Monthly Archives: February 2015

Hospital Outpatient Costs Still Rising Says New Study

A new study released earlier this week by the Workers’ Compensation Research Institute (WCRI) and reported on in Claims Journal, found the following:

  • States with percent-of-charge-based fee regulations or no fee schedules had the highest payments to hospitals for outpatient surgical episodes for knee and shoulder surgeries. In particular, states with no hospital outpatient fee schedules had 60 to 141 percent higher hospital outpatient payments per episode compared with the typical state with fixed-amount fee schedules.
  • There was tremendous variation in the rates of change in hospital payments per surgical episode across states. From 2006 to 2013, South Carolina saw a reduction of 31 percent in this metric while in Alabama the average hospital payment per surgical episode grew by 81 percent. States with percent-of-charge-based fee regulations or no fee schedules had more rapid growth in hospital outpatient payments per episode than states with other regulatory approaches. In particular, most percent-of-charge-based fee regulation states that did not have updates to the reimbursable percentage of charges experienced growth in hospital payments per surgical episode that was 157–286 percent faster than the median of states with fixed-amount fee schedules.
  • States with cost-to-charge ratio fee regulations had similar levels and growth rates in hospital outpatient payments per episode to states with fixed-amount fee schedules. Hospital outpatient payments per episode in states with cost-to-charge ratio regulations grew 10–25 percent from 2006 to 2013.

The indices compared payments per surgical episode for common outpatient surgeries under workers’ compensation from state to state for each study year, as well as the trends within each state, from 2005 to 2013.

The WCRI study covered 33 large states, representing 86%  of workers’ compensation benefits paid in the United States. The states are studied in the report were : Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.

Given this study’s findings and the scope of states represented, it would be a no-brainer for any insurance company or broker, or any employer to consider alternatives to the ever increasing cost of hospital care in the US, by exploring medical tourism hospitals which charge a fraction of what US hospitals are charging.

Yet, the workers’ comp industry still ignores what is staring them in the face, and insists that if they do something different, if they use this technique, or that company’s cost-saving scheme, they are going to save money on expensive surgeries. IT AIN’T GONNA HAPPEN, FOLKS.

Earlier this week, my fellow blogger, Peter Roumaniere, released a report called, “Seismic Shifts: An Essential Guide for Practitioners and CEO’s in Workers’ Comp”, published by WorkCompCentral, and reported by Lynch Ryan.

The report examines how technology and changes in the demographics of the workforce will impact workers’ comp from the present through 2022. Some of the report discussing things that this writer has already seen personally from experience in the industry, such as the shrinking of the workers’ comp industry as more companies are bought up or go out of business altogether, how jobs in industries that used to account for the bulk of workers’ comp claims are seeing a decline in claims being filed, how automation is impacting the processing of workers’ comp claims, and the nature of how adjusters do their job.

From what I found in the report, it would seem that there is not much time for the industry to adapt to the changes Peter outlines, and given the resistance to change with regard to rising health care costs in general, and medical care costs in workers’ comp in particular, as I have discussed in previous posts, it would take some really forward thinking executives to throw caution to the wind, step outside of the padded cell, and find alternatives on their own.

These two excellent reports paint a very bleak picture indeed for the industry if they refuse to act, and act now, instead of waiting for 2022, to make these and other necessary and crucial changes. Opting-out of state systems is one way, but will take years to spread through all fifty states, let alone a majority of states, and as costs keep rising, with no end in sight, economic laws of supply and demand will necessitate looking at better quality health care for lower costs in medical tourism destinations.

You have until 2022 to change, so my advice is to start now. As I mentioned in an earlier post, I am willing to work with any broker, carrier, or employer who is sick and tired of being bled by the Wall Street vulture capitalists and the entire medico-legal system known as workers’ comp, to save money, and to provide the best care for their injured workers or their client’s employees, while at the same time, helping to break the monopoly of the American health care cartel.

You know where to reach me.

If you would like to purchase the WCRI report, you can order it here:


Generic Drugs Boosting Pharmacy Costs for Workers’ Comp

Payers are having a tough time slowing the increases of generic drug prices, according to an article in last week’s Business Insurance, by Sheena Harrison.

Ms. Harrison reported that certain generic medications used in workers’ comp claims such as antibiotics, antidepressants and opioid painkillers, have seen price increases ranging from 8.5% to nearly 2,050% (yeah, that’s not a misprint or a typo on my part) in 2014 vs. 2013.

The increases in generic drug prices was revealed in testimony given at a US Senate Subcommittee hearing last fall on rising generic drug prices.

According to Ms. Harrison, Pharmacy Benefit Managers, third-party administrators and other workers’ comp service providers are noticing the higher prices as well.

One such third-party administrator, Broadspire, in Sunrise, FL, said that their average generic prescription cost increased 19% last year compared with 2013, as quoted by Carol Valentic, vice president of cost containment for Broadspire.

According to Valentic, the fourth quarter of 2014 was probably the first quarter that we saw that generic values were creeping up.

In the summer of 2011, I did my internship for my MHA degree with Broadspire in the Sunrise office and one of the projects I worked on was an analysis of physician/pharmacy-dispensed drugs costs within physician provider networks (PPN).

Pharmacy Benefit Manager Express Scripts has also seen price increases for drugs such as pain medications, muscle relaxants, anti-inflammatory drugs and prescriptions for heart disease and high blood pressure.

Monitoring drug utilization is one of the strategies being used to ensure that injured workers get generic medications for the appropriate time periods and dosages, as well as switching patients to cheaper medications that have the same outcomes.

Generic drug prices may be here to say unless federal lawmakers take action, according to the article.

Consolidation among pharmaceutical companies is given by workers’ comp experts as a top contributor to higher prices. They say that pharmaceutical company closures or mergers have allowed the remaining player to boost prices for medications that were previously made by several companies.

We all know that drug costs in the US, both generic and brand-name drugs, are much higher than they are overseas. In fact, my mother worked for a company that helped seniors get their medications cheaper from Canada, the UK, and Israel, so the idea that consolidation or mergers is the culprit is not telling the whole story.

As with the rising cost of health care in general, and the cost of surgeries in particular, it seems that drug costs are making workers’ comp claims costs even more of a problem for the industry to deal with.

When will the industry wake up to the fact that the American health care system is broken, corrupt, and expensive, wasteful, and fiscally out of control?

When will the workers’ comp industry learn, that if something can be had a lower cost with the same or better quality somewhere else, even if that somewhere is in another country, in a medical facility that caters specifically to American and foreign patients, that they should avail themselves of that opportunity?

Strategies such as monitoring drug utilization, as mentioned above, is just one more way the industry is doing the same things over and over again and expecting different results. We all know the real reason our health care system and the workers’ comp system is the way it is, GREED. And the notion that health care is just one more revenue stream, one more profit center for those who have capital and are making money off of the sick and injured of the nation.

I am willing to work with any broker, carrier, or employer who is sick and tired of being bled by the Wall Street vulture capitalists and the entire medico-legal system known as workers’ comp, to save money, and to provide the best care for their injured workers or their client’s employees, while at the same time, helping to break the monopoly of the American health care cartel.

You know where to reach me.

Is Being Too Conservative a Good Thing for Workers’ Comp?

Conservative: disposed to preserve existing conditions, institutions, etc., or to restore traditional ones, and to limit change.

A friend suggested to me this evening that the industry has not moved as quickly as they had hoped, and I began to think about this with regard to the more than one hundred articles I have written on the subject of implementing medical tourism into workers’ comp. My friend was commenting on the lack of speed to move forward with a proposal they presented to a client. It then occurred to me that I needed to say something about this, because of late, I have refrained from my usual habit of passionately advocating and defending the idea of medical tourism for expensive surgeries in workers’ comp.

So the title of my article does not refer to the political definition of the word conservative, although, there are some political conservatives in the industry who in the past have attacked this idea as ridiculous and a non-starter. Yet, I have heard from a few small voices out there, many of whom are much more knowledgeable and wiser than I, that this is not the case and that it is a good idea, if not for the rules and regulations that have limited change and preserved the existing order. So the question must be asked, is being too conservative a good thing for the workers’ comp industry?

You have read many of my articles about the issues of opioid drug abuse in workers’ comp, about the fraud and abuse many have suffered at the hands of those in the industry who are supposed to help them, but who instead only seek to line their own pockets, and those of the service providers and hangers-on of the gravy train called workers’ compensation. And you have read about all the other issues plaguing workers’ comp that never seem to be solved, but only require more money, more new programs and “solutions” to be adopted that only scratch the surface of the real problem.

I have, in the past, railed against doing the same things over and over again, and expecting different results, and yet, day after day, week after week, month after month, the conservative mindset in this industry, as the definition above states, is disposed to preserving existing conditions, and to limiting change. Change which the industry needs to realize is necessary and required for the continuation of the workers’ comp system, otherwise it will either cease to exist or will break down from its own failures and ineptitude.

My good friend Joe Paduda this morning gave us a preview of the upcoming WCRI conference through an email interview with the WCRI Executive Director, Rick Victor. One of the questions Joe asked Dr. Victor was the following: “what has been the most surprising result that will be discussed at WCRI?” Dr. Victor replied, that “an underappreciated, but likely very significant unintended consequence of the Affordable Care Act is shifting cases from group health to workers’ compensation.”

If this assessment is correct, then the workers’ comp industry’s problems just got a whole lot worse, and failure to change and adapt to new ideas and new means of providing the best quality medical care at the lowest cost, will only make things even more dire. But when the conference is over in a couple of weeks, all the attendees will go home, report to their superiors, and go about their business as usual, while the orchestra plays on the Titanic (or Nero fiddles while Rome burns, if you are a history buff).

My last two posts touched upon the subject of globalization and the globalization of health care. Maria Todd rightly points out that it will take some time to achieve. Yet, this industry has closed its mind and its eyes to the changes all around them, pretending they do not exist or are not happening.

That is why being too conservative is not a good thing for workers’ comp, because any system that fails to adapt will become extinct. Being too conservative, too cautious and too afraid of change can be very deadly, not only to people, but to institutions and systems such as workers’ comp. So all you dinosaurs out there, keep ignoring what is staring you in the face. They will be digging up your “bones” far into the future.

Why the Globalization of Health Care Will Not Be Easy, but May Come to Pass in the Future

Maria Todd has written a very excellent piece on the globalization of health care. I will let Maria speak for herself.

NAFTA, Work Comp and Cross-Border Medical Care: A Legal View: Update

An update now on a topic I discussed last January in my post, NAFTA, Work Comp and Cross-Border Medical Care: A Legal View.

David DePaolo reports today that the Supreme Court  docketed for review the case of Porteadores Del Noroeste v. Industrial Commission of Arizona, No. 14-937 on Tuesday.

This case, I thought was decided months ago when the AZ Court of Appeals ruled that Mexican firms sending employees into US became subject to same work comp laws domestic employers are subject to, and that NAFTA did not pre-empt AZ work comp statutes, and that Porteadores could face liability in AZ for compensation that one of its workers claimed he was due.

The Court also said that the unambiguous language of NAFTA provides that only US can challenge a state law as conflicting with the terms of the agreement between US, Canada and Mexico.

However, as David says, this does not mean that the court will review the case, but they at least will take a look at it to determine if it is in their interests, and the interests of this country, to do so.

We will have to wait and see what the Supreme Court does going forward, and if they do review the case, it may have a chilling effect on not only cross-border medical tourism, but overseas as well.

Stay tuned.