Mar

Time for more science in medicine – and less marketing

Posted by Joe Paduda on Wednesday, March 10th, 2010 | Comments

Prostate cancer may be one of the most over-diagnosed and over-treated conditions in the nation. It is also one of the most over-publicized, with ex-politicians (Bob Dole) and sports figures (Ed Randall) encouraging all men over 50 to get a test that is no more accurate than a flip of the coin, costs big bucks, and may well lead to costly, unnecessary, and painful surgery.
In an editorial in today’s NYTimes, Richard Ablin, who discovered PSA (the enzyme that is the target of the test), publicly disavowed the test, calling it a “hugely expensive public health disaster”. He went on to detail the statistics: “American men have a 16 percent lifetime chance of receiving a diagnosis of prostate cancer, but only a 3 percent chance of dying from it. That’s because the majority of prostate cancers grow slowly. In other words, men lucky enough to reach old age are much more likely to die with prostate cancer than to die of it.” [emphasis added]
The cost of prostate hysteria comes to about $3 billion a year for the tests, plus the pain and discomfort and sexual dysfunction – and cost – of men treated unnecessarily.
One study found “1410 men would need to be screened and 48 additional cases of prostate cancer would need to be treated to prevent one death from prostate cancer.”
Another study found “94% of the cancers detected with the routine PSA blood test would not cause death before the age of 85.”
What’s really disturbing about this is the evidence was there 15 years ago. I wrote a paper for a now-defunct journal describing the results of AHCPR’s Prostate Outcome Research Team which documented much of the problems described by Dr Amblin today. Yet the science is hard-pressed to overcome the marketing muscle behind the test, muscle that has been used to develop fake grassroots organizations supporting the testing (aka astroturf). These organizations are funded by companies who benefit not only from the test, but the devices and seeds used to ‘treat’ positive results.
Here’s one example.

Michael Milken, the principle founder of the Prostate Cancer Foundation, is a significant investor in the venture capital industries. Are you aware that Michael Milken founded Proquest Investments, a $1 billion venture capital fund, with a specific investment thesis centered around prostate cancer after founding the Prostate Cancer Foundation? If you review the board members to ProQuest, you will find that six of the seven scientific advisors to ProQuest Investments are executives or member doctors to the Prostate Cancer Foundation. It seems clear that ProQuest Investments operates as a for profit extension of the Prostate Cancer Foundation, a 501(c)(3) designated non-profit

.
This not for profit encourages testing and screening, resulting in millions of unnecessary tests, thousands of impotent and incontinent men, and billions in revenue for the physicians, device and pharma companies, and facilities providing the testing and treatment.
What does this mean for you?
Payers are wasting money, patients are getting unnecessary treatment, and physicians are violating their oath to do no harm. Which category are you in?
Note – I’ve contacted Ed Randall, the host of the popular (and very good) Talking Baseball radio program several times in an effort to encourage him to stop promoting PSA testing. He’s never responded. I encourage you to contact Mr Randall yourself here – http://www.erbatforthecure.org/ and ask him to reconsider his advocacy that harms patients and increases costs while benefiting for profit companies.

Mar

The ethics of clinical guidelines

Posted by Joe Paduda on Tuesday, March 9th, 2010 | Comments

Next month I’m going to be speaking at the Geisinger Clinic on the subject of Comparative Effectiveness – the payer’s ethical dilemma. I’m fascinated by this issue as it strikes at the heart of the problems with, and perhaps solutions for, the health insurance crisis.
If we are to solve the access and cost problem, payers, providers, and patients must be comfortable with the decision process and methodology. Today, there’s precious little ‘comfort’ with the current ‘system’. And that’s understandable.
There’s a lot of ‘art’ in medicine; physicians diagnose conditions and recommend specific treatments based on what they think will help, often without much in the way of peer-reviewed research supporting their views. Much is based on their own training and experience and the knowledge passed on to them by their medical school professors and colleagues, provided in specialty society and other medical journals, passed on by medical device and pharmaceutical firms, and learned at conferences and symposia.
Most of the time this knowledge delivers the ‘right’ outcome; the patient gets better. But in some instances there are at least a couple different treatment options for the patient’s condition. Physicians recommend what they think will work based on the patient’s unique characteristics (physical, emotional, financial, history), and these ‘recommendations’ may be several. For example, chronic lower back pain treatment options may include surgery, physical therapy, medications, some of the above, all of the above, and variations of each of the above.
Sticking with the back pain issue, think of this from the payer’s perspective. The wide variation in back surgery rates is well-documented, with Medicare data indicating a 500% variation between Ft Myers and Miami Florida. We don’t know why there’s such a wide difference, but it is safe to assume that the rate is too high in Ft Myers, too low in Miami, or perhaps both.
When a physician in Ft Myers recommends surgery for a patient with a back condition, it is understandable why payers would have concern over the appropriateness of the procedure. To address this concern, payers utilize clinical treatment guidelines in an effort to determine if the recommendation is ‘appropriate’.
In some cases, the guidelines provide clear and convincing support for or against the procedure, but in many others the finding is not so clear cut. The patient may have some but not all of the clinical findings that are ‘necessary’ to support surgery; there may be other medical conditions present that complicate treatment determination; the patient may want one type of treatment for their own reasons.
The result is the payer – and the physician – are functioning in a somewhat grey area.
There are obvious financial factors in play as well. The physician gets paid to do the procedure, the pharma company gets paid if the patient takes their meds, the device company gains revenue for each device sold, the payer saves money if expensive procedures aren’t performed, the patient may want drugs for inappropriate reasons.
The ethical issues are apparent. While we would hope that decisions would be based solely on the evidence, there often isn’t enough of the right type of evidence to arrive at a clear cut decision. When that occurs, what other factors affect the decision? How are disagreements resolved, and what is that resolution? When there’s strong disagreement, what factors, evidence, criteria are ‘used’ to support the parties’ different positions?
If you have experience with situations that speak to this ethical dilemma, I’d appreciate hearing from you.

Mar

Texas’ efforts to add science to the art of work comp medicine

Posted by Joe Paduda on Thursday, March 4th, 2010 | Comments

As anyone who has studied physician practice patterns is only too aware, there is wide variation in how physicians practice; the kinds of tests they order, whether they admit patients to the hospital or treat on an outpatient basis, the drugs they prescribe and the outcomes they deliver.
If we are to gain control over health care costs and ensure patients receive the right treatment and payers get value for their dollars, we have to force more science into the art of medicine.
Texas’ Division of Workers Comp’s push to publish data [sub req] on work comp physicians’ compliance with clinical guidelines is a step in the right direction. While only in the formative stage, and pretty limited at that, the effort is long overdue but nonetheless a critical step in reforming the dysfunctional mess that is our health care system.
Unlike any other good or service, when employers ‘buy’ health care they have no idea of what that investment returns; they don’t know what they get for their dollars. When an automobile manufacturer buys tires, it makes its decision on which tires it buys based on the performance of those tires, their durability, ability to carry the car’s weight, handling, cost, and value compared to other tires on the market.
That same auto manufacturer has no idea what it gets when it spends millions on health care. What is the return on investment on the premiums paid and the services bought with its dollars? How does it measure the value of the office visit, the return on the MRI, the 30 day supply of medication?
Because employers don’t know and can’t measure the return on their medical spend, they focus on spending as little as possible – they have to provide health and workers comp insurance, but want to spend as few dollars as they can because there’s no way to know what the return is on that investment.
Which is why Texas’ efforts are so important. While one can (and I’m sure some will) argue that they are starting too small, (WorkCompCentral reports that one recommendation is to begin looking “at compliance by doctors with treatment guidelines in ordering MRIs for back and spine injuries”), it is far more beneficial for all concerned to begin the effort, to engage providers, payers, regulators, and claimant advocates than to wait till there’s broad consensus on multiple performance measures.
What’s great about workers’ comp is that unlike group health or medicare or medicaid, the same dataset includes information about return to work, the cost and duration of disability, and the final ‘functional’ outcome (I’ll concede that these data aren’t always accurate or consistent). When we’re evaluating medical care, the ultimate outcome should always be based on the degree to which the patient recovered and returned to functionality.
What does this mean for you?
Do not let the perfect be the enemy of the good – encourage Texas’ DWC to proceed quickly with their initial efforts, engage with them in a positive way, share data, and push for more measures, more results, more openness. Understand that physicians have concerns about outcomes, many of them legitimate, and work with them wherever possible.

Feb

How many dollars are wasted on physical therapy?

Posted by Joe Paduda on Friday, February 12th, 2010 | Comments

Probably a lot. Perhaps most. And certainly a big chunk of the bucks your insurer/TPA is paying.
Unlike surgery, imaging, drugs, and other types of medical treatment, PT has long been a bit of a black art.
The clinical guidelines for PT that do exist (with one exception I’ll get to in a minute) usually say something like ‘two visits a week for four weeks’, without describing what is to be done during those visits, who’s supposed to do what gets done, and equally important, what shouldn’t be done.
That’s the primary reason physical medicine (PT and chiro) accounts for about one out of every five dollars spent on medical care in work comp, and would account for big bucks in group if it weren’t for tightly written benefit limits (x visits at a 50% copay).
Before the PTs out there start flaming me, know that I’m a believer in the ability of appropriate PT and have seen lots of data that support the use of PT in helping injured folks return to functionality. But I’ve also audited many work comp claims where the claimant had been to PT hundreds of times. I recall one where the claimant had over five hundred (500) visits over a three year period, with each PT note looking identical to the previous one. The payer couldn’t cut off the treatment because the treating physician had ordered it, and the clinical guidelines weren’t robust enough to force the issue in court.
Last month the NYTimes had an excellent article by Gina Kolata on just this issue. Here’s an excerpt:
“My doctor at the Hospital for Special Surgery in New York, Joseph Feinberg, seems to share my opinion [that much of PT is waste]. “Very often, I think the hot packs, cold packs, ultrasound and electrostimulation are unnecessary,” he said, adding, “For sure, in many cases these modalities are a waste of time.”
So has physical therapy been tested for garden-variety sports injuries like tendinosis? Or is it just accepted without much question by people who urgently want to get better?
It depends, says James J. Irrgang, a researcher in the department of orthopedic surgery at the University of Pittsburgh and president of the orthopedic section of the American Physical Therapy Association.
“There is a growing body of evidence that supports what physical therapists do, but there is a lot of voodoo out there, too,” Dr. Irrgang said. “You can waste a lot of time and money on things that aren’t very helpful.”

(not in Ms Kolata’s article, but helpful for perspective…)
Sometimes, manual stretching by a physical therapist can actually eliminate a sports injury, he said…They are the exceptions. More common are the “voodoo” treatments, he said. And what might those be? None other than ice and heat and ultrasound, Dr. Irrgang said.
Ice and heat, Dr. Irrgang said, “can control pain a little bit” but “are not going to take care of the problem.” The underlying injury remains.”
But the lack of credible evidence-based clinical guidelines can make it difficult for payers to contest unnecessary treatment, especially in those states where regulations make it tough for payers to stop paying for unnecessary treatments.
There are credible, thoroughly researched clinical guidelines specific to PT, with the best focused not only on how many visits over how many weeks, but what should be done during those visits. I’ve reviewed all of the guidelines used in work comp for PT, and the most thorough are published by Expert Clinical Benchmarks, a subsidiary of MedRisk. (MedRisk is an HSA client)
Guidelines can’t be developed in six months; rather they must be carefully researched, assessed by acknowledged experts in the field, tested against claims and medical billing data, and reviewed periodically. There are far too many companies touting their ‘utilization review’ programs which are based on little more than the ‘same old same old’ guidelines that have never worked in the past, or quickly-assembled amalgamations of journal articles, neither of which will be of any help in front of a work comp judge.
What does this mean for you?
If you’re serious about managing PT, start with science.
UPDATE
I received an email from a good friend and colleague in the PT business who felt my post was an insult.

Let me reiterate – there are good PTs, and bad PTs.
There is good PT management, and bad PT management.
Some PT is quite useful, appropriate, and necessary, and some is not. When payers don’t use solid clinical guidelines it makes it very difficult for adjusters, case managers, peer reviewers, and hearing judges to differentiate between appropriate and inappropriate PT. And there’s lots of inappropriate PT in work comp.
In the course of my consulting practice, I’ve seen dozens of cases where claimants received more than a hundred PT visits over a year, and many where the total number was well over two hundred. This type of utilization is simply indefensible, and unfortunately often results in adoption of regulatory control mechanisms.
Some states have chosen to use caps on visits as proxies for utilization management, with 24 appearing to be the most common limit. This is at best a blunt instrument, but nonetheless it appears to have resulted in lower costs for physical medicine in the jurisdictions that have adopted the ’24 visit rule’.

Feb

Medicare and Workers’ Comp – NCCI’s view

Posted by Joe Paduda on Tuesday, February 2nd, 2010 | Comments

Recently NCCI released a white paper entitled “Medicare and Workers Compensation Medical Cost Containment”. The report goes well beyond a discussion of the relationship between Medicare’s physician and hospital reimbursement policies’ impact on workers comp; not that it doesn’t address that timely topic in some detail, but it also details the unforeseen implications of using Medicare reimbursement, the impact of the growing Medicare deficit on future health care, and the demographic factors and how they are felt differently in work comp and Medicare.
Ok, pretty geeky stuff I’ll admit, but interesting nonetheless. (wait, isn’t that contradictory?)
Here’s my summary of takeaways you should know.
The Center for Medicare and Medicaid Services (CMS) projects health care as % of GDP will go up one full point to 17.6% this year, driven by a declining economy while the demand for health care decline. US health care costs continue to be the highest in the world, by far.
Unlike group health, there’s an increasing disparity between Medicare reimbursement for specialty care, sx and radiology and Work comp fee schedule rates. Comp pays relatively more than group for these services.
One of the (many) issues inherent in basing WC on Medicare is that Medicare rates change for reasons specific to Medicare. As an example, the adoption of changes due to the budget neutrality factor legislation in 2008 changed the basic formula used in setting physician reimbursement. The changes increased relative value units (RVUs) and decreased conversion factors (CF). For those WC states that only adjust CFs, this may well have unintended consequences. The NCCI report stated “simply updating CFs for inflation and not offsetting the RVU change will give MARs that are about 8% higher than is likely to be intended.”
One conclusion in the study really stood out: CMS says the vast majority of Medicare patients “have access to specialty care, so it follows that many wc specialty care MARs (fee schedules) are well above what is needed to assure access [for wc patients]”.
As an example IL work comp pays 450% of Medicare, AK 510%, CT 360% for surgery.
That does raise a question: If most reimbursement for WC is below the WC fee schedule, does that not at least partially negate the importance of the FS as a price setting mechanism?
Finally here’s another finding worthy of consideration. The percentage of comp medical costs subject to physician fee schedules has declined from 58% in 2001 to 53% in 2006 (+/-). And, more and more procedures are being done on outpatient basis, and many states don’t have outpatient reimbursement schedules that have limits on utilization or even address it like Medicare’s methodologies do.
What does this mean for you?
Watch what happens with Medicare. Closely.

Jan

Work comp medical costs – heading up…

Posted by Joe Paduda on Tuesday, January 26th, 2010 | Comments

To no one’s surprise. work comp medical costs appear to be on their way up, and at a rate significantly higher than the medical CPI.
First the what, then the why.
The latest data from NCCI indicate comp medical inflation (based on lost time claims) was 6% in 2008, just a bit more than the previous year. While I’ve no doubt the figure is accurate, it is important to understand that NCCI’s figure is derived from data that doesn’t include some fairly significant states – CA and NY being two of the more important.
Another data point comes from an admittedly highly selective source: from conversations with large payer clients, I get the distinct impression that their 2009 medical expenses are trending much closer to ten percent higher than 2008.
Add these data to the latest data from WCRI [subscription required] that indicates California’s trend is hitting 9% – a number that may well undervalue the latest figures as WCRI’s data is somewhat dated, and the picture gets a bit clearer. In fact, more recent data suggests the inflation rate is well into double digits, with the WCIRB reporting comp medical trend at 16%.
To be sure, California is a unique environment, with unique fee schedule quirks (including allowing hospitals to charge twice (!!) for surgical implants), a recent history of ever-lower work comp premiums, and a mix of managed care programs and providers that is quite diverse. Add those factors to the significant increase in ultimate medical costs due to the Ogilvie and Almarez/Guzman decision and California looks particularly problematic. Yet it also has a reputation as a ‘leading indicator’, a reputation that work comp observers would do well to respect.
What’s driving the increase?
There is a very long answer to this, which involves cost-shifting, increases in the number of individuals without health insurance, reduced Medicaid and Medicare reimbursement, ineffective fee schedules, physician dispensing of repackaged drugs, the growth of narcotic opioid usage, Part D, the nursing shortage and a host of other macro and micro influences, most of which are addressed elsewhere in other seventeen hundred posts on MCM (this blog, to the newcomer).
There’s also a shorter answer – misaligned incentives for work comp managed care programs, and payers’ increased reliance on managed care program revenue and profits. This leads to a focus on processing bills (which generate fees) and doing utilization review (which generate fees) and using huge provider networks (which generate fees) and sending lots of claims to case management (which generates fees), instead of actually managing the medical components of the claim.
Here’s one blatant example of this situation:
Workers comp payers spend hundreds of millions of dollars each year on medical management – pre-cert, utilization review, peer review, case management, clinical guidelines, and the variations and permutations thereof. Dozens of companies from mom-and-pops to regional players to industry giants like Coventry and Genex employ highly trained professional medical personnel to watch over the care delivered to injured workers, carefully reviewing and approving or not approving thousands of medical procedures.
Then, the medical bills come in to the payer. The frightening/amazing/unconscionable truth is that many non-approved medical treatments actually are performed, and billed for, and likely paid – because those determinations are not automatically fed into the bill review system’s database, and/or the bill review system can’t link the determination to the bill/provider/claimant.
How much of this actually occurs on a national basis is impossible to say, and there’s no doubt some payers have the links in place to ensure most if not all medical management determinations are linked to the right claimant/provider/event.
And because many (not all, but many) payers rely on managed care to generate departmental and corporate margins, they aren’t focused on the results of UR and bill review, but rather the dollars generated by those functions.
What does this mean for you?
Time to ask what’s important and what isn’t, and why you are in business, and how you produce results, and whether or not your incentives are aligned with employers’.

Jan

How to change health behavior

Posted by Joe Paduda on Monday, January 18th, 2010 | Comments

I’ve been working with a mid-sized self-insured employer on their health benefits plan; they got hit hard with costs from diabetes last year and the (relatively thin) data available suggests it’s going to get worse in the near future; there are many more individuals at high risk for diabetes (among other ills). If they don’t do something to reduce their employees’ risks, their costs are going up, and fast.
While muddling thru the data, we all agreed that if we all exercised, maintained a reasonable weight, ate healthy foods and amounts, drank in moderation, and didn’t smoke, their costs would be much lower; heck, as a nation there’d be no health care financial crisis.
Good luck with that.
Alas, we’re getting fatter, lazier, and many of us are getting sicker as a result. With so much of our health care budget spent on lifestyle-driven diseases, it’s increasingly obvious that getting people to change behaviors – stop smoking, reduce their drinking, get off their duffs and get out for a walk/ski/cycle – would go a long way to reducing expenses.
So I’ve been investigating motivational techniques and results, looking for ways to help my client get their employees to make long term commitments to healthy behaviors/ There’s been lots published about this; Employers try to motivate healthy behavior by paying for gym memberships and smoking cessation, reducing premiums for employees who earn points for maintaining healthy weight levels, and hire fitness and health promotion experts to staff their wellness centers. These efforts have had some positive effect, but only on the margins.
Turns out the positive, reward-based motivation may well be misdirected. Instead of rewarding people for good behavior, the evidence suggests that penalizing them for ‘bad’ behavior by taking something away is much more effective.
Here, from a brief piece in The Economist:

In a new paper Tanjim Hossain of the University of Toronto and John List of the University of Chicago explore a real-world use of these insights. The economists worked with the managers of a Chinese electronics factory, who were interested in exploring ways to make their employee-bonus scheme more effective. Most might have recommended changes to the amounts of money on offer. But Mr Hossain and Mr List chose instead to concentrate on the wording of the letter informing workers of the details of the bonus scheme.
At the beginning of the week, some groups of workers were told that they would receive a bonus of 80 yuan ($12) at the end of the week if they met a given production target. Other groups were told that they had “provisionally” been awarded the same bonus, also due at the end of the week, but that they would “lose” it if their productivity fell short of the same threshold.
Objectively these are two ways of describing the same scheme. But under a theory of loss aversion, the second way of presenting the bonus should work better. Workers would think of the provisional bonus as theirs, and work harder to prevent it from being taken away.
This is just what the economists found. The fear of loss was a better motivator than the prospect of gain (which worked too, but less well). [emphasis added] And the difference persisted over time: the results were not simply a consequence of workers’ misunderstanding of the system.

What does this mean for you?
For managed care companies and employers, think of basing benefits on a plan with relatively modest employee coinsurance/contribution level, adjusted upwards for failure to comply with health standards. Yes, there will be complaining about what constitutes lifestyle issues v genetics, and how it may be unfair to penalize this or that lack of compliance, but while you’re dickering around with these points, your costs are continuing to escalate.

Jan

Health insurance and workers comp claim frequency

Posted by Joe Paduda on Monday, January 4th, 2010 | Comments

A recent dialogue on the LinkedIn WC group got me to dive back into the question of what, if any, influence does the presence of health insurance have on work comp claim frequency? The data aren’t conclusive, but the answer appears to be ‘There is a trend, but not in the direction you’d think.’
Commonly accepted thinking holds that workers without health insurance will claim off the job injuries under work comp so the medical bills get paid. (That’s what I thought too.) Turns out that the opposite appears to be the case; workers who have health insurance are more likely to file WC claims than those who don’t.
It isn’t quite that straightforward, so don’t just read this and take it at face value; there are significant complicating factors.
The seminal study on the health insurance: WC claims relationship was done by RAND and published in 2005 . If anything, it appears to indicate that workers with health insurance are more likely to file WC claims, however the driver is not the presence of health insurance but rather the nature of the employer.
From the study abstract:

…uninsured and more vulnerable workers are less likely to file claims than the insured. We study this relationship and find that it emerges as the result of employer characteristics. Workers at firms who offer health insurance to employees are more likely to file workers’ compensation claims: the characteristics of the firm are more important than the insurance status of workers themselves; [emphasis added] moreover, even repeat injury sufferers are more likely to file during episodes in which their employer offers health insurance. This suggests that the workplace environment and employer incentives may have a significant impact on the utilization of the workers’ compensation system.

Key highlights from the study itself:
– injured workers without health insurance are about 15% less likely to file a WC claim than workers with health insurance
– workers in firms that offer health insurance are twenty-one points more likely to file a claim than those in firms that don’t offer health insurance
RAND’s conclusion that the workplace environment is the key factor affecting claim rates and frequency was supported by several recent reports indicating injured low wage workers are particularly unlikely to file work comp claims. One of the more intriguing studies was done under the auspices of the National Employment Law Project which focused on the problems faced by low-wage workers when they are injured on the job. The study looked at a population that accounts for fifteen percent of all workers in just three cities; Chicago, New York, and Los Angeles. Extrapolating the numbers out in just those three cities indicates that 75,446 workers comp injuries were not reported.
Nationally, that works out to about a million claims unreported.
The study reported 92% of low-wage workers don’t file work comp claims for injuries that require medical attention.
Fully half of the workers with on the job injuries “experienced an illegal employer reaction”, including firing the worker, calling immigration authorities, or telling the worker not to file a comp claim.
What does this mean for you?
With health reform with some form of mandate looking increasingly likely, some, steeped in conventional wisdom, will expect claims frequency to decline. Others will expect it to increase now that more workers will have coverage.
The latter group’s view will be more correct than the former’s; or more accurately ‘less wrong’. Bad employers will remain bad employers regardless of whether or not they offer health insurance, therefore, after the mandate is in place, injury reporting behavior may increase somewhat but probably not by much.
(kudos to Mark Walls for starting and managing the LinkedIn group)

Dec

Drug use in workers comp – the narcotics problem

Posted by Joe Paduda on Wednesday, December 23rd, 2009 | Comments

Just in time for Christmas, the good folks at NCCI have released their study of Narcotics in Workers Compensation, providing readers with just what they want – more evidence that the workers comp industry has a long way to go to get prescription drug use under control.
Sorry to spoil your pre-holiday glee, but the news is pretty troubling. Here, according to Barry Lipton et al, are the ‘highlights’:
– Narcotics account for nearly one quarter of all workers compensation Rx costs
– The share of drug costs attributed to narcotics increases as claims age
– Narcotics are used mostly for back injuries in workers compensation
– and perhaps most troubling, the use of narcotics early in the life of claims is increasing
NCCI’s report (which uses 2007 data) comes on the heels of my firm’s Sixth Annual Survey of Prescription Drug Management in Workers Comp, which found drug cost inflation jumped top 7.5% in 2008, marking the first increase in the inflation rate in the six years the Survey has been conducted.
The ‘good news’ is that the percentage of drug dollars spent on narcotics has stayed relatively flat for the last eight years, this despite the rapid, and close to complete, penetration of PBMs into the work comp space. While that good news may not appear to reflect well on PBMs (and payers’ efforts too), NCCI found that average narcotic costs per claim stabilized several years ago after several years of rapid growth. (I’m a big believer in cost per claim as a metric, as it does away with the influence of variations in claim frequency and is thus a better way to assess drug management performance)
The net? Cost increases have flattened out, but to this non-pharmacist’s eye there appears to be a lot more narcotic spend than necessary.
There are some rather interesting geographical nuances here as well; states with above average use of narcotics include CA, OK, TX, LA, AL, SC, MA, DE, and NH, proving that it isn’t just the deep South that has a narcotics problem.
What does this mean for you?
Time to get focused and get after your drug problem. This isn’t just a drug cost issue; the extended use of narcotics is also associated with longer duration of disability and higher claims costs.
And a note of compliments to NCCI on the study – this is precisely the kind of information payers need to know.

Dec

Where were the payers in Florida?

Posted by Joe Paduda on Wednesday, December 9th, 2009 | Comments

The ongoing battle over the work comp hospital fee schedule in Florida continues, as challenges have been filed by two hospitals, the Florida Hospital Association, and FairPay Solutions that prevent implementation of a dramatic revision to existing fees pending further action by an administrative law court.
According to Mike Whitely’s piece in WCC, the suits, reported this morning in WorkCompCentral (sub req) allege that the FL Department of Workers Compensation

“DWC exceeded its rule-making authority and strayed into the legislative realm by abandoning the usual-and-customary charge system.
Florida Statute Section 440.13 gives the final authority for setting workers’ compensation medical fees to the state’s Three-Member Panel. But it specifies that all outpatient fees are to be paid at 75% of usual and customary charges, except as otherwise provided by state law. The statute separately sets the payment for outpatient surgeries at 60% of charges.
FHA and FairPay argue in the filings the proposed fee plan “enlarges, modifies and contravenes” the law by shifting to a Medicare multiple fee schedule.”

Fortunately for employers and insurers in the Sunshine State, the actions of FairPay and the hospitals will save them from much higher hospital costs, costs that the payers have done nothing to address.

I’m bewildered as to why payers – insurers, employers, TPAs, self-insured groups – have not vociferously protested the proposed changes. As I’ve noted repeatedly, the proposed changes will dramatically increase medical costs in Florida’s work comp system with no concomitant increase in value, return to work effectiveness, quality of care, or reduction in total claim cost or duration of disability.
No, this is nothing more than a giveaway to hospitals, a big increase in their income from treating workers comp patients. Here’s how work comp payers are going to be harmed by the proposed changes.
First, this methodology means work comp will pay 174% of Medicare for surgeries and 395% for other hospital outpatient services. Does anyone, at any payer, think that it is reasonable for them to pay hospitals four times more than Medicare does?
Second, the location of services will likely change dramatically to the higher cost hospital location. Thus procedures which were being done in offices will now be billed – at the much higher rates – by hospitals.
Yet not a single payer filed a protest that would have delayed the implementation of this onerous and costly regulatory change.
Not one.
What does this mean for you?
Who’s looking out for your interests?

Category: Research