Jul

From North Dakota, proof that Blunt was railroaded

Posted by Joe Paduda on Saturday, July 24th, 2010 | Comments

Last Friday the news couldn’t have been much worse for ex North Dakota state work comp fund CEO Sandy Blunt: the state’s Supreme Court affirmed his felony conviction on charges of theft. I spoke with Sandy that day, and can only report that he was all but devastated by the ruling.
What a difference a week makes. This morning, Sandy must have a whole different outlook – the prosecutor who convicted him is herself under investigation for allegedly suborning perjury and prosecutorial misconduct.
Late this week sources informed me that the state’s bar association was about to begin a formal ‘trial’ of Cynthia Feland based on evidence she withheld information from Blunt and his defense attorney. While this isn’t an actual criminal proceeding, it is quite serious, as the allegations, if upheld, are grave enough to result in Feland’s disbarment for life.
As I reported months ago, “I contacted Feland several times over the last few weeks, asked her directly about this situation, and she refused to address the key question – had she provided Blunt with a copy of the State Auditor’s memo which cleared Blunt of any malfeasance related to Spencer?…” You can read her response to my query, but here’s the net – The prosecutor has no record of providing the defense with a document that would have allowed the defense to prove that the prosecution’s main charge was not a crime.
While I couldn’t force the issue, the state Bar Association, and the county sheriff, have.
The details are beginning to come out. This morning’s Bismarck Tribune had a front-page, above-the-fold article detailing the allegations against Feland. Although Feland pooh-poohed the proceedings, according to the Tribune, “Sending a case to the Disciplinary Board for formal proceedings means “basically, they’re making a finding that there’s probable cause that misconduct occurred,” [ND Supreme Court Clerk Penny] Miller said.”
As assistant prosecutor, Feland personally led the state’s prosecution of Blunt.
The evidence was brought to the attention of the ND Bar Association by Steve Cates, author of the North Dakota Beacon and one of Sandy’s long time supporters. Case has diligently and persistently pursued the facts in this case for more than a year and a half, poring over thousands of pages of transcripts, reviewing each and every exhibit and scrap of evidence.
In the course of Cates’ research it became apparent that Feland had failed to turn over exculpatory evidence, evidence that would have proven Blunt’s contention that a state auditor had reported that most of the charges against him should never have been brought.
Not only did Feland withhold evidence, but she knew, before she brought the charges, that several of the charges weren’t crimes. And even more seriously, Feland suborned perjury by getting a key prosecution witness, Jason Wahl, to lie on the stand.
Feland isn’t the only prosecutor in hot water over their mishandling of the case. According to the Tribune, “The documents obtained by the Tribune said the Inquiry Committee West also found that Riha [Feland’s boss] was issued an admonition for violating rules 5.1(a) and (b) of the Rules of Professional Conduct by not making sure that the attorneys in his office were conforming to the rules of professional conduct. The admonition also was issued against Riha for violating rule 3.8(d) of the Rules of Professional Conduct for his office not turning over a Nov. 8, 2007, memorandum from Jason M. Wahl in the state auditor’s office to Feland.“[emphasis added]
The Wahl memo indicated Blunt’s actions regarding a discharged fund employee, actions that Feland had said were illegal, were perfectly legal.
Sources also indicate, and I have confirmed, that the county sheriff has launched a criminal inquiry into Feland based on alleged perjury charges. The charges stem from Feland’s statement to the judge at Blunt’s trial that all charges against Sandy had been sent to Blunt’s defense counsel before trial. It now appears that Feland knew this wasn’t true.
At long last, the truth is beginning to come out. Blunt was convicted, and his conviction upheld, due to prosecutorial misconduct. Simply put, he was railroaded by a prosecutor who accused him of crimes he didn’t commit and lied to the judge during the trial.
Sandy can’t get his life, or his reputation back. Here’s hoping he makes the Burleigh County prosecutors pay for what they did to him, and make it abundantly clear that these criminal actions carry a very heavy penalty.

Jul

Changes to physician reimbursement under reform – the details

Posted by Joe Paduda on Friday, July 23rd, 2010 | Comments

Several clients have asked for more detail on how the reform bill will change Medicare reimbursement for physicians and other non-facility providers. Here’s the synopsis.
First, note that this pertains only to reimbursement changes contained within the reform bill. There are a host of other initiatives, ideas, pending changes, and reimbursement ‘tweaks’ outside the bill that will also impact reimbursement.
Reimbursement for primary care services – provided by some internists, family practice docs, pediatricians, PAs, and nurse practitioners – will increase 10% between 2011 and 2015. After 2015, the increase – which is described as a ‘bonus’ – will theoretically expire.
The key word here is ‘some’.
To get the increased compensation, 60% of the provider’s charges for services over the last (to be determined) months/years must have been for primary care.
There’s also more funds for some general surgeons – a 10% bonus if they provide ‘major surgical procedures in health professional shortage areas“.
That’s it for the easily described changes. Now here’s the more complex.
1. Bundled payments – there’s a national pilot program authorized under reform that would allow for bundling of payments for an entire episode of care, as opposed to the current fee for service (FFS) methodology. Under this scenario, a group of physicians, ancillary care providers, and facilities would get paid a flat amount for a specific condition/diagnosis.
2. Post 2014 and the Independent Payment Advisory Board – Starting in 2014, the IPAB would be required to recommend specific Medicare spending reductions in any year in which Medicare’s per capita cost growth rate exceeded a specific target. IPAB’s recommendations are more than just idle talk; they would become law unless Congress passed an alternative proposal that resulted in identical savings. Some provider types are excluded for a limited time (this is too deep in the weeds to go into here).
There’s more in the bill, but it is for very specific services, types of providers, and geographic areas yet to be identified – in all, few providers will be affected.
For more detail on the bill’s impact on reimbursement, click here.[opens pdf]
What does this mean for you?

Remember this is just the reform bill – it is highly likely other changes driven by other bills, regulatory changes, and miscellaneous factors will have as much – if not more – impact.

Jul

On your beach reading list – Health Wonk Review

Posted by Joe Paduda on Thursday, July 22nd, 2010 | Comments

HWR guru and lead organizer Julie Ferguson’s got the editor’s pen this week, and uses it to great effect with the Dog Days of Summer edition.
Julie’s focused on post-reform ‘what now’ and ‘what’s this mean’ issues, covering those devilish details with contributions from Uwe Reinhardt, Jaan Sidorov, Maggie Mahar, and other great writers on all things health.

Jul

Work comp cost drivers – NCCI’s update and implications

Posted by Joe Paduda on Wednesday, July 21st, 2010 | Comments

The good folks at NCCI just released a report [opens pdf] detailing workers comp medical cost drivers; there are two ‘headline’ findings; severity is increasing at a slower rate, and the price of medical services is becoming a larger contributor to overall cost increases.
(The studies are based on lost time claims closed within 24 months of accident, so an increase in the length of time claims are open or the number of claims open longer than 24 months won’t show up.)
A quick side note than we’ll discuss these and other findings. The study covers experience through 2006, thus changes over the last three plus years are not considered. As I’ve reported here and NCCI has covered in many papers, several components of medical have seen rather significant changes since 2006: pharmacy costs are up; facility costs are spiking; surgical expenses, driven in large part by implants have increased dramatically in several ares; physical medicine costs in several jurisdictions are down and imaging expenses appear under control, due in large part to the impact of networks.
The big news is the increase in utilization has tapered off; we haven’t seen fewer medical services, but we also haven’t seen continued growth in the number of services provided to claimants. I’d hasten to add that while this is good news, we’re still dealing with too many services delivered to to many claimants.
The bleeding isn’t getting worse, but it’s still pretty bad.
The price issue is troubling. Most of the 21% increase in severity was due to higher prices for medical services, this at a time when the utilization of provider networks, offering discounted pricing for medical services, has grown significantly. PPO penetration, on a national average basis, is in the 60% range with wide variation among states – NJ and FL commonly see rates above 85%, while Texas and California are closer to 50%.

PPO penetration has increased significantly over time, yet prices have also grown. There are several potential explanations for this:
a) a change in utilization patterns over time, wherein more expensive procedures are used more often. This doesn’t appear to be the case, as the NCCI study accounted for changes in service type.
b) an increase in fee schedules. again, this doesn’t appear likely as most fee schedules have seen modest increases, with a couple notable exceptions.
c) increased provider pricing in UCR states. I’m thinking this has undoubtedly contributed to price increases. UCR pricing (usual, customary, and reasonable) are based on charges (not payments) for that procedure in that area in the preceding time period. Historically, UCR increases by double digits each year.
d) increased provider leverage in contracting. There’s no doubt this has contributed to cost increases, as we’ve seen in California, Illinois, and many other states.
What does this mean for you?
You will want to assess how the prices you’ve been paying for specific procedures (and the number of procedures themselves) have changed over the past few years to see if NCCI’s findings re price and utilization have continued since 2006.

Jul

Like it or not, physician ratings are coming

Posted by Joe Paduda on Tuesday, July 20th, 2010 | Comments

Some physicians and physician groups are quite upset about insurers’ recent moves to offer employer customers tight, small networks of providers based on quality and cost criteria. In an effort to block these new plans, the AMA and other groups are focusing on the few problems with ratings and avoiding the larger issue – some physicians are just bad actors.
What they should be doing is working closely with health plans and regulators to ensure the rating process is transparent, fair, and objective.
Insurers, governmental agencies, employers, coalitions, organized labor, all have been involved in assessing provider performance, many for years. CMS has launched several initiatives including measures for nursing homes, hospitals, and more recently, a nascent physician quality reporting program.
In the private sector, a Mercer survey [purchase required] indicates 14% of large employers were using such “high-performance” health-provider networks in 2009, an increase from 12% in 2008.
According to the AMA, “Physicians’ reputations are being unfairly tarnished using unscientific methodologies and calculations.” The complaint appears to be based in part on concern that individual physician ratings may be derived from too few data points and some physicians may treat more severe or complex cases, and therefore their ratings will suffer – unfairly.
Health plans responding to the concerns contend they have dealt with the issue by rating physician groups instead of individual physicians.
The AMA’s contention has some validity, just as the health plans’ responses should be taken seriously.
The larger point is simple – networks based in large part on provider ratings are absolutely, inevitably the wave of the future. Some provider organizations, including the Minnesota Medical Association, have already bought into the trend, are engaging with payers, and helping to improve the assessment process.
The attempt by some ‘provider advocacy’ (my term) organizations to stop or hinder this is misguided and eventually counterproductive. Throughout history, guilds and labor organizations have tried to protect all members, including members they should censure, in an effort to keep control of their industry. Eventually, these efforts all fail.
What does this mean for you?
Providers would be well served to focus on substantive issues in provider rating systems, and realize protecting the bad actors hurts all providers and helps none.

Jul

Controlling health care costs: Who’s responsible?

Posted by Joe Paduda on Monday, July 19th, 2010 | Comments

I don’t understand why those who believe health reform is socialism don’t have faith in the free market’s ability to control costs and deliver quality.
Here’s why I’m confused.
Several large health insurers have decided its time to get serious about managing costs; they’re introducing plans with limited provider networks and either no coverage for out of network providers or high deductibles and co-insurance/copays.
The plans, introduced by United Healthcare, Aetna, Wellpoint and others, are currently only available in a few markets as the healthplans test market receptivity.
Kudos to these insurers for finally getting serious about managing cost. While they are concerned about the potential for a repeat of the consumer backlash seen in the nineties, I’m betting the consumer backlash will be minimal.
The political backlash is a whole different story; more on that in a minute.
Most employees are all too aware of the rising cost of benefits; they have seen their premium contributions increase dramatically as the benefits plan has slimmed down. While some aren’t going to be happy if they have to pay more to see their favorite doc or go to the nearest hospital, their anger will be tempered by the knowledge that they are better off than many of their neighbors who have no insurance at all.
That wasn’t the case in the early nineties. Since 1993, the number of people without insurance has increased almost 20% to 52 million from 43.9 million.
Just as the benefits landscape has changed, so has the political. We’re already starting to hear some politicians complain that employers’ changes are evidence that ‘ObamaCare’ isn’t working as advertised, that the President’s promise that reform would allow you to keep your current plan wasn’t true.
These critics probably know their argument is specious at best. The reform legislation was specifically designed to allow employers to maintain control over their plans, the thinking being the free market will develop solutions to the cost and coverage problem.
And that’s precisely what is beginning to happen, albeit slowly and in baby steps. Health plans have realized that risk selection isn’t the path to success, quality and cost of care and more effective member health management is.
There’s a bit of hypocrisy, or perhaps more kindly, ignorance among those who criticized ‘Obamacare’ for its ‘socialist’ leanings and now fault reform for benefit plan changes implemented by employers seeking market answers to rising costs.
The cost control steps included in the reform legislation are weak, scarce, and small; stronger cost controls were discarded in order to get the bill past lobbyists and their friends in the Senate (and to a lesser extent, the House). As a result, we’re left with a bill that – de facto – relies on private insurers and employers to develop tools and methods to control cost.
Critics can’t have it both ways. Either decry the bill for its weak cost controls and governmental ‘takeover’ of health care, or slam it for forcing employers to change plans to control costs because the bill doesn’t do enough.
Trying to both results in one argument refuting the other.

Jul

Should Medicaid be the basis for work comp drug fee schedules?

Posted by Joe Paduda on Friday, July 16th, 2010 | Comments

There’s a good bit of activity on the regulatory front as states with work comp pharmacy fee schedules consider possible changes to address the myriad issues inherent in AWP.
A little background will help frame the issue.
First, it’s important to understand the fee schedule amount is only paid if the script doesn’t go thru a PBM, and the vast majority of scripts do go thru a PBM, ensuring the carrier/employer/fund pays substantially less than the fee schedule.
My firm’s survey of large payers indicates network penetration was 82% in 2008. Therefore, fewer than one in five scripts are paid at fee schedule.
Some think setting a fee schedule at Medicaid solves the problem neatly. Were it only that simple.
Let’s look at California, which is the only state using Medicaid (known as Medi-Cal in CA). In point of fact, drug costs per claim are up 72% despite a fee schedule reduction that cut price more than 25%. Clearly, the lower fee schedule did NOT control cost.
I believe what has suffered is the clinical management of drugs; as evidenced by CWCI’s recent report narcotic opioid usage is up 600% over the last few years. In addition, cost per claim is up dramatically – driven primarily by utilization.
Medicaid could be used as the basis for a reimbursement calculation, however Medicaid has several inherent problems.
First, it is a political football, subject to the political winds. This has caused significant problems in New York already, and has led regulators in California to prevent implementation of the lower MediCal reimbursement rates for work comp. As state budgets become increasingly constrained and as Medicaid greatly expands, we will undoubtedly see more states seek to reduce program costs by price reductions – simple, politically palatable, and score-able.
Second, Medicaid doesn’t cover a some drugs used in comp, especially pain meds and drugs that are not on individual states’ Medicaid formularies. As states seek cost reductions beyond those available from simple across-the-board fee cuts, they will move to tighter formularies covering far fewer medications, reference pricing, and other mechanisms that will effectively limit the drugs on the ‘fee schedule’.
As a result, a Medicaid-based fee schedule would be the subject of ongoing lobbying activity and legislative/regulatory action as it requires constant ‘maintenance’; legislators change reimbursement, drugs came on and off formulary, prices go up and down.
In terms of alternatives, WAC, AWP, and some of the other methodologies are inherently flawed. However there are other standards – standards such as Federal Supply Schedule, Average Manufacturers’ Price that are not subject to the same flawed processes as AWP. Examining these may help stakeholders assess their usefulness as an alternative.
(for a synopsis of the various pricing metrics, click here.
What does this mean for you?
1. Fee schedules for drugs are not applicable to most drugs paid under workers comp as PBM rates apply.
2.States will move away from AWP; it will be important to understand the alternatives, their pros and cons.

Jul

Narcotic usage in workers comp – what’s really going on?

Posted by Joe Paduda on Thursday, July 15th, 2010 | Comments

There’s a bit of confusion in the comp pharmacy management space, as there appears to be contradictory evidence from two respected sources about the use of narcotic opioids in workers comp.
First, everyone agrees there’s just far too many claimaints getting far too many far too potent narcotics. Perhaps not in those exact terms, but close enough. Heavy duty, potent, potentially addictive, divertable, high-street-value drugs are dispensed far too often in comp.
But there is a bit of disagreement about exactly what’s going on.
First, CWCI, the always-authoritative California Workers Comp Institute, has been researching and reporting on this problem for several years, and their data shows the use of narcotic opioids is increasing. Dramatically.
In contrast, one of the largest work comp PBMs, PMSI, recently published their results which indicate a decline in usage of this type of drug early on in the claim cycle. I asked Maria Sciame, PharmD, PMSI’s Director of Clinical Services what she thought might account for the decrease in the use of opioid analgesics in the acute phase of injury.
Here’s her take (and I quote):
1. increased physician awareness of the potential negative effects of opioids
2. additional organized opioid monitoring strategies (mandatory reporting) associated with opioids may have reduced “off the cuff” opioid prescribing
3. increased awareness of pain management guidelines that call for non-opioids for the initial treatment of mild to moderate pain
4. decreased prescriber fear regarding the use of non-steroidal anti-inflammatory agents over the past year…remember the FDA warnings that have been issued within the past few years regarding the negative cardiovascular affects associated with NSAID use…started with Vioxx…physicians are becoming less cautious and have regained their comfort level with the use of NSAIDs again; thus, replacing narcotics for acute injuries with NSAIDS.
There are a couple other factors worth considering.
a) PMSI’s business all flows thru a PBM, whereas CWCI’s script data is from payers that use PBMs and some that don’t (even in this day and age, some payers don’t use PBMs; go figure). PBMs have clinical management programs in place to address things like early usage of narcotics.
b) CWCI’s data isn’t specific to early usage, whereas PMSI’s is (in this instance)
c) CWCI is specific to California; PMSI’s is national and as NCCI has reported, there are dramatic differences in prescribing patterns across states. NCCI’s research also indicates narcotic usage across the country has stabilized somewhat of late after several years of consistent increases.
So, what does this mean for you?
If you aren’t using a PBM, get with the program. If you are, find out if they are actively, assertively, and effectively managing narcotic opioid scripts and claimants on those scripts. If they aren’t, find out why not (hint, it may be because you’re not able to provide data or support their efforts, if that’s not it, they’ve got some explaining to do)
Ask for data on narcotic usage for claims less than a year old, and older ones as well, and decide if your results are acceptable.

Jul

Work comp pharmacy – one company’s experience

Posted by Joe Paduda on Wednesday, July 14th, 2010 | Comments

The work comp pharmacy benefit management industry is growing increasingly sophisticated, and the release of PMSI’s Annual Drug Trends Report this morning adds to the trend.
Many of the larger work comp PBMs produce similar reports, providing deep insights into cost drivers, the effectiveness of solutions, and trends that anyone with any responsibility for med loss would be well advised to read.
Here are the quick takes from my admittedly not in-depth read of PMSI’s effort.
1. Price was up significantly last year, climbing 4.7%. This is heavily influenced by the price increases pushed thru by big pharma on brand drugs last year in anticipation of health reform.
2. Utilization was up only slightly, driven by more days supply per script.
3. Mail order utilization was up 3.6%, which undoubtedly contributed to the higher utilization as mail order scripts tend to include more days’ supply than those dispensed by retail stores.
4. The average number of scripts per injured worker was 11.1 in 2009. Yep, eleven point one. That’s a lot of drugs.
5. The report includes an interesting chart graphically illustrating the impact of the age of the claim on scripts per claimant; claims a year old typically had around three scripts at an average price per script of thirty bucks or so; in contrast ten year old claims had 23 scripts averaging over $180 each.

6. Generic efficiency (the percentage of scripts that could have been filled with a generic version) remained at 92%. This is driven by several factors, including state regulations (some have mandatory generic language and others are considering adopting it), PBM and payer intervention and outreach, and the ‘macro’ pharmacy market’s introduction of new brands. Generic efficiency and ‘conversion’ is key to cost management; according to PMSI (and consistent with other reports) each one point increase in generic utilization reduces cost by 1.4%.
7. Pharmacy in comp remains primarily, and I’d argue overwhelmingly, driven by pain. PMSI’s data suggests over three-quarters of drug spend was for pain management – one of the key differences between work comp pharmacy and group/Medicare pharmacy.
8. Our old nemesis OxyContin again accounted for a lot of comp dollars, with 9.9% of spend allocated to the brand and generic versions. On the good news side, Actiq and Fentora usage declined significantly (type ‘actiq’ into the ‘search this site’ text box above and to the right for plenty of reasons why this is a very good thing).
9. Finally, the average days supply of narcotic analgesicvs was up 6.4% while the number of claimants getting those drugs actually declined. This may be due to those claimants who could use alternative meds getting off narcotics (or not starting on them in the first place). As a result, the claimants still taking these drugs are more likely to need more meds.
There’s a lot more meat in the report, lots of detail on which drugs are driving how much utilization, changes in utilization by class of drug, and most importantly, the impact of clinical programs on utilization and drug mix.
What does this mean to you?
Two things.
While PMSI is one of the largest PBMs, remember that these data refer to their customers’ experience and therefore may not be exactly equivalent to your book of business. That said, don’t use that as an excuse if your stats aren’t up to snuff – instead look for ways to get better.
As you pack for that summer vacation, grab a copy of your PBM’s report (go to their site and find it there, or call your rep and have them send it over) and perhaps a couple others.
You know you want to, and you can always hide it inside a Cosmo or Men’s Health to prevent mocking stares from the knuckleheads on the next beach towel.

Jul

What works in wellness

Posted by Joe Paduda on Tuesday, July 13th, 2010 | Comments

Getting employees to change unhealthy habits, exercise, eat right, and do all the other little things that make for better health and lower health care costs is fiendishly difficult. As a nation, we’ve proven that if anything, trying to change behavior is a losing proposition.
But every now and then there’s a glimmer of hope, with evidence that some change is possible – and sustainable.
Earlier this week the Orlando Sentinel had a front page article about one company’s very successful campaign to help its workers shed some pounds. The company, Total Medical Solutions (HSA consulting client, altho I take no credit for this success), started a team-based weight loss program that has resulted in the disappearance of hundreds of pounds, bonded workers from different parts of the company together around a common goal, and led to some significant business for area clothing stores.
While the benefits for workers are apparent – better health, greater self-esteem, more energy – there are also long term benefits for TMS in the form of (hopefully) lower medical expense for costs associated with obesity. Diseases including hypertension and diabetes are strongly associated with obesity; returning to a healthy weight can dramatically reduce the chance someone will contract these conditions.
There’s another benefit – TMS grouped their workers together in teams, teams that crossed department and positional lines. Execs from one department found themselves allied with line workers from another area; accountants with call center staff, operations with marketing (now there’s an idea…) – all working together to lose weight.
I’ve got to believe that this sharing of a common goal will have other benefits, in the form of renewed commitment to corporate objectives, a better ability to work together, and a stronger sense of team.
Kudos to the folks at TMS for finding a creative way to help their staff get healthier.

Author: Joe Paduda