Medical malpractice and physician dispensing

So, here’s a question for you.  Given the patient safety issues inherent in physician dispensing of repackaged drugs to work comp claimants, are medical malpractice liability carriers considering this issue when underwriting coverage?

If not, why not?

Here are some of the problems with physician dispensing…

  • as research from CWCI and WCRI illustrates, prescribing patterns often change when dispensing rules and reimbursement change. If a patient is harmed, and the prescribing pattern changed before that event, is there added risk for the carrier?
  • the doc often has never seen the patient before, so they don’t know what medication the patient is taking, their medical history, or situation. If they dispense meds, they have to do so without full insightinto
    • the patient’s medical history
    • current drug regimen and possibly dangerous drug-to-drug interactions
    • other treatments the patient is receiving from other providers
  • most dispensing docs only give drugs to their workers comp claimants. So, if a workers comp claimants gets meds and has a problem, and a group health patient with the same diagnosis is treated differently, the plaintiff’s lawyer is going to ask, why? what was the motivator?
  • in many states, docs can and do dispense addictive drugs – opioids particularly.  There’s obviously a financial incentive for the doc to dispense meds to a patient, and if and when one of the doc’s patients is diagnosed as an addict, the plaintiff’s lawyer may well raise the financial incentive as a possible factor.
  • if the doc is dispensing opioids to a patient, and those opioids are being diverted, is there an issue?

And that’s just what I can think of off the top of my head.  I’m guessing underwriters and risk managers can come up with a few more…



Variation in hospital results – how to use the data

It has long been known that there’s wide variation in the type, quantity, and outcomes of medical care across providers.  A new report – research done by Dartmouth, and funded by the Robert Wood Johnson Foundation – looks at variations in re-admission rates among and between hospitals, and provides some striking insights.

The researchers used 2010 Medicare data; the overall results indicate one of eight surgical patients were readmitted within 30 days of discharge.  Non-surgical patients were readmitted more often; one out of six was back in within 30 days.

According to the report, the “issue of patients being readmitted to the hospital is considered important because many are avoidable and, as the report notes, can occur because of differences in patient health status; the quality of inpatient care, discharge planning, and care coordination; the availability and effectiveness of local primary care; and the threshold for admission in the area.” [emphasis added]

CMS recently began reducing reimbursement to hospitals with high levels of readmissions – which will make it really important for those hospitals.

So that’s kinda interesting, but not really. Here’s what’s really interesting.

The good folks at Dartmouth have published the re-admit rates for all hospitals, and you can download the spreadsheets.  Now before we go picking the best hospitals based only on their numbers, let’s look a little deeper.

Looking at two hospitals in my home state of CT, one can see the readmit rate for St Vincent’s in Bridgeport is much higher than Middlesex Hospital’s.  One answer may lie in the population; Bridgeport is a lower-income area than Middlesex, and likely has a much higher proportion of patients without adequate primary care and/or insurance.  Dartmouth provides some insight into this – 82% of patients discharged from Middlesex after congestive heart failure treatment saw a primary care provider compared to only 60 percent at St Vincent’s.

A couple other stats looked interesting; the data for surgical re-admits for UPMC facilities indicates they do a pretty good job keeping readmits down – and therefore overall quality is likely better than most (again this is just one data point).  Similarly, patients discharged after a heart attack from Geisinger’s Wyoming Valley facility have a high incidence of primary care follow up – compared to other facilities in PA (58 percent v 48 percent.  However, they’d be just above average in Wisconsin (54.4 percent).

What does this mean for you?

While there’s a LOT to digest here, I’d suggest one use would be for network direction.  Identify the hospitals with statistically better results, assess them for confounding factors, and think about how best you can direct patients/injured workers to those better-performing facilities.




Time’s running out; schedule your Obamacare RFID chip implant today!

After my post last week on some crappy journalists’ mis-characterization of an IRS memo as an admission by the Obama administration that family premiums would be $20,000 in 2016, I received an email from a reader about an even better story.

Seems the nut-o-sphere is rife with claims that anyone signing up for health insurance will be implanted with an RFID chip containing their medical and financial records.

I kid you not.

This is yet another complete mis-characterization by people looking for any reason – real or not – to find fault with PPACA.  (there are plenty of reasons without resorting to outright lies…)

This BS intentionally mis-reads the PPACA’s Medical Device Registry language – which is clearly intended to track medical devices to “facilitate analysis of postmarket safety and outcomes data.” This language – which looks pretty simple and quite clear is mis-interpreted to imply that we all are going to get a chip implanted somewhere on our persons.

What does this mean for you?

Please do a bit of fact-checking before sending on emails…





Medicare, MSAs, the SMART Act, and your taxes

I’ve long avoided getting into the Medicare Set-Aside issue for a bunch of reasons; it’s highly esoteric, requires deep knowledge, is ever-changing, can get pretty nasty and getting educated about MSAs would come with a high opportunity cost – I wouldn’t be able to do any real work for a couple months.

But never one to waste an opportunity to stick my neck into the noose, here goes.  First, my admittedly ill-informed view.

CMS’ failure to a) make rational decisions pertaining to future costs and treatment and b) provide intelligent guidance to P&C payers is a travesty. 

For CMS to assume that any current treatment will continue forever, at current prices, with current (brand) drugs, when any sane person knows that is absolutely NOT going to happen, is nuts.

Passage of the SMART Act helps address several key problems, but there is still much to be addressed before insurers can feel comfortable settling claims – comfortable that they aren’t getting screwed, comfortable that CMS isn’t going to come back and ask for more money, comfortable that the process, methodology, and calculations are actually somewhat stable – if not rational.  Certainty is the goal here, and we’re still well short of that.

Leaving aside the debacle that has been CMS’ attempt to implement a law passed by Congress (with little guidance as to how to actually implement Congress’ wishes), there’s a different issue that deserves mention – why MSAs?

Their purpose is to ensure that taxpayers don’t have to pay for care that should be covered by another entity.  And I’m very much OK with that.  As a taxpayer and contributor to Medicare’s funding, I don’t want my tax dollars spent on care that should be paid for by someone else.  I doubt anyone does.

Therein lies the rub.  Reality is, for decades, we taxpayers have been footing the bill for medical care consumed by workers comp claimants, to the tune of tens/scores/hundreds of millions of dollars (pick one).  That was great for those on the hook for WC claims and premiums, not great for taxpayers.

So, on the one hand, I think everyone (except maybe CFOs at and owners of P&C carriers) supports the IDEA of the Secondary Payer Act.  On the other hand, making the idea a reality has been a(n) mess/disaster/embarrassment. But on the third hand, it is necessary.

I know, commenting on something so obvious may seem like a waste of pixels.  But it’s good to know CMS is actually trying to save taxpayers’ dollars.

Now if they could only figure out how.






WCRI’s Annual Meeting; what you can expect

WCRI’s annual meeting is coming up at the end of the month in Boston; this conference always delivers a deep dive into key issues facing workers’ comp.  The brain trust at WCRI have made several changes to the conference over the last few years, most notably the data on which their research is based is much more current and covers more states.

I spoke with WCRI’s Executive Director, Dr Rick Victor yesterday about the conference and what attendees can expect.  Here – paraphrased – is what I learned.

The conference begins with an extensive review of treatment guidelines and unnecessary care, featuring a presentation by Prof. Thomas Wickizer of Ohio State on the evidence of the impact of treatment guidelines.  As payers confront growing medical costs and higher utilization, there’s a lot of interest in guidelines. But not all guidelines are created alike, and how they are implemented can be just as significant as how they are developed.  When I asked Rick what attendees can expect, he gave a very brief answer: “like the other discussions, evidence.”

What will be especially useful is evidence from both the WC and non WC worlds, and how UR does or does not compliment the guidelines; in addition the plusses and minuses of different approaches will be discussed and compared.

Recent WCRI conferences have included more coverage of external influences on workers’ comp; that continues this year with a discussion between former VT Gov. Howard Dean and Sen Judd Gregg (R NH) about the political dynamics affecting workers comp and healthcare. I asked Dr Victor what led to this expanded focus on external factors.

His response: “In 2008 the world shifted in fundamental ways that affected the lives and fortunes of most Americans.  You can’t really address WC effectively without talking about the impact of the financial crisis on people.”  He went on to promise not to depress everyone again with another “surprise”, so this year the external factors discussion will focus on solutions. He went on to say “The problems are well understood, so now we need to talk about how to get out of it.  Two people with different perspectives but both very thoughtful and experienced will help us understand where the leverage points are in the political process for meaningful change, and provide their prognosis.”

Finally, there will be a thorough discussion of the Opioid Epidemic, focusing on the urgency and scope of the problem both nationally and in workers’ comp.  Topics covered will include prescription drug monitoring programs, opioid guidelines, education and prevention, and the treatment of dependency.

The net – this year’s WCRI conference looks to be a don’t miss event.  Be there.



IRS, health care premiums under ObamaCare, and right-wing distortions

There’s a bunch of nonsense circulating on the web claiming the Obama Administration has said the average family premium under Obamacare will be $20,000 in 2016.

The sources, primarily lousy journalists, right-wing ideologues and wingnuts (Betsy McCaughey), are either:

a) unable to read and understand basic English; and/or

b) quite willing to distort, mis-inform, slant and obfuscate.

The kerfuffle began with a lengthy IRS memo released last week.  [opens pdf] Ideologues took one sentence (page 70, third paragraph) out of the document and claimed it said something which it absolutely did NOT.

The nut-o-sphere mis-read the IRS’ statement and interpreted an example as the IRS’ estimate of cost.


If you read the para at the beginning of the relevant section, it reads “The following examples illustrate the provisions of this section.”  Note the use of the words “example” and “illustrate”.

In fact, no one knows what the premium for a bronze-level plan for a family of 5 will be in 2016.

Now that we’ve thrown out that trash, let’s talk about family premiums, shall we?

First, let’s be precise about definitions. Employers’ costs are almost always lower than individual coverage, so be precise when talking about costs – are they for individual coverage, Medicaid, or employer-based plans.

Second, most individuals/families with incomes below 400% of the Federal Poverty Level will have a subsidy so their “cost” on the individual (or small employer” market will be less than the “list price.”

Third, the cost for a medium cost area is about $19,138 for a family of four for the Silver plan with no subsidy. If you make $80 grand, your cost – after the subsidy – is $11,528.

Fourth, my family – with four covered, all of us healthy, and no subsidy now or later, is paying $756 in premiums for a policy with an $11,900 deductible TODAY. That’s $20,972 TODAY. I can’t wait for Obamacare, as our costs will go DOWN and coverage vastly improve if the IRS’ figures are correct.

The best resource for calculating cost is the Kaiser Foundation’s calculator –

Unfortunately this is yet another example of ideologues taking statements out of context to advance their own agenda. Of course I didn’t read news of this revelation about Obamacare in the credible press; they ignored it because it isn’t a story. There is no story here. Unless it is about distortions for political gain.

This first came to light (for me) in the Workers’ Comp Advisory Group’s forum; not sure why it was there.


The last Coventry earnings report ever

As Coventry prepares to become part of Aetna, Coventry’s earnings report marks the last quarterly report we’ll see from Allen Wise and Co.  As par usual, I’ll split my review into two parts; workers comp (of most interest to many readers) and the rest of their business in a future post.  There’s no earnings call scheduled, so no Q&A with investors or presentation from management to mull over…

First, overall it was a strong quarter for Coventry with revenues up 10% driven by big growth in public-sector programs; commercial membership declined slightly. Quarterly profits also rose, altho annual profits were down about 4 percent.

Today, it’s work comp.

As far as revenues a tough quarter for the work comp division, actually a tough series of quarters.  Revenues dropped each quarter, albeit slightly.  However, the total decline was over $14 million over the four quarters, and the year saw a drop of $26 million or 3.3 percent from the prior year.

There were several business losses over the last year that undoubtedly contributed to the drop in revenues.  ESIS switched PBMs from Coventry’s FirstScript to Progressive, and moved other services from Coventry as well.  The PBM move probably had the largest impact on the WC Division’s financials, as the entire pharmacy spend counts as top line for CVTY thus losing tens of millions of pharmacy has a big impact on reported revenues.  The loss may have been a wake-up call to management, as there have been some indications that FirstScript is working to elevate its game.  However, it has a ways to go to catch up to the offerings of its competitors, almost all of which have a pretty significant head start.

While that was a significant loss, it was likely a good deal smaller than one that has yet to be felt; the US Postal Service moved their PBM business from FS to PMSI.  The deal was done late last fall and it should hit the financials sometime early this year.

To the credit of the WC Division and boss David Young, they were able to add enough incremental revenue thru price increases and smaller account wins to mitigate a good chunk of the loss of the ESIS business  and other losses.

So, where does that leave Coventry work comp?

A recent re-shuffle will put the division under former-CFO-now-head-of-National-Business Joe Zubretsky. Interestingly, former Coventry CFO Shawn Guertin is now working for Aetna in a top finance slot.  Guertin’s experience with the WC business will likely be the subject of a discussion or two between these two gentlemen…

Zubretsky’s most recent public comments about work comp have been pretty positive.  I fully expect Aetna to embrace the business; it has less regulatory risk than their core business, zero insurance risk, and may have some strategic benefit as Aetna looks to the future of disability management. And let’s not forget the strong positive cash flow generated by the division, cash that will be sorely needed by mother Aetna as they continue to prepare for 2014.

Net is we can expect Coventry’s comp division to flourish under Aetna; there may be some changes but I’d expect them to be positive, and we may even see investment in the unit.  




What we nerds love…

is research that helps us understand why things are the way they are.

And while we rarely get to make out with supermodels like the guy in the SuperBowl ad (word is it took 45 takes to get it “right” (good for him!!),

Bar Rafaeli and…

we do get pretty excited about great research.  Which makes today a pretty good day.  Two studies were released – one from Washington on back surgery outcomes and complications and the other from CWCI discussing the use and cost of compound medications in worker’s comp.

First, Gary Franklin MD and colleagues published a study in the February edition of Health Services Research on the safety of lumbar fusion, an all-too-common procedure in workers’ comp.  Here’s my non-clinical take on the key findings.

  1. Outcomes  – defined for this study as complications within 90 days of a fusion – for workers’ comp patients were not nearly as bad as I thought they’d be. Surprisingly, they were somewhat better than the average!
  2. However – and it’s a BIG “however”, that may be due in part to the Washington state fund (L&I)’s tough stance on authorizing fusions.  In turn, that was based on priori research that indicated fusions had generally poor outcomes.  So, L&I’s numbers for outcomes may have been better because they do a good job of winnowing out those claimants more likely to have poor outcomes.
Pretty cool, eh? Gotta love the power of the monopolistic carrier.
Well, here’s some not-so-cool news.
Eileen Auen, CEO of PMSI and Alex Swedlow and his colleagues at CWCI have co-authored a study examining the cost and trends associated with compound medications in California. (disclosure – both are friends and I was a reviewer of the draft report)
And the results are about as appealing as Ms Rafaeli’s ad-mate.
For the blissfully-unaware, compound medications are concoctions of various real and pseudo-medications fabricated by parties evidently more interested in sucking money out of employers and taxpayers than healing patients.  There is precious little evidence supporting the use of these medications for the kinds of conditions suffered by workers’ comp claimants; nonetheless they are inordinately popular among a subset of providers.
California instituted controls on the use of compound meds 1/1/2012, the thinking being these “controls”would reduce compounds in comp.
The good news is compounds dropped from 3.1 percent to 2 percent of scripts.
The bad news is while there were fewer compounds dispensed, the cost of each went up over 68 percent, so compounds’ share of drug costs increased from 11.6 percent to 12.6 percent.
That’s right – fewer compounds cost more money.
How’d that happen?
Well, compound prescribers and dispensers quickly figured out how to game the “controls” by adding more ingredients and more of each ingredient to each compound.  
There it is, another example of unintended consequences.
What does this mean for you?
Unscrupulous providers will quickly figure out how to game regulations/controls that are not well-developed and carefully considered. Better to do something right than to do it quickly.


Rapid change in California’s health system

The pace of change  – mergers, consolidations, physician/hospital affiliation, new construction and shifting of services – in California’s health care system is fast and accelerating.  Several area-specific reports just out from the California Healthcare Foundation provide a great overview of the changes in specific markets, and are well worth study for any payer working in the Golden State.

In a quick review of CHCF’s report on San Diego a few things jump out.

  • Hospital systems’ profitability is generally increasing rather substantially, this in a period when many are investing big bucks in new plant and equipment.  Margins for several systems are into the double digits.
  • Lots of investment is occurring in the wealthier (read – privately insured) areas, such as La Jolla.  No surprise that.
  • Safety net providers are benefiting from federal largesse, using funds to expand services to low-income communities and add medical home capacity as well.

For Los Angeles, the title of the report says it all “Fragmented healthcare system shows signs of coalescing.”  Whether it’s physicians aligning with health systems, hospitals joining together, or health systems merging, there’s lots of efforts to get bigger, increase service areas, and expand services themselves.

Unlike San Diego, LA is a pretty fragmented market, with too many hospital beds, no dominant systems or facilities, and many systems looking to consolidate the market.  Kaiser is the only system with a double-digit share of hospital discharges at 11.8%.  And, also unlike SD, margins for many facilities are negative to just barely above break-even.  There are exceptions; Cedars-Sinai had a 7.6% operating margin in 2010 and UCLA’s was almost twice that.

The study indicates that one driver of the relatively poor financials in LA may be an over-supply of hospital beds at 205 beds/100k people vs the state average of 181.

There’s a wealth of useful information in these studies.  Payers of any stripe doing business in California would be well-advised to read them carefully, and consider the implications for their future.