Jan
16

Physician dispensing – the latest from Florida

Physician dispensing in Florida is back in the news, as we await with bated breath the outcome of this session’s legislative battle.
On one side is the Florida Medical Association and Automated Healthcare Solutions, the Miramar company that provides software, billing services, and otherwise enables the physician dispensing industry.
On the other is the Chamber of Commerce, most of the state’s work comp insurers, and several large employers seeking to correct a loophole in the law, a loophole that has enabled dispensers and their facilitators to suck over $50 million out of employers’ and taxpayers’ wallets to pay for drugs at inflated prices.
Here, excerpted for brevity’s sake, three recent articles:
An editorial in the Palm Beach Post says this:
[In late 2010, the GOP majority in the Senate was poised to end the loophole by overriding a veto of a bill by past Gov Charlie Crist]:
By late 2010, however, Automated Healthcare Solution had given nearly $1 million to the Republican Party of Florida. The company also gave big to the political action committees of new Senate President Mike Haridopolos and new House Speaker, Dean Cannon. Physician groups had given. The override never happened.
Meanwhile, Alan Hays [author of a bill to close the loophole] had moved from the House to the Senate. Last year, he introduced the loophole-closing bill again. It had no House companion, and went nowhere. This year, Sen. Hays is back with a similar bill, SB 668. There is a House bill, HB 503. It has passed one committee, by a vote of 14-1.
For those who oppose his bill, Sen. Hays said, “It’s all about how many millions they can make from gaming the system.” Indeed, the estimated savings from closing the loophole are now $62 million. In August, the Workers Compensation Research Institute reported that “the average payment per claim for prescription drugs in Florida’s worker compensation system was 45 percent higher than the median” of other states the group had studied between 2006 and 2008, all because of repackaging. Recall that unexpected rate increase in 2009.
Those who profit from it claim that the current system helps workers take medicine more faithfully and get back to work quicker. In fact, SB 668 would not prevent physicians from dispensing drugs. They just would have to charge based on the normal fee schedule. They couldn’t rip off the system.
Automated Healthcare Solutions’ main argument against this bill is the $160,000 it has donated to the Republican Party and the $10,000 it has donated to Rep. Cannon’s PAC, the Florida Freedom Council. The Florida Medical Association has donated, and its ex-lobbyist is Sen. John Thrasher. He chairs the Rules Committee, and can stop any bill from reaching the floor.
This isn’t Special Interests vs. The Little Guy. Florida’s major business groups support the bill. Still, the biggest thing wrong with Tallahassee is that certain groups use lobbyists to get certain favors that help a few people but hurt the state overall. You’ve heard Gov. Scott and most legislators claim that they want Florida to be more business-friendly. So cozy up to this bill. Confound the skeptics.
Friend and colleague David Depaolo has a post in Work Comp World:
“Our WorkCompCentral news story calls AHCS a software firm, but that is not an accurate representation – the company manages physician dispensing of drugs with automated systems to control inventory, repackaging, and claims management to help ensure top dollar reimbursement to the physician…
According to news reports, companies controlled by AHCS executives Dr. Paul Zimmerman and Gerald Glass gave $100,000 to a committee that supported Scott during the 2010 elections. Five companies affiliated with AHCS sent $500 checks each to Scott’s campaign, according to the publication Health Care News Florida.
The FMA seems to be tightly integrated with AHCS. FMA spokeswoman Erin VanSickle referred questions by WorkCompCentral on FMA’s stance on the bills to Alia Faraj-Johnson, an outside media consultant for AHCS.”
And WorkCompInsider adds this
“A Tampa Bay news report talks about how the state’s pill mill crackdown was held up by proponents of doc dispensing, including AHCS principals: “The two Miramar workers’ compensation doctors have helped pump about $3 million into the political system through a dozen companies in the past year.”
On the other side of the issue comes this from Stanley T Padgett, an attorney who is also “CEO of FPP Health Solutions, LLC (“FPP”). FPP is the exclusive Pharmacy Services Provider to the FMA [Florida Medical Association];
“Dispensing provides patient convenience, better patient compliance and better medical outcomes. It also provides an additional revenue stream [emphasis added] to offset the constant onslaught of government and provider reimbursement cuts for physician services.”
Stanley T Padgett’s argument is that compliance increases with physician dispensing, but nowhere in his article does he reference the fact that the vast majority of physician dispensing in the Sunshine State is for work comp patients. In fact, Stanley T Padgett only discusses patients with chronic conditions, specifically hypertension – a diagnosis that is extremely rare in comp. We’ll also ignore his unfounded assertion that somehow compliance will increase if docs dispense medication (there are many reasons for non-compliance, and asserting that it’s more convenient to get your pills from a doctor than from one of the three pharmacies on the next street corner and therefore physician dispensing will reduce medical costs in Florida by over $10 billion is just laughable.
If, as Stanley T Padgett claims, the purpose is to “provide patient convenience, better patient compliance and better medical outcomes”, then why, pray tell, don’t those docs dispense drugs for Medicare, Medicaid, and group health patients?
What does this mean for you?
It’s crunch time, folks. If you want to end this outrageous assault on employers and taxpayers, tell Florida’s Governor and legislators to back Sen. Hays’ bill.


Jan
13

The hardening work comp market

Today’s’ WorkCompCentral arrives with a solid piece[sub req] from Greg Jones detailing the current work comp insurance market environment, which III’s Bob Hartwig characterizes as “firming”; rates are up but not (yet) into the double digit territory which is Hartwig’s definition of “hard”.
It’s been a long five or six years, rates are at historic lows in many states, and the hardening is spotty – some states (Texas) are still seeing rates that are flat or nearly so, while others (Florida) are looking at big increases.
For now, the question is not “when will the market harden?”, rather it is “how fast and how much are rates going to increase?”
TPAs are hoping the answer is “very soon and a lot”, and most insurers are as well – especially the ones who have reserve deficiencies…
What does this mean for you?
Realism in pricing is good, even though prices are up for employers, the recent pricing was simply too low. If it had continued, real damage would have been done to lots of insurers, and we’d be looking at insolvencies and a very hard market coming very quickly.


Jan
12

Okay, here’s the last of my predictions for the work comp business 2012…
7. The physician dispensing cost control bill currently pending in Florida will pass.
After several years of political intrigue, huge campaign contributions from companies making enormous profits from physician dispensing, and continual efforts by good actors in the system, outraged taxpayers and employers will finally succeed in limiting reimbursement for drugs dispensed by docs to the original underlying price of the non-repackaged drug.
I hope. And so should you.
That won’t’ be the end of the issue; Maryland, South Carolina, and other states are also battling to limit this latest and greatest abuse of the comp system. Even if we win in Florida, there will be many more battles ahead.
8. More payers will diversify their provider network partners.
As Aetna winds up its work comp network operation, payers’ interest in exploring other network options will increase. Following the lead of Broadspire and ESIS and enabled by technology that makes it easier than ever to mix and match provider networks, we’ll see several other large payers award more network business to more network companies. Expect firms such as Anthem, HFN, Horizon, Cofinity, Rockport and Prime to gain share.
That doesn’t mean anyone should count Coventry out. They are the oldest, largest, and most entrenched, and are working hard to address network gaps that will arise when their relationship with Aetna finally ends (which is still a long way away).
9. York Claims will finish the year well on its way to becoming a top-tier TPA.
Through savvy deal-making, a pretty intelligent sales approach, and what is by several accounts a strong focus on doing the right thing for the employer (and not just generating fees for York), York has transformed itself from what was a not-very-good TPA a decade ago to a well-regarded and very well run organization. York’s robust technology and strong market share in key sectors (especially governmental entities in several states), coupled with the expertise they’ve added as a result of acquisition (I’m especially impressed with the JI Companies deal) bodes well for their future.
Perhaps I should modify the headline – York already is a top tier TPA in terms of capabilities; these capabilities will drive them towards the top tier in terms of revenue and market share.
10. Oklahoma will eliminate the requirement that all employers have workers comp insurance.
There are moves afoot in several states to reconsider the work comp mandate, but none have more traction than the one in OK. Whether it’s because they share a long border with the only state that doesn’t require comp (Texas), many of their larger employers also have big operations in Texas and like the opt-out there, or there’s something more ephemeral, a sense that work comp as currently constructed doesn’t work the way it should anymore, Oklahoma may well be the next state to allow employers to opt out.
There’s already a study group authorized by the State Senate that’s looking into the feasibility of the change; their findings should be released in the next few weeks. that will be just in time for the next legislative session which starts in February.
This may not become law in 2012, but I’d expect some movement that allows some employers to opt out, perhaps in a pilot program as early as next year.
Well, there we have it. Oh, there’s one more..
11. My annual April Fool’s post will generate some controversy, tick off a few people, and generally cause consternation among those who either don’t have a sense of humor or can’t read a calendar. It will also not get me in as much hot water as some others because I have to vet it through my PR department…


Jan
11

How concerned are workers comp execs about opioids?

I’m finishing up compiling results from the most recent survey of pharmacy management in workers comp, and had to take a break and get this out.
I just totaled up the responses to the question “How much of an issue are opioids in workers comp?”
The average response was 4.8 on a 1 to 5 scale, with 5 “extremely significant”.

This is the highest score for any question in the eight year history of the survey.
Moreover, respondents are deeply concerned about the increased risk of addiction and dependency inherent in widespread and prolonged use of these highly addictive drugs. They rated their level of concern at 4.4.
Respondents were from a variety of payers: state funds, large private insurers, TPAs and smaller regional carriers.
Kudos to WCRI, NCCI, and CWCI for raising awareness of the issue.
Next step is to put solutions in place.


Jan
11

Work Comp Outpatient facility costs – the summary

With the release of WCRI’s latest report – this on on outpatient facility surgery costs – I’ll have to leave the next and last wave of crystal ball gazing to tomorrow. That’ll ensure it has a full charge before I polish it up one more time for some serious prognosticating.
The report is typical WCRI – carefully researched, stuffed full of appendices, state-specific information, methodological discussions and data dissection. Fortunately authors Rui Yang and Olesya Fomenko have provided a quick summary of major findings for those who don’t want to read all 123 pages. We’ll get to them after a (very) quick synopsis of the methodology.
For trending purposes, Yang, Fomenko, and assistant Juxiang Liu analyzed payments for the 2003 – 2009 service years for knee and shoulder arthroscopy, surgical episodes common in workers comp, thereby taking into account fee schedule, coding, negotiated, and network discounts. The cost differentials were based on 2009 data.
– It will come as no surprise that states with no fee schedule, or one based on percentage of charges – had higher costs in 2009. And, those costs increased more over time than states with fees based on standards such as APCs (Ambulatory Payment Classification groupers)
– Illinois had the highest costs, 45% above the median (recall that work comp is already a v very profitable payer, so paying 45% more than median means WC is really profitable business for facilities)
– Massachusetts had the lowest cost, at 40% of the median. However, Mass had the highest rate of increase over the six year period at 85%.
– Notably, Maryland, the only state that sets costs level across all (well, mostly all) payers was the second lowest cost state at around 55% of the median.
– looking at arthroscopic knee surgery, Maryland’s FS rates were $928, about an eighth of Illinois’ at $7.713. For shoulder surgery, IL’s outpatient FS rates were more than twelve times higher than Maryland’s…
So, a couple of observations.
1. the information is a couple years old, and therefore doesn’t factor in changes since then. There’s no way WCRI could as many changes don’t make their impact felt for some time. That said, I’d note that Illinois’ new FS is ‘more of the same’, using a percentage reduction below charges that, as the study shows, won’t control costs.
2. the average cumulative trend rate from 2003 – 2009 was 38%, not terribly different from the overall CPI for similar services (6% per year). That’s encouraging, if you’re average. Texas’ increase was 73%…
3. With the expansion of Medicaid, pressure on hospital reimbursement from Medicare and the rapid increase in the number of uninsured, workers comp’s unenviable position as the best payer in the business is ever more firmly established.
And a conclusion.
Fee schedules and network discounts based on a reduction off charges DO NOT WORK, if “work” is defined as controlling costs.
If “work” is defined as making money for network companies, they work really, really well.


Jan
10

My crystal ball blanked out yesterday after revealing the top three predictions for 2012; it recharged overnight and looks ready to continue this morning. I’ll see what it shows and hopefully, before the light dims, we’ll have a clear picture of what the new year will reveal.
4. Attacking opioid addiction and dependency will hit the top of many payers’, regulators’, and employers’ agendas.
Led by reports and publicity from notables including Gary Franklin, Medical Director of Washington State’s work comp fund, Alex Swedlow of CWCI, WCRI and NCCI, there’s been a tremendous awakening among stakeholders to the human and financial cost of opioid abuse in workers comp. The quicker payers are already moving from “oh my it’s a big problem” to “here’s the plan to fix it.”
It’s about time. The damage caused by rampant over-prescribing of opioids is immeasurable. Devastated families, dead claimants, rising insurance premiums, increased crime, completely unnecessary disability and higher costs for employers and taxpayers are the result.
Identification of claimants at high risk for addiction and treatment of those individuals must – must be a priority. Intelligent payers will stop ignoring the problem or hoping it will go away, and work to a) prevent more overuse and b) help those already addicted/dependent to get healthy.
5. Now that Illinois is starting to approve Preferred Provider Programs, there will be lots of interest followed by disappointment that they really don’t do much to control over-utilization.
I know, this is a gimme. The good folk at the Illinois Department of Insurance have been forced to come up with regulations to implement legislation that is about as convoluted as it could possibly be. Unfortunately, claimants who are interested in gaming the system will use the loopholes in the PPP system to get what they want when they want it from the providers they want to get it from. The PPP will only really work for claimants who weren’t interested in gaming the system.
Unfortunately the PPP isn’t much of a solution.
6. As work comp premiums begin to rise, we’re going to see a renewed interest in loss control, risk management, and medical management.
With rate increases coming in California, Florida, and Massachusetts (among other states), employers are going to have to dust off those yellowed risk management plans, recall the basics of loss prevention, and perhaps re-hire the loss control pros they laid off over the last few years when their services weren’t ‘needed’.
Look for the big consulting houses, and smaller boutique firms, to emphasize their loss control expertise and capabilities; mono-line (and heavily-work-comp-focused) carriers will also tout their knowledge and ability to help employers control comp program costs.
The ball is dimming, and client work calling…time to put the sphere back in the charger.
We’ll conclude tomorrow.


Jan
9

What’s going to happen in workers comp this year?

There’s a lot happening in the work comp industry: a hardening market; frequency ticking up; consolidation/mergers/acquisitions and buyouts; legislative and regulatory changes; and management moves. And all this against the backdrop of a very big election year.
So here’s what I’m going to be watching for.
1. Health reform will impact workers comp.

I have no idea what the Supremes will do when they rule on the constitutionality of the PPACA, aka health reform bill. Their ruling could kill the law, leave it alone, or eliminate the individual mandate. But no matter what the official decision is, the health financing and delivery industries have changed dramatically over the last two years, and that change will only accelerate over the next two.
The rapid consolidation of health care providers, growth (via acquisition) of delivery systems, and acquisition of providers and provider-based managed care plans by payers is changing the landscape, as is the expansion of Medicaid. Health plans KNOW they have to change their models, get bigger, invest billions in technology and solidify and strengthen relationships with providers, regardless of whether reform survives or not.
All health plans are very tightly focused on those strategic imperatives. As a result workers comp, long a sideline, has been relegated to a position of insignificance, with one exception – Anthem. I’d expect to see the Big Blue continue to expand their work comp presence, but they’ll be the only one to keep pushing. The rest are too busy worrying about the 98% of the business that is group, Medicare and Medicaid.
For comp, network discounts will diminish, That doesn’t mean medical costs will increase, as discounts don’t always, or even most of the time, equal savings. Network options will change, and we’ll see more piecemealing of networks as other payers follow the lead of Broadspire and now ESIS and diversify their network relationships.
2. M&A in comp is going to accelerate.
There was a lot last year, but 2012 is going to be the year of the deal. With the pending changes in capital gains slated to kick in a year from now, several private equity-owned companies getting well past the three year horizon (and a couple past five), some long-time entrepreneurs looking to ride off into the sunset, and what appears to be an uptick in valuations, it’s a no-brainer.
3. Comp rates will go up.
Well, this already started, but it bears repeating. After a way-too-long soft market, it’s about time pricing sanity returned. Higher work comp premium rates will drive business to TPAs, encourage risk managers to, well, actually manage work comp risks, increase vendor business (think UR/case management, PT, bill review, and networks) and generally help all of us in the industry.
Three more tomorrow…


Jan
6

For work comp, the soft market is over

It’s increasingly evident that the way-too-long soft market in workers comp is coming to an end – if it isn’t already over.
The latest news comes from MarketScout (reported by Mark Ruquet in PropertyCasualty360.com), which indicated WC rates were up three percent in December, the highest increase among all P&C lines.
Earlier, Moody’s noted that reserve releases (insurance companies deciding they have too much money set aside to cover future claim costs) for work comp claims had pretty much ended, and ISO reported P&C insurers’ net income for the first three quarters of 2011 had declined by two-thirds from the same period in 2010.
This comes as welcome news to insurers, brokers, TPAs, and has implications for work comp services companies as well. And while employers may not look forward to paying higher premiums, they have to realize they’ve been enjoying a long period of low rates and great availability, factors which have reduced their expense significantly over more years than anyone could have expected.
For TPAs, many of whom have been hanging on by a thread while waiting for employers to once again look hard at self-insurance, this couldn’t come any sooner. Word is there’s been an uptick in proposal requests from employers.
For companies such as York (which just completed another acquisition of JI Companies late in December), Broadspire, Gallagher Bassett, and Sedgwick, this could well be the start of some nice, profitable growth. That is, if they don’t decide to cross the stupid line when it comes to pricing.
What does this mean for you?
Congratulations, you’ve made it through the longest soft market in recent history.


Jan
6

HWR is up

The first edition of Health Wonk Review for the year is up at the OHP blog – a well-organized and quick review of what happened while you were otherwise engaged.


Jan
5

Changes to Managed Care Matters

Nothing drastic, so no, we’re not going away or selling the site to the New York Times, and despite rumors to the contrary, MCM has not been acquired by a very large TPA.
No, we’ve added a feature that should make the blog an easier read on mobile devices – blackberries and iPhones and Droid phones too. Just click on the box on the right hand side of the home page and voila’. We’ve heard from a couple readers that it’s a bit tough to read posts on their handhelds, so hopefully this will help out.
Or, even simpler, add this link to your favorites – it’s a direct connection to the mobile feed.
We’re looking at making some blog upgrades later this year – if you have any usability gripes or issues, let us know and we will keep those in mind as we plan our next iteration.
Also coming in the next week are posts on:
– results of the eighth annual Survey of Prescription Drug Management in Workers Comp
– a review of Paul Starr’s new book on health reform in America
– an analysis of Rick Santorum’s health care record
– the new NCCI report on aging and workers comp injuries.
Vacation was great, and it’s good to be back.