Oct

Are you paying for defective surgical implants?

Posted by Joe Paduda on Wednesday, October 13th, 2010 | Comments

The answer is probably YES.
When surgical implants are defective or implanted incorrectly, the patient has to go back in for more surgery. And the Work Comp insurer or healthplan or self-insured employer or reinsurer has to pay. The only way to mitigate risk is to track the model and manufacturer for each implant – yes, it’s work, and yes, it’s work worth doing internally or at the very least outsource it to a specialist firm.
How many dollars are we talking here?
Well, joint replacement devices are a $12 billion industry.

(image from www.algor.com/news_pub/cust_app/SMPES/default.asp)
One survey reported that the total world market for spinal implant devices was $4.2 billion; note this study used 2006 data. Another indicated the market was $5 billion in 2005, and predicted growth to $20 billion by 2015. Stryker, one of the major manufacturers, expects growth of 16% per year in the spinal implant market. Yet another report (note opens .pdf) indicated the 2007 worldwide market was $7 billion, with the US accounting for $5.4 billion of that total.
(I’m working on getting more current data and will include it in a follow up piece later this week)
Today’s WSJ reports [link expires 10/15/10] on a new effort by the impant industry to set up a registry for joint replacements:
“manufacturers are backing the “American Joint Replacement Registry” and have chipped in start-up funding.
By joining voluntarily and influencing development, manufacturers may dodge having to face mandated rules down the road. They’ll gain product-durability insight that could help as new, higher-priced devices need to be justified by comparative-effectiveness testing… The nonprofit registry is incorporated in Illinois, which has strong data- protection laws…It also will produce detailed annual reports,”
Couple of notes.
First, this does NOT include spinal and other implants; it is limited to joint replacement implants.
Second, who gets access to the data, and how it is used, is still very much up in the air. Will insurers get to check on a member’s/claimant’s implant if the member requires additional treatment?
So, what to do?
Track those device serial numbers and manufacturers in a secure database. Follow the news to identify recalls and product liability issues and reference your database to identify possible matches.
It’s not easy, and it isn’t foolproof, but its likely to be very cost effective.
For a detailed albeit it somewhat dated discussion of the industry and it’s impact on workers comp, click here.

Oct

Why is it acceptable to shift costs to workers comp?

Posted by Joe Paduda on Thursday, October 7th, 2010 | Comments

Last week WorkCompCentral’s [subscription required] Bill Kidd wrote about the battle in Illinois over reimbursement for surgical implants.
The quick-and-dirty is hospitals are resisting a reduction in compensation for the devices themselves from 65% of billed charges to the manufacturer’s invoice price plus 25% plus shipping and handling.
While the ‘invoice price’ is fungible at best, the change will almost certainly reduce comp payers’ costs in what is rapidly becoming one of the costliest states in the union.
That is, if hospitals’ efforts to overturn the change are successfully resisted. You can read Bill’s piece for the details – what i want to address is the larger issue – why do some providers think it is acceptable, if not standard business practice, to charge workers comp claimants more for care than other patients?
Sure, this makes sense for primary care and treating specialists – we all know it takes more time to deal w the rules, regulations, return to work process etc inherent in work comp. And it takes a good deal more work for a retail pharmacy to process a comp script than a Medicare or group prescription.
But that’s not the case for medical devices, or hospitals, or many other types of care and treatment. Yet hospital care for comp patients is almost always significantly more expensive, medical device costs are much higher, and outpatient facility charges are legendary for their high cost.
On one hand, I completely understand the providers’ perspective – with declining Medicaid and Medicare reimbursement, the money’s got to come from somewhere.
But I don’t agree with it. This amounts to a hidden tax, a surcharge on employers to pay for un- and under-compensated care that hurts employers, jobs, insurers, taxpayers, school boards, governments.
As reform becomes the law of the land, there will be less need for facilities to shift costs to workers comp. Here’s hoping there will be less shifting, as well.

Oct

Florida’s solution to the high cost of repackaged drugs

Posted by Joe Paduda on Tuesday, October 5th, 2010 | Comments

Mike Whitely of WorkCompCentral’s piece [subscription required] this morning about Miami-Dade Schools’ solution to the high cost of repackaged drugs should be required reading for any employer or insurer operating in the Sunshine State.
As noted here and elsewhere, a loophole in the Florida workers comp law allows drug repackagers and their affiliated technology and billing companies to set the price for drugs at whatever amount they desire. As the law requires payers to reimburse at AWP + $4.18 for dispensing, if the AWP for a repackaged drug is 5 times what the same drug would cost at a retail pharmacy, too bad – for the payer.
However, there’s another law on the Florida books that provides a solution – simply stated, employers and insurers that contract with a PBM or a retail pharmacy for drugs can pay that contracted amount for any script from any dispenser. That’s correct – the payer’s liability to the dispenser is the same as if that drug was dispensed through one of the payer’s contracted pharmacies.
Miami-Dade Schools began implementing this policy September 15 of 2009. Since that time, the Schools have saved an estimated $700,000 – the equivalent of about eight teachers’ pay and benefits.
A letter [opens .pdf] from Florida CFO Alex Sink (currently a candidate for Governor) cites the specific statute:

section 440.13(12)(c), Florida Statutes, which provides:
As to reimbursement for a prescription medication, the reimbursement amount for a
prescription shall be the average wholesale price plus $4.18 for the dispensing fee, except
where the carrier has contracted for a lower amount. Fees for pharmaceuticals and
pharmaceutical services shall be reimbursable at the applicable fee schedule amount.
Where the employer or carrier has contracted for such services and the employee elects to
obtain them through a provider not a party to the contract, the carrier shall reimburse at
the schedule, negotiated, or contract price, whichever is lower. No such contract shall
rely on a provider that is not reasonably accessible to the employee.

and makes this recommendation:

The Division urges employer/carriers providing reimbursement for prescription medication under Chapter 440, Florida Statutes, to take section 465.0267(1), Florida Statutes, into consideration when making prescription provider reimbursement decisions.

What does this mean for you?
Well, what are you waiting for? Talk with your PBM, ask them to implement Ms Sink’s recommendation, and start reducing your drug costs.
Disclosure – I gave $250 (or something like that) to Ms Sink during her campaign for CFO some years ago. She’s been a strong advocate for Florida’s employers – and workers – and I remain a supporter.
(Note – I received this in an email from a Florida Insurance consulting firm. I appreciate their correction.
“In reading your most recent article about physician repackaging, I noted an incorrect statutory reference. The referenced “section 465.0267(1)” does not exist in Florida Statutes. I am quite certain that it should read “465.0276(1).”. The mistake appears to not be yours as it actually originates from Alex Sink’s letter which had the numbers in the citation transposed in one place, but correct in another.”)

Oct

Workers comp, drug dispensing, political contributions, and jobs

Posted by Joe Paduda on Friday, October 1st, 2010 | Comments

Automated Healthcare Solutions, their execs and affiliates contributed $1.7 million to political campaigns over the last two years.
If anyone has any doubts about the financial returns enjoyed by the physician dispensing business, yesterday’s report in Health News Florida should put them to rest.
According to reporter John Dorschner, “The analysis of the $1.7 million in contributions by AHCS, related entities, executives and family members shows $615,000 has gone to the Freedom First Committee, linked to incoming Senate President Mike Haridopolos and $600,000 to the Florida Liberty Fund, linked to incoming House Speaker Dean Cannon. Another $200,000 went to the Florida Chamber of Commerce Alliance.”
It appears much of this then flowed thru to specific candidates, including Governor Charlie Crist.
That would be the same Charlie Crist who vetoed a bill that would have drastically cut reimbursement for physician dispensed medications.
According to the article, AHCS CEO Paul Zimmerman said the company supports politicians who “understand the risks employers go through and how we create jobs.”[emphasis added]
Another perspective on the job-creation front comes from a statement by Miami-Dade Schools’ risk and benefits officer Scott Clark. Miami-Dade Schools recently decided to stop paying inflated prices for drugs dispensed by physicians; according to the HNF article “Scott said he expects his moves to save the school board about $700,000 this year.”
That’s enough cash to hire – or keep – about 11 teachers.

Sep

The AHCS – Paduda lawsuit – quick update

Posted by Joe Paduda on Wednesday, September 29th, 2010 | Comments

I’ve gotten a number of calls and emails from friends and colleagues interested in – and concerned about – the news that AHCS has filed suit against me and my consulting firm for defamation etc.
Here’s where things stand.
1. I still haven’t been served with the suit. I doubt AHCS hired all those lawyers and PR flacks to just say they’re going to sue me, but as of today, no process server has appeared at my door. I further doubt they spent all their money calling reporters and filing suits, so perhaps they just forgot about letting me know…
2. To those folks interested in contributing to a legal defense fund, we’re working on it. As soon as we have all the details figured out, I’ll let you know. And in the meantime, thanks very much for all the moral support .
Which brings me to number 3.
In brief – AHCS just changed their website after some pointed questions from a probing reporter – not me.
Carol Gentry’s Health News Florida published a story today concerning the suit, a story well worth reading.
I’ll let the piece speak for itself, but do want to point out a couple of passages.
First, here’s this quote from AHCS’ CEO Paul Zimmerman – “We’re not a repackager. We don’t sell drugs. We don’t set the price on drugs,”.
Whoa, not so fast there. Here’s what followed that rather definitive statement…
“The AHCS executives said their company provides “healthcare IT” (information technology), not repackaging. “My mistake,” Paduda wrote later. “From reading their website they sure sounded like a repackager to me.”
Indeed, last week the company’s website, AHCS.com, said it had a “technology platform called ezDispense for point of care dispensing applications that enable [the company] to remove traditional barriers associated with physician dispensing.
“The company also provides [a] mail order program for physicians for certain medications; point-of-care drug testing procedure for the qualitative portion of the test; and custom-compounded topical solutions [emphasis added] for patients whose pain cannot be controlled with oral therapy alone.” ?
When Health News Florida pointed out what was on the website on Friday, Zimmerman said it was incorrect, that the company does not provide doctors with any drugs. [emphasis added] He did not explain how the website error occurred.
By mid-day Saturday, the section about providing some mail order and compounded drugs had vanished from the website.”
So.
AHCS sued me (I think) for defamation based largely on my statement that they were a repackager, which I based on reading AHCS’ website. Which Zimmerman then admitted was ‘incorrect’.
I’d note that I pointed out the selfsame passages on AHCS website in my letter to them asking for clarification – but instead of clarifying, they spent all weekend working on a 21 page suit (or so I hear) which they then filed on Monday.
Caught in a ‘misstatement’, Zimmerman, his crony Jerry Glass, and their horde of PR flacks may decide to accuse the HNF reporter, John Dorschner, of misquoting Zimmerman or otherwise getting his facts wrong. Good luck with that – Dorschner is a seasoned, highly respected veteran reporter, far more knowledgeable and experienced than a mere blogger from Connecticut.
Zimmerman has another problem – he “noted that Paduda is president of CompPharma, which describes itself as a “consortium of pharmacy benefit management firms.” Zimmerman said these firms, often owned by insurance companies, are competitors of AHCS because the PBMs try to steer patients to pharmacies and away from doctor-dispensed drugs…Zimmerman berated Paduda for not disclosing that relationship in his postings about AHCS.”
First, someone should tell Zimmerman that I disclose my relationship with CompPharma when the posting even remotely references that organization. The offending posts had nothing to do with the comp PBM industry, but had everything to do with companies that reap enormous profits by taking advantage of loopholes in the system.
Furthermore, Zimmerman doesn’t have a clue about the comp PBM industry. Of the ten PBMs that are currently members of CompPharma, not one is owned by a workers comp insurance company.
Not a one.
For all the money he’s paying Ron Sachs and Panza Maurer, (what’s with the owl?) you’d think he’d have enough to actually get his facts straight.
Then again, he wouldn’t have had to spend any money at all if he just responded to my original letter.
Part of me wants to suggest to Zimmerman, Glass, and AHCS that they just drop the suit and leave me alone, and leave it at that.
But another part of me wants to go after these guys. They’re starting to really piss me off.
(sorry for the language, but I couldn’t think of anything else that adequately conveyed my anger)

Sep

Work comp claims IT survey – your last chance

Posted by Joe Paduda on Tuesday, September 28th, 2010 | Comments

If you want to get a detailed copy of HSA’s first Annual Survey of Worker Comp Claims IT Systems, time is running out.
Respondents will receive a detailed version of the Survey Report; non-respondents will recieve an executive summary version. The survey will take you about fifteen minutes; click here to get started.
Friday’s the last day for you to complete the survey; We’ve already exceeded our goal for respondents, but will keep the survey up till then.
There’s quite a bit of interest in acquiring new systems or improving current ones; When asked “What would be the primary business drivers for a system change?”, the vast majority of respondents said “Enhanced functionality that will increase staff efficiency and improve customer service.”
The desire to “increase staff efficiency” was heard consistently in responses to several other questions, and will be one of the areas we’ll explore in detail in the final Survey Report.

Sep

AHCS – what’s NOT in the suit

Posted by Joe Paduda on Friday, September 24th, 2010 | Comments

A couple days ago my evening was interrupted by a call from a reporter, who wanted my comment on ‘the suit’. I had to confess I didn’t know what he was talking about, whereupon he somewhat incredulously asked if I hadn’t seen ‘it’.
I said I didn’t know what ‘it’ was, whereupon he proceeded to tell me that he had just got off the phone with Ron Sachs, who evidently was hired to do PR for Automated Healthcare Solutions. (Later, after other, similar calls, I learned that Sachs had evidently been hitting the phone pretty hard, informing all about the suit that AHCS had filed naming me and my consulting firm, Health Strategy Associates LLC, as defendants.)
By the way, Ron Sachs Communications’ website has this to say: “Sachs also distinguished himself by serving as former Florida Governor Lawton Chiles’ Director of Communications. The deeply experienced senior management team includes two communications directors to two governors (Bush and Chiles), a seven-time Emmy Award-winning producer, a former Senate staff director, and communications directors to state agencies, the Cabinet and a Senate President…Serving clients with 25 full-time professionals and offices in Tallahassee and Orlando”
Pretty impressive resumes, AND Mr Sachs has 24 times more staff than I do, and that’s just the PR firm…
Now, I still haven’t been ‘served’, but I’ve been informed that the suit charges me with a variety of offenses related to my blog posts of September 2 and 9. And I do know that the AHCS folks are plenty mad, and have lots of money – my guess is Ron Sachs doesn’t come cheap.
Here’s a bit of history. AHCS sent me a letter and email a week or so ago calling me out on a number of issues related to the afore-mentioned posts. Here’s a bit of what I wrote back:
“…I’m only too happy to publicly acknowledge and correct any errors in the two posts. In the six years I have been writing MCM, I’ve worked hard to establish and maintain a reputation for veracity; on occasion that effort has required a correction and I’ve been more than willing to write one. I’d note that in the past I’ve left my mistakes on the blog as I believe it’s important for readers to be able to see the entire span of my work, warts and all. Happy to discuss this further as the situation dictates.”
I then went on to address each of their issues point by point, again offering to review any materials and correct and apologize for any errors,
Apparently that good-faith offer wasn’t good enough, as they spent loads of time last weekend hitting my blog, then filed what I understand is a 21-page charge in Federal District Court on Monday. In fact, AHCS still hasn’t responded to my letter – Perhaps they were going to file no matter what I said…
The main point in the suit appears to revolve around my characterization of AHCS as a ‘repackager’. According to AHCS, they are NOT a repackager, but a healthcare IT company. My mistake; from reading their website they sure sounded like a repackager to me. I’ll discuss this in more detail in a later post.
What I want to talk about now is what ISN’T in the suit, and why that’s important.
There were at least two statements in the letter that evidently aren’t in the suit.
One involved a statement questioning Paul Zimmerman MD’s claim to have been a Medical Director for several firms. In the letter, they demanded I retract that statement; that demand evidently isn’t in the suit itself.
My guess – and this is only a guess – is Zimmerman et al decided they couldn’t prove that he was a ‘Medical Director’. However, as of today, their site still says:
“Dr. Zimmerman is considered an expert in workers’ compensation who has served as medical director for a number of workers’ compensation insurers, third party administrators, and self-funded employer programs including Liberty Mutual, The Home Depot, Pan American Airlines, Baxter Healthcare and Sears.”
What’s my point? AHCS’ letter was pretty, well, demanding. Strident. Threatening – really threatening. It also didn’t include any documentation, materials, or evidence supporting these claims. AHCS was demanding I retract my posts on the basis of nothing more than their say-so. Then, when they decided to file charges in Federal Court, they didn’t include their assertions that Zimmerman was a ‘Medical Director’ at Sears, Liberty, Baxter, etc.
Why? Was this an error or oversight? Highly doubtful.
Next, the letter said that Zimmerman had sued Dr Richard Dolsey (since deceased) for slander and won. That claim is apparently not contained in the suit either. I could not find any record in the Miami-Dade or Broward court records of Zimmerman suing Dolsey for slander (I’m not a legal researcher, so perhaps it’s in there somewhere). Again, in my letter I asked AHCS for documentation; I’m still waiting.
And my point is…?
AHCS attempted to bully me into retracting my statements on the basis of nothing more than their say-so. When I offered to review any materials they’d provide, retract any statements in error and apologize publicly, they ignored my letter and filed suit.
I find this, well, weird. Here they had the opportunity to get me to publicly acknowledge errors, publish a retraction, and apologize for those errors, yet they decided to hire Ron Sachs and a high-powered law firm to file suit against me. If they had provided that documentation, and we had a chance to discuss their issues, this might well have been a post of apology and correction, which would have resolved the entire issue in a couple of weeks at zero expense.

Sep

Survey of Workers Comp Claims IT Systems

Posted by Joe Paduda on Wednesday, September 22nd, 2010 | Comments

Health Strategy Associates’ First Annual Survey of Workers Comp Claims IT Systems is well underway, and we’re well on our way to reaching our goal. Respondents will be receiving a detailed copy of the Survey Report.
We’re using SurveyMonkey to collect and tabulate responses; the survey takes about 15 minutes to complete. Click here for the Survey.
We’ll have a couple preliminary revelations posted here shortly; early indications are there’s lots of ‘opportunity’ for improvements among vendors…
Here’s one not-surprising-and-quite-revealing item:
88% of the front-line representatives and managers said their current system is NOT fully integrated with their bill review and utilization review system (75% wish that it was); conversely, 68% of the executive leadership responses state that their system IS fully integrated with their bill review and utilization review system.
Disconnect, indeed.
The Survey seeks input from front-line folks and execs in claims and IT, and we’ll be comparing and contrasting responses to see if – or perhaps more accurately where – there’s a disconnect or differences in opinions between the two groups.
A brief summary version will also be available to the general public. Customized analyses of and presentations on Survey findings will be offered as well. Of course, no respondent-specific information will be provided in any version of the Survey report.

Sep

Patient confidentiality? Not in Texas

Posted by Joe Paduda on Tuesday, September 21st, 2010 | Comments

Q – When is it legal for someone to examine patient records?
A – when they are a legislator seeking to “defend doctors he believes were wrongly the subjects of misconduct investigations by the [Texas Medical} board, which licenses the state’s physicians.”
According to an article in the Texas Tribune, that’s exactly what happened in Texas. As a state legislator, former state Rep. Bill Zedler, R-Arlington, “had authority to obtain and review private patient and physician records. The Texas Medical Board provides such records — which also detail patient treatment — only by special request and solely for official legislative purposes.”
Wait. Did I just write that? How does a state law supersede HIPPA, which mandates confidentiality of patient records?
And it turns out Zedler did NOT review the records for legislative purposes, but rather to assist specific physicians, two of whom were – you guessed it – large campaign donors. According to the Texas Tribune, Zedler requested records from the Texas Medical Board for:
“Houston anesthesiologist Vladimir Redko and Dallas thoracic surgeon Dr. William Rea, neither of whom were constituents. According to the board’s disciplinary orders, both were ultimately sanctioned for “egregious” treatment violations ranging from performing invasive procedures to injecting natural gas and jet fuel into the patients in order to diagnose chemical sensitivities. Records show that the doctors gave Zedler a combined total of $25,000 in the past half-decade and that some contributions were made just weeks before Zedler requested their case files.”
Zedler reviewed the medical records himself; while he’s not a physician, or nurse, he was a medical equipment salesman, so “I know what appropriate treatment is and isn’t,” he says. “I sold equipment, so a lot of times my customers were doctors. I’ve been inside surgical suites before — that kind of stuff.”
Zedler didn’t limit his investigations to the Texas Medical Board. Again, according to the Tribune, “Physician investigators at a separate agency, the Division of Workers’ Compensation of the Texas Department of Insurance, recall that Zedler also took great interest in doctors who were under investigation at workers’ comp.[emphasis added] Dr. Bill Nemeth, the division’s former medical advisor, says Zedler had some success in stopping investigations of the doctors on whose behalf he intervened.”
On the basis of his experience selling medical equipment, Zedler took it upon himself to examine what would normally be considered confidential patient records, then contact the state regulatory authorities in an effort to get them to drop investigations of at least two physicians who were significant campaign donors.
And this guy is running for election.

Sep

Are workers comp claims ‘undercounted’?

Posted by Joe Paduda on Thursday, September 16th, 2010 | Comments

Good friends and colleagues Frank Pennachio and Susan Toussaint’s WorkComp Advisory Group is conducting their annual get together at the Blackstone Hotel in Chicago (scene for much of the movie ‘The Untouchables’. (Remember the scene with the baseball bat in the dining room after the big dinner?)
The keynote this morning was provided by Peter Rousmaniere, who spoke on, among other issues, what appears to be a significant problem with under-reporting of injuries to OSHA, and a more significant problem with low reporting rates for illnesses (which evidently OSHA does not require to be reported).
Peter described a couple of instances wherein employers asked clinicians to use Steri-strips to close a wound instead of stitches in the hope that this would reduce the need to report the injury as work-related. Evidently this may be more of an issue in food preparation, construction, and seasonal work.
A major airline reported no injuries at one airport, and four airports with no lost time injuries. Meanwhile, the national average injury rate was 11.9% – almost one in six employees were injured during the year, and the lost time injury rate was about one in thirty employees per year. It could be that the five facilities were particularly safety conscious, or perhaps claims were not reported due to other motivations.
Peter supported these – and other anecdotes, with citations from work done by Dr Glenn Pransky that also described some significant concerns with under-reporting of OSHA claims. I’d note this is separate from workers comp – OSHA claims don’t always have to be reported as work comp claims.
There’s the segue into comp.
That also spurred a lively conversation with several of the agents and brokers in attendance discussing the pros and cons of self-management of occ injuries.
Peter’s discussion reminded me of research I’d come across some months ago that provided more depth to the issue.
And here’s one item that should get anyone thinking.
More than 75,000 work comp injuries were not reported in just three cities last year [2008]. Close to a million may have gone unreported nationally.

Category: Workers Comp