Category: Workers Comp

Feb
5

What we nerds love…

Posted by Joe Paduda on Tuesday, February 5th, 2013 | Comments

is research that helps us understand why things are the way they are.

And while we rarely get to make out with supermodels like the guy in the SuperBowl ad (word is it took 45 takes to get it “right” (good for him!!),

Bar Rafaeli and…

we do get pretty excited about great research.  Which makes today a pretty good day.  Two studies were released – one from Washington on back surgery outcomes and complications and the other from CWCI discussing the use and cost of compound medications in worker’s comp.

First, Gary Franklin MD and colleagues published a study in the February edition of Health Services Research on the safety of lumbar fusion, an all-too-common procedure in workers’ comp.  Here’s my non-clinical take on the key findings.

  1. Outcomes  – defined for this study as complications within 90 days of a fusion – for workers’ comp patients were not nearly as bad as I thought they’d be. Surprisingly, they were somewhat better than the average!
  2. However – and it’s a BIG “however”, that may be due in part to the Washington state fund (L&I)’s tough stance on authorizing fusions.  In turn, that was based on priori research that indicated fusions had generally poor outcomes.  So, L&I’s numbers for outcomes may have been better because they do a good job of winnowing out those claimants more likely to have poor outcomes.
Pretty cool, eh? Gotta love the power of the monopolistic carrier.
Well, here’s some not-so-cool news.
Eileen Auen, CEO of PMSI and Alex Swedlow and his colleagues at CWCI have co-authored a study examining the cost and trends associated with compound medications in California. (disclosure – both are friends and I was a reviewer of the draft report)
And the results are about as appealing as Ms Rafaeli’s ad-mate.
For the blissfully-unaware, compound medications are concoctions of various real and pseudo-medications fabricated by parties evidently more interested in sucking money out of employers and taxpayers than healing patients.  There is precious little evidence supporting the use of these medications for the kinds of conditions suffered by workers’ comp claimants; nonetheless they are inordinately popular among a subset of providers.
California instituted controls on the use of compound meds 1/1/2012, the thinking being these “controls”would reduce compounds in comp.
The good news is compounds dropped from 3.1 percent to 2 percent of scripts.
The bad news is while there were fewer compounds dispensed, the cost of each went up over 68 percent, so compounds’ share of drug costs increased from 11.6 percent to 12.6 percent.
That’s right – fewer compounds cost more money.
How’d that happen?
Well, compound prescribers and dispensers quickly figured out how to game the “controls” by adding more ingredients and more of each ingredient to each compound.  
There it is, another example of unintended consequences.
What does this mean for you?
Unscrupulous providers will quickly figure out how to game regulations/controls that are not well-developed and carefully considered. Better to do something right than to do it quickly.
Feb
1

Work comp hospital costs – what WCRI’s report says, and what it means

Posted by Joe Paduda on Friday, February 1st, 2013 | Comments

The good folk at WCRI have produced a very useful – and very timely – analysis of outpatient facility costs, cost drivers, regulatory mechanisms, and trends in 20 key states.  Timely because the upcoming changes to Medicare and Medicaid’s hospital reimbursement bode ill for workers’ comp, and doubly timely because payers are seeing significant increases in facility costs in many states.

There’s a lot to consider in the study, here’s what struck me.

  • States without fee schedules are way more costly than those states that have outpatient facility fee schedules based on a fixed amount (not percentage-of-charges) reimbursement methodology.
  • States with percentage-of-charges “fee schedules” are about as costly as states with no fee schedules at all.
  • Even states with fee schedules based on a fixed reimbursement can be problematic; Illinois is a great example as it has the highest costs of all 20 study states.
  • Changing or modifying fee schedules appears to drive changes in billing patterns, which are supposed to be based on actual services delivered.

What stands out most is the overall trend.  Costs went up over the study period, sometimes a lot, other times there was an initial decrease after a fee schedule change went into effect after which an upward trend resumed.  And while some methodologies seem to do a better job controlling cost inflation than others, all can be gamed.

Cap reimbursement on a per-procedure basis, and watch utilization go up.

Base reimbursement on a lower percentage-of-charges, and miraculously charges escalate dramatically.

But start with low costs, and those low costs will likely persist; the ten lowest cost states in 2006 were still in the bottom half in 2010.  Yes, some had moved a notch and others down, but no state moved more than two slots.

What does this mean for you?

Watch FS changes in your key states very carefully, but don’t hold out much hope that any big changes will dramatically impact costs over the long term.

 

Jan
30

Physician dispensers are getting desperate

Posted by Joe Paduda on Wednesday, January 30th, 2013 | Comments

Oh this is getting fun!

Earlier this week WorkCompCentral published a column ostensibly written by a physician attacking me for exposing the dangers, both physical and financial, inherent in physician dispensing of repackaged drugs.  I say ostensibly because the column reads like it was ghost-written by one of the industry’s shills, perhaps one of Ron Sachs’ interns. (Ron’s the guy physician dispensing company AHCS hired to call reporters to tell them they were suing me).

By the way, I LOVED the column.

It was an amazing combination of pronouncements from an arrogant-beyond-belief doctor, with a really nasty and personal attack on me, my motives, and my ethics.

Alas, it was so poorly done, with so many logical fallacies and nonsensical arguments based on nothing more than fact-free opinion that I can’t believe a real doctor actually wrote it.  After all, doctors are supposed to believe in science; you know, research, medical evidence, facts, logic supported by data – those kind of things.  Yet the column didn’t have any of those, instead it was a mishmash of unsupported claims based on “our experience”, and never directly addressed the key issues I raised in my piece, e.g. retail pharmacies have much more complete access to patient data, and docs who dispense don’t.

(btw, a Summit on Physician Dispensing will be held in Boston on February 25/26.  Sponsored by PMSI and Progressive Solutions, the Summit is free of charge and is held the day before WCRI’s annual conference – in the same hotel.  This is an invite-only event; there are a few slots open.  Email me at jpadudaAThealthstrategyassocDOTcom for details.

The ostensible author, one Dr Rafael Miguel, offered not a single shred of evidence to support his claims of better outcomes and enhanced quality of care. When not denigrating pharmacists, mischaracterizing my statements, and accusing me of profiting from defeating physician dispensers (more on that below), Dr Miguel/the intern hid the total lack of data supporting his claims behind the omnipotence of the god in the white coat, as if his title is proof enough and we non-physicians should meekly listen and obey.

You can tell the physician dispensing industry is in desperate straits when they use surrogates to question the motives of their opponents, fabricating reasons why anyone would dare interfere with their ability to suck money out of taxpayers and employers by charging outrageous amounts for the drugs they prescribe – and dispense – to workers’ comp claimants.

That’s known as “diversion”; when you can’t refute a critic, yell really loud about what a bad person they are.

Well, let’s look at Dr Miguel.

Dr Miguel is a dispensing physician using Rx Development Associates.  A quick check of their website reveals frequent mention of one of the key benefits of physician dispensing; additional revenue for the physician.  RxDA also touts how easy it is to sign up and use their system to generate big profits, “without interrupting or burdening staff members.”  That’s in direct conflict with Dr Miguel’s assertion that physicians “must recover the costs and time to provide this service to workers compensation patients.”

Let’s look at Dr Miguel’s scripts.  He’s dispensed fluoxetine, etodolac, omeprazole, and gabapentin, among other meds. One of those scripts, omeprazole, is commonly used for heartburn.  Omeprazole, also known as Prilosec, can be bought over the counter for about a buck a pill; Dr Miguel charged about $10  pill.  That’s not opinion or hyperbole, it’s fact.  Miguel charged about ten times more for the drug than it would have cost over the counter.

Dr Miguel/the intern contends docs can’t buy drugs for the same price retail pharmacies do, and that’s why they have to charge so much more.  Again, he offers no evidence of this.  In fact, if Dr Miguel had tried, he could have found repackaging companies clamoring to sell him drugs at very low prices.

Finally, allow me to address Dr Miguel/the intern’s questioning of my motives, and contention that my efforts to combat physician dispensing are “what can only be described as an attempt to fatten Mr. Padudas personal bottom line.”

  1. As I have noted many times, I am co-owner of CompPharma, an association of workers’ comp PBMs.  It makes no difference (financially) to me if  physician dispensing dies off, explodes, or just stumbles along. I don’t get a nickel more or less.
  2. My public battle with the industry and its advocates has cost me tens of thousands of dollars in legal fees not to mention hundreds of uncompensated hours.
  3. Yes, PBMs will benefit if physician dispensing ends, but I am not a PBM, nor do I own a PBM, nor do I get paid based in any way on their volume of business.
What Miguel/the intern can’t understand is some people just have principles, standards that they live by, ethics that require them to speak out when they see others doing wrong.
And physician dispensing of repackaged drugs is wrong.

 

 

Jan
29

Marketing is NOT sales or communications or…

Posted by Joe Paduda on Tuesday, January 29th, 2013 | Comments

The lack of effective, or even decent, marketing in the work comp services and insurance industry is all but universal.  It is also damaging – to the industry as well as to individual companies.  And it is dumb.

The value of a brand is well-documented;

A brand is build by marketing – which is NOT communications or proposal writing or trade shows or parties at trade shows or trinkets given to adjusters.

Marketing – BIG M MARKETING – is all of those and more.  It starts with defining the value you bring to a specific segment.  It requires a simple and clear statement of that value so that potential buyers understand how it relates to them, and that must resonate.  And it continues from there.

But the purpose of this post is not to provide a primer on marketing or branding, but rather to call attention to the dearth of effective marketing.  My sense is this happens because most leaders just don’t get marketing – they think it is soft, fluff, a waste, a nice-to-have, when in reality it is a have-to-have.  Companies have to stand for something, mean something, and that “something” isn’t what the leader THINKS it is, it is what the market thinks it is.

How do you know if you have effective marketing?  Obviously, or perhaps for some less than obviously, market research.  What do users/buyers/influencers think of your company ?  How do you know?  No, how do you REALLY know?

Objective and well-designed market research.

Allow me to close with an example of what effective marketing can do.

I give you Joe Paduda. (forgive the use of the third-person)

A consultant in the industry, known by a few folks eight years ago, mostly former co-workers and colleagues, Paduda is now quite well-known throughout the industry. He has keynoted the two largest conferences, is a sought-after speaker and expert, almost four thousand people subscribe to his blog, and many seek to curry favor with him, or avoid pissing him off.  His client list is extensive, he does not work cheap, and he regularly turns down projects.

The “Paduda brand” drives success.  Smart, insightful, opinionated, honest, fair, objective with deep understanding of the industry and strong strategic sense.  A tendency to be bleeding-edge (not politically, altho some would disagree, but rather too far in front of trends) and occasionally, and pretty publicly, wrong.

Marketing – via the blog (thank you Julie Ferguson!) and public relations (thank you Helen Knight!) is the driver of my success.

If I can do it, so can you.  All it requires is consistent commitment, a willingness to spend money, and a relentless focus on building and strengthening your brand.

What does this mean for you?

Success – or lack thereof.

Jan
24

A tale of two states – Idaho and Florida

Posted by Joe Paduda on Thursday, January 24th, 2013 | Comments

Yesterday came the welcome news that the good – and smart – folk in positions of authority in Idaho have drafted work comp regulations designed to prevent outrageous up-charging for physician-dispensed repackaged drugs.  Approved by both Legislative houses, the rules will shortly go into effect.  Idahoans are fortunate indeed to be in a state where they can proactively prevent a problem by implementing regulations, and don’t have to pass legislation to save taxpayers and employers dollars.

Oh, if that were only the case in Florida.  

Two bills have been introduced by allies of physician dispensers that purport to address the issue.  Both require physician dispensers to pay a $15 “rebate” to employers for each physician dispensed script they bill.  Why, you ask?

They say that physician dispensed drugs’ average bill is only $15 higher than the average retail pharmacy bill, so the $15 covers their higher costs.

They are, of course, lying.

First, physician dispensing companies get docs to dispense by telling them they can make another $50 grand (or more!!) a year giving drugs to work comp claimants.  You can’t make fifty grand if you only make $15 more per script – unless you dispense 3,333 scripts a year…

Second,  physician dispensers almost exclusively dispense generics, which are much cheaper – on a per script basis – than brand drugs. Retail chains sell brands and generics – brands cost over $200 per script. Thus, the claim that physician dispensed drugs only cost $15 more on average than retail is misleading and false on its face; in fact WCRI’s recent report on pharmacy in Florida notes: “physicians were paid 35-60 percent more than pharmacies for the same prescription.”

Of course, it is highly likely that the sponsors received thousands of dollars in contributions from those dispensers, who spent over $3 million in the last election cycle to ensure they could keep sucking money out of taxpayers’ and employers’ wallets to buy jets and fancy Italian sports cars – and generate fat profits to their investors – ABRY Partners being the most visible.

To our friends in Idaho; Yippee-Kai-Yay!

To those in Florida; Illegitimi non carborundum.

 

Jan
22

In workers’ comp, it’s the tail that’ll kill you

Posted by Joe Paduda on Tuesday, January 22nd, 2013 | Comments

More than 10% of workers comp medical costs are for claims more than 20 years old.

And that percentage may well increase.  That’s the finding from NCCI’s latest research, courtesy of Barry Lipton, John Robertson, and Dan Corro. There are a few striking findings well worth considering:

  • Diseases were the largest contributor to costs, followed by complications from medical care.
  • Drugs (38%), home health, implants/orthotics/prosthetics and other supplies make up 58% of costs compared to 16% of costs for claims less than 20 years after injury.  Notably, the authors predict that drug costs for today’s injuries 20 years out may well account for more than 50% of total spend.
  • About a quarter of drug costs were for opioids – drugs that are not indicated for musculoskeletal conditions.
There is a wealth of information in the report, information that should be carefully considered by any and all payers with a significant number of legacy claims.  And, those payers with claims that look like they may well be around in 20 years.
Here are my top four takeaways.
  1. How new claims are handled has a dramatic effect on where they are in 20 years. The vast majority of those claimants should probably NOT be on opioids; the fact that they are indicates a) they will likely never get off and b) the reason they are not closed is very likely because they are taking opioids.
  2. There are two very different types of home health/DME; the commodity-type for relatively young claims that need a cane crutch or wheelchair for a few days and the legacy claims that need a van, home mods, and nursing assistance forever. Huge implications that are NOT well understood by most vendors and buyers.
  3. Far too many claimants get far too much care in hospitals, when they may well be better served in a less-intensive inpatient facility.  Hospitals LOVE workers’ comp; it is very profitable and there are few controls on length of stay.  Payers would be well-served to figure out how to use less hospital care.
  4. Payers should also carefully examine medical records for patients suffering from complications due to medical care.  Poor medical care, lack of diligence on the part of treating providers, and flat-out malpractice are likely contributing to higher claim costs.
And kudos to NCCI for conducting this research.

 

Jan
17

Medical marijuana and workers’ comp. Seriously?

Posted by Joe Paduda on Thursday, January 17th, 2013 | Comments

I was chatting with Jennifer Wolf-Horesjh, Executive Director of IAIABC, this morning when the conversation turned to medical marijuana in workers comp.  I have no idea how we ended up there, but Jennifer is a great conversationalist and very well informed about everything work comp-related, so she’s on top of the issue (and pretty much everything else).

As luck would have it, IAIABC just completed a survey of states’ positions on work comp and medical marijuana.  A couple states have specifically banned the use of medical marijuana in worker’s comp treatment (Montana and Vermont), while others have administrative restrictions/requirements in place. Others allow it.  (Jennifer also told me about a recent court case wherein an insurer was required to pay for the marijuana growing equipment used by a claimant; if anyone has a record of that send it over and I’ll update the post. )

So, here’s the deal.  What logic would one use to approve the use of medical marijuana in workers’ comp?  There’s very little evidence that it is beneficial for most conditions for most people, although some anecdotal evidence that it works for a few. But just because a (very) few find relief from cannabis does not make it a viable medication – and one employers should be paying for – without careful scrutiny and ample evidence that it works for a specific claimant.

Alas, logic and workers’ comp aren’t often used in the same paragraph, so perhaps this is just another indication of how screwed up WC is.  As if we needed one.

There’s an excellent white paper on the topic from PBM myMatrixx as well as a webinar for your edification.  PMSI’s Jay Krueger has also authored a paper on the subject, and WorkCompInsider was an early reporter on the subject as well.  Oh, and in case you think you’ve heard it all, read Jon Coppelman’s piece on an idiot who a) got stoned and b) then went to feed bears in an animal park.

Jan
9

Predictions for the work comp world in 2013 – page three

Posted by Joe Paduda on Wednesday, January 9th, 2013 | Comments

Now that the easy ones are out of the way, let’s get into the final four predictions.

7.  We’ll learn that physician dispensing of repackaged drugs has harmed patients

When physicians dispense drugs, they don’t have access to the huge databases used by pharmacists to track patients’ meds and alert them to potentially dangerous drug-to-drug interactions.  Moreover, the work comp doc often is seeing the patient for the first time, doesn’t know what drugs they are taking, and the patient often misremembers as well.  This is a recipe for disaster.

This year we will learn of one (or likely more) patients harmed or killed as a result.

8.  The good folk at NCCI will finally schedule a credible liberal speaker for their annual meeting.

After a steady diet of Charles Krauthammers, Arthur Laffers, Peggy Noonans, and Scott Harringtons, it’s time for a little balance – and not a token a la Alan Colmes.  No, we need a  real liberal to shake things up.  How about Barney Frank? Jon Stewart? Rachel Maddow? Bill Moyers? James Carville? Donna Brazile?

Ok, I know it isn’t going to happen, but still, wouldn’t that be great? Alas, I’m afraid we’re going to hear yet another polemic about the evils of socialized medicine, wealth redistribution, and over-regulation…

9.  The level of interest and activity around opting out of workers’ comp will increase – significantly

Driven by growing frustration with the moribund, hide-bound, usually-dysfunctional “system” that is workers comp in most states, employers and legislators will push harder in more states for the ability to opt out of workers’ comp.  See Peter Rousmaniere’s excellent review of Texas’ approach for more on this, and kudos to Sedgwick for funding the project.

10.  Predictive modeling for claims management will come of age.

If there’s one over-hyped yet misunderstood topic in workers comp it’s predictive modeling.  I’m hoping 2013 sees a lot more precision and clarity in articles about, discussions of, and reports on predictive modeling. Less marketing blahblah and more specifics; way less hype generation and a lot more “this is what we did and this is what the results were and this is what we learned”.  There’s no question that effective and targeted statistical analysis can drive much better results; there’s also no question much of what we’ve seen to date shows the talk has not delivered the sought-after results.

However, as studies such as the one published by Dr Ed Bernacki and Jeffrey Austin White of Accident Fund show, there is good work – very good work – being done.  We just need more results; I expect we’ll see more this year…

We shall see what happens, what doesn’t, and what surprises the New Year brings. As it undoubtedly will. 

Jan
8

Predictions for 2013 – page two

Posted by Joe Paduda on Tuesday, January 8th, 2013 | Comments

Following yesterday’s post on predictions for workers’ comp in 2013, here are three more.

4.  Aetna will keep – and grow – their workers’ comp services business

With the acquisition of Coventry, Aetna consolidated its position as one of the largest health plans in the nation.  They also jumped into a leadership slot in the comp services industry, a business that is attractive to mother Aetna for several reasons. Despite opinions to the contrary, it is all but certain that Aetna will keep and seek to grow the Coventry workers comp business.  That will be welcome news for CEO David Young, who’s long been tasked with generating cash while being starved of resources.

5.  Physician dispensing of repackaged drugs – we’ll see higher prices in some states and much more physician dispensing in many. 

With their gravy train in Illinois and Michigan brought to a screeching halt by new regulations, the physician dispensing industry will drive up prices in those states where the practice is still allowed.  North Carolina, Florida and Maryland are among those states where payers should keep a VERY close watch on dispensing and billing patterns. When and where possible, use direction to steer away from those bad actors…

There are also some distressing reports that the big dispensing firms are looking to hire lobbyists in states that currently prohibit or significantly restrict the practice.  Be on the lookout for this in NY and TX.

6.   Several more states will adopt clinical guidelines to help determine appropriate/medically necessary care.

While this may seem like a no-brainer, the reality – as demonstrated by recent events – suggests it is anything but.  The adoption and effective use of evidence-based clinical guidelines is often subject to political grandstanding, parochial attitudes, and ignorant complaints about “cookbook medicine”.  That said, I’m hopeful we’ll see significant progress in New York, Illinois, California and other states.  The more that evidence-based medicine is the basis for assessing workers comp treatment, the better.

We’ll finish up tomorrow.

Jan
7

Predictions for the workers comp world in 2013

Posted by Joe Paduda on Monday, January 7th, 2013 | Comments

Here’s what I see happening in the world of workers’ comp and WC services in 2013… three today, three tomorrow and the last four Wednesday – unless other news intrudes.

1.  Vendor consolidation

There are two main drivers – the dramatic increase in private equity involvement in workers’ comp services and large payers seeking to internalize services to increase their top lines and bolster profits.  And we ain’t seen nothing yet.  Expect several of the larger players to join forces/be acquired/become “platform” companies that PE firms use to build large, diverse service providers.

2.  Higher medical costs driven by facilities

We have seen harbingers of the future in WCRI’s report on cost drivers in Indiana and other research.  Facilities – hospitals, health care systems, vertically-integrated delivery systems – whatever version or name you want to give them – are becoming an increasingly large, and increasingly expensive provider of medical services to work comp claimants.  According to the latest data, about a third of all physicians are employed by hospitals – and that data is a couple years old.  And, provider consolidation is accelerating – driven by PPACA and market forces as well as much higher Medicare reimbursement (procedures billed by hospitals get paid at higher rates than those billed by docs).

Most WC fee schedules are based on Medicare – or on some mechanism that is even more lucrative.  Thus, as health care systems acquire occ med practices, work comp payers are going to see the same procedure cost more – just because it is billed by a facility rather than a doc.  Providers will figure out work comp is a really profitable line of business.  When they do, they’re going to be upgrading their occ med departments and tying them much more closely to orthopedics, home care, PT, and related services.

3.  Continued ignorance of opioids’ impact on long-term costs and outcomes, coupled with inaction by most payers.

When insurers finally figure out how bad this problem is, they’re going to either go catatonic or their heads will explode. We will know that top execs really understand how bad this is when they get very focused on this issue internally and externally and very demanding of their staff, vendors, and regulators.  This will manifest itself through aggressive efforts to identify and address existing claimants – and not just attempt to prevent extended use of opioids by new claimants. To those who would argue this is already happening, I would respond “perhaps in some small ways at a relatively few payers and in a handful of states, but the response to date is all out of proportion given the size of the problem.”

Three more tomorrow…