Where have all the work comp opioid patients gone?

Workers’ comp has done an admirable job reducing the volume and potency of opioids dispensed to work comp patients.

This from our latest Survey of Prescription Drug Management in Workers’ Comp…

The question is – how many work comp patients really stop taking opioids?

A Canadian study offers a sobering possibility – many likely did not.

those injured workers that received…120 MED or more at the end of their claim were likely to have post-claim opioid use in approximately 80% of cases. [emphasis added]

Caveats abound – different country, different system, different approach to opioid management. Yet we need to ask ourselves questions that are deep and uncomfortable.

Did we really help these patients?

Were they addicted, dependent, and/or have serious chronic pain that we failed to adequately address?

Have we looked deep enough into what happened to those patients taking opioids after they stopped?

Perhaps most important – What is our responsibility to those patients?

This is not – an any way – justification for the opioid industry’s twisted and misguided attack on efforts to reduce opioid over-prescribing. It is crystal clear that industry has killed hundreds of thousands of people, devastating communities and families.

Rather, we need to make very sure we are doing the right thing for patients. In some instances this will involve telling patients what they don’t want to hear; we need to be prepared to do that and help them thru the process, while understanding that process is very difficult.

What does this mean for you?

Do you know whether patients no longer getting opioids via work comp are still taking them? What responsibility do you bear?


High hospital costs? This may be why.

Work comp and auto payers in many southeastern states have seen a sharp rise in facility costs over the last five years.

While ineffective fee schedules are partially to blame, the real driver may well be politicians’ refusal to expand Medicaid.

When Medicaid expansion was offered in 2014 as part of the ACA, most states took advantage of the option, resulting in a massive decline in uncompensated care. However, the ACA also reduced federal payments to hospitals in tough financial shape, the rationale being Medicaid’s expansion would reduce the need for additional funding.

Not surprisingly, the cost of uncompensated care dropped dramatically in states that expanded Medicaid.

Equally unsurprising was the increase in the cost of uncompensated care for those states that didn’t expand Medicaid.

In the chart below, the gold bubbles in the top right show how much the uninsured rate increased, correlated with uncompensated care’s share of hospital costs.

So, we have a massive revenue shortfall in non-expansion states; Florida, Texas, Georgia, South Carolina, and others, setting up pretty dire financial situation for hospitals.

What does this have to do with workers’ comp, you ask?


The chart – courtesy WCRI – shows a remarkable correlation between non-Medicaid expansion and higher prices paid for workers’ comp.

The reason is simple. Hospitals, especially those in southeastern states, rural and small ones, are desperate for revenue, and workers’ comp is a very soft target.

What does this mean for you?

If you think you’ve got the right answer for facility costs, you’re probably wrong.


What the heck is going on in the Golden State?

For the second year in a row, claim frequency for self-insured employers is up (frequency is the percentage of FTEs that file a work comp claim). Over the two years the total increase in frequency was 12.4% while actual claim counts rose 10.8%.

Meanwhile, over that same period, work comp premiums declined…(also from CWCI); driven mostly by a drop in premiums charged for covered payroll (so this wasn’t due to fewer employees covered by work comp).

What is going on here?

For self-insured employers, it’s not more workers; the number of FTEs marginally increased – and frequency accounts for employee count variation. But, those workers are suffering injuries/illnesses slightly more often.

Insurers’ premiums are driven by payroll, past and projected future claim counts and costs – but also by insurers’ business priorities. With work comp insurance profits remaining high, it is indeed possible that underwriters are ignoring warning signs in their pursuit of market share and more premium dollars.

This has happened before – and it always ends badly.

It’s also theoretically possible the “LA Basin Effect” (cumulative trauma claims inspired by unscrupulous doctors and lawyers in the Los Angeles area) is having a disproportionate effect on self-insured employers. I kind of doubt it, as large employers are more attuned to this type of mischief than smaller, insured employers.

There’s another possible factor affecting premiums that I’m pursuing; too early to dig into it but suffice it to say that it might well offset the premium impact of any frequency increase.

What does this mean for you?

“I am on the verge of mysteries, and…the veil which covers them is getting thinner and thinner.” Louis Pasteur



The latest data on opioids in work comp

We’ve just about completed the 16th (!!) Survey of Prescription Drug Management in Workers’ Comp, and there are two key findings you need to know.

First – total opioid spend in 2018 dropped 23.2% across all 27 respondents (ranging from very large TPAs to state funds to insurers to small state-specific payers). The average decrease among respondents was just over 22%.

That dramatic reduction comes on the heels of a 16% reduction from 2016 to 2017, and a 13% decrease in 2016.

From last year’s Survey; each numbered column denotes a respondent’s results (2019 Report will be out in August)

Over the last few years, payers and PBMs have cut the amount of opioids dispensed to work comp patients by more than half.

While cost reductions are good news for employers and taxpayers, when you talk with payers its mostly about patient safety and return to functionality. Patients taking opioids over long periods aren’t getting better, aren’t going back to work, and most (but not all) are not functioning very well. That means they aren’t the parents, friends, daughters or sons, grandmothers or grandfathers they can or want to be.

Second takeaway: payers are anything but satisfied or complacent. All the 27 people I’ve talked with to date remain focused, committed, and completely engaged in continuing to fight the good fight against overuse of opioids. They’ve asked me what other payers are doing, what they can do differently, what works and what doesn’t.

That’s a great relief. One would understand if payers’ focus was shifting to other issues, now that they’re seeing massive progress in the battle over opioid over-prescribing.

With some exceptions, the knottiest problem remains how to help chronic opioid patients find other ways to handle their pain, to help them function at a higher level even with chronic pain. Payers are very creative and dedicate lots of dollars and time to solving chronic opioid usage. This focus will continue to help patients get better, while reducing costs for employers and taxpayers.

I’d be remiss if I didn’t note – once again – that work comp is leading the rest of the world on solving the opioid issue. You knew about it sooner, took drastic action much faster, and are delivering much better results than Medicaid, group health, or Medicare. 

Yeah, the workers’ comp industry is often maligned for its many faults and challenges. But this is one area – and a damn important one – where you’ve got much to be proud of.

What does this mean for you?

Well done. Stay focused. 




“Toxic Stews” and workers’ comp

Flooding and wildfires are causing increased rates of cancer, asthma, and other respiratory ailments among the people exposed. These events are getting larger and more frequent, a reality that will affect the work comp industry.

Notably, we understand a lot more about the long-term health effects of disasters due to tracking the health status of individuals affected by the attack on the World Trade Center. Data indicates higher rates of thyroid and prostate cancer as well as pulmonary fibrosis among those studied.

A well-researched article in the NYTimes this morning shows this is a much bigger issue, citing:

  • raised levels of carcinogenic PCBs from flooding in Puerto Rico,
  • significantly higher rates of asthma from Californians exposed to smoke from wildfires, and
  • sinus problems, skin irritation and respiratory ailments reported by individuals after hurricane Harvey flooded industrial areas around Houston.

Harvey is particularly scary. Research showed benzene, lye, vinyl chloride, butadiene, and dioxin were just a few of the 200+ chemicals and contaminants spread across thousands of acres of residential neighborhoods, parks, playgrounds, schools, and business district by floodwaters.

While the long-term effects are far from certain, what we do know that clean-up crews and construction workers likely face significant exposure risks. I wrote about this a couple years ago; given the growing intensity and frequency of “weather events” driven by climate change, we can expect more in coming years.

What does this mean for you?

Occupational illness/disease claims may well increase significantly over the next few years, an eventuality that most employers, insurers, and actuaries have likely not considered.





Monday morning quick hits; OneCall, WCRI, and a correction/expansion

Too darn busy last week to get my usual 3-5 posts up…things are calming down this week so expect to see posts in your inbox.

Followup on One Call; after the Debtwire article about OCCM debtholders organizing to prepare for a “potential liquidity event and expected covenant violation…” I was inundated with nonsense from anonymous writers accusing me of bias…this continued last week. [reminder – I reserve the right to know who is commenting]

A couple people told me OCCM owner Apax had offered $50 million to OCCM management, who turned it down.

Sorry, that’s just not credible; let’s walk thru the logic here.

  • Private equity firms such as Apax don’t have a pot of money to write checks from. All Apax’ funds are from investors, and Apax has to get investors’ approval before using any of their funds.
  • To do this, A) Apax would have to restructure the entire transaction, giving stock to B) investors who think sending money to a company that will likely be owned by creditors is a great idea.
  • There’s no way OCCM management would “turn down” a cash infusion. As Debtwire reported, “cash flow has been limited by high capex needs as a result of its effort to migrate users under a single system” (Debtwire is referring to Polaris’ development cost).
  • OCCM has a line of credit-type load that, according to Debtwire,

    “had USD 50m drawn at 31 March” out of a total available amount of $56.6 million….so, One Call had only $6.6 million available AND was paying interest on the $50 million it had already borrowed.

    Ergo, if management HAD been offered $50 million in cash, they would’ve been delighted to accept it. For the reasons enumerated above, I very much doubt that offer was made.  If you know otherwise, I’m all ears.

To my critics, reporting facts isn’t “biased”, Debtwire isn’t biased, and neither are financial statements. For non-believers, One Call has to report its second quarter results within 45 days of the end of the quarter. That’s a month from today.

It is possible, if not probable, that the debt investors will see the numbers before mid-August. If the numbers are consistent with Debtwire’s reporting, there may well be a “covenant violation.”

Update – One Call CEO Rone Baldwin provided a financial update this morning; he states:

One Call is in full compliance with all debt covenants for the second quarter of 2019 and expects to be compliant for the remainder of 2019, based on the full-year guidance that it intends to provide to investors in its second quarter conference call.

Will keep you posted.

Want to know how medical prices affect worker outcomes? Then WCRI’s upcoming webinar featuring Bogdan Savych PhD is a must.

Worker mis-classification – the usually-intentional is coming under increasing scrutiny, with the latest moves coming from the Garden State. Gov. Phil Murphy released a report which, according to Business Insurance, indicated “employee misclassification, which has grown 40% over the past decade…in 2018 alone 12,315 workers in New Jersey were misclassified as independent contractors.”

Finally, I heard from several folks about my York-Sedgwick post suggesting that my statement “a highly profitable managed care unit built by former leader Doug Markham” was inaccurate.

Fair point.

In my haste I failed to give credit to the many other people who built that business. Markham led Wellcomp prior to – and after – York’s acquisition of MCMC. The businesses were run separately for a time, then “combined” in a move that resulted in Markham running the new entity entitled CareWorks.

Mike Lindberg and his colleagues at MCMC – acquired by York – built a thriving managed care business that served, and continues to serve, a big list of customers. MCMC was kinda/sorta “combined” with York’s internal managed care entity under Markham when Mike Lindberg departed; I won’t get into the drama that surrounded that move. MCMC was a big chunk, if not the larger piece, of York’s managed care entity.

BJ Dougherty, Lisa Oskoui, Larry Brinton, Steve Junker are some of the professionals whose contributions made MCMC a successful company. (apologies in advance to those folks I failed to name)





With 20+ interviews to date, we are starting to see some patterns in responses.

For those unfamiliar with our annual survey, click here to get access to public versions of the last dozen-plus Survey Reports.

Respondents are the folks in charge of the pharmacy programs at major work comp insurers, TPAs, state funds, and self-insured employers. Drug spend ranges from $200 million plus to $1 million.

Quick takeaways:

  • Spend continues to decrease; haven’t totaled up the numbers yet but my guess is it’s a high-single-digit drop from 2017 to 2018.
      • A big cut in opioid spend is a major contributing factor
  • Transparency is the biggest single issue in work comp pharmacy; respondents aren’t happy with the level of transparency, are frustrated with the lack of clarity around AWP, and want more detail on pricing.
  • That said, respondents generally acknowledge it’s fine for PBMs to make a margin, they just want to make sure that margin is reasonable.
  • Opioids remain perhaps the biggest issue, but many payers have made remarkable progress in reducing both initial and chronic opioid usage.
  • Compounding is seen as all but dead, crushed by aggressive moves by payers, regulators, and legislators.
  • Specialty medications while not yet much of an issue, may well be especially if assumption laws for pubic safety workers gain more acceptance.

There’s a lot more to come; we’ll be wrapping the data collection part of this year’s effort in a few days.  If your organization’s pharmacy program management person  wants to participate – and get a detailed, respondent version of the Survey report, let me know via the comment box below this post…


Key takeaways from what happened last week

Here’s what else was happening last week while we were tracking One Call’s financial troubles…

Who’s for Medicare For All? Who wants to “abolish private health insurance in favor of a public run plan?”

That was the question asked of the 20 (!) Democratic candidates for President at last week’s debate with the request that those in favor raise their hands.

While it was great to see politicians put on the spot, forced to give a “yes or no” answer, the reality is it’s not that simple: There are multiple and quite different versions of “MFA”, ranging from Sanders’ version which is the “no cost to consumers, covers everyone, administered by the Feds, paid for with a big tax increase” to others’ “you can buy into Medicare if you want or keep your employer-based coverage.”

When someone tells you Candidate X wants to do away with your health insurance, make sure that someone knows what they are talking about. Ask them to define exactly what Candidate X’s platform is, then fact check with Google.

Here’s a great side-by-side analysis of all the health reform bills now under consideration. Lots of nuance here…

Provider consolidation – costs and benefits

The California Health Care Foundation published a solid analysis of the implications costs and possible benefits of provider consolidation.

The net – costs go up, quality of care doesn’t.

Key takeaways include:

  • A study of US hospitals by Stanford University researchers found that “hospital ownership of physician practices leads to higher prices and higher levels of hospital spending.”
  • vertical integration increases hospitals’ bargaining power with insurers.
  • Physician groups owned by large hospital systems were more than 50% more expensive than those owned exclusively by physicians, and
  •  “Physician-hospital integration did not improve the quality of care for the overwhelming majority of [quality] measures,”

Drug pricing

Thanks to WCRI for sharing their Flash Report on Drug Trends. The researchers looked at very recent data from 27 states; key takeaways include:

  • compound utilization has fallen off a cliff
  • opioid spend dropped in every one of the 27 states
  • Louisiana’s opioid spend topped all study states at $100 per claim per quarter
  • total drug spend also decreased in 25 of the 27 states.

A brief video intro is available here.  And, the findings parallel what I’m hearing from respondents to our latest PBM in WC Survey.

Next up, another excellent piece from Adam Fein on spread pricing and rebates.

Dr Fein opines that spread pricing – the PBM makes its money on the difference between what it pays the pharmacy and what it charges the payer – isn’t necessarily a bad thing. He also discusses how some manufacturers use rebate payments as a way to force buyers to use their drugs.

head’s up – I’m about halfway thru the 16th (or is it 17th?) “Annual survey of pharmacy benefit management in workers’ comp”; pricing is a hot topic, but the respondents’ views are not what I expected. More on this next week…

Worker mis-classification

Excellent piece in WorkCompCentral about the ongoing effort to combat the real fraud in comp – sleazy employers, employee leasing companies, and labor brokers that lie to avoid paying workers’ comp premiums.

The piece reviews research by Harvard University’s Law School; the research was triggered by:

the USDOL [Department of Labor]…rolling back worker protections in a variety of ways, initially withdrawing a WHD Administrative Interpretation on misclassification, and piloting an amnesty program for wage and hour violators, called the PAID program. As a result of this retreat at the federal level, state enforcement has become more critical than ever.

The entire report is here; the takeaway [emphasis added] is:

“Misclassification and payroll fraud harm workers, depriving them of rights and protections to which they are legally entitled. Law abiding businesses also suffer, as they struggle to compete with companies that unlawfully lower their costs”

Have a great holiday week, enjoy friends and family, and get out and away from work.

I am!


Research Roundup

In which I drop a “Nerd Bomb” into your email folder…

Here’s this week’s research-that-impacts-you I found compelling…

From WCRI, a report analyzing the relationship between prices for medical services and patient outcomes. More specifically, authors Olesya Fomenko and Bogdan Savych and ask the question “What happens to worker outcomes when prices increase or decrease?”

The authors used a comparison of workers’ comp medical prices for common office visits to group health, with the latter used as a proxy for adequate or benchmark compensation (my words, not the authors’.)

Key takeaways:

  • Medical prices are “not strongly related to measures of recovery of physical health and functioning, speed and likelihood of return to work, or duration of temporary disability.”
  • But…as all healthcare is local, there are some unexpected (at least to me) findings.
    • in areas where WC pays less than group health, raising WC prices results in more care delivered to WC patients, increased temporary disability (TD), but no significant change in access to care – and no impact on outcomes
    • where WC pays MORE than group, increasing WC prices results in more care delivered to WC patient, less concern about access – but NO meaningful impact on outcomes

Changing bad health behaviors

If you’re using financial incentives to change people’s health behaviors, you may be disappointed. Research published in NEJM indicates support from loved ones and clinical support are  more effective.

Pharmacy costs

Lost in the mostly-incoherent squabbling about drug prices is this: Net prices – that is, what insurers/healthplans/employers/payers paid AFTER rebates – for “traditional” drugs DROPPED last year (specialty med prices increased marginally).

Dr Adam Fein’s analysis of PBM trend rates showed the overall increase across all PBMs was in the low single digits; individual PBM results varied somewhat.

I’d encourage all to read Dr Fein’s post – and to subscribe to Drug Channels.

Speaking of drugs, the American Pain Society – the fine folks partially funded by opioid manufacturers looks to be filing for bankruptcy. 

Finally, how important is clinical care to a person’s overall health?

The answer – not much.

Your family income, environment, whether you take care of yourself – all these are WAAAAAY more important than the quality of care you get.

Which ties in pretty well to the research above about health behaviors.

What does this mean for you?

Get out and take a walk, and lift some weights too!

Note – this is me getting some exercise while on the boy’s annual mountain bike trip in Moab, Utah. Fortunately the “healthy behavior” of riding my bike a lot wasn’t outweighed by my inability to avoid crashing a few times…


NCCI AIS research review – Comparing work comp to group health

Barry Lipton PhD did a quick review of a few ways work comp and group health differ – and how they are sometimes comparable.

The biggest difference is that workers’ comp is very focused on return to work, and more broadly, we care more about functionality.  In group health, not so much.

Differences – other than the obvious e.g. WC=ortho and trauma; group health= everything

  • price differences are 12% higher for work comp than group health,
  • while utilization is 60% higher for workers’ comp
  • so total costs are 77% higher.

This differs by state, with Alabama, Missouri, and Virginia showing the biggest cost difference compared to national averages, and Colorado and South Dakota with the lowest cost compared to that average.

It also differs by type of service – not surprisingly physical medicine is used much more in workers’ comp, driven almost entirely by more utilization.

That’s not surprising, as comp conditions are predominantly musculoskeletal injuries and focused on return to functionality, while group health deals with many more conditions and RTW is irrelevant.

There’s also a big difference in the cost of MRIs…

You can see that Medicare pays way less than work comp (WC is blue, Medicare is green-ish). You can also see the impact of Medicare’s change in reimbursement in 2013; it started to really impact workers comp in the years after 2014 as regulators adopted/factored in/used Medicare’s rate for reimbursement in their state.

What does this mean for you?

Price + Utilization = Cost. But one has to factor in RTW in comp, a focus that is nonexistent in group health.