Category Archives: Drugs

Slight Increase in Average Medical Costs for Lost-Time Claims, Part 1

It’s that time of the year again, the time when I review the NCCI State of the Line Report.

As an added feature this year, I am including a look at the Medical Cost data, a new subject which I heard about back in February, when I attended NCCI’s 2017 Data Education Program.

First up is the distribution of medical costs by category. NCCI supports regulatory and legislative initiatives by providing State Medical Data Reports using data from their Medical Data Call.

For Service Year 2015, the distribution of payments across the various categories is based on data for all jurisdiction where NCCI provides ratemaking services, except Texas.

The key takeaway, as the following table will show, is that in 2015, physician costs were almost 40% (38%) of total medical costs, combined inpatient and outpatient hospital costs were approximately 30% (31%), and prescription drug costs were about 11%.

Table 1.

Table 1.

Source: NCCI’s State Medical Data Reports

Drilling down further, the distribution of physician costs for Service Year 2015, indicates that the bulk of the costs were associated with physical medicine, 30%, and surgery was associated with 24%, 10% associated with radiology, as shown in Table 2.

Table 2.

Table 2.

Source: NCI’s State Medical Data Reports

Getting even further, the next area the report covered was prescription drug payment changes over time.

The key takeaways here are the following:

  • In 2011, generic equivalents represented 47% of payments for all drugs prescribed. This increased to 58% by 2015, and driven largely by brand-name drugs.
  • Repackaged drugs now represent a small portion of overall drug payments because several states have implemented regulation on reimbursement.

Table 3.

Table 3.

Source: NCCI’s Medical Data Reports

NCCI analyzed the impact of prescription drug fee schedules on the cost of drugs by classifying states into one of four categories. States that had fee schedules were classified as Low, Medium, or High, based on the size of the Average Wholesale Price (AWP). The fourth category were states without a schedule.

The key takeaways here are:

  • Transitioning from not having a schedule to a low-fee schedule significantly reduces prices for WC prescriptions
  • Moving from no schedule to a high-fee schedule may increase drug costs, as shown in the following chart.

Chart 1.

Chart 1.

Source: NCCI’s Medical Data Reports

NCCI also looked at physician payments as a percentage of the Medicare reimbursement rate. In most states, they said, WC physician services are subject to fee schedules, just like the ones in group health and Medicare.

One way to measure physician costs across the states is to compare WC payments to the Medicare reimbursement rate.

The key takeaway from this is:

  • Prices paid relative to Medicare vary widely, from about 100% (Florida – 101%) to over 250%
  • Of the five jurisdictions with the largest percentage, all but Alaska (263%) are currently operating without a fee schedule
  • Countrywide the average is 150%

What does this mean for you?

While there are some positives in these numbers, especially with the cost savings from going to a low fee schedule for drugs, and an increase in the use of generic over brand-name drugs, and a decline in the percentage of repackaged drugs, medical costs are still very high for workers’ comp.

In the next post, I will look at the medical lost-time claim severity.

Big Insurer to Put Dispensing Docs on Notice

An article in Healthcare Finance yesterday reported that Aetna has put more than 900 opioid prescribing physicians on notice that they fall with the 1 percent of top opioid prescribers.

Here is the link to the article:

http://www.healthcarefinancenews.com/news/aetna-puts-more-900-physicians-notice-they-fall-within-top-1-percent-opioid-prescribers

What does this mean for workers’ comp?

It means that other insurers need to do the same for the physicians who prescribe opioids for injured workers, but as Joe Paduda recently reported, the drug spend is going down.

But he also said this, earlier this week,  “Medical services for people with opioid dependence diagnoses skyrocketed more than 3,000 percent between 2007 and 2014.”

This was for privately insured people, he continued.

“The dollar cost of the drug itself is the least of the cost issues; dependency is strongly associated with much higher utilization of drug testing, overdose treatment, office visits and (my assumption) higher usage of other drugs intended to address side effects of opioids.”

So just because Aetna is watching does not mean that the problem is going to go away any time soon.

Turbulence Ahead for Workers’ Comp Market

There may be turbulence ahead for the workers’ comp market, according to an article today on PropertyCasulty360.

The article, by Nancy Grover, says that the market can be characterized as stable, but that there are changes in the nation’s workforce, as well as technological advances, that threaten the balance of the industry. (see “Workers’ Comp Besieged: Independent Views of the Problems Workers’ Comp is Facing” and “Workers’ Comp at a Crossroads: Where Does it Go from Here?“)

Grover states that the industry’s financial outlook is positive, but that the NCCI State of the Line report earlier this year, warned that there was “calm now, but turbulence ahead”.

I will have more to say on the challenges facing workers’ compensation when I publish my second presentation slides that I may present in Mexico this December.

Among some of the challenges, Grover reports the industry is facing are increased medical costs (I have written extensively about this as well), threats to their security systems, and the changing nature of the workforce (another issue I have mentioned before, especially with regard to immigration and medical travel in the Western hemisphere).

According to one industry source she cites, medical costs are the number one cost driver (see “Lost-Time Medical Costs Approaching $30K: When Will You See the Light?“).

NCCI found that the average medical cost per lost time claim grew by 4% in 2014, which was an increase from the previous three years, where the average medical cost rose between 2 – 3%, Grover said.

Drug prices are also a cost driver, according to Joe Paduda (see “Drug Costs Make Up Bulk of Work Comp Medical Costs [Infographic]“).

“The other thing happening is facility costs for hospitals and healthcare systems are going up at or near double-digit rates for many payers and not many are paying attention”, according to Joe.(see “Outpatient Facility Costs Rising Could Benefit Medical Tourism Industry“)

There are also market threats, Grover writes, such as the “on demand” economy with companies like Uber. Lyft and others raising questions for workers’ comp industry personnel.

Unfortunately, Grover does not offer alternative solutions other than those that are being tried, and have been tried, with little or no success.

One such “solution” is medical provider networks, to closely contain costs by managing care for injured workers, but as she points out, they have not proven effective among all states.

Here is what  some in the industry really looks like to this reporter:

hear-no-evil-see-no-evil-speak-no-evil

They keep saying and doing the same things over and over again, and costs continue to rise, challenges are rushing headlong towards them, opt-out expansion threatens to destroy workers’ comp altogether, but they are deaf, dumb and blind to reality and to alternatives. One wonders if they really are like these three. They just act upon instinct and don’t have a grasp of the changes around them outside of their little space.

Oh well, evolution works in strange ways, so there is hope.

Drug Costs Make Up Bulk of Work Comp Medical Costs [Infographic]

As reported today on PropertyCasualty360, medical services now contribute to more than 60% of Workers’ Comp claims, in part due to two cost drivers: physician dispensing and compounded drugs, according to Marsh.

While the industry continues to grapple with the cost drivers of physician dispensing and compounded drugs, it would be prudent also to tackle the rest of the medical services that are contributing to more than 60% of claims under workers’ comp.

Expensive surgeries are also another factor in this that no one is discussing, no one at least inside the industry itself. No wonder that medical services have reached that high a percentage.

Oh well, you can lead dumb horses to water, but you can’t make them drink, so let them keep doing the same things over and over again and hope to get different results.

Here is the infographic:

War on Drugs

California is Going to Pot

For Maria

No, this post is not about the water shortage in California, but whether or not, medical marijuana will be allowed in workers’ comp.

David De Paolo’s posts about workers’ comp in California makes me wonder at times to ask, “What are they smoking?”, but in the following article, it is not the California system that is smoking pot, but a claimant who wants to, and have it paid for under workers’ comp.

The article, from UR Nation is here.

——————————————————————————————————————————-

I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com. Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp. Connect with me on LinkedIn and follow my blog at: richardkrasner.wordpress.com. Share this article, or leave a comment below.

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.

An Algorithm a Day, May Keep the Pain Doctor Away

Image

As previously discussed on this blog, prescription pain medication abuse is a big problem in workers’ compensation, (see Opioid Abuse in Workers’ Compensation: What the Medical Tourism Industry Needs to Know).

There has been a lot of writing on the subject, and a great deal of meetings, webinars, and conferences, with very little solutions being offered, or action taken besides passage of legislation and the creation of state-run databases, as in Kansas and California.

But recently, as reported last week in the Wall Street Journal article, “When Your M.D. Is An Algorithm” by Timothy W. Martin (April 11,2013), a summit was held in Orlando, Florida that brought together patient advocates, policy makers, and law-enforcement officers, as well as representatives of a new cottage industry: companies that are taking a data-driven approach to deal with the drug-abuse problem.

The National Rx Dug Abuse Summit showcased companies that are combining medical research and guidelines with computer analysis to guide doctors about what drugs should be administered, in what doses, or if at all.

These companies, mainly insurers and medical-bill review consultants for companies paying workers’ compensation claims said they are filling an unmet need: that of providing research-driven clinical advice and guidelines to doctors who have not been thoroughly trained on how to treat pain.

There are some doctors, who are skeptical of these programs that have names such as “Opioid Defense Manager” and “VantageComp”. They do not believe that these programs play any role in medical treatment, especially when they are used by companies looking to lower drug costs and medical spending.

One of the 40 analytic companies that attended the conference was Rising Medical Solutions, Inc. Their in-house algorithms, assesses whether an individual is a low, medium or high risk. This is based on a 30-question survey that asks about an injured worker’s optimism about their recovery, their previous injury history and whether they smoke, along with other signs that measure their vulnerability to painkiller addiction.

Rising Medical CEO, Jason F. Beans said that the company had determined that being on painkillers any longer than two weeks, could be an indicator of addiction. Beans also went on to say that, “We enact interventions to prevent the small lower-back claim from becoming a lifelong addiction.”

PMSI’s proprietary Risk Intelligence System, has 18 criteria it says could signal fraud or abuse. According to Ishita Sengupta, director of workers’ compensation at the National Academy of Social Insurance, a nonprofit research group that tracks workers’ compensation benefits and costs, the analytics-driven industry has grown to more than three dozen companies from just a handful a decade ago.

Insurance companies such as AIG, Liberty Mutual and Travelers have added analytical or predictive modeling abilities to their workers’ compensation divisions.

Pharmacy-benefit managers such as Modern Medical Inc.  and consulting firms such as Prium, a Georgia firm that consults to workers’ compensation payers, are also involved with analytics. Michael Gavin, chief strategy office at Prium, said “Your doctor’s approach to pain care may lead you to become addicted—but that is not the case with high cholesterol or high blood pressure.”

All this growth in a nascent industry such as analytics comes about because workers’ compensation spending is soaring. As Martin points out in his article, and as I have pointed out in my white paper, Legal Barriers to Implementing International Medical Providers into Medical Provider Networks for Workers’ Compensation, the average medical cost for lost time claims was $28,000 in 2011, which was nearly double the cost in 2001, when the cost was $15,900.

Both Martin’s article and my white paper cite data from the National Council on Compensation Insurance (NCCI), an industry-created company that tracks workers’ comp spending and the overall health of the industry.

So as the medical tourism grows, and the idea to implement medical tourism into workers’ compensation becomes a reality, medical tourism facilitators and medical tourism providers will be able to know beforehand if a surgical patient who was injured on the job and receiving medical treatment abroad, is already a painkiller abuser or could become one. The provider will have the benefit of the knowledge provided by analytics to determine risk of addiction so that patient addiction can be halted or avoided altogether.

This in turn, will also help the wider medical tourism industry because the very analytics used to determine risk of addiction for injured workers can be used for non-occupational injury patients receiving the same surgery. And that will give the medical tourism industry more credence with the healthcare community at large.