Author: Joe Paduda

Feb
16

Web advertising on MCM

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

In what has to be the irony of ironies, my experiment with Google Ads has AHCS advertising on MCM.(it may not come up on your page as Google has some weird way of determining what you see)
Their ads even appear on my blog posts about the suit…
Yes, that’s the same AHCS, the AHCS that sued me last fall for defamation, libel, and a bunch of other awful things (case has since been thrown out of Federal court on a technicality; if they refile you’ll be the first to know…).
I’ve been a somewhat reluctant advertiser as the thought of making money because people click on ads on my site, ads that may bring them to companies like AHCS, makes me…uncomfortable?
I know, I can block them, but I think it’s kind of funny that AHCS will end up paying me when people click on their ads. Then again, they could always block my site…

Feb
16

Narcotic opioids in comp – Cephalon’s role

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

Narcotic manufacturer Cephalon is back in the news, once again facing an investigation focused on the use of Fentora, a Schedule II narcotic, in workers comp cases.
Fentora is only FDA approved for breakthrough cancer pain – a condition quite rare in workers comp. The investigation apparently stems from allegations around Cephalon’s efforts to promote the use of Actiq(r) and Fentora(r), their highly potent narcotics for workers comp patients.
Those efforts were quite successful, estimates indicate ” in the first half of 2006 approximately 99% of the 187,076 Actiq prescriptions filled in the U.S. were not for cancer patients.”
actiq_Drug-300x300.jpg
Cephalon recently disclosed the following: “In January 2011, we received a subpoena … in connection with an investigation relating to Postal Service employees’ workers’ compensation claims. The subpoena requests that we provide to the Postal Service documents pertaining to FENTORA. We understand that this investigation is being conducted by the Postal Service in conjunction with the Civil Division of the United States Attorney’s Office in Philadelphia.” (from Cephalon’s latest SEC filing).
This latest investigation is not exactly the first instance of this type of conduct. In fact, in an earlier court ruling, the judge said “data suggested that more than 80% of patients using Actiq did not have cancer,” and “oncologists accounted for only 1% of Actiq prescriptions filled at retail pharmacies in the U.S.” [emphasis added] It is possible that oncologists are dispensing Actiq from their offices, although that’s rather difficult and complicated due to rules and regulations about storage and protection of Schedule II narcotics.
In 2007 Cephalon paid $425 million in fines and interest stemming from its promotion of off-label use of another narcotic opioid – our old nemesis Actiq, and another $6+ million to the state of Connecticut for similar reasons. They are also facing RICO (racketeering) and other charges related to allegations Cephalon’s promotion of Actiq and other drugs violated several laws.
As recently as 2008, Actiq was one of the top five drugs in workers comp measured by dollars spent for many payers; Fentora appears on most PBM’s lists of the top 25 drugs.
But it’s not just about the dollars. Actiq has been linked to dozens of deaths from overdose, including one case in Kansas where a doctor operating what can only be described as a ‘pill mill’ was indicted for involvement in fifty-six patients.
Roy Poses wrote four years ago that Cephalon had admitted Actiq was involved in the deaths of 127 people.
It is indeed possible more have died since then…
Thanks to Mike Whitely writing in this am’s WorkCompCentral for the tip.

Feb
14

Cutting Federal health care costs

Posted by Joe Paduda on Monday, February 14th, 2011 | Comments

The debate is on, and it is going to get even more nasty, heated, and divisive.
If we’re serious about cutting Federal health care expenditures over the long term, here are two changes that will do just that.
1. Requiring HHS to negotiate with pharma for Part D drug costs would reduce annual expenditures by over $20 billion.
As I’ve noted repeatedly(but unfortunately few in the mass media have), Part D’s perhaps the biggest deficit problem we have – the ultimate unfunded liability is now over $20 trillion. Of course, we could solve the majority of our budget problems by just canceling Part D, but neither the Democrats nor the Republicans ) will do that.
So, as long as we’re stuck with the damn thing, we ought to make it as inexpensive as possible. The best way to do that is to use the buying power of Part D to negotiate with manufacturers to get the best possible price for drugs that you – the taxpayer – are paying for. Believe it or not, the original Part D legislation expressly forbids negotiation with manufacturers for pricing.
In a 2006 House analysis, a report “showed that under the new Medicare plan, prices for 10 commonly prescribed drugs were 80% higher than those negotiated by the Veterans Department [emphasis added], 60% above that paid by Canadian consumers and still 3% higher than volume pharmacies such as Costco and Drugstore.com.”
Another study indicated “An annual savings of over $20 billion could be realized if FSS [Federal Supply Schedule] prices could be achieved by the federal government for the majority of drugs used by seniors in 2003-2004…”
Are there problems with this? Absolutely. Reducing prices may impact R&D expenditures and will affect pharma margins – effects that must be balanced against the nation’s long-term financial viability.
2. Stop paying for medical ‘bridges to nowhere’; Require HHS to base reimbursement for devices and therapies on efficacy and effectiveness.
As noted in a recent piece in Health Affairs, “with only very rare exceptions, Medicare does not use comparative effectiveness information to set payment rates. Instead, it links reimbursement in one way or another to the underlying cost of providing services.” CMS is prohibited from considering benefit to the patient when developing reimbursement formulae and levels.
About a third of US health care dollars are spent on treatments that are likely not effective. One has only to look at the history of MRIs, carotid endarterectomy, and angioplasty to identify billions of dollars that have been wasted on treatments that did not help, and may well have harmed, thousands of patients. These treatments, devices, and providers make money for their purveyors and manufacturers, dollars that they are loathe to give up.
It is amazing that we pillory the Feds when they spend taxpayer dollars on services or items that (some opine) don’t work at all or don’t work as they are supposed to, yet prohibit CMS from doing precisely that.
Cutting costs while improving outcomes is absolutely possible. Whether it is politically feasible is another question entirely.

Feb
10

Workers comp fraud – what NOT to do

Posted by Joe Paduda on Thursday, February 10th, 2011 | Comments

From WorkCompCentral comes this entertaining news – one of the ‘stars’ of the TV show AxMen got busted for work comp fraud. [sub req]
No, he wasn’t spotted hosting a Mensa meeting.
The alleged fraudster, one Jimmy Smith, has been receiving what appears to be PPD benefits (that’s permanent and partial disability for you non-work comp geeks out there) for over three years. According to the L&I’s (the Washington state work comp fund) fraud blog, Smith had two injuries back in the mid-nineties, injuries so severe that he no longer could work.
Jimmy’s just a good ole boy with a green heart and a sense of history: “I’ve got a thing about not killing tress, I’m a fourth generation logger, and I figured this would be a way to give back what my ancestors prob’ly took.” Yep, he’s a bigger than life figure, and he knows it “we’re normal guys, doing extraordinary things”.
Looks like one of those ‘extraordinary things’ was cashing disability checks while running a logging operation. And Jimmy wasn’t just sitting behind a desk. Nope our hero was out there every day, pushin’ and pullin’, cussin’ and a-yellin’, showing the young guys just how it was done.
take-an-ax-to-it.4337386.40.jpg
Jimmy’s the guy in the water pulling on the rope…
Jimmy wasn’t just managing and directing. In one of the shows, Mr Smith put on SCUBA gear, jumped into the water, put heavy chains around logs, and ran a winch and a boat to drag the logs up out of the river. Not exactly “sedentary” activity – the highest exertion level he had alleged he could handle when filing for permanent disability.
He even shows his scars – one where his diaphragm was ripped loose, another from what he says was a compound fracture of both bones in the lower leg – and describes the injuries in detail, quite proud of his dedication to being “the best there is.”
Hard to see how anyone could work at a job as strenuous and exhausting as underwater logging after those horrible injuries – Jimmy’s one tough guy.
He’ll need to be, because his next starring role may be in ‘Lock-Up’.
The Ax-Men part of Jimmy’s reality TV star run may be coming to an abrupt end. Court documents indicate he’s facing over ten years of potential jail time and fines of over twenty thousand dollars.

Feb
9

Coventry workers’ compensation business – no news is…

Posted by Joe Paduda on Wednesday, February 9th, 2011 | Comments

Didn’t hear anything in Coventry’s earnings call yesterday about workers comp – even though it accounts for about three-quarters of a billion dollars in revenue and somewhere’s north of $85 million in margin – for Coventry.
Turns out I didn’t listen close enough – workers comp was mentioned twice during the call – once when discussing the Louisiana suit, and the other when describing what new CFO Randy Giles will be doing for the next few months (he’ll be “splitting his time…” between workers comp and Coventry’s six other businesses).
I’ve discussed Louisiana before – and made no secret of my view that Coventry’s been severely…mistreated…by the courts.
It is indeed encouraging to hear the new finance chief will be learning the work comp business – although Workers Comp chief David Young’s amply demonstrated his ability to squeeze ever more margin out of the sector, another pair of eyes may be helpful. As long as they aren’t accompanied by questions such as: “how many members do you have?”
My sense is Coventry’s work comp business has been squeezed just about dry. Price increases and assertive contract negotiations on the one hand, with ongoing issues with data quality – and the downstream negative impact on revenue – on the other have pushed the numbers pretty close to stasis. Emerging alternatives, brutal competition, declining claims frequency and increasing provider negotiating leverage will make 2011 a tich tougher than 2010.
Or perhaps more than a tich.

Feb
8

Coventry’s 2010 earnings – the numbers

Posted by Joe Paduda on Tuesday, February 8th, 2011 | Comments

Coventry’s 2010 earnings report is out, and the news was generally pretty good. Revenues are down considerably, but that’s due to the company’s decision to exit Medicare private Fee for Service; operating earnings are up for the year (from 3.6% of revenues to 5.9% for the year, and 5.4% to 7.8% for the last quarter) and EPS is up nicely as well.
The numbers are a bit misleading, as there were two significant ‘one-time’ events that greatly affected results. According to the press release;
“These results include a favorable impact from the MA-PFFS product of $0.45 EPS and an unfavorable impact from the previously announced Louisiana provider class action litigation of $1.18 EPS [this is from their workers comp network business]. Excluding the impact of MA-PFFS results(1) and the provider class action charge(2), core earnings for the year were $546.4 million, or $3.70 EPS.”
Medical loss ratios (MLR) were down almost across the board, in every product line, with Medicare Part D dropping to 64.7% last quarter. If Coventry’s experiencing the same situation as its much larger competitors, the overall MLR improvement appears to be due in large part to lower utilization.
From a strategy standpoint, I’m going to be listening carefully later today when company execs discuss the future. Two deals in smaller, midwestern markets have been consummated, and I’d expect there will be more as CVTY seeks to gain scale in markets where it can compete – read, avoid markets where the Blues, UHG, Aetna, and Wellpoint dominate. Coventry’s cash position is quite good, with about $850 million in the bank and other liquid assets. I’d expect some of this will be allocated to deals similar to the Wichita transaction.
More on strategy in a post later this week…
Workers comp
Comp revenues appear to be relatively flat. While not split out separately, they can be tracked in the “Other Management Services” line which also includes rental network revenues.
The total line was up less than one percent year over year, reflecting Coventry’s enviable – but limiting – position as the dominant provider of work comp network and related services. According to an informed source, total WC revenues are likely in the $750 million range.

Feb
7

Health reform and Medicare cost reduction

Posted by Joe Paduda on Monday, February 7th, 2011 | Comments

The ongoing and far-from-resolved debate about whether or not health reform will erduce costs has generated lots of fear-mongering, wildly inflated claims, and far too little intelligent discussion. Jonathan Cohn’s attempt to add a bit more intelligence to that discussion is well worth a read.
Care and Cost, a sort of ongoing compendium of thoughtful articles on the subject, republished Cohn’s Kaiser Health News piece dissecting the Medicare Actuary’s recent comments on the impact of reform on cost.
Richard Foster is the chief actuary for Medicare – the person tasked with calculating how much it will cost, and estimating whether cost will go up or down and by how much due to this or that change. He recently testified before the House Budget Committee on the impact of reform on Federal health expenditures, basing his testimony largely on the basis of his work in April of 2010.
Foster made a couple of key points.
Cohn’s piece focuses on a couple key points. First:
“By 2019, the net reduction in Medicare expenditures is estimated to be 0.5 percent of GDP, which represents an 11-percent decrease from the level projected prior to the Affordable Care Act. [emphasis added] This percentage reduction would grow larger over time as a result of the compounding effect of the slower annual updates in Medicare payment rates for most categories of health care providers.”
Good news, right?
Well, he then went on to call into question the basis for that estimate:
It is important to note that the estimated savings for one category of Medicare provisions may be unrealistic. The Affordable Care Act requires permanent annual productivity adjustments to price updates for most providers (such as hospitals, skilled nursing facilities, and home health agencies), using a 10-year moving average of economy-wide private, non-farm productivity gains. While such payment update reductions will create a strong incentive for providers to maximize efficiency, it is doubtful that many will be able to improve their own productivity to the degree achieved by the economy at large. [emphasis added]
So, what happens? According to Foster, about 15% of Part A providers (non-hospital/facility, non-pharma) would become unprofitable, and CMS might make changes to increase their reimbursement.
There’s another distinct possibility; Congress will tell CMS that it can’t increase payments to less-efficient providers, and those providers either a) get more efficient or b) drop out of the program. And there’s ample precedence for this scenario; one need look no further than the recent changes to durable medical equipment reimbursement.
I’d add the recent – and long overdue – focus on the national debt and deficit may significantly increase the intestinal fortitude of members of Congress, perhaps enough even to make them stick to their guns and force providers to get better or get out.
What does this mean for you?
Intellectual honesty is all too rare in the debate over reform. Foster’s views are well worth discussion, but don’t take them at face value.

Feb
3

Work Comp Arbitration – a dangerous job!

Posted by Joe Paduda on Thursday, February 3rd, 2011 | Comments

For your entertainment pleasure, I bring you Jon Coppelman’s post on an Illinois workers comp arbitrator who
– fell on courthouse steps, injuring most of his extremities
– filed a claim for “post-traumatic carpal tunnel” – anyone have the ICD 9 for that???
– ruled on carpal tunnel cases for 230 prison guards who claimed carpal tunnel syndrome from turning keys in sticky locks…
very, very entertaining.

Feb
2

If health reform is overturned

Posted by Joe Paduda on Wednesday, February 2nd, 2011 | Comments

We know that much of the opposition to the Accountable Care Act is feeling pretty good right now, as they should after the Florida judge’s rejection of the Act.
What we don’t know is what will happen if they are successful in overturning health reform.
What will our country’s health system look like in five years if there isn’t reform?
Impact on insurers
Without reform of the insurance underwriting and rating laws, insurers will seek to be even more selective about the policies they write – their right, and I’d argue an obligation on the part of the for-profit health plans. As stock companies, their first obligation is to their owners – and that obligation requires them to generate profits and growth. That is not a value judgment – it is a statement of fact.
Health plans just don’t want the ‘risk’ that someone will have a claim. I’d expect healthplans will also continue to ‘churn’ their books – to try to dump policies that have been in place for more than three years, as that is about when claims start to pile up.
The number of viable healthplans will continue to shrink. As a mature industry, the healthplan business has been steadily consolidating – if anything that will accelerate. And no, the free market will not increase ‘choice’; we already have a free market for commercial plans (and Medicare Advantage and Part D) and in most areas there are at most two plans to choose from.
Smaller healthplans will find it increasingly hard to compete, as the big plans get ever-better discounts from providers, who have to make up the lost revenue by cost-shifting to the smaller plans with less clout. As their costs go up, so will their rates, until they either wither away or get bought out by the big plans.
PPO plans will get ‘nichier and nichier’. Their higher medical costs will push members towards HMO-type plans, making it harder for employers with widely-spread workers to get affordable coverage unless they buy insurance from one of the big plans that operates in all the areas the employer has bodies. Inevitably, some workers will be left with poor coverage…
Impact on individuals and families
Bureaucrats at insurance companies will still be making decisions about what doctors you can see and how much they’ll pay and what they’ll cover and what they won’t. You’ll have to ask permission for services, and hope and pray they get paid. Those same bureaucrats will tell you they’re interested in keeping you healthy, but that’s only till they can churn you out of their book.
There will continue to be a hodgepodge of state-specific insurance mandates, rules, regulations, and enforcement mechanisms, as well as benefit designs and limitations
But the big problem is this – it will get harder and harder for individuals and employers to get insurance coverage.
Here’s one all-too-common scenario. The breadwinner loses her/his job, and with it health insurance coverage. They find a new job, but that company doesn’t offer benefits as they are too expensive. So, Ms/Mr Breadwinner, responsible person that s/he is, tries to buy an individual policy. There are several insurers that write those policies, so the applications go in – followed by requests for medical records, documents, and attestations signed by their physicians. Oops, one of the family has a mild case of asthma, and dad takes cholesterol medication, and mom saw a counselor a few years ago after her dad died.
Three insurers decline to offer a proposal, and the one that does will exclude any cardiovascular coverage for dad, any pulmonary issues for junior, and mom won’t be covered for any psychiatric or anxiety or related issues. And, oh, the policy is 50% more expensive than the original quote. Leaving Mr/Ms Breadwinner to decide if they want to come up with $22,000 a year for less-than-full coverage and their HSA deductible (in 2009 dollars)…
Unfortunately there isn’t any governmental assistance, so the Breadwinners, who make $75k a year, are looking at spending almost a third of their gross income on health insurance – insurance that doesn’t cover their most likely health problems.
Think this is hyperbole? You’re wrong. This is happening every day in every community, and if health reform is overturned, it is going to happen more and more often.
What does this mean for you?
Here’s hoping those seeking to overturn reform have a solution in mind that will actually work. And when you consider their ‘solutions’, remember that no insurer will cover your pre-existing condition unless they are forced to. Or your parents’ or your kids’ or your friends’.
Posted by on August 12, 2009 2:53 PM | Link to this post