Jul
27

that giant sucking sound…

Is coming from hospital trauma centers vacuuming thousands out of your wallet.

Trauma centers are supposed to handle the worst trauma cases – those from major car accidents, gunshots, airplane crashes, building collapses – you get the picture. Smelling gold, some hospital systems – including HCA – figured out that “activating” trauma centers lets them charge fees up to$50,000 per patient – even if that “trauma center” never actually treats the patient.

The fact that HCA has opened trauma centers in 90 of its 179 hospitals – many in close proximity to other trauma centers – indicates it is not a pubic health need as that “need” is already being met.

Shockingly, Florida is once again the poster child for what look to be abusive billing practices.  From Kaiser Health News:

In Florida alone, where the number of trauma centers has exploded, hospitals charged such fees more than 13,000 times in 2019 even though the patient went home the same day,

Florida trauma activation cases without an admission rose from 22% in 2012 to 27% last year, according to the data. At one Florida facility, Broward Health Medical Center, there were 1,285 trauma activation cases in 2019 with no admission — almost equal to the number that led to admissions. [emphasis added]

Work comp and auto alert…

Peter Johnson penned a deep dive into the explosive growth of trauma centers in the latest edition of Health Plan Weekly [subscription required]. In his article, Peter reported the number of Level I and II trauma centers almost doubled from 2008 to 2020, going from 305 to 567.

From his piece (Peter was quoting me):

It is abundantly clear this [the growth in the number of trauma centers] is not due to a years- or even months-long dramatic increase in apartment building fires, accidents, gun fights, or multi-car crashes.

Trauma used to be defined as high-acuity, emergent cases involving severe injury. Not any more at some of these facilities. Reports abound of patients with minor injuries requiring stitches, cold compresses, and even just a baby bottle and a nap billed for trauma activation.

What does this mean for you?

Any facility bill with a trauma center charge must be subjected to very careful and thorough review. Especially in states that allow higher payments for so-called “outliers”.

Auto insurers – pay attention!!


Jul
23

Well, I got that one wrong…COVID-related treatment delays

Didn’t happen.

That’s the result of a just-published study conducted by Olesya Fomenko PhD, one of WCRI’s talented researchers.

Not only were there no delays during the first half of 2020, when the pandemic was raging – but there was a slight improvement in waiting times for some services.  This may have been due to non-COVID patients actively avoiding medical treatment facilities (that’s my speculation, not Dr Fomenko’s).

This was true even in states hit hard in the early months of the pandemic; of note the waiting time for surgeries decreased by 1/3.

The same held for pretty much all injury types; soft tissue injuries, fractures, lacerations, you name it, none had delays in treatment. 

The report documents decreases in emergency room visits in Q2 2020 for lost time claims – again this may well be due to patient reluctance to go where COVID may be present. It’s also a reminder that all employers should do everything they can to ensure workers with non-emergent injuries DO NOT SEEK TREATMENT AT ERs.

ERs are way more expensive than occ med clinics, often exhibit abusive billing practices, don’t understand workers’ comp, and are where sick people go.

Other findings…

Non-COVID claims plummeted in the 27 study states during Q2 2020…

There was little difference in the type of injuries incurred during COVID’s worst times…

There’s a lot more in the 63 page report, but my main takeaway is this – I was pretty sure there would be treatment delays – and that was wrong.

Sure, logically my assumption made sense; people would avoid care because they were scared of being near COVID patients. And that was certainly true for most medical care; visits to doctors’ offices dropped 70-80%.

But that “logical” assumption didn’t take into account that when you get a nasty cut, or fall off a ladder, or break your leg, you need medical care.

What does this mean for you?

Question your assumptions.


Jul
20

Transparency in drug pricing

One of the top issues in work comp pharmacy – heck in all pharmacy – is transparency.

More than half of the 27 respondents to our latest Survey pf pharmacy management in workers’ comp want more transparency, while several others “need more transparency as I don’t feel comfortable not knowing if pricing is fair.”

The question is – what exactly is “transparency?

Is it the customer knowing what the PBM paid for the drug?

What about rebates?

Is it knowing what the pharmacy “charged” the PBM for that drug (which may or may not be what was paid)?

What about MAC pricing (Maximum Allowable Cost), where the PBM fixes the price it pays for a type of drug, say ibuprofen 800 mg, at a flat rate regardless of the drug manufacturer’s AWP price (there are lots of companies making ibuprofen 800mg)?

Net is “transparency” isn’t quite transparent.

What does this mean for you?

If you are evaluating PBMs, make very sure you understand exactly how they define transparency.  The best way to compare is to have them reprice specific drugs from the same pharmacy dispensed on the same day.

 


Jul
16

What’s the end game for Injured Workers’ Pharmacy?

IWP has been a pain in the butt for work comp payers for years. The company’s business model is predicated on getting prescribing doctors and claimant attorneys to have their patients/clients get their meds from IWP.

There are a bunch of potential issues with this, including:

  • there’s no opportunity for the payer to prevent an inappropriate or even dangerous script;
  • clinical management may be significantly compromised;
  • prices can much higher than a similar medication at a retail drug store; and
  • IWP’s billing creates huge headaches for adjusters, clinical managers, bill processors.

While IWP has claimed it manages the clinical aspects of drugs, it also paid $11 million to settle charges filed in Massachusetts ; Attorney General Maura Healey said:

“They  [IWP] dispensed thousands of prescriptions for dangerous drugs, including opioids like fentanyl, with a shocking lack of regard for whether those prescriptions were legitimate,”

WorkCompCentral’s William Rabb wrote an excellent summary of the MA case here;  Rabb noted IWP allegedly “paid referral fees to doctors, claimants’ attorneys and others in exchange for the names of injured workers who were candidates for pain medication…” [I also mentioned this here.]

Just last month, Business Insurance reported Bridgewater, Massachusetts-based Keches Law Group P.C.:

admitted in a consent judgment filed in Suffolk Superior Court that it referred about 800 of its clients and potential clients to Injured Workers Pharmacy LLC to fill prescriptions in exchange for about $90,000,

Keches allegedly entered into two agreements with IWP in which the pharmacy paid for the firm to participate in an X1 racing event and a yacht outing, and picked up the $24,000 tab for a holiday lunch in exchange for referrals, according to court documents.

A Louisiana case involving a $13,111 bill submitted by IWP provided other insights into IWP; according to the article in WorkCompCentral an attorney for IWP’s opponent “said claimants attorneys like to use OWP because they know it will inflate drug prices, thus increasing the value of medical benefits and, as a result, their own fees, which are 20% of benefits awarded.”

While some payers in some states have successfully challenged IWP’s demands for payment, overall the company has more often than not gotten paid for scripts it claims were dispensed to claimants – and in some cases won legal judgments to that effect.

At some point its owner will want to sell and move on. The question is, who will buy it?

I don’t see a PBM buying IWP; the PBM’s clients would likely not be pleased, unless the PBM promised to reform things.

But – and its a really big BUT – if the PBM, or any other buyer for that matter, substantially changed IWP’s business model to make it more “payer friendly” that may well reduce IWP’s cash flow and profits. IWP’s owners’ expectations for a sale price would be based on IWP’s earnings – earnings that may well suffer if the business model changes.

Then there’s the company’s legal history; investors hate potential future legal problems almost as much as a business model that isn’t sustainable [not saying IWP’s isn’t, but not if a PBM buys it]. Given the most recent legal situation was just last month, any buyer is going to be very very careful.

Most PE firms look to exit and make 3+ times their original investment. That looks to be a very heavy lift. Of course, IWP could change its business model to be more payer friendly and a bit less…enthusiastic about compensating docs and attorneys. But any move like this would take a lot of time, require extremely careful planning and execution, and is not guaranteed to preserve profits.

What’s weird about this is CEO Michael Gavin was a good friend, someone I liked, admired and respected. I haven’t spoken with Michael in years…it would be awkward at best.

What does this mean for you?

Be wary of business models that work until they don’t.


Jul
14

Latest data on WC drug spend, opioids, generics and PBM ratings

27 payers were kind enough to participate in this year’s Annual Survey of Prescription Drug Management in Workers’ Compensation.  I’m working thru the data now…here are a few highlights. (The Survey falls under CompPharma, a workers’ comp pharmacy consultancy; as always, responses are confidential and not shared with anyone or any entity)

Overall, pretty darn positive (but premature as some data is still coming in) results…

Opioids

Across all 27 respondents, opioids accounted for 18.7% of drug spend, a drop of half a point over the last 2 years.  That’s good news indeed…but there are caveats which we will get into in a future post.

One thing to note – there was a good bit of concern last year that the COVID thing might/would increase opioid usage; that didn’t happen. Again, good news.

Drug spend 

Overall drug spend decreased 12.3% from 2020 to 2021; about half of the respondents attributed the drop at least in part to fewer claims. In turn, most tied the drop in claim count to COVID.

Over the last decade, work comp pharmacy costs have dropped 9 out of the ten years.

Generics

Generic drugs accounted for 89.3% of all scripts, with generic efficiency ( the percentage of all drugs dispensed as generics that could have been generics) averaging just under 98%.

Again, an improvement over 2018’s 87% generic fill percentage.

PBM ratings

Once again respondents rated myMatrixx as the top PBM with 3.7 out of a possible 5 points, with market-share leader Optum trailing by a half-point. Mitchell is tied with Optum, while Coventry’s First Script lags another half-point behind. (Mitchell recently acquired Coventry)

Again, data is preliminary and subject to change.

More to come; as always a big thank you to the respondents who will each received a detailed copy of the Survey report; a public version will also be prepared and available at no cost to all.

Note – myMatrixx is an HSA consulting client; myMatrixx was not involved in conducting the Survey.


Jul
7

Surprise billing in workers’ comp

President Biden’s HHS Secretary announced a major new Rule addressing surprise billing for out-of-network emergency services last week. While not yet final, the Rule – and subsequent modifications – may address a major cost area for workers’ comp.

To be clear, the current version only applies to “group health plans, group and individual health insurance issuers, carriers under the Federal Employees’ Health Benefits (FEHB) Program…”

The Rule happened because providers are bankrupting patients by charging ungodly fees for out of network services, and payers aren’t covering those fees.

Quick highlights on the Rule…

  • it goes into effect January 1, 2022
  • for health plans that cover any benefits for emergency services, the rule requires plans to cover emergency services without any prior authorization and regardless of whether a provider or facility is in-network
  • it applies to:
    • most emergency services,
    • air ambulance services from out-of-network providers, and
    • non-emergency care from out-of-network providers at certain in-network facilities, including in-network hospitals and ambulatory surgical centers.

I wrote about this issue a couple years ago..

While this has made headlines in the private insurance world, it has yet to get much attention from work comp insurers. That may be because comp payers are pretty unsophisticated about facility billing, despite claims from bill review departments/vendors to the contrary. (there’s legislation in Texas that deals with a very narrow slice of the issue; it will have almost no impact on the problem save for patients treated at a federal medical facility)

Congress has been blathering about “solving” the surprise medical bill problem all year – making as much progress as usual, that being none. That’s largely because the PE-owned medical service companies are spending tens of millions fighting legislation intended to stop surprise billing.

What’s clear is while the PE firms may win this battle, they will certainly lose the war. The surprise bill fiasco will generate huge returns over the short run, but lead to major reform as voters get madder and madder about this legal theft. The PE firms fully understand this. They are fighting to preserve their right to rip off patients as long as they can, and will keep doing so until voters rebel.

That “war” has now heated up – in a big way.

Work comp folks can jump into the fray by encouraging their state legislators to include work comp (and auto for that matter) in the list of payers covered by state surprise billing laws – About 18 states have comprehensive surprise billing laws today; many other states’ laws deal with parts of the issue.

What does this mean for you?

If work comp is included in the ban on surprise billing, good news indeed.

If not, expect even more charge-shifting to work comp patients. 


Jun
30

Innovation 2

After re-reading my last rant about the lack of real innovation in workers’ comp, I decided to stop complaining and instead lay out a few recommendations.

Think impact, not features and benefits.

The “solution” and vendor selection process starts out way too detailed, down in the weeds instead of up in the strategic clouds. Instead of diving into the minutiae, both buyers and sellers should take a giant step back and focus on the buyer’s strategic goals.

What is the C-Suite focused on? What are the top execs worried about? What are their long term goals?

Only after the vendor really understands those strategic objectives, how they were developed, why they are so important, and what the buyer is doing to reach them should the vendor say anything that isn’t a question.

That’s the easy part.

Next, the vendor must build a story around how it will help the buyer meet those strategic objectives.  DO NOT discuss anything that is not directly tied into those strategic objectives. DO NOT about talk about your features and benefits – the buyer DOES NOT CARE.

Things buyers care about may include…

  • reducing the combined ratio
  • reducing reserves
  • reducing administrative burden on staff

but you won’t KNOW what is important unless you do the really hard work to find out.

What does this mean for you?

To get a buyer to care, you need to know what they care about – and why.


Jun
22

Work comp -The Innovation Prevention Industry

Workers’ comp is the Innovation Prevention Industry.

As I wrote years ago, many executives, risk managers, “thought leaders” and brokers decry the lack of innovation in workers’ comp – yet they are often the very reason innovation doesn’t happen.

There are a host of reasons – cultural, practical, financial, historical, structural – all hampering, if not outright preventing real innovation.

Fundamentally, work comp is hyper-conservative, hidebound and traditional. A few notes…

  • it’s almost entirely about musculoskeletal injuries – which haven’t changed for about a million years (no, that’s not hyperbole). Cause, treatment, and physical recovery are extremely well-understood – at least for those who want to understand.
  • it’s insurance – which by definition is risk-averse
  • it’s not important to the C-suite – work comp costs are a rounding error on corporate ledgers, account for <1% of US medical spend, and are steadily decreasing.

Structural problems  – starting with the RFP process – kill off innovation, starving it of light and energy before it can take root.

In most – but not all – cases, the RFP/vendor selection process is just stupid. The entire thing is intended to allow the committee to pick a vendor – to compare apples to apples by forcing respondents to tell how they will deliver a specific, detailed, highly-structured solution that precisely meets specs.

That’s fine – but what if you really need an orange?

Instead, the buyer should ask how each vendor will solve their problem, what they do differently, how they can deliver better results, and what the buyer must do to achieve break-through results.

Next – other barriers to innovation, and why you need to blow them up.


Jun
17

Thursday catch-up

Doing my best to avoid work on Fridays…so moving this occasional catch-up post to Thursdays…

COVID

Promising news on the effectiveness of a drug to help infected patients fight off the virus was reported by the Economist. The good news – Regen-Cov:

saved the lives of many of those unable to make their own antibodies in response to SARS-CoV-2. Such “seronegative” individuals constituted about a third of the 9,785 hospital patients in the study…compared to a control group given standard treatment … 20% more patients survived

The bad news – it’s stupid expensive, and supply chain issues are hampering production.

A study conducted by the National Institutes of Health indicates COVID may have been in circulation earlier than originally thought. Blood samples from Illinois, MassachusettsMississippi, Pennsylvania and Wisconsin indicate the virus was in those states in December 2019. An earlier CDC study found similar evidence in California, Oregon, and Washington.

These findings indicate a better and more thorough process to identify disease outbreaks may well be warranted.

Comp drugs

WCRI is hosting a timely webinar on Interstate Variations and Trends in WC Drug Payments on June 24. Register here. Gotta say I’m darn impressed by the researchers’ ability to obtain, analyze, and report on payments as recent as Q2 2020. This makes WCRI’s information much more actionable for regulators, clinicians, and payers alike.

Dr. Vennela Thumula and Dongchun Wang of WCRI will be guiding us thru their findings; the webinar is free.

I am finishing up the latest Annual Survey of PBM in WC which will have 2020 and 2019 data; last chance to participate and receive a detailed, respondent-only version of the report. If you want to participate let us know in the comment section below (there’s no cost to participants).

Couple interesting – and very preliminary – takeaways…

  • growing interest in transparency, along with an increased awareness that this isn’t a simple issue.
  • spend continues to decrease, with respondents attributing some of the decrease to COVID.
  • opioid spend continues to drop, but most respondents are still struggling to help chronic pain patients/long-time users of opioids reduce usage.
  • there’s a growing awareness that the PBM pricing model needs to change. With spend declining and a push for transparency, knowledgeable payers understand that paying PBMs less year after year is not sustainable.

Previous public versions of the Survey Report are available here for download at no cost.

 

 

 

 

 

 

 

Hospital pricing

Hospitals are supposed to be publishing their prices – at least Federal regulations require them to. But those smart, sneaky administrators are figuring out all kinds of ways to avoid telling you how much it will cost for that MRI, drug, band-aid, or lung transplant.

From JAMA:

hospitals must publish discounted cash prices (applicable to uninsured patients) and payer-specific negotiated rates. Second, hospitals must display price data, including expected out-of-pocket costs, for “shoppable services” that can be scheduled in advance (eg, office visits) in a consumer-friendly manner that facilitates service-specific comparisons across hospitals (eg, price estimator tools). [emphasis added]

As of early March, only 17 of 100 randomly selected hospitals were complying with the regulations. The penalty for non-compliance is…wait for it…

$300 a day.

Perhaps if the Feds charged hospitals the same way hospitals they charge us, we’d have a bit more compliance. 

How about…the Feds tell the hospitals after the fact what the cost will be, based on a “compliance chargemaster” that takes into account the hospital’s margin, quality scores, number of collection suits it has filed, and medical error rate.

Thanks to the estimable David Deitz MD PhD for the head’s up.

Wellness works

Finally, HealthAffairs reports wellness programs don’t really improve population health, reduce healthcare spending, or improve employment outcomes. 

Almost 40 years ago, I was halfway through a Master’s of Science in Health/Fitness Management when it became obvious this was NOT going to be a lucrative career…quite the opposite. Not saying I was prescient, just that employers sensed this was a nice-to-have and not a got-to-have, and that lack of importance showed in salaries.

Dodged that bullet.

And really finally, congratulations to my favorite baseball team – the White Sox have the best record in baseball after taking 2 of 3 from Tampa Bay. I

know my friends in the Bay area will be heckling me when the Rays surge again…hey, you gotta take advantage of good news when it comes!


Jun
15

A business model in search of a problem

The workers’ comp services business is brutally competitive; a shrinking pie fought over by increasingly aggressive vendors, each striving to differentiate and demonstrate value.

Smaller players and newer entrants are pushing hard, attempting to show how their approach/service model/pricing/technology is better than more-established competitors’. This is keeping the big players on their toes, forcing them to improve, revise, deliver, respond…even innovate.

I can’t – and wouldn’t – fault any vendor for its efforts to differentiate. For buyers, the key is to discern which “differentiators” are actually useful, and which are just marketing-speak intended to make the vendor’s business model viable.

Blah blah blah blah blah…blah

A couple ideas may help separate the real from the flashy.

First – what problem does this solve? and is that your’s, or the vendor’s?

I’d suggest buyers can cut to the core if they ask:

  1. is this is going to decrease my combined ratio?
  2. by how much over what time period?
  3. at what internal cost? and
  4. how – exactly – is it better, and by how much, than my present approach.

Second, what proof statements is the vendor using to get your attention?

Are they comparing their “results” to industry leaders? If so,

  1. Where – exactly – are they getting the data re the leaders’ results?
  2. What is the basis for comparison – are the types of claims, patient demographics, injury types and severity, diagnoses, co-morbidities, employer types, and jurisdictions the same for the new vendor and the industry leaders?
  3. Does the new entrant have enough claims (that are similar to its competitors) for the comparison to be statistically valid?

Finally, dig deep into the methodology and thinking behind the vendor’s approach. Do they really understand at a deep level the problem they are solving, and can they clearly articulate:

  • the causes and origination of the problem (e.g. facility costs are increasing due to revenue maximization efforts by healthcare systems driven by financial pressures)
  • why the current solutions do not meet the buyer’s needs (e.g. broad-based WC PPOs have little negotiating leverage, don’t assess quality, and benefit from high prices and lots of services), and
  • how their solution is better, sustainable, and where and how it integrates into the buyers’ operations, processes, and technology and is consistent with regulatory requirements.

What does this mean for you?

This is not to say there aren’t better answers out there – indeed there are.

The key is to quickly identify solutions with real potential to solve your problem, as opposed to those that solve the vendor’s.