Finally.

New Hampshire and the Feds are going after opioid manufacturers with a vengeance.

NH State law enforcement has reached a $3.2 million settlement with fentanyl drug manufacturer Insys and is pursuing investigations against Purdue Pharma, Actavis Pharma, Janssen Pharmaceuticals and Teva Pharmaceuticals.

The FBI indicted six senior Insys executives last month on charges of racketeering.

And actions have been taken against the company’s sales force and/or prescribers in several other states as well.

Insys’ Subsys fentanyl drug was narrowly approved by the FDA for breakthrough cancer pain. In what has become an only-too-successful marketing strategy, allegedly Insys aggressively promoted Subsys for non-cancer treatment purposes.  Reports indicate only 1 percent of Subsys scripts in New Hampshire were written by cancer doctors.

The Granite State has the highest death rate from fentanyl overdose in the nation.

A Physicians’ Assistant in New Hampshire was allegedly paid speaking fees as a backdoor way of incentivizing him to prescribe Insys’ Subsys(r) a version of opioid fentanyl.

Reports indicate of the 100,000 doses consumed in NH, this one PA, Christopher Clough, prescribed 84% of them.

What happened in New Hampshire is directly related to Insys’ marketing practices.  Make no mistake, this was all about profits, regardless of the damage to patients, families, society, kids.

This from the NYTimes:

“As Subsys grows more mature, we expect the number of experienced patients to grow,” Michael E. Faerm, an analyst for Wells Fargo, wrote last year in a note to investors. “As the experienced patients titrate higher, the average dose per prescription should increase.”

The former Insys sales representatives said they were paid more for selling higher doses…

What a great business. A highly addictive drug creates more revenue for the manufacturer and for sales reps as patients need more and more and more to get “relief” – or get high.

New Hampshire has subpoenaed other large opioid manufacturers who have refused to comply with the demand to provide materials. It’s highly likely Purdue, Teva et al will be compelled to comply when higher courts rule.

What does this mean for you?

A bittersweet moment indeed, but at long last corporate crooks are being criminally charged for their actions that killed people to create profits.

Here’s hoping they are convicted and sentenced to long terms at awful places.

 

Beware of “astroturf”

As “Astroturf group” is one that looks like a “grassroots” organization that is actually founded, funded, and an advocate for a large organization.

Big pharma is infamous for the practice; one great example is the American Pain Foundation, an opioid-peddling outfit masquerading as a patient advocacy organization (thanks to WCC’s Elaine Goodman for the reminder).  The APF was shut down after an expose by ProPublica’s Charley Ornstein and Tracy Weber.

The APF is instructive.  90% of its funding came from big pharma and medical device companies.

Endo, J&J, and Purdue Pharma of OxyContin fame were major backers.  This is the same Purdue that pleaded guilty to federal criminal charges in 2007.  Sadly no Purdue executives went to prison despite thousands of deaths and millions of addicts from opioid over-prescribing.

And ruined communities – this was once a trailer occupied by a heroin dealer in Kentucky. (Credit HuffPo)

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APF got both the Joint Commission – THE healthcare facility accreditation organization – and the Federation of State Medical Boards – to send letters and publish “guides” and other materials promoting pain as the “Fifth Vital Sign”, a brilliant marketing ploy that required physicians to ask about – and treat – pain.

Their reach extended into the Veterans Administration and hundreds of other organizations. The Fifth Vital Sign campaign, backed almost exclusively by opioid manufacturers, created the opioid disaster we are living thru.

This is not yesterday’s news it’s happening today.  In many state capitals the opioid industry remains a powerful and insidious force promoting opioid use.

The damage done is incalculable – hundreds of thousands of dead people, millions of addicts, destroyed families, devastated communities.

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Why discuss this now?  Because big business is ascendant.  With the incoming administration focused on reducing regulations and oversight across pretty much every industry we will undoubtedly see Astroturf groups proliferate.

What does this mean for you?

Our families and our towns cannot afford another opioid epidemic.

ACA Deathwatch: the GOP’s “repeal”

If you are confused and frustrated with the Republicans’ moves to repeal and replace ACA, rest assured they are way more frustrated – and more than a little concerned – than you are.

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Here’s what’s going on.

There are two main issues.

  1. Repeal without replacement is a budgetary and political minefield.
  2. Congressional Republicans aren’t even close to agreeing on what a replacement bill would look like

Republicans are working to finalize a bill that would defund major parts of ACA. There is NO consensus among Republicans on the details of this bill – and won’t be until at least January 27 (don’t be surprised if the replacement bill isn’t ready till well after January 27…). This won’t require any Democratic support as it is a budget bill. The GOP will own the bill – and the bill’s repercussions.

Earlier this week the CBO gave us a taste of what a repeal without credible replacement would look like, and that taste was bitter indeed.

  • 18 million would lose health insurance within twelve months
  • Premiums would jump by 20 percent to 25 percent immediately

BTW the CBO’s Director was appointed by Republicans in 2015.

If the GOP moves forward with repeal without a replacement bill – which looks highly likely – it will get hammered by Democrats in what will be reminiscent of the Tea Party’s assault on Democrats during ACA’s passage. Dems will turn the tables on Republicans, and with voters primed to fear losing coverage, the message will resonate.

The GOP’s problem is simple – ACA funding is very complex and cutting funding (which is how Republicans are “repealing” ACA);

  • decreases the number of people with insurance and/or
  • increases state government budget deficits and/or
  • increases the federal deficit and/or
  • hurts Medicare, and/or
  • hurts hospitals, and/or
  • hurts insurers.

There’s intense lobbying going on as device manufacturers, hospitals, governors, insurance companies, the very wealthy and other special interests seek to protect themselves.

While Republicans do have “plans” to replace ACA, they do NOT have consensus on “A plan”.  There’s a plan from HHS Secretary nominee Tom Price, another from Speaker Ryan, other plans based on prior GOP bills, plus lots of ideas from GOP-affiliated think tanks and lobbying groups. Make no mistake, there’s a lot of ideological division among Congressional Republicans.

When the GOP does write a replacement bill, it will be scored by the CBO.  A part of that scoring has to do with the definition of health insurance. Up till now, CBO used the ACA’s definition; now that ACA is going away, it will revert to the previous definition.  Not to get too deep in the weeds here, but that’s NOT good news for the GOP.

The dilemma facing Republicans is simple; there’s no way they can deliver on their promises to ensure people don’t lose coverage, reduce costs, and improve access.

Republicans are about to pull a Wile E Coyote, running full speed off the cliff. Given Democrats’ amazing ability to turn certain victory into crushing defeat by losing the messaging battle, the GOP may make it to the other side unscathed.

What does this mean for you?

The CBO is the key.

ACA Deathwatch – The Impact on Workers’ Comp

With Republicans getting closer to repealing ACA, it’s time to consider how this would impact workers’ compensation.

I’ve discussed the possible impact of ACA here; net is the big increase in the insured/employed population may be at least partially responsible for the flat-to-declining work comp medical costs we’ve seen over the last two years.

There’s also this.  A colleague alerted me to a 2014 RAND study that assessed the potential impact of ACA on liability insurance, including workers’ comp in 2016.

RAND’s main takeaway:

“the ACA is expected to reduce auto and workers’ compensation insurer costs and increase medical professional liability insurer costs by a few percentage points as of 2016.”

The report is fairly complex (a summary is here); here’s what it had to say in bullet points.

  1. RAND estimated work comp costs would be $930 million lower due to ACA.
  2. This reduction is driven by lower fees and other insurance coverage for workers.

“Lower fees” derive from lower fee schedules (we’ve seen this in imaging in CA and FL and facility and surgery in other states) and lower prices due to providers less concerned about indigent care and associated bad debt.

“Other insurance coverage” refers to group health or Medicaid coverage for non-occ conditions, as well as substituting for workers’ comp in some instances.

If ACA is repealed without a simultaneous and credible replacement, we may well see a rise in the number of workers without health insurance. The key issue to track is a cutoff of funding for Medicaid expansion – ACA added about 13 million more employed people to the insured rolls; if they lose coverage they’ll need a different payer to cover their injuries. Bad news for workers’ comp.

There are other issues, but Medicaid is the big one.

What does this mean for you?

Be careful what you wish for.  And be even more careful of hasty and simple solutions to very complex problems.

Friday catch-up

2017 is starting off to be the most interesting/bizarre/entertaining/terrifying year in memory.

As one who tracks the goings-on internationally and in DC with some diligence, it’s been impossible to keep up with the craziness. Here’s my attempt to summarize the week that was.

The one thing you missed – and why you shouldn’t have

Trying out a new mini-post on the most important thing may have missed this week. Today’s it’s UnitedHealthcare’s acquisition of a big outpatient surgical clinic company.

This is important because the giant ($175 billion) healthcare company is investing more in care delivery – likely to better control its “cost of goods sold”.  As vertically integrated healthcare systems (think Kaiser, UPMC) get better at insurance, insurers have to get better at care delivery.

ACA Deathwatch

The reports of ACA’s death appear to have been greatly exaggerated. 

Yes, the Senate passed a bill that is the first step in a repeal process.  But it is ONLY a first step. Without diving too deep into the nerdy details, the bill just instructs Senate Committees to begin drafting a repeal bill and lays out general principles.  But there’s no consensus on when the repeal would take effect, what a replacement would look like, or even how it would be funded.

Things are going to get pretty complicated, especially in the Senate. There’s a lot of concern among Republicans in key leadership positions that quick movement on a bill would lead to a considerable backlash – and major political damage.

For freemarketers and Libertarians, there’s this:

“We did have the government out of the individual market up until 2014 [when most of the ACA provisions went into effect], and we know exactly what happened: There were millions of people who couldn’t get coverage,” Field said.

The ACA created a market that did not exist before — one that insures sick people. Field says it’s a market failure that the industry on its own will not cover the highest-risk customers. “If you want to cover everyone, the government has to do something.”

Town said pushing the government out of the equation will leave many citizens without access to health care.

“If you want to live in that world, so be it,” he said. “But I think we as a society have made the joint decision that having a vast part of a population uninsured and having limited access to health care is not a route that we want to go. Getting rid of the ACA is not going to get rid of the government’s role in health care.” [emphasis added]

Here’s a good summary of some of the issues the Republicans face – and why they are treading carefully…key quote:

The real reason health care premiums and deductibles are so high is that medical care is very expensive in the United Statesfar more costly than it is anywhere else in the world. The United States pays very high prices to doctors and hospitals and drug and device makers, and Americans use a lot of that expensive medical care. [emphasis added]

And here’s why keeping only the popular parts of ACA won’t work.  Alas.

Work comp

The M&A activity level has dropped off considerably – if not precipitously. The WLDI sale – a relatively small transaction – is one of the very few recent deals. Don’t expect activity to ramp up as the industry is:

  • pretty consolidated already, so there are fewer companies available to buy;
  • work comp is a declining industry with negative growth – not very attractive to investors;
  • prices were really high for a long time, and company owners still expect to get paid a lot. Sellers still expect to get those high prices, but…
  • buyers are much more cautious due in large part to the “OneCall Effect” (financial returns haven’t met expectations).

Don’t miss the Rx Drug Abuse Summit – April 17-20 in Atlanta.  It’s the most comprehensive and focused event on the biggest issue in workers’ comp.

Nothing is more important to work comp than the overall economy.  Read this – when you have time – for a solid grounding on what to watch for in 2017.  Spoiler alert – economic growth, which has trended up significantly over 2016, is likely to moderate over the next two years. And watch out for inflation.

 

Finally, for management wonks, here’s a great piece on execution from Harvard Business Review.

Cutting thru the ACA repeal confusion

Today’s HealthWonkReview has a series of posts on:

  • the current status of the ACA repeal process, implications thereof,
  • GOP plans to pass a replacement and
  • Dems’ plan to thwart Reps’ moves to kill ACA
  • insurers’ reactions,
  • providers’ reactions,
  • and what it all means to consumers.

The posts are all briefly summarized and you can click thru for more details…

Then there’s an expose on HHS Secretary nominee Price’s ethical problems from trading stocks in companies affected by legislation he was working on.  Yeccch.

And lots more…

Of course, the posts have citations and backup info.

Thanks thanks thanks to Julie Ferguson for collating all this for your edification!

WTF’s with LA?

That’s Los Angeles, not Louisiana.

I ask that question, dear reader, because the latest report from the fine folk at CWCI raises yet another question about why LA is so different from the rest of California.

The latest information (available here for purchase; free to CWCI members) indicates cumulative trauma claims happen way more frequently in the LA Basin than elsewhere in the Golden State.

Whaaaat?

Are there millions of Angelenos doing manual data entry and getting carpal tunnel?

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Getting wrist injuries from turning keys like those guards at the Illinois prison?

Hurting their hands clapping for all the Hollywood crowd?

Twisting their necks from constantly looking up at the gorgeous blue sky? (no, that can’t be it)

Too many botox injections? (that’s kinda cumulative trauma, right?)

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Too much yoga?

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It can’t be crooked physicians…right?

 

 

ACA Deathwatch: What “repeal” means to you

Here are questions you may want to ask about what a “repeal” and “replacement” will do.

  1. What will happen to your premiums?
    If more young people sign up, premiums for us older folks go down. If there is no mandate to buy insurance (and the continuous coverage requirement is far weaker than a mandate), insurance premiums for the 50+ crowd are going to go up – a lot. That’s because healthy seniors will decide the premiums are too high, so the only folks that will buy insurance will be the sick ones.  Insurers know this, so they will either a) exit the market; b) raise premiums to the moon; c) drastically limit coverage for specific medical conditions like heart disease or cancer; or d) go bankrupt.
  2. Is your medical condition still covered?
    ACA requires almost all insurance plans cover all physical and mental health conditions under the essential health benefits requirement. Replacement plans under consideration have no such requirements, allowing insurance companies to exclude specific types of treatment, specific conditions, types of providers, etc.
  3. Is addiction treatment covered?
    Currently mental health coverage is required for most employee and individual plans. Given the huge problems we face with opioid and crystal meth addiction, will a replacement plan require coverage for those seeking to end their addiction? Before ACA, about a third of individual insurance plans didn’t cover addiction treatment. And you can bet your house “replacement” insurance plans wouldn’t offer coverage…
  4. Can insurers limit coverage for medical diagnoses or conditions?
    Under ACA, there are NO lifetime or annual caps for specific medical conditions. The “replacement” plans allow insurers to set arbitrary caps for any diagnosis – cancer, heart disease, orthopedic injuries, or any other category they define.
  5. What happens if you lose your job and can’t afford to pay for individual health insurance while you are looking for work?
    Under the replacement plans, if you have a “gap in coverage” where you don’t have health insurance, when you apply for new coverage your insurer doesn’t have to cover your pre-existing medical conditions, and/or they can charge you higher rates.
  6. Who pays for emergency care for those without health insurance?
    Before ACA family insurance premiums included about $1000 for the additional cost of indigent care due to cost-shifting.  If the number of uninsureds grows – as it most certainly will – they will get care at hospital emergency rooms (hospitals are required to care for anyone presenting with emergent needs regardless of insurance status). So, this “hidden tax” will almost certainly increase your premiums.
  7. Will you be able to buy cheaper insurance from out-of-state health insurers?
    No.  There are three states that allow that today – and NO out-of-state insurers are selling across state lines.

 

ACA Deathwatch – The GOP repeal bill is out

Late Friday the Republican Study Committee released its ACA Repeal Bill.

No word on a replacement plan as of this writing.

Key points

  • A tax credit of $7,500 (individuals) or $20,500 (families) which will apply to income and payroll taxes, and will be indexed for inflation at the same rate as CPI-U. The credit does NOT vary by a person’s income level, so folks making $10,000 a year get the same amount as multi-millionnaires.
  • Fund high-risk pools at $2.5 billion a year for 10 years for those people who can’t get insurance on the open market (note high risk pools have historically not worked over the long term due to state budget limits and increasing costs due to adverse selection)
  • Requirement that individuals MUST stay continuously insured to avoid pre-existing condition limits. Lots of problems with this…
  • Allow sale of insurance across state lines – an initiative that is already in place in three states – and no insurer has EVER done this because it doesn’t work.

For several reasons outlined succinctly in a piece in Health Affairs last week, repeal without replace is problematic. Best guess is the final repeal legislation will call for a replacement within 3 years.

Finally, there is still no consensus among Republicans on a strategy re replacement, much less what a replacement bill would involve.

 

Why is work comp wage replacement capped, part 2

There are some differing opinions on this issue; I heard from several colleagues with different views on wage replacement caps; two somewhat different perspectives are provided below. [original post and reader comments are here]

From Bruce Wood – former Vice President and Associate General Counsel at AIA; retired after 27 years, currently consulting (AIA is a client):

The amount of the maximum weekly benefit amount (WBA) is a major cost element in workers’ compensation. Industry (surely, AIA) policy has always deferred to business and labor on the amount of the maximum WBA, lest the insurance industry be accused of seeking to inflate insurance premiums by supporting more generous benefits. It would be interesting to see if many others in the business community go along with increasing the maximum, much less completely eliminating it even for workers with annual incomes of hundreds of thousands of dollars, who typically have alternative sources of income support.   I would expect policyholders to be reluctant to accept this increased expense.  

All states have a maximum WBA, in nearly all instances indexed to a percentage of the statewide average weekly wage (SAWW). Most – 36 — today cap benefits at 100 percent of SAWW.  Sixteen states exceed 100 percent, with one at 200 percent.  Eleven states fall below 100 percent; and the maximum temporary total disability benefit in two states is a fixed dollar amount that can be changed only by the legislature.  In the early 1970s, when the National Commission issued its report, many states did not use a maximum WBA equal to even two-thirds of SAWW.  The Commission recommended an immediate step-up to two-thirds, with a phased increase thereafter, to 100 percent (by 1975), 133 1/3 percent (by 1977), 166 2/3 percent (by 1979), and 200 percent (1981); and it further recommended the maximum be indexed annually (for new injuries) to the state’s current average weekly wage.  After the Commission report, the states all raised their maximums, but as noted few were willing to go above 100% because a higher maximum is very costly. Nowhere in the Commission’s narrative is there consideration for eliminating any cap.  Thus, the Commission seems to have accepted the premise that some cap on benefit levels was essential in balancing overall system costs and in lending greater actuarial predictability to those costs. Public policymakers need to obtain actuarially credible pricing estimates before reaching any conclusions about raising, let alone eliminating, any cap.

It should be noted that any serious consideration to significantly increasing benefit caps should necessarily include examination of the wage replacement rate (typically 2/3 of gross pay) as well as using net pay rather than gross pay as the wage base. The National Commission recommended that states adopt a net pay basis for benefits, at 80 percent of “spendable income.” The Commission’s recommendation took cognizance that workers’ compensation indemnity benefits are not subject to income and payroll taxes, and thus a more generous WBA for higher income individuals may reduce return to work incentives by replacing a higher percentage of pre-injury net pay, or in some cases, exceeding it. Replacing a percentage of net pay would better-preserve return-to-work incentives and more equitably pay benefits to workers in different income tax brackets.     

As with everything in comp, it is all more complex than might appear.

From a current C-suite Executive and former Chief Claims Officer:

I’ve been asking this question [why is there a limit pegged to AWW] since I was a 22 year old claim trainee and have pissed off a number of insurance executives and mid-level managers in the process of simply being honestly curious.   The pricing argument is a red herring – with loss data and payroll data available to the level of detail it is, I don’t buy it.   I’ll take the question a step further…why do some states limit the number of weeks of indemnity for someone who remains off work and is legitimately disabled?  Seems to be against the concept of equity and the ‘grand bargain’ that was originally intended.

Wonder why we as an industry have the reputation we do????

What does this mean for you?

It’s always helpful to hear different opinions from folks with deep, relevant experience.