Author: Joe Paduda

Apr
16

Report from RIMS – day one

Posted by Joe Paduda on Monday, April 16th, 2012 | Comments

This year’s RIMS conference is in Philly once again, and by the looks of the exhibit floor there’s a lot going on. Here’s a few of the news bytes circulating around the floor.
– TPA TriStar is acquiring REM, continuing the ongoing consolidation in the property/casualty claims administrator market. I’ll be by the TriStar booth later today to get more details.
– Despite the rumors to the contrary, Coventry is NOT acquiring managed care services company Genex.
– PBM PMSI will release their annual drug trends report shortly; early indications are drug costs were up just over three percent, driven by price increases. And all of the price increase was due to an 8.9% increase in pricing for branded drugs in 2011; generic pricing was essentially flat.
– UR/peer review firm CID Management has won a major contract with SCIF, the California state fund. Reports indicate they will begin providing UR services for about half of SCIF’s volume in a couple months.

Apr
13

Express Scripts, Medco, and Walgreens – the deal

Posted by Joe Paduda on Friday, April 13th, 2012 | Comments

Now that Express Scripts’ takeover of Medco has gotten the okay by federal regulators, it’s a done deal. The new company will be the nation’s largest pharmacy benefit manager, with only CVS-Caremark
There’s pressure on Express to get this deal done as well, as sources indicate the giant PBM will make some clients “whole” on scripts purchased at Walgreens, albeit only for a limited time. That’s costing Express more money every day; while the “limited time” make-whole deal will expire (for many customers) at the end of June, customers will not take kindly to an end in Express’ subsidy of Walgreens’ scripts. Most assuredly Walgreens is well aware of the growing pressure on Express, and likely made the decision to wait it out, hoping that a) the Medco deal would be rejected by the Feds, and b) as the make-whole guarantees expired, Express would be forced to sweeten their offer to Walgreens.
Now that the deal has been approved, there’s a bit more pressure on all parties to resolve their differences, sign a new contract, and move on. While Walgreens is a major force in retail pharmacy with their 8200 stores making them the largest chain, ESI-Medco will handle a full 40 percent of all scripts in the US.
That’s just too much market share; Walgreens has to get a deal done. Script volume declined by 8% – 9% late last year, likely as a result of the loss of ESI contract. Now that ESi brings those scripts to the bargaining table, Walgreens will be hard pressed to come up with any business case wherein not contracting with ESI-Medco is viable.
But, many (including your correspondent) also thought the two parties would get a deal done earlier this year. There is always the chance that there’s just too much of a gap, and/or too much animosity.
And, Walgreens does have an alternative ‘strategic option’; they can acquire Rite-Aid, thereby upping the ante. That deal has been rumored for some time, and could be part of their overall negotiating tactics, as well as a long-term strategic move.
Of course, Medco has had and continues to have a contract with Walgreens, a contract that resulted in 125 million scripts for Walgreens. Now that Express and Medco are coming together, the Medco contracting folks may (pure speculation here) take the lead on resolving the issue. As they’ve not been involved in the previous (failed) negotiations, they may be able to resolve the impasse more quickly by not having to rebuild relationships and re-establish trust.
Remember – while the deal is between companies, the deal-makers are people, and people have to get the deal done. I’d bet they will, and give odds.
What does this mean for you?
Consolidation among the largest buyers of scripts may mean lower costs for their customers, but as the market consolidates further, it could may lead to monopolistic pricing.

Apr
11

The overwhelming crisis of addiction

Posted by Joe Paduda on Wednesday, April 11th, 2012 | Comments

I’m attending the National Rx Drug Abuse Summit in Orlando. The first conference of its kind, there are representatives from law enforcement, Congresspeople, physicians, Federal regulators, patient advocates and pharma experts, all focused on what this morning’s keynote speaker described as the national health issue with the most potential impact on society.
Nora Volkow MD, director of the National Institute on Drug Abuse, was compelling and factual, but the impression I was left with was chilling. Her data-centric, science-based approach was cooly clinical.
Until you thought about the individuals who underly the data. Families, kids, parents, coworkers, friends, all are deeply affected by what Volkow could have called a national emergency. I’m sure you know someone who’s been directly and deeply affected by prescription drug abuse.
The leading cause of death of Americans aged 1-35 is unintentional injuries; overdoses has surpassed motor vehicle accidents as the leading cause of accidental injuries. 75% of those overdoses involved prescription drugs.
Reps. Nick Rahall, Mary Mack, and Connie Mack are speaking today as well, confirmation of the importance of this issue.
WCRI’s Dr Rick Victor and I are speaking later today about opioids and workers comp; ours is the only comp-focused talk; after listening this morning it’s more clear than ever that the work comp industry must get very, very serious about opioid use in workers comp.

Apr
9

The drug testing controversy

Posted by Joe Paduda on Monday, April 9th, 2012 | Comments

If patients are prescribed opioids, ‘best practices’ calls for
– assessment of risk for dependency and addiction;
– completion of an Opioid Agreement:
– ongoing assessment of pain and functionality; and
– random urine drug testing (UDT).
This last has become – for some – yet another of the myriad ways to suck money out of the workers compensation system. Yet there’s no question UDT is a necessary component of opioid management.
Today’s WorkCompCentral arrived with an excellent piece on the issue authored by Greg Jones. The premise of the article is a flap involving accusations of overbilling by a former employee of a company that allegedly does billing for drug tests.
The details of the controversy aren’t what’s important.
What’s important is for payers to understand two things:
a) drug testing is a critical piece of opioid therapy; and
b) just like physician dispensing, MRIs. PT, surgery, heck almost anything, it can be gamed, over prescribed, abused, and made into the proverbial money tree.
Properly done, drug testing enables physicians to determine if the patient is taking the prescribed drug; if they’re taking other drugs that may be contra-indicated; and/or if the patient is taking illicit drugs. Given the issues with addiction, abuse, diversion, and misuse, drug testing is a critical component of the medical management process.
Grossly over-simplifying the issue, it boils down to this. Fee schedules and reimbursement rules allow physicians and labs to bill multiple codes for multiple ‘tests’ for different drugs – so, the more tests, the more money. Typically, physicians bill for testing that just indicates the likely presence or absence of certain drugs, and a lab bills for ‘confirmation’ using much more sophisticated processes and technology.
There’s a reasonable argument to be made that paying docs to test in their offices encourages compliance with opioid management best practices, as long as the amount paid is also ‘reasonable’. Unfortunately, the research indicates UDT is grossly underutilized; one study found fewer than one of every seven physicians treating patients with opioids test their patients.
In-office testing is also much less reliable than lab-based testing; therefore any office-based test result must be confirmed with a test at an accredited lab.
So, the conundrum is this: payers want to encourage drug testing, but don’t want to get stuck with outrageous bills. There are several tactics payers can use.
1. Inform contracted physicians that drug testing in office will be reimbursed at $XX.XX – a flat rate regardless of the number of drugs tested for.
2. Drop physicians who refuse to comply from your network.
3. Require proof of testing and assurance that the prescribing doc has reviewed the test results and factored those results into ongoing treatment.
4. Contract with a lab for a flat fee to cover a comprehensive list of drugs; this ensures the physician has a full view into the patient’s drug consumption while capping the payer’s fees at a ‘reasonable’ rate.
What does this mean for you?
Drug testing is necessary, it’s also ripe for abuse.
(Disclosure – Millennium Labs is an HSA consulting client)

Apr
6

The GOP budget, fiscal responsibility, and Part D

Posted by Joe Paduda on Friday, April 6th, 2012 | Comments

Rep. Paul Ryan (R WI) and the House Republicans are touting their budget as fiscally responsible and prudent. What Mr Ryan conveniently forgets, or more likely avoids, is this:
Eight short years ago he – and his GOP buddies – passed the single largest entitlement program since Medicare – the Medicare Part D drug benefit – with no dedicated financing, no offsets and no revenue-generators – the entire future cost – which is now around sixteen trillion dollars [see page 148] – simply added to the federal budget deficit.
According to Bruce Bartlett writing in the Fiscal Times, “By 2030, Part D alone will cost taxpayers 1 percent of GDP.”
There’s a legitimate argument that health reform is going to add additional cost, and will require additional revenue. Let’s accept the GOP’s claim that health reform will add $700 billion to the deficit. That’s one-twentieth of the deficit from Part D.
That’s right – Paul Ryan’s Part D added twenty times more to the Federal deficit than even he claims reform will. Yet the GOP budget he wrote doesn’t include any provisions to end, or fix, or reduce Part D.
Notably, the President’s budget proposal doesn’t address long term costs of Part D either – and yes, that’s a serious problem.
Folks, we have a BIG deficit problem. If we aren’t deadly serious about what we need to do, we’re screwed. Whether you’re a conservative or liberal, Glenn Beck-er or Rachel Maddow fan, red stater or blue stater, there are basic, immutable facts.
Part D’s $16,000,000,000,000.00 ultimate cost is one of the more obvious.
It would have been more than refreshing if Ryan and the Republicans’ budget was more financially responsible, more old-style fiscally-conservative-Republican. That would have been courageous – admitting he and his party made a mistake. Sure, they would’ve taken a hit from older Americans who love Part D, but true statesmen, real leaders know that tough, unpopular stands are necessary some times
Ryan’s blatant hypocrisy reveals that he – and his party – don’t care one whit about the deficit or budgets or fiscal responsibility. Nope, they just want to get re-elected.
What should we do?
Either a) end Part D or b) allow the Feds to use their buying power to negotiate with pharma. That alone would save about $20 billion a year.
Canceling Part D won’t happen; neither party is about to tell seniors they can’t have free medicine. If Ryan et al were really concerned about the deficit, they’d consider using the government’s buying power to reduce costs and thus lower the deficit. But of course they won’t; that would alienate big pharma and cut into their campaign contributions.

Apr
5

Work comp pharmacy – the basics

Posted by Joe Paduda on Thursday, April 5th, 2012 | Comments

There’s an excellent webinar on the nuts-and-bolts of work comp pharmacy scheduled for April 12. Put on by National Council for Prescription Drug Programs (NCPDP), the webinar features industry experts Jim Andrews, RPh, SVP Pharmacy Services at Cypress Care and Kevin Tribout, Executive Director Government Affairs for PMSI.
Jim and Kevin are very, very knowledgeable and great communicators as well (full disclosure – they’re also good friends and their companies are members of workers compensation PBM consortium CompPharma, LLC).
hat tip to WorkCompWire for the news…

Apr
5

Is your hair on fire yet?

Posted by Joe Paduda on Thursday, April 5th, 2012 | Comments

The single biggest crisis facing workers comp is NOT the market cycle, employment, rate adequacy, or regulatory changes.
It is opioids. As Gary Franklin MD, Washington state fund’s Medical Director says, this is a “hair on fire” issue.
I’m not talking about the $1.4 billion employers spend on these drugs, nor am I referring to the other medical costs incurred by claimants on opioids or the dollars wasted on diverted drugs or the hundreds of claimants dead from opioids prescribed for their injury; not even the disastrous personal impact on claimants and their families.
It’s what opioids do to disability duration – that’s what’s going to drive up rates, kill off carriers, and jack up employer’s premiums.
Claimants on opioids are NOT going back to work; not to their original job, a new job, any job. They can’t drive, operate machinery, think clearly, function physically. Most employers can’t or won’t re-employ opioid-taking claimants out of concern for their safety and additional liability. Can’t blame them either.
The issue is this – the industry has not accounted for the financial impact of the explosive growth in opioid usage among long-term lost time claimants. Sure, a couple of big insurers have figured this out and are moving very fast (and very quietly) to assess the risk and try to mitigate the impact, but the vast majority of carriers, employers, reinsurers, actuaries, and regulators have yet to catch on.
While some are beginning to implement programs in an attempt to reduce the initial use of opioids for injuries, that’s closing the proverbial barn door after the herd is long gone. These programs are often pretty ineffective as well; even if the medical director/case manager/guidelines recommend against approving opioids, adjusters usually approve them anyway. That’s not really the adjuster’s fault; they just don’t have the experience/education/training/support to make the right call.
The real killer is the claim backlog, those old-dog, legacy claims where the claimant has been on OxyContin, Fentora, Actiq, hydrocodone and god knows what else for five years, where the doses have been escalating, there’s been no drug testing for compliance, and the treating doc has no long term plan other than ‘more’.
What does this mean for you?
If you aren’t already deep into a financial analysis of the real impact of opioids on claim closure, disability duration, indemnity and medical expense, start immediately. Not this afternoon, not tomorrow, not after next month’s planning call.
Now.
And don’t settle for platitudes, for “not to worry we’ve got that figured out” statements. Demand projections based on actual experience backed up by real data. And be prepared for some very, very bad news.
But better to get that news now then a couple years down the road from your favorite rating agency. While they haven’t figured this out yet, you can be sure they will.

Apr
3

No, the Feds aren’t taking over workers comp

Posted by Joe Paduda on Tuesday, April 3rd, 2012 | Comments

My last post was, in fact, MCM’s annual contribution to the national celebration of April 1. Over the last eight years I’ve had a lot of fun with this, only occasionally (once, to be precise) going just a tad too far.
Rest assured it only happens once a year – the prank, that is. Going too far may happen a bit more often.
This year’s post was purposeful – for two reasons.
Rumors about the Feds’ purported interest in getting more involved in workers comp continue to pop up every now and again, as much as we try to show how this a) makes no sense and b) there’s no one in DC with any authority remotely interested in stepping into workers comp. The April 1 post was my attempt to highlight the absurdity of the ongoing ‘debate’; there is no ‘debate’, the Federal government is not taking over workers comp.
On a broader scale, I’d ask that you, dear reader, view what you read here and everywhere else for that matter with a healthy dose of skepticism. And while you’re at it, challenge your own firmly held beliefs. None of us has sole proprietorship of the “truth”, we all can learn from each other, but only if we’re willing to listen.
We now return to our regularly scheduled blog postings…

Apr
1

Workers’ comp medical to be federalized

Posted by Joe Paduda on Sunday, April 1st, 2012 | Comments

While all of Capitol Hill was focused on the hearings on ObamaCare at the Supreme Court, the Administration was quietly proceeding with plans to federalize the medical portion of workers’ compensation. The effort has reportedly been led by Assistant Deputy Secretary A. Pryl Pfuelle who has been working closely with the Executive Secretariat on policy implications and coordination efforts. Details on timing, rollout, reimbursement levels and other critical matters are still to be worked out, but the Secretariat is likely looking to FECA as the regulatory agency that will be tasked with oversight responsibilities.
There have been rumors about increased Federal involvement in workers comp circulating for some months, but this is the first clear indication of actual changes in the offing. Evidently the legal aspects have been addressed in the Zadroga Act and under the LibbyCare provisions of the Affordable Care Act. While these bills covered occupational disease, there is enough flexibility to allow them to extend to address occupational injury as well.
For now, this is likely to only affect the medical portion of workers comp; HHS’ Office on Disability had been involved in discussions for some time about including the disability/indemnity portion of workers comp in the program, but for now the move is “not on the table.”
While the deal isn’t “done”, reports are the planning is near complete. Evidently the move was initially brought up at a White House meeting last summer between Executive Office staff and several Fortune 500 CEOs. The execs, most of which had backed Obama’s 2008 campaign, pushed the White House to do more to help business and specifically the manufacturing and industrial sectors. Rising comp costs were specifically identified as a significant drag on hiring and a working group established to evaluate ways to reduce those costs. The group, whose members are not known, reportedly settled on utilizing the Medicare system and reimbursement mechanism as a relatively straight-forward way to reduce medical expense while also slashing work comp’s administrative costs.
At a follow up get-together early this year plans were presented to the “core group” and received a favorable response.
As most state fee schedules are based on Medicare’s RBRVS, and an increasing number of states are adopting the MS-DRG reimbursement mechanism for facility costs, the sense is this won’t be much of an issue for providers. Additional work will need to be done to refine the coding and reimbursement for comp-specific issues such as return to work planning, functionality assessment, and there will have to be some flexibility to accommodate state-specific reporting and documentation requirements.
What does this mean for you?
Time will tell.