Category: Workers Comp

May
13

Explaining pharmacy pricing, part 4

Posted by Joe Paduda on Monday, May 13th, 2019 | Comments

Do you have any idea if you are paying your PBM what you should?

Work comp payers’ PBM pricing is based on AWP; typically it is a percentage below AWP. Brand drugs are discounted 10-16%, and generic pricing is typically below AWP -40% .

The PBM is making its money on the “spread”; the difference between what it pays the pharmacy, and what it charges you.

Your PBM contracts with retail pharmacies, chains, food and drug purveyors (think Walmart), and independent pharmacies. In some cases third party billers are also contracted, along with physician dispensers and mail order pharmacies.

Here’s where it gets funky.

The PBM’s contracted rates with those pharmacies are all over the place and may even vary by region or drug. That’s fine; you are getting a discount, and the PBM is betting it will – overall – make a profit.

That is, it’s fine IF your average discount is equal to or better than what you were promised.

Reality is, very few workers’ comp payers review their PBM’s bills to make sure that the average discount is what they were promised. 

Workers’ comp insurers and TPAs audit claims, case management performance, reserves, bill review, hospital bills, network discounts, legal bills…pretty much everything BUT pharmacy.

The Russians said it best.

That is NOT to say PBMs purposely mess with the numbers/bills/codes to increase their reimbursement. Rather, like any entity, mistakes can be made, lapses occur, updates lag.

Unfortunately, in the audits we’ve seen these errors usually benefit the PBM.

What does this mean for you?

If you’re looking to ensure you’re paying what you should, let’s talk.

May
6

It’s work comp pharmacy week at MCM

Posted by Joe Paduda on Monday, May 6th, 2019 | Comments

And to kick it off, here are quick facts about work comp pharmacy…

Total workers’ comp drug spend was about $4 billion last year.  Others will argue it’s much higher, after 15 years of digging into the data I’m quite comfortable that figure is accurate.

That’s about 13% of total work comp medical spend  of $31 billion (using NASI’s industry-standard report as the source).

Work comp drug spend has been steadily – and significantly – decreasing for the last eight+ years; my best estimate is drug costs are down about $1.1 billion since 2010.

This remarkable drop has been driven by dramatic decreases in opioid usage and fee schedule changes; PBM consolidation has also been a driver as PBM pricing has declined over the last several years.

Today there are two major WC PBMs, two mid-tier ones, and a host of much smaller companies with little market share.

In 2017, opioid spend declined to less than a quarter of total drug costs, driven by a 30% drop over the previous two years. The even-better news is patients not taking opioids also don’t need to take drugs to mitigate the side effects; insomnia, depression, constipation, erectile dysfunction, etc. And, the knock-on effects on claim duration and settlements are positive indeed.

You can download CompPharma’s latest PBM in WC report here,  all of our 15 surveys are available here.

Tomorrow we’ll dig into pricing and what’s real – and what isn’t – in the media’s coverage of drug pricing.

May
2

The CBO’s Single Payer Report and worker’s comp

Posted by Joe Paduda on Thursday, May 2nd, 2019 | Comments

The CBO’s 34-page analysis of Single Payer is out, and there are no references to workers’ comp or occupational injuries/illnesses. 

That doesn’t mean there aren’t plenty of ways Single Payer would affect work comp.

Briefly, Single Payer is a very broad term that over-generalizes a bunch of very different approaches to universal health insurance coverage. As defined in the CBO report, in Single Payer programs “people enroll in a health plan operated by the government, and the receipts and expenditures associated with the plan appear in the government’s budget.”

When you recall that work comp accounts for about 1% of total US medical spend, it’s no wonder the CBO report ignores us. But, how Single Payer would affect comp depends on two core issues:

  • whether care for occupational injuries/illnesses is covered by Single Payer, and
  • whether there is a universal fee schedule.

If WC care is included under Single Payer, it is likely work comp would evolve to an indemnity-only system. This currently exists in several other countries, and seems to work pretty well.

If WC medical care is NOT included in Single Payer, the impact would be driven largely by the presence – or absence – of a universal fee schedule. 

Without that universal fee schedule, providers would likely continue to do their revenue maximization thing, although they’d supercharge those efforts. Why? Because reimbursement from all other payers would drop significantly, and providers would look to comp to replace as much of that lost income as possible.

What does this mean for you?

The healthcare system is the elephant, and workers’ comp is the mouse.

Apr
29

RIMS reminders

Posted by Joe Paduda on Monday, April 29th, 2019 | Comments

Morning all!

I’m not attending RIMS, but if you are, a few things to help you survive – and profit from – the week.

1.  Realize you can’t be everywhere and do everything. Prioritize.

2.  Leave time for last-minute meetings and the inevitable chance meetings with old friends and colleagues.

3.  Unless you have a photographic memory, use your smartphone to take voice notes from each meeting – right after you’re done.  Otherwise they’ll all run together and you’ll never remember what you committed to.

4.  Introduce yourself to a dozen people you’ve never met.  This business is all about relationships and networking, and no better place to do that than this conference.

5.  Which leads to help someone out. Yes, you’re incredibly busy and have lots of priorities. Make it a point to listen to someone who looks lost or bewildered, say hello to a student there for the first time, shake hands with a guest from another country.

6.  Wear comfortable shoes, get your exercise in, and be professional and polished.  It’s a long 2, 3,or 4 days, and you’re always ‘on’.

Finally, I’ll echo Sandy Blunt’s advice – in these day of YouTube, phone cameras, Twitter, SnapGram and InstaChat, what you do is public knowledge.  That slick dance move or intense conversation with a private equity exec just might re-appear in a tweet…

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Apr
26

So what?

Posted by Joe Paduda on Friday, April 26th, 2019 | Comments

or the longer version…What does this have to do with workers’ comp?

I hear that far too often, usually when talking with a work comp exec about Medicare reimbursement changes, the number of workers without health insurance, MS-DRGs, Medicaid expansion, health system consolidation, physician employment trends, single payer/Medicare for All.

While many execs appreciate that “external” factors affect workers’ comp, few really understand the implications. That’s a big miss, and leads to strategies based on false assumptions and flat out ignorance.

A telling example…

I’ve been grousing about the “revenue maximization” industry that’s been driving up work comp facility costs for years. By focusing technology, expertise, and highly sophisticated tools, health systems are getting ever more effective at hoovering dollars out of your wallet.

If you need more evidence that we work comp folks are woefully ignorant of and unprepared for this, a just-out article reports there’s a shipload of private equity money invested in the revenue maximization industry – with billions more on the way.

PE firms are looking to double their investment in 3-5 years; these are very smart folk who’ve all done a lot of work to project where things are headed. And they are investing tens of billions of dollars in companies that are laser-focused on increasing facility reimbursement.

The smart money knows we are woefully ill-equipped to stand up to their billing expertise. Other payers use multiple vendors both pre- and post-payment to ensure they are only paying what they are legally obligated to. We are talking payment integrity, deep coding analysis, minute comparison of line items to medical records, accessing huge databases of reimbursement data from Medicare, Medicaid, group/individual health plans to ascertain REAL U&C…

You’ve got, what, bill review and a few nurses manually sorting thru bills?  And you picked your bill review vendor based on the lowest bid and then screwed them down on price even more?

Worse, as other payers continue to upgrade, improve, and generally keep pace with the revenue maximizers, work comp is going to fall further and further behind.

See where this is headed? (Hint – We’re the muppet in the middle)

Finally, there’s this thing called Fiduciary Responsibility.

From the Cornell Law School…

The duty of care requires that directors inform themselves “prior to making a business decision, of all material information reasonably available to them.” Smith v. Van Gorkem, 488 A.2d 858 (1985).

Whether the directors were informed of all material information depends on the quality of the information, the advice available, and whether the directors had “sufficient opportunity to acquire knowledge concerning the problem before action.” Moran v. Household Intern., Inc., 490 A.2d 1059 (1985).

What does this mean for you?

Ignorance, arrogance, or laziness is no excuse. 

 

 

Apr
23

Gallagher Bassett’s using data to improve care for work comp patients

Posted by Joe Paduda on Tuesday, April 23rd, 2019 | Comments

What passes for predictive modeling today is like Google maps, except the app tells you when to turn a half-hour after you’ve passed the intersection.

Adjuster finding out a claimant had spinal surgery 6 weeks ago…

By the time adjusters figure out a claim has gone off the tracks, it’s often too late to do anything but increase reserves. That’s because there’s no real-time monitoring, no way to clearly and definitively identify when – exactly – that happens.

A promising approach is in the works at Gallagher Bassett.

Building off research conducted by Johns Hopkins, GB has developed a tool that enables real-time monitoring of medical services delivered to its claimants. Using a proprietary platform, alerts are sent when patients’ quality of care is headed in the wrong direction.

The trigger is inappropriate medical treatments. GB matches medical bill data with evidence-based treatment guidelines, with each service, procedure, or medication individually assessed. As the number of inappropriate treatments increases, alarm bells ring.

Of course, that doesn’t mean all treatment that is non-compliant is inappropriate. However, much is, and there’s a clear – and quite strong – correlation between bad medical care and lousy claim outcomes.

Those are clinical words and hide the real import of GB’s approach. Getting claims back on track means patients get better faster, AND the risk of bad outcomes from inappropriate surgeries, injections, drugs, and tests decreases.

What does this mean for you?

There’s lots of data out there – and far too little smart use of data. This is promising indeed.

 

 

 

Apr
22

California’s State Fund is on the way to making UR work way better

Posted by Joe Paduda on Monday, April 22nd, 2019 | Comments

Pick any eight – Utilization Review is:

  • a pain in the neck for everyone involved
  • marginally useful
  • mostly manual, with limited cross-platform integration (claims, bill review, medical management, reporting)
  • annoying, frustrating, and a time waster for providers
  • forcing everyone to jump thru hoops to stop a few unnecessary procedures
  • delaying care for workers’ comp patients
  • necessary to reduce inappropriate care, helping patients recover and employers and taxpayers save money
  • pretty much pointless unless tightly aligned with Evidence Based Clinical Guidelines

California’s State Fund is working to fix many of the issues, while better delivering on the intent – ensuring patients get the right care, quickly. The UR Connected program is starting with the Fund getting its own house in order.

The intent is to automate much of what is now manual, and in so doing eliminate much of the administrative burden, speed up decisions, and reduce frictional costs for all parties.  Paper, fax, or clearinghouse submissions will still be accommodated.

I’d hazard a guess that after initial teething problems, the Fund and treating providers will also see a significant reduction in errors, and much faster turn around times.

Phase One, now pretty much complete, is best described as an automated rules engine development and construction project. It is focused on figuring out all the State Fund’s back office functions involved in care approval and payment. Internal business rules, processes, regulatory requirements, and workflows have been documented and automated; they will be continuously updated.

In May, the State Fund will push to get larger providers electronically tied into the system, which should drastically reduce all parties’ workloads. Today, the doc’s office sends Requests For Authorization by fax, State Fund staff enters the data into their system manually and then sends the determination back – via paper.

This isn’t much different from how every payer handles UR in every state, and yet it is mind-boggling that we work this way in 2019.

In the future the goal is to have as many of these RFAs possible handled electronically, with providers accessing the system via a portal or direct electronic integration.

Expect the State Fund to being pushing this out to their larger providers first, then to those with a high volume of legitimate RFAs. In a discussion with State Fund staff, a spokesperson noted that while workers’ comp patients are a relatively small portion of the typical providers’ case load, the administrative burden is greater – which will motivate them to build connections to the Fund.

Down the road just a bit is integration with bill payment. As an RFA is a request for approval for the entire care process, when automated the bill review process becomes more of an invoicing function; when the services come to BR most of the information needed to process the reimbursement request is already there.

What does this mean for you?

The State Fund is going about it in the right way – the result should be improved care, lower barriers to access, and less frustrated providers.

 

 

Apr
18

The buyer – user disconnect, aka the Shiny Object problem

Posted by Joe Paduda on Thursday, April 18th, 2019 | Comments

Sorry, too darn busy this week to get my usual 4 or so posts in.

Had a very interesting conversation with a work comp services exec earlier this week which got me thinking about “portals” – those internet entry points where payer staff can access bills, reports, notes, alerts and other documents and messages about their claims.

Turns out portals are more shiny object than productivity enhancer…

The point the exec was making was that management always wanted to see and hear about the portal – but desk-level folks rarely used it. Adjusters and case managers preferred emails and other more direct and specific communications over logging into and clicking thru a portal to find specific information. And, user preference for direct communication was overwhelming.

The exec’s point was a lot of resources are devoted to developing, implementing, upgrading and maintaining these portals – which aren’t used by the very folks they are built for.

In a very unscientific poll, I asked a few other contacts about their customers’ use of their portals; all agreed that desk-level users didn’t use them much – if at all.

As in one out of 10 or 20 desk level folks even logged into the damn thing

There’s a critical point to be made here – the people who make buying decisions want/demand that potential vendors invest a ton of brain power and dollars into a thing that doesn’t add any value.

What does this say about payers; I’d suggest it shows a disconnect between the buyers of services and the users of those services that is rather striking – and all too common.

Let me go further – the buyers need to understand they are serving the needs of the desk-level folks. Anything and everything the buyers – who are almost always higher-paid and have nicer offices than the people who actually do the work – do should be grounded in and specific to how the users actually do their jobs.

I would argue that the “blame” for this is shared by vendors, who need to do a MUCH better job challenging buyers’ firmly-held-and-very-wrong perceptions.

But that’s pretty unfair, as buyers tell potential vendors what they want, and if your proposal doesn’t check the “portal” box, you’re toast.

The larger point is even more disturbing; I daresay this isn’t the one-and-only example of the management-worker disconnect.

Example – in our bill review and UR services, execs believe UR and bill review are connected via EDI or directly while users emphatically disagree.

I’d love to hear what you think. Shoot me examples of the management-user disconnect in the comments section below to help focus us on stuff that actually helps the desk-level folks do their jobs.

Instead of shiny objects.

What does this mean for you?

There’s precious little “mistake room” in work comp; wasting valuable resources and time on projects with little benefit is dumb.

(in this case, helpful comments by anonymous posters are welcome!)

Apr
12

Research Roundup

Posted by Joe Paduda on Friday, April 12th, 2019 | Comments

in which I attempt to summarize recent research into workers’ comp and medical management and describe what it means for you.

Thanks to Elaine Goodman of WorkCompCentral, we learned this morning that folks who consumed marijuana during recovery from an injury were likely to use more opioids  – for much longer – than individuals who did not use marijuana.

Implication – This calls into question the idea that marijuana use reduces opioid use.

California’s WC Insurance Rating Bureau reported premium rates declined again in 2018 – they are now down 24 percent over the last four years. The combined ratio is at a very solid 91 – BUT that’s a big jump from 2017’s 85.

Big driver – “Pharmaceutical costs per claim decreased by 69 percent from 2012 to 2017”

Implications –

  • California reforms continue to reduce costs, but the it’s getting late at the party…
  • Drug costs are dropping big time.

Predictions are the number of retail stores, and the jobs in those stores – are continuing to drop. 75,000 more stores will close by 2026 – that’s seven years from now. Sears, Payless Shoes, Gymboree, ToysRUs, RadioShack, GNC are among those closing stores.

Implication – fewer jobs, lots of empty storefronts, distressed malls mean less retail construction – and lower employment in retail.

Healthcare costs for working families  “rose 27.7 percent from 2010 to 2016…while median household income rose 19.8 percent…” There’s a lot of variation among states. The percentages in the map indicate premiums as a percentage of family income.

Implication – Voting families are finding healthcare is increasingly unaffordable, ergo more focus on healthcare in the election.

Need to know what states’ work comp UR guidelines are? WCRI’s State Policies on Treatment Guidelines and UM‘s got you covered.

If I missed something – and I’m sure I did – please provide a BRIEF summary and a link in the comments section.

And happy April to all!

Apr
3

What worked then, works now.

Posted by Joe Paduda on Wednesday, April 3rd, 2019 | Comments

In 1992, worker’s compensation case managers were finding their patients were often unable to get to their doctor’s office, PT appointments, or to the drug store to get their prescriptions filled. Many didn’t have their own vehicles or relied on friends, family members or public transportation, all with their own challenges.

Without prompt care, therapy, and medications, recovery was hampered and disability extended.

One case manager found a college student to help, and Cem Kus started transporting her patients using his own vehicle [Cem and the case manager – Janet Kus – are now the co-owners of MTI]. Cem did this for five years – in addition to scheduling and later hiring and managing additional drivers.

MTI’s first transport vehicle and driver

Cem got to know most of the patients personally – and what each needed. One particular patient stands out. A fireman was hurt in a fire; as his friend carried him out of the building on his back, he missed the last step. They fell and the friend landed on his back, injuring his spinal cord; since then he has been confined to a wheel chair. Cem; “We have helped him get to and from treatment ever since that injury. We bought wheelchair vans to accommodate this patient and others; since there were very few wheelchair-accessible vans available in the 1990s, MTI customized the vans ourselves.”

As time passed, the company hired more drivers, handled the communications with payers, payroll, and dispatching. Just a few years after that first trip, Cem and Janet formed Medi-Trans Inc (MTI) and hired their first person to take incoming calls, handle the scheduling, and arrange for dispatching.

What drove MTI’s initial growth was simple – responding to their customers’ need for prompt, accurate, and comprehensive communication. Patients, adjusters and case managers wanted and expected timely updates, status reports, and notice of issues, and wanted their transportation partners to stay on top of files to make sure everyone was picked up on time, arrived, and returned according to plan.

It wasn’t just communications. Work comp patients needed a lot more flexibility than the normal cab service was able or willing to provide.  So, MTI was flexible in terms of pick up and drop off locations and accommodated patients who needed to pick up medications. The company became adept at handling everything from scheduled care on an ongoing basis – PT visits, for example, and one-time services such as trips to an MRI facility.

Fast forward 20+ years, and nothing’s changed. Simply put, MTI thrived for two reasons – because it took work off their customers’ desks, put it on their’s, and treated patients as individuals with unique needs.

It’s still about people handling each service, communicating with the parties, and adapting as things change.

According to Cem; “we have to be flexible to meet the patient’s needs and keep adjusters and case managers aware if something unusual occurs.  That is why we take special instructions and communicate with claimants and update service on a ongoing basis – different customers and different situations require it.

The company has just completed a major systems upgrade, allowing for more timely communication and integration of its various services – transportation/translation, DME/Home Health Care, imaging, and PT. But the system won’t replace the personal touch – because it can’t.

Patients, physicians, adjusters and case managers needs’ change, sometimes from minute to minute. Quick access to a person who is knowledgeable, experienced, and thorough is critical.

It is also something no automated system, no matter now sophisticated, will ever be able to replicate.

What does this mean for you?

It always has been, and always will be, about customer service.

[disclosure – MTI is an HSA consulting client]