Author: Joe Paduda

Mar
29

Comp medical costs are back on the rise

Posted by Joe Paduda on Tuesday, March 29th, 2011 | Comments

We usually find out about things first when there’s a report out of California; growing facility costs, surgical implants, physician repackaging, compound meds, narcotic usage are among the cost drivers that received wide-spread attention after publicity in California.
Yesterday’s news that medical costs have resumed their seemingly-inexorable rapid climb may be the most troubling revelation yet from the Golden State.
Here’s what CWCI had to say about their review of recent medical cost trends:

The results confirm the findings of the earlier studies, again showing a sharp reduction in medical payments immediately after the reforms were enacted in 2004, followed by a distinct trend of increasing medical payments associated with work injuries beginning in AY 2006 and continuing through the end of the study period. This trend has pushed average medical expenditures per claim significantly above pre-reform levels, with all four of the medical expense categories continuing to rise. [emphasis added

According to CWCI, the growth in medical costs was far outweighed by the increase in medical management/cost containment expenses. That’s concerning, but without these cost containment investments, medical costs would have been much higher.
CWCI again – “Although the utilization review and the Medical Provider Network access fees represent significant, ongoing medical cost containment expenditures for workers’ compensation claims administrators, prior CWCI studies have shown that they are associated with an estimated $12.8 billion to $25.3 billion in medical cost saving between 2004 and 2008. [emphasis added] I would note the terminology is somewhat indirect, cost containment programs are “associated with” the savings. It is impossible to say what would have happened if those programs had not been in place, thus we can only make (well-)educated assumptions.
Which leads to this rather troubling conclusion – despite major reforms, huge investments in what look to be much-more-effective cost containment programs, and ongoing attempts to close regulatory loopholes, medical costs are once again zooming up.
And if its happening in California, a state with pretty strong managed care, it may well be much worse in other jurisdictions.
What does this mean for you?
Do you know where your medical costs are heading?

Mar
28

What’s going to affect work comp in 2012 – MSAs

Posted by Joe Paduda on Monday, March 28th, 2011 | Comments

A couple weeks ago I started a three-part series on what’s going to affect workers comp in 2012. After a few diversions and current-events-driven-interruptions, we’re finishing up today with the impact of MSAs
Pharmacy costs – and CMS’ treatment of same – are causing many payers to delay or reconsider settling claims. While MSAs are not, (very) strictly speaking, required to close claims in most jurisdictions (Maryland being the exception), as a practical matter, payers are quite reluctant to settle claims without an approved MSA.
From conversations with several payers, MSA experts, and claims execs, it is becoming apparent that CMS’ current ‘policy’ related to drugs has reached the point where it is severely affecting claims handling.
There are at least three major issues here – and likely a few others of just-slightly-less importance.
First, CMS is valuing drugs at the current AWP, regardless of the actual price paid, brand status, or likely future pricing. Many scripts are currently paid below AWP, due either to state fee schedules that are below AWP or PBM contracts that offer even more reductions. I’m not sure of the logic here, but it does appear counter-intuitive.
Second, a similar ‘policy’ appears based in the belief that the claimant’s current treatment regimen will never change, that it is set in stone. The drugs dispensed to the claimant at the moment the MSA is developed are what the valuation is based upon. If there are brand drugs that are likely to go off-patent (a definite until the recent OxyContin re-branding), there’s no change in estimates of future cost to account for that. If the meds are typically prescribed for a brief duration, no matter.
In the latter case, CMS has a pretty good case; there are far too many claimants taking drugs today that most reasonable practitioners would characterize as only appropriate for a limited duration – Schedule II narcotics as perhaps the prime example. I’d suggest that in this instance, we’ve done it to ourselves.
Finally, CMS takes a rather dogmatic view of off-label prescribing – it doesn’t like it. This significantly complicates the picture as many claimants’ drug treatment regimens include off-label use of meds. While off-label use can be completely inappropriate, in many instances it is not. Thus, the ‘policy’ can lead to confusion and difficulties in reaching agreement with CMS.
As a result of these and other MSA-related complications, most payers are not able to settle claims that they’d very much like to get off their books once and for all. Claim loads are increasing as a result, and reserves are as well.
Several industry stakeholders are working diligently to resolve these and other issues. What is clear is CMS is going to ensure they are protecting CMS’ interests. While this is a generally good thing (we taxpayers are thereby protected as well), the current stalemate is not helping anyone.

Mar
25

Docs and drugs – details on the ‘high prescribers’

Posted by Joe Paduda on Friday, March 25th, 2011 | Comments

I wasn’t there, but certainly heard enough about it to wish I was.
I’m referring to CWCI’s annual meeting held yesterday in San Francisco, a meeting that might well have been subtitled “Opioids and the Doctors who prescribe them”.
The report that triggered the excitement (CMS has been asked to review the information, national media has weighed in, and some in the physician community are circling the wagons and attacking the study methodology) was discussed in some detail earlier on MCM; more details on who some of the more ‘liberal’ prescribers were and what they prescribed were presented at the meeting yesterday.
As we get more information on what’s happening with opioid prescribing, the revelations are getting even more frightening, particularly the information about Actiq(r) and Fentora(r), drugs that are only FDA approved for breakthrough cancer pain. Shockingly, there were essentially no diagnoses of cancer in the claimant population
The top 10% of docs who prescribed Schedule II opioids prescribed 84% of the Actiq and Fentora ; turns out that these high prescribers were usually prescribing these drugs for back injuries. (by the way, these drugs commonly cost upwards of $3000 per month…)
Overall, about three percent of doctors treating work comp patients prescribed 65% of the Schedule II narcotics. And, more than half of these scripts were for back strains and sprains.
Meanwhile, in my own home state of Connecticut, we learned this morning of yet another physician caught allegedly using his dispensing powers to enrich himself illegally.
What does this mean for you.
It’s long past time for payers to start working together – or individually – to identify these physicians, find out what’s going on, and take action. We can wait for regulators and law enforcement to act, but in the meantime costs are going up, claimants are dying from overdoses, and the damage to society increases.

Mar
24

Health reform – the public’s awareness, or lack thereof

Posted by Joe Paduda on Thursday, March 24th, 2011 | Comments

The interesting numbers from the monthly Kaiser tracking poll aren’t the public’s like or dislike for health reform, but the rather impressive level of ignorance about reform that persists even now, a year after passage.
Here are a few ‘highlights’.
– half the country (52 percent) is aware the health reform law is still the law of the land, just over one in five Americans (22 percent) think health reform has been repealed and is no longer the law and another quarter (26 percent) aren’t sure either way.
– 59% think the law creates a new government health plan – which it doesn’t
– 40% think it allows the government to make end of life care decisions for Medicare beneficiaries
– 45% believe the law cuts Medicare benefits previously provided to all beneficiaries – which it doesn’t
And it isn’t just the ‘average American’ who’s confused.
This was brought home to me in a conversation I had with a very well educated business person earlier this week – trained as an economist, this individual is in the health information management sector. He wasn’t aware of some of the rather basic provisions of the reform bill, and misconstrued others.
My sense is most of the debate about health reform ignores what’s really in – and not in – the Patient Protection and Affordable Care Act. Instead, there are heated arguments about topics, provisions, themes, taxes, limits, intrusions that are based on not much more than “I read this on the internet or heard it on talk radio’.
To test your own knowledge about reform, take this quick quiz. Not to worry, scores won’t be posted on the class bulletin board.
Full disclosure – I scored nine out of ten…

Mar
23

Opioids in workers comp – attacking the messenger

Posted by Joe Paduda on Wednesday, March 23rd, 2011 | Comments

This morning’s WorkCompCentral had a piece by Greg Jones noting complaints by medical specialty groups about the study on physician prescribing of opioids recently released by CWCI.
I received a copy of the letter as well, and frankly was surprised – for several reasons.
What was most troubling was the statement that “Alone, the report’s findings do not indicate that there is anything inappropriate.”
I would argue that the findings absolutely indicate there is something very, very wrong going on here. In fact, a relatively few physicians are “handling the bulk of the prescriptions”; that was amply demonstrated in the analysis and results provided in the report, the details of which were discussed in detail therein.
In addition, the statement that “we are not surprised by these early findings” was quite troubling. I certainly was surprised.
Why was this not surprising to the medical society? Was it not surprising that a relatively few physicians were treating patients with low back sprains and strains for extended periods with relatively high doses of narcotics, when all evidence-based clinical guidelines do not support such treatment?
The letter suggested CWCI conduct a deeper analysis to determine whether the treatment was appropriate based on treatment guidelines.
Huh?
Every treatment guideline I’ve heard of, including ODG, ACOEM, Washington State – none of them supports extended use of opiods for treatment of musculoskeletal issues. None.
I would also note that the letter called into the question the methodology itself. The author of the letter’s statement “it is clearly misleading to use
the initial diagnosis” is inaccurate. Even a cursory review of the study
methodology reveals the researchers used a rather sophisticated clinical grouper to identify the PRIMARY diagnosis, which may well not be the initial diagnosis.
Finally, the letter asserted that others had mis-cited or misinterpreted the CWCI work, and requested CWCI somehow correct, clarify, or take steps to correct those misinterpretations. Studies are cited and discussed and reviewed and analyzed in the media and by individuals all day every day; I just don’t think CWCI has the time, resources, or obligation to monitor what everyone says about their research.
I guess is the net is I’m really taken aback by the letter.
There’s clearly abuse going on here, along with bad medicine and out of control prescribing of very addictive, dangerous medications that are ripe for diversion and abuse. I’m just very surprised that instead of taking this seriously, a medical society would attack the messenger. There’s something very rotten going on, and denying it is the wrong approach.

Mar
22

Federalization of workers comp – part 4

Posted by Joe Paduda on Tuesday, March 22nd, 2011 | Comments

Today’s post concludes the four-part discussion of the ‘Fedealization of Workers’ Comp’. And we’ll go out not with a bang, but rather a whimper…
There have been a couple of relatively recent developments that appear to have excited some concern that the Feds (e.g. Congress, HHS) are pursuing a plan to insert themselves deeper into work comp.
One occurred in November of last year, as Rep. Lynn Woolsey (D-CA), chairwoman of the Workforce Protections Subcommittee, called a subcommittee hearing on “Developments in State Workers’ Compensation Systems.”
The subcommittee hearing highlighted criticisms of the 2007 Sixth Edition of the AMA Guides to Permanent Impairment and what several witnesses identified as a trend toward shifting costs away from state workers’ compensation systems onto federal medical and disability programs – Social Security Disability Insurance and Medicare – and private health insurance plans. Several folks testified about various aspects of the issue, the hearing concluded, and nothing more has come of this.
I don’t see this one-day hearing before a subcommittee as terribly significant or portentous.
More recently, Sen. Susan Collins, R-Maine, asked the Government Accountability Office to start looking into possible waste, fraud and abuse in federal workers’ compensation benefits.
The federal government pays benefits to about 49,000 federal employees under the Federal Employee Comp Act (FECA).
What got Sen. Collins interested was the news that the U.S. Postal Service was paying workers’ comp to 132 employees who were at least 90 years old — decades after they should have retired. In my admittedly cursory research, I couldn’t find any provision in FECA that ends payment of benefits at a specific age, so this may well be entirely legitimate.
Collins asked GAO to audit FECA and find out how long people stay on the program, how many recipients receive benefits well past retirement age, and how the program compares to state workers comp plans. She also asked GAO to check workers’ comp records against the government’s list of deceased employees and payroll to find anyone who may be “double dipping,” or getting benefits and a paycheck at the same time, or who may still be receiving benefits after death. FECA doesn’t have any caps on how much benefits one can draw, or other cut-off periods, which Collins said makes it especially susceptible to fraud.
I’d suggest that this kind of publicity makes it unlikely anyone would consider the federal system one we should move to.
Finally, the President’s National Commission on the Deficit’s final report mentioned workers comp exactly once, and then only in passing. In a section on medical malpractice reform, the Commission noted that “Among the policies pursued, the following should be included: 1) Modifying the “collateral source” rule to allow outside sources of income collected as a result of an injury (for example workers’ compensation benefits or insurance benefits) to be considered in deciding awards…”
I would draw your attention to the wording, specifically “For example”. I’d suggest this one parenthetical mention of workers comp is not suggestive of any larger agenda.
Conclusion
The various ‘indicators’ that some point to are at best mischaracterizations of separate and very distinct issues – concerns about FECA; single big, one-time problems; coverage for workers employed in extra-state occupations; and/or political maneuvering to help constituents (Libby and Black Lung).
Why there won’t be a major Federal effort to co-opt or insert itself into workers comp:
1. Congress has many, many bigger issues to deal with, and workers comp is most definitely NOT a big issue.
2. There’s no traction for the issue; no political constituency wants a major fix, and folks from both political poles like it just the way it is.
3. Likely determined and motivated opposition from stakeholders
4. No one in Washington wins by reforming/addressing workers comp – and things only happen in DC if someone wins.

Mar
21

Federalization of workers comp – part 3

Posted by Joe Paduda on Monday, March 21st, 2011 | Comments

This morning we’re back at it. Now that we’ve talked about the political landscape, reviewed the OSHA Act and National Commission and discussed the progress, albeit rather minor, of workers comp in the several states, it’s time to dive into the myriad events that have convinced some that the Feds are just about to land their black helicopters atop your local Workers Comp Commissioner’s Office and take over the whole shebang.
Or, as I will argue, NOT.
Since 1974, there have been a few Federal actions that impact workers comp, and a few more that to some indicate some nefarious plot on the part of the Feds to take over WC.
Title X
Perhaps the best known example was back in the early days of the Clinton administration. Comp was originally part of the Clinton reform package, known as Title Ten, which essentially integrated the delivery – but not the financing – of work comp medical care.
What you may not know (and I didn’t until Bob Laszewski told me) is exactly one (1) person in DC wanted Title Ten. Bill Clinton. No one else, not Ira Magaziner or Jay Rockefeller or Hillary gave two hoots about WC, but the big dog did. Title X was essentially removed by Ted Kennedy by rewriting it in such a way that it had very little impact on WC. And we all know what happened to the Health Security Act…
The Baca bill
In January, 2008 Congressman Joe Baca, Democrat from California, introduced House Resolution to form a National Commission on State Workers Compensation Laws. HR 635 was referred to committee but no further action has been taken. The same bill was also introduced in the 2009 and earlier this year Congress where it died in committee. The 2011 edition, entitled HR 623, has a handful of cosponsors – CONNOLLY CONYERS, FILNER, GRIJALVA, KILDEE, and STARK; it was referred to a sub Committee on March 4, and has not been heard from since… (sub Committees are where bills go to expire for lack of attention)
My sense is the Baca bill has received a lot more attention outside Congressional chambers than it deserves (and yes, I am one of the guilty parties. For some reason, organizations antagonistic to additional Federal involvement in workers comp see this as quite dangerous. Here’s SIIA – HR 623, introduced by Representative Joe Baca (D-CA-43), could open the door to a federalization of workers’ compensation laws.
Highly doubtful. And if it was passed, and a door was thereby ‘opened’, it would lead not to Federalization of comp, but to another door, and another door, and yet another, all of which would have to be successfully unlocked before Congress could move on to the next step in what would be a lengthy, highly contentious, and ultimately, extremely unlikely takeover.
That first door isn’t going to be approached, much less opened, even though it is a pretty innocuous one. Here’s what HR 623 says:
 The proposed bill would establish a 14 member national commission to review all states’ workers’ compensation laws, specifically to determine whether the workers’ compensation laws of each state provide prompt and equitable systems of compensation and appropriate and necessary medical care for work-related injuries. The commission will also study and evaluate whether it should make other recommendations to help ensure prompt and good faith payment of benefits and medical care to injured workers and their families.
Health reform – or the Accountable Care Act
There is no mention of P&C or work comp in President Obama’s platform or policy papers or other bills addressing reform – Senate bills (Finance, HELP) or House Committee reform versions or final bill (HR 3590) or reconciliation bill (HR 4872)
Senator Jay Rockefeller, Democrat from West Virginia, filed an amendment with the Senate Finance Committee designed to merge auto medical insurance, workers compensation and healthcare into the health coverage plan, but that was quickly dismissed.
There was one occupational illness remedy contained within the Act, ‘Libby Care’. Included in the reform bill by Sen Max Baucus (D MT), this provision covers medical care for people exposed to asbestos in Libby, Montana; not just workers, but anyone exposed to asbestos or vermiculite from the mines in and around Libby. Care for victims will be delivered under Medicare, with more flexibility for innovation and supplemental services/treatment
Libby Care is seen by some as a step toward federalizing workers compensation. It isn’t. Far from it. There are 1700 superfund sites, and any future ‘sites’ must be declared a National Public Health Emergency by Secretary of HHS. Libby is the only one with this designation. Moreover, there don’t appear to be any other sites that meet the criteria today and the requirements
Gulf spill
During the height of the clean up of the Gulf of Mexico oil spill, some claimed the Gulf Coast states would be unable to handle the huge influx of expected workers comp claims, thereby opening another door into potential nationalization of comp.
This didn’t happen, for two rather apparent reasons. First, anyone injured while working on the water side of the high tide mark would already be covered by federal law – the Jones Act. Second, there just weren’t that many WC claims due to the on-land part of clean up effort; the heavy hand of OSHA and the mandated precautions taken by the clean-up workers on the beach resulted in few workers comp claims. Of course, it’s possible the shore-side clean-up workers will have future workers comp claims due to the exposure to oil and dispersants.
The point here is the existing Federal regulatory and insurance infrastructure handled this situation rather well. While some may, and undoubtedly will, point to problems, limitations, and anecdotal frustrations, there’s no systemic issue here that would have been avoided by some big new Federal program.
Tomorrow, we’ll conclude this series,.

Mar
17

Federalization of workers comp – part 2

Posted by Joe Paduda on Thursday, March 17th, 2011 | Comments

This evening we’ll dig into some of the history of Federal activities related to workers comp, activities that some view as somehow connected, a series of events leading to some greatly expanded role for the Feds in workers comp.
Me, I see this as disconnected, independent, nonlinear – a mishmash of events triggered by politics, publicity around public health problems, and constituent service/appeasement.
But that’s just me…
Let’s start with OSHA and the National Commission
There’s been talk of a federal workers comp system since 1970 when OSHA was created by the Occupational Safety and Health Act of 1970. Chaired by John Burton, the National Commission on State Workmen’s Compensation Laws was tasked with, among other things, evaluating state workers compensation laws, rules, and regulations. When the study was completed in 1972, the commission did not recommend the nationalization of workers comp. The study did make many recommendations adopted by many states, recommendations that many agree were long overdue.
The National Commission deemed 19 of the recommendations as ‘essential’, and noted that at the time of the report’s publication, the average state complied with 6.9 of the 19 essential recommendations. Over the next eight years, average state compliance rose rapidly to 12.0 in 1980.
In a recent hearing before a Congressional sub-Committee, Burton cited as proof of a more recent “counter-reformation” and outright deterioration in state compensation systems the fact that, as of 2004, average state compliance was still only 12.8 of the 19 essential recommendations. With all due respect to Professor Burton, a man who has probably done more than any other single human to improve workers comp, I’d note that a 0.8 increase is not, strictly speaking, a deterioration. It may be a very minor improvement, but it is an improvement nonetheless.
Here’s how Professor Burton addressed the issue: “The extent of the deterioration in adequacy and equity of state workers’ compensation programs in the last 20 years is not reflected in compliance scores with the essential recommendations of the National Commission. Rather, the slippage has occurred in other aspects of the program. A number of states changed their workers’ compensation laws during the 1990s to reduce eligibility for benefits (Spieler and Burton 1998). These provisions included limits on the compensability of particular medical diagnoses, such as stress claims and carpal tunnel syndrome; limits on coverage when the injury involved the aggravation of a preexisting condition; restrictions on the compensability of permanent total disability cases; and changes in procedural rules and evidentiary standards, such as the requirement that medical conditions be documented by “objective medical” evidence.”
I don’t see those changes as a diminution of workers comp, but rather a response to medical conditions based on rather sketchy science, an effort to accurately and fairly allocate employers’ responsibility (and therefore employee responsibility as well), and a response to the assignment of responsibility for degenerative skeletal-muscular conditions to the employer.
If anything, I’d argue there are more conditions covered under work comp now than forty years ago. In my home state of Connecticut, as in several others, public safety employees’ cardiovascular conditions are automatically deemed to be compensable. That’s just a BIT of a stretch.
I’m not clear how an improvement in average state compliance, and the increase in the type of condition covered by workers comp in many jurisdictions, is a ‘deterioration’. And it would appear that almost all of our national legislators don’t see a significant problem, either.
Many would argue that our national legislation is comprised of slick, money-grubbing, intellectually challenged politicians who don’t know a damn thing about much of anything. That’s may be your opinion, but it is irrelevant – the national legislators are the ones who decide what legislation is going to see the light of day, and, as I noted in some detail yesterday, they are very, very uninterested in workers comp.
Tomorrow, some of the other Federal initiatives…

Mar
16

The Federalization of Workers Comp – seriously?

Posted by Joe Paduda on Wednesday, March 16th, 2011 | Comments

This afternoon I was a lunch time speaker at the IAIABC Conference in St Louis, where I was asked to opine on the chances of a major Federal incursion into the (mostly) state regulated world of work comp. I’ve noted (way) more than once that this is one of those ‘never gonna happen’ things, so here was an opportunity to make my case in front of a very knowledgeable and engaged group. There was a lively and informed discussion after the talk, and I’ll dive into that in a later post.
Here’s the first of several excerpts from that talk. I welcome your comments and contrasting opinions.
Workers comp is a tiny, all-but-insignificant industry that accounts for less than two percent of total US medical spend. Sure, it may be wildly important to you and me, but, really, does anyone else give two hoots about work comp?
Didn’t think so.
Insurance segments that tend to be regulated or addressed (in a meaningful way) on a national basis are those that are so large or complex or federally-specific that only the federal government has the interest and resources and capacity required to address the risk – which is how flood insurance came about, and nuclear plant risk guarantees, terrorism risk insurance, and coverage for the beryllium industry.
WC doesn’t fit the profile. – it’s relatively small, has an active, vocal, and effective group of stakeholders from across the political spectrum and both political parties (plaintiff attorneys and the Chamber of Commerce are two examples), and isn’t perceived by anyone in a position of authority to be anywhere close to broken.
Why would anyone in Congress – except Joe Baca, – have any interest at all in taking on workers comp?
And if they did, which they don’t, where exactly would this fit on the priority list? Above the budget bill? Just below immigration reform? Senior to the medicare physician fee fix bill, or not? More, or less, important than the nuclear non-proliferation treaty? If less, now that the treaty is passed, can we expect some major action?
Somewhat less significant than the Israeli West Bank settlement issue, or more? More critical than the energy bill, or no?
If Congress(wo)man X has to spend time thinking about comp, or Afghanistan, or the US nuclear industry, or Iran, or China’s refusal to adjust its currency valuation, or bank regulation, what do you think s/he will do? Where will s/he spend her time?
As to any interest at CMS in taking over WC, wouldn’t you think they have enough to do what with dealing with Congressional oversight hearings, implementing health reform, expanding Medicaid by a third, revising hospital reimbursement, drastically changing physician compensation, completely redo-ing Part D, developing and implementing over a dozen pilots and trial programs, and revamping Medicare Advantage?
Next, we’ll review a bit of history and discuss some of the new ‘news’ that is generating excitement among those concerned about a federal takeover.