Author: Joe Paduda

Jul
20

Transparency in drug pricing

Posted by Joe Paduda on Tuesday, July 20th, 2021 | Comments

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?

Posted by Joe Paduda on Friday, July 16th, 2021 | Comments

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

Posted by Joe Paduda on Wednesday, July 14th, 2021 | Comments

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
12

Is the anti-COVID vaccine movement a secret Leftist plot to reduce conservative power?

Posted by Joe Paduda on Monday, July 12th, 2021 | Comments

I haven’t seen any proof that it isn’t…and, well, if one believes the Left is a secret cabal of demons chasing kids, it sure looks like it could be.

Two very interesting data points.

First, residents of counties that voted for Trump are significantly less likely to have been vaccinated.

Same holds true for states…

Second, almost all recent COVID-related deaths are among folks who aren’t vaccinated; fully-vaccinated people account for less than one out of a hundred COVID-related fatalities.

And, the ones who stand to gain if more Trump voters die from COVID are Democrats and Leftists.

Of course this is utter nonsense, but no less nonsensical than accusing Hillary Clinton of leading a child-sex ring headquartered in a pizza restaurant.

What does this mean for you?

Satire has lost its impact.

Jul
8

The Delta Variant – key facts

Posted by Joe Paduda on Thursday, July 8th, 2021 | Comments

What you need to know about the Delta Variant

  1. Delta is more transmissible than the original COVID and the Alpha variant.
  2. It may be more dangerous as well; a Scottish study found Delta victims were about twice as likely to be hospitalized than those infected with other COVID versions.
  3. Various studies indicate full doses of the various vaccines are quite effective at preventing COVID infections, reducing hospitalizations and deaths.
    1. Canada – Pfizer is 87% effective.
    2. UK – Pfizer is 88% effective in preventing symptomatic disease; Astra Zeneca 60% effective against symptomatic disease
    3.  Israel – Pfizer 64% effective at preventing infections, 93% in preventing serious problems from COVID infection (note I was unable to locate the actual research; source is the Israeli government.)
  4. Delta is responsible for the vast majority of new cases in the UK.
  5. Countries with relatively low Delta infection rates continue to see declines in overall COVID infections.

What does this mean for you?

Get vaccinated.

Jul
7

Surprise billing in workers’ comp

Posted by Joe Paduda on Wednesday, July 7th, 2021 | Comments

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

Posted by Joe Paduda on Wednesday, June 30th, 2021 | Comments

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
29

You bet your life.

Posted by Joe Paduda on Tuesday, June 29th, 2021 | Comments

For my friends out there who remain unconvinced COVID vaccinations are a good idea, please think again.

Breakthrough infections – fully vaccinated people contracting COVID – accounted for only about 1 in every 700 hospitalizations.

Put another way, people who haven’t been vaccinated accounted for 699 out of 700 hospitalizations.

A similar dichotomy holds for COVID-related deaths; fully-vaccinated people account for less than one out of a hundred COVID-related fatalities.

Not surprisingly states with lower vaccination rates are seeing higher infection, hospitalization and death rates.

Great source for tracking state-specific data

Arkansas, Oklahoma, and Missouri are among those states likely to experience increases in COVID infections, hospitalizations, and deaths.

There is another factor in play here – unvaccinated people are far more likely to get infected, become a COVID host, and pass their germs on to others. So not only do they risk their own health, they also endanger many more people.

And – and it’s a BIG and – the more people infected, the more likely COVID will mutate and become more transmissible and deadlier. We’ve already seen this with the Delta variant; transmission rates are increasing rapidly especially in the South.

What does this mean for you?

Please – get vaccinated.

Jun
24

The Delta Variant

Posted by Joe Paduda on Thursday, June 24th, 2021 | Comments

You are as done with COVID as I am.

COVID is not done with us.

Here in New York’s Finger Lakes everything is open; had a great family night out yesterday, no masks required for those of us fully vaccinated, hiring signs are all over, and the joy that is upstate NY in summer is in full swing.

While we are blissfully enjoying life, the Delta Variant is:

That’s the bad really bad news.

The good news is vaccinations – especially the ones based on mRNA (e.g. Pfizer) are still “spectacularly effective” against the Delta variant. 

As in 96% effective in preventing hospitalizations.

However, that’s after both doses; a single dose is just 33% effective at preventing symptomatic illness.

Here’s the thing. The more of us that get infected, the greater the chance that the damn virus morphs into a deadlier, more transmissible, and thus even bigger problem. So far the vaccines we have are working.

But – and it’s a damn big “but”, far too few of us are vaccinated. That’s particularly true of southern states, where a combination of misinformation,  awful treatment of minorities by some governmental entities and segments of the medical community (the Tuskegee experiment being a prime example) and resulting mistrust, and difficulty with the J&J vaccine have combined to drastically slow vaccination rates.

click here for detailed state-specific data

Here’s a great graphic detailing state progress towards full vaccination…

All this is to say that the fewer vaccinated people there are, the more likely COVID will mutate into something even worse.

What does this mean for you?

Get vaccinated.

Note – if you want to debate or disagree, cite credible sources for your statements. Period.

Jun
22

Work comp -The Innovation Prevention Industry

Posted by Joe Paduda on Tuesday, June 22nd, 2021 | Comments

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.