Friday’s here!

And you get to start the weekend early (we hope).

While you were focused on other stuff – like work – here’s what else was going on in our little world.

Fraud – two very different views.

This morning’s WorkCompWire arrived with the news that some small businesses are concerned that their employees may be contemplating workers comp fraud.  In a survey sponsored by EMPLOYERS Insurance, 13% of respondents were concerned “employees would commit workers’ compensation fraud by faking an injury or illness in order to collect benefits.”

(according to EMPLOYERS, 6% were very concerned, 7% somewhat concerned)

The other fraud-related topic comes from WorkCompCentral’s Sherri Okamoto. Ms Okamoto filed a story on the Labor Dept.’s just-published finding on employee misclassification.  In the announcement by DOL, the following statement appeared:

A worker who is economically dependent on an employer is suffered or permitted to work by the employer. Thus, applying the economic realities test in view of the expansive definition of “employ” under the Act, most workers are employees under the FLSA.

WCC’s piece noted several recent court cases, rulings, and other findings that have forced employers to pay back wages, re-classify workers as employees, and otherwise restricted businesses’ efforts to avoid identifying workers as contractors.

The implications for health and workers’ comp insurers are clear: more premiums and a larger market.

Note – DoL’s document is well worth the read as it is highly relevant to the evolving “sharing economy”.

Implementing health reform

Following up on my piece re “there is no Obamacare”, found this from Avalere Health;

the average provider networks for plans offered on the health insurance exchanges created by the Affordable Care Act (ACA) include 34 percent fewer providers than the average commercial plan offered outside the exchange.

No one should be surprised by this.  Health plans competing on exchanges MUST be price competitive; now that healthplans can’t just deny coverage, they have to compete on the basis of delivering care at the lowest possible cost (yeah, outcomes will be a factor at some point, but they really aren’t so far).  The cost of care is determined in large part by provider reimbursement and utilization of health care services, both of which are driven by the payer-provider contract.  Providers want more volume, lower administrative burdens, less uncertainty about and much speedier reimbursement – and do NOT want to share patients with every other Dr Tom, Dr Dick, and Dr Mary in their service area.

And that’s why we have narrow networks on exchanges – providers give lower prices in return for more patients and less hassle.

BTW, this is right where we were back in the heyday of group- and staff-model HMOs; they fell out of favor as members wanted more choice.  Now, those people who want choice are going to have to pay a lot more for it.

Expect to see much more “network narrowing” in the future.

Another state is going to expand Medicaid – Alaska.

Providers are getting stronger

This week’s announcement that Connecticut-based Yale-New Haven health system is acquiring another big hospital in the eastern part of the state is just one more indication that the provider world is consolidating and gaining negotiating leverage.  Both health care providers and the payer industry are consolidating, but to date it appears the providers are the ones gaining the upper hand in the battle for leverage.

See you next week


The now-notorious 59 modifier

I’m really puzzled about two things.

After 4500+ views of my post re the 59 modifier and its use/abuse, an energetic conversation on Mark Walls’ LinkedIn group on the topic, and a bunch of conversations with PT providers, what’s surprising is the:

  • apparent lack of concern amongst most PT providers about this, and
  • the lengths to which some are going to spin this as a “non-issue”

For the providers, it isn’t so much a lack of concern as misplaced anger.  Many of the  commenters and PTs I’ve spoken with are painting all managed care companies with the same broad brush, an approach that is as unfair and wrong-headed as characterizing all PTs as over-utilizers.  Do networks make money by connecting providers and payers? Yes.

Is this somehow “bad”? Of course not.  Aggregators work in every industry in this country – from insurance to hospital supplies to shoes to department stores to travel.

In work comp, there are networks that don’t alter provider treatment codes, and there are networks that do.  If you want to know if your network does, ask them.

Providers should be focusing on the impact of networks adding the 59 modifier to the treating providers’ bills.


  • are you, treating provider, getting paid fairly for this treatment that you allegedly didn’t bill correctly for?
  • your treatment records now reflect higher utilization for many patients; as networks are constantly evaluating and assessing provider performance, are you being judged fairly?

OK, on to the messaging.

There is an obtusely-worded document currently circulating that makes several rather stunning statements, including:

  • Treating providers correctly use the 59 modifier the vast majority of the time
  • 59 modifiers should be used on less than ten percent of PT bills
  • The network reviews the clinical documentation and adds the 59 modifier if appropriate

Given that some HSA clients have seen modifiers on more than 40 percent of their bills, it’s hard to see how a network could take the time to individually review clinical documentation on each and every bill, then make a determination that 40% of bills needed to be changed.

Especially when those treating providers bill correctly the vast majority of the time.

The coding experts I have spoken with all agree: no network should ever change a treating provider’s coding, which this document indicates the network actually is doing.  OK, perhaps the coding experts I spoke with don’t know what they’re talking about…

and perhaps your spouse is going to win “The Voice”.

We are left with the rather clear statement that less than 10% of provider bills should include the 59 modifier.

What does this mean to you?

If more than 20% of PT provider bills include the 59 modifier, somebody got some ‘splainin to do…

because your PT costs and “savings” may well be inflated.


Fraud? Abuse? Ignorance?

I promise your eyes will NOT glaze over – but you need to know what’s going on in the arcane world of procedure coding. Why?

Because your PT costs may be $15-$19 per visit higher than they should be.  And the savings your vendor is touting might be even more inflated.

Here’s what’s going on – and remember, this is specific to PT.

It’s common for therapists to perform multiple procedures at the same time – on a single body part.  There’s a list of procedures that are commonly performed together, and unless the therapist adds a specific modifier to the procedure code, only one will be reimbursed.

Nationally accepted standards (under CMS’ National Correct Coding Initiative) allow the therapist to be reimbursed for only one of these procedures.  Sometimes it is appropriate for the PT to bill for multiple procedures – for example, if two procedures commonly done simultaneously are performed at separate and distinct times.

In this circumstance, the treating provider documents the reason for the variance in coding in the medical notes.  On the bill, the “59 modifier” is added to the end of the CPT code to indicate that the code should be paid.

Hang in there – almost done…btw there’s a good overview of the latest info on this courtesy of medical bill review company Equian here

National average statistics (from two HSA customers I’ve been working with on this) indicate the 59 modifier should be on about 11%-15% of lines on PT bills.

Which brings me to the crux of the matter.  Some payers are seeing 59 modifiers on almost ALL BILLs.  After a lot of research, digging thru billing data, and back-and-forth with therapists and PT networks, it appears the 59 modifiers were NOT added by the therapist; they were added by a PT network company.

Further, there’s no explanation in the treatment notes for this billing practice; no evidence the affected procedures were actually performed at separate and distinct times; no indication the PT network company reviewed the treating provider’s notes prior to upcoding.  No documentation, no record, no history.

It appears that the intermediary was adding the 59 modifier as an automated system edit without reviewing the treatment notes. Without putting too fine a point on this, the systemic upcoding has resulted in higher costs for payers, along with significantly exaggerated savings as the bills show higher billed charges.

Perhaps there is a perfectly reasonable explanation for this, however I’ve not heard one to date.  And the coding experts I’ve spoken with can’t seem to come up with one either.

Let me be clear – this is specific to the use – appropriate, inappropriate, or questionable – of the 59 modifier, and only the 59 modifier. Ongoing research has not turned up other billing-related issues.

What does this mean for you?

You need to ask your billing folks to review their PT billing data to determine if:

  • You’ve been paying too much for PT

  • You have made decisions on PT vendors based on inaccurate information

  • Your employer clients have been billed for too much PT, and paid too much for managed care services.

How will you know if this is a problem?
Look at bills processed between 2009 and 2014 –

  • If more than 20 percent of lines on your PT bills have the 59 modifier, you MAY have a problem.
  • If more than 40 percent of the lines on your PT bills have this modifier, you DO have a problem.

What do you do if you think you’ve got a problem?

  • Ask your PT network/billing intermediary to explain, and require them to show why they are adding the modifier and how they are justifying doing this without reviewing the treating provider’s bills.

That will be a very interesting conversation…


Delivery systems and workers’ comp

There’s been quite a bit of focus on alternate health care delivery methods of late, with medical homes and Accountable Care Organizations prominently noted as ways care will be improved and costs reduced.  One source indicates there are 270 ACOs currently operating with an estimated 20 million members.

While the early evidence is somewhat mixed, in general the news is positive; a Pennsylvania ACO raised quality, and decreased infections and readmission rates, leading to a year over year decrease in medical costs.  Generally, ACOs involve facilities and providers agreeing to focus on specific quality measures and reward performance instead of paying on a fee for service basis.  In PA:

Half of hospitals and physicians’ potential earnings are based on their performance improvement in hospital-acquired infections, patient experience, readmissions, surgical care, and treatment for heart attacks, heart failure and pneumonia. The other half of the earnings are based on the providers’ ability to manage costs across inpatient care, outpatient care, ancillary care, home health services and prescription drugs.

There are problems inherent in the model; patient satisfaction is a tough metric to achieve when ER patients only want narcotics for their pain, while readmission rates are going to be higher when patients refuse to be responsible for post-discharge care. Our daughter works in an inner-city ER and this is all too common; patients KNOW these are key criteria and tell care givers they will downscore them if they don’t get their meds.

Nonetheless, it’s a far better financial model than fee for service as it doesn’t incent more care and higher intensity care.

Notably, it’s hard to find any evidence of ACOs in work comp.  I’d be most grateful if readers could point me to any reports or information related to alternative delivery systems in WC; while there are some bundled payment models, and a couple episode-of-care pilots I’m aware of, there’s just not much going on as far as I can see.

Just leave a comment here – and thanks!


Operation UNITE’s Karen Kelly led off with some of the most disturbing data I’ve ever seen on the impact of opioids in Kentucky and the country.

  • average age of first drug use is 11.  Eleven.
  • in some counties, 50% of children are being raised with no parents in the home.
Operation UNITE is doing terrific work in Kentucky – sponsoring treatment, supporting narcotics enforcement and interdiction, buying drug lock boxes for homes, education of kids and others, sponsoring summer camps, building community coalitions, and drug-free workplace training – among many other initiatives.
And their work is paying off – there’s been a year over year decrease in dispensing of all controlled substances by 11.7% in their area.
There are a wealth of resources available on their site, from videos to educational materials  to news and updates on progress in the battle against opioid abuse.
(I’m moderating a session at the National Rx Drug Abuse Summit with Washington state’s Gary Franklin MD and Amy Lee of Texas DWC  addressing opioids in workers’ comp at their annual meeting in early April.) There are several other sessions addressing opioids, detailing what works, what doesn’t, strategies and results.



California State Fund’s great work on opioids

70 doctors are writing one-third of the scripts for opioids in California.

Most of those scripts are for conditions where opioids are NOT appropriate treatment.

Those claimants that get opioids are off work 3.6 times longer; litigation is 60 percent higher, and their claim costs are twice as high as claimants who don’t receive opioids.

Hopefully you’re not so jaded by the flood of bad news about opioids that you yawn and move on to updating your facebook status; given the ongoing flood of bad news about opioids that wouldn’t be surprising.  Most fortunately, California’s state workers comp fund (SCIF), is on this issue like white on rice.

Here’s some of what SCIF is doing:

Kudos to SCIF for their assertive stance; it is great to see a payer take this on with a comprehensive and well-designed approach.
What does this mean for you?
If SCIF can do it, so can you.  And yes, the CA rules may be different, but there are ALWAYS things payers can do to address opioid overuse.




Variations in medical care – it happens in PT, too.

There’s yet more evidence that treatment patterns vary significantly across providers.  Today’s evidence comes courtesy of two academic institutions and Medrisk, Inc. (consulting client) which reported significant differences in the type and duration of physical therapy provided to workers’ comp claimants.

The study looked at several variables contained in billing data: location of service, duration of care, type of care, and other data points; the data was case-mix adjusted.

There are several key takeaways:

  • corporate physical therapy centers billed for more visits and more units per episode than other practice settings.
  • there was a “large difference in treatment utilization between geographic regions regardless of practice setting, diagnosis, body-part treated or surgical intervention”
  • these corporate centers billed for “a lower proportion of physical agents indicating a greater use of those interventions supported by evidence-based guidelines (exercise and manual therapy) compared to other practice settings.”

These findings were consistent across diagnoses and after controlling for surgical v non-surgical cases.

Let’s look at the second takeaway.  It should come as no surprise that the type, volume, and delivery of medical care one gets varies a lot from region to region.  While one would like to think that the care we get is based on science, in many instances the care you receive depends more on where your provider was trained, the local standard of care, and the personal opinion of the treater than what has been scientifically proven to work.

That said, the final point – that treatment in line with evidence-based medical (EBM) guidelines is more common in corporate settings is…intriguing.

Increasing the use of treatments for workers comp claimants that are in line with evidence-based medical (EBM) guidelines is a primary goal of many payers, regulators, and other stakeholders; WCRI’s just-published review of state workers’ comp regulations provides ample evidence of this trend.  While there could well be reasons the use of treatments supported by EBM were more common in corporate-based settings, the discussion in the report appears to address some of the key factors; delay in initial treatment, severity, and acute v chronic status.

Let’s be sure to recognize that these findings are general, overall, and based on statistical analysis.  Undoubtedly there are clinic-based, private, facility-based, and other PT practices that are quite focused on EBM and rigorous in their application.  And, to reiterate, there may well be sound and valid reasons for the differences noted by the stdy authors.

What does this mean for you?

1.  Good to see research focused on this key area of workers’ comp; with 15 to 20 percent of medical dollars spent on physical medicine, the more we know, the better.

2.  Payers should talk to their network partners to find out what type of care their PT providers deliver.  If they don’t know, find a network that does.


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…



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.