Year: 2016

Sep
23

HWR reports on what’s REALLY happening in health care

Posted by Joe Paduda on Friday, September 23rd, 2016 | Comments

Thanks to Louise and Jay Norris, HWR is up and ready for your enlightenment.

One of the great things about HWR is the information on stuff the regular media ignores, written by people who actually really understand health care.

Whether it’s reporting on the impact of ACA on poor and sick folks, the exploitation of immigrant workers, or a deep dive into pharmaceutical pricing, there’s way more insight here than you’ll get anywhere else!

And congratulations to Louise and Jay on their tenth year publishing Colorado Health Insurance Insider!

Sep
21

What the latest work comp drug spend means

Posted by Joe Paduda on Wednesday, September 21st, 2016 | Comments

NCCI released a study yesterday indicating drug spend for active claims increased 6 percent in 2014, driven by higher prices. That’s consistent with the finding from CompPharma’s Annual Survey of Prescription Drug Management in Workers’ Compensation, however more recent data indicates drug spend in 2015 dropped precipitously.

The chart below is from CompPharma’s to-be-released-momentarily 2016 Drug Survey; for the 30 payers surveyed (combined they account for just under a quarter of total work comp drug spend), drug costs dropped 8.7 percent in 2015.

drug-cost-trend

Two observations.

Work comp PBMs are Unicorns; incredibly rare and completely unique, their business model is based on reducing their revenue.  In a very small, totally mature industry, PBMs compete for payers’ business by showing how they will reduce drug costs, and especially reduce overuse of opioids.

What other business does that?

In addition, work comp PBMs do this without the economic levers of deductibles, copays, coinsurance, and tiered formularies that group health and Medicare PBM programs use.  In fact, non-work comp PBMs can’t fathom how they do this.

“How they do this” is thru a deep understanding of drivers, a willingness on the part of the PBM to eat the cost of drugs that a payer decides aren’t compensable or related, a lot of analytics to identify potential issues and problems, many well-trained people dealing with patients, prescribers, pharmacists, adjusters, case managers, attorneys, sophisticated clinical management programs.  All this is necessary, highly effective, and expensive indeed.

I bring this to your attention, dear reader, for a couple reasons.

First, on a per-pill basis, work comp drugs tend to cost more.  That’s because it costs a LOT more to manage work comp pharmacy than to manage group, Medicare, or Medicaid.

Second, slashing fee schedules to Medicaid reimbursement means PBMs can’t afford to keep driving down costs and reducing opioid usage.

What does this mean for you?

PBMs and payers are doing great work addressing a major driver of work comp costs and disability; below-break-even fee schedules will force them to become pure transaction processors, something employers, taxpayers, and patients can ill afford.

Note – I am president of CompPharma.

Sep
19

What its like fighting the opioid industry

Posted by Joe Paduda on Monday, September 19th, 2016 | Comments

I’m struggling to find an analogy that fits how one-sided this fight is.

it’s not a knife-to-a-gunfight thing; at least you could throw a knife and have a chance of injuring your adversary – then run away.

it’s not a David v Goliath thing, because big pharma is VERY aware of “David’s” capabilities and vulnerabilities.

The best I could come up with is an ant vs. a boot.

ant

A couple recent articles highlight how bad our collective butt is getting kicked (thanks to Steve Feinberg, MD – a colleague and pain management doc in CA).

While publicly vowing to help roll back opioid usage, the opioid industry is spending millions to convince state legislators to slow-walk efforts to reduce opioid prescribing, weaken PDMP usage requirements.  One telling datapoint; Pharma spent $880 million on lobbying and contributions from 2006 – 2015, anti-opioid groups spent $4 million on contributions to state political campaigns AND lobbying from 2006 – 2015.

In New Mexico, efforts to curb opioid prescribing have been defeated, thanks to an overwhelming push by big pharma.  The opioid pushers hired 15 lobbyists, contributed to most members of the key Committee working on the bill, and got what they paid for.

And it’s not just overt lobbying by pharma; these bastards are funding “patient advocacy” groups like the Cancer Network, creating their own “astro-turf” patient groups, even stuffing wikipedia with opioid advocacy crap and changing entries to delete negative information about opioids.

What does this mean for you?

This…

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Sep
15

Work comp’s future is not what you think it is

Posted by Joe Paduda on Thursday, September 15th, 2016 | Comments

What drives workers’ comp is employment – more specifically, payroll, industry type, and claim frequency.

Employment is the end-all and be-all of workers’ comp – for premiums and policies on the front end, and getting work comp patients back to work when claims do happen.

So when a whole lot of jobs in a bunch of industries look to be disappearing, we work comp folks need to take notice.

If you insure, manage claims for, provide services to, or otherwise work in the transportation/logistics industry, you’d best be watching developments in Pittsburgh and keeping your eye on Otto.

Uber is experimenting with its self-driving cars in the Steel City, a big step on the way to fully automated driverless cars.

self-driving-uber

Ford is heavily involved, and will have a self-driving car on the market in 5 years.  Sign me up; as one who spends way too much time behind the wheel, I’m all over this.  Do work, read, work while being transported to client meetings? Heck yes!

The giant “ride-sharing” company is also behind Otto, an effort to automate long-haul trucking.

Photo below from SF Chronicle; testing of Volvo truck by engineer Nic Munley.

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Unlike competitor Lyft, Uber doesn’t seem to care that its current drivers are going to be left ride-less in the not-too-distant future, nor is Uber bothered that, if when Otto and its lookalikes are successful in removing drivers from trucks, those 900,000 truck drivers will not have jobs.

And without truck drivers, truck stops won’t be selling much food or necessaries. Motels won’t be providing showers or rooms. Body shops won’t be needed as much either.

Uber contends that the 24/7 usage of driverless vehicles will mean more jobs for mechanics, but that’s speculative at best.  In fact, as these vehicles will just be replacing miles driven by vehicles currently piloted by people and not adding more vehicle miles, I don’t see why any more mechanics will be needed. Actually, less maintenance may be the norm due to constant monitoring of vehicle systems.

So…

  • far fewer truck drivers
  • fewer support staff
  • fewer jobs in service stations, motels
  • fewer “taxi-type” drivers
  • fewer accidents = less work for body shops, less demand for auto parts and paint, less need for auto claims adjusters

For work comp…

  • much lower premium volume
  • far fewer claims to service
  • far fewer jobs to return injured drivers to
  • possibly more claims in the near future as drivers see the writing on the wall
Sep
14

Opt-Out – unneeded, unnecessary, and ill-conceived

Posted by Joe Paduda on Wednesday, September 14th, 2016 | Comments

Legislators in Oklahoma carefully crafted their Opt-Out legislation, seeking to address concerns about Constitution issues, fairness to workers, and redress,

Despite that intent, the state Supreme Court ruled the law is unConstitutional.

Therein lies a lesson for advocates and detractors from Opt-Out.  However, advocates should be cautioned against focusing solely on legal issues, as there’s a much bigger issue with opt out.

Namely, workers’ comp is not “broken”.

Moreover, moves to “reform” via Opt-Out have inspired a backlash among those concerned that workers will be ill-treated if not outright harmed by Opt-Out.  While advocates cite legislation that purports to require equitable treatment, most of the “power” is on the side of the employer in Opt-Out, making it difficult indeed for aggrieved workers to seek and obtain fair treatment if their employers don’t abide by the letter of the law.

Folks who work in jobs where there’s a higher risk of occupational injury are angry about their loss of earning power, about jobs that are disappearing, about powerful employers gaining ever more power, about decreased opportunities for them and their kids.  And they have every right to be angry.

The aggressive push to overturn a workers’ comp system that has worked quite well for the vast majority of employers and workers for a century feels like yet another finger on the scale for employers, especially because there’s no need for it.

Does work comp need improvement…Heck yes.  Here are a few changes that would make almost any state’s system work better for everyone.

  • Get rid of caps on maximum weekly wages.  Why peg income maximums to an average weekly wage, when workers who make a lot more will NOT be able to provide for their families at an income that is a small fraction of their working earnings?  That is nonsensical, grossly unfair, and unethical.
  • Adopt real evidence-based treatment guidelines coupled tightly to utilization review, allowing for expedited, clinician-driven review.  Use the Institute of Medicine standards for evidence and guidelines.
  • Allow direction of care to network pharmacies to eliminate physician dispensing, a practice that prolongs disability, raises medical costs, and provides no benefit for anyone but dispensing companies and providers.
  • Fully fund and fully staff employer fraud departments.  Crack down hard on wage fraud, especially that perpetrated on construction projects.  The return on investment on this will be healthy indeed.

One change we hope to see is an end to the pointless debate about Opt-Out – it is unneeded, unnecessary, and ill-conceived.

Sep
12

Oklahoma is opting out of Opt Out

Posted by Joe Paduda on Monday, September 12th, 2016 | Comments

With the news that NCCI is proposing a 10.2 percent rate decrease for Oklahoma, [sub req] the “Opt-Out” movement is rapidly approaching irrelevancy.

Following on the heels of successful legal challenges to Opt Out legislation (with more possibly on the way), the news that a mere 54 employers have chosen the Opt Out option, AND a 3.4 percent decrease earlier in the year, I don’t see how Opting Out of workers’ comp in the only state that allows it will survive. [technically Texas employers “opt in” to comp as they are not legally required to provide the coverage.]

This is a good thing.

While many employers that Opt Out do so honorably and with the full intention of dealing with their workers fairly and equitably, some most assuredly do not.  While the work comp system has its flaws – and more than its share of bad actors in all areas, it does work quite well for the vast majority of employers and patients.

Opt out allows bad actors to completely screw their employees, hiding behind legal walls that protect the employer from legal action by injured workers.  That’s completely wrong, and is all but impossible under workers’ comp statutes.

What does this mean for you?

Can we please nail the coffin shut and throw a truckload of dirt on top of an idea that deserves to not see the light of day?

Sep
7

Pre-vacation catch-up

Posted by Joe Paduda on Wednesday, September 7th, 2016 | Comments

Headed out on a much-needed vacation; MCM will be on hiatus till the middle of next week.

Here’s a few items of note that came across the virtual wire over the last few days.

Mylan’s EpiPen Disaster.

In the story-that-will-not-die, EpiPen manufacturer Mylan continues to dig its hole deeper and deeper.  The latest news – the actual cost to make and fill an EpiPen is less than 10% of the product’s actual price.  And may be as low as four bucks – for a $300 injector.

Of course, when you need an EpiPen, you really, really need one – and could not care less what it costs. (it is used to reverse the most dangerous symptom of anaphylactic shock – asphyxiation)

But there are so many hands out in the EpiPen distribution chain, all making a margin as the product works its way down to the end user.  Most striking is the rebate Mylan likely pays to the insurer – one estimated by the estimable Adam Fein at around 40% of the product’s list price.

Now Mylan CEO Heather Bresch is providing all of us a lesson in how NOT to respond when confronted by reporters asking about price increases and huge compensation packages.  Bresch said, and I quote: “No one’s more frustrated than me.”

That takes some balls – and a whole lot of cluelessness.

The parents who can’t afford to replace their kids’ EpiPens every year when they expire and have high-deductible plans so they pay the $600 out of pocket might be a touch more “frustrated” than Ms. $19-million-a-year Bresch.

Beyond that, there’s a nastier, uglier, and way bigger problem here.  Health care in this country is a for-profit business, and Mylan is operating in the best interests of its stockholders.

And no, the “free market” won’t solve this issue – markets don’t care about people.

Provider consolidation continues

CMS’ changes in reimbursement are driving adoption of IT systems designed to track and report patient encounters with a focus on quality metrics.  These systems are expensive, difficult to implement, and require ongoing updating and maintenance.

More consolidation does not mean more efficiency or cost-effectiveness…in fact some data indicates costs go up.

Implication – more sophistication in billing, electronic medical records (EMR), coding and contracting means payers will find smarter and more knowledgeable negotiators across the table, and more sophisticated billing.

Work comp rates keep coming down

California, North Carolina, Kentucky, Tennessee all are joining the states that have announced decreased work comp rates.  I know Florida’s getting all Sunshine-y for plaintiff attorneys, and payers are in a justifiable uproar about that, but that’s an anomaly.

Implications – good news for employers and taxpayers, bad news for opt-out.

Which remains a “solution” (and a pretty poor one at that” to a problem that doesn’t exist.

Okay, gotta run.  see you next week!

Sep
2

Opioids – you have no idea.

Posted by Joe Paduda on Friday, September 2nd, 2016 | Comments

Two people very close to me are on the front lines of the opioid disaster.  Working in ERs and ambulances in the northeast, they see – multiple times every day – how bad it is.

You have no idea.

The toll this is taking is wide, deep, and devastating.  Some public safety workers are burning out, beyond frustration and anger to a place of fatalism.

Yesterday an unconscious woman was admitted after her kids told their dad she was taking a nap on the kitchen floor.  The nap was induced by a very heavy dose of benzos on top of heroin; when dad came home from work – he’s a public safety worker too – she was unresponsive.

Revived with a hefty dose of Narcan, the woman “justified” her dosage as needed due to some unspecified mental trauma.

This one example is playing out multiple times every day for every ambulance crew, in every ER, in every neighborhood.  NPR’s morning news greeted me with a piece about elephant-tranquilizer Carfentanil, a made-in-China chemical that is exponentially more powerful than fentanyl, which is exponentially more powerful than heroin.  Now spreading rapidly thru Ohio, Florida, and the midwest, carfentanil will soon find its way into your town.

If you think I’m being alarmist, you’re wrong.

Here’s how this is impacting us today.

  • parents are dying in front of their kids.  who’s going to take care of those kids, and prevent them from following in their parents’ tragic footsteps?
  • To some public safety workers, Narcan is NOT saving lives, it is a Get-Out-Of Jail-Free card, allowing users to “safely” push the limits of dosing in their quest to get ever higher ever longer.
  • opioids may soon be replaced by drugs such as carfentanil.  Why grow poppies when you can just order this pill from a chemical factory in China?
  • Public safety workers are at the end of their ropes.  How can they not be white-hot with anger at users when confronted several times a day with parents “justifying” their using after being revived with Narcan.

This started with legitimate “prescription” drugs pushed by pharma companies making billions.  Make no mistake, these bastards are the ones who started the ball rolling, a ball that has gotten ever-larger and is crushing more and more of us as it picks up momentum.

The great late David DePaolo penned a piece on Purdue just days before he died.  It’s well worth reading, and remembering.

But the disaster unleashed by Purdue and their ilk is way beyond what any of us thought it would become.  As powerful and necessary as the Surgeon General’s letter to physicians is, it is so, so late.

Will this epidemic be solved by public health measures far greater than anything we’ve thought of or funded to date, or, like smallpox among Native Americans or the Plague in Europe, is it fated to burn out only after it kills most users, leaving no one else to infect?

Have a great weekend.

Sep
1

Workers’ comp hospital costs – implications for payers

Posted by Joe Paduda on Thursday, September 1st, 2016 | Comments

WCRI’s report on variations in hospital outpatient costs is yet more evidence of the wide and seemingly nonsensical variations in work comp regulations, fees, payments, and practices among and between states.

Among the findings:

  • an eight-fold variation in costs from the lowest-cost state – NY – to the highest – AL.
  • Shockingly, fee schedule states’ costs are a LOT lower than non-fee schedule state costs.
  • Costs in percentage-of-charge fee schedule states were much higher than those in states with Medicare-based fee schedules.

There’s a wealth of information in the report; here’s my takeaways.

Captain Obvious Alert.

In many states, workers’ comp is a huge profit generator for hospitals and health care systems.  Anyone following the drama in Florida surrounding “negotiations” around facility reimbursement in past years saw this play out in vivid color.

Hospitals are almost always much more politically influential than workers’ comp stakeholders, giving them a decided advantage in influencing legislation, and sometimes regulation as well.

As Medicaid and Medicare continue to clamp down on costs, hospitals and health care systems will get even better at maximizing revenue from workers’ comp.  Moreover, network discounts provided to workers’ comp payers are fading as payers realize the opportunity inherent in comp, and work comp PPO contractors confront the “yeah but you’re only 1 percent of my revenue” argument.

There is an entire industry devoted to revenue maximization; claims adjusters and bill review folks would be well-served to brush up on the techniques used by these folks. Here’s just a couple examples from quick research…

Considering the dollars paid to facilities and hospitals account for at least a third of work comp medical spend in most states, this is a big problem.

So, what to do?

  1. Analyze your data! Where are you spending your dollars – by state, facility, employer.
  2. Compare it to WCRI’s information – not just in this report, but the others these brilliant researchers have produced
  3. Direct, channel, refer – even in states where you don’t have an absolute right to “direct”, you CAN influence where your patients go to get care.
  4. Find and work with a medical bill review specialist with expertise in the specific states of most concern.
  5. Get creative – talk to your adjusters with long and deep experience to find out what works and what doesn’t.

Kudos to WCRI’s Olesya Fomenko and Rui Yang for their work – they’ve taken a shipload of data and turned it into information that’s understandable  – and actionable.