Monday catch-up

Summer is in full swing, which means the A/C is running at full blast in Florida and Texas, while those of us in upstate NY are gloating…I know, you will be soon when we’re subzero and you’re at 70…

Things are supposed to slow down somewhat – they haven’t yet. Here’s what happened last week while I was working on a couple projects last week.

P&C results

The P&C industry is doing well – very well. For the second straight year it will show an underwriting profit, and the combined is still almost three points below 100. Rating agency Fitch thinks things will deteriorate somewhat as the cost of weather-related cats increases; that and lower investment performance (as the equity markets cool off) will lead to lower return on surplus as well.  Still and all, things are looking pretty good – for the P&C industry.  That said, P&C financials are not exactly good; historical return on equity is really low and the cyclical nature of the industry is legend.

Work comp

One of my favorite states, Montana, is suffering from dramatic increases in already-high workers comps cost, driven in large part by drugs; pharmaceutical costs account for 16 percent of total medical compared to 11 percent nationally. Their top drug, accounting for almost 15 percent of total spend – Oxycontin.  That is about twice what it is nationally.

One more time folks – Oxycontin has almost NO PLACE IN WORKERS’ COMP.

Hopefully the state’s new medical guidelines will help reduce this.  Kudos to State Medical Director for Carla Huitt MD for highlighting the issue.

There’s a news brief from NCCI re claim frequency - they report that it continued its decline last year, with indemnity claims dropping 2 percent.

The Coventry work comp auction is proceeding, albeit without many of the big private equity firms. I’ve heard they are concerned about:

  • the PPO network, specifically Aetna’s unwillingness to help re-contract providers. As this is the crown jewel, the lack of a fail-safe strategy to preserve the network greatly reduces the deal’s appeal.
  • the lack of tech and other support for BR 4.0, the bill review platform.  With the layoff of much of the application support staff and chronic under-funding for BR 4.0, the new owners need to either private label someone else’s app or get out of bill review altogether.  Not good.
  • the mediocre-at-best-performance of the other businesses (case management, UR, PBM, etc)
  • the need to recruit a “name” exec to lead the company (nothing against current management, they’ve been handed an impossible task by mother Aetna)

I’d expect Apax/One Call to be the winning bidder – if there is one.  If that happens, the mega-humongous OCCM/Apax will have even more market power.  Methinks payers are going to be most worried about that.

Joe Boures has been promoted to CEO at Healthcare Solutions, replacing David George who stays on as Board Chair.  Under George, predecessor company Cypress Care acquired Procura to become Healthcare Solutions, then added PBM ScripNet and PBM/DME/HHC provider Modern Medical, making HCS one of only two companies to offer a full range of work comp managed care services. Joe is a friend and good man whose steady, thoughtful style will serve the company and its customers well. [disclosure - I have a very small equity position in HCS]

Also just heard that Acrometis has landed a new customer – MacRisk.

Implementing PPACA

For the states that opted out of expanding Medicaid, the proverbial chickens are headed home to roost – and they’re dropping loads of red ink on hospitals in the process.  That’s the news from Fitch,

Fitch has downgraded 10 entities [hospitals and health systems]. Of those, five are in states that have not participated in expanded Medicaid coverage. Several of those downgrades were driven by operating performance declines related to funding and reimbursement pressures, which may have been lessened by Medicaid expansion. Conversely, of the nine upgrades since Jan. 1, eight were hospitals in states that have expanded Medicaid. [emphasis added]

From Jonathan Cohn comes the news that states that decided to expand Medicaid have seen insurance coverage increase almost three times more than states that have foregone expansion.  As folks in these states are healthier to start with, the health disparity between the states will – depressingly – increase.

I’m really confused by House Speaker John Boehner’s decision to sue President Obama over alleged abuse of executive power; after all the caterwauling about immigration, Guantanamo, the border, drone strikes, recess appointments, and the Bowe Bergdahl trade, the best he can come up with is the delay in the employer mandate...

It doesn’t make sense.  Politically, there’s increasing evidence that voters are feeling better and better about PPACA, torpedoing what had been THE key talking point for GOP candidates this fall.  GOP senators and congresspeople have all but abandoned “Obamacare” as a talking point.  Bringing more attention to an issue that may redound to their opponents’ benefit is puzzling at best.

As evidence, I give you the news that political ads slamming “Obamacare” may well have resulted in higher enrollment in “blue” states.

Back to work now!

 

 

The contentious and misunderstood world of drug testing

Any time you have to mention urine in a blog post you know it’s going to be a tough one.

There’s a kerfuffle in the world of urine drug testing, one of the more litigious and contentious industries I’ve ever encountered.  The parties involved, Ameritox and Millennium Labs, have been involved in litigation for some time now.  [full disclosure, Millennium has been a consulting client for a couple of years; I work closely with them, and have found them to be great people who do the right thing consistently.]

A while back, Ameritox lost a suit brought by Millennium over alleged deceptive advertising; more recently a jury ruled Millennium had improperly given cups to docs in four states, a practice the jury deemed an unfair trade practice. Ameritox trumpeted their “win”, however the jury’s finding was inconsistent with the opinion of several experts in the area, all other charges were dropped, and the case is on appeal.  And there was a serious legal question raised when one of the key witnesses allegedly provided information that perhaps they had no right to.

Be that as it may, the case was noted by friend and colleague David DePaolo, who opined: 

While medical guidelines recommend drug testing for compliance purposes and to help ensure that drugs aren’t being diverted to the black market, we know those are specific case recommendations particular to a certain set of medical facts, not to be applied universally.

But the way medical suppliers stimulate sales with physician gifting and revenue enhancement programs tests the ethical and moral qualities of the individuals on the front lines, and physicians should not be placed in those positions, and we should not be placed into positions of having to pay for it.

Sometimes drug testing is warranted. Most of the time it is not.

A couple comments.

First, research from various organizations including WCRI clearly indicates there’s far too much testing going on of a small population, and far too little of most.  About a quarter of folks who should be tested are, while some unscrupulous docs test every patient every time, making bank.  I respectfully disagree with David’s statement that “most of the time” drug testing isn’t warranted.

Second,

What is correct is to say many more patients taking opioids should be tested, and that testing should comply with accepted evidence-based clinical guidelines; Washington State, Colorado, ACOEM, and others are all excellent sources.

Opioid abuse, misuse, diversion, and related problems have long surpassed crisis status – we’re now in a national disaster with more people dying from this than motor vehicle accidents.  Drug testing is a critical part of the answer.  Yes, there are vehement disagreements among stakeholders, and yes, they can get very contentious, and yes, I have a dog in this fight.  That said, I – and many others – have been working long and hard to bring attention to the opioid disaster, and we need to keep the focus on addressing the problem and not get distracted by tangential issues.

On that all parties should agree.

What doe this mean for you?

There’s a real danger that we over-react, over-simplify this issue, and in so doing make blanket statements that do more harm than good.

 

 

 

Latest changes in the work comp PBM world

Helios is the new name for PMSI/Progressive.  The idea is to have a single name for the two different firms, both of which had positive brand images in the work comp world.  In talking to the marketing folk, their take was that while both brands had strong equity neither legacy name would work for the combined entity.

It seems a shame to end PMSI’s decades-long run, especially after Eileen Auen, Jay Krueger, and their excellent colleagues rescued the PBM from what seemed like a sure path to oblivion.  Instead of watching over the demise, they turned it into one of the top players in the business.  That said, Progressive had a well-earned and well-deserved reputation as a VERY customer-focused PBM; beginning under founder Dave Bianconi (one of the best people in the business…ever). If anything that focus has grown under the current Auen-Young-Sisson triumvirate; customers are (with rare exceptions) universally pleased.

So, Helios it is.

That will be a d/b/a; due to legal, regulatory, compliance matters I would not expect to see the Helios name show up on provider contracts and other legal stuff as that may well trigger all kinds of re-filing and jumping-through-legal-hoops.  But what we’ll very likely see is a big re-branding push, with lots of PR, a new logo, and a splash in Florida next month and Vegas in the fall.

Meanwhile, Aetna’s much-discussed sale of its workers’ comp sub (I know, I owe a bunch of folks on my mis-call on this one) hasn’t been finalized – as far as I know.  In conversations with several potential financial buyers, Coventry WorkComp’s declining revenues and earnings, coupled with the problems inherent in re-contracting a provider network without mother Aetna’s market clout and concern over PBM First Script’s strong ties to network Express Scripts makes for a “sub-optimal-go-forward-scenario.

Yup, that’s a direct quote. I think it means the potential investor doesn’t think they can pay what Aetna wants and get a decent return on that investment.

Undoubtedly, someone else will come up with a different scenario; whether it’s enough is to-be-seen.

Side note - long time First Script exec Brain Carpenter has joined Healthcare Solutions as their top clinical pharmacist.  HCS has been dramatically increasing the number and expertise of their pharmacist corps and the addition of Brian is a big plus. Brian will report toy EVP Jim Andrews; kudos to Jim (who I am fortunate to consider a good friend) for successfully building HCS’ clinical programs.

What does this mean for you?

Stability at one PBM…

 

Up? Down? Sideways? What’s up with health care costs?

There’s been a good deal of confusion over health care cost trends for the first half of this year.  Initial reports indicated they were up dramatically; more recent intel paints a very different story.

So what’s the deal?

First, let’s not confuse “costs” with “insurance premiums”.  Unfortunately, many mass media outlets don’t understand that insurance premiums are not costs…which certainly contributes to the confusion. Overall, premium increases for large employers have been trending generally downward for years, with 2014′s 4.4% rise just a touch over 2013′s record-low 4.1% increase. A big part of that is from increased deductibles and employee cost-sharing; today employees pay over a third of the cost of their insurance, a big change from way back in the day when many employers covered the entire cost (yep, I’m old).

Second, let’s not confuse “price” with “cost”, as this report does.

Recall cost is the price per service times the volume of services – so the price matters, as does the utilization of health care.

Fortunately, some sources – the PWC annual report being one of the better ones, don’t conflate or confuse.  Their latest estimate is health care costs will go up 6.5% this year, while premiums will only rise 4.5%.

That makes sense – more coverage means more utilization especially among folks who just got insurance.  Early indications are the recently uninsured are less healthy than the general population, a finding that should surprise no one.  Many may have long-term but relatively low-severity chronic conditions, while some undoubtedly could not get or afford coverage.  These newly-insureds will seek care for their long-term conditions, and that care will be pretty expensive. Think of this as a one-time big bump in cost due to pent-up demand; I would not be surprised to see spikes in cost for surgery, orthopedics, cardiology, pulmonology, rheumatology, and other areas with high chronicity over the next couple of years, followed by a reduced inflation rate.

What does this mean for you?

Don’t get too wrapped up in any forecasts or reports of recent cost trends; wait a year before putting much stock in inflation rates and you’ll find you have a lot less back=tracking to do. 

 

 

 

Is PPACA – the Affordable Care Act – working?

That depends on how you define success.

Are more people covered?  Is health insurance more affordable? Are patients “protected”?

In general, the data says yes.

From Jonathan Cohn, a summary of PPACA’s impact on coverage:

the proportion of working-aged adults without insurance dropped from 20 percent in the late summer of 2013 to 15 percent in the late spring of 2014...there are still a lot of Americans walking around without health insurance today. But there are about 9.5 million fewer of them than there were last fall… [emphasis added]

re Affordability, among those who enrolled in a PPACA-compliant plan, about half saw premiums increase – with the other half seeing a reduction.  Notably, the self-reported health status of enrollees was generally lower than the overall population.  This isn’t surprising; many likely couldn’t get coverage due to pre-existing conditions before PPACA.

Of course, many got subsidized insurance, which significantly reduced their premium cost.  Some may say this is a problem; I’d suggest that one can’t fairly evaluate PPACA on individuals’ ability to afford health insurance without accepting the need for and role of subsidies.  Which, btw, are paid for by various fees and taxes on health plans, devices, tanning beds, and rich benefit plans and reductions in reimbursement for Medicare.

The patient protection piece is harder to assess; the elimination of medical underwriting, requirement that plans cover kids to age 26, mandated enrollment, subsidies for small employers, and enforcement of actions against health plans who try to finagle their way to excluding certain groups (AIDS patients, for one), are all helpful.  However, given that health insurers have always made their money by not insuring those who might have claims, this will be a long, difficult, and up-and-down struggle.

Old ways don’t change without a lot of continued, intense, focused pressure.

What does this mean for you?

PPACA is here to stay. It is pretty far from perfect, but it’s better than the alternative.

Compound medications – a killer scam

Compound drug use is exploding – so much so that Texas has changed their employee benefits program to limit reimbursement to $300.  They didn’t have much choice, as the Texas Employees’ Retirement System’s compound drug costs have gone up 4,600% over five years.

That was not a typo.

They’re now requiring prior auth and ONLY covering FDA approved drugs.

The only thing that may potentially slow down the growth is bad news – and that was delivered in spades last week with the news that a coroner’s report found the infant died after ingesting a topical pain cream.  After sustaining injuries at work, the baby’s mother, Priscilla Lujan, applied some of the cream to her knee and back, made a baby bottle, and some of the substance got on the nipple.  The story was broken by Karen Foshay of KPCC; Foshay reported the cream contained the

“antidepressant amitriptyline, the pain reliever tramadol and the cough suppressant dextromethorphan…

Workers’ compensation records show Jarminski’s office billed $1,700 for the initial 25-day supply of the cream. That is much more than the prices of various mass-produced medications, asserted McCann.

Jarminski [the mother's physician] was informed the cream was linked to Lujan’s son’s death but, according to McCann, that didn’t stop the doctor from sending more creams.

“Priscilla had expressed she didn’t want to see that cream anymore or use it anymore,” McCann said. “Despite that they continued to send her more creams by mail and bill workers’ comp for it.”

McCann said at least two to four more tubes of cream were sent to Lujan after her son’s death. It’s unclear how much Jarminski billed in workers’ compensation claims for those additional tubes.

As horrible as this is, this baby’s death may protect others from this deadly scam. The press is all over this, medical malpractice insurers are undoubtedly quite concerned, and law enforcement is getting more engaged.

While one would hope the mother’s doctor prescribed this medication solely for health reasons, the prescribing physician was one of those indicted in the California compound drug case.

Of course, the compounders have hired a PR firm to try to convince us with BS that which they can’t validate with science – and even started an astroturf group to “fight for patients rights”.  Like the right to have tubes of deadly cream lying around…

UPDATE From a colleague’s email -

One strategy that seems to work well in Texas is to approach every compound as Experimental and Investigational and require prior authorization for ALL. The Texas WC UR rules appear to allow for that approach since essentially none of the compounds has gone through specific FDA approval. Without high quality (or essentially any) studies to support their use compounds can only be viewed as E&I in Texas.

At least one large carrier I know of is approaching compounds this way in Texas and other jurisdictions.

For those interested in the current state of research into compounds and workers’ comp, CompPharma’s research paper can be downloaded here.

What does this mean for you?

DO NOT approve compounds without proof of medical necessity and safety.

Stop reading this

do your real work, and get out early to enjoy the holiday.

Not to worry, we’ll be carefully monitoring all things relevant to workers comp, medical management, and health policy while you’re doing the family thing, soaking up Vitamin D, and avoiding Hurricane Arthur.

See you Monday.

Seven out of ten work comp adjusters say…

Senior Associate Jack Johnston joins us again, getting us up to speed on his research into work comp adjusters -

Over the past month or so I’ve been doing research on the claims adjuster profession to get a better understanding of what adjusters like, don’t like, and what their managers can do better – both in improving the adjuster’s lot and the companies they work for. From what I’ve gathered from various online sources, for the most part, adjusters aren’t the happiest, most fulfilled workers.

Gathering information from general websites such as www.glassdoor.com and adjuster-specific websites – www.claimspages.com, www.adjusterspace.org, and fromoneadjustertoanother.ning.com has produced a few positives and a lot of negatives.  Here’s what adjusters have to say about their job and the company they work for:

The Good:

Among those with good things to say, when it came to the pros a lot of them talked about the good benefits they received.  Getting paid during time off and having a 401k; can’t complain about that!  Another somewhat common pro was the flexibility of the work schedule.  Some adjusters stated that if they were doing well enough with work, they could get permission to work from home.  Other adjuster work-life positives included satisfaction with their compensation and the enjoyable camaraderie with co-workers.

The Bad & the Ugly:

While there were a lot of different complaints listed in the many sites I was researching, there were a handful that popped up repeatedly.

Let’s start with caseloads.  There seems to be a ridiculous number of cases handled by some adjusters, forcing them to work overtime (which they don’t get paid for).  Overall, most adjusters appear to be overworked; common complaints included: we are “always behind on work” and “There was an enormous amount of work that is expected of everyone, and it can be very defeating to have most of your days end without a feeling of accomplishment. (sic)” 

Even if an adjuster is doing a good job in the office (or at home), s/he probably shouldn’t expect much of a reward.  Promotions are scarce and raises tend to be paltry, with most getting a 1-2% increase (and that’s only if you are lucky enough to be given a raise).  The lack of ability to move up in the organization has upset many of the adjusters as they feel they aren’t rewarded for the work they put in with the heavy caseloads they deal with every day.

A fair amount of reviewers I read complained that instead of promoting within their company, the firm would hire someone from an outside company and place them in the higher position.  That’s a low blow to the employees who have been working there for years, expecting their effort and loyalty to lead to more responsibility and more income only to see the new person get the job.

Another common complaint is that managers are not qualified and don’t do a good job providing feedback to adjusters.  The adjusters never receive compliments or congratulations and are always told what they are doing wrong and how much more work they have to do.  They complain that they are not trained enough to handle some of their cases efficiently and they also feel that their offices are understaffed.  The adjusters want upper management to be realistic.

Conclusion:

I understand that this is certainly not the voice of all of the claims adjusters in the workers’ comp world but this is what I’ve found.  Websites like www.glassdoor.com can be easily accessed and false information, positive or negative, can be posted by bad actors. 

With that said, 69.2% of adjusters on the glassdoor website would not recommend their job to a friend.

Summary:

  • Adjusters like their benefits, salary, and co-workers… for the most part.
  • Schedules can be flexible (can work from home with permission).
  • No raises, room for growth, and no pay for working OT.
  • Overworked, large caseloads.
  • Always behind on work.
  • Lack of feedback from upper management.
  • And perhaps the most telling quote – “Run, do not work here”

Hartford changes Medical Directors

As of next Monday, Marcos Iglesias MD will be moving from Midwest Employers to the Hartford, where he will be taking over as Medical Director from Rob Bonner, MD.

I know both well, and the move is a good one.  Rob has done yeoman work at the Hartford, particularly in the areas of pharmacy, disability rating, and analytics.  He’s also been a leading voice in the effort to add more science to the practice of workers’ comp medicine, speaking out against physician dispensing, directing research on compound medications, and leading a key committee at the American Insurance Ass’n focused on workers’ comp. I’ve worked with Rob on a number of issues, and hope to work with him in the future on projects as he transitions to a less-full-time schedule.

Marcos is equally passionate about the right care for the right patient.  With extensive experience in occupational medicine practice as well as leadership roles at several insurers, he will bring an equally strong voice to the Hartford.

I’d be remiss if I did not acknowledge the insight shown by Midwest Employers in actually staffing a corporate medical director position.  I can’t think of any other reinsurers with MDs, and far too few primary insurers have full-time medical directors. Among those that do, many don’t have anywhere near the influence, responsibility, or authority they need and deserve. The Hartford is one insurer where the Medical Director does more than most; alas most workers’ comp payers don’t understand that medical is now approaching 2/3 of claims costs.

If they did, there’d be a lot more medical directors with a lot more authority and responsibility.

What does this mean for you?

Does your work comp insurer get it?