Author: Joe Paduda

Jul
20

WCRI – under assault by physician dispensing company

Posted by Joe Paduda on Friday, July 20th, 2012 | Comments

After the release of its much-awaited update on physician dispensing in workers comp, WCRI found itself under verbal assault from physician dispensing company Automated Healthcare Solutions.
AHCS, perhaps the largest firm in the business (and partially owned by Boston-based ABRY Partners, who also owns Gould and Lamb and York Claims), said this about the study and WCRI in an email to WorkCompCentral’s Mike Whitely:
“It is not surprising that this unscholarly work is the vehicle being used to deliver a self-serving message the insurance industry wants the public to hear…Despite repeated requests, WCRI has refused to make available its underlying data for prior reports, which leads us to believe that this questionable work has not been properly peer-reviewed and has not been validated by an independent third party.”
Talk about cranky…
First, this statement is from the same AHCS that has repeatedly quoted WCRI in its written statements supporting physician dispensing of repackaged drugs. Including at the last Illinois fee schedule meeting, where AHCS employee Gary Kelman MD quoted extensively from WCRI’s previous work in an attempt to justify the higher costs and utilization patterns exhibited by physician dispensers. Their advocates have also used WCRI’s reports and statements in Hawai’i, where they succeeded in delaying controls over costs for physician-dispensed repackaged drugs
Second, WCRI has a well-deserved and long-held reputation for unbiased, high-quality and well-done research. If anything, critics (including me at times) have lamented the time it takes WCRI to produce reports. Aggregating data from different companies, ensuring data quality, reviewing findings, and QA’ing every analysis, calculation, result, and formula before you even get to writing up results takes a lot of time and talent, and that’s before you get to writing up the results and fact-checking each and every statement, figure, statistic, finding, and conclusion.
Third, WCRI is funded by a variety of sources, which AHCS could have checked easily if they wanted to – insurers, state regulators, labor organizations, employers, and others. Or perhaps they did and didn’t want to mention the broad funding and support base enjoyed by WCRI.
Let’s also not forget WCRI doesn’t take stands or suggest policy – they never have. That’s not their function, and it is one they take very seriously.
For AHCS to impugn WCRI is a classic case of shoot the messenger. Fact is physician dispensing drives up costs, enriches a very few physicians, dispensing companies, and private equity firms (ABRY in particular), and risks patient safety while increasing disability duration, hurting employers, and increasing taxpayers’ burden.

Jul
19

Physician dispensing in comp – growth is exploding

Posted by Joe Paduda on Thursday, July 19th, 2012 | Comments

In Illinois, physician dispensed drugs accounted for almost two-thirds of all drug costs in 2010-11. Same in Florida.
Maryland – 47%; Pennsylvania – 27%; Tennessee 25%; Michigan – 22%.
The data are from WCRI’s just-released study on Physician Dispensing in Workers Comp, and reveal growth in physician dispensing that can only be described as “explosive”.
In Illinois, physicians’ share of all prescription costs increased from 22 to 63 percent of all prescription payments over 07/08 to 10/11.
You read that right; growth tripled over three years.
Even more revealing, the volume of scripts dispensed by docs grew from 26% to 43%.
You read that right too. In Illinois, costs went up more than twice as fast than the number of scripts, which means the physicians dispensing medications raised their prices dramatically. A specific example; the price of Vicodin purchased at a retail pharmacy dropped 2 percent, while physician dispensed Vicodin went up 66% over that three-year period.
Notably, prices did not change much in Florida, perhaps as physician dispensing firms and repackagers, responding to heavy political pressure, kept a lid on pricing rather than face added scrutiny.
The study reported on physician dispensing across 23 states, representing over two-thirds of all work comp benefits in the nation.
A couple other points deserving of attention. First, proponents of physician dispensing claim lots of benefits including increased compliance, lower cost, and more rapid return to work. Note that they make these claims without a single shred of evidence to support those claims. Contrast that with the overwhelming evidence – in this and other reports from WCRI, NCCI, CWCI and other sources – that clearly demonstrate the exploding costs of this practice, costs that are borne by employers and taxpayers.
Second, these proponents assert that limiting reimbursement to the price of the non-repackaged drug will mean docs won’t dispense (and thus won’t deliver the “benefits” noted above). Not true.
California instituted price controls limiting reimbursement to the price of the non-repackaged drug several years ago; over half of all scripts California are still dispensed by physicians, just as they were pre-reform.
There’s much more in WCRI’s study; lead author Dongchun Wang points out that prescribing patterns for dispensing docs are dramatically different than non-dispensing physicians, and docs have dispensed OTC medications and charged much higher prices than retail pharmacies.
NCCI reported physician dispensed drugs accounted for 28% of all drug costs back in 2008. Now, three years later, it could well be that two-fifths of drug costs are from physician dispensed repackaged drugs.

Jul
17

How awful is Obamacare?

Posted by Joe Paduda on Tuesday, July 17th, 2012 | Comments

A job-killing socialistic government-run abandonment of the free market and abuse of federal power – that’s pretty much on the far end of the “awful” scale.
If that was true, we’d all be up in arms. But it isn’t.
I’m continually puzzled by the level of anger directed at “Obamacare”; listening to some of the more vitriolic detractors you’d think it was single-payer with death panels and mandated reimbursement levels and no privacy protection with care delivered by former gulag employees…
in Gulag facilities…
gulag.jpg
What “Obamacare” is…is not “government-run” health insurance; the vast majority of newly covered folks will get their care from private insurers, who will negotiate with providers on their own terms, and set their medical management policies themselves.
What Obamacare is not – is a “job-killer”. Recall Massachusetts enacted legislation very similar to PPACA back in 2009.
Overall, employment gains in healthcare Massachusetts outstripped the rest of the country by four points; Mass added 9.5% more health care jobs since passage of reform while the rest of the nation averaged 5.5%.
But the impact wasn’t just on health care job counts. While the rest of the country saw a 2.9% drop in employment since Massachusetts passed reform, Mass’ employment dropped by a mere 0.2%.
While some jobs will likely be lost, the jobs that will be gained will be high-paying, professional ones.
According to the NFIB – no friend of Obamacare, “The employer mandate would boost demand for healthcare goods and services, thereby increasing employment in healthcare-related sectors. [emphasis added] The number of ambulatory healthcare professionals (physicians, dentists, and other healthcare practitioners) needed will increase by 330,000. An additional 327,000 staff will be required to work in hospitals. Some 157,000 more nurses (net of retirements) will be needed to staff doctors’ offices, outpatient clinics, and other provider locations. And payrolls at insurance companies will expand by 76,000 workers.”
(Note this study focused on the original mandate, not the one that exempted employers with fewer than 50 workers – and this would have created 890,000 jobs. (NFIB hasn’t updated their numbers to reflect the lack of mandate for small employers, which may well have reduced the number of jobs lost in retail and services.)
Okay, so we have 330,000 more jobs for docs and dentists, and 157,000 net new openings for nurses. That’s almost half a million new high-paying jobs; these aren’t retail clerks, burger flippers or car wash attendees, these are folks making from $50,000 to $400,000.
That pretty much takes care of the government-run and job-killing issues.
That leaves, let’s see, children are covered till age 26; exclusion of pre-existing conditions won’t be permitted; no lifetime caps on coverage; seniors won’t have to worry about the “donut hole”…
What’s left? What’s really wrong with Obamacare? No fact-free rants please.

Jul
16

The Medicaid expansion and political choice

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

If Medicaid isn’t your business, you may be tempted to ignore the implications of the current kerfuffle over whether or not states should accept free money to expand Medicaid. That would be a mistake.
As all-powerful and influential as Medicare has become, the Medicaid expansion will make the joint state-federal program THE payer to reckon with, setting reimbursement, defining “care”, restructuring provider contracts and relationships, and dramatically affecting provider billing patterns and practices.
With the Medicaid expansion now up to invidiual states, we’re hearing some say “no way” and others say “Hell yes”. At first, this split mirrored political lines, but now it’s getting harder to tell which side of the argument a governor is on merely by the color of their political stripes. The indecision on the part of governors who would seem to be natural enemies of federal largesse is telling.
In every state capitol where the decision is uncertain, there’s fierce lobbying on the part of providers attempting to convince governors to take the money and expand Medicaid. Make no mistake – providers have a huge stake in this decision, and are pulling out all the stops. Perhaps the most powerful influence in this is going to come from states’ hospitals and provider communities – but mostly the hospitals. These are the ones most affected by the increase in uninsured’s, and they will be the ones that benefit the most – financially – from a Medicaid expansion.
States such as Florida and Texas are particularly important. 29% of the Sunshine state’s working-age population doesn’t have health insurance; bad as that is, it is better than Texas, where fully a third is uninsured. And these data are from 2010; it is highly likely those percentages have risen as a result of the recession.
Both Governors Scott and Perry say they will turn down the federal money (covers 100% of expansion costs initially, declining to 90% eventually), hospitals and other providers – currently struggling to meet the needs of very large populations with zero ability to pay for care – are going to be in ever worsening shape.
(Governors of Mississippi (27% uninsured), Alabama (22%), and Louisiana (25%) have also said they won’t expand Medicaid.)
They are going to have to make up the revenue loss from somewhere, and that “somewhere” is going to be from privately-insured patients. That will lead to health insurance costs increasing much faster in “non-expansion” states than in the rest of the country, which will lead to employers dropping out of the system, which will lead to more uninsured, which will lead to more uncompensated care…
You get the picture.
There’s already huge cost-shifting in our health care system, in effect a hidden tax on private payers, workers comp, and auto insurance coverage, a tax levied by providers desperate to cover the costs of the uninsured.
What does this mean for you?
If governors stand on principle and refuse the expansion, the result will be more cost-shifting, really unhappy providers, and higher insurance costs for everyone.

Jul
13

Work comp claim frequency – pretty stable

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

After an increase in claim frequency in 2010 as the nation emerged from the Great Recession, the trend flattened out in 2011, as frequency declined by one percent – significantly less than the average over the last 20 years.
That’s the word from NCCI, who just released their annual update on work comp claim frequency. [opens pdf]
So, this means, what?
Depends on who you are.
Service companies – TPAs, managed care firms and the like – are glad it wasn’t a steeper drop in frequency, as claims volume drives their businesses.
Insurers are pretty much okay with the number – frequency drives cost and they need lower costs to return to some semblance of profitability.
Investors in the comp space – and these days it seems like every private equity firm in the country fits that description – have another number they can plug into their HP calculators to come up with financial projections for this deal or that.
Employers were likely looking for a bit more of a decrease, as it would have helped their rates and actuarial projections (reduced their WC exposure).
Since 1991, frequency has been cut in half – a remarkable achievement and one that looked like it persist for years to come. The flattening out of the rate of decline is likely driven by residual effects of the recession and its tendency to dampen claiming activity; can’t prove that but with jobs harder to come by and not a lot of hiring happening in many high-frequency sectors, seems logical.
As the economy picks up steam – if it ever does – we may well see another uptick in frequency due to more hours worked at a faster pace with less-skilled and trained employees.
Here’s hoping…

Jul
12

PMSI’s Opioid Summit -Part Two, addiction

Posted by Joe Paduda on Thursday, July 12th, 2012 | Comments

The first part of the report was supposed to be followed quickly by this, the second – however events overtook me, and I’ve just now come back to report on the Opioid Summit put on by PMSI last month in Sarasota.
We now turn to Dr Len Kamen’s talk on addiction – Dr Kamen is an addiction specialist practicing in Philadelphia, with extensive experience in workers comp.
Dr Kamen provided this definition of addiction: “Addiction is a primary, chronic disease of brain reward, motivation, memory and related circuitry”, that has these characteristics:
A. Inability to consistently Abstain
B. Impairment in Behavioral control
C. Craving; or increased “hunger” for drugs or rewarding experiences
D. Diminished recognition of significant problems with one’s behaviors
and interpersonal relationships
E. A dysfunctional Emotional response
Addiction refers to the loss of control over the intense urges to take the drug/substance even at the expense of adverse consequences – jail, divorce, losing custody of children, homelessness…
(The clarity brought by Dr Kamen speaks to an ongoing conversation at Mark Wall’s LinkedIn Group on this issue)
The discussion addressed the “chronic pain dilemma”, attempting to determine if the claimant is addicted to or dependent on opioids. There are three ways to think of chronic pain patients;
– Managed chronic pain patients – an opioid user on low, stable dose with return to function
– Dependent chronic pain patient – opioid user on escalating doses of long/short acting opioids, with high pain levels and low functionality
– Addicted patients – exhibits abusive and aberrant behavior, unstable with no identifiable pathology.
A session at the upcoming NWCI Conference focuses on chronic pain; moderated by Liberty Mutual National Medical Director David Deitz Md PhD, two experts on the subject will provide insights on: creating an effective pain management protocol; at what point in a treatment plan should pain management be utilized; are there effective practice parameters that have been developed to determine if a formal program of pain management is called for and if so, what types of treatments should be a part of such program.
There was a lot more to this, and I’ll be providing additional resources in the next post.

Jul
11

Integrating work comp claims systems…

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

Integrating claims systems with medical management, bill review, UR, and other applications is the holy grail; yet few payers are really, truly, actually “connected”. There’s far too much cutting-and-pasting, systems store pictures of documents instead of capturing key fields on those documents in electronic format, too many yellow stickies on the display stand, lots of toggling back-and-forth between systems, double-, triple, or quadruple-entry of claimant data – you know the drill.
Many reading this likely believe their systems are “integrated”. And many of these many would be mistaken. A survey we conducted in 2010 found four-fifths of claims handlers did not believe their systems were “fully integrated’; almost as many executives believed they were.
There are any number of reasons to integrate these systems, Acrometis has picked six.
They include reduction in network leakage and overpayment of medical bills; higher network penetration; better vendor management; improved direction of care; more effective and accurate state reporting; and enhanced overall efficiency.
Hard to argue with any of these, and even harder to understand why it’s 2012 and adjusters are still stuck toggling between systems, double-entering data, and cutting and pasting from a medical management system into claims. Not only does the lack of integration waste time, it also increases error rates, frustrates adjusters and other claim handlers, and increases medical expense.
It also makes it difficult for payers to comply with unique policyholder or customer demands, limiting the payer’s ability to compete for and win new business.
We are in an “interesting” time; the work comp market is hardening, medical costs increasing, rules and regs changing in several key jurisdictions, and customer demands increasing in number and complexity. Yet insurers and TPAs are still under-staffed, all lack adequate IT resources, there’s precious little time for training, and new competitors are entering the comp market, seeing opportunity to gain from the upswing in pricing.
What does this mean for you?
Successful payers are those that adapt, maximize their resources, and eliminate duplicate work and errors.

Jul
9

UCDavis – workers comp shifting costs TO other payers…I think not

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

A few weeks ago the folks at UCDavis published a study on workers comp, asserting that WC payers – insurers, TPAs, but ultimately employers and taxpayers – are heavily subsidized by other insurers, that, in effect, work comp cost-shifts to other payers on a scale almost beyond comprehension.
To quote UCDavis’ press release, “almost 80 percent of these [occupational injury medical and associated] costs are paid by employer-provided health insurance, Medicare, Medicaid, Social Security and other disability funds, employees and other payers..this cost shifting leads to artificially low workers’ compensation premiums that should be used to cover wage replacement and medical care for employees injured on the job.”
Note – I wish I could add a lot more to this analysis, but I’ve asked UCDavis for a copy of the actual report (“Workers’ Compensation Benefits and Shifting Costs for Occupational Injury and Illness.”) twice over the last month, and have had no response whatsoever.
So, rather than wait seemingly forever for my email inbox to chime with the welcome news that Ms. Marjory Spraycar has responded to my entreaties, here’s what I make of this “study”.
First, there’s no indication that researchers Leigh and Marcin factored in settlements; those legal resolutions that result in the claimant assuming all future responsibility for medical and wage replacement issues related to their work comp claim. Simply put, if there’s a settlement, the claimant agrees that they – the claimant – will be responsible for the medical and related costs of that work comp injury going forward (this is simplistic and yes, there are variations, but generally speaking this is the way it works). Not Medicare, or Medicaid, or their Aunt Sally, or Aetna or Blue Cross – the claimant.
For Leigh and Marcin to assert that somehow work comp is “shifting cost” to Medicare et al for reported claims is just not reasonable nor accurate – if Leigh and Marcin have considered settlements (which, as i’ve not been provided a copy of the report, I can only assume they have; after all Leigh and Marcin are professors at a major research institution).
Next, I don’t know if they differentiated among states with no ability to close medicals and those where medicals can be settled. If they have extrapolated data from settlement states to all states, this would be a major error.
Third, they recommend we “Link premiums with company-specific injury experience rather than industry-wide estimates, which would encourage companies to lower premiums by reducing workplace hazards.”
I thought this was what experience rating and ex-mods did; perhaps I am mistaken. or perhaps not.
Finally, there’s absolutely no question work comp pays for treatments to help the claimant get healthy enough to return to work – even when those treatments are for conditions completely unrelated to the work comp injury, and especially when the claimant does not have other health insurance thru their employer or Medicaid. I don’t know if Leigh and Marcin put those expenditures on the work comp payer side of the ledger; somehow I don’t think so. Moreover, the failure of group health payers to deal with obesity problems shifts costs to work comp in a major way, one that – again, I do not think Leigh and Marcin considered.
There were a couple other articles that referenced the study; evidently (this is hearsay) home productivity and fringe benefits were included as part of the study’s analysis of costs due to work comp not paid by the work comp industry.
This is, to be kind, rather a stretch. The ever-quotable Bob Hartwig of III noted workers comp “was never meant to be a form of business interruption insurance, which is what’s being proposed here.”
I remain hopeful I’ll hear from Ms Spraycar or one of her associates at UCDavis. Quite frankly I’m surprised by the lack of responsiveness.
Then again, this is just a blog…

Jul
2

SCOTUS on health reform – the bloggers respond – Part Two

Posted by Joe Paduda on Monday, July 2nd, 2012 | Comments

The blogosphere’s view of the Supreme Court decision is nuanced, insightful, and often surprising. Following up on our late Thursday night report on initial reactions to the decision, this is a quick tour of “the best of” posts over the weekend.
We start off with views on the Supreme’s ruling that the Feds can’t cut off all Medicaid funding to states that don’t increase Medicaid coverage. Anthony Wright trenchantly observes:
“For the first three years, the federal government would pick up the cost of 100% of the newly eligible. In 2017-18, then the federal government picks up 95% of the tab, and then down to 90%, into the future. Even in the out years, the federal government is providing a 9:1 match.
In terms of investments in health care, or in terms of economic stimulus, there’s no place that can get you the bang-for-your-buck of a 9:1 match. Why would any Governor or Legislature reject this?
Over a dozen years ago, Congress created the SCHIP program, and allowed states to do a child health expansion voluntarily, with no tie to Medicaid funding. The SCHIP program provides a 2:1 match. And ultimately, 50 states took advantage of his benefit.”
Good take; I’d note the political winds have changed pretty dramatically over the last decade, and I would not be surprised to see some conservative govs stand on “principle” and refuse free money even if it gets their poorest citizens health care.
Bob Laszewski notes the 29 governors who’ve expressed outrage/concern/anger over the Feds attempt to require them to expand Medicaid coverage now are in the driver’s seat:
“Whether or not their state gets a Medicaid expansion is now entirely up to them. It’s put up or shut up time for conservative governors and state legislators who said the ACA was an onerous expansion of federal powers over their states.
If some states do reject the Medicaid expansion, consumers between 100% of poverty and 133% of poverty would become eligible for the private federally subsidized insurance in the exchanges since the subsidies start at 100% of poverty.”
Nathan Cortez at Health Reform Watch took the dissenting Justices to task; “What disappoints me about the joint dissent (by Alito, Kennedy, Scalia, and Thomas) is that it doesn’t seem to appreciate why health insurance is a unique problem of unique scale that requires unique solutions like mandates. How do you pretend that the uninsured are pre-commerce? How do you pretend a $2.5 trillion industry doesn’t exist?”
Neil Versel is still surprised about Chief Justice John Roberts’ support of ACA; he also notes that ACA is no panacea, and health care in the US is still, well, in need of improvement. Lots of improvement.
I’ve been reading a history of the New Deal; much of the legal footing for the dramatic expansion of governmental programs was based on the Constitutionally-established ability of the Federal government to tax. One book does not a scholar make, but the precedence is well-established and rock-solid.
I posted Friday about the impact of the decision on workers comp; overall, it is good news indeed – healthier claimants with more coverage = lower work comp costs, although access to primary (and some specialty) providers is going to be tight indeed for several years to come.
Finally, Jaan Sidorov has been tracking goings-on here whilst on vacation in Sweden; he thinks reform is here to stay, and we better get used to it.