What Maryland SHOULD be studying

Three weeks ago a group of stakeholders in Maryland decided physician dispensing wasn’t that bad [scroll down in link].

These stakeholders agreed to not do anything legislatively to address doc dispensing for another two years because their own analysis had indicated physician dispensing in MD was not changing.  Now, a lobbyist for physician dispensing “technology” firm Automated Healthcare Solutions has penned an opinion piece that can only be described as a hit job on WCRI, a highly respected research organization.

There are two related problems here.

  • It’s obvious the doc dispensers’ strategy is to try to discredit WCRI – no other reason to publish an editorial in a paper in a state that you’ve already won.
  • The stakeholders that signed the letter agreeing to forgo any legislation ignored research from Johns Hopkins University (located in Maryland) proving physician dispensing is associated with much worse patient outcomes.

I won’t dignify the lobbyist’s moronic prattling with a point-by-point rebuttal; WCRI already has in the measured, professional, and very precise way that is the hallmark of academic research. Suffice it to say that the lobbyist’s own writing shows he is even less knowledgeable about statistics, research standards, and data analytics than our Newfies are.

This guy calling out WCRI on statistical analysis is akin to me telling Blake Shelton he doesn’t know the music business.

Next, in a letter citing the Maryland Workers’ Compensation Commission, the stakeholders asserted “contrary to previous trends reported by the Workers’ Compensation Research Institute, Maryland claimants received a smaller proportion of prescription drugs dispensed directly from their physicians, as compared with prescriptions dispensed from pharmacies.”  After much review, my conclusion is this – there are differences in the methodologies used by the MWCC and WCRI – but those differences do NOT mean WCRI’s work is wrong.

First, the data collection process the stakeholders used to come up with their conclusion is not as rigorous as it could – and likely should – have been. For example, they asked multiple sources for data on physician dispensing, but failed to provide tight criteria or definitions for these sources to categorize the data. As a result, the findings are questionable because the sources may well have:

  • used different criteria to identify “physician dispensers”
  • used different definitions of “repackaged” drugs
  • differing ability to identify what entity dispensed a drug
  • differing ability to differentiate between physician-owned “pharmacies” and retail pharmacies
  • different definitions of “generic” and “branded” drugs

Second, the MWCC analysis used an entirely different methodology than WCRI, a methodology that, among other factors, included different time periods and a different set of claims.  It is NOT surprising that different data sets, different methodologies, different time lines yield different results.

On its own initiative, WCRI used the stakeholders’ methodology in an attempt to understand the discrepancy, with the following result:

When we replicate the data and methods used by the Commission on the data used in our Maryland draft study, we get 16.7 percent where the Commission reported that 15.7 percent of prescriptions were dispensed at physicians’ offices. Hence, when we use similar methods on different data sets, we get similar results.

Ignored in the lobbyist’s “editorial”, and by the stakeholders as well, is this:

In the last published WCRI study on this topic, Maryland was compared to 20 other larger than average states. We found that physician dispensing in Maryland was more frequent than in 17 of these 20 states—twice as common as in the median state, [emphasis added] and four times more frequent than in the neighboring state of Virginia. 

Rather than get into a “mine’s better than your’s” conversation, here’s what we know.

There’s no question Maryland has a very large physician dispensing problem – one that all the research indicates is likely driving worse outcomes for patients and higher costs for employers and taxpayers.  The really troubling thing here is the stakeholders know, or should have known outcomes may be significantly and adversely affected by doc-dispensed drugs, yet went along with the deal.

In conversations with stakeholders, I asked why they didn’t consider this, and got no answer.  When I pressed and asked if they were going to work with JHU’s researchers to look at outcomes, I was told they “may have to think about that.”

Think about…what?

I don’t think these stakeholders are bad people or ill-intentioned; they do have a lot on their collective plate.

I do think they have – for their own reasons, which may make sense to them – given up the fight against physician dispensing.

In so doing, they are missing out on an opportunity to help Maryland employers, taxpayers, and injured workers.

They are also empowering the dispensers in other states.

What does this mean for you?

All the research indicates physician dispensing increases disability duration, indemnity expense and medical costs.  THAT is what Maryland should study.

Note – in the interest of full disclosure, I am (as most of you already know) president of CompPharma LLC, a consortium of workers’ compensation PBMs. It’s also important for readers to know that it matters not one iota to me financially if physician dispensing increases or decreases.

It does matter to me personally as it is flat out wrong. It is bad policy that is damaging the many to enrich a very few.

It’s March! well, almost…

Here’s the quick update on goings-on this week.

First, Helios has an excellent synopsis of rules, regs, and laws affecting many aspects of workers’ comp medical management here.  Get it, save it, and you’ll find it’s a great reference.

Kudos to David Williams!  His Health Business Blog has its tenth anniversary this week; he celebrates by hosting a most excellent Health Wonk Review.  Posts on hypocrisy and executive compensation at a Catholic Health Network, convoluted and mostly losing efforts to avoid the PPACA mandate, hospitals’ patient experience ratings and the profitability of fund-raising make for a quick roundup of news and views certain to keep you on top of all things health policy.

Ben Miller at WorkCompCentral reports on the recent spate of mergers in the PBM world (subscription required).  Ben discusses the non-work comp market, noting WC is affected by goings-on in the (much larger) group health, medicare/medicaid world.

Heard about several PT provider groups who are quite concerned/angry/furious re the 59 modifier issue.  Two have retained outside counsel and both are pursuing audits.

Finally, here’s a really good piece on how some efforts to motivate employees are counter-productive; Hint – it isn’t (all) about money – but it isn’t that simple either. Well worth your time.

The work comp PBM industry’s evolution continues

The news that Catamaran has acquired PBM, bill review, and network company Healthcare Solutions is yet more evidence that the workers’ comp services market is mature and evolving.  Nowhere is this more evident than the WC PBM industry where there are now six major PBMs, down from ten just five years ago.

This is partly due to the change in definition of “major”; as industries consolidate the size of the companies increases as scale and buying power become critical to success.

As a colleague pointed out, this transaction doesn’t consolidate the industry per se…

Here are the key data points…

  • HCS’ purchase price is $405 million
  • at EBITDA of $35 million, the multiple is a very healthy 11.6x
  • the deal is expected to close in the second quarter
  • Catamaran’s revenues for 2014 were over $21 billion

The transaction transforms Catamaran, the fourth largest PBM serving the health, Medicare and Medicaid industries from a back office and network supplier to the workers’ comp PBM industry to a direct vendor. Things could get complicated, as WC PBMs Carlisle and myMatrixx use Catamaran’s back office and network services.

Sources indicate HCS’ management and staff will remain in place; good move as CEO Joe Boures has a very strong team that has delivered solid sales improvements, a robust and effective clinical program, and strong customer relationships.  As Catamaran doesn’t have these capabilities in-house, and HCS is growing in a mature industry, I’d expect minimal changes.

What does this mean?

Several takeaways.

  • multiples remain very strong – good news for anyone considering selling their company.  Considering it looks like this wasn’t an auction but rather a direct sale, this bodes well for anyone considering a transaction.
  • strong management drives value; after several years of spotty performance, a revamped management team has created a lot of value for HCS’ owners (full disclosure – I have a tiny equity stake left over from a previous role on HCS predecessor Cypress Care’s advisory board)
  • very happy for the Datelle family (founders of Cypress Care); Hank, Marc, and Lisa are all friends and it’s good to see them do well – again.

more to come…

King V Burwell and the Supremes’ view of “standing”

“Federal courts are courts of limited jurisdiction,” the acting United States solicitor general explained to the Supreme Court in a 1990 argument. “The presumption is that they are without jurisdiction, and the plaintiff must affirmatively prove that he has standing to invoke the power of the court.”

That’s a quote from Supreme Court Chief Justice John Roberts – given that Roberts and his fellow Justices will be ruling on the suit that seeks to disallow subsidies for policies obtained via the Federal health exchange, it has special meaning.

The suit, funded by the Koch-backed Competitive Enterprise Institute, is ostensibly being brought by four plaintiffs who, in theory, have to prove they were harmed in order to have “standing”.  In a nutshell, “standing” means that if you aren’t harmed by an action, then you can’t complain about it.  I may not like the speed limit in Hawaii, but since I never go there I have no standing to sue.

As several news outlets have reported, three plaintiffs don’t have much to complain about; this from the Wall Street Journal:

Legal experts say the fact that Mr. King could avoid paying the penalty for lacking insurance by enrolling in VA coverage undermines his legal right to bring the case, known as “standing.” The wife of a second plaintiff has described her husband on social media as being a Vietnam veteran. The government previously questioned the standing of a third plaintiff on the grounds that her income may exempt her from paying the penalty for lacking insurance, but a lower court didn’t address the issue.

The fourth plaintiff, Brenda Levy, is Medicare-eligible in June of this year – about the time the Court would rule on the case.  As I am NOT a legal scholar or lawyer, and don’t even watch legal shows on TV, I’m not qualified to say whether Medicare eligibility changes “standing” (Medicare recipients can’t be forced to carry insurance under PPACA as they are covered by Medicare).  If it doesn’t, then the case will go forward as even one plaintiff with standing is enough.

That said, this Court seems – to my uneducated eye – to use “standing” to avoid ruling on contentious issues.

What does this mean for you?

Hard to say, as handicapping this Court is a fool’s game.

Friday update

There’s a lot going on these days; several major private equity transactions in the works with one on the cusp of closure (and no I can’t name the companies),

ARAWC is a new group led by Sedgwick’s Chris Mandel in an effort to expand employers’ ability to opt out of workers’ comp.  Currently Texas and Oklahoma are the only states that allow employers to not carry workers’ comp; there is a bill in Tennessee that would make the Volunteer State the third.

Smart move on the part of the giant TPA; expands the brand, positions S as a player in the new niche, and generates conversations with employers that otherwise wouldn’t happen.  Sedgwick gets marketing.

For those interested in more details on correct coding, the folks at Equian have added a sequel to their popular Correct Coding Initiative video.  With all the excitement about the 59 modifier out there, it’s well worth the 4 minutes.

In the “I CANNOT WAIT TILL I CAN STOP TALKING ABOUT THIS” category, a college in Baltimore has set up an educational program to train doctors on physician dispensing.  This after Maryland’s recent decision to not do anything about physician dispensing because, according to data collected by DWC, it is not a problem.

This just in; physician dispensing advocates and their supporters spent just over a million dollars lobbying last year in Pennsylvania.  That’s the total from examining reporting for 2014 for the various dispensing companies, medical societies and fellow travelers who were focusing on doc dispensing.

Nice of them to use employers’ and taxpayers’ dollars to try to suck even more dollars out of those very thin wallets.  Even nicer that they lost.

Enjoy the weekend…


The good ones

There are plenty of bad actors in the workers’ compensation industry – there are also lots of people – many unrecognized – who do the right thing day in and day out.  Some do so behind the scenes, others are right out there in front.  In my 25+ years in the business I’ve met – and watched – many of these women and men, and come to respect and admire them for their tireless commitment to making the work comp world better.

A few weeks ago I posted about the passing of Anne Searcy, M.D., noting “Her passing reminds us all that there are many people striving every day to do the right thing for the right reasons.”

Dr Searcy and the many people who share her selfless dedication deserve our thanks, our appreciation, and certainly broader recognition for the work they do and the impact they make.  Fortunately there are efforts such as the Comp Laude Awards (thanks to Dave Depaolo and his colleagues at WorkCompCentral) and others that focus on the good folks in comp. These efforts deserve more attention as they remind us (me especially) to not lose track of the good.

Bruce Wood is one of those good people.  Responsible for workers’ comp at the American Insurance Association, Bruce is a behind-the-scenes guy who truly understands and wholeheartedly supports the purpose of workers comp – prevent injuries and take care of the workers who do get hurt on the job.  To say he is dedicated is to damn with faint praise; Bruce is passionate, professional, and effective; he really cares.  In the eight years I’ve had the honor of working with him, I’ve seen the respect industry leaders have for his ability to effect positive change quietly, without drama or fanfare.

Bruce brings together industry professionals with outside experts to share ideas and puzzle out solutions to issues as diverse as opioids and second injury funds, medical treatment innovation and employee classification, black lung disease and “opt-out” options.  Somehow he’s able to get a group of industry execs from very diverse companies to agree on policies that improve the system for injured workers, employers, and taxpayers.

Partially as a result of his yeoman work, AIA has added members, most recently Accident Fund Holdings, Inc.

By enabling the industry to speak with one voice supporting the right thing, Bruce is one of the good ones.  That’s not to say he’s perfect; Bruce’s political leanings are (as my lovely bride would say) diabolically opposite from mine…but I’m working on it!

What does this mean for you?

There’s hope for workers’ comp.

The Thursday catch up

Sorry, dear reader it’s been a very busy week.  here’s what I;ve been tracking.

At WCRI, Rick Victor’s now the CEO and his apparent replacement has been named.  While that’s good news, what’s better is longtime WCRI exec Ramona Tanabe has been promoted into a new position of EVP and Counsel. Ramona is universally respected for her ability and knowledge; she’s one of the most talented people at a very talented place.

Back to the new guy; John Ruser, Ph.D comes to WCRI with a wide range of experience at the Bureau of Labor Statistics and in other positions at the Departments of Labor and Commerce.  I expect there will be a blurb up on WCRI’s site here in the near future.

Here’s a brutally funny – albeit 17 minute long – John Oliver video on pharma marketing.  It’s well worth your attention, as only the John Olivers of the world can make something this disturbing this entertaining.

Sticking with drugs, and the aggressive marketing of same, I’ve been immersed in the world of hepatitis C drugs for a couple of weeks.  Well, if not immersed, perhaps toe-dipping.  Anyways, turns out these new miracle cures may well not be cures at all.  The research cited to assert claims of a cure is pretty very hugely limited; one mass media article looked at outcomes after a whole six weeks of treatment…and further erred/exaggerated/got this entirely wrong by assuming “no more virus” is the same as an actual “cure”. 

btw, Health News Review is a terrific site for those questioning the validity of mass media reports on anything medical.

As if this wasn’t enough, news just out that health care spending may have grown by 5.6 percent in 2014, driven largely by…you guessed it…prescription drug costs which zoomed up 13%, and possibly higher net health insurance costs.

The numbers are preliminary, to be sure.  Of course, the real metric is health care costs as a percentage of GDP; we’ll have to wait another month or so for almost-final GDP and health care cost figures.

That’s all for now…


To understand, be at WCRI

The annual WCRI meeting is just a couple weeks away – if you haven’t signed up, you better do it now – here.

I caught up with Executive Director Dr. Rick Victor via email last week to get his take on key findings.  Understanding Rick doesn’t want to give too much away, here’s what attendees will hear..

MCM -There’s been a lot of recent research coming from WCRI; what has been the most surprising result that will be discussed at WCRI?

Rick Victor (RV) – An underappreciated, but likely very significant unintended consequence of the Affordable Care Act  is shifting cases from group health to workers’ compensation.

MCM – What is a key finding attendees will take away?

RV – Why surgery rates vary from state to state

MCM – Do you see any conventionally held wisdom that will be confirmed, or rejected, by research presented at WCRI?

RV – For states that do not have fee schedules, the decision to adopt one is a strategic decision from which there may be no going backwards

One of the most useful aspects of the WCRI Conference is there are few events where the audience is as sophisticated, diverse, and knowledgeable.  That’s why the conference is always sold out.

What does this mean for you?

Better be there…

The individuals suing to overturn Obamacare

An enterprising journalist located the 4 individuals so harmed by PPACA that the Competitive Enterprise Institute is taking their case, now known as King v Burwell, to the Supreme Court.

Two of the four qualify for hardship exemptions – that is, because even the cheapest PPACA plan would cost them more than 8 percent of their income, so they are exempt from the individual mandate.

“King” in King v Burwell is one of these two; he’s an uninsured 64 year old smoker who will soon be on Medicare.  Mr King is somewhat ill-informed about “Obamacare”, but as his income is low, he avoids the individual mandate.

The other, Rose Luck, is, if anything, even less informed about Obamacare; she warned her Facebook buddies Obamacare will “cost some people 77,000 dollars a yr.” While she won’t be required to buy insurance, Ms Luck is no fan of the person whose name is used to label PPACA; she did call the President the “anti-Christ” and said Obama was elected by getting all “his Muslim people to vote for him.”

I don’t see how these two worthies were actually “harmed”, as in, suffering any material or measurable or painful or negative consequences, from PPACA

Brenda Levy is also few months away from qualifying for Medicare, has actually never attended any of the court proceedings, and, when told that her suit could eliminate health insurance coverage for several million fellow citizens, was kind of upset, saying “I don’t want things to be more difficult for people…I don’t like the idea of throwing people off their health insurance.”

(about 8.2 million Americans will likely lose coverage if King wins)

Still, she doesn’t like Obamacare, even though she could have bought a plan for $148 at a time when she claimed her premiums were $1500 a month…

Which brings us to the fourth litigant, Doug Hurst of Virginia Beach VA. Although Mr and Mrs Hurst too would have qualified for a very large subsidy, Ms Hurst is vehemently anti-Obamacare.  When approached by the reporter, she would not provide any insights into her position or rationale.

Still, Mr Hurst and Ms Levy at least seem to have the legal “standing” to claim PPACA has somehow harmed them.  I don’t see how the other two litigants can, as they aren’t required to do anything due to their low income status.

So here’s my question.  Is this the best group of litigants the Koch-backed CEI could come up with?  How about someone who had to change health plans, or an employer mandated to offer coverage? A provider affected by lower reimbursement perhaps?

There’s no question PPACA can be improved; there’s also no question many opponents’ blind fury makes for pretty crappy strategy.

What does this mean for you?

CEI is little better than Hurst, King, or Luck – ill-informed ranters who don’t have any idea what they are litigating.  Of course, CEI does have the dollars to bring a case that may well cost 8.2 million Americans their health insurance.


Romance is in the (health care policy) air!

A romantic but but not icky edition of Health Wonk Review is up at Peggy Salvatore’s Health System Ed blog.  Peggy covers all manner of romance and passion, minus the omni-present 50 shades stuff (thank you Peggy!)

Whether it’s a quick and highly readable explanation of Medicare’s Sustainable Growth Rate, a paean to the individual mandate and history thereof (thank you GOP!), or an alert about the dangers of nursing, Peggy’s got it for you!