Category: Research

Jun
6

Monday catch-up

Posted by Joe Paduda on Monday, June 6th, 2016 | Comments

Summer’s arrived in upstate New York – and boy do we appreciate it. While I was watching all the trees turn green, I missed reporting on a bunch of stuff last week.

So better late than never, here it is.

P&C industry outlook

Let’s start with the macro stuff.  A couple weeks back, Fitch published a piece wherein they opined the P&C industry is in for a tough time this year. After several years of stellar performance, Fitch expects prices to decrease as competitors battle for market share. Here’s how they put it:

Renewal rates are flat or declining for most commercial market segments following a hardened market from 2011-2014. The price competition comes from underwriting success and market capacity expansion from earnings accumulation. As price competition intensifies however, this will likely be a drag on premium growth, according to Fitch. Commercial lines written premium volume grew by only 1.8 percent in 2015.

For work comp, Fitch identified prescription drug costs and continued low interest rates as problematic; the first increases costs while the second reduces investment income.

Opioids

The number of opioid scripts in the US actually declined last year. And that was the third year in a row. That’s the best news we’ve heard in quite a while. Since 2012 – the peak year for opioid script volume – the number of scripts has dropped by 12% – 18% (depending on the data source).  

In case you’re interested, prescription opioids accounted for about $10 billion in total spend in 2015. Workers comp accounted for around 14% of that, a rather striking figure when you consider total work comp medical spend accounts for 1.4% of overall US medical spend.

Yup, work comp uses about ten times more opioids than other payers.

And how the bad news; the drop in scripts hasn’t been accompanied by a decrease in the death count, which stands at 28,000 for 2014.

California Workers’ Comp

Well, at least it hasn’t gotten any worse.  That’s my take on the just-released CWCI study on the UR/IMR process for Q1 2016.

  • IMR volume is about the same as last year at 160,000 determination letters per year;
  • the overall IMR uphold rate is the same as last year at 89%;
  • Rx drug requests still account for nearly half of all disputed medical service requests submitted for IMR (and 40% of the Rx drug IMRs are requests for opioids or compound meds);
  • and a small number of docs still account for the majority of the disputed  service request that undergo IMR (the top 10% of medical providers accounted for more than ¾ of the IMR service requests).  

My take – the IMR process is preventing people who don’t need opioids from getting scripts for opioids.  That’s a very, very good thing.  Yet the same docs keep prescribing this crap to patients knowing full well these requests will be rejected.

I’m very much looking forward to hearing all those “injured worker advocates” heaping praise upon the system for protecting their clients’ health and wellbeing, and that of their kids as well.

I’ll personally nominate each of them for a Comp Laude Award.

Jun
3

What’s with the gloom and doom?

Posted by Joe Paduda on Friday, June 3rd, 2016 | Comments

“The economy seems to pulse — surges a little bit, pauses, surges a little bit, pauses,” said Kevin Logan, chief U.S. economist at HSBC. “And in the end it’s nothing.”

That’s the money quote from a very readable piece in today’s Washington Post, one that seems at odds with the doom and gloom emanating from some politicians and pundits.

Before my inbox overflows with tales of woe, I fully understand there are places where the recovery is halting at best.  And there are still too many who have decided to exit the workforce – although the number isn’t nearly as high as many think.

And, the percentage of the population that is without health insurance continues to decline – down to 11.0% in Q1, 2016. Deductibles are increasing for many – as they have for the last two decades – but it’s still far better to be insured than not.

Wage growth has increased, the unemployment rate is half what it was at the peak of the recession (and likely headed lower), manufacturing is growing, consumer spending is high, and most stock market indices remain relatively high.  Consumer confidence is in a six-month slump, but one wonders if that’s partially driven by the incessant drumbeat of negativity from Trump et al.

All that said, it’s abundantly clear the employment world is going to change dramatically over the next decade, and it is possible if not likely some of the unease is due to fears that automation and offshoring will continue to eliminate stable, good-paying jobs.

I bring this to your attention, dear reader, to add a bit of perspective and data to the discussion.

Enjoy the first weekend in June

 

 

Jun
2

Opioids and Workers’ Comp – a quick update

Posted by Joe Paduda on Thursday, June 2nd, 2016 | Comments

The rest of the world is beginning to catch up to the progress workers’ comp has made fighting the opioid scourge.  Kudos to PBMs, payers, regulators, researchers and some physicians for recognizing the incredibly negative effects of opioids years ago, and taking action to mitigate some of these effects.

That is NOT to say we’re anywhere close to getting this solved – far from it.

But we have seen some evidence of decreases in the number of new claims getting opioids in some areas and an overall decline in opioid scripts and morphine equivalents (MEDs).  We’ll have more information in a couple of months when CompPharma (a consortium of work comp pharmacy benefit managers) releases its 13th Annual Survey of Prescription Drug Management in Workers’ Compensation. (note I’m president of the organization and am conducting the research, past reports are available free for download here.)

A few factoids to give some perspective:

From CWCI’s most recent research:

  • Opioids declined to 27.2% of all scripts dispensed to California work comp patients in 2014, down from a peak of 31.8% in 2008.
  • Average number of morphine equivalents per script declined from 550 in accident year (AY) 2007 to 422 in 2012.
  • The % of work comp patients receiving opioids within 24 months of injury increased from 22.4% in 2005 to 27.9% in AY 2012
  • Express Scripts reported overall spend for opioids declined 4.9% in 2015, the fifth consecutive decrease.
  • Helios reported:
    • the percentage of work comp patients getting opioids declined by 1.6% from 2013 to 2014.
    • opioid utilization dropped 2.9% over the same period

What we have NOT seen is any significant progress dealing with the knottiest and most important problem – long term opioid users.

I can’t count the number of erstwhile start-ups, business ventures, and eager entrepreneurs I’ve spoken with who contend they’ve figured it out.

By definition, anyone who claims to have a universal solution most certainly doesn’t understand the problem.  Unlike reducing initial and secondary scripts, addressing patients who’ve been taking opioids for months is very much an

  • individual,
  • patient-by-patient approach
  • requiring flexibility,
  • a deep understanding of the disease state and chronic pain and addiction,
  • a willingness to experiment and fail, and
  • a very long term commitment to a business model that almost certainly will not be hugely profitable.

That’s not to say there isn’t opportunity – there most certainly is.

What does this mean for you?

We’re at the end of the beginning of the work to address opioids.  This will take focus, years, diligence, and unrelenting focus.

May
24

Workers’ comp – for hospitals, it’s where the money is

Posted by Joe Paduda on Tuesday, May 24th, 2016 | Comments

Two recent articles in Health Affairs highlight a growing issue for employers and taxpayers; some hospitals are increasingly looking to work comp as a profit maker.

Depending on the state, facility costs can account for anywhere from around 32 – 40% of total work comp medical expenses (different states classify locations-of-service differently).

Ge Bai and Gerard Anderson examined the fifty US hospitals with the highest charge-to-cost ratios and found their markups over Medicare-allowable costs were three times higher than the average hospital.

This is critical in work comp because state work comp regulations often base facility reimbursement on charges – despite NO evidence or requirement that those charges have any basis in reality.

Fully 20 of the fifty hospitals are in one state – Florida – that uses a percent-of-charges reimbursement methodology for hospital outpatient services (manual is here).

Bai and Anderson’s latest work provides a deeper dive into hospital profitability.  A few key quotes:

  • Hospitals with for-profit status, higher markups, system affiliation, or regional power, as well as those located in states with price regulation, tended to be more profitable than other hospitals.
  • Hospitals that treated a higher proportion of Medicare patients, had higher expenditures per adjusted discharge, were located in counties with a high proportion of uninsured patients, or were located in states with a dominant insurer or greater health maintenance organization (HMO) penetration had lower profitability than hospitals that did not have these characteristics.

The methodology used by Bai and Anderson is somewhat different from that used by other researchers in that it excluded income from non-patient care services. I infer that they did this to focus specifically on the actual care delivery cost and not factor in other revenues from services such as parking, gift shops, investment income, etc.

So, what are the implications?

  • Work comp is a soft target for facilities in many states
  • The percentage-of-charges methodology is a license to…profit
  • More profitable facilities have likely already figured out how to make the most revenue possible from every source – including workers comp
  • Less profitable hospitals are going to learn from their more profitable competitors
May
12

Correction – Are work comp medical costs really dropping?

Posted by Joe Paduda on Thursday, May 12th, 2016 | Comments

Last week’s announcement at NCCI AIS that medical costs for lost time claims dropped for the first time ever was a shocker. Talks with experts and industry pros after Kathy Antonello’s talk led to much head scratching and wondering.

The likeliest contributor is…California.

My mistake – California is NOT an NCCI state.  I was under the mistaken impression that, while CA is not an NCCI state, CA does share data with NCCI and therefore was included in the data used for this research.

Today’s WorkCompCentral opened with the news that California’s work comp rates are dropping 5%, driven primarily by reduced medical costs.  In turn, that decrease was due to favorable medical development on older claims – which means those older claims are turning out to be less expensive than originally forecast.

As California accounts for more than 20% of ALL workers’ comp premium, it should not be a surprise that the reforms that have stripped out a lot of the egregious profiteering and waste (e.g. double billing for surgical implants, reduced reimbursement for certain procedures, reductions in costs for physician-dispensed drugs) have actually lowered cost for older claims.

What’s not apparent is the undoubted improvement in patients’ medical outcomes. By reducing incentives for too many surgeries and drugs, patients aren’t getting as much unnecessary care that prolongs disability and has dangerous side effects.

Notably, if Los Angeles was removed from the data, results would be a LOT better. That county has most of the worst physicians treating work comp patients.

What does this mean for you?

Don’t write work comp in LA County.

Apr
26

Opioids, spines, and dead people

Posted by Joe Paduda on Tuesday, April 26th, 2016 | Comments

Friend and colleague David Deitz, MD, PhD, was kind enough to provide his perspective on two seemingly-unconnected items in the current issue of the New England Journal of Medicine that are highly relevant for medical providers treating occupational injuries.  Here’s his view:

Deitz – The first is an editorial by Drs. Thomas Frieden and Debra Houry from the Centers for Disease Control (CDC) reviewing the new CDC opioid prescribing guideline. It’s a concise review of what led the CDC to develop the guideline, as well as a clear statement of what CDC hopes to achieve. The money quote is this one: “We know of no other medication routinely used for a non-fatal condition that kills patients so frequently.”

Included in the same issue is one of a regular series of Images in Clinical Medicine – this one entitled Resolution of Lumbar Disc Herniation without Surgery. You don’t need a medical education of any kind to interpret this one – the pair of MRI images beautifully demonstrates a large disc herniation which resolves over a 5-month period. Nothing surprising to students of low back pain, there is abundant literature demonstrating that the best care for the majority of patients with lumbar disc herniation is conservative – maintaining physical activity as much as possible while waiting for the natural resolution demonstrated again in this case.

While I don’t think the Journal editors intended the irony, it’s sobering to think about how many opioids have been prescribed to injured workers over the last 20 years for this condition, and its (often unnecessary) surgical consequences. One of the most common conditions in WC, and a routinely-prescribed medication with potentially fatal consequences. Hopefully, we’re starting to do better.

Paduda – In a related piece, Michael Van Korff ScD andGary Franklin MD MPH summarize the iatrogenic disaster driven by opioid over-prescribing.  Over the last fifteen years, almost 200,000 prescription opioid overdose deaths have occurred in the US, with most deaths from medically-prescribed opioids.

Doctors prescribed opioids that killed well over a hundred thousand people.

Here’s one…

avery

Today, about 10 million Americans are using doctor-prescribed opioids; somewhere between 10% – 40% may have prescription opioid use disorder – they may well be addicted.

Van Korff and Franklin note that 60% of overdose fatalities were prescribed dosages greater than a 50 mg morphine equivalent.

This despite evidence suggesting “neither high opioid dose nor dose escalation improves patient outcomes.”

The authors suggest three immediate steps we can take:

  1. Avoid ill-advised and unplanned initiation of COT (chronic opioid therapy). Don’t prescribe more than 10 pills initially, check the Prescription Drug Monitoring Program database, educate the patient.
  2. Regulators and legislators need to change policies and regulations to reflect what we KNOW about COT and its inherent dangers.
  3. Considerably enhance population surveillance of opioid prescribing and safety.  The FDA should expand its postmarketing surveillance program for long-acting opioids to patients using short-acting versions.

What should you do about this?

  1. Do NOT allow opioids for “herniated” disks.  (I know, easier said than done…)
  2. Require a pre-auth for ALL acting opioid scripts, and all increases in dosage above 50 mg MED.
  3. Wherever and whenever possible, ensure prescribing docs check PDMPs, educate patients, limit initial scripts, complete an opioid agreement.
  4. Educate patients – for those already on excessive dosages, have your nurses contact the patient to educate them on the potentially fatal risk inherent in long-term use of opioids.
Apr
25

Monday catch-up

Posted by Joe Paduda on Monday, April 25th, 2016 | Comments

Happy Monday! here’s a few items you may have missed.

King v CompPartners – the California case may have implications for UR, IMR, and the “exclusive remedy” foundation of worker’s comp.

Here’s a very brief summary (see url above for more detail).

  • The underlying issue – did CompPartners’ UR reviewer do the right thing? is not in question.  The treating doc’s request was appropriately rejected as it was inconsistent with California’s evidence-based treatment guidelines.
  • However, the patient allegedly suffered seizures due to sudden cessation of the medication, and contended that the UR physician had a “duty of care” to inform the patient of that risk and recommend a weaning process.
  • The plaintiff took the case outside the work comp judicial process to civil court, where he lost.  It then went to Appellate Court, where the ruling raised this “question”: could Utilization Review be considered medical treatment, and the reviewer a treating provider?
  • This is contrary to all work comp precedent; the case is now before the State Supreme Court, which has stayed the Appellate Court’s ruling pending a decision.

Implications – talking to those who know better than I, the Supreme Court will likely reject the Appellate Court’s validation of civil court as an appropriate venue for the case, thereby reaffirming the “exclusive remedy” inherent in workers’ comp.

One issue that strikes me about this case; as the medication in question was prescribed by a physician for a condition deemed not covered by workers’ comp, why did the patient not a) pay for the medication himself or more likely b) get his health insurer to cover the script?

This would have allowed the patient to continue taking the drug and avoid the health issues experienced by the patient allegedly due to suddenly stopping the medication.

If you are in ChicagoLand and/or looking into value-based networks, read this. Really interesting piece on how a big provider system thinks about narrow networks, contracting, and what it wants to get paid for high-end services.  And will “eat” on commodities, such as MRIs for $100.

Here’s a shocker – media is all over reports on how chocolate helps athletes – even if the underlying study is pretty much nonsense. A much more important study that determined a very common spinal procedure is fraught with danger and likely counter-productive – was all but ignored.

From HealthNewsReview:

“Provocative discography” is a diagnostic procedure that’s used up to 70,000 times a year in the United States at great cost to the health care system. It’s commonly performed on patients with so-called “degenerative disc disease” who are considering spinal fusion surgery — a $40 billion per year industry”

If you have to rely on MCM to hear about critically-important research, there’s something really wrong with the mass media.

Looking forward to NCCI next week; will be on a panel moderated by Peter Burton with Mark Walls and Bob Wilson discussing regulatory issues.

Hope to see you there.

Apr
19

ACA’s 20 million increase in insureds – implications for workers’ comp

Posted by Joe Paduda on Tuesday, April 19th, 2016 | Comments

That’s a bit of a misstatement; ACA alone is not responsible for increasing the number of insureds by some 20 million, but there’s no question it was the primary causal factor.

Be that as it may, let’s examine who the newly-covered are, what they do, and where they reside.  The insured population’s demographics may be of interest to workers’ comp payers.

As noted yesterday, the newly-insured population is poorer, more likely to be recent immigrants, and much more likely to be Hispanic than the rest of the country. For work comp, what may be of more interest is the jobs they hold and where they live.

First, the percentage of part-time workers insured rose by 5.8 points, while the full-time population’s coverage went up 2.8 points. Those concerned with so-called Monday-morning injuries, may see this as a plus for work comp as more working people have insurance to pay for non-occ injuries.

Next, what do these workers do?

Pretty much everything; of particular interest to the work comp community, several high-severity &/or high-frequency industries saw significant jumps in the percentage of workers with health insurance. (details below)

  • agriculture +5.4%
  • construction +4.7%
  • transportation/warehousing +4.0%
  • manufacturing +3.3%
  • natural resources + 3.9%

Why is this important?  A few reasons.

Insured people are healthier than the uninsured, so they will heal faster if they do get injured on the job.

Work comp payers won’t have to foot the bill for medical conditions non-occ-related for insured workers.  This isn’t the case for claimants who do not have health insurance; actually work comp payers technically don’t need to pay for non-occ conditions, but end up paying for those conditions if by so doing the claimant gets better faster.

Monday-morning injury frequency may be reduced (if it is a real problem and not just commonly-accepted wisdom).

(chart below from NYT article)

Screen Shot 2016-04-19 at 12.33.44 PM

I bring this to your attention, dear reader, because clients, friends, and all manner of industry folk are keenly interested in the “impact of ACA on work comp.”  Fact is, we don’t know what it will be, but we can prepare if we look closely at what’s happening and make some educated, experience-based guesses.

What does this mean for you (work comp payers)?

A long term and incremental plus…perhaps.

Apr
12

Why be a crook when you can be a dispensing doc?

Posted by Joe Paduda on Tuesday, April 12th, 2016 | Comments

WCRI’s latest report on physician dispensing confirms what we weary soldiers have known for years; the physician dispensing industry is way better at figuring out how to screw employers and taxpayers than workers’ comp payers and regulators are at stopping them.

We’ve tried eliminating the upcharge for repackaged drugs; they came up with custom-manufactured medications.

Fail.

Here’s the summary from WCRI:

the mechanism involves the creation of an opportunity to assign a much higher AWP to these new-strength and new-formulation products. Consider cyclobenzaprine HCL (a muscle relaxant), for which the most common strengths are 5 milligrams and 10 milligrams. If a new strength of 7.5 milligrams comes to market and the original manufacturer of that new strength sets a new AWP, this AWP could be much higher than the AWPs set by the original manufacturers for the existing 5- and 10-milligram strengths. These new strengths and formulation, almost all dispensed by physicians, are labeled as drugs made by generic manufacturers, not repackagers, and therefore, are not subject to the new reimbursement rules targeting physician-dispensed repackaged drugs.

Shockingly, Florida and California, two states that have attempted to control doc-dispensed drug costs with a repackaged drug cost cap have seen these “new” drugs become the most popular versions of the drug – and the most costly, with an average price of $3.01 per pill compared to $0.38 for the “regular” formulations.

Why has this 7.5mg version become so popular?

Is it better than 5mg or 10mg versions?

Of course not.

Make no mistake, these dispensing docs – and the industry that supports them, are quite clear about the money.

Proof.  More proof. And even more proof.

WCRI used data from 2 years ago; if anything it’s way worse now.

The solution is both simple in concept and difficult in execution.  Enable employer direction to pharmacies, a situation that currently exists in NY and MN (and in some cases in CA as well).

Yes, limiting doc dispensing to the first few days helps – legislation in IN and PA has been quite helpful in limiting the shameless profiteering of corrupt docs. However, the dispensing industry is quite creative in coming up with ways to circumvent regulations; don’t be surprised if:

  • docs rent a corner of their office to a “pharmacy”, and/or
  • docs get ownership in a pharmacy down the hall, and/or
  • companies are setting up vending machine-like dispensaries in medical office buildings

In fact, these all – and likely other maneuvers – are already operating in many states.  As I noted a year ago, these bad actors “will find any loophole, whether in a states’ pharmacy licensing process, medical board regulation, work comp statute or scope of practice to find a way to continue screwing employers and taxpayers.”

Because that is precisely what they are doing.

What does this mean for you?

It is long past time to stop playing nice.

Mar
24

Opt Out and work comp – the definitive report

Posted by Joe Paduda on Thursday, March 24th, 2016 | Comments

At the 2016 WCRI Conference, several hours were devoted to opt out – what’s happening in TX and OK, variations among and between proposals to expand opt out to other states, employer views and challenges and problems and opportunities and…

No stone was left unturned.  Now, some folks think this was way too much time spent on what is a pretty small issue.  I’d suggest the exhaustive and complete review was helpful and needed, providing attendees, reporters, and you, dear reader with a source for a 360 perspective.

Trey Gillespie opened the Opt Out session with a dispassionate, thorough, and compelling demolition of the idea itself and execution thereof.

There are four different types identified by Gillespie

Tx – WC is not mandatory – so companies “opt in” to work comp

OK – qualified employers must have a benefit plan that meets specific requirements

TN – a proposed hybrid of the TX and OK models

SC – pending legislation proposes both models

Really, opt out moves occupational injury coverage from work comp to an ERISA plan – a federally-regulated benefit plan.  Gillespie identified a number of differences between ERISA and work comp; the ones I captured are below (I may well have missed others).

  • ERISA – there is no statutory or contractual entitlement to benefits
  • eligibility is based on employment status at the time of benefit – not the time of injury
  • employer decides what – if any – injuries are covered, and which employees, if any, are eligible.

Opt-out coverage commonly excludes industrial diseases caused by asbestos and silica and similar substances, along with assaults and terrorism.  It’s also much harder to “file a claim” as the reporting requirements, conditions, and limitations are much stricter than under work comp statute.

This last is key; according to NCCI, less than 20% of LT injuries were reported on the date of injury.  As opt out plans typically require immediate reporting, there’s a reasonable question as to the impact of opt out on those workers who can’t or don’t report their claim “immediately”.

There are also quite a few restrictions around the kinds and types of medical care that is covered.  Definitions such as “medically necessary” are fungible and, more disturbingly, almost all of the OK approved plans incorporate language that allows the Claims Administrator to terminate or change a previously-agreed-upon treatment plan at any point.

All in all, this makes a mockery of employers’ responsibility to make employees injured or hurt on the job whole.

More tomorrow…