I received an email from an individual who attended a “hearing” on a workers comp bill in Hawai’i. It’s compelling for two reasons – it clearly illustrates the comp system’s vulnerability to manipulation by those seeking ever-greater profits and ever-lesser oversight, and the weakness and inadequacy of employers’ and insurers’ efforts to prevent that manipulation.
Here’s the perspective of Charlie Donovan – and no, Mr Donovan is not an insurance guy; in fact he works for a group of physicians that serve workers comp claimants.
“I was bothered by the fact that one of the biggest supporters of the [IME] bill, and from my understanding one of the most active participants in fundraising for Senator [Josh] Green [orthopedic surgeon and drug dispensing physician], was not only given the chance to testify, but was called upon again to answer questions in front of the committee.
I was incensed that there were 2 orthopedic surgeons with over 50 years of combined experience treating patients, performing surgery, and conducting IMEs sitting 10 feet in front of Sen. Green who were not given the time of day.
And it seemed so blatantly unfair that an injured worker who had driven in “all the way from Waianae” was given a chance to testify, but that a neurologist with over 30 years of experience who flew in from Maui to give testimony was not afforded the chance to speak.
But when testimony was closed, I looked at my watch and saw that barely 40 minutes had expired since the hearing was gaveled to order. With easily 2 dozen more people anxiously waiting to have their opinions heard, it was over.
Epiphany!!! The entire hearing had been a charade. The members of the committees who graced us with their presence (all 6 of them) were not interested at all in being educated, or in hearing what the “public” had to say. Passage of that bill was a “done deal” before anyone walked into the room, and the hearing was nothing more than an inconvenience for the committee members.
I suppose that I was naïve for thinking that “public testimony” really mattered, that years of experience, statistical data, and the opinions of other professionals would trump fundraising donations. I suppose that somewhere down deep I knew that politics was a dirty business, and that “public service” was a catch-phrase of absolutely no significance. But part of me didn’t want to admit it, until it was rammed down my throat in the most transparent piece of kabuki I have ever seen.
So while facts comes before fundraising in the dictionary, I must now begrudgingly admit something that I probably already knew – that the order is obviously quite different in the world of politics.
Like wandering behind a horse and getting kicked, this is a lesson that will not have to be taught twice.”
What does this mean for you?
Insurers and employers better get real, and fast. You are going to get your heads handed to you if you don’t stop dissembling and focus on these issues.
Workers comp is a very, very soft target for profiteering physicians and the various businesses that have sprung up to suck money out of employers’ premium checks. They are organized, very well-funded, and aggressive.
Meanwhile, insurers and employers are sitting idly by while these bad actors use your dollars to buy political influence.

After posting last week on the politicization of the physician dispensing issue in Hawai’i, I heard from a number of stakeholders alarmed by that – and other issues.
Chris Brigham, MD, has been following what can only be described as an effort to eviscerate Hawaii’s workers comp system. He contributes these observations to MCM.
The Aloha State has been friendly to physician dispensing and to certain legislative officials, including Senator Clayton Hee, Chairman of the Senate Judiciary and Labor Committee, receiving funding from individuals and entities associated with physician dispensing companies [Hee’s contributors were identified in MCM last week; last week I referenced a physician dispensing cost control bill that would take steps to deal with this issue, however the bill is likely to end up in the Committee and die.]
Physician practices involved in physician dispensing lobbied very actively for another bill, a bill that would effectively thwart the independent medical evaluation process in Hawaii.
HB 466 was passed this week by the State’s Joint Committee on Judiciary and Labor and the Committee on Health (chaired by Senator Josh Green, MD, who has also been the recipient of fund raising by interests aligned with physician dispensing companies.) This bill would require independent medical evaluations (IMEs) to be performed upon mutual agreement of the injured employee and the employer. The attitude and behavior of the treating physician heavily influences the patient; if the treating physician feels threatened by the IME physician, it’s likely the treating doc will advise the patient to reject the evaluation. Thus, what this bill really means is the treating doctor and employer have to agree on an IME. If there is no agreement, the evaluation is assigned by the director to a doctor from a list of qualified physicians maintained by the state.
At the hearing, a physician who heads up a large practice involved in physician dispensing stated he would be pleased to provide names of physicians qualified to be on the “list”. Interestingly, documents reveal that certain physicians charge a fee of $3500 for an IME for one of their own patients and the resulting five page report. Curious how a doctor could perform an “independent” evaluation on his own patient…
This bill also limits IMEs to one per case, unless valid reasons exist with regard to treatment. How does this deal with various issues that occur during a life of a claim and to multiple problems? What is the rationale or need for this legislation? No studies have been performed to demonstrate a problem. Hawaii has been known for high quality IME reports and, according to data published in the AMA Guides Newsletter March / April 2010; Hawaii has the highest degree of accuracy in impairment ratings in the country.
How is this state going to deal with changes that are likely to dramatically increase costs and result in delayed case closure? This is particularly problematic given Hawaii’s state budget shortfall. This legislation appears to be responding to a non-existent problem, rather than addressing any issue of questionable care. If decision makers are rational, recognize the true issues, understand there is no money to pay for the proposed needless changes, and do not make decisions influenced by who sponsors their campaigns, there is still a slim opportunity for defeat. I’m not optimistic.
In terms of thwarting bad care, could it get worst for Hawaii? Yes.
The same parties are advocating passage of a bill to allow the Director to approve treatment plans without a hearing if they are disputed by the employer, a bill to permit the Director or claimant to reopen cases even years after they are resolved by settlement if a question arises concerning undue influence or the injured worker’s mental competence, and a bill to allow attorney’s fees to be awarded if a claim is prosecuted or defended without good cause. Attempts to bring evidence-based medicine to Hawaii have been thwarted.
What does this mean for you?
Beware of strategies by certain stakeholders who are attempting to alter the workers’ compensation system through legislation to be more “friendly” to them – even if it results in increased costs (human and financial).
Recognize that some of these stakeholders may well be seeking influence through contributions to key legislative decision makers; Money talks. Recognize despite its beauty, not all is perfect in Hawaii – it is a wonderful place to visit, however you probably would not want to have a business or be injured there.

Florida appears poised to restrict overcharging for physician dispensing of repackaged drugs to workers comp patients, so dispensing companies are looking for greener pastures.
One that looks promising indeed is Hawai’i, where physician dispensing exploded onto the scene last year, with several physician offices jumping into the business. And these docs didn’t start out slowly; no, they enthusiastically entered into this new opportunity to “improve patient care and increase compliance” by prescribing and dispensing drugs to large numbers of workers comp patients. It is unclear whether this desire to improve patient care and increase compliance led these physicians to dispense drugs to their Medicare and group health patients; hopefully some enterprising legislators or reporters in the Aloha State will find out.
Outside of the palm trees, sandy beaches, and salutary climate, there are some eerie parallels between Florida and Hawai’i, specifically the early and aggressive lobbying – and political contributions – of companies and individuals profiting from physician dispensing.
We’ll focus on one individual in particular – Sen. Clayton Hee, a Democrat. Sen Hee happens to be Senate Judiciary and Labor Committee Chairman. That would be the Committee where a bill intended to cap the costs of physician dispensed drugs was tabled (and effectively killed for that session).
Hee raised more money than any of his colleagues during the six-month filing period ended Dec. 31, raking in $68,800.
More than half ($38 grand +/-) came from individuals and entities affiliated with, related to, employed by, or clients of “physician dispensing technology company” Automated Healthcare Solutions.
You’ve got to admire AHCS’ bipartisanship; Hee is an avowedly liberal Democrat, while AHCS’ contributions in Florida have gone to very conservative Republicans.
The $38 grand is peanuts compared to the $3 million spent by AHCS et al in an effort to keep their Florida business alive and prospering.
The bill has been “carried over” to this year’s session, and is currently making progress through the various committees. Unfortunately, it will end up before Senator Hee’s committee, where, in all likelihood, it will die for lack of attention. You can track the bill’s progress – or lack thereof — here.
What does this mean for you?
Physician dispensing of repackaged drugs is coming to your state, or more likely, is already there. If Florida caps the cost, you can be assured physician dispensing in your state is about to increase – by a lot.

Word is the recent flurry of acquisitions and mergers in the work comp services industry isn’t likely to taper off any time soon.
Genex is reportedly up for sale, Injured Workers Pharmacy has seemingly been in play for months, a major managed care firm may be in play, and there is significant activity on the part of investment firms looking to buy into the PBM space.
This comes on the heels of MSC’s purchase of complex care firm Total Medical Solutions, York’s purchase of JI Companies, and the sale of Paradigm Services to an investment firm (one without much experience in workers comp), all taking place just last month, not to mention 2011, a very active year for work comp deals.
Among the likely acquirers are investment firms eager to jump into what looks like a business ripe for consolidation and automation, as well as current players seeking to add assets and services to their portfolio of companies/products/services. Expect ISG Holdings to be especially active; with Stratacare and Bunch already onboard they are positioned well to expand into related service lines.
The spate of activity may slow for a bit as sellers seek higher valuations than the current 7x EBITDA (+/-) that is around average these days, this typically happens as owners see other deals done, want to get in on the gravy train, and believe their company offspring is more valuable than others they’ve seen sold. But, with the threat of an increase to capital gains coming at the end of this year, there’s a big incentive for owners to cash out now and save big dollars in tax expense.
What does this mean for you?
Perhaps a bit of distraction, which may open up opportunities for vendors/service companies who can stay focused on their customers’ needs.