Category Archives: physician dispensing

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.

Medical Management Internship Paper, Summer 2011

No doubt, many of my readers have wondered what I learned in my MHA degree program, and why my writing has been of interest to so many of you.

Upon checking my stats for the blog, I noticed that someone had viewed a paper I wrote in the summer of 2011 for my Summer Internship course, as part of my MHA degree program requirements. The school I attended required all students without a health care background to take a one-credit course as an Intern in a health care organization.

The organization I choose was one my school already contracted with, Broadspire. At the end of the course, we were expected to write a paper about our internship for a grade in the course.

The following link will direct the reader to a copy of my paper that I hope the reader will find interesting, and will highlight my skills as a researcher and writer. Speaking engagements as well as research opportunities are most welcome, as are full-time positions and consulting opportunities.

https://www.dropbox.com/s/5573hm8xo074po0/Medical%20Management%20Internship%20Paper.docx?dl=0

As the summer session was very short, only three projects were undertaken, and the last one was truncated due to time constraints and the report presented to Broadspire concentrated on only two states, Florida and California.

Let me know your thoughts.