Jun

The cost of narcotics in workers comp

Posted by Joe Paduda on Wednesday, June 29th, 2011 | Comments

I’m in DC for a couple of meetings focused on the use, abuse, and impact of narcotics in workers comp. To say this is starting to get major traction would be an understatement; payers, policymakers, employers, and pharma are all recognizing the issue for what it is – one of the biggest problems in comp today.
For now, here’s a few numbers to help put things in perspective.
– workers comp payers spent about $1.4 billion last year on narcotics. That’s ‘billion’ with a ‘B’.
– A study in Washington state determined that there between eight and twelve deaths were associated with workers comp claimants’ use of opioids each year from 1999 – 2002.
– over a third of claimants who start using narcotics are on them for more than a year.
– a fifth are on for more than two years.
– a seventh are on for more than three years.
– this despite well-recognized treatment guidelines that suggest narcotics should be used for a limited dime during the acute phase of an injury.
– in a Washington study, only 16% of the low back claimants taking opiates saw an improvement in functionality; only 30% saw a reduction in pain.
– the extended use of opiates doubles the risk of duration exceeding one year.
The elephant in the room is the issue of addiction. Many payers don’t want to hear about the likelihood that many of their long-term claimants are – in fact – addicted to or dependent on narcotics. For some reason, they appear content to ignore the issue; a couple claims people I’ve spoken with have said “we don’t want to ‘buy’ the addiction.”
Well, here’s a news flash; You already have.
Whether you choose to acknowledge this or not, claimants who have been getting opiates (and/or opioids, the synthetic version) for more than 90 days at a dosage exceeding 120 morphine equivalents per day are are at high risk for dependency/addiction.
And the ones who are addicted are ‘treating’ their addiction by consuming drugs which:
a) employers are paying for – directly or indirectly
b) are preventing return to work
c) increase total medical costs and require claimants to take other drugs to address the side effects of narcotics
d) may be sold, given away, or taken by family, friends, or other users.
What does this mean for you?
It’s time to get real, folks. Here are a few ways to get started.
Begin identifying the claimants at risk for addiction; develop a scientifically – and jurisdictionally – sound approach to addressing the risk; partner with your PBM on a comprehensive strategy; work with regulators to change rules where necessary and possible; task your medical director with developing – and implementing – a solution.
Washington State has what looks to be an excellent, well-researched approach.

Jun

The toughest job in workers comp

Posted by Joe Paduda on Tuesday, June 21st, 2011 | Comments

is that of claims adjuster.
Whether you know them as adjusters, examiners, file handlers, or claims case owners, these women and men are the ones who write the checks out of the checkbook – both literally and figuratively. What they do, and how they do it, has more impact on the success or failure of an insurer or employer’s work comp program than any other position (although some underwriters would argue they’re just as important).
Adjusters determine compensability; keep an eye out for fraud; authorize indemnity payments; encourage/direct/cajole claimants to go to preferred providers; interface (or, as one seasoned adjuster referred to his approach, ‘in-your-face’) with claimant attorneys; meet with employers’ risk managers to review claims, discuss reserves, and encourage RTW planning; set, change, and justify reserves; encourage, and in many cases educate treating docs to think about RTW; try to figure out if this or that unpronounceable drug is appropriate for the claimant’s condition; authorize, or deny, medical treatment; prepare and present cases to hearing judges; explain to their managers why they can’t get a case closed or IME scheduled.
All this while looking every day at a case load that, a decade ago, would have seemed far too large. With claims case loads at many payers in the 150 range (lost time), adjusters have about twenty minutes a week to focus on each claim.
Twenty minutes.
Of course, this is before we factor in the other stuff; ongoing CEUs required in many jurisdictions and the training requirements for new products, vendors, programs, and technology innovations.
And recall that we’ve been hammered by a work comp market that’s been soft as fresh WonderBread for several years, leading payers of all types to consolidate, cut staff, hold off on investments in technology and workflow improvements, and require everyone to ‘do more with less’.
I’m often asked by those in- and outside the comp business what the secret to success is. In most cases, the answer is the same:
Take work off the adjuster’s desk and put it on your’s.
Mark Wall’s LinkedIN group always has great insights; for more detail on what these folks go thru, and how those struggles affect their ability to handle claims effectively, check out this conversation .

Jun

Illinois’ work comp PPO: what’s the real impact?

Posted by Joe Paduda on Friday, June 17th, 2011 | Comments

Employers and insurers decry the recent reform instituting PPOs in Illinois as ‘California Lite’. Plaintiff attorneys claim it will lead to undertreatment and negative consequences for claimants.
What’s the real impact?
The right answer is it’s a bit early to say. The PPOs go into effect September 1; at least they CAN go into effect then; there’s a lot to be done by employers, network developers, and regulators before an employer can activate a PPO, so it may well be several more months before we start seeing widespread adoption.
First, the State Department of Insurance has to certify Preferred Provider Programs – there’s too much text to quote here – search for “Sec. 8.1a. Preferred provider programs” – relevant section starts on page 88 line 23.
When an employer does get a PPO certified and implemented, there’s a couple key points to remember.
First, when an employee reports an injury the employer has to tell him/her of the PPP and the employee’s need to choose a physician from the PPP.
Second, employees can opt out of the PPP – here’s the relevant text:
“Subsequent to the report of an injury by an employee, the employee may choose in writing at any time to decline the preferred provider program, [emphasis added] in which case that would constitute one of the two choices of medical providers to which the employee is entitled under subsection (a)(2) or (a)(3)”
Essentially this allows the injured worker to choose their initial treating doc, who controls their referrals to specialists, ancillary providers, and facilities. My take on the network direction provision is it is pretty weak, and – realistically – will help with those claimants engaged in doctor shopping. However, payers’ ability to control which physicians and other providers treat their injured worker, while certainly strengthened, is not greatly enhanced.
While some seem to have concluded that the initial opt-out decision is one choice, and the subsequent selection of a provider is the second, I’m not sure that’s the case. The regulatory process will certainly clarify the issue, and if the other analyses are correct, the single opt-out choice will help employers – and in most cases, facilitate return to work and reduce unnecessary medical expense.
That said, note that an injured worker’s initial opt out includes the treating doc, and anyone that treating doc refers the worker to. Physical therapy, imaging, surgery, hospitals, you name it. That’s a lot of ‘opt-out’. My sense is Illinois providers who want to maintain their current lucrative flow of work comp patients will get very good at complying with the (future) regulations to keep referrals within that initial treatment stream.
What does this mean for you?
The net is this – the regulatory process will greatly affect the actual impact of the reform law. We don’t yet know what the specifics will be, but any employer would be well-served to identify PPPs that:
– a) contract with a relatively few physicians with demonstrated expertise in workers comp and focus on return to work;
– b) don’t include every doc in the yellow pages (I’d run from any PPP that markets itself based on how many physicians it has); and
– c) include ancillary providers to keep care in the PPP.
Of course, discounts are important, but make sure the treating docs – the ones who order the scripts, arrange for surgery, prescribe PT, and facilitate RTW – are treated well. Look for deeper discounts on the ancillary/secondary providers – the ones that do what the original doc tells them to.
There’s a detailed discussion of the issue at WorkCompCentral – subscription required.

Jun

Work comp premiums are firming

Posted by Joe Paduda on Tuesday, June 14th, 2011 | Comments

Today’s Insurance Journal arrives with this bit of positive news: while rates for most lines of property and casualty insurance are still soft, work comp premiums are firming, driven in part by increasing rates in California, and for the first time in several years, higher rates in other states as well.
The data come from Towers Perrin’s Commercial Lines Insurance Pricing Survey (CLIPS), which is derived from figures submitted by insurers. That said, the database is rather small as the contributors account for about a fifth of the market. Given the highly competitive nature of the business, I’d be pretty confident these data are indicative of the larger market, as there’s no way a subset of commercial carriers could sustain price increases if other insurers were not increasing rates as well.
Another note of interest from CLIPS; accident year loss ratios continue to deteriorate, with the latest information indicating about a 5% deterioration from 2009 to 2010.
The report follows on the heels of another report indicating the P&C industry’s reserve cushion is getting slightly thinner. Fitch Ratings indicates industry reserves are likely just about ‘adequate’, but this is still reflects a deterioration from previous years.
What does this mean for you?
Work comp rates are firming.

Jun

Drug tests for everyone – Rick Scott goes off the deep end again

Posted by Joe Paduda on Thursday, June 9th, 2011 | Comments

Our colleagues at Workers Comp Insider sent us news of Florida Governor Rick Scott’s latest idiocy – he issued an executive order requiring drug testing for all state employees every quarter.
The master of simple solutions to complex problems has done it again. Here’s a bit from Jon Coppelman’s piece.
“All current employees – regardless of what they do – must be randomly tested every quarter. Because drugs stay in the body for hours and even days after they are used, the governor is attempting to control every waking minute of the state workforce. Not even commercial drivers are subject to such stringent monitoring.
This policy does not stem from “business necessity” nor does it take into account individual freedom and the right to privacy. Using the governor’s logic, you could argue that everyone in America should, for one reason or another, be tested for illegal drugs. This is bad policy and, to put it bluntly, unAmerican.”
A few questions spring to mind.
– does this include Scott and his staff, and all political appointees? the language seems to say it does.
– is this Constitutional ? seems like a potential case could be made that this is a violation of due process, privacy…
– what are the legal implications? Scott’s Order will result in hundreds of thousands of drug tests each year – many will be false positives, leading to…what? what is the next step? retest? what recourse will workers have if their tests are positive? do they get fired immediately? what if they metabolize meds differently?
– the drug tests are for ‘illegal drugs’ only, yet the abuse of prescription drugs has surpassed illegal drugs on the popularity scale. So, what does Scott’s Order do about rampant abuse of opioids in Florida? anything?
– how much is this going to cost? let’s see…
168,000 state employees.
tested 4 times each year
figuring a drug test (all in, staffing, reporting, actual test, etc) costs about $100 (they’re much more expensive on a retail basis, but Scott will likely go for a low bid.
and the total is – $67,000,000.
Yep, $67 million dollars.
and this from the idiot who didn’t want to implement a Prescription Drug Monitoring Program because it would cost less than a million dollars a year.
Now, let’s add in the legal costs – because employees will sue if they get fired. And the cost of hiring replacement workers (who all have to get drug screens).
and remember this doesn’t address abuse of OxyContin etc.
What does this mean for you?
next time you vote, consider the consequences.

Jun

Illinois adopts impairment guidelines – and this means exactly, what?

Posted by Joe Paduda on Monday, June 6th, 2011 | Comments

The major changes in Illinois’ workers compensation system are stirring much conversation, modeling, and debate among stakeholders. One of the least-understood (at least by me) provisions of the reform legislation dealt with the adoption of impairment guidelines.
The person who probably knows more about impairment and disability assessment than anyone else alive was kind enough to offer his thoughts on the issue. Chris Brigham, MD, has been involved in this issue for thirty years. Here are his thoughts on the potential impact of the guidelines in Illinois:
In the past determining permanent partial disability was not consistent in the State of Illinois since the Industrial Commission did not make use of any standard guidelines, such as the AMA Guides to the Evaluation of Permanent Impairment (AMA Guides), which are used in the vast majority of state workers’ compensation systems in the United States, in other arenas, and internationally. Historically, the Industrial Commission would determine the extent of PPD (Permanent Partial Disability) based on their “experience” and would not allow testimony for any doctor’s opinion as to the percent of disability. Factors that the Commission considered (and will continue to consider until 9/1/2011) are nature of accident and injury, extent of lost time, physical findings, ability to return to work, description of job, average weekly wage, and subjective complaints. Adding the use of the Guides as a component in determining PPD awards has the potential of increasing the reliability and consistency of these awards.
House Bill 1698, Section 8.1b Determination of permanent partial disability, applies to injuries that occur on or after September 1, 2011. Since permanent impairment is not assessed until the claimant has achieved maximal medical improvement (MMI), which may not occur until a year or longer post injury if there is permanent loss, it is probable that this will not significantly impact actual claims until mid 2012. However stakeholders need to be prepared for this change.
The most current edition of the AMA Guides is the Sixth Edition, which reflects substantial improvement in impairment assessment. The Sixth Edition is currently used by fourteen states, for Federal Employee’s Compensation Act (FECA) cases, and internationally by several countries.The assessments must be performed by physicians; this is consistent with the standards defined in the AMA Guides and makes sense since clinical judgment is required by the Sixth Edition. Based on our experience nationally reviewing several thousand ratings, there is a relatively high error rate in assessing impairment; therefore, steps will need to be taken to assure accuracy.
I asked Chris to expand on the issue of errors in determining ratings and impairment; here’s his response.
We are observing a lower error rate with the Sixth Edition [compared to the Fifth Edition] which reflects significant improvement in the process of assessing impairment, using a more contemporary and consistent methodology – one that is less likely to result in errors.
Several steps should be taken to reduce the error rate, starting by recognition of the significance of this problem. This has been area that the property and casualty field has not adequately addressed, resulting in significant costs – both financial and personal (having some perceive themselves as more impaired than they actually are).
– Impairment ratings must be done when the individual is at maximal medical improvement; therefore clients should take steps to determine if someone is at MMI and then proactive steps to assure an accurate rating.
– The process of assessing impairment is based primarily on three steps: 1) obtaining clinical data (history, physical examination findings, and studies), 2) analysis of the clinical data and 3) applying the data to the criteria provided in the Guides (consistent with specific procedures as defined in the Guides). The traditional rating process has the same person (the physician, either treating or IME) perform all three steps; however this does not work well.
– Ratings should be performed by skilled IME physicians who have demonstrated competency in performing ratings and the quality of their work should be monitored. In advance, clients can have experts on the Guides review the clinical data (obtained from step 1, typically this information is available in clinical records), analyze this data, and either prepare a rating for review by an evaluating physician or provide guidance on how the rating should be done.
– All impairment ratings received should be “screened” based on certain criteria, and if impairment ratings are above a specific threshold or “red flags” are identified, the ratings should be involved by experts on the Guides. We find that this is a highly technical area requiring both significant experience with the Guides and working closely with physicians; we find that this typically is not within the skill set of an adjuster or attorney. If the expert finds the rating to be incorrect, than interventions should be taken to correct the rating. These interventions are dependent on the jurisdiction and case.
– We have developed an approach that works well in securing an accurate rating; this process involves assigning the three step process to two different parties, with the steps 1 and 2 being carried out by an evaluating physician (an IME physician following specific directives about what data to provide) and, using the resulting data, have step 3 completed by an expert on the rating process. This is similar to the process many of us use for our taxes, e.g. we are given directives about what data to obtain and this data is then reviewed by another party to complete the forms and compute the final result.
The Sixth Edition, the current Edition, will be used in Illinois, and this should be of tremendous benefit in achieving more reliable ratings. In the Fifth Edition there are differing approaches depending on which chapter is used, however in the Sixth Edition the approaches are consistent reflecting methodology used with the International Classification of Functioning, Disability and Health.
The impairment rating is only one factor that will be considered in determining the level of permanent partial disability. Other factors that must be considered: the occupation of the injured employee; the age of the employee at the time of the injury; the employee’s future earning capacity; and evidence of disability corroborated by the treating medical records. No single factor shall be the sole determinant of disability.
Since impairment is not synonymous with disability, it is appropriate to consider other factors in determining disability. The amendment states “In determining the level of disability, the relevance and weight of any factors used in addition to the level of impairment as reported by the physician must be explained in a written order.” The fact finder will need to use judgment; however the rationale for the decision must be documented. Significant weight should be given to the impairment rating in determining the PPD.
Chris’ conclusion – To have the impact the House Bill was meant to have, we recommend the arbitrators give thoughtful consideration to the AMA Guides rating and how it was determined. It they do, we believe this process will result in both a more valid and reliable process to determine permanent partial disability. If they do not, the improvement hoped for will not be achieved. Requiring use of the current edition of the AMA Guides is a positive step forward in assuring more appropriate permanent partial disability awards.
What does this mean for you?
While the new Impairment Rating methodology has promise, the actual impact depends just as much on HOW the methodology is implemented as the tools used. This is not a panacea, nor is it a purposeful attempt to harm workers. One hopes the parties will work together to make sure the implementation is effective and well-designed.
One hopes.

Jun

Work comp reform in Illinois – the details

Posted by Joe Paduda on Thursday, June 2nd, 2011 | Comments

With the passage of major work comp reform in Illinois, there’s lots of interest in determining exactly what was passed, and more importantly what it means.
First, the bill. It’s not easy to find it, as it is ‘hidden’ on the Illinois state site; when you click on the link for HB 1698 it brings up a bill addressing adoption; I have no idea why, probably due to parliamentary procedure requirements dealing with bill introduction.
The bill you’re looking for is here.
There are several provisions that address key issues.
Tightening awards for carpal tunnel – this had to be in there. A report by the Belleville News-Democrat on a ‘pandemic’ of carpal tunnel claims filed by guards at a downstate prison incited outrage across the state. According to the story, “taxpayers paid almost $10 million to employees at Menard [the prison] for various workers’ compensation injuries. In all, more than 500 claims were filed, and about half are pending.”
Utilization review – while UR has been around for years in IL, it’s been a pretty toothless UR. The new provisions put the onus on the worker to show why their treatment is appropriate if the payer finds it does not meet criteria for medical necessity.
Fee schedule reduction – the biggie. While there’s so much spin around this from providers it’s a wonder Illinois hasn’t disappeared into a vortex, there’s no getting around this – its a major reduction in provider reimbursement. Yes, their fees will still be among the highest in the country, but a thirty percent reduction is meaningful. There’s a bit of confusion about the basis for the fee schedule; currently it is based on 90 percent of Ingenix’ 80th percentile, split up into 29 geographic areas. There’s an annual inflation rate increase pegged to the CPI.
Provider networks – the ‘Preferred Provider Program’ – yes, this brings employer direction to Illinois work comp. Well, sorta. Here are some of the details (there’s lots to digest, so this is going to take some time).
– the State Department of Insurance has to certify Preferred Provider Programs – there’s too much text to quote here – search for “Sec. 8.1a. Preferred provider programs” – relevant section starts on page 88 line 23.
– when an employee reports an injury the employer has to tell him/her of the PPP and the employee’s need to choose a physician from the PPP.
– employees can opt out of the PPP – here’s the relevant text:

“Subsequent to the report of an injury by an employee, the employee may choose in writing at any time to decline the preferred provider program, [emphasis added] in which case that would constitute one of the two choices of medical providers to which the employee is entitled under subsection (a)(2) or (a)(3)”

Essentially this allows the injured worker to choose their initial treating doc, who controls their referrals to specialists, ancillary providers, and facilities. My take on the network direction provision is it is pretty weak, and – realistically – will help with those claimants engaged in doctor shopping. However, payers’ ability to control which physicians and other providers treat their injured worker, while certainly strengthened, is not greatly enhanced.
There’s a lot more to this, and undoubtedly more to be determined through the regulatory process as well. I leave discussion of impairment ratings, disability determination, and other key provisions to those more expert than I.
What does this mean to you?
For employers, and most employees, and certainly taxpayers – this is long awaited and pretty good news. Costs will come down. Doctor shopping, while not fixed, will be more visible and better monitored. Providers will have to show payers and employers they are serious about treating with a focus on return to work.
And premiums, and the burden on Illinois’ taxpayers, will come down too.

Jun

Illinois work comp reform – the impossible is reality

Posted by Joe Paduda on Wednesday, June 1st, 2011 | Comments

Late last night the Illinois House passed major work comp reform legislation, legislation that will dramatically affect workers’ comp providers, significantly reduce medical cost, and tighten up several key issues related to claim duration.
While most are focusing on the 30% reduction to the fee schedule (currently set at 80% of the 90th percentile of Ingenix’ UCR), the major change will likely be the institution of employer direction in a state long tied to employee freedom of choice. The bill – HB1698 – allows employers to use medical networks that are approved by the state Department of Insurance, a change that will dramatically alter the provider landscape, greatly strengthening networks’ ability to contract at rates lower than the fee schedule. While the new law will allow employees to opt out of the network at the time of injury, they have to do so in writing.
Governor Pat Quinn will sign the legislation, which also passed the Senate – this time easily.
More news is here.
A synopsis of some of the main provisions is here. (note this appears to be a plaintiff attorney’s interpretation)

May

Sedgwick buys Xchanging

Posted by Joe Paduda on Tuesday, May 31st, 2011 | Comments

The Brits finally threw in the towel. After several years of working diligently to make a go of the US TPA market, Xchanging cut its losses, selling what used to be known as Cambridge Integrated Services to Sedgwick for a price rumored to be in the low tens of millions.
Cambridge had been on a slow but steady downward spiral for some time, losing clients, adjusting talent, and revenues and failing to land much, if any new business. According to folks who had worked there, there was a good-faith effort on the part of Xchanging to reshape Cambridge’s adjusting process into a more…Continental model, including changing workspaces to open tables. This didn’t go over so well, helping to add to the talent loss.
With this latest deal, Sedgwick further elevates itself above the rest of the TPA pack. Notably, the deal includes a settlement services entity, yet another vendor Sedgwick will add to its portfolio. It also removes a potential competitor, although as noted above, Cambridge wasn’t too much of a threat of late.
Here’s hoping the folks left behind at Cambridge find the transition a good one, and their futures brighter than they were yesterday.

May

Drug testing in workers comp – we need more, not less.

Posted by Joe Paduda on Tuesday, May 31st, 2011 | Comments

In the online edition of Risk and Insurance, fellow work comp consultant Maddy Bowling authored a piece focused on a rapidly growing segment of the work comp managed care industry – drug testing. Maddy’s a very experienced, and very knowledgeable work comp professional, and I completely agree with her main point – payers would do well to make sure they “connect the dots”.
That said, I have a somewhat different take re drug testing’s purpose and value.
To be clear, I’m referring to the use of urine screening for claimants prescribed narcotic opioids – the Schedule II drugs that are potentially addictive, at risk for diversion, often quite expensive, and not indicated for long-term use for musculo-skeletal ailments. (I’m NOT referring to pre-employment screening or testing post-accident.)
Maddy asks some highly relevant questions:
“aren’t our pharmacy benefit management (PBM) vendors identifying multiple prescribers, multiple prescriptions and potential drug interactions? Aren’t they identifying cases that require detailed drug reviews and possible peer intervention? Aren’t they identifying the top opioid prescribers in your book of business? Isn’t your PBM reviewing your out-of-network pharmacy bills to ensure that they have all the pharmacy information on every injured worker and taking action if anything seems inappropriate?”
All these are important, necessary, and should be part of your pharmacy management program.
But PBMs can’t do everything on their own, and neither can case managers. Maddy observes that on-site case managers can check bottles to see if drugs are being taken, ask about non-prescribed (illicit) drug seeking behavior, and ask the claimant specific questions about compliance. While I respect the ability of many field case managers, it is unlikely they will be able to consistently and accurately discriminate between truthful and less-than-truthful claimants.
Drug testing can provide quantitative evidence of compliance with drug treatment plans. It can also:
– identify illicit drugs in the claimant’s urine (thereby providing evidence of compliance with opioid agreements)
– identify claimants with genetic tendencies to rapidly (or otherwise ‘differently’ metabolize opioids (this from the Mayo Clinic “To optimize treatment for individual patients, clinicians must understand the variability in the ways different opioids are metabolized and be able to recognize the patient characteristics likely to influence opioid metabolism.”
Drug testing is also relatively cheap. We’re talking a few hundred dollars per test;
– equivalent to a few hours of case management,
– a relative bargain when compared to the cost of a couple months of OxyContin and many other opioids,
– and a screaming deal when compared to extended indemnity benefits, settlement costs, and MSAs.
I’m pretty familiar with the monitoring, alert, and management tools in the PBMs’ and payers’ armamentarium. And there’s no question most payers would do well to utilize more of those tools, to, in Maddy’s words, help ‘connect the dots’.
I’m also quite sure there’s far too little use of drug testing in workers comp.
It’s not just me. The State of Washington adopted strict guidelines for opioid prescribing (opens google doc), guidelines that include provisions for urine drug testing.
What does this mean for you?
The overuse and abuse of opioids in workers comp is a disaster – economically, financially, and socially. There’s also no question some individuals metabolize opioids differently. Drug testing can help physicians – and patients – better manage pain, while adding a level of certainty that subjective opinion…can’t.

Category: Workers Comp