Insight, analysis & opinion from Joe Paduda
Actiq, the lollypop pain killer, is rapidly becoming the biggest problem drug in workers comp. FDA approved only for treating cancer pain, the potent narcotic is now on most payers’ top 5 drug list (ranked by dollars spent).
There are likely several factors that have enabled a drug clearly not approved for musculo-skeletal conditions to achieve this high “honor”.
If you have yet to shower, you may well need one after reading this.
Just in time for election season, another chapter in Ohio Bureau of Workers’ Comp scandal is heading for court. The latest news comes from the Toledo Blade, which reported last week that the BWC’s CFO is alleged to have accepted bribes from brokers for investment firms eager to invest the Bureau’s funds.
The Cleveland Plain Dealer has published an article that is highly critical of Ohio’s workers comp managed care program. The analysis performed by the paper (and subsequently reported by AP and other news outlets) notes that administrative costs associated with claims management have gone up much faster than the rate of inflation,while medical costs have experienced a similar trend.
Several other papers inside and outside Ohio are also focusing on the BWC managed care program.
Continue reading Has workers comp “managed care” worked in Ohio?
The mess, and it is a real mess, that is the Ohio Bureau of Workers Compensation scandal has spread its ugly tentacles. The latest is the innuendo that the present head of the North Dakota state workers comp insurer has been unfairly linked to one of the accused felons involved in the Ohio BWC corruption. (ND is a monopolistic state, where WC insurance is only available from the state itself).
I have no personal knowledge of the ND fund situation, but find it most distressing that an individual who once had the misfortune to work with one of the sleazy officials in Ohio would be somehow tainted by that link.
Fortunately, an upcoming audit report will provide an objective review of the ND fund’s operations (link is the past report, new report is due shortly) and results. Here’s hoping that it finds nothing even close to the swamp of misdeeds and corruption that was Ohio’s BWC.
With the news that Aetna has entered into the work comp pharmacy benefit management business, there are now officially a bazillion WC PBMs doing business. Maybe even two bazillion.
Aetna has been in and out of the WC business in the past, and now appears to be in it, at least as a managed care vendor. Aetna Workers Comp Access is the brand name for the company’s PPO network, one that is gaining some traction in certain jurisdictions. The new PBM venture appears to be an attempt to use Aetna’s group health-oriented PBM to deliver drugs to comp patients. But the WC PBM business is much much different than group health. There are no deductibles or copays in comp, identifying the patient’s PBM is much more of a challenge, and the country is a crazy quilt of different regulations, as each state sets its own rules, reimbursement levels, and operating standards.
The strategy is to cross sell the PBM to Aetna’s (group health) employer clients. One of the touted benefits is the ability to identify potentially harmful drug interactions across both group health and WC medical treatment. Aetna has landed their first customer, CostCo, and are also bidding on carrier business (several of the larger insurers have been or are out to bid for PBM services).
Aetna is not doing this on their own, but has contracted with Rockville, MD based CatalystRx to provide the WC expertise needed to operate in the comp market. This is a somewhat puzzling choice; Catalyst is not a big player in WC and does not have a lot of experience in the space. Their contribution will be key if Aetna’s newest venture is to become a viable option for comp drug buyers.
What does this mean for you?
Another option in the already-crowded WC PBM industry, albeit one with a different twist.
As a public service, I’ve put together a (partial) list of firms that repackage drugs for physician dispensing. This is primarily a workers comp issue, as comp insurers and TPAs are increasingly concerned about the cost of drugs dispensed by physicians. In some circumstances, the billed and payable amount can be several times higher than the cost for the same type of drug dispensed through a pharmacy.
California Healthline reports that Gov. Arnold has agreed to sign a bill that would allow injured workers to select their own physicians for two years past the (scheduled) expiration of that right in April 2007. This may not be all that meaningful, as many employers have joined WC managed care plans that allow employers to select treating providers.
In fact, it may drive even more employers to managed care plans as they will now not be able to direct care for another two and a half years.
In a transaction that surprised many (including me), Atlanta-based claims administrator Crawford and Co. announced it is acquiring FL-based Broadspire Services from investment group Platinum Equity. The deal is valued at $150 million, and will move the combined companies into third place on the list of top property and casualty TPAs (third party administrators; firms that process claims on a fee-for-service basis without taking any insurance risk).
Broadspire CEO Dennis Replogle will be staying with the new company, which likely will go thru some transition and specialization as Crawford figures out where it fits in.
The deal is another in the ongoing parade of consolidation that started with the original firesale of Kemper National Services to Platinum several years ago. Since then, Sedgwick was acquired by Fidelity National and then bought CMI; Broadspire bought Cunningham Lindsey and RSCKO, and several smaller deals were consummated as well.
Rumors had been circulating for some time that Sedgwick CMS was looking at Broadspire, and internal sources at the target company reported that Sedgwick staffers had been at the Broadspire offices in Plantation FL. Sedgwick management has been under serious pressure to increase revenues, and absent serious price cutting, a large acquisition looked to be the most likely route.
If the price seems low, it may be due in part to the timing of the deal. The softening insurance market (which may not be softening for long) makes insurance a better buy in some instances than going self-insured. If the market does turn, Crawford will be able to congratulate itself for buying at the right time.
The Hartford’s annual study of drug costs provides insights into what drugs are driving costs, and the results a carrier can expect if they work hard at managing drugs. The big insurer enjoyed a reduction (!) in drug costs year-over-year of one percent, driven largely by the demise of the COX-2 drugs and the emergence of generics for Oxycontin and Neurontin.
Heavy-duty pain med Actiq continues to be a big problem for the Hartford, as it is for other payers. Of note, one payer I work with has been able to sharply curtail the use of Actiq through a targeted clinical management program involving physicians doing peer review. And, Actiq is coming off patent next year, which may reduce the price per dose. (but the manufacturer has developed a “new and improved” version that will likely be used as a substitute…)
The Hartford’s results are not surprising. Payers with aggressive, integrated approaches to managing drug costs are experiencing modest increases in drug expenses, while those without a strong focus on managing pharmaceutical expense have been hammered by costs increasing upwards of 15% annually. The Hartford participated in my firm’s third Annual Survey of Prescription Drug Management in Workers Compensation; their results, and the results of several other large payers, helped keep the industry’s overall inflation rate to 10%.
The keys to success? Managing utilization. A strong clinical management approach. The intelligent use of prior authorizations. And a company-wide commitment, backed up by the resources needed to attack the problem.
What does this mean for you?
You too can control drug costs – by focusing on utilization and clinical management.
Three workers comp physicians and one medical practice were recognized as the best comp providers in Florida at the fourth annual Florida Choice Awards for Workers Compensation banquet last night in Otlando. Sponsored by Choice Medical Management (a consulting client), the awards are one of the few, if not the only, attempt to recognize the second-most important player in workers compensation, the physician.
These are the folks who diagnose the injury, assess causality and relatedness (is the injury work-related and to what extent is work responsible) write the scripts, encourage the patient, talk with the employer about alternate duty, fill out the innnumberable forms, develop treatment plans, and deliver the care.
The Choice awards represent the right way to work with comp docs – respect them, recognize them, reward them.
They are also in marked contrast to the way other networks, payers, and insurers think about and act towards physicians. For example, the head of claims for a large work comp insurer, speaking at the Florida Work Comp Institute conference (host of the Choice Awards) noted in his speech that driving greater network penetration and “savings” was key to reducing work comp expense. That mis-prioritization is largely responsible for the explosion in medical expense in work comp.
And physicians are beginning to reject the discount-oriented “managed care” approach employed by many work comp payers. Sources indicate that the Florida chapter of the American College of Occupational and Environmental Medicine (the professional association of occupational medicine physicians) will be forming a committee to develop a position statement related to managed care networks.
Here’s hoping it is direct, definitive, and blunt.