.

Just under 50% of all medical management fees are from UR.

Among the cases that go to elevated UR, about 43% are for pharmacy, most for opioids and compound drugs.  A third of IMR decisions are also for pharmacy.  There’s a lot of misunderstanding about how many medical requests are handled internally vs done by an outside physician reviewer.

Just under 6 percent of all treatment requests were denied or modified before getting to IMR.  4.7% of all treatment requests are denied at the IMR stage.

Less than one in 20 treatment requests are ultimately denied via IMR.

75% approved internally, 18% are approved by elevated review; 4.7% are ultimately denied by the IMR process.

Less than one in 20 treatment requests are ultimately denied via IMR.

CWCI’s next step is to look into how a pharmacy formulary would affect pharmacy spend and scripts; looks like it would dramatically reduce the use of opioids, brand drugs, and compounds.

Stay tuned and check their website for updates on CWCI research.

 

WCRI’s Thursday morning begins with a series of presentations and discussions on the impact of PPACA/Obamacare on workers’ comp.

According to WC Executive Director Rick Victor, “Few pieces of legislation have the potential to affect people both financially and personally as the ACA. ”

(Note – my sense is there’s way too much attribution of normal market changes -positive and negative – to ACA, more on that later)

Rick went on to provide a framework for understanding ACA with specific attention to individual states.  Among the key issues

Will expansion of care lead to:

Shortages of providers who treat injured workers, which may lead to longer disability and higher costs – Victor opined that in states where Medicaid expands shortages will be greater than in non-expansion states. Similarly in states with low health status and/or an older population. As an economist, Victor noted that prices might rise and that will reduce shortages – in this case, payers will pay providers above the fee schedule to get access to care.  There’s a precedent for this in Canada, where providers in Ontario treating work comp patients get paid more than when they treat non-occ patients.  This happens in Massachusetts today as well…

That said, WC ALREADY pays more for specialty care than Medicare or Medicaid or group health in almost all states, so additional payments are likely not necessary. Given a multitude of factors, WCRI predicts the states that will have primary care shortages are:

• California
• Florida
• Louisiana
• Texas
• New Mexico
• Nevada
• Mississippi

I’d note that most of these are states that – at present – aren’t expanding Medicaid.  If – or more likely when – they decide that Medicaid expansion is a good thing, the predicted provider shortage may get worse.

Healthier employees – The data suggests folks with insurance are healthier than those that are not insured.

Victor doesn’t seem to think ACA will reduce unnecessary care for injured workers. Notably, he didn’t give a time frame for that statement; I firmly believe the work done by PCORI WILL have a dramatic effect on the care that’s delivered to, say, patients with back pain.  That’s going to take time – years, not months, but it will have a big impact.

Lots of discussion of the impact of PPACA on cost shifting – and a wealth of data Rick presented that indicated providers find creative ways to upcode, shift procedure mix, or otherwise find ways to increase revenues in the face of price controls or other regulatory attempts to restrain costs.

My research indicates cost-shifting is a complicated issue.

There’s been a good bit of discussion – some on Mark Walls’ LinkedIn group, on the potential for PPACA to influence claiming behavior.  The net is, I just haven’t seen any credible research that indicates PPACA will lead to more claims.  I’ve discussed this in detail here.

Finally, be careful to NOT attribute anything and everything, good and bad to ACA. A lot of things were occurring before ACA, including provider consolidation, more and higher deductibles, rising costs.

Will ACA accelerate, decelerate or change these trends?  It is impossible to separate out ACA’s effect from that of other factors.

 

Rebecca Yang analyzed the impact of the 2011 30% fee schedule reduction on prices paid for professional services in IL. Here are the highlights…

• WC prices paid (not billed, or Fed Schedule) for office visits were 18% lower than group health and 15% below Medicare.
• Costs for office visits went from 20% above the study state average to 20% below that average after reform.
• Surgery was a VERY different story; arthroscopic knee surgery costs were 166% higher than group health and 380%+/- above Medicare.
• Actual prices paid dropped after the reduction, but by 24%, not 30%.  this was likely due to negotiations between the providers and network operators.  In addition, some providers dropped out of networks, eliminating any discount below FS.
• It appears utilization may have increased, off-setting a third to a half of the impact of price reduction.

Carol Telles spoke briefly on what other states can learn from Texas’ recent reforms – designed to address medical utilization by introducing medical management tools, and reducing utilization. These tools actually added some cost, so the cost:benefit of the reforms have to be considered.

Relative to 14 other states, medical cost per claim over a 15 year period declined from highest among the other states to a position in the bottom third.

A big driver was a large decrease in utilization of non-facility care, which actually dropped by about 30% over the study period.  All other states costs increased, some by 70%.

There were a wide array of changes over a couple different reform periods including broadening the use of UR, implementing health care networks, increasing the prices for medical services, adoption of evidence-based medical guidelines, pre-cert for PT/OT, and a closed formulary for medications.  Most of the effects of these changes weren’t observed until 2011 or 2012, with the formulary’s impact delayed even further.

A few highlights specific to the impact on chiropractic

• chiro utilization dropped 8.5%; % of claims with chiro dropped 60 percent.
• the percentage of medical payments for chiro decreased from 10% to 3.5%
• however, chiros are utilized more in Texas than in any study state except California

Re medical cost containment expenses, costs per claim went up about 40% and have stayed there since the reforms were fully implemented.  These expenses were a third higher than the average study state.

What does this mean for you?

Overall, adding medical management services and their attendant costs appears to be related to reducing medical costs.

Today starts off with a discussion of the impact of health care reform on the health care system – there’s another talk tomorrow morning on the impact of ACA; here’s the first of a nine part series I penned last summer…will be interesting to see the panelists’ views.

The first presentation was by MIT’s Dr Jonathan Gruber on health care reform.  Gruber noted that a government-run program is never going to happen, but each time we tried to do this in the past and failed, a chunk of the underserved got some form of relief – Medicaid, Medicare, Part D, S-CHIP, etc.

RomneyCare, seen by many as the basis of PPACA, is a combination of left- and right-favored ideas, including community rating reforms, an individual mandate, and subsidies for those who couldn’t afford insurance on their own.  This went into place in 2006.

The uninisurance rate in Mass. is now 3% (compared to the national rate of about 16%), premiums in the individual market fell by about 50%, and premium trend rates for small employers have been flat for the last couple of years.  However, Mass’ reform was subsidized to the tune of a half-billion dollars.  This too has become part of the basis for PPACA, along with the individual mandate, subsidies for low-income families and expanded Medicaid, and rating reforms.

Lots of nonsense has been dumped on the ACA – the death panels being only one of the most blatantly false.  Gruber highlighted the impossibility due to political issues  – there were just too many forces – political, industry, lobbyists – blocking meaningful cost reduction.  There are, however, five cost control mechanisms.

1. Cap the taxable benefit of employee health benefits – currently the tax-free status of benefits reduces taxes by $250 billion. The “Cadillac plan” tax cap is intended to address this, albeit in a bass-ackwards way; this will reduce costs by not by much.
2. Health insurance exchanges – introduced more competition and lowered cost of sale. (in my view the leveling of the playing field coupled with universal coverage will force health plans to compete on the basis of outcomes and cost – and this is going to have a very large, and very positive, effect on long-term cost inflation)
3. IPAB – independent payment advisory board – which can affect Medicare health reimbursement by forcing Congress to save money or agree to use IPAB’s recommendations.
4. Research on Comparative Effectiveness
5. ACO and other experiments; medical homes, bundled payments, and other mechanisms aimed at coordinating care and reducing cost especially for chronic conditions.

In response to a question about freedom, Gruber noted that there are more health plans available now thru the exchanges than there were prior to reform.

Insurance prices for exchange plans for 2014 were about 15% below predictions, however this pricing was more of a guess than an actuarial projection based on past data.  We will know much more at this time next year when the 2015 rates are in place.

I loved Gruber’s characterization of states’ failure to expand Medicaid as political malpractice…

 

That’s the conclusion I’ve reached partway thru a quick-and-dirty survey of a handful of savvy, connected brokers.

The people who buy workers’ comp insurance and or claims and/or medical management are, mostly, clueless.  

They succumb to spreadsheets when comparing TPAs.  Because they have no idea how to separate out the good ones, they go for the cheapest per-claim fee, then are surprised when their ALAE costs are thru the roof.  But hey, that’s “claim-related” so they’re safe.

They bitch at their insurer when their claims costs go up, but won’t direct to good docs, or educate their employees before injuries, or hold management accountable.

They think bigger networks are better networks, that deeper discounts deliver big savings, that case management is the “state of the art.”  Many are quite ignorant of evidence-based medicine – which to my mind is the ONLY way we’re ever going to deliver quality care at reasonable prices.

Providers who pitch outcomes and return to work get some traction with a few of the bigger employers, but nowhere near enough to change the managed care business model.

To be fair, some large employers – think Lowe’s, Costco, Safeway – are doing really great stuff, and I’m sure there are lots of others who are innovating and improving and demanding performance.

The only thing that’s protecting these “buyers” is the up-and-down insurance cycle, a driver that has a disproportionate effect on the price and availability of work comp insurance and claims services.  Those that think they are safe may want to consider what’s coming.  PPACA has and will dramatically affect provider behavior, provider access, and the type and quantity of care delivered.

What does this mean for you?

To paraphrase HL Mencken, you get the work comp results you deserve, and you deserve to get them good and hard.