Author: Joe Paduda

Apr
1

Health Strategy Associates has been purchased.

Posted by Joe Paduda on Thursday, April 1st, 2021 | Comments

When you get an offer you can’t refuse…you don’t.

A couple months ago I was approached by an investment firm looking to build a niche practice focused on non-group health medical management. Long story short, for some undoubtedly very good reasons they decided HSA was the right fit.

I never thought a highly specialized, boutique consultancy with one “employee” would have any value beyond what we bring to clients, but clearly I didn’t think hard enough.  Sure, the footprint is solid. Yes, we can bring some very skilled, smart, and experienced experts to any engagement. And we certainly have a brand. Most of the time that’s a good thing, but sometimes it most definitely isn’t.

This isn’t a firm you’ve likely heard of; it’s not even domiciled here. For that reason, we’ll keep the HSA name.  Expect there to be additional resources and expertise, a broader array of skills and knowledge “on offer.” [I have to get used to the non-American English terms, so that’s a start]. There may be a bit less snarkiness from your faithful author too – but that’s attributable more to age sanding off some of the rougher edges than any edict from on high.

Speaking of which, we talked long and deep about whether and how we could work together, and ended up deciding we could. Despite my pathologic aversion to others attempting to tell me what to do, that shouldn’t be [pause for deep breath] an issue. There’s mutual respect and an understanding that when friction does arise we’ll work through it.

Couple of items of note.

First, expect an announcement from our new owners in the coming days.  We agreed that it would be best if we kept the initial focus on HSA and how this [doesn’t] affect clients.  Shortly we will do a more formal mutual release.

Second, yes there will be changes – good ones. HSA will remain focused on niche areas and serve the same client base (payers, service providers, and related businesses). I will continue to speak out on issues, commend those I respect and admire and condemn misguided and wrong actions and results.

Expect more use of technology to aid communications with blog subscribers, more polished presentations and reports, and expand into other channels.

I’d suspect we’ll get into other communications channels – perhaps podcasting, maybe even some video stuff. There are any number of things I’ve wanted to do but just don’t have the bandwidth or expertise or diligence to actually get done.

Finally, I cannot thank clients, supporters, and detractors enough. Over the last 25 years you have helped build HSA, made it better, and made me better. Critics have challenged me and in many cases made me re-think long-held beliefs.

What does this mean for you?

Expect the unexpected.

Mar
30

Chronic pain, opioids, and other drugs – the latest research

Posted by Joe Paduda on Tuesday, March 30th, 2021 | Comments

Dr Steve Feinberg pointed me to two studies conducted by the Agency for Healthcare Research and Quality on chronic pain, both systematic reviews [reviews of published studies of a specific topic]. One focused on opioid treatments for chronic pain, the other on non-opioid pharmacologic treatment.

The non-opioid research reviewed 190 studies, of which 185 were RCTs. Researchers concluded:

improvement in pain and function was small with specific anticonvulsants, moderate with specific antidepressants in diabetic peripheral neuropathy/post-herpetic neuralgia and fibromyalgia, and small with nonsteroidal anti-inflammatory drugs (NSAIDs) in osteoarthritis and inflammatory arthritis.

The takeaways include there are some benefits from some drugs, often dependent on the patient’s medical condition.

The opioid treatment for chronic pain study was based on a review of 162 studies; “115 randomized controlled trials (RCTs) [the gold standard of clinical research], 40 observational studies, and 7 studies of predictive accuracy.”

Note that for research purposes, chronic pain is described as pain that lasts more than 3 to 6 months.

There was more credible research available to assess short-term outcomes vs longer-term outcomes; there was no RCT comparing opioids to placebo for medium or longer-term periods.

Takeaways included (and these are direct quotes):

  • There were no differences between opioids and nonopioid medications in pain, function, or other short-term outcomes
  • Opioids were associated with small benefits versus placebo in short-term pain, function, and sleep quality.
  • There was a small dose-dependent effect on pain, and effects were attenuated [reduced] at longer (3 to 6 month) versus shorter (1 to 3 month) followup.

Most concerning, “there is evidence of increased risk of serious harms that appear to be dose dependent” [the higher the dose, the greater the risk].

This crossed my desk the day before a good friend’s brother died of an apparent opioid overdose, adding a painful exclamation mark to the study’s conclusion.

Extensive research in Australia focused on long-term opioid use in patients with chronic non-cancer pain found that:

Despite limited evidence of efficacy, there has been a considerable increase in the long-term prescribing of opioids for chronic non-cancer pain in several countries

Here’s the thing; the research we do have clearly demonstrates the risk of opioids is high, and the benefits are limited. However, there isn’t near enough research on the efficacy of long-term usage of opioids for chronic pain.

Anecdotal evidence indicates some patients can do well on opioids for extended periods.

That said, the evidence we do have suggests that overall, efficacy may be limited at best, and the risks are high. Fortunately more research on opioid efficacy and risks and chronic pain has already been funded.

What we cannot do is force patients off opioids; this is dangerous and unethical.

What does this mean for you?

Opioids have their place – but be very careful, especially when use is long-term. Life is precious. 

 

Mar
29

Facilities, fee schedules, and what should be your takeaway

Posted by Joe Paduda on Monday, March 29th, 2021 | Comments

Perhaps the most practical presentation at this year’s WCRI conference focused on outpatient facility costs. While the content itself was excellent, what was more valuable were the implications for medical spend management.

Rebecca Yang PhD provided a wealth of information about outpatient fee schedules, Medicare reimbursement, and the impact of Medicare’s changes on workers’ comp fee schedules. Note that as the slides indicate, findings are preliminary so subject to change.

First, the findings.

Dr Yang noted that outpatient hospital and Ambulatory Surgical Center costs  [outpatient costs] represent about 15% of total medical spend across the 18 study states, with Louisiana the outlier at 28% of spend.

There are lots of different ways to manage spend via fee schedules; one can base reimbursement on a fixed amount, % of charges, cost to charge, Medicare or some hybrid mechanism.

All have strengths and weaknesses, issues and challenges, but – with one very big exception – in general it is better to have a fee schedule than not – except when the fee schedule is easily gamed (we’re looking at you, Florida).

That exception is cost-to-charge, a term describing the ratio between a hospital’s expenses and what they charge. As we’ve discussed here ad nauseam, all hospitals in C-t-C states have to do to make bank is jack up their charges. 

I won’t dive deep into details about how Medicare’s changes to reimbursement affect workers’ comp except to note that when the dog wags the tail, the flea on the end (that’s workers’ comp) gets whipped about.

Okay, maybe a little detail…

The Peach State adopted Medicare as the basis for the WC FS back in 2013.  Essentially, the change followed Medicare FS changes, except excluded device reimbursement and (if I heard this right) some associated charges.

Medicare made changes to its reimbursement in 2016 and 2017 which drove  reimbursement declines for some knee surgeries; others were unaffected.

The point of this is to note that basing a fee schedule on a third party’s reimbursement demands payers really deeply fully understand the underlying third party’s reimbursement policies, practices, requirements and nuances.

Most workers’ comp entities don’t. The result is they are unable to ensure medical bills and accompanying documents support reimbursement – or don’t. Far too often, bill review entities just assume everything is in order (if the surgery was pre-approved) and authorize payment for all billed services. Reality is it’s pretty common that some of those billed services should have been bundled into the overall surgical fee.

What does this mean for you?

This isn’t unique to Georgia, or knee surgeries. If your BR operation doesn’t know this stuff at a granular level, you’re probably overypaying. 

(WCRI published an excellent summary of outpatient reimbursement and drivers last year).

Oh, and don’t forget my annual Aril Fool’s post is coming up Thursday. Don’t be fooled!

Mar
26

Friday catch-up

Posted by Joe Paduda on Friday, March 26th, 2021 | Comments

Swamped with WCRI’s annual confab (more posts to come on that event) and client work. And the ubiquitous Zoom/Teams/Webex meetings…my high is 6 in one day.

Hoping that’s more than you – for your sake.

Okay, here’s a few items of note.

WCRI’s sessions are recorded and available to registrants here. There’s a ton of great info on fee schedules, the impact of state regs on opioid usage, projections on the future of employment, and treatment for COVID.

Risk transfer

Tuesday I’m co-hosting with Carisk Partners’ CEO Joe Berardo a webinar on Risk Transfer Strategies. We will dive into the key to successful risk transfer programs – behavioral health. Usually it’s not the medical that’s the real issue – it takes a unique approach to get to the real drivers.

If you’re a claims exec, claims or risk manager, or medical director please join us; take a brief survey here before hand so we can be sure to cover the issues you’re most concerned with.

Vaccine effectiveness

Very good news indeed out this week – Medscape reported:

Testing (in California) showed new cases among 2.5% of those tested within the first week after the first dose, 1.2% during the second week, 0.7% in the third week, 0.4% during the week after the second dose was given and less than 0.2% in the second week after the second dose.

In North Texas, where workers were also vaccinated in the midst of the largest COVID-19 surge the region had seen, 2.61% of unvaccinated employees developed the infection versus 1.82% of partially-vaccinated workers and 0.05% of fully-vaccinated employees.

Put another way, you’re fifty times more likely to get COVID if you aren’t vaccinated than if you’re fully vaccinated.

I’ve got my first – hope you have both.

If you’re not at the table, you’re on it.

Great piece in Harvard Business Review on the impact of the pandemic on health system consolidation. This is going to be a major driver of facility costs for workers’ comp. Key excerpt:

Studies to date tend to rebut the argument that acquisitions improve efficiencies, reduce costs, and lead to better care coordination. Instead, they show that consolidation increases prices and fails to improve the quality of care. For example, hospitals’ acquisitions of physicians’ practices in California has been linked to higher prices for primary care and specialist services and to increases in insurance premiums.

Back to work next week – enjoy the last weekend in March.

Mar
23

WCRI on COVID and non-COVID claims, treatment delays (not) and drivers thereof

Posted by Joe Paduda on Tuesday, March 23rd, 2021 | Comments

The 2021 WCRI Annual Issues and Research confab kicked off today with several excellent presentations – not surprisingly there was a lot about COVID and its impact on employment, injuries, and claims.

The conference continues tomorrow – register here if you haven’t already…

I’ll get to those in later posts, but will start our coverage with Dr. Olesya Fomenko; she gave a very well-done – and very well-attended presentation on claims during COVID. Note that some of the findings and graphics may be preliminary so subject to change

Regarding COVID claims for Q2 2020 there was wide variation in the volume of COVID claims between the study states; in Massachusetts 42% of claims were COVID, compared to 1% in SC. On average 6% of claims in median state were due to COVID. COVID claims were-disproportionally LT claims.

There are a variety of reasons for these differences. Massachusetts has pay without prejudice, NJ’s presumption law went into effect pretty early, and the timing and severity of pandemic, impact of shutdowns and social distancing all affected the variability across states.

There was a relatively strong association between the COVID death rate and number of WC claims for COVID; this seemed to be more of an influence than presumption (slide below).

Not surprisingly the number of non-COVID claims dropped dramatically in Q2 2020 in WCRI’s study states; the majority of states had at least a 30% drop in non-COVID claims, with MA’s claims cut in half.  Employment also dropped dramatically, but there wasn’t much of a correlation between states’ employment reduction and drop in WC claims

Injury types weren’t didn’t change much from pre to post – altho the percentage of claims that were LT increased.  [This finding echoed research discussed by CWCI a few days ago]

Again, similar to CWCI’s research, there was no evidence of treatment delays for claims with injury dates in the first half of 2020. In fact, there was a slight improvement in time to surgery and PT. That holds true except for ER services which declined, perhaps driven by reluctance to go to a place where COVID might be present.

What does this mean for you?

Assumptions are dangerous – we now know that medical care wasn’t delayed, that COVID claims weren’t expensive (see CWCI), and that (shocker!) COVID claims counts were lower in states that did more to stop its spread.

Kudos to WCRI for excellent research giving us a much deeper understanding of the impact of the pandemic – and what drove the interstate differences.  And thanks to the organizations that support WCRI – you are helping all of us.

 

Mar
22

The cost:benefit of catastrophic case management

Posted by Joe Paduda on Monday, March 22nd, 2021 | Comments

A well-designed, thorough, and much-needed study of the impact of nurse case management on catastrophic claims was completed late last year by the University of Washington.

The UW study examined 216 cat cases insured by L&I, the state workers’ compensation fund, and evaluated workers satisfaction and self-reported outcomes, duration of time loss and total medical costs.

Among the conclusions were these:

there is a high level of worker satisfaction with nurse case management services, and

there were no changes in the average duration of time loss or average medical costs after implementation of the nurse case management pilot for catastrophic injuries.

One particularly striking conclusion was the Economic Analysis. The Analysis “examined the predicted and actual medical and NCM costs for one outcome based firm with the most referrals (Paradigm).” Of the 216 cases, there were a total of 25 referrals to Paradigm, of which 15 were accepted by L&I and managed by Paradigm. [A detailed description of the analysis of the Paradigm cases begins on page 104)

The report noted the small number of Paradigm cases precluded a formal “statistical assessment or economic evaluation, e.g., return on investment (ROI) analysis.” Instead, the UW researchers provided a “descriptive analysis involving comparisons of different cost measures in order to assess the economic value of NCM services provided by Paradigm.”

Regarding the Paradigm cases, the study concluded:

the cost for nurse case management alone was 1.8 times the total medical costs paid by L&I.  In addition, the medical costs estimated by the outcome-based firm were substantially higher than the actual medical costs paid by L&I, on average. For all other firms, the costs of nurse case management were substantially lower than the average medical costs for the injured workers. [emphasis added]

I reached out to Paradigm to get their take; this is their response:

Paradigm is aware of the UW research paper and has reviewed its findings. It is not possible to reach any of the conclusions made about the “economic value” of our services based on the limited scope and methodology of the report. The report fails to capture the most meaningful measure of success, which is the ability to achieve maximum functional outcomes at a lower total cost of care. This is the model that Paradigm, and our clients, uphold. As you know, Paradigm’s Catastrophic Outcome Plan product, which is the service that UW referenced in the paper, is not a traditional case management solution.

We confidently stand by our results and our 30-year record of delivering life-changing outcomes to catastrophically injured workers and their families, and value to our clients. We encourage you to read the October 2020 study conducted by independent actuarial firm Milliman which confirms Paradigm’s results.

I followed up with this request:

MCM – I’d appreciate a bit more explanation about what specifically about the limited scope and methodology prevents one from reaching any of the conclusions cited by the study’s authors?

Is there any comment re what could have accounted for the high costs of case management compared to medical costs for many of the patients?

Paradigm responded:

Our commitment to Washington L&I was to deliver our risk bearing outcome plan model that provides a total lower lifetime cost and a guaranteed outcome—verified by Milliman as recently as October 2020, and based on 30 years of clinical data. With this product, Paradigm provides an integrated system of clinical capabilities, data, and experts to deliver lower lifetime costs. Comparing case manager expenses to Paradigm’s outcome plan model is not valid. Further, the study focused on a short timeframe (less than 24 months) and could not have captured the outcome and total cost benefits that Paradigm delivers.

Three observations. 

First, the 24 month time period may well have been too short to capture the full impact of Paradigm’s program.

Second, the cost of case management services strikes me as “valid” indeed, if one is concerned about the total cost of a cat case. I cannot imagine a scenario where a VP of claims or Medical Director wouldn’t have some rather pointed questions about a cat case where case management costs were almost double medical expenses.

Third, Paradigm predicted medical costs that were much higher than what L&I actually paid.

Disclosures

Carisk is an HSA consulting client; it has a division that competes with Paradigm Outcomes.

I’m working with two of the researchers on a PCORI-funded analysis of the impact of different regulatory approaches on opioid prescribing in workers’ compensation.

Note – For more of my coverage of Paradigm, click on links for posts complimenting the company on its strategy and suggesting more payers should utilize their services.

 

Mar
19

COVID claims aren’t expensive, and treatment isn’t being delayed

Posted by Joe Paduda on Friday, March 19th, 2021 | Comments

Those are my two top takeaways from CWCI’s excellent analysis of 2020. I had the opportunity to tune into the virtual annual meeting, and Alex Swedlow was kind enough to walk me through questions on several key issues. (note that the data is preliminary)

The net:

  • Non-COVID claims were down by more than 25% in 2020;
  • WC Covid claims are pretty inexpensive;
  • COVID claim denials were actually less frequent than denials for non-COVID claims (when using an apples:apples comparison)
  • Most COVID claims aren’t incurring any medical cost;
  • Contrary to a previous post, there were no appreciable delays in accessing treatment

Let’s start with the last point. The data on all claims incurred in California May to October showed initial treatment delays were non-existent.

When looking at days to first Evaluation, pandemic-era claims actually had less delays than non-pandemic-era claims.

Overall, COVID hasn’t been expensive for workers’ comp payers. COVID claims that had medical expense were more expensive than non-COVID claims – BUT most had NO medical expense incurred. (Mark Priven and I predicted this 9 months ago...while others thought the opposite would happen.)

What does this mean for you?

Be careful making assumptions. 

I’m going to get more into the cost-of-COVID next week.

Mar
18

The post COVID service bump

Posted by Joe Paduda on Thursday, March 18th, 2021 | Comments

Now that things are sort of returning to “normal”, the investment community is again looking into the work comp services business for potential investments.

Couple things I’ve noticed in conversations with investors.

Some service entities are conflating revenue increases due to the “return to normal” with actual new business. In other words, these companies are claiming they are getting new business from new customers (or expanding their business with current customers) when really their existing customers are just seeing more claims as the economy bounces back.

While I get why service entities would want potential investors – and current investors for that matter – to think they are taking share from competitors, that’s a pretty short-sighted approach, may actually be counter-productive – and it’s also unethical.

Investors are going to look deep and hard at revenues to make sure the uptick in revenues is due to actual new business. These people are quite smart and very very good at picking apart reports and data, Companies that mischaracterize their business will find themselves hard-pressed to explain why dollars coming from old customers should not be counted as new.

Second, by characterizing revenues from recovering clients as “new”, service entities will have to explain why their former customers’ revenues aren’t returning. That has made for some very interesting conversations indeed.

What does this mean for you?

Don’t do stupid stuff. Like this guy.

 

 

 

Mar
17

COVID quick update

Posted by Joe Paduda on Wednesday, March 17th, 2021 | Comments

Quick takes on stuff you need to know – and most of it is good news indeed.

Eli Lilly has what may be one of the more promising treatments, a cocktail of two unpronounceable drugs showed strong results in a recently-completed double-blind trial involving 769 patients.  The bamlanivimab-etesevimab duo cut the risk of hospitalization and death by 87% versus placebo.

Unlike the hydoxycholoroquine “research” touted by the former occupant of the White House, this is real science by reputable scientists which shows the drug has a positive impact.

Other research indicates the Pfizer vaccine works to stop the Brazilian variant; since I’m getting my first shot – and it’s the Pfizer version – Monday, that’s good news indeed. Pfizer also believes its vaccine will work against the South African variant as well.

These are all good news, as economists believe an economic recovery is highly dependent on stopping COVID.  One stated: “The vaccine is truly incredible…. It’s the best kind of stimulus we could want.” Excellent podcast for your morning walk or pm drive is here.

Terrific research out of CWCI last week; in their annual meeting, Alex Swedlow, Rena David and colleagues provided a lot of information on what’s happened with claim counts, costs, claim duration, and treatment timing. One very bright spot – February saw a huge drop in COVID workers’ comp claims. Rena also reported that “many workers with non-COVID claims got faster treatment than before the pandemic…” A big chunk was via telemedicine, which hit 25% of office visits in April and May, then dropped to about 18% in October. [thanks to WCC’s Mark Powell for his reporting]

I’m hoping to interview Alex and will provide more intel in a future post.

What does this mean for you?

Science, people. 

Mar
11

The latest workers’ comp drug scheme

Posted by Joe Paduda on Thursday, March 11th, 2021 | Comments

CWCI released a report detailing the latest in what’s been a long line of schemes to manipulate workers’ comp regulations to suck money out of employers’ and taxpayers’ wallets.

CWCI’s Bob Young, Jackie Secia, and Steve Hayes conducted the research, which found opioid scripts dropped from three of every ten prescriptions in 2011 to one out of nine today. That’s the good news – or rather, great news.

The research also identified two drugs – fenoprofen calcium and ketoprofen as the other primary reason NSAID costs jumped from 14.2% of total drug spend to 23.5% in less than two years. Oh, and these meds aren’t wonder drugs that grow hair while curing low back pain and strengthening joints and rejuvenating shoulder cartilage…they are similar to aspirin, ibuprofen, and naproxen.

OK, here’s how the scheme works.

First, both drugs are exempt from prospective Utilization Review (also known as Prior authorization) requirements, so prescribers don’t have to get approval before prescribing, and dispensers don’t have to worry about getting paid. 

Second, neither drug is on the California workers comp drug fee schedule, so employers and taxpayers have to pay 83% of the “average wholesale price”. AWP is a number made up by the drugs’ manufacturers, and can be anything they want it to be. Over the last four years, the average cost of fenoprofen calcium (FP) sextupled (is now 6 times higher); ketoprofen’s costs jumped more than ten times.

So, some smart schemers figured out that they could make a shipload of money by a) jacking up the price of a drug that costs pennies to make, and b) convincing a few docs to prescribe it to workers’ comp patients.

FP and ketoprofen are the main reason “not listed” drugs suck up more of employers’ and taxpayers’ dollars than other drug categories.

graph courtesy CWCI

It’s not just California.

PBM audits we’ve recently completed found both drugs showing up in New York; I’d expect they’ll appear in other states soon enough.

There’s a lot more we need to know – who’s pushing these drugs, why are docs prescribing them, what does the supply chain look like, are FP and ketoprofen also gaining traction outside of workers’ comp.

That said, we know enough right now to know we’ve got a big problem on our hands.

What does this mean for you?

Every PBM program must have an early warning capability to identify emergent drugs, and an ability to adapt quickly to ensure abuse is minimized.