If there's one area of work comp pharmacy management that's making payers crazy, it's physician dispensing (followed closely by compounding).

The number of physicians and clinics dispensing drugs is growing; as one state seeks to reel in abusive practices, the purveyors move to the next. I first examined the business four years ago and found 18 companies in the business; a recent search turned up over fifty (I stopped counting there). This despite California's belated move to rein in the practice that had, at one time, accounted for over half of the work comp drug costs in the 'Golden State' (an appelation likely invented by dispensing firms...)

The problem lies not in the actual practice, but in the opportunity for abuse - an opportunity that far too many 'entrepreneurs' have grabbed onto with both hands. (Details on this, and specifically the high cost of drugs in Florida, are provided below)

That's not to say all clinics and practices dispensing drugs are unethical - some bill appropriately, charging perhaps slightly more than usual but nothing outrageous. That's OK, as handing the patient their meds on the way out fo the office can help increase compliance and reduce patient hassles.

Unfortunately, those good actors are the exception rather than the rule. The Investigative Reporting staff here at Managed Care Matters recently uncovered some rather alarming information about one physician dispensing firm - Automated Healthcare Solutions.

Automated Healthcare Solutions, located in south Florida, has one of the slicker websites, full of platitudes about improving patient care, ensuring access, improving outcomes, reducing payers' administrative workload...

Sounds great. Before you sign up, you may want to do a quick check on the folks behind AHCS.

Let's start with Paul Zimmerman, M.D. 'practicing orthopedic surgeon' and CEO of AHCS.

Impressive bio - including claims that he was formerly Medical Director at "Liberty Mutual, The Home Depot, Pan American Airlines, Baxter Healthcare and Sears". Knowledgeable sources have informed me that Zimmerman was never a 'Medical Director' at Liberty Mutual. And there's no evidence he filled that role at the Home Depot either. I've asked AHCS to provide substantiation for Zimmerman's claims...no response yet...

There's much more to the Zimmerman bio, information that for some reason the good doctor hasn't included on the AHCS site.

We'll leave aside his rather modest rating on healthgrades, as the sample size is so small as to be unreliable.

There are two other issues that may provide insight into Dr Z's policies and practices.

Allegedly, some years ago Zimmerman decided to go into practice in South Florida. He was taken under the wing of the late Dr Richard Dolsey, one of the best occ med physicians I've ever come across. Dr Dolsey ran an excellent practice (Physicians' Health Centers in Miami), dealt ethically and honorably with patients and payers alike, and was widely respected in the physician community. In the course of their association, Zimmerman practiced at Dolsey's clinic, at least until he allegedly decided to open his own office. According to sources knowledgeable about the events, Zimmerman was accused of attempting to interfere in Dolsey's practice, specifically by taking patients, clients, and staff from Dolsey to help Dr Z's new practice hit the ground running.

Instead, Dr Dolsey found out about Dr Z's plans, and right about the time Zimmerman was about to execute his plan, confronted him. According to sources, the confrontation allegedly involved Zimmerman being escorted out of the office in restraints.

Dolsey subsequently sued Dr. Zimmerman and won his case.

More recently, Zimmerman's decided to become heavily involved in Florida's political scene, contributing heavily to GOP candidates and campaigns. Among the candidates Dr Z has supported is Charlie Crist, the ex-GOP and current independent candidate for Senate. In fact, the Zimmermans have maxed out their individual contributions to Crist - who happens to be the current governor.

The dollars didn't stop there - at a measly $9600. Zimmerman's company, AHCS, also plopped down a check for $100 grand on the desk of the Florida First Committee, Inc., a Florida PAC controlled by GOP veteran Bill McCollum.

Loyal readers may recall Crist vetoed a bill that would have tightly limited reimbursement for physician-dispensed drugs, a veto that came out of nowhere, surprising many who thought it was a done deal as it would have helped rein in costs in the Sunshine State, where drug costs are 38% higher than other states reviewed by WCRI.

Yep, Crist vetoed a bill that directly, materially, and significantly helped Zimmerman and AHCS. A bill that, had it become law, would have significantly hurt Zimmerman.

What's the net?

What do you think?

Florida's drug cost problem
Florida's drug costs were recently analyzed by WCRI, which reported:

"...the average payment per claim for prescription drugs in Florida's workers' compensation system was $565--38 percent higher than the median of the study states.

The main reason for the higher prescription costs in Florida was that some physicians wrote prescriptions and dispensed the prescribed medications directly to their patients. [emphasis added] When physicians dispensed prescription drugs, they often were paid much more than pharmacies for the same prescription.

The WCRI study, Prescription Benchmarks for Florida, found that some Florida physicians wrote prescriptions more often for certain drugs that were especially profitable. [emphasis added] For example, Carisoprodol (Soma®, a muscle relaxant) was prescribed for 11 percent of the Florida injured workers with prescriptions, compared to 2 to 4 percent in most other study states.

Financial incentives may help explain more frequent prescription of the drug, as the study suggested. The price per pill paid to Florida physician dispensers for Carisoprodol was 4 times higher than if the same prescription was filled at pharmacies in the state. [emphasis added]

The study reported that the average number of prescriptions per claim in Florida was 17 percent higher than in the median state. [emphasis added] Similar results can be seen in the average number of pills per claim.".

Posted by at 11:49 AM | Permalink | Comments (0)

Brief. To the point. Here.

that sums up Hank Stern's edition of Health Wonk Review - the best o' the blog-o-sphere.

Posted by at 9:37 AM | Permalink

There's been a lot going on in New York's work comp system; heated discussions over adoption of disability and medical treatment guidelines, an uproar over assessments for self insured groups, and ongoing actions and attempted actions regarding the pharmacy fee schedule have kept our attention focused on the Empire State for lo, these many months.

Now comes news that New York may be the first state to dramatically increase payment for cognitive services. I heard this from WorkCompCentral's Mike Whitely, who informed me that New York Work Comp Board Chair Bob Beloton is looking to raise reimbursement for physician evaluation and management codes by 30%.

Mike will have much more on this tomorrow (read WCC to see); I'll focus my comments on the whys and wherefores.

First off, this is a good move, for many reasons. Fees haven't been increased for 14 years in New York, making it high time for a raise.

Second, if there's one service that is waaay under-valued in work comp, it is the time the treating physician spends with the injured worker, discussing the injury and treatment options, providing insights into medical care under work comp, educating the worker and their family about return to work, and discussing same with the employer and insurer. A 30% increase is money well spent.

Third, this will hopefully draw the attention of other states, and get them thinking about the significance of cognitive services.

All that said, I do have a major concern - as should you. About half of the care delivered to work comp claimants in NY is thru a discounted network. These networks may well try to keep their current discount arrangement, as a higher fee schedule will mean they deliver more 'savings' and thus earn higher fees (they get paid on a percentage of the 'savings', or the delta beween the fee schedule and contracted reimbursement amount).

It will be too bad if this (possible) increase doesn't result in actual increases in reimbursement, and instead just makes networks more profitable.

What does this mean for you?

Good news.

Posted by at 12:41 PM | Permalink | Comments (0)

Summer is ending next week, and favorable tax treatment will sunset not much later. With the end of vacation season fast approaching, investors will likely step up the pace, while owners looking to maximize their take-home are motivated to get deals done before 2011.

Another big motivator is the large amount of cash sitting idle as private equity firms have been waiting for things to settle down before risking their investors' funds.

Here's what's happening.

ISG Holdings announced this am that they have finalized their purchase of Bunch and Associates. The deal took forever to close, but now that ISG owns the managed care vendor look for Bunch to dump their Ingenix relationship and move to Stratacare (part of ISG's holdings).

Part of Bunch's attraction for ISG was the potential to move their bill review from Ingenix to Stratacare, a move that will increase margins by a couple million bucks. This won't be easy nor smooth, as Bunch has built a lot of logic in and around the PowerTrak bill review system, logic that has helped Bunch sell their services to self-insured employers. There are going to be some pointed conversations down in Lakeland (Florida, Bunch's home) as the new owners look to maximize margins while customers, and customer advocates, look to proceed with caution.

Earlier this summer, Odyssey Investment Partners' One Call Medical acquired transportation and translation company STOPS, broadening its workers comp portfolio. From a synergy perspective, this makes sense as injured workers often need transportation to their MRI appointment; as the largest MRI network in work comp, OCM should be able to leverage the relationship quickly.

Injured Workers Pharmacy has been looking for a buyer for some time, and the book is still out. IWP got hammered when NY changed their work comp pharmacy regs a couple years back, and has since moved into other states where they try to get claimant attorneys to get their clients to buy drugs thru IWP. Payers report IWP's costs are much higher than the same, or essentially identical drugs purchased thru PBMs' retail networks, making IWP persona non grata in the payer community.

PT firm Align Networks was rumored to be considering a sale this fall, but reportedly has decided to hold off for now.

There are a few more possible deals in the works, but we'll have to wait and see what develops. I'd expect at least two more transactions in the space before the end of the year, perhaps more.

Posted by at 9:54 AM | Permalink | Comments (1)

That's the question North Dakota prosecutor Cynthia Feland should be asked by Judge Bruce Romanick if and when she appears in front of him to discuss Sandy Blunt's request for a new trial.

The tortured history of Feland's prosecution of former North Dakota state fund CEO Sandy Blunt is entering a new phase, as Feland will shortly have to respond to a State inquiry into her conduct during the trial, conduct which may well have included a failure to provide the defense with exculpatory evidence.

This isn't a routine or common issue, despite what Feland says. In fact, it is quite rare for a prosecutor to be the subject of this type of inquiry, and once it gets to this stage, it is highly likely Feland will face disciplinary action by the State Supreme Court.

That's one repercussion for Feland.

Another may be equally harsh. As anyone who's watched any legal show on TV knows, the prosector must give all its evidence to the defense. Otherwise the defense has no idea what it is being charged with. This is absolutely basic to the US legal system, a core principal that is fundamental to our system of justice.

Blunt's attorney has filed a request for a new trial or dismissal of Blunt's conviction on charges brought against him by Feland. As I've discussed here repeatedly, the fact that these charges led to a court case in and of itself is incredible; Blunt's felony conviction for authorizing gift cards, trinkets, and food for employee meetings and refusing to require a terminated worker to repay moving expense is beyond comprehension.

Nonetheless, that's what happened. So here's what's new.

According to the article in the Grand Forks Herald, "Prosecutors did not turn over copies of a Bureau of Criminal Investigation agent's interviews with four Workforce Safety and Insurance executives and a state auditor, Blunt attorney Mike Hoffman said in a court filing. Hoffman said he had requested copies of all law enforcement interviews in the case...

Prosecutors also said Blunt allowed a senior WSI executive, Dave Spencer, to keep almost $8,000 in moving expenses that he should have repaid, and to exhaust his sick leave when he was not ill, a benefit worth about $7,000.

Spencer's employment agreement said he would have to repay some of his moving expenses if he resigned within two years; he left WSI in September 2006 after working there for about 19 months.

Hoffman said a Bureau of Criminal Investigation interview with the auditor, Jason Wahl, that was not disclosed to him[emphasis added] quoted the auditor as saying Spencer's repayment of the money was a "nonissue" because Blunt forced Spencer out of his job. That would have undercut prosecutors' arguments that the money was an illegal benefit to Spencer, Hoffman said. (according to North Dakota state policy, "In the event of a voluntary resignation, you will be responsible to repay the relocation reimbursement according to the following schedule: Before 1 Year 100%, Between 1 and 2 Years 50%, After 2 Years 0%."; Spencer's termination was not voluntary, thus Wahl's memo proved there was no crime.)

Feland's argument that the prosecution file was open to Hoffman does not absolve prosecutors of their obligation to turn over relevant material to the defense, Hoffman contended.

"An 'open file' policy does not abrogate or dilute the requirement that prosecutors disclose evidence" that the defense requests, Hoffman said. [emphasis added]

Not even in North Dakota.

By the way, I asked Feland repeatedly if she had provided this information to Hoffman or Blunt; she never answered the question.

Now, she'll have to.

I can't wait.

Posted by at 10:12 AM | Permalink | Comments (0)

Yesterday I discussed the ongoing debate about potential changes to California's work comp fee schedule.

In case my position was too subtle, I've got grave reservations about using RBRVS (Medicare) as the basis for a work comp physician fee schedule. That said, it looks like RBRVS will replace the current methodology, but there's still a lot of tweaking to do before the move is finalized.

Today we'll dive into facility costs, which look to be rising rapidly in the Golden State, driven in part by a loophole in the regs that allow double billing for spinal implants, along with consolidation in the hospital market and the attendent market power. This power is allowing hospitals to get ever-higher pricing in their negotiations with work comp network providers, which, in turn, is reducing 'savings' delivered by those networks to payers.

Here's a quick review of the CA facility fee schedule and some of the nuances and effects thereof.

Inpatient

The Official Medical Fee Schedule (OMFS) for inpatient care is facility-specific, based on Medicare's MS-DRG methodology plus a 20% multiplier. Thus, WC pays about 20% more than Medicare for inpatient services. The idea behind MS-DRGs was sound - pay hospitals more accurately based on better coding of comorbidities and complications.

In reality, costs have escalated under MS-DRGs as hospitals have gotten better at coding, leading to payments almost 5% higher than projected under the previous DRG methodology.

According to a study published in July of last year by RAND, the spinal implant pass-through results in additional costs of at least $60 million to the system, and that estimate was based on Medicare's average payment for the devices. Anecdotally, it appears that many work comp payers are likely paying well above that level. Efforts are underway to address this issue, but in the meantime payers are paying much more than they should for these devices.

Additionally, it isn't too much of a leap to think that this over-payment may drive additional unnecessary utilization, as unscrupulous providers seek to maximize their revenues by performing as many procedures as possible.

Ambulatory surgery

This has been a bone of contention (sorry) for some time for WC payers in California. The regs actually peg reimbursement to hospital fees, at the same 120% of Medicare, resulting in reimbursement that many view as excessive. Quite excessive. Regulators are looking to revise the regs, and many expect reimbursement to decline as a result.

The revision process is happening as you read this; the latest proposal calls for adjusting the ambulatory surgical center fee schedule by reducing the multiplier for ambulatory surgical center facility fees to 100% of the Medicare outpatient fee schedule, plus a 2% reimbursement for high cost outlier cases. (here's the latest update.)

So, what's the net?

I'd argue, as many have, that the work comp facility fee schedule is too high. In some other states this wouldn't be too much of an issue, as most bills would be repriced to a network discount, negating the fee schedule problem (albeit not entirely).

Unfortunately for payers in California, hospitals' negotiating power has grown to the point where they can often dictate terms to large group health payers, who have much more bargaining power than work comp networks. In many instances, networks are negotiating deals with hospitals that are not much better than fee schedule

The result? Of late we're seeing payers' facility costs climb by double digits, with little relief in sight.

So what to do?

Rather than look for discounts, look at underlying costs. There are wide variations between and among facilities for the same services, and by comparing costs and outcomes, payers can identify facilities that, while they may not offer a 'discount' per se, offer a much lower price than a hospital that does promises a discount.

A good place to start is the Dartmouth Atlas where you can find cost and outcome data for specific hospitals.

Posted by at 6:53 AM | Permalink | Comments (0)

There's a lot going on in California's workers comp system - medical costs zooming up and driving premium increases along the way, narcotic usage skyrocketing, a dramatic increase in scripts for medical foods and compounds, judges upholding controversial decisions, and momentous decisions re changes to the fee schedule. Add the continued news about rising hospital costs, and you've got more than enough activity to keep anyone busy.

We can't cover all the issues here, so a summary will have to suffice - promise to dig deeper into a few later this week and into next.

First, the controversy over changing the workers comp fee schedule.

California does not currently use Medicare's RBRVS methodology as the basis for its non-facility fee schedule, making CA the only fee schedule state to not use RBRVS.(the other states that don't use UCR, and I'd argue they really don't have 'fee schedules' in the true sense of the term). The state has been considering moving from its current methodology the Official Medical Fee Schedule, or OMFS) to RBRVS for several years, with considerable progress over the last couple of months.

Most recently, public hearings were held in Sacramento with various stakeholders asked to respond to the latest revisions to the suggested fee schedule, revisions that added an additional $52 million in projected physician payments. I'll spare the details on the methodological discussions, which have to do with changing teh conversion factor, one of the components of the RBRVS pricing methodology. (workcompcentral.com posted on this August 18). The basic argument advanced by providers is, well, pretty basic - if you reduce reimbursement, there may well be an access problem as providers opt out of workers comp.

According to workcompcentral.com;

"Destie Overpeck, the DWC's chief counsel, said she was encouraged that most of the providers in the audience seemed to support the division's multiple conversion factor plan, or at least understood it was needed to smooth the transition to a new system.

Primary care physicians, occupational therapists and providers who bill under the "all other" category would generally see an increase in payments, Overpeck said. "They seem to be saying, 'Hey, we understand it's not as high as we want or would get with a single conversion factor, but if you lower the rate on surgeons too much they won't be there anymore," she said."

There is some evidence that lower work comp reimbursement does impact provider participation. When Florida increased reimbursement over a decade ago, anecdotal reports indicated more surgeons started accepting work comp patients. A pretty solid research effort (albeit one specific to neurologists) presented at the meeting showed a strong correlation between reimbursement rates (as a percentage of RBRVS) and provider participation rates; according to the study, "G{eneral] M[edical] fee levels provide the highest correlation (90.7%) with neurologist willingness to accept workers’' compensation patients."

The study also noted "a modified RBRVS medical fee schedule set at 156% of Medicare for EM fees and 121% for all other fees (an often-discussed plan) would result in a neurologist WC participation rate of 12.0%, third lowest in the U.S."
(A METHODOLOGY FOR PREDICTING PROVIDER PARTICIPATION IN WORKERS’' COMPENSATION MEDICAL FEE SCHEDULES
STEVEN E. LEVINE, M.D., PH.D. AND RONALD N. KENT, M.D.)

Perhaps the key point was best made by Kent Spafford, CEO of OneCall Medical, the leading work comp imaging company. Spafford noted: "The California Workers' Compensation Fee Schedule is designed to provide adequate compensation to providers, so they are willing to provide care to injured workers. It is not the vehicle to control costs. Any action relative to the fee schedule should be designed to induce current and future providers into the system and not disenfranchise the existing providers."

Recognizing OneCall's is keenly interested in the fee schedule as it bears directly on the company's ability to profitably operate in the state, Spafford's comments are nonetheless well worth consideration. Without reasonable access to care, disability durations may well increase, the quality of care decline, and system costs continue their current upward trend. Notably, access under the current OMFS is pretty good, with 90% of patients reporting 'good access to quality care'; the access problems that did occur weren't related to cost but to administrative hassles, language issues and UR delays. As access is good under the current system, one has to consider the possible benefits of reduced prices - for some providers and some services in light of possible decreased access.

Moreover, as I've discussed here on numerous occasions, price per service is but one of, and certainly not the most important, contributor to total cost. As we've seen with California's revised drug fee schedule, cutting price often doesn't reduce cost - in fact, total drug costs in CA went up - way up - after the fee schedule was slashed.

I'll draw a distinction between physicians and hospitals; as I'll discuss tomorrow, California's hospital costs are high and trending higher, with no likely end in sight.

California's Division of Workers Comp is working diligently to balance the cost:access equation. I'd suggest that a careful and thorough assessment of hospital costs may well indicate there are lots of dollars to be saved, dollars that won't compromise access.

Posted by at 7:35 AM | Permalink | Comments (1)

In the course of my consulting practice, I see a lot of work comp medical bill review 'savings' reports. Over the last fourteen years (since founding Health Strategy Associates in 1996) I've collected, reviewed, and analyzed scores of savings reports from pretty much every vendor in the business - as well as many of the larger TPAs and insurers.

There's some consistency in the business, but not near enough. That alone makes it hard to compare one vendor to another, much less benchmark one company's performance against the industry.

Leaving that aside, there are a number of issues with most reports, issues that clients/insureds/policyholders would do well to consider when evaluating performance or comparing potential vendors.

1. Does the savings report include reductions below state fee schedule (SFS) and/or Usual Customary and Reasonable (UCR)? Many vendors don't split out savings below SFS/UCR, instead lumping all reductions into one 'overall' category. This is either a) an oversight as any vendor should be willing and able to demonstrate their ability to reprice bills to comply with regulations, or b) a way to inflate savings so the naive buyer sees a bit percentage reduction and thinks the vendor's doing a crackerjack job.

2. Does the savings report clearly identify the source of UCR data? There are several vendors out there that provide these data, and knowing which is important in evaluating performance.

3. How are savings percentages calculated? Do they include savings for duplicate bills or duplicate line items (they shouldn't). Do they include all types of care, such as pharmacy and imaging? In many instances these services are outsourced to specialists, requiring the customer to combine results to get an overall figure.

4. For pharmacy, savings should be reported using AWP as the benchmark - if the vendor wants to include SFS, that's fine, but AWP (and make sure they define the source) is the universal standard.

5. How is network penetration calculated? Is the basis the number of bills or dollars? Dollars are preferred, but may skew the numbers higher than number of bills, as network penetration tends to be higher for facilities (which have higher average bill charges).

6. Over time, have you seen a decrease in fee schedule reductions and an increase in so-called 'nurse review' or 'bill audit' or 'professional review' savings? Hint - if these are billed separately, there's often an inherent motivation on the part of the vendor to lowball SFS reductions in favor of these 'other' reductions.

7. Semantics and definitions. Make sure there's a clear and complete understanding of each and every term, including such seemingly-obvious ones as 'bill' - can be a 'staple', a single page, a date of service, or 'up to x lines'.

What does this mean to you?

After all, you're the customer.

Posted by at 8:52 AM | Permalink | Comments (1)

It's hard to overstate the importance of the claims IT system in workers comp.

Systems directly, and materially, affect: productivity; compliance; claimant and policyholder satisfaction; medical costs; litigation rates, expenses, and outcomes; administrative expense (both unallocated and allocated); claims cost; employee retention and satisfaction; and ultimately growth, revenues, and profitability.

To date there hasn't been a comprehensive survey of claims systems providing insights and data on features, trends, user satisfaction, key attributes, cost, flexibility, connectivity, issues and problems.

That's about to change.

Next month Health Strategy Associates will conduct the First Annual Survey of Workers Comp Claims Systems, gathering input from all stakeholders including IT executives, claims executives, managers, and desk adjusters. The results of the survey will be available early in the fourth quarter, with an executive summary available at no cost to interested parties.

Management responses will be gathered in a structured telephonic interview format, while an online survey instrument will be used to gather responses from desk-level experts. Input from the two groups will be compared and contrasted, and we're betting there are areas where the folks 'on the front lines' see things a bit differently than the people 'in the management suite'.

Sandy Blunt, former COO of the Ohio state workers comp fund and former CEO of the North Dakota state fund, is running the project, and we couldn't have a better leader. Sandy's been intimately involved identifying requirements, selecting systems, comparing vendors, assessing performance, and designing workflows. His leadership will ensure the Survey is as practical as it is timely.

If you are interested in participating in the survey, send an email to Sandy at SBluntAThealthstrategyassocDOTcom.

Participants will receive a detailed version of the Survey Report.

We anticipate this will become an annual Survey, one of the series of Surveys conducted by Health Strategy Associates as we continue to help work comp payers, providers, and stakeholders make more informed decisions.

Posted by at 7:54 AM | Permalink | Comments (0)

Now that health reform is the law of the land, the focus has turned to implementing the law itself. As anyone knows, the real work, and the real impact, is in the details, the definitions, the requirements and operating guidelines.

And that's what this edition of HWR is all about.

Fundamentals
Let's begin this edition of HWR with a quick review of the fundamentals - starting with Tinker Ready's reminder that "All health care is local." Actually she's channelling Atul Gawande in her report on his talk at the National Quality Colloquium this week. Gawande's summary of why that's the case is a very helpful reminder as we contemplate implementing reform.

My contribution to this edition asks the rather uncomfortable question "Managing health care costs - whose job is it?" WIth health plan associations whining about the lack of cost controls in the reform bill, one has to ask - exactly what function do health plans perform? If they're asking the government to control costs, what is their purpose?

Friend and colleague Gary Anderberg is guest-posting over at Workers Comp Insider this biweek; Gary's post is similar to Tinker's in that his focuses on health insurance, and the services covered by insurance, are really 'risk management tools' to help maximize productivity. True True True, and a wonder more don't think the same way...

On the "Good News' front,"Congratulations If You Were Born Between 1952 and 1964" takes a look at the recently released report that shows health reform just extended the financial solvency of the Medicare Part A Trust Fund by 12 years. Brad Wright also stresses that we're not out of the woods with the cost problem--2029 isn't that far away--and we need to realize that this isn't a problem we can solve, as much as it's a tension that we have to figure out how to navigate.

In that vein, the always-insightful Jason Shafrin tells us the real story re the impact of reform on state budgets - not too good, but not too bad, either.

Reactions to reform
The opposition to reform continues to make its case; Anthony Wright documents the ongoing efforts by Anthem Blue Cross of California to stop California's health insurance exchange. Anthony opines Anthem's actions "should be a clarion call for California consumers about why we need to advance these bills, this year."

In a related post, Roy Poses digs deep into Wellpoint's rate increases, and finds out that the employee tasked with announcing the increases had serious concerns, concerns that may have led to her termination. As always, Roy finds the truth and does some of the best reporting in the blogosphere.

These last two stories are particularly important, because as Aaron Carroll warns us, insurance companies are very good at what they do. Which in this instance is risk selection. Talking in this case about Medicare HMO enrollment, Carroll elaborates:

"Somehow the private insurance HMOs figured out a way to get the healthy people to jump ship out of the another plan into theirs!

Not only that, but people who left the (private) HMOs and went back to the (public) Medicare used 180% more care after leaving than the people who stayed. Somehow the private insurance HMOs figured out a way to convince the sicker people to jump ship back to the public plans."

Jaan Sidorov notes that "the odds against prevailing against a Presidential veto are..questionable and the waste of political energy would be atrocious." But Jaan does think that the bill can be improved, and offers serious ways opponents should move.

The always -informed and -informing Maggie Mahar thinks the liberals/progressives who are hoping the anti-reform folks succeed (as it will usher in a single payer system) are basing their hopes on faulty assumptions, namely that Americans will like a Medicare-for-all plan. Maggie notes "A great many Americans have employer-based insurance that they like--particularly if they work for large companies. They don't want to give it up for an unknown government plan."

Maggie adds: "we're all lucky that large companies are covering so many people with benefits that are, on average, rich and comprehensive."

EHR, benefits, and babies
One of the keys to health reform is widespread adoption of Electronic Health Records; David Blumenthal and Dr Don Berwick (yes, the same Don Berwick who runs CMS) document the significant progress being made in that direction, emphasizing the new regs on 'meaningful use'. Anyone remotely involved in EHR should read their post...

But before we adopt those EHRs, make sure to shred the patient records - or suffer the consequences described by David Harlow.

Implementation is all about the details - and there are bazillions of them, all critically important to those directly impacted. Jay talks about maternity coverage, and the absence of clarity about same in Colorado - even though all plans are supposed to provide coverage as of 1/1/2011...

Ryan opines that health plans authorized by the Feds should cover birth control, but only because we own the consequences if we don't.

All carrot and no stick - Innovation in insurance - oxymoronic to some, just plan moronic to others (sorry, couldn't resist). Our old friend and colleage David Williams writes about the problems realizing the potential of Value-Based insurance Design, noting "in practice most VBID programs encourage the use of high value services but don't discourage the use of low value services."

Important in their own way
Kinda-but-not-really related is this piece from Adam Fein of DrugChannels, who broke the story about CMS's quest for a vendor to survey retail prices, payment, and utilization rates for pharmacy - as well as wholesale pricing. Could this lead to a substitute for AWP? Dare we hope?

Joanne Kenen reminds us why the ER is no place for palliative care, providing insights into what happens there - and more importantly - why.

John Goodman calls Medicaid "the most abusive health plan of all" in his post. Goodman bases his claim on states revising Medicaid enrollment and eligibility requirements, calling them 'rescissions'. Ed. note - the reason most of these folks lost their coverage is the states where they lived ran out of money to fund Medicaid. Tax increases would've solved that 'problem'...

Finally, over at InsureBlog, Mike Feehan says health plans should keep their reserves, no matter what Consumers' Union thinks.

Posted by at 6:59 AM | Permalink | Comments (2)

The good folks at CWCI just published a research report (The Cost and Utilization of Compound Drugs, Convenience Packs and Medical Foods in California WC) documenting the rise in spend on medical foods, repackaged drugs, and compound drugs from 2006 - 2009; the highlight is these categories accounted for almost 12% of drug spend in California in Q1 2009.

A couple of the findings that jumped out at me...

- the average amount paid per compound drug as $728 in Q1 2009.

- medical food reimbursement hit $233 per script that quarter

- a new category, 'co-packs' has emerged as a significant therapy; these are combinations of drugs with medical foods dispensed as a single unit.

The story of drug costs and attempts to address same in California is fascinating, with lessons aplenty for regulators and payers.

- A drastic reduction in the fee schedule was followed by explosive growth in repackaged drugs.

- Regulatory changes finally addressed that issue, but meanwhile the use of narcotic opioids increased six-fold, likely negatively impacting disability duration as well as increasing cost.

- New entrants into the therapeutic armamentarium, entrants that are foreign to many adjusters, case managers, and work comp execs alike, are growing in importance, requiring regulators and payers alike to understand their impact and develop policies for coverage and reimbursement.

The list of medical foods includes Theramine, Gabadone, Sentra, Apptrim, Trepadone, and others, with Theramine (pain) and Sentra (sleep aid) accounting for over half of the volume in California. Medical foods are pretty new to me; according to the Orphan Drug Act (1988 Amendment), a medical food is "a food which is formulated to be consumed or administered enterally (orally) under the supervision of a physician, and which is intended for specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation."

I'm no pharmacist or clinician, and am certainly not able to comment on the efficacy of medical foods or specific medications. For a primer on medical foods, click here.

There does appear to be evidence supporting the use of medical foods for treatment of pain, osteoarthritis, and other conditions, with one medical food, Limbrel, the subject of large, double-blind, placebo-controlled clinical studies in the United States and Japan. According to one source, "Limbrel administration has resulted in statistically significant improvement in all primary clinical endpoints (functional mobility, functional stiffness and functional joint discomfort)."

What does this mean for you?

If your P&T; Committee hasn't looked at medical foods yet, you may want to add it to the agenda for the next meeting. It is highly likely we're going to see more of these scripts, and far better to be ready than to have your adjusters making decisions completely unprepared.

Posted by at 6:36 AM | Permalink | Comments (0)

A new report documents the impact of the recession on the health care system, and for many Americans, the news is proof of what they know all too well - higher deductibles and copays are reducing their ability to access care.

The report [fee req] does not document whether the forgone care would have been necessary/appropriate/supported by evidence-based guidelines, and it is likely some of the forgone care was unnecessary. That said, it's only 'some', and it is highly likely Americans with slimmer benefits, or no benefits at all, are skipping visits, medications, therapies, and operations that will over the long term will have very serious implications.

According to a piece in the NYTimes, the researchers reported "We find strong evidence that the economic crisis -- manifested in job and wealth losses -- has led to reductions in the use of routine medical care." 26.5 percent of respondents reported reducing their use of routine medical care since the start of the global economic crisis in 2007.

The report adds more weight to the increasing evidence that the recession, coupled with the unique American health insurance system, has had a significant impact on Americans' ability to access care.

The importance of primary care in prevention is well documented; [opens pdf] timely use of primary care tends to reduce the need for interventional procedures such as CABG, thereby reducing cost and improving long term quality of life. Delaying or forgoing primary care will likely have the opposite effect, increasing future health care costs.

Impact on workers comp

Over the short term, this 'side effect' of the recession will likely increase work comp costs and extend disability duration, as more injured workers will have poor health status due to forgone care. If diabetics aren't controlling their blood sugar, asthma sufferers have more acute episodes, and hypertensives are taking their meds every other day, it is going to be more difficult, costly, and time-consuming to help these claimants recover functionality.

Over the long term, health reform will reduce work comp costs as many more individuals will have coverage. But until 2015 (or so), we won't see this positive influence.

Posted by at 7:12 AM | Permalink | Comments (2)

We're learning a lot from Massachusett's experiment in universal coverage - and some of the lessons are rather enlightening.

Take this one.

According to Bestwire, Lora Pellegrini, president of the Massachusetts Association of Health Plans, said something along the lines of "That's the problem with the new U.S. health care reform law... it offers millions of uninsured Americans access to health insurance but doesn't address underlying medical costs, which are contributing to costly premiums." [not a direct quote]

Wait.

If health plans rely on the government to help control costs, exactly what value do they deliver?

In fairness, Ms Pelligrini noted the market share of some provider groups is a significant factor in insurers' inability to negotiate favorable rates. There's no question negotiating power has shifted back towards providers, and that shift is contributing to higher costs for health plans.

Doesn't seem to be hurting profits, though; the industry is enjoying a stellar 17.4% return on equity after seven publicly traded health plans reported earnings above expectations.

Try as I might to sympathize with insurers, their complaints are besides the point.

Suppliers in any business seek to maximize profits. Smart buyers will figure out how to find more cost-effective suppliers, develop alternative supply chains, or in very tight supply markets even resort to vertical integration, setting up their own suppliers.

I see no reason health plans can't do the same. There's far too much 'old thinking' among health plans; they remain overly concerned with the size of their network directory, believing large provider networks are essential to success.

Clearly, nothing could be further from the case. Some health plans are beginning to experiment with smaller, more exclusive networks, and I have no doubt the lower costs will make them much more attractive than the 'old school' huge networks with high costs due to broad access. No, success will come to those payers who creatively figure out how to work closely with selected providers, establishing partnerships, paying fairly, sharing information, and providing feedback.

Otherwise they're just administrators, and not very efficient ones at that. If health plans are going to rely on the government to control costs, what, precisely, are health plans for?

Posted by at 6:39 AM | Permalink | Comments (1)

Mark Farrah and Associates' latest report indicates health plans enjoyed a nice bump in enrollment in Q1 2010 from the previous quarter, with the entire increase coming from ASO (large, administrative-services only plans that are sold to larger employers) business.

In fact, risk-based insurance plans (more commonly purchased by smaller employers) saw a significant decline in enrollment in Q1 of 0.6%, or 890,000 members. According to MFA's report, " WellPoint added 565,000 new ASO members in 1Q10, but lost 400,000 fully insured members. UnitedHealth saw gains in both segments."

What's happening here?

It's no surprise that the economy has hammered employers small and large, but smaller employers are more 'flexible' when it comes to benefit plans. They can choose to drop or add coverage much more quickly and with fewer repercussions than big firms. In fact, large employers almost never drop their coverage, while the percentage of smaller employers offering health insurance has been shrinking steadily for years.

The actual decrease in employer coverage (at least as it appears in MFA's highlights) is masked somewhat by increases in Medicare Advantage PFFS plans, which grew significantly for CIGNA; there's much of the Medicare PFFS story still to be written as Coventry completes its exit and other health plans work thru their respective strategies.

Year over year, Medicare Advantage plans have seen significant growth, with membership up by 600,000 members, despite a drop in the number of insurers offering MA options.

Meanwhile, medical trend numbers are looking better, contributing significantly to the jump in profits enjoyed by most of the major health plans. Contributing to the increase in 2009 was a drop in pharmacy expense, which was somewhat offset by a 1.2 point increase in the percentage of medical expense paid to hospitals.

Ok, so net it out.

That hard work is changing from a risk selection to care and cost management business.

Posted by at 8:53 AM | Permalink | Comments (2)

California's Senate will be considering AB 2779 today, a bill that would (among other things) require Prior Authorization of compound medications for work comp claimants. While there's no question compound meds are a big issue, the bill would do nothing to solve the Golden State's larger problem - out of control drug utilization.

(thanks to WorkCompCentral for the heads up)

Here's the issue.

The work comp drug fee schedule in California is pegged to Medi-Cal, resulting in the lowest reimbursement for drugs in the nation (with the possible exception of WA).

Pharmacy Benefit Managers (PBMs) operate on the difference between what they pay the pharmacy and what their customers pay them. In California, that delta is tiny, if not negative. If PBMs don't have any operating margin, they can't afford to allocate clinical resources to deal with prior auth requirements; they'll lose even more money in an effort to help their clients. That's neither appropriate nor good for the long term health of the comp business in California.

To those who claim the low fee schedule hasn't caused any problems, I'd suggest a thorough read of CWCI's excellent discussion of the explosive growth of narcotic opioids among comp claimants. Here's the brief takeaway - California slashed the work comp pharmacy fee schedule just about in half six years ago. Since that time, the number of scripts per claimant has increased 25% and costs per claimant are up 31% (CWCI stats). And that's not the worst of it. Schedule II narcotics have gone from less than one percent of scripts to almost six percent, a six-fold increase.

But what does that have to do with a bill designed to attack one of the emerging cost drivers - compound meds? Isn't the proverbial half a loaf better than no loaf at all?

No. While the bill enables payers to deny compound meds for medical necessity (a relatively easy call, as I don't know of any evidence-based guidelines that recommend compounded medications, PBMs simply can't afford to develop the workflows, do the research, hire the clinical staff, and manage and monitor the intake/referral to the adjuster/approval-denial/appeal processes. This is a lot of work, requires careful planning and implementation, and must include clinical staffing - nurses, pharmacists, and in some cases perhaps physicians.

We've seen the impact of the low fee schedule on total costs - they've gone up. What we haven't seen is the impact on injured workers - many more are now on narcotic opioids, with some undoubtedly suffering from all the complications linked to these potentially debilitating and addictive drugs.

AB 2779 piles more work on top of an already overburdened industry, while doing nothing to address the underlying problem.

A major step in the right direction would be for California to de-link the comp fee schedule from Medicaid. That would give PBMs the pricing stability they need to help their clients regain control over drug costs.

For a detailed discussion of Medicaid's suitability for work comp drug pricing, click here.

Posted by at 9:06 AM | Permalink | Comments (1)

In the almost six years I've been publishing MCM I've never strayed this far off topic. Except for the annual April Fool's day fun (consider yourself warned), this is all about stuff somehow related to managed care, health policy, insurance...

Try as I might, I just can't come up with a link here. Except for the very very distant possibility of a workers comp claim.

So here's what's got my attention.

Just a few minutes ago, a flight attendant, fed up with a &^@&*(?! of a passenger, ran to the exit door, pulled the emergency escape hatch, inflated the slide, and jumped out of the plane.

Yes, the plane was on time, and no, it hadn't been sitting on the tarmac broiling in the sun with backed up potties.

Fortunately, JetBlue 1052 was on the ground in New York [scroll to the bottom and read the comments; some are hilarious] when Steven Slater, the flight attendant in question, pulled the cord.

Wait, this gets better...

Turns out Mr Slater was reacting to a passenger who had jumped up just after the plane had landed, started to get his bag out (you've undoubtedly been on a plane with one of these jerks), refused to stop when Slater asked him to. In fact, the passenger's bag fell out of the overhead and smacked Slater on his head.

Slater didn't go nuts then - he actually asked the passenger for an apology. Instead of doing the right thing, the guy (ok, it might have been a woman, but we all know it wasn't) cussed Slater out. Whereupon Slater got on the PA, screamed a few choice words (reportedly "To the passenger who called me a m---f--er, f--- you!...I've been in the business 28 years. I've had it. That's it") over the squawk box, and exited the craft.

I kid you not.

Perhaps Mr Slater can claim work comp from an injury that discombobulated his sense of propriety...

Posted by at 4:22 PM | Permalink | Comments (4)

Just in case you thought the problems with abuse of powerful prescription drugs have been overstated, here's a wake-up call.

The CDC's Director is taking this very seriously, saying: "Overdose with prescription drugs is one of the most serious and fastest-growing problems in this country."

The problem is showing up in a doubling of Emergency Room admissions due to prescription drug abuse, driven primarily by oxycodone, methadone, and hydrocodone.

Narcotic use is rampant in workers compensation as well. Studies by NCCI and CWCI point to the frequent use of narcotic opioids for workers comp claimants, with the explosive growth in California particularly troubling.

One of the issues in comp is that unlike group, most Medicare Part D plans, and to a lesser extent Medicaid, claimant copays are nonexistent. There's no financial skin in the game, as medications are free.

Another potential contributor is the potential street value of these drugs; while there isn't conclusive documentation of the percentage of scripts that are diverted, the 'sense of the industry' is that diversion is not uncommon. Add to that the desire on the part of some states to reduce the work comp drug fee schedule to match Medicaid, and there's no surprise use is exploding (if PBMs can't afford to manage utilization, utilization isn't managed).

Here's what some of these drugs are reportedly worth on the street.

The estimated street value of one 40-milligram OxyContin pill is about $40; another report indicates an 80mg dose is going for $30 in the northeast.

Actiq runs about $25 a dose.

Duragesic patches range from $20-$75 depending on brand, location, and dosage.

So, narcotics are ripe for abuse, there's a big - and very profitable - secondary market for them, and use is growing. That's one side of the story.

The other is the inability of many legitimate pain sufferers to get adequate treatment.

Research published by Oregon State University indicates "at least 30 percent of patients with moderate chronic pain and over 50 percent of those with severe chronic pain fail to achieve adequate pain relief."

Some think the inability of those with chronic pain to get treatment thru standard channels is a big component of the overall narcotic diversion issue.

What does this mean for you?

Like so much else in health care, there are no clear problems or easy solutions. This is more evidence of the complexity of one small part of the challenge.

Posted by at 8:31 AM | Permalink | Comments (1)