Despite overwhelming evidence that physician dispensing in workers’ comp leads to extended disability, higher medical costs, and higher indemnity expense, doc dispensing continues to expand.

Here’s why this is such a tough nut.

Back in the day, almost all physician-dispensed drugs were repackaged medications; since WC drug fee schedules were based on AWP, and repackagers could set their own AWP, it was child’s play to make millions by stuffing a few pills into a bottle,dispense to an unwitting claimant, and pocket the several hundred dollars.

In response, many states passed laws or implemented regulations eliminating the repackaged drug upcharge by basing reimbursement on the non-repackaged drug.

The dispensing industry quickly adapted by identifying and buying their drugs from “contract” manufacturers; drug companies that “manufactured” their own drugs, and therefore could set their own AWP.  Not surprisingly, these prices were far higher than comparable drugs from mainstream manufacturers; however, payers had no choice but to pay the price as required under statute or regulation.

Another wrinkle came out of the creative minds of those seeking to suck dollars out of employers and taxpayers; “novel” drugs.  These new creations were very slight tweaks of long-accepted formulations, tweaks such as increasing or decreasing the milligrams of one active ingredient by a negligible amount, thereby creating a “new” drug that could be sold thru dispensing docs.  At a price that was far higher than the “non-tweaked” drugs these variations mimicked.

In response, some states (IN, PA) have moved to ban or significantly restrict physician dispensing.  Others have attempted to do so only to find their efforts thwarted by the unbelievably well-funded doc dispensing lobby.  (Remember they are using the hundreds of millions they’ve sucked out of employers and taxpayers to pay their high-priced lobbyists and curry favor with medical societies; they are using your money to fight you)

At one time, I thought this was the right move as it would end the practice. As one who’s been fighting this battle for almost a decade, I still believe banning physician dispensing is a necessary and appropriate strategy, one every state should implement immediately.

However.  As we’ve seen, the doc dispensing industry’s creative minds are always at least three steps ahead of regulators, legislators, and payors.  So, while one would think banning doc dispensing – or significantly restricting it – would be the final answer, I’m not so sure.

Without getting too deep in the weeds here, my concern comes from years of watching these shameless profiteers outmaneuver us pretty successfully.  They will find any loophole, whether in a states’ pharmacy licensing process, medical board regulation, work comp statute or scope of practice to find a way to continue screwing employers and taxpayers.

For example:

• docs are leasing space in their offices, at astronomical prices for just a couple of square feet to “pharmacies” which are nothing more than drug storage cabinets.
• “pharmacies” are opening up actual locations next door to doctors’ offices and clinics; we have no way of knowing what, if any, financial relationships exist between the prescriber and dispensers.
• dispensing docs are flying in to Hawaii, setting up shop in a clinic and seeing work comp patients for a day or two and dispensing drugs to those patients.
• automated drug dispensing machines are appearing in medical office buildings; these buildings are often partly owned by the docs working there, and the machines’ owners are leasing space.
• similar machines – totally automated, handling dispensing, billing, and record keeping – are being leased to docs in California and other states.

So, what’s the work comp industry to do?

1. Ban physician dispensing, with tight language prohibiting physicians from profiting from or sharing in the revenues from dispensing.
2. Include clauses in network contracts prohibiting dispensing by physicians.
3. Refuse to pay for doc-dispensed medications unless evidence of clear medical necessity for immediate dispensing is provided. (I know, this is a thorny one, but it’s either that or continue to get screwed)

Over the last two weeks I’ve been talking with senior execs at many large and mid-sized work comp payers about claims management; their approach, focus, staffing, priorities, perspectives.

What’s been most enlightening was kind of subtle; it just sort of appeared after I reflected back on my notes from a couple dozen phone calls.

Sure I’ve learned a lot about different approaches, unique thinking, resources applied and the pluses and minuses of using internal staff versus vendors in various roles.  No one pretends to know it all, and many are very open to hearing opinions and views that conflict with theirs. Where there’s universal agreement, in fact the only place that exists, is the reason for what they do.

They all want the best care possible for the claimant, especially for those claimants that are grievously injured; burned, crushed, electrocuted, blinded; those with brain injuries and spinal cord damage and amputated limbs.  It’s all about getting the patient to the best possible facility as fast as possible, identifying and contacting the best possible physicians to oversee care, and making very sure the patient’s family is kept apprised and abreast.

At times there are problems, or screwups, or delays, and these execs are, to a person, angry and upset when their company somehow fails. They take responsibility, figure out what happened, and do their best to try to prevent a future mistake. They do this because they really care about what they do and take their commitment to their policyholders and their employees very, very seriously.

I am absolutely sure there are execs at work comp payers who don’t think this way, who see their job as a job, claimants as problems, and are not terribly concerned about the wellbeing of those claimants.

I am also very sure this latter group is a minority in the work comp industry.  One of the exec’s comments capsulized what others were saying in different words; “we want to send the patient to the same provider we’d want our kids to go to if they were in this situation.”

And they do.

What does this mean for you?

The work comp industry has a lot of warts, but there are also a lot of really good people who strive every day to do the right thing.

After several attempts to get the ProPublica and NPR reporters working the work comp beat to see both sides of a very complex “system”, better understand the drivers and dynamics, and correct their errors publicly, I’m giving up.

Clearly, they don’t want to hear anything that doesn’t agree with their superficial and clearly biased view of the work comp system, are quite willing to distort and misuse industry data to support their position, and have an agenda they are determined to promote, damn the facts.

The latest screed from PP continues what is by no measure “reporting”, but rather a bald-faced advocacy effort using anecdotes in an attempt to indict an entire system, to simplistically and cynically post pictures of terribly injured workers to get readers to blame the awful insurance companies, to distort and misuse data to promote their ideological position.

I’m going to elaborate on their misuse of NCCI and NAIC data to tout the high financial “returns” of the work comp system next week; for now I’ll focus on the employer direction issue.

In the original Demolition article, reporter Michael Grabell said:

In 37 states, workers can’t pick their own doctor or are restricted to a list provided by their employers. [italics added for emphasis]

That is categorically false.  I sent a detailed explanation of why and where this is false, provided the background documents from WCRI, and followed up.

Did he correct the original article?  No.

Did he update it and note the mistake?  No.

Did he admit his initial statement was wrong, even in a private message? No.

However, in his latest polemic, he states:

37 states now restrict injured workers’ ability to choose their own doctors. Green states [citing a graphic] allow employers and insurers to choose workers’ doctors, at least initially. Blue states restrict workers to doctors approved by their employer, state, or insurer [italics added for emphasis] or to those in their employers’ managed care plans.

This isn’t a minor oversight or wordsmithing; Grabell’s reporting has been an attempt to show how the work comp system is slanted in favor of employers, and his mischaracterization of WCRI reports clearly is intended to support his position.

There’s something more insidious here.  Grabell is attempting to show that somehow workers choosing their doctors is better, that those awful employers and insurers are just out to screw the worker.

In the vast majority of cases, that’s utter bullshit. (sorry, no other way to describe it). And if Grabell had actually wanted to get the story right, and not just promote his ideological position, he would have talked with employers who are doing everything they can to identify the best docs and get their injured workers to those docs.

In emails and conversations I pointed out to Grabell that the reason employers want control is to prevent injured workers from being harmed by profit-seeking physicians, and suggested he look into physician dispensing of opioids, especially in Florida; the Drobot case where hundreds of workers reportedly received horrible care; and other examples (Illinois prison guards) where profiteering physicians have gamed the system, harmed workers, and cost employers and taxpayers millions.

And I heard…crickets.

What does this mean for you?

This isn’t reporting, it is advocacy.

37 States Now Restrict Injured Worke Ability to Choose Their Doctor

It’s the middle of conference season, with WCRI behind us, CWCI coming Thursday, and RIMS on the horizon.

David Deitz MD PhD will be giving the keynote at CWCI, and it is one I am eagerly anticipating.  David’s a keen observer of the workers compensation space, one of the nation’s leading experts on work comp medical issues, and the perfect choice to provide much-needed clarity on medical cost drivers, evidence-based medicine and the application thereof.

It is also particularly timely as there’s been much discussion of issues surrounding the Independent Medical Review process, the provision (or lack thereof) of medical records, and related issues.

I’m thinking not so much about IMR specifically, but rather the larger question of why the IMR process was put in place, how it has worked or not to date, and what the real issues are. And, of course, how IMR should be modified – if at all.

Unfortunately, there has been a good bit of confusion surrounding IMRs, and the latest WorkCompCentral reporting provides a good example of how complex and multi-faceted this is.  After an initial report that apparently indicated thousands of medical records had not been received on a timely basis, subsequent reports have revealed that many of these missing records likely pertained to cases that are closed.

I’d note that the furor created by the initial report was, while predictable, also premature. As with many “incidents”, both within and outside workers’ compensation, a full understanding of the background, contributing factors, processes involved, and facts of the case often result in a very different view than the original reports seem to provide.

Right now I’m in an airport listening to a Congressional inquiry into the alleged incident involving Secret Service agents, alcohol, and barriers in front of the White House.  Our elected officials are pillorying the head of the Secret Service for not firing/disciplining the alleged offenders, and the Secret Service head continues to try to impress upon our representatives that he can’t do that unless and until the investigative process is completed.

Sorry to see there’s a predilection to rush to judgment in a lot of different settings…

Should be an interesting week in California.

What does this mean for you?

Always good to wait until all the relevant facts are provided before coming up with conclusions…