Author: Joe Paduda

Apr
13

The narcotic abuse problem hits home

Posted by Joe Paduda on Wednesday, April 13th, 2011 | Comments

Today’s local news reported the arrest of a doctor from our small town for allegedly illegal prescribing controlled substances. The physician, by all accounts a well-liked and generally respected member of the community, was charged with illegally prescribing “Demerol, Percocet, Valium and Fentanyl for a patient in a frequency that exceeds his own directions for use.”
I don’t know the person in question, although several neighbors do. I do know this is an all-too-common news story; a cursory search finds similar reports from Ohio, Los Angeles, Pennsylvania, Georgia, and upstate New York where a thirteen year old boy recently died of a prescription drug overdose.
The problem has attracted the attention of Congress, where Senator Chuck Schumer (D NY) recently introduced legislation to monitor, track, and attack illegal trafficking in prescription drugs.
What can be done?
First, a national Prescription Drug Monitoring Program, like the one advanced by Sen Schumer, would be a big step in the right direction. While there are about 33 state-based PDMPs in place today, they are pretty ineffectual. Many are voluntary; they don’t track interstate transactions; many don’t cover all controlled substances, and most are underfunded.
Second, states need to get serious about their PDMPs. The poster child for irresponsible behavior is that model of personal rectitude, Gov Rick Scott of Florida, who’s been trying to shut down Florida’s PDMP before it even gets started. (word is the pressure on Scott may finally be having an affect, as Scott may be changing his position, although one can never tell what he actually will do.)
Third, payers must use their data mining capabilities to ensure they aren’t victimized by this practice; identify high prescribers, determine if that activity is legitimate or not, and engage with law enforcement when red flags appear.

Apr
12

News you might hear at RIMS

Posted by Joe Paduda on Tuesday, April 12th, 2011 | Comments

The annual property and casualty conference/gathering of the tribes known as RIMS is slated for Vancouver BC the first week in May. A great city, terrific restaurants, and lots to do around town.
I’ll miss it this year – too much client work and I’ll be at NCCI’s Annual Meeting later that week. While it’s a (much) smaller affair, it is also highly focused on work comp, content-rich, and well-attended by industry pros. Can’t do both, so NCCI it is.
While I won’t be liveblogging from RIMS, I daresay there will be more than a couple newsworthy items that will generate a lot of buzz. Here’s what I’m hearing, and what may be ‘ready for prime time’ by May 1.
Word is giant work comp insurer Chartis (formerly AIG) is going to dump Coventry’s bill repricing system in favor of Medata. While Medata CEO Cy King won’t comment, I’ve heard this from two separate sources, both very knowledgeable about the process. Reportedly, Medata beat out StrataCare and Mitchell.
This would be a big win for Medata; a very big win.
UPDATE – Got a call from an AIG exec this afternoon who assured me no final decision has been made.
PT firm Align Network is on the block. Multiple potential buyers are looking at the company, and I’d guess (yes, that’s a guess) a deal will be consummated this year. Align has grown rapidly, based in large part on management’s strong industry contacts and relationships. The company has a customer-service-heavy operational model that some adjusters and nurse case managers like a lot; the scalability of that model will have a big impact on the multiple.
There’s a good bit of activity in the work comp PBM world, with several large payers looking to improve their results this year. With WC pharmacy costs spiking up near double digits last year (my estimate), drugs are once again in the spotlight. Expect there to be a lot of activity around PBMs’ booths, and even more in their hospitality suites and more discreet locations.
A couple other deal-related items are brewing; if they get closer to completion before RIMS I expect we’ll hear about it/them.

Apr
11

Is justice on the horizon in North Dakota?

Posted by Joe Paduda on Monday, April 11th, 2011 | Comments

For over two years I’ve been following – with a strong sense of outrage and disgust – the travails of Sandy Blunt as he’s been pilloried by the prosecuting and investigatory authorities in North Dakota. At long last it appears there’s hope justice will be done.
The prosecutor who’s vindictive and unethical practices have made a travesty of justice is about to face her own fate. At the end of June, Cynthia Feland will be tried by a Disciplinary Board under the authority of the North Dakota Supreme Court for prosecutorial misconduct.
While Ms Feland tries to make light of the charges, the facts (something she’s quite unused to dealing with) are most definitely not in her favor.
In 2009, there were 17 cases that went thru the Disciplinary Board Panel Hearing; that’s where Feland is headed. And the odds aren’t good.
Only 2 cases were dismissed. Of the remaining cases, the Panel reprimanded the attorney in 6, the Supreme Court suspended the attorney in seven, and disbarred the offender in 2.
Let’s do the numbers.
– Feland has a twelve percent chance of acquittal – or about one in eight. She’s got equal chance of being disbarred outright.
– She’s got a thirty-six percent chance of reprimand, the next ‘most favorable’ outcome.
– It’s more likely (forty-two percent chance) she’ll be suspended (which would likely mean she loses her judgeship, which she won in an election last year).
So Feland has an 88% chance of being disciplined, disbarred, or having her license to practice suspended.
This has been going on far too long, and at a personal and professional cost to Sandy that’s just appalling. But it’s not just Sandy who’s suffered. All of us who work in this industry, who push hard to do the right thing, to deliver better results for injured workers, their families, and employers, are being penalized by this injustice.
Sandy Blunt was persecuted because he didn’t accept the status quo. He wasn’t willing to go along to get along. He required more of his employees at the North Dakota state work comp fund, more than just punching a clock and doing their time. Sandy set standards for performance and responsiveness that some couldn’t meet, and rather than acknowledging their own shortcomings, they turned on the person the State tasked with turning around their poor performance.
And the justice system, and many – but assuredly not all – of the people of North Dakota were complicit.
Feland’s hearing will take about two days. It’s to be held in the largest hearing room in the court building. It’s going to be gratifying to see the person who’s tried to ruin one of the finest people I know get her comeuppance.

Apr
8

The Ryan deficit plan, part two – shifting cost to Medicare recipients

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

Rep Paul Ryan’s (R WI) Plan to address the deficit relies heavily on private health insurers to solve the seemingly-intractable health care cost inflation problem. Today we’ll finish the discussion of his solution for Medicare.
Ryan’s Medicare plan does include means-testing and increases in the age of eligibility, both of which will affect costs on a macro scale. Means testing increases revenues for CMS, while increasing the eligibility age reduces the number of recipients – both valuable and needed, but neither does anything meaningful to restrain the increase in health care costs for Medicare recipients.
In fact, Ryan’s plan will increase Medicare’s cost trend by ‘fixing’ the physician reimbursement schedule, a fix that will add about $350 billion to the deficit today, and do nothing to reduce physician costs going forward. Beyond that, there’s precious little in his plan that does anything material to address the real problem – health care cost inflation.
For that, Ryan is relying on private insurers, who would take over responsibility for Medicare. They would be paid a fixed price, and would be expected to provide all necessary benefits for that price – an approach that’s very similar to how the private insurance market works today. How’s that going to work?
Pretty well, according to Ryan, who asserted that the Congressional Budget Office had reviewed his numbers. (at least that’s what I think he says; read it yourself here.)
Well, the CBO did review his plan, and the results are pretty discouraging.
Here’s Forbes’ Rick Ungar:
“Accordingly to the CBO estimates, the program would result in seniors paying twice as much for their care – a sum that would total more than $12,510 a year…
The GOP proposal, which would begin in 2022, involves providing a ‘voucher’ – or as Ryan likes to call it, ‘premium support’ – to seniors to help pay for their health insurance. The average American would receive a check for $8,000, representing roughly what the CBO estimates Medicare would have to fork out for the average beneficiary in 2022. In addition to the government’s costs, the CBO estimates that seniors, in 2022, would lay out about $6,150.00 in out-of-pocket costs in the Medicare system. That totals an average cost of health care for participating seniors, in 2022, to be $14,770.
Under the GOP privatization plan, the cost to purchase the health insurance policy would cost about $20,520 per year – leaving the seniors out of pocket in the amount of $12,510 or more than twice what they would pay in 2022 should the Medicare system we currently have continue.”
Ryan says his plan is adjusted to account for medical inflation; in actuality Medicare premium increases in the Ryan plan are based on the overall inflation rate, which is significantly lower than the medical CPI.
Fact is, private insurers have been managing Medicare for millions of beneficiaries for well over a decade, and they’ve shown no ability whatsoever to control costs. In fact, when the subsidy paid to private insurers was cut, they screamed bloody murder.
What does this mean for you?
While there are parts of Ryan’s Medicare plan that deserve serious consideration (increasing eligibility age for one), his reliance on private insurance is naive at best, and the complete lack of real controls over cost is quite disappointing. After all the fanfare over his plan and willingness to take on the tough issues, Ryan’s shown himself to be just another number-massaging political operator.

Apr
6

Paul Ryan’s health care ‘fix’

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

Rep Paul Ryan (R WI) has come up with an economic/philosophical/governance plan that puts our problems squarely on the table – unsustainable government spending, driven in large part by health care costs.
While that’s not exactly new news, it is helpful to be reminded of how big the issue is. And some of his ideas, like increasing the eligibility age and means-testing for Medicare, make a lot of sense. And they will help, on the margins.
If you were looking for real solutions to the health cost problem, you’re going to be sorely disappointed. Limiting eligibility doesn’t address cost drivers, it just limits the number of people in the program. And that’s where Ryan’s ‘plan’ falls apart.
Unfortunately, he’s fallen into the same trap his Democratic colleagues did with their version of health reform – the Ryan plan does little to address costs.
The main pillars of Ryan’s plan are privatizing Medicare, changing Medicaid to a block grant program, and replacing health reform with a refundable tax credit ($2300 for individuals, $5700 for families).
While each of those ideas are attractive on their face, they are not going to do anything to solve the real problem – cost inflation.
If privatizing Medicare was the solution, Medicare Advantage programs would be less expensive than good old government run Medicare, and the private insurers that manage them wouldn’t be screaming about the reduction in their payments from the Feds. MA plans are MORE expensive than plain Medicare. They’ve also been around for about twenty years, more than enough time for the private market to prove it can do a better job delivering benefits while controlling costs.
The sad fact is that hasn’t been the case. While this may be difficult for free market ideologues to grasp, the for-profit system has not delivered better results for the Medicare population, better results defined as lower costs and better outcomes with happier members
Ryan also recommends fixing the Medicare physician fee problem by adding $350 billion to the deficit, an idea that does nothing to control costs, and actually increases the financial burden of the system on taxpayers.
I’ll look at Medicaid and private insurance in later posts – where we’ll examine Ryan’s plan to require insurers to take all comers without forcing people to get coverage before they get sick, and institute tort reform to somehow control costs when credible studies indicate this is a minor cost driver.

Apr
4

The AHCS suit – whatever happened?

Posted by Joe Paduda on Monday, April 4th, 2011 | Comments

Some of you may remember that after I wrote about Automated Healthcare Solutions (AHCS) last September, I was sued for defamation. That case was dismissed by the Federal Judge.
AHCS has not forgotten, and I will not be surprised if AHCS corrects the issues with their initial suit and refiles it. I’ll let you know if that happens but, in the interest of accuracy, I want to summarize those events and to clarify a couple of statements from my September 2010 posts re AHCS.
On or about Thursday September 16, 2010, I received a letter from AHCS attorneys demanding a retraction of my “false statements.” I was traveling at the time, but sent an e-mail response on Monday, September 20th.
In my September 20th e-mail, I stated that I had tried to reach AHCS before my initial post, and had received no response, but that I would still write a correction if it was warranted. Ironically, I added in my closing paragraph that “… I’m looking forward to continued productive dialogue so as to establish the facts…” That was the extent of our dialogue. The following day AHCS filed its lawsuit; it has never responded to my September 20th e-mail.
As I mentioned above, there are two statements in my post of September 9, 2010 which I want to clarify. First, I wrote this:
“An audit of Miami-Dade County Public Schools’ workers comp program determined AHCS-affiliate Prescription Partners, LLC was paid over a quarter million dollars for drugs in 2008. That’s a lot of money, but even more striking is the average cost per script; Prescription Partners; average script was $423.25, by far the highest per script cost of any supplier. Miami-Dade’s PBM had an average cost of $188.52.”
The audit noted in the post referred to a document entitled “OIG Final Audit Report Re: Miami-Dade County Public Schools Workers’ Compensation Program, Ref. IG08-25SB” (OIG refers to Office of the Inspector General).
AHCS took exception to the inclusion of the $453.25 figure in the paragraph that began with the lead “An Audit…” The Final Audit Report included the OIG’s report as well as a response from Gallagher Bassett, the TPA for Miami-Dade Public Schools. While I did not specifically attribute the $423.25 figure to the OIG’s report (I didn’t even mention the OIG), I could have been more clear and noted Prescription Partners’ $423.25 average cost per script figure was provided by Gallagher Bassett in their response to the report (on page 8 of their response, to be precise).
Some may think this a minor detail, but it would have been more precise if I had noted that Prescription Partners’ average cost per script of $423.25 mentioned in the Final Audit Report was determined by Gallagher Bassett.
The second statement is:
“Gerald Glass advertises himself as a ‘medical doctor’. Which he isn’t. Glass, Founder and ‘Co-CEO’, claims he got a medical degree from Windsor University, a Caribbean academic institution. However, I found no evidence that Glass had ever been licensed as a physician in the US…”
I based that statement on a review of Mosby’s Medical Dictionary 8th ed.; American Heritage Medical Dictionary c 2007; Dorland’s Medical Dictionary for Health Consumers c 2007 – all include licensure as a requirement to be defined as a medical doctor (all sources redirect “medical doctor” to ‘physician’ for definition).
In AHCS’ original lawsuit, they stated “Dr Glass earned his medical degree from Windsor University, and he therefore carries the title of “medical doctor.”
In subsequent conversations with MDs, several opined that earning a medical degree enables one to use the title ‘medical doctor’. I respect their opinions that Glass is entitled to call himself a medical doctor as a result of graduation from Windsor University’s School of Medicine.
Finally, there were several other complaints in their original suit, complaints which I have attempted to discuss with them several times, to no avail.
As I’ve said numerous times, if I made a mistake, I’m more than happy to admit said mistake publicly. Well, happy may not be the correct-est word, but suffice it to say I’ll publish a retraction/correction/apology immediately after I determine I screwed up.
But that retraction/correction/apology can’t happen unless AHCS shows me where I made a mistake. I’ll keep you posted.

Apr
1

Wellpoint is NOT getting into work comp insurance

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

My annual April Fool’s entry has caused a good bit of agita for Anthem Wellpoint’s workers comp folks.
Wellpoint has been in the workers comp services business, and that business is still operating.
The post put up this morning has turned out to be less than funny; I regret the error in judgment and apologize for the confusion I created. This was my mistake, and my mistake alone.
The post has been deleted.

Mar
31

Drug cost inflation – it’s getting bad

Posted by Joe Paduda on Thursday, March 31st, 2011 | Comments

For some time we’ve been hearing about drug costs heading back up – driven by utilization increases (the all-too-common driver) more than price. Of late, price has started to take over the lead as the main cause of drug cost inflation.
From several sources comes news that manufacturers pushed up prices for brand drugs well above medical inflation rates (never mind ‘normal’ inflation, which is much lower than medical inflation). The always-enlightening Seeking Alpha had a piece recently by Daniel S. Levine reporting that the GAO’s research of a market basket analysis of 100 commonly used drugs found “brand name prescription drug prices grew at an annual rate of 8.3 percent from 2006 through the first quarter of 2010, a faster pace than the 3.8 percent annual rise in overall medical costs.”
In total, brand drug prices increased 37.7% over the study period, while generics dropped almost 10 percent.
Fortunately for high generic users (work comp being perhaps the highest), generic drug prices fell over the same period by 2.6 percent per year.
The GAO report (opens pdf) used several pricing levels to develop their report. They examined U&C prices, which are based on the actual cash price for that drug on that day at that pharmacy, AWP, and AMP. While the different methodologies delivered slightly different results, overall, all showed pretty consistent inflation figures.
Another report from Barclays Capital [subscription required for full article] indicated brand prices for the 130 top-selling drugs by sales went up 6.9% in 2010, after an almost-identical increase of 6.8 percent in 2009.
What does this mean for you?
Push generics. And understand that brand prices are driven by brand expiration and manufacturers’ pretty-much-unfettered ability to charge what they want.

Mar
30

Rick Scott and drugs – an ‘inconsistent’ position

Posted by Joe Paduda on Wednesday, March 30th, 2011 | Comments

This am’s WorkCompCentral reported that Florida Gov. Rick Scott spoke out in favor of a ban on physician dispensing of Scheduled drugs – those medications regulated/tracked by the DEA.
It’s indeed encouraging that Scott has finally decided to do something positive about the pill mills that write scripts for more oxycontin than all other states combined. But the Gov, citing what can only be called specious arguments, still opposes a Prescription Drug Monitoring Program.
According to Jim Saunder’s piece in HealthNews Florida, “Scott also at least partially endorsed a House proposal to prevent doctors from dispensing drugs in their offices. Scott, however, added a caveat that such a ban should include “appropriate” exceptions — and didn’t elaborate about what those exceptions might be.”
Moreover, Scott’s new position does nothing to address the $34 million problem.
That’s how much more Florida’s employers are paying for drugs dispensed by docs for workers comp patients than they would if the drugs were dispensed by retail pharmacies.
Here’s how WCRI described the issue:
“Cambridge, MA-based WCRI found that the average payment per claim for prescription drugs in Florida’s workers’ compensation system was $565–38 percent higher than the median of the study states.
The main reason for the higher prescription costs in Florida was that some physicians wrote prescriptions and dispensed the prescribed medications directly to their patients. When physicians dispensed prescription drugs, they often were paid much more than pharmacies for the same prescription.
The WCRI study, Prescription Benchmarks for Florida, found that some Florida physicians wrote prescriptions more often for certain drugs that were especially profitable. For example, Carisoprodol (Soma®, a muscle relaxant) was prescribed for 11 percent of the Florida injured workers with prescriptions, compared to 2 to 4 percent in most other study states.
Financial incentives may help explain more frequent prescription of the drug, as the study suggested. The price per pill paid to Florida physician dispensers for Carisoprodol was 4 times higher than if the same prescription was filled at pharmacies in the state.
The study reported that the average number of prescriptions per claim in Florida was 17 percent higher than in the median state. Similar results can be seen in the average number of pills per claim.”
To say Scott’s position is inconsistent is like saying abuse of prescription drugs is bothersome; a wild understatement.