Category: Workers Comp

Mar
12

I was wrong.

Posted by Joe Paduda on Thursday, March 12th, 2015 | Comments

In my post last week related to ProPublica’s Demolition article, I said:

Informed sources indicated that reporters Michael Grabell of ProPublica and NPR’s Howard Berkes failed to contact WCRI before this week; a rather stunning oversight on the part of the reporters.

I was wrong, and I apologize for the error.  Turns out at least one of the reporters attended WCRI’s 2014 meeting, and they did email WCRI multiple times requesting various reports and research documents.  The error is mine and mine alone and is solely due to my misinterpretation of conversation with sources.

Speaking about ProPublica/NPR’s recent work comp reporting at last week’s WCRI conference, WCRI President and CEO Rick Victor PhD. noted it is very difficult to write a balanced article using anecdotes as the basis.

Dr Victor’s point assumes one is looking to write a balanced article.

While there are numerous examples of what I see as bias in the initial article, here’s one that makes the case. It pertains to choice of physician; the authors infer this is a “limitation of benefits.”  I disagree with that inference for multiple reasons, but let’s focus on this statement:

“In 37 states, workers can’t pick their own doctor or are restricted to a list provided by their employers.”

This sentence is factually inaccurate.

There are two reports from WCRI that speak to choice of physician; neither provides support for that statement.  It appears the authors added two different and distinct categories – states with employer initial choice, and states restricting employee choice – to arrive at the 37 number.

Considering the first category, states with employer initial choice, many states allow employees to change doctors via various mechanisms and without employer approval.  ID, ME, MI, NC, NM, UT, and VT are examples.

Re the second category, restrictions on employee choice are many and varied; certainly they aren’t limited to requiring the worker to pick from a “list provided by their employers.”

Some states allow employees to make one change on their own, others allow a judicial entity to authorize a change, others have different mechanisms.  In fact, there are only 15 states that allow the employer to “select [the initial treating] provider without limitation”; several of those allow the employee to change via various mechanisms.

I’d suggest that it would be just as inaccurate to say “35 states allow employees to choose their physician” as it was for the authors to write “In 37 states, workers can’t pick their own doctor or are restricted to a list provided by their employers.”

Put another way, it would be equally “accurate”.

I’m not splitting hairs here – this as an example of what I believe to be a bias that pervades this and other articles published to date.  There is much nuance and complexity in workers’ comp regulation, nuance that, if not supportive of the authors’ apparent bias, they apparently chose to ignore or misrepresent.

I don’t make this statement lightly. Grabell and Berkes are highly experienced, well-thought-of professional reporters.  I’m just a blogger, albeit one who happens to know a lot about work comp.

There’s an awful lot more to this, but you – and I – have work to do and don’t have time to fact-check every statement.

What does this mean for you?

If you see this differently, if you think I’m being unfair, if, as one subscriber said in an email they inadvertently sent me that I’m a “shill for the insurance industry”, I’d like to hear how and why I’m getting this wrong.

Mar
11

What happened while we were at WCRI wrap-up

Posted by Joe Paduda on Wednesday, March 11th, 2015 | Comments

Just digging out after WCRI; between built-up work and a desire to give you, dear reader, a break after filling your inbox late last week, MCM has been on a brief holiday.

We’re back!

While we were buried in all things work comp-related, the real world kept a-spinning. First up, what’s been going on with health reform, the costs thereof, and the impact on budgets.

A lot.  The most recent federal budget projections show a decline of around $300 billion in future costs for health insurance.

That’s huge.  Gigantic. Monumental.  Unprecedented.

In comparison, cutting NASA completely – $77 billion.  Ending Amtrak subsidies – $14 billion. Eliminating the deduction for all charitable giving? $214 billion.

There are two ways the federal government “pays” for health insurance – subsidies for folks insured via their employer; the portion of their “pay” isn’t taxed.  Second, the feds subsidize premiums for individuals buying insurance via the Exchanges on a sliding scale based to income. A more detailed discussion of the changes and impact thereof is here.

Note this does NOT include Medicare – although those projections are decreasing as well.

The latest budget estimate has Medicare costs over ten years coming in about $700 billion below 2010 projections.  

One of the reasons Medicare cost projections are declining – “Between January 2012 and December 2013 there have been 150,000 fewer readmissions among Medicare patients—an 8% decline.” – hat tip to the Economist, and don’t forget to credit PPACA!

As if that’s gonna happen…

From a couple weeks back  is this news that California’s docs aren’t likely to be overwhelmed with patients due to ACA.  This from California Healthline:

  • 13.04 additional emergency department visits per week by newly insured individuals; and
  • 1.16 additional primary care visits per week by newly insured individuals.

 Back to work comp…

Good piece by PRIUM CEO Michael Gavin in WorkCompWire on work comp drug formularies; my only suggested add would be to make sure formularies aren’t rigid.  Need to allow payers, and their PBMs, to okay and reject meds based on the claimant’s diagnosis, medical treatment, other drug regimen, and other clinical factors.

Medata has promoted long-time COO Tom Herndon to president.  Tom’s not only a black belt in all things bill review and IT, he’s also a good guy, knows ops inside and out, and casts a mean dry fly.  Congratulations to Tom and his colleagues at Medata.

Enjoy hump day!

Mar
6

The state of the States’ work comp systems

Posted by Joe Paduda on Friday, March 6th, 2015 | Comments

The variation in the cost to manage work comp clams varies wildly across states – from a low of less than $4000 in Wisconsin to more than twice that in Louisiana.

And, these costs are steadily increasing at annual rates betwen 4% and 11%.

Litigation is a big cost driver in several states, accounting for more than half of expenses in CA MN FL and LA.  WCRI’s Carol Telles described the factors contributing to those differences, noting bill review, networks, and other medical cost management efforts are a factor particularly in non-fee schedule states.  Other drivers are choice of medical provider and mandated medical management tools including UR and guidelines.

Telles contrasted Texas and New Jersey, states that have quite different approaches to medical managment and the regulation thereof.  Somewhat counter-intuitively, Texas is highly regulated, while NJ is most assuredly not. NJ has no fee schedule, treatment guidelines or UR, but does have employer direction and has allowed networks since 2011.

TX has required medical guidelines and UR, a drug formulary, and eliminated “informal” networks several years ago.  Networks are highly regulated and there is a medicare-based fee schedule.

To paraphrase Ms Telles, “Medical management may reduce costs, but there is a cost associated with that effort.”  She made that statement while discussing Texas – the data indicates medical management costs have stablized at 21% of medical costs per claim since 2011 (however medical costs per claim continue to increase).

Telles provided some excellent insights into litigation rates, costs, and drivers as well; factors contributing to expenses include:

  • complexity and length of dispute resolution process
  • process for obtaining and challenging medicl opinions on MMI
  • settlement usage

Notably, defense attorney expense was the largest single component in most states; however as plaintiff attorney fees are usually included in the indemnity fees we don’t know what the plaintiff attorney expenses were.

 

 

Mar
2

What Maryland SHOULD be studying

Posted by Joe Paduda on Monday, March 2nd, 2015 | Comments

Three weeks ago a group of stakeholders in Maryland decided physician dispensing wasn’t that bad [scroll down in link].

These stakeholders agreed to not do anything legislatively to address doc dispensing for another two years because their own analysis had indicated physician dispensing in MD was not changing.  Now, a lobbyist for physician dispensing “technology” firm Automated Healthcare Solutions has penned an opinion piece that can only be described as a hit job on WCRI, a highly respected research organization.

There are two related problems here.

  • It’s obvious the doc dispensers’ strategy is to try to discredit WCRI – no other reason to publish an editorial in a paper in a state that you’ve already won.
  • The stakeholders that signed the letter agreeing to forgo any legislation ignored research from Johns Hopkins University (located in Maryland) proving physician dispensing is associated with much worse patient outcomes.

I won’t dignify the lobbyist’s moronic prattling with a point-by-point rebuttal; WCRI already has in the measured, professional, and very precise way that is the hallmark of academic research. Suffice it to say that the lobbyist’s own writing shows he is even less knowledgeable about statistics, research standards, and data analytics than our Newfies are.

This guy calling out WCRI on statistical analysis is akin to me telling Blake Shelton he doesn’t know the music business.

Next, in a letter citing the Maryland Workers’ Compensation Commission, the stakeholders asserted “contrary to previous trends reported by the Workers’ Compensation Research Institute, Maryland claimants received a smaller proportion of prescription drugs dispensed directly from their physicians, as compared with prescriptions dispensed from pharmacies.”  After much review, my conclusion is this – there are differences in the methodologies used by the MWCC and WCRI – but those differences do NOT mean WCRI’s work is wrong.

First, the data collection process the stakeholders used to come up with their conclusion is not as rigorous as it could – and likely should – have been. For example, they asked multiple sources for data on physician dispensing, but failed to provide tight criteria or definitions for these sources to categorize the data. As a result, the findings are questionable because the sources may well have:

  • used different criteria to identify “physician dispensers”
  • used different definitions of “repackaged” drugs
  • differing ability to identify what entity dispensed a drug
  • differing ability to differentiate between physician-owned “pharmacies” and retail pharmacies
  • different definitions of “generic” and “branded” drugs

Second, the MWCC analysis used an entirely different methodology than WCRI, a methodology that, among other factors, included different time periods and a different set of claims.  It is NOT surprising that different data sets, different methodologies, different time lines yield different results.

On its own initiative, WCRI used the stakeholders’ methodology in an attempt to understand the discrepancy, with the following result:

When we replicate the data and methods used by the Commission on the data used in our Maryland draft study, we get 16.7 percent where the Commission reported that 15.7 percent of prescriptions were dispensed at physicians’ offices. Hence, when we use similar methods on different data sets, we get similar results.

Ignored in the lobbyist’s “editorial”, and by the stakeholders as well, is this:

In the last published WCRI study on this topic, Maryland was compared to 20 other larger than average states. We found that physician dispensing in Maryland was more frequent than in 17 of these 20 states—twice as common as in the median state, [emphasis added] and four times more frequent than in the neighboring state of Virginia. 

Rather than get into a “mine’s better than your’s” conversation, here’s what we know.

There’s no question Maryland has a very large physician dispensing problem – one that all the research indicates is likely driving worse outcomes for patients and higher costs for employers and taxpayers.  The really troubling thing here is the stakeholders know, or should have known outcomes may be significantly and adversely affected by doc-dispensed drugs, yet went along with the deal.

In conversations with stakeholders, I asked why they didn’t consider this, and got no answer.  When I pressed and asked if they were going to work with JHU’s researchers to look at outcomes, I was told they “may have to think about that.”

Think about…what?

I don’t think these stakeholders are bad people or ill-intentioned; they do have a lot on their collective plate.

I do think they have – for their own reasons, which may make sense to them – given up the fight against physician dispensing.

In so doing, they are missing out on an opportunity to help Maryland employers, taxpayers, and injured workers.

They are also empowering the dispensers in other states.

What does this mean for you?

All the research indicates physician dispensing increases disability duration, indemnity expense and medical costs.  THAT is what Maryland should study.

Note – in the interest of full disclosure, I am (as most of you already know) president of CompPharma LLC, a consortium of workers’ compensation PBMs. It’s also important for readers to know that it matters not one iota to me financially if physician dispensing increases or decreases.

It does matter to me personally as it is flat out wrong. It is bad policy that is damaging the many to enrich a very few.

Feb
26

The work comp PBM industry’s evolution continues

Posted by Joe Paduda on Thursday, February 26th, 2015 | Comments

The news that Catamaran has acquired PBM, bill review, and network company Healthcare Solutions is yet more evidence that the workers’ comp services market is mature and evolving.  Nowhere is this more evident than the WC PBM industry where there are now six major PBMs, down from ten just five years ago.

This is partly due to the change in definition of “major”; as industries consolidate the size of the companies increases as scale and buying power become critical to success.

As a colleague pointed out, this transaction doesn’t consolidate the industry per se…

Here are the key data points…

  • HCS’ purchase price is $405 million
  • at EBITDA of $35 million, the multiple is a very healthy 11.6x
  • the deal is expected to close in the second quarter
  • Catamaran’s revenues for 2014 were over $21 billion

The transaction transforms Catamaran, the fourth largest PBM serving the health, Medicare and Medicaid industries from a back office and network supplier to the workers’ comp PBM industry to a direct vendor. Things could get complicated, as WC PBMs Carlisle and myMatrixx use Catamaran’s back office and network services.

Sources indicate HCS’ management and staff will remain in place; good move as CEO Joe Boures has a very strong team that has delivered solid sales improvements, a robust and effective clinical program, and strong customer relationships.  As Catamaran doesn’t have these capabilities in-house, and HCS is growing in a mature industry, I’d expect minimal changes.

What does this mean?

Several takeaways.

  • multiples remain very strong – good news for anyone considering selling their company.  Considering it looks like this wasn’t an auction but rather a direct sale, this bodes well for anyone considering a transaction.
  • strong management drives value; after several years of spotty performance, a revamped management team has created a lot of value for HCS’ owners (full disclosure – I have a tiny equity stake left over from a previous role on HCS predecessor Cypress Care’s advisory board)
  • very happy for the Datelle family (founders of Cypress Care); Hank, Marc, and Lisa are all friends and it’s good to see them do well – again.

more to come…

Feb
19

The good ones

Posted by Joe Paduda on Thursday, February 19th, 2015 | Comments

There are plenty of bad actors in the workers’ compensation industry – there are also lots of people – many unrecognized – who do the right thing day in and day out.  Some do so behind the scenes, others are right out there in front.  In my 25+ years in the business I’ve met – and watched – many of these women and men, and come to respect and admire them for their tireless commitment to making the work comp world better.

A few weeks ago I posted about the passing of Anne Searcy, M.D., noting “Her passing reminds us all that there are many people striving every day to do the right thing for the right reasons.”

Dr Searcy and the many people who share her selfless dedication deserve our thanks, our appreciation, and certainly broader recognition for the work they do and the impact they make.  Fortunately there are efforts such as the Comp Laude Awards (thanks to Dave Depaolo and his colleagues at WorkCompCentral) and others that focus on the good folks in comp. These efforts deserve more attention as they remind us (me especially) to not lose track of the good.

Bruce Wood is one of those good people.  Responsible for workers’ comp at the American Insurance Association, Bruce is a behind-the-scenes guy who truly understands and wholeheartedly supports the purpose of workers comp – prevent injuries and take care of the workers who do get hurt on the job.  To say he is dedicated is to damn with faint praise; Bruce is passionate, professional, and effective; he really cares.  In the eight years I’ve had the honor of working with him, I’ve seen the respect industry leaders have for his ability to effect positive change quietly, without drama or fanfare.

Bruce brings together industry professionals with outside experts to share ideas and puzzle out solutions to issues as diverse as opioids and second injury funds, medical treatment innovation and employee classification, black lung disease and “opt-out” options.  Somehow he’s able to get a group of industry execs from very diverse companies to agree on policies that improve the system for injured workers, employers, and taxpayers.

Partially as a result of his yeoman work, AIA has added members, most recently Accident Fund Holdings, Inc.

By enabling the industry to speak with one voice supporting the right thing, Bruce is one of the good ones.  That’s not to say he’s perfect; Bruce’s political leanings are (as my lovely bride would say) diabolically opposite from mine…but I’m working on it!

What does this mean for you?

There’s hope for workers’ comp.

Feb
17

To understand, be at WCRI

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

The annual WCRI meeting is just a couple weeks away – if you haven’t signed up, you better do it now – here.

I caught up with Executive Director Dr. Rick Victor via email last week to get his take on key findings.  Understanding Rick doesn’t want to give too much away, here’s what attendees will hear..

MCM -There’s been a lot of recent research coming from WCRI; what has been the most surprising result that will be discussed at WCRI?

Rick Victor (RV) – An underappreciated, but likely very significant unintended consequence of the Affordable Care Act  is shifting cases from group health to workers’ compensation.

MCM – What is a key finding attendees will take away?

RV – Why surgery rates vary from state to state

MCM – Do you see any conventionally held wisdom that will be confirmed, or rejected, by research presented at WCRI?

RV – For states that do not have fee schedules, the decision to adopt one is a strategic decision from which there may be no going backwards

One of the most useful aspects of the WCRI Conference is there are few events where the audience is as sophisticated, diverse, and knowledgeable.  That’s why the conference is always sold out.

What does this mean for you?

Better be there…

Feb
5

The now-notorious 59 modifier

Posted by Joe Paduda on Thursday, February 5th, 2015 | Comments

I’m really puzzled about two things.

After 4500+ views of my post re the 59 modifier and its use/abuse, an energetic conversation on Mark Walls’ LinkedIn group on the topic, and a bunch of conversations with PT providers, what’s surprising is the:

  • apparent lack of concern amongst most PT providers about this, and
  • the lengths to which some are going to spin this as a “non-issue”

For the providers, it isn’t so much a lack of concern as misplaced anger.  Many of the  commenters and PTs I’ve spoken with are painting all managed care companies with the same broad brush, an approach that is as unfair and wrong-headed as characterizing all PTs as over-utilizers.  Do networks make money by connecting providers and payers? Yes.

Is this somehow “bad”? Of course not.  Aggregators work in every industry in this country – from insurance to hospital supplies to shoes to department stores to travel.

In work comp, there are networks that don’t alter provider treatment codes, and there are networks that do.  If you want to know if your network does, ask them.

Providers should be focusing on the impact of networks adding the 59 modifier to the treating providers’ bills.

Specifically;

  • are you, treating provider, getting paid fairly for this treatment that you allegedly didn’t bill correctly for?
  • your treatment records now reflect higher utilization for many patients; as networks are constantly evaluating and assessing provider performance, are you being judged fairly?

OK, on to the messaging.

There is an obtusely-worded document currently circulating that makes several rather stunning statements, including:

  • Treating providers correctly use the 59 modifier the vast majority of the time
  • 59 modifiers should be used on less than ten percent of PT bills
  • The network reviews the clinical documentation and adds the 59 modifier if appropriate

Given that some HSA clients have seen modifiers on more than 40 percent of their bills, it’s hard to see how a network could take the time to individually review clinical documentation on each and every bill, then make a determination that 40% of bills needed to be changed.

Especially when those treating providers bill correctly the vast majority of the time.

The coding experts I have spoken with all agree: no network should ever change a treating provider’s coding, which this document indicates the network actually is doing.  OK, perhaps the coding experts I spoke with don’t know what they’re talking about…

and perhaps your spouse is going to win “The Voice”.

We are left with the rather clear statement that less than 10% of provider bills should include the 59 modifier.

What does this mean to you?

If more than 20% of PT provider bills include the 59 modifier, somebody got some ‘splainin to do…

because your PT costs and “savings” may well be inflated.

Feb
3

Update on OneCall’s executive moves

Posted by Joe Paduda on Tuesday, February 3rd, 2015 | Comments

In a press release issued late yesterday, OneCall Care Management indicated the company had named Chris Watson as EVP Operations.  While the release doesn’t provide any clear indication if this position is superior to the current two “divisional” COOs, word is Watson will have overall responsibility for all operations.

A press release about Ms Lane’s new position noted that Bob Zeccardi will “continue in his role as CSMO (Chief Sales and Marketing Officer); I had written yesterday “Long-time sales boss and all-around good guy Bob Zeccardi has moved into a different role, partially replaced by Matt Dougherty, former eastern regional sales VP.”

Clearly, Bob remains as CSMO; my earlier characterization of a “new role” for Bob may well be in error.  Not trying to dissemble here, rather basing this on sources indicating sales will be aligned with the two operational “divisions” (my word, not theirs) with DME (labeled EDM for some reason by OCCM insiders) home health, dental and “doctor” in one division and PT, Imaging, and Transportation/Translation (T&T) in the other.

I asked OCCM’s PR folks for clarification and received copies of three press releases; one referenced above, one about Linda Lane’s new position as EVP Business Development, and one about their CIO (which I noted yesterday), followed by a statement to the effect that they wouldn’t comment on sales strategy and alignment as that is proprietary.

Be that as it may, if there have – or haven’t – been changes we’ll know pretty soon.

(Note only one of these releases is up on their site; the two dated yesterday aren’t up yet. Sometimes it takes a little time to get press releases posted to company websites.)

Hat tip to WorkCompCentral for the notice…

Jan
30

Fraud? Abuse? Ignorance?

Posted by Joe Paduda on Friday, January 30th, 2015 | Comments

I promise your eyes will NOT glaze over – but you need to know what’s going on in the arcane world of procedure coding. Why?

Because your PT costs may be $15-$19 per visit higher than they should be.  And the savings your vendor is touting might be even more inflated.

Here’s what’s going on – and remember, this is specific to PT.

It’s common for therapists to perform multiple procedures at the same time – on a single body part.  There’s a list of procedures that are commonly performed together, and unless the therapist adds a specific modifier to the procedure code, only one will be reimbursed.

Nationally accepted standards (under CMS’ National Correct Coding Initiative) allow the therapist to be reimbursed for only one of these procedures.  Sometimes it is appropriate for the PT to bill for multiple procedures – for example, if two procedures commonly done simultaneously are performed at separate and distinct times.

In this circumstance, the treating provider documents the reason for the variance in coding in the medical notes.  On the bill, the “59 modifier” is added to the end of the CPT code to indicate that the code should be paid.

Hang in there – almost done…btw there’s a good overview of the latest info on this courtesy of medical bill review company Equian here…

National average statistics (from two HSA customers I’ve been working with on this) indicate the 59 modifier should be on about 11%-15% of lines on PT bills.

Which brings me to the crux of the matter.  Some payers are seeing 59 modifiers on almost ALL BILLs.  After a lot of research, digging thru billing data, and back-and-forth with therapists and PT networks, it appears the 59 modifiers were NOT added by the therapist; they were added by a PT network company.

Further, there’s no explanation in the treatment notes for this billing practice; no evidence the affected procedures were actually performed at separate and distinct times; no indication the PT network company reviewed the treating provider’s notes prior to upcoding.  No documentation, no record, no history.

It appears that the intermediary was adding the 59 modifier as an automated system edit without reviewing the treatment notes. Without putting too fine a point on this, the systemic upcoding has resulted in higher costs for payers, along with significantly exaggerated savings as the bills show higher billed charges.

Perhaps there is a perfectly reasonable explanation for this, however I’ve not heard one to date.  And the coding experts I’ve spoken with can’t seem to come up with one either.

Let me be clear – this is specific to the use – appropriate, inappropriate, or questionable – of the 59 modifier, and only the 59 modifier. Ongoing research has not turned up other billing-related issues.

What does this mean for you?

You need to ask your billing folks to review their PT billing data to determine if:

  • You’ve been paying too much for PT

  • You have made decisions on PT vendors based on inaccurate information

  • Your employer clients have been billed for too much PT, and paid too much for managed care services.

How will you know if this is a problem?
Look at bills processed between 2009 and 2014 –

  • If more than 20 percent of lines on your PT bills have the 59 modifier, you MAY have a problem.
  • If more than 40 percent of the lines on your PT bills have this modifier, you DO have a problem.

What do you do if you think you’ve got a problem?

  • Ask your PT network/billing intermediary to explain, and require them to show why they are adding the modifier and how they are justifying doing this without reviewing the treating provider’s bills.

That will be a very interesting conversation…