Author: Joe Paduda

Jul
8

Opioids, deaths, and workers comp

Posted by Joe Paduda on Friday, July 8th, 2011 | Comments

The number of of people dead from opioid analgesic use quadrupled over the last nine years. Opioids are synthetic opiates, and include methadone, OxyContin, Percocet, Oxycodone, fentanyl, and Actiq.
11,499 people died as a result of opioid usage in 2007, up from less than 3000 in 1999.
That’s twice as many as died from cocaine, and five times more than died from heroin.
The data come from the CDC’s National Vital Statistics System, and was published in the CESAR bulletin of May 31.
Another study published in JAMA indicates significantly higher risk of death for those taking more than 100mg/day.
This dosage level is not uncommon in workers comp, and the high dosage, coupled with long-term usage of opioids, significantly raises the chance of death from overdose. In fact, in comp, – over a third of claimants who start using opioids are on them for more than a year; a fifth are on for more than two years; and a seventh are on for more than three years.
And the usage of opioids in comp is exploding – the number of scripts is up 500% in California – in only four years.
The unknown is how many workers comp claimants are dying from opioid overdoses. I’m thinking that ‘unknown’ will not remain unknown for much longer, and when the data does come out, there’s going to be a lot of ‘energetic’ conversation about who’s at fault and what to do.
Here’s hoping we get to solutions pretty quickly.

Jul
6

Work comp’s latest and greatest – drugs, devices, and doctor participation

Posted by Joe Paduda on Wednesday, July 6th, 2011 | Comments

In the last couple weeks there’s been a wealth of new reports, analyses, and studies released about various aspects of the work comp world. Too many to give each the attention it deserves, so a synopsis of a few will – alas – have to suffice.
Yesterday David DePaolo posted on his contention that there aren’t “any valid scientific studies demonstrating that the introduction of an RBRVS fee schedule would result in a mass exodus of physicians from workers’ compensation”. After asking for examples of same, he received seven plus an article that his own WorkCompCentral published six years ago. (thanks to Mark Walls’ LinkedIn Group for the tip)
David hasn’t reviewed each of the “studies” he received, but a quick analysis indicates the scientific rigor of most is rather less than, well, rigorous. Several appeared to be telephonic surveys of doctors’ offices (several studies didn’t provide any information on methodology). At least one [opens google docs] made several conclusive statements without any discussion of how they arrived at those conclusions. Another authored by the same writer provided background on the methodology, which was a phone call to physician offices where the person answering was asked if the physician accepted workers comp patients.
A quick read indicates the methodologies used appear to be rather less than scientific, the conclusions based on opinions of cause and effect rather than rigorous analysis. That’s not to say that low fee schedules may well influence physician participation, but rather to point out there’s not much in the research provided to conclusively demonstrate the linkage.
From the good folk at WCRI comes the latest research on narcotic usage in workers comp. While this particular aspect of the subject (interstate variation in usage of narcotics) has been explored in some detail by NCCI, WCRI’s report looks specifically at usage for non-surgical lost-time claims in 17 states for the period 2006 – 3/2008. The report indicates usage on a per-claim basis was highest in LA MA NY and PA, with those four states plus CA, NC and TX showing a higher proportion of claims with long-term usage of narcotics than average.
Shockingly, few long term users were monitored according to medical treatment guidelines…
Meanwhile, the government shutdown in Minnesota means the state’s WC Division is closed for all but critical services.
On the good news front, the ‘low cost’ (well, it’s relative…) movement has entered the surgical device industry, with the WSJ reporting the emergence of a new business model; “Low-cost orthopedic parts [are] cheaper versions offered with a no-frills sales approach. This typically means not sending sales representatives into operating rooms to advise surgeons, which is a common but cost- and labor-intensive practice.”
I’d note that there are several companies currently focused on this space in workers comp, but with a different model. They find out about a scheduled surgery, identify the devices to be used, and order them on behalf of the insurer – usually at a much lower price point than that charged by the facility.

Jul
5

The deficit deal’s impact on workers comp

Posted by Joe Paduda on Tuesday, July 5th, 2011 | Comments

When Congress reaches agreement on a deal to increase the debt limit, there will almost certainly be parts that significantly affect workers comp. Medicare and Medicaid are on the table, with both likely to lose hundreds of millions in funding over the next ten years.
And as we all know, what happens in Medicaid and Medicare affects work comp via cost-shifting, fee schedule changes, reimbursement rules, and altered provider practice patterns.
It is not a question of ‘if’ these huge programs are cut, but rather “how much”. Accounting for 23% of the Federal budget, Medicare and Medicaid have to be on the table if there’s to be any measurable deficit reduction.
Here’s what may happen in the ultimate deficit reduction agreement. along with my assessment of potential impact on work comp
– Reductions in the amount Medicare pays hospitals for bad debts resulting from Medicare beneficiaries’ failure to pay deductibles and co-payments; right now CMS pays 70 percent of those debts after the hospitals make “reasonable efforts” to collect.
Impact – hospitals will look to increase reimbursement from work comp and other private payers; work comp is usually the most profitable payer for hospitals; I’d expect this to increase.
– Cuts to Medicare payments to teaching hospitals for physician training and other programs.
Impact – more incentive to seek additional reimbursement from work comp
– Allow or require CMS to negotiate directly with pharma for drug prices.
Impact – possible cost shifting to comp as pharma and other stakeholders seek additional funds to offset lower Part D reimbursement
– Reductions in Federal subsidies for Medicaid.
Impact – incentive for providers to cost shift; however Medicaid providers may not treat many work comp claimants so impact may be minimal.
– Give more power to the Independent Payment Advisory Board (IPAB) created by the Affordable Care Act; set a target of holding Medicare cost growth per beneficiary to GDP per capita plus 0.5 percent beginning in 2018.
Impact – possibly positive, as improvements in delivery systems, reimbursement, pay-for-performance, clinical guideline adoption and acceptance, and other tools/processes would help improve care and reduce errors.
– Reduce reimbursement for durable medical equipment (seen any scooter ads lately?)
Impact – lower margins for DME manufacturers and distributors will motivate cost-shifting, however fee schedules may mitigate those efforts. Watch for creative ways around fee schedules and ‘upselling’.
Public opinion will help shape the outcome; recent polls suggest the public is more willing to accept some reductions rather than a wholesale overhaul of Medicare and Medicaid. That said, the health industry’s various stakeholders are already hitting the phones hard to forestall – or more likely minimize – reductions to their favorite programs.
What does this mean for you?
We’re the mouse; CMS is the elephant; keep your head up, watch out for those big feet, and be nimble. Work comp will be affected by the ultimate deficit reduction agreement; success favors the aware and the well-prepared.

Jul
1

Happy Fourth

Posted by Joe Paduda on Friday, July 1st, 2011 | Comments

Managed Care Matters will be celebrating the nation’s independence this weekend; a new flag graces the flagpole out front, friends and family will be with us to watch the fireworks show off the Town beach; and I’m going to try to finish reading a biography of James Madison I’ve been working on for about a year.
Have a great holiday – and see you next week. If you’re working, that is

Jun
30

What’s wrong with Sandy Blunt.

Posted by Joe Paduda on Thursday, June 30th, 2011 | Comments

The former head of North Dakota’s state workers comp fund has been – and continues to be – vilified by a few people who obviously don’t know the guy. (more on the appeal in a future post).
Prosecuted for ‘misuse of funds’, Sandy’s life has been ruined because he approved payments for balloons, small ($50) gift cards, sweets, and cakes for employee recognition events, along with refusing to seek repayment for relocation expenses for an employee terminated for performance (which was legal and appropriate).

Well, I do know the guy, and there’s plenty wrong with him. Here’s the real scoop on this horrible guy/abuser of the public trust/scofflaw…
Well, he worked for George HW Bush in the White House (our politics are pretty different, but I keep hoping he’ll come over to the bright side).
He’s an avid, very well informed – and extremely loyal – Cleveland sports fan. (Gotta respect that, even if you don’t understand it)
He isn’t a golfer. (Me neither, so that’s actually a big plus)
I don’t think he can dance.
He went to one of those fancy Eastern big-name business schools (Wharton, I think).
He is such an Eagle Scout (which he actually is) that he won’t let his kids download music from file-sharing services because it is unethical. I’m sure the young Blunts think he’s horribly unfair.
For a non-IT guy, he’s pretty good at tech stuff, making me think he was an AV club guy in his high school days (and not, that’s not meant pejoratively).
Sandy was COO of Ohio’s Bureau of Workers Comp before he was recruited to professionalize the NoDak state fund (so much for that honest effort). By all accounts he was well-liked, and more importantly, very well respected in that role. But still, he was a workers comp exec, and you KNOW what those people are like…
He’s unremittingly positive, unerringly cheerful, and undeniably an upbeat person. Despite what the ‘criminal justice’ system has done to ruin his life, Sandy’s always positive. I don’t get it.
He’s a very, very good analyst. Sandy’s helped me on several consulting projects involving analyses of big databases of medical and claims data and interpreting the results, and the guy knows his stuff. This ticks me off, because he sees stuff I don’t.
He knows his college sports, and probably did pretty well in the NCAA pool. Those guys who a) know their sports and b) are analytical usually do. Again, pretty darn annoying.
There’s more, but if I say anything else I’ll embarrass the guy even more. Still, glad I’ve finally come clean on just what kind of bad actor this Blunt guy really is.
I feel so much better now!

Jun
29

The cost of narcotics in workers comp

Posted by Joe Paduda on Wednesday, June 29th, 2011 | Comments

I’m in DC for a couple of meetings focused on the use, abuse, and impact of narcotics in workers comp. To say this is starting to get major traction would be an understatement; payers, policymakers, employers, and pharma are all recognizing the issue for what it is – one of the biggest problems in comp today.
For now, here’s a few numbers to help put things in perspective.
– workers comp payers spent about $1.4 billion last year on narcotics. That’s ‘billion’ with a ‘B’.
– A study in Washington state determined that there between eight and twelve deaths were associated with workers comp claimants’ use of opioids each year from 1999 – 2002.
– over a third of claimants who start using narcotics are on them for more than a year.
– a fifth are on for more than two years.
– a seventh are on for more than three years.
– this despite well-recognized treatment guidelines that suggest narcotics should be used for a limited dime during the acute phase of an injury.
– in a Washington study, only 16% of the low back claimants taking opiates saw an improvement in functionality; only 30% saw a reduction in pain.
– the extended use of opiates doubles the risk of duration exceeding one year.
The elephant in the room is the issue of addiction. Many payers don’t want to hear about the likelihood that many of their long-term claimants are – in fact – addicted to or dependent on narcotics. For some reason, they appear content to ignore the issue; a couple claims people I’ve spoken with have said “we don’t want to ‘buy’ the addiction.”
Well, here’s a news flash; You already have.
Whether you choose to acknowledge this or not, claimants who have been getting opiates (and/or opioids, the synthetic version) for more than 90 days at a dosage exceeding 120 morphine equivalents per day are are at high risk for dependency/addiction.
And the ones who are addicted are ‘treating’ their addiction by consuming drugs which:
a) employers are paying for – directly or indirectly
b) are preventing return to work
c) increase total medical costs and require claimants to take other drugs to address the side effects of narcotics
d) may be sold, given away, or taken by family, friends, or other users.
What does this mean for you?
It’s time to get real, folks. Here are a few ways to get started.
Begin identifying the claimants at risk for addiction; develop a scientifically – and jurisdictionally – sound approach to addressing the risk; partner with your PBM on a comprehensive strategy; work with regulators to change rules where necessary and possible; task your medical director with developing – and implementing – a solution.
Washington State has what looks to be an excellent, well-researched approach.

Jun
27

Tort reform – another perspective

Posted by Joe Paduda on Monday, June 27th, 2011 | Comments

Remember the woman who sued McDonald’s and won millions ($2.9 million to be precise) after spilling hot coffee on herself? Like millions of others, you may have been outraged at the award for something so trivial.
There’s a film on HBO tonight that you should watch.
Hot Coffee is a documentary about Stella Liebeck, the elderly woman who spilled coffee on herself and sued McDonald’s, “while exploring how and why the case garnered so much media attention, who funded the effort and to what end.”
Like most, I read the headlines abut the suit back in 1992 and thought “jeez, this is ridiculous”.
Maybe not.
This from wikipedia:
“Stella Liebeck, a 79-year-old woman from Albuquerque, New Mexico, ordered a 49 cent cup of coffee from the drive-through window of a local McDonald’s restaurant. Liebeck was in the passenger’s seat of her Ford Probe, and her nephew Chris parked the car so that Liebeck could add cream and sugar to her coffee. Stella placed the coffee cup between her knees and pulled the far side of the lid toward her to remove it. In the process, she spilled the entire cup of coffee on her lap
Liebeck was wearing cotton sweatpants; they absorbed the [180 degree] coffee and held it against her skin, scalding her thighs, buttocks, and groin. Liebeck was taken to the hospital, where it was determined that she had suffered third-degree burns on six percent of her skin and lesser burns over sixteen percent. She remained in the hospital for eight days while she underwent skin grafting. During this period, Liebeck lost 20 pounds (9 kg, nearly 20% of her body weight), reducing her down to 83 pounds (38 kg). Two years of medical treatment followed.”
Without being too graphic, think about that. An entire cup of 180 degree coffee dumped in your crotch, causing third degree burns on an extremely sensitive area with millions of nerve endings. An anatomical region involved in rather essential physiological functions.
Disclosure – my wife’s family was involved in McDonald’s for decades, we still own stock in the company, and know many fine people at McDonald’s.

Jun
22

Will employers drop coverage due to reform?

Posted by Joe Paduda on Wednesday, June 22nd, 2011 | Comments

There’s been much publicity around a McKinsey survey that purported to indicate many employers would drop their employee health insurance plans, a finding markedly different from that predicted by several other studies.
Were the other surveys wrong, and is McKinsey right?
Give me a minute…
First, lets examine the McKinsey study. It was conducted by Ipsos, a firm contracted to McKinsey; the survey was done on line
Here are the key findings, as reported by McKinsey:
– Overall, 30 percent of employers will definitely or probably stop offering ESI [employer-sponsored insurance] in the years after 2014.
– Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.
– At least 30 percent of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries.
Notably, the folks from the highly-regarded consulting firm initially refused to release the details of the survey, the methodology, and information on exactly who was surveyed. That’s weird. After significant pressure from Congress and others, they did provide additional information about the process and methodology, but details on who responded (other than broad characterizations) were not revealed. I read the Survey instrument itself; you can download the pdf http://www.mckinsey.com/en/US_employer_healthcare_survey.aspx.
What’s weird is why McKinsey delayed publishing the details. The instrument and methodology look to be pretty sound; results were weighted to account for differences in the actual employer population; and the survey firm itself is well-regarded. But, here’s the kicker. When asked how much their company paid for health benefits, almost three in five didn’t know. If these respondents were truly decision makers or influencers, you’d think they’d know this rather basic information.
WIth that rather major concern, it is clear this was not some cheap-shot Tea Party-funded hack job.
That said, there are two sets of questions that appear to deliver very different takes on the over-arching question – will employers drop coverage after 1/1/2014. In the initial question re would they maintain or drip coverage, 9.2% said they ‘definitely would’ drop coverage, and another 20.5% said probably. This question was preceded by a detailed description of individual subsidies and employer penalties, however, while the questionnaire (specifically around question 8) did include some details of the employer subsidies/premium support provided under ACA, it appears these were presented in a sidebar on the internet-based survey and may not have been shown to all respondents. Whether folks read this in detail, or understood what they read, is an open question.
The other question (hat tip to Kate Pickert of TIME’s Swampland) asks if the respondents knew what their competitors would do in response to reform. Not surprisingly, 31.4% said they didn’t know, but 27% said continue as is or with minor changes and 24.3% said continue offering coverage but with significant changes.
The folks at the Urban Institute published a response (based on their Health Insurance Policy Simulation Model (HIPSM)) to the McKinsey work in which they refute McKinsey’s central finding. From the report:

• Employers with fewer than 50 employees are expected to experience substantial savings on health care costs due to the benefits of the health insurance exchanges and subsidies for the smallest firms. These employers face no requirements to contribute to the health care costs of their workers under the ACA;
• Savings on premium contributions are offset by employer responsibility assessments for those employers with 50 to 100 workers, which is expected to result in a very small increase in total costs for this group;
• The smallest firms are expected to experience a significant increase in offer rates under the ACA, while offer rates for those with 25 or more employees are expected to remain stable;

Notably, the methodologies were markedly different, but, the conclusions were supported by the underlying data.
Which leads to this conclusion.
We don’t know what employers will do.
That said, here’s what I think. More smaller employers will offer coverage after reform than do today.
Some mid-size (50-100) employers will drop coverage and pay the penalty.
Remember, once people start seeing the benefits of an entitlement program, they are loathe to give it up. Just think about Part D, Medicare, and Social Security, and the unwillingness of (most) politicians to do anything material about these programs.

Jun
21

The toughest job in workers comp

Posted by Joe Paduda on Tuesday, June 21st, 2011 | Comments

is that of claims adjuster.
Whether you know them as adjusters, examiners, file handlers, or claims case owners, these women and men are the ones who write the checks out of the checkbook – both literally and figuratively. What they do, and how they do it, has more impact on the success or failure of an insurer or employer’s work comp program than any other position (although some underwriters would argue they’re just as important).
Adjusters determine compensability; keep an eye out for fraud; authorize indemnity payments; encourage/direct/cajole claimants to go to preferred providers; interface (or, as one seasoned adjuster referred to his approach, ‘in-your-face’) with claimant attorneys; meet with employers’ risk managers to review claims, discuss reserves, and encourage RTW planning; set, change, and justify reserves; encourage, and in many cases educate treating docs to think about RTW; try to figure out if this or that unpronounceable drug is appropriate for the claimant’s condition; authorize, or deny, medical treatment; prepare and present cases to hearing judges; explain to their managers why they can’t get a case closed or IME scheduled.
All this while looking every day at a case load that, a decade ago, would have seemed far too large. With claims case loads at many payers in the 150 range (lost time), adjusters have about twenty minutes a week to focus on each claim.
Twenty minutes.
Of course, this is before we factor in the other stuff; ongoing CEUs required in many jurisdictions and the training requirements for new products, vendors, programs, and technology innovations.
And recall that we’ve been hammered by a work comp market that’s been soft as fresh WonderBread for several years, leading payers of all types to consolidate, cut staff, hold off on investments in technology and workflow improvements, and require everyone to ‘do more with less’.
I’m often asked by those in- and outside the comp business what the secret to success is. In most cases, the answer is the same:
Take work off the adjuster’s desk and put it on your’s.
Mark Wall’s LinkedIN group always has great insights; for more detail on what these folks go thru, and how those struggles affect their ability to handle claims effectively, check out this conversation .