Category: Workers Comp

Jan
4

The Millennium Health settlement

Posted by Joe Paduda on Monday, January 4th, 2016 | Comments

Some weeks back, the Feds announced they’d reached a settlement with Millennium Health on allegations that drug toxicology firm Millennium Health was involved in illegal practices (my characterization, not theirs).

More recently, Millennium has been working through a reorganization wherein the company’s debtors will assume control of Millennium. This reorg (currently held up by legal wrangling) was driven in large part by a $256 million settlement Millennium agreed to pay to resolve allegations of improprieties.

Note: Millennium is a consulting client, has been for almost four years, and will continue to be a client for the foreseeable future.

A bit more detail on my relationship with Millennium.

I’ve worked very closely with Millennium to design and promote a work comp-specific program.  This program – a flat fee covering all drugs and metabolites tested by Millennium, coupled with a payer-specific outreach program and supported by clinical liaison personnel – has been widely accepted by and dramatically slashed drug testing costs for many payers. Everyone I’ve worked with at Millennium – their clinicians, researchers, operations, finance, executive, sales and account management staff – has been professional, highly ethical, and committed to their customers.  Over the last four years, I never encountered anything that remotely indicated a possible ethical transgression.

The drug testing program now being considered by Medicare – a flat fee for an entire panel of tests – is what Millennium has been offering work comp payers for over three years.

After extensive research into the allegations and legal wrangling among and between the parties, there appear to be two primary issues described in the DoJ statement referenced above – giving testing cups to physicians, and promoting/allowing physicians to have “standing orders” for drug tests.

Millennium was accused of violating Stark laws by giving docs test cups that the docs would use to collect urine specimens and send those specimens to Millennium for quantitative testing if further testing was required.  Millennium was also accused of inappropriately billing Medicare for drug tests by promoting custom “panels” wherein physicians would always request the same panel of drug tests for each payment.

First, the cups – and this is where things get a little confusing.  According to  Health Law Attorney Blog, 

Millennium initiated the practice of entering into “cup agreements” with physicians under which Millennium agreed to provide POCT [point of care testing] cups to physicians free of charge if the physicians agreed: (i) not to bill any insurer for the urine testing service; and, if further testing was required, (ii) to return each test cup to Millennium for lab testing of the urine specimen. If the physicians failed to comply with these requirements, then Millennium would charge them for the price of the cups.

There’s an illuminating discussion of the cup issue here.  It looks to me like the key issue is the government’s contention that by giving docs cups with immunoassay test strips attached, Millennium violated Stark laws.  If the cups did NOT have those test strips, this would not have been an issue.  I’m not clear as to how MH could have violated the Stark laws if the docs did not bill any payer for those cups and thus did not receive any remuneration, but it is clear that this was indeed a violation.   As the above-reference Blog notes:

quoting the government here – “whenever a laboratory offers or gives to a source of referrals anything of value not paid for at fair market value, the inference may be made that the thing of value is offered to induce the referral of business.” With that statement, the government clarifies its position that the fact the physician does not bill for the item or service does not, by itself, negate this inference.

So, just giving the cups away, even while requiring the docs to not bill for them, was a violation.

Now, the panels.  Drug test are supposed to be specific to a patient; the allegation against Millennium was that physicians and/or Millennium created custom panels of drugs and metabolites, specific to individual physician, panels that would be tested for every patient.  Here’s how the Department of Justice described this:

Millennium caused physicians to order excessive numbers of urine drug tests, in part through the promotion of “custom profiles,” which, instead of being tailored to individual patients, were in effect standing orders that caused physicians to order large number of tests without an individualized assessment of each patient’s needs. [emphasis added]

The DoJ also notes the agreement settles allegations that Millennium inappropriately billed Medicare for genetic testing.

Clearly, these were very significant issues. They have resulted in major changes at Millennium including an overhaul of the Board and significant changes to management and ownership.  There’s also a requirement that Millennium operate under a “corporate integrity agreement” overseen by HHS for five years.

The $256 million settlement addresses the Feds’ allegations, and there has been no determination of liability.  That said, some may well infer that Millennium’s decision to settle the case and essentially turn the company over to its creditors indicates the company was not confident it would prevail if things progressed to trial.

It’s been an ugly, messy, and at times repugnant story.  Here’s hoping the legal wrangling ends soon.  In the meantime, I will continue to work with Millennium to help them deliver on their commitments to the work comp industry.

Note: Millennium Health has not provided any information to me regarding this matter other than what is publicly available on their website.  Millennium has been aware of my intention to write a post on this topic once the legalities were resolved.  MIllennium has not reviewed, seen, edited, or otherwise been involved in this post.

Dec
18

“Obamacare”, Medicaid, and workers’ comp settlements

Posted by Joe Paduda on Friday, December 18th, 2015 | Comments

In a piece in Insurance Thought Leadership, misleading labeled “Obamacare Expands Into Workers’ Comp”, MaryRose Reaston asserts that

The Affordable Care Act (ACA) was created to expand healthcare coverage. Unfortunately, the act has overstepped its bounds and will dip into the workers’ compensation coffers by requiring mandatory reporting for Medicaid beneficiaries. [emphasis added]

No, ACA has not “overstepped its bounds”.  The efforts by states are just that – state-based – and they are allowed/enabled by Federal legislation that is separate and distinct from the ACA.  Michael Stack has written an excellent summary of the situation, noting that the federal legislation allowing Medicaid to pursue settlements was part of the Medicaid Secondary Payer Act, which in turn was part of the 2013 Budget Bill..

In fact, I find the attempt to link ACA with state Medicaid recovery activity curious and convoluted. ACA expanded Medicaid – in states agreeing to do so. States remain the primary regulatory bodies for Medicaid. There is nothing in Ms Reaston’s argument that indicates how or by what means ACA encourages Medicaid to pursue workers comp settlements. States that expand or don’t expand Medicaid can decide to pursue settlements – independent of ACA.
Make no mistake, there are clear “winners” here – taxpayers. Any taxpayer should demand Medicaid recover any monies necessary to provide treatment paid for by Medicaid that should have been covered by workers comp.

Dec
17

ACA, work comp, and case shifting – the details

Posted by Joe Paduda on Thursday, December 17th, 2015 | Comments

Last week’s webinar on ACA and the possibility of case-shifting due to capitation was quite well attended – those who could not make it can take a listen by signing up here (there’s a fee for members and non-members of WCRI).

I was honored to be asked to participate, asked to present a different perspective (namely, it’s very hard to attribute case-shifting to ACA) based on what I see as a very complex and diverse health care world.

Here are a few reasons for my skepticism.

The argument for case shifting requires several assumptions:

  • HMOs are capitated
  • there are financial incentives e.g. capitation at the primary care level
  • primary care providers are aware of the financial implications of case assignment
  • PCPs purposely assign cases to work comp based on those financials
  • the ACA will lead to more Accountable Care Organizations that will use capitation more

A couple observations.

  1. About 2/3 of HMOs use capitation to reimburse provider groups.
  2. About 60% use some form of fee for service, so many HMOs use BOTH capitation AND FFS.
  3. Almost all PCPs are NOT paid by capitation.  In fact, PCPs are most often paid by FFS.
  4. Some – but by no means all – ACOs contract with employers.  Capitated reimbursement is almost unheard of in these arrangements.
  5. The interaction of reimbursement and physician behavior is complex and by no means straight forward.

So, while the provider group is frequently capitated, the providers within that group are not.

There’s also no indication that capitation at the group level is becoming more popular under ACA.

Finally, I’d suggest that folks really interested in this take the time to dig deep into provider reimbursement under ACOs and ACA and HMOs.  It’s very complex, far from simple, and, as Jaan Sidorov illustrates so eloquently when describing a research study intended to promote standards of care:

This study should give pause to anyone who thinks that physicians can be manipulated with more money.  They live by more than bread alone.

What does this mean for you?

When you think you are starting to figure things out, it’s probably because you just haven’t looked deeply enough.

Dec
14

2015 Work Comp predictions – how’d I do?

Posted by Joe Paduda on Monday, December 14th, 2015 | Comments

Each year I publicly prognosticate about the year to come – and, being one committed to personal responsibility, I report back 12 months later.  Here’s how prescient I was this time around.

1.  Aetna will NOT be able to sell the Coventry work comp services division.

Verdict – correct, although I’m not sure mother Aetna tried very hard…

2.  Work comp premiums will grow nicely.

Correct – employment and payroll is up.  That plus higher rates in CA delivered a BIG year.

3.  Additional research will be published showing just how costly, ill-advised, and expensive physician dispensing of drugs to workers’ comp patients is.

Correct – thanks to WCRI and NCCI’s AIS talk by WCRI CEO Rick Victor PhD and CWCI President Alex Swedlow

4.  Expect more mergers and acquisitions; there will be several $250 million+ transactions in the work comp services space, with more deals won by private equity firms.

Pending…

5.  A bill renewing TRIA will be passed; the new GOP majorities want to show they can “govern” and this has bipartisan support.

Correct.

6.  Liberty Mutual will continue to de-emphasize workers’ comp.

Correct – the former market leader is now somewhere around number 5, however it is still working on national accounts thru the Helmsman subsidiary

7.  After a pretty busy 2014, regulators will be even more active on the medical management front.  Work comp regulators in several more states will adopt drug formularies and/or allow payers/PBMs to more tightly restrict the use of Scheduled drugs via evidence-based medical (EBM) guidelines and utilization review.

Expect more restrictions on physician dispensing and compounding, increased adoption of medical guidelines and UR, along with incremental changes in several key states (California we hope) to “fix” past reform efforts.

Partially Correct – formularies have been a very hot topic and regulations tightening up compound dispensing and pricing are in place in several states.  California’s a bit less of a concern following the Stevens ruling affirming the constitutionality of the UR/IMR process. 

But there’s been little progress re physician dispensing and not much on UR and EBM.

8. There will be at least two new work comp medical management companies with significant mindshare by the end of 2015. These firms, pretty much unknown today, are going to be broadly known amongst decision-makers within the year.  While they will not generate much revenue this year, they will be attracting a lot of attention.

Wrong.  The companies I’ve been following aren’t quite there yet.

9. Outcomes-based networks will continue to produce much heat and little real activity.

Wrong.  There just hasn’t been much “heat” generated this year; perhaps things are evolving to a different model or platform.  More on this in my predictions for 2016…

10.  Medical marijuana will be a non-event.  Amidst all the discussion of medical marijuana among workers’ comp professionals, there’s very few (as in no) documented instances of prescribing/dispensing of marijuana for comp claimants. Yes, there will likely be a few breathless reports about specific claims, but just a few.  And yes, there may also be a few instances of individuals under the influence of medical marijuana incurring work comp claims, but these will be few indeed.

Not sure.  Not that I’m waffling here, but activity has been limited to a couple of states, with New Mexico the most prominent.  Much as we respect the Land of Enchantment, NM’s relatively small population and still-unusual legalization of Marijuana does not make its situation a major deal.

What say you, dear reader?

Dec
11

Friday catch-up

Posted by Joe Paduda on Friday, December 11th, 2015 | Comments

Buried in a project and travel this week, so missed a few things worthy of note.

Health care reform

From PwC, a new report on the evolution of primary care.  Key takeaways – The “consumer” of primary care is changing to more elderly and more Hispanic buyers; who delivers primary care is changing as big retail outfits get involved, and reimbursement is getting better too.

A thoughtful piece from Health Affairs unpacking the recent news of health care spending growth.  Important note – remember this is OVERALL growth, not per-insured.  As insurance covers more Americans, it isn’t surprising that health care costs increase as well.

Work Comp

WCRI is out with a revealing studies about California post-reform.  The California study indicates early results show medical costs are down about 5 percent since 2012’s reform implementation.  

There’s a related study just out from CWCI – an exhaustive analysis of the UR/IMR process and results therefrom. Key takeaway – the estimated approval rate for all California workers’ comp medical services ranges between 95.7% and 96.1%.

Had a very interesting evening talking with a couple dozen Wall Street folks about workers’ comp earlier this week.  Interesting because a) it’s still surprising to me that anyone in the investment community really focuses on work comp; b) most were pretty knowledgeable about the space; and c) I learned a lot about the “secondary debt market” for privately held company debt.

Key takeaways:

  • lots of interest in work comp fee schedule dynamics
  • actual dynamics of the specialty services buying process are not well understood
  • so-called white space (un-penetrated accounts, service leakage to non-participating providers) a very hot topic

Other things of interest

Have you heard of the Cochrane Collaboration?  It’s an organization that produces:

systematic reviews and meta-analyses which encompass all of the studies both published and unpublished on a particular [medical] question, studies that have been analyzed and statistically combined to create a summary of what is reliably reliable.

Here’s an excerpt [highlights are mine]

Think of the body of medical procedures, screening programs, and drug treatments as a pie. If you were to divide that pie into thirds, the first third would contain all of those procedures or treatments that we know are underpinned by quality medical research and for which we can truly say with some degree of certainty that they “work.” The second piece of pie would contain those things we routinely do but we don’t have strong evidence that the benefits exceed the harms, because they haven’t been well studied. The last third would contain many things that we do in medicine and health care where there is evidence that they do more harm than good, and we should stop doing those things.

An interesting piece from Harvard Business Review on “why no one is reading your white paper.” I’d suggest it’s also because no one cares – that is, your white paper has to speak to a specific problem that person has.

If it doesn’t, it may be interesting but it won’t be effective.  Effective defined as inspiring that person to do something.

Dec
8

Does the ACA cause providers to shift cases to work comp?

Posted by Joe Paduda on Tuesday, December 8th, 2015 | Comments

The ACA is in place and causing massive changes to the provider and payer landscape. One question broached by WCRi in recently-published research deals with the possibility of “case shifting” from group health to work comp.

That is, do primary care providers selectively “allocate” cases to work comp based on reimbursement motivations?

If yes, there are obvious and significant ramifications for all of us, many of which will have negative consequences for employers and insurers.

But, in my view, the picture is anything but clear – on many levels.

WCRI’s hosting a webinar this Thursday at 2 pm EST on the topic.  They have been kind enough to invite me to present a contrasting perspective.  There are already over 100 registrants, so the good folk from WCRi have opened up registration to accommodate the demand.

Sign up here.

Webinars are $39 for WCRI members; $79 for non-members; and no charge for members of the press, legislators as well as their staff, and state public officials who make policy decisions impacting their state’s workers’ compensation system.

See you there.

Dec
7

Monday catch-up

Posted by Joe Paduda on Monday, December 7th, 2015 | Comments

CompPharma’s annual meeting was held last week; CompPharma is an association of workers’ comp PBMs of which I am president.  This year the focus was on connecting payers’ Medical Directors, PBMs, and regulators in an effort to broaden all parties’ understanding of each others’ priorities, issues, concerns, and constraints.

A few key takeaways;

  • Drug formularies must be evidence-based and supported by utilization review.  UR must incorporate a quick and intelligent way to resolve disagreements.
  • Formularies should NOT be restrictive – on either side.  That is, regulations should support payers’ ability to restrict access to inappropriate drugs and readily approve drugs that a formulary may deem inappropriate.
  • We continue to make good progress against overuse and abuse of opioids, but the biggest challenge remains long-term users of the drugs.
  • The regulator’s task is beyond complex. Rapid changes in medical knowledge, conflicting state and federal laws (e.g. marijuana), reduced staff in many jurisdictions, and an adjudicatory process built for far less complicated times combine to ensure very few answers are simple and straightforward.
  • Things are getting better in California, where the UR process has likely prevented serious harm in multiple instances.  That said, well over 95% of all medical procedures and treatments are approved, a result that may indicate too much leniency rather than too little.  

CDC’s draft opioid usage for chronic pain guidelines was obtained by an organization despite efforts to keep it closely held..  Notably, CDC’s researchers found precious little evidence supporting the practice.  Note the draft is just that.

Implementing reform

Things are getting contentious in the provider – health plan world.  As payers seek to promote narrower networks, some providers left out of those networks are not happy. While the most public airing of the dispute is in New Jersey, rest assured this is occurring in your state.

Expect a lot more in the news about this early next year; we’ll be all over this in January.

Meanwhile, both primary care and specialist physicians have seen a slight increase in pay since reform implementation.

Health insurance premium increases have been the subject of much reporting and even more confusion – some of it caused by the reporting.  Here’s a quick summary of what’s REALLY happened.  One key quote:

The average premium of the lowest-cost silver plan increased by less than 5 percent in five states, increased between 5 and 10 percent in five states, and increased by more than 10 percent in just four states.

Workers’ compensation

Jennifer Wolf-Horesjh, Executive Director of IAIABC has launched a podcast entitled Accidentally.  The initial effort is well worth a listen.

Along with former SAIF CEO John Plotkin, Bob Wilson, and Bob Reardon of ISG I participated in a panel discussion on Social Media at NWCDC, focusing on positive aspects of social media.  The video is up here.

Meanwhile, the US economy continues to improve, and the workers’ comp world is benefiting as employment increases lead directly to higher premiums.  While rates are decreasing in most states, the jump in payroll is more than enough to offset the rate drop.

NCCI’s out with the final report on how things went for work comp insurers in 2014.  Overall, ’14 results were pretty good despite low investment returns. The combined ratio (claims plus admin expense) stayed below 100, indicating insurers made money on an underwriting basis (not counting investment returns).

And t he good folk at WCRI have just published their latest research on Louisiana; you get order the publication here.  Key takeaway – after adoption of medical treatment guidelines, utilization of medical services decreased.  Remember, correlation is not necessarily causation…

Nov
23

Would you want your family covered by Opt Out?

Posted by Joe Paduda on Monday, November 23rd, 2015 | Comments

Today’s WorkCompCentral brings an editorial on the “trend” in some state capitals towards plans legitimizing opting out of workers compensation.  Friend and colleague Peter Rousmaniere has done more research and investigation of opt-out programs than anyone else I know.

He knows of what he speaks, and his view of opt out is one we work comp folks should carefully consider.  His reporting on Oklahoma, overall trends, and progress to date are clear evidence of Peter’s expertise.

Among Peter’s concerns are:

  • the requirement that employees report injuries within 24 hours.  Peter notes there’s no good reason for this requirement.
  • Very low wage replacement levels, so low that higher-compensated employees may well be discouraged from filing claims
  • plan documents that are indecipherable
  • documents pertaining to individual claims that prohibit injured employees from sharing the document with anyone.
  • opt out plans being considered in several states may well violate ERISA.

It is important to note that many employers opting out in Texas are doing so responsibly, however the new efforts promoted by AAWC are anything but.

The net is this – would supporters of these programs want their family members covered by these plans?

Pro Publica published an extensive review of opt out; it is damning however in my view it suffers from a lack of credibility coming from its biased, slanted, and in many cases patently false “reporting” on workers comp.

What does this mean for you?

AAWC’s opt out promotion smacks of continuing a race to the bottom, adding yet another insult to working people.  If AAWC is really interested in doing right by workers it sure has a strange way of showing it.

 

Nov
20

The Anti-Opioid Movement is gaining speed and traction

Posted by Joe Paduda on Friday, November 20th, 2015 | Comments

The pushback on opioids has accelerated dramatically; every day there’s at least one major announcement about states, the Feds, or other entities taking major steps to attack the overuse of opioids.

We are starting to see some progress.  Perhaps most noticeably, a few weeks ago the CDC published draft guidelines re the use of opioids for treating chronic pain.

Unsurprisingly, the pain industry wasn’t happy. They’ve penned letters to CDC officials and Congress, with one complaining: “a lobbying organization that seeks to reduce the prescribing of opioids appears to have played a significant role in developing the guidelines.”

Allow me a moment to pick my jaw off the floor.  This is the height of hypocrisy.

This is coming from an industry that has used the billions it has made from selling opioids to:

  • lobby state and federal elected officials and regulators,
  • pack ostensibly unbiased review panels with drug company shills,
  • fund “research organizations” that published biased research supporting opioids, and
  • brilliantly and effectively promote the use of this incredibly dangerous and damaging drug.

I’m just stunned at the unmitigated gall of these people.

CompPharma (the work comp PBM advocacy organization of which I am president) has joined with the National Safety Council, Physicians for Responsible Opioid Prescribing, American Society of Addiction Medicine, National Coalition Against Prescription Drug Abuse and several other groups to support the DC guidelines.

The human cost of opioids is a constant and terrible reminder of the impact the opioid promotion industry has on each of us.

Yesterday the estimable Steve Feinberg MD sent one of his periodic emails re interesting issues related to work comp and the delivery of care in comp.. This one was a column by Bob Beckel, an editorialist who recounted how he had to check himself into rehab after a mere eight weeks post-op care involving OxyContin and Percocet had addicted him to the stuff.

Truly frightening.  And very common.

A truly awful side effect of the rampant overprescribing of prescription opioids has been the explosive growth in heroin use.  When patients can’t get prescription opioids, those addicted or dependent may well turn to illicit versions of opiates, namely heroin.

myMatrixx’ Phil Walls RPh has written an excellent synopsis of the history and current status of heroin. Detailed, thorough, readable; download and read on your next flight.

Perhaps the most trenchant observation appeared a couple weeks ago in an editorial in the New York Times entitled “How Doctors Helped Drive the Addiction Crisis”.  Here’s Dr Richard Friedman’s concluding paragraphs:

WHAT is really needed is a sea change within the medical profession itself. We should be educating and training our medical students and residents about the risks and limited benefits of opioids in treating pain. All medical professional organizations should back mandated education about safe opioid treatment as a prerequisite for licensure and prescribing. At present, the American Academy of Family Physicians opposes such a measure because it could limit patient access to pain treatment with opioids, which I think is misguided. Don’t we want family doctors, who are significant prescribers of opioids, to learn about their limitations and dangers?

It is physicians who, in large part, unleashed the current opioid epidemic with their promiscuous use of these drugs; we have a large responsibility to end it. [emphasis added]

Kudos to Gov Charlie Baker (R) of Massachusetts.  Gov Baker is calling for a strict limit on initial opioid prescriptions throughout his state.  Of course several docs are protesting this, noting problems of access for patients who need the medications.  It would be even better if these docs noted the problems inherent in opioid prescribing; perhaps they did but the reporter didn’t publish those comments… (thanks to Jake for the tip!)

Finally, there are many, many pieces and parts to ACA, including significant funding for clinical research, patient outcomes research, and research into improving the delivery of care. The Patient-Centered Outcomes Research Institute just closed it’s request for proposals for research into Clinical Strategies for Managing and Reducing Long-Term Opioid Use for Chronic Pain.

There’s nothing more important in the work comp world than this issue. 

Nov
17

NWCDC – key takeaways

Posted by Joe Paduda on Tuesday, November 17th, 2015 | Comments

What was noticeable about this year’s NWCDC was what wasn’t.

That is, I didn’t hear or see much that was surprising or new or revelatory.  After a score of scheduled and many more unscheduled meetings, what emerged was an overall sense that the work comp industry is doing pretty well, the big takeaway being the status quo continues.

That needs some additional explanation. Today’s “status quo” is marked by:

  • consolidation both within and among industry verticals;
  • emergence of smaller, niche-specific service providers; and
  • continued interest on the part of investors.

Let’s take those on in order.

First, there’s no question consolidation continues.  In an industry with a structural decline in claims frequency, the rules of a mature industry are incontrovertible.

  • Scale and efficiency are critical to success.
  • Some service offerings/verticals are being commoditized.
  • Market share is hard to come by.
  • Service deficiencies lead to customers leaving, while
  • price is key to gaining other suppliers’ unhappy customers.
  • Vendors are broadening their services by acquiring “sub-vendors” (think TPAs acquiring medical management assets); and
  • Vendors are acquiring other vendors in the same market vertical (think Genex acquiring other case management firms).

Yet there are multiple examples of new competitors emerging, looking to take advantage of opportunities that arise because their much larger competitors are focussed on streamlining, efficiency, consistency, cost control.  While these tactics make sense in a mature market, they also create openings because customers don’t all want the same thing delivered the same way.

I’ll dig deeper into that tomorrow.

Finally,  investment professionals were evident on the floor and at sessions.  This year I encountered representatives from hedge funds in addition to the usual investment banking and private equity folks.

The investment interest seems to be concentrating in a couple areas – the really big and pretty small. On the “really big” end of things, the continued reports that UnitedHealthcare is going to invest in the WC PBM space, Examworks’ ongoing acquisition campaign, and Mitchell’s move into pharmacy management are all indicative of the trend.

While I haven’t seen much in the way of funding for small firms, it could well be there’s a good deal of activity I’m not aware of.  Certainly there’s a lot of interest among investors as they focused their time on the periphery of the exhibit show floor, looking for smaller companies with intriguing, potentially disruptive solutions and services.

Finally, I was somewhat surprised to hear about a good deal of innovation on a variety of fronts.  More on this later this week.

What does this mean for you?

Status quo does not mean static.  The industry continues to evolve, but there are potentially significant external factors that may well change where we are headed.