Category: Workers Comp

Dec
4

So you think you know work comp claims?

Posted by Joe Paduda on Tuesday, December 4th, 2012 | Comments

Sign up for Mark Walls’ seminar and find out if you really do.

I’d especially recommend potential investors, vendors, and service providers who sell to or work with or interact with workers comp claims adjusters and organizations sign up for Mark’s presentation.

That said, understand Mark will be talking about how claims should be handled, which may – or may not – bear much resemblance to how certain claims adjusters actually handle claims.  Nonetheless, those who want to understand the role of claims, and interaction of claims and related areas (managed care, investigations, litigation, technology, providers) would be well-served to sit in.

 

Dec
3

The latest work comp fraud

Posted by Joe Paduda on Monday, December 3rd, 2012 | Comments

WorkCompCentral reported [sub req] this morning that a Pennsylvania County was defrauded by its risk manager to the tune of $490,000.  The County’s TPA (Inservco, owned by Penn National) paid $490,000 for fraudulent bills approved by Dauphin County’s risk manager.  The  County discovered the scam when the risk manager, Garry Esworthy retired and the county reviewed the bills and payments to a company he’d set up in his wife’s name.

While there’s plenty of embarrassment to go around, it appears that the scam was easy to perpetrate.  As the risk manager, Esworthy had the ability and authority to approve payments for bills processed by Inservco.  He set up a company in his wife’s name, and submitted bills to Inservco. The TPA processed the bills, then sent them to Esworthy for approval.  Once he signed off, the checks were cut and sent to his account.

The scam was discovered after he retired and a County official looked into some of the bills and became suspicious.

Evidently Inservco is not to blame in this case. WorkCompCentral’s Mike Whiteley reported that earlier this year Inservco “came under fire from New Jersey State Comptroller Matthew Boxer, who said the company failed to disclose “side agreements” with bill repricing vendors it hired as TPA for the New Jersey Sports and Exposition Authority and for a city, county, and school district in New Jersey.” (the NJ Sports and Exposition Authority is a former HSA consulting client)

Boxer released an alert indicating “New Jersey governments could be wasting taxpayer dollars if they don’t closely monitor companies they hire to administer workers’ compensation claims…”

 

 

 

Nov
30

What the Illinois repackaged drug fix means for you

Posted by Joe Paduda on Friday, November 30th, 2012 | Comments

Now that Illinois has fixed its physician dispensing upcharge problem, there’s one less target for the dispensing industry.  While that’s great for the Illini, it’s not so great for those in states where upcharging for repackaged drugs is still allowed.

That’s you, Florida.  And you too, North Carolina, and Virginia, and Michigan.

You can expect the prices for repackaged drugs to increase, in some places dramatically. With Illinois joining GA SC AR MS CT CA AZ and other states where upcharging for dispensed drugs is essentially banned, there are fewer states where the dispensing industry can still plunder employers and taxpayers.  The dispensing industry must continue to generate ever-higher margins for their owners and investors, so they are going to increase prices and push for more scripts for more claimants from more physicians dispensing.

As WCRI has ably reported, prices for drugs dispensed by Florida physicians have held remarkably stable, while prices in other state, notably Illinois, increased substantially.  There’s some thinking that the industry has purposely held prices in the Sunshine State down in an effort to remove some of the pressure to pass a legislative fix.  After spending the last two days at the Florida Chamber’s Insurance Institute and conversing at length with  legislators keenly interested in the topic, my sense is the issue will once again be front and center in Tallahassee.

One anecdote points to the extent of the problem.  A good friend from a PBM told me yesterday that one of their clients sent them a $4300 bill for a repackaged drug, and asked what was to be done.  The PBM told them:

  1. that same drug would have cost $151 at a retail pharmacy
  2. as this was in North Carolina, where the fee schedule is “pay as billed”, there wasn’t much they can do.

This isn’t by any means a rare event. It is happening every day in many states, likely even your’s.

 

Nov
27

Niches in work comp medical management

Posted by Joe Paduda on Tuesday, November 27th, 2012 | Comments

Reflecting back on the Vegas comp conference (perhaps the best one in recent memory), what struck me most was the significant increase in companies focused on seemingly ever-smaller niches in the medical management space.

Perhaps it’s partially driven by the rather stunning success of MSC after they dumped their pharmacy business, along with the growth of MSA firms (and all their sub-species); MedRisk, Align, and PBMs; the acquisitions of transportation and translation firms, dental specialists, and imaging companies; and the sudden (!) understanding that pain management is really, really important in work comp.

Regardless, I must’ve picked up a dozen business cards from various individuals who are investing/starting companies/focusing/seeing opportunity in various niche areas, including dental, pain management, addiction/dependence, imaging, DME, IMEs, and home health.  Some were pretty/very sharp, with tight understanding and deep knowledge, while others just had an idea and had little idea of what to do or how to do it or who would pay for it or what they’d pay – but gosh, there sure is an opportunity!

While there’s no doubt there are lots of opportunities, there’s even less doubt turning opportunities into revenue is a very tough slog requiring discipline and tight focus.  Here, in no particular order, are a few recommendations/observations about building a niche business.

1.  No one cares about your company or you or your idea.  They really don’t.  What they DO care about is their personal individual unique pain point – that’s what’s important to them. Don’t waste their time with descriptions of your business.  If you can address their specific pain point, you have an opportunity.

2.  Listen don’t talk.  Ask don’t tell.  When in doubt, ask it again. Figure out exactly what their issue is, how it relates to your solution, then ask what their opinion is.

3.  Lunch is not business.  A meeting is not progress.  A contract is not meaningful.  What is meaningful is revenue, services delivered, bills sent and paid.  Don’t get caught up in having meetings.

4.  There are lots of reasons potential buyers will use bigger, more established companies, most of them quite reasonable.  If you are to succeed, there has to be a compelling, customer-centric reason for a prospect to use your’s.  You can’t be as good as, you have to be better – with better defined by that individual prospect.

5. While niche companies can – and usually do – a much better job addressing the specific service area that is their focus, often that area is so small that a big reduction in cost won’t move the proverbial needle.  Drugs are about 12-14% of spend, PT about the same, imaging around 5%, DME and home health a few percent each, and transportation and translation perhaps a point or so each.  Saving a payer 20% on their DME isn’t going to be meaningful in terms of the combined ratio, but it may be very meaningful for the individual at the payer tasked with addressing that area.  But she can’t solve her problem unless your solution can actually be implemented and used.

 

Nov
21

Employers in Illinois have much to be thankful for

Posted by Joe Paduda on Wednesday, November 21st, 2012 | Comments

As of yesterday, employers won’t have to pay outrageously inflated prices for drugs dispensed to their injured employers.  Until the legislature approved regulations capping drug prices for repackaged drugs, employers’ workers comp drug costs had been increasing at an astounding rate.

The regs now require insurers to base reimbursement for physician dispensed repackaged drugs on the price of the drug before it was repackaged.  Here’s the new language as published in the Illinois Register:

“If a prescription has been repackaged, the Average Wholesale Price used to determine the maximum reimbursement shall be the Average Wholesale Price for the underlying drug product, as identified by its National Drug Code from the original labeler.”

A big win to be sure, as physician dispensing companies, their investors and enablers were making millions in Illinois doing little more than taking pills from one bottle and putting them into another. The result? In Illinois, costs for physician dispensed drugs went up more than twice as fast as the number of scripts, because physicians dispensing medications raised their prices dramatically. According to a WCRI study, while the price of Vicodin purchased at a retail pharmacy dropped 2 percent over a year, physician dispensed Vicodin went up 66% over that three-year period.

I won’t get into how employers were able to defeat the efforts of physician dispensers, their investors and enablers to stop the new regulation except to acknowledge this would not have happened without

Lest we get too complacent, realize this is but one state out of 50. The repackagers and their enablers will continue their efforts in Florida, Hawai’i, Michigan, and everywhere else to keep sucking money out of employers and taxpayers to pay big dividends to private equity firms, buy corporate jets and fancy cars.

For now, congratulations to the good guys.  Then back to work on Monday.

Nov
20

Compounding pharmacies – it’s not just about steroid deaths

Posted by Joe Paduda on Tuesday, November 20th, 2012 | Comments

An excellent piece by a couple gentlemen from Liberty Mutual describes the myriad problems with and risks of compounding medications – over and above the disastrous faulty steriods from the New England Compounding Center.

A few highlights:

  • “oversight of compound medicines actually is minimal…And as with any industry that has minimal regulation and oversight, there is great potential for fraud and abuse. The lure of possibly significant profits also is helping drive this fraud trend.”
  • “these drugs do not use the standard national drug codes (NDC). This lack of a standardized coding allows unscrupulous providers to easily double bill payers for the same medication. Also, the absence of NDC codes generally does not allow for payers or administrators to apply drug utilization edits to incoming compounded bills.”
  • “The FDA does not require pharmacies to report adverse events associated with compounded drugs. Based on voluntary reporting, media reports, and other sources, the FDA has become aware of over 200 adverse events involving 71 compounded products since about 1990.”

There’s much more at the link.

Thanks to Sarah Sellers, PharmD, for the tip.

Nov
19

Comorbidities double workers’ comp claims costs

Posted by Joe Paduda on Monday, November 19th, 2012 | Comments

Claimants with comorbidities [health issues identified by the treating doc] cost a lot more than patients without.

That’s the conclusion of NCCI’s latest report, and a finding all workers’ comp stakeholders would do well to consider carefully – for several reasons.

1.  The percentage of working-age Americans with chronic conditions [e.g. asthma, hypertension, depression, diabetes, etc] is large and increasing.  According to the CDC, 27 percent of Americans are obese, 29 percent have hypertension, and 7 percent have diabetes.  All are substantially higher than a decade ago.

2.  NCCI’s analysis only included claimants where the WC treating physician coded and billed for a comorbidity.  Compared to the CDC figures, this occurred in about 10% of the patients who likely had comorbidities.

3.  The “growth rate of workers compensation claims with a comorbidity diagnosis is outpacing growth rates of the given conditions in the US population.” NCCI had a couple potential explanations for this trend; I’d suggest it is likely because many WC claimants:

a) don’t have health insurance;

b) their comorbidities are hampering their recovery from the occupational injury;

c) treating docs must address those comorbidities if there’s any chance of getting the claimant back to functionality; and

d) payers are paying for that treatment because it makes financial sense to do so.

One rather stunning finding – 81% of claims with diagnoses of obesity incurred lost time.

I’d be remiss if I didn’t note that the rollout of Obamacare will cover millions more claimants, thereby allowing work comp payers to send bills for non-occ conditions to the employee’s health insurer.  While some states continue to resist reform, there are others (e.g. Florida) that have decided to participate after all.

What does this mean for you?

Healthier workers = lower workers comp costs.

Nov
14

Texas’ work comp reforms – quick takes

Posted by Joe Paduda on Wednesday, November 14th, 2012 | Comments

WCRI just released an assessment of the results of work comp reform in Texas, and – generally speaking – they are pretty positive.

Here are a few highlights; the complete report can be purchased here.

  • Costs per claim dropped 4 percent in 2010, driven by a 6 percent decrease in temporary disability duration and 2 percent decline in medical payments.
  • While WCRI’s research indicated most states’ costs declined or were stable, Texas’ dropped “more than most.”
  • Prices for non-hospital services increased after January 1, 2011 – likely driven by the elimination of so-called “voluntary networks”.
  • The growth in employment in the Lone Star State likely helped keep costs down.
  • Medical cost containment expense trend declined in 2010, however costs are still high at $3600 per claims.  Looks like the increased volume of UR post-2006 was a significant contributor to those costs.

It’s too early to tell how much of an impact will result from the changes in opioid prescribing (driven by the closed formulary), but I’d bet we’ll see lower medical costs and a significant decrease in temporary disability as well.  However, the real impact will not be felt for some time – and that will be a reduction in permanent disability.

What does this mean for you?

Macro factors – e.g. the improving economy – significantly affect workers comp.

Reforms can drive better results.  They can also increase some costs – as we’ve seen in Texas with UR.

Nov
12

Work comp medical, OneCall, and the future of workers’ comp

Posted by Joe Paduda on Monday, November 12th, 2012 | Comments

Something struck me during the bloggers speak session on Thursday – at a time when medical costs are heading up, driven by over-utilization, opioids, crappy networks, and percentage-of-savings-based networks, there are few medical experts in positions of real authority in claims organizations – much less leading those claim organizations.

Even more revealing, the medical directors at most (but not all) payers have little real authority.  Work comp payers are mostly run by men (mostly) with backgrounds in claims, underwriting/actuarial or finance. Sure, many are highly experienced and very well seasoned, but they’re fighting the last war – the one where indemnity was the enemy.

That’s no longer the case, hasn’t been for some time, and most certainly will not be in the future when medical accounts for 70% of claims costs. What we have is an industry where claims doesn’t adequately consider medical – which is understandable because the top guy is a former claims guy.

They see the world as it was back in the day, not as it is today. A piece on military leadership by Thomas Ricks is worth quoting:

“in Iraq: our military commanders focused on planning the 2003 invasion but virtually ignored the task of planning for what might happen during the long occupation that followed. Though it was clear, almost from the start, that our round-’em-up approach to the insurgency wasn’t working and that using heavy firepower in the effort was counterproductive…

Why weren’t our troops better prepared for the challenges of protecting civilians from resistance fighters, interrogating suspected insurgents and detaining enemy fighters?…The stakes of not finding out are great — for while we know we have a strong military, we truly don’t know if we have the right one for the conflicts we may face during the next two decades.

That was the discovery the British made — the hard way — in the Second World War. On the eve of the war, the Royal Navy was the biggest in the world, but Britain’s military leaders did not understand that the aircraft carrier and the submarine had drastically changed the nature of maritime conflict.” [emphasis added]

Most payers and claims organizations are built for and managed to “fight the last war”, one where indemnity was the enemy.  Yes, some few the rare “claims guy” does “get” medical – but most don’t.

Outsiders get this, and that’s why there were a plethora of private equity folks and related people circulating around the exhibit floor and attending sessions. There are a couple three (and that’s only the ones I know about) deals currently in process and lots of rumors flying around about others. Smart people see the opportunity created by this situation, and are moving quickly to position themselves to profit from others’ myopia.

As proof, some may not realize that Coventry is no longer the largest (measured by revenue) WC managed care company.  OneCall/MSC is.  Yes, OneCall does seem to be buying up everything, but it doesn’t take a genius to figure out they’ve figured out where the future opportunity is – managing medical for payers who can’t do it on their own.

Oh, and contrary to oft-repeated rumors, MedRisk is NOT being acquired – not by OneCall nor anyone else.  Lest you, dear reader, think I know not of what I speak, I promise to listen to Rush Limbaugh for an entire week if MedRisk does get bought.

PMSI isn’t on the block either.

Nov
5

Providers’ unmitigated gall

Posted by Joe Paduda on Monday, November 5th, 2012 | Comments

This morning’s workcompcentral arrived with the news that hospitals and device manufacturers somehow are arguing the huge overpayment for surgical devices in California is justified because of the “additional costs” of putting these devices in comp claimants.

Seems the California Hospital Association hired a consulting outfit to see just how much more costly it is to do surgery involving screws and cages and other hardware for people with occupational injuries than non-occupational ones.  And, stunningly, it’s waaaaaaay more expensive!

Yep, wrenching that back lifting a stack of drywall at work requires surgery that is, well, different/more complex/more involved/more time-consuming/more lucrative than lifting drywall at home when you’re re-doing the family room. The doctors, facilities, devices, tools, patients, support staff, all are identical – the only difference is who’s paying for the device – workers comp or Medicare.

The “disagreement” arises over a regulation proposed by DWC California that would set device reimbursement at 120% of Medicare.  That’s ALREADY higher than Medicare, but not enough for the profiteers.

Writing in this morning’s WCC, Greg Jones reported that hospitals and their allies said “additional allowances for devices used in certain spinal surgeries are not enough to make up for lost revenue from eliminating the spinal pass-through”.

No $%&*(.  It’s not supposed to.  

The “pass through” provision allowed these providers to “pass through” grossly inflated charges to workers comp payers.  There’s more to it than this – of course – but the net is this.

Once again workers comp is the trough.  As friend and colleague John Swan often reminds me, pigs get fat, and hogs get slaughtered.