The Super Bowl of Drugs

Warning – rant follows…

The two main takeaways from last night’s SuperBowl are:

  • A really good defense and great defensive plan can beat a really good young quarterback.
  • Drugs are where the money is.

I’ll leave the first point to those more expert in football analysis and focus on the second for a minute or two.

In a sign of the imminent arrival of the Apocalypse, there were three ads for drugs shockingly none for life-threatening conditions.  Nope, we Americans must have way bigger concerns than diabetes and cancer – namely the coming open-toe shoe season and the inner workings of our lower digestive tracts.

Yup, there was an ad for a toenail fungus cure, (TOENAIL FUNGUS?!). another for diarrhea (DIARRHEA?!) and one for Opioid-Induced Constipation.  The cheapo fungus ad cost a mere $5 million for 30 seconds; the animated intestine discussing bowel movements graced our screens for a full minute; so did Astra Zeneca’s solution for the opposite problem.

The toenail fungus AND intestine ads came courtesy of Valeant, a name you may recall from news stories about Federal investigations into its pricing practices.  Over the last few years, Valeant has bought up the rights to at least four drugs – then jacked up the drugs’ prices by a factor of 10. (this is getting to be a common practice)

And opioid-induced constipation?

Okay, that’s a problem, but WhyTF are we taking so many opioids that pharma gets to make more hundreds of millions of dollars on a problem pharma created?

What a brilliant business plan; let’s create a drug that makes people feel really good AND is highly addictive, encourage doctors to prescribe it for everything from a sore back to cancer, then, when we have saturated the market so that there’s enough pills sold to give every American a month’s supply every year, let’s charge them three hundred bucks a month so they can poop.

When you watched those ads, did you think about all the zeros on your health insurance bill this month, realize that your family deductible is about equal to what you paid for your first decent car, and see that your choice of providers is best described as “few and far between?”

We are seeing a free market system running wild.

What does this mean for you?

If we stay on this path, we’re bankrupt.




Workers’ comp is leading the way on opioids

Welcome to the war, everyone.

Okay, so work comp is not the most progressive industry. We are – often justifiably – seen as slow-moving, overly conservative, reluctant to adopt change and averse to innovation.

Except when it comes to opioids, where work comp has been far in front – and continues to lead.  By advocating for treatment guidelines, restrictions of physician dispensing of opioids, formularies tied tightly to UR, analytics and clinical intervention, work comp has long been very active in a crisis that is only now getting real attention in the “real world”.

In a shocking statistic, opioid-related deaths in this country hit 28,647 in 2014, a 9% increase over 2013,

On the “What in hell took you so long”, it is wonderful to see the President call for $1.1 billion in funds to address the opioid crisis. The mainstream media is (finally) all over the issue.  Congresspeople are strident and passionate, finally joining Rep. Hal Rodgers R KY who has long been a leader, calling for action action action.  Presidential candidates are speaking out about the crisis.  It is an acknoledged public health emergency.  The CDC is promulgating guidelines.  Meanwhile, the opioid industry and their supporters are employing all their usual tactics in an effort to keep their profits flowing – expect them to spend whatever they need to.

For those of us in work comp who have been desperately working on the issue for years, this is welcome indeed.  We’ve been fighting this battle for at least ten years, thanks to research by CompPharmaCWCI, NCCI, and WCRI. Innovative efforts by a few insurers. Passionate and vocal leadership from pharmacists and medical directors. Washington State fund L&I’s Gary Franklin MD has been the industry’s leading voice on this issue for a decade, and the progress L&I has made under his direction (kudos to Jaymie Mai, PharmD as well) has been enormous.

The American Insurance Association’s Bruce Wood has been a forceful voice for common-sense, practical solutions, tirelessly bringing this issue to the attention of legislators, regulators, comp executives, and other stakeholders

A special shout out to PBMs, where diligent, targeted, persistent effort by execs, case managers, medical directors, clinical pharmacists, data analysts and account execs have actually led to a decrease in new claims with opioids for the last two years.

Think about that.   Working with payers, PBMs have been cutting opioid scripts for new claims by 5-7 percent per year for the last two years, likely significantly reducing adverse consequences – addiction, misuse, diversion, death.

PBMs make their money when patients are prescribed and dispensed drugs.  Yet PBMs, and their payer customers, have been working tirelessly to reduce the number of pills their patients take.

I’d be remiss if I didn’t acknowledge PBMs’ customers – adjusters and execs alike – have been a key part of the solution.  I recall a terrific program instituted by OneBeacon a decade ago that rewarded adjusters for identifying claimants on opioids and referring those claimants to a physician for review and treatment modification efforts.

Somehow the uninformed and unwilling-to-be-informed out there have not seen fit to allocate credit where credit is due.

Yes, work comp can be archaic, byzantine, frustrating, and even stupid.  And yes claimants can be mis-served for any number of reasons.

But what you’ve done about opioids is truly remarkable. Yeah, we still have a long way to go.  But we are well ahead of the rest of the world.

Note – I am president of work comp PBM consortium CompPharma.


Workers’ comp – predictions for 2016

Just realized I’ve yet to post my annual Top Ten Predictions for Workers’ Comp – my apologies!

Here we go…

  1. The comp market will soften pretty much everywhere*.
    As rates continue to come in flat or a few points down, the equity markets flounder about, and interest rates stay low, there’s going to be more capital than places to put it. So, expect work comp insurers and insurance funders to keep looking to expand market share – which will keep rates low.
  2. *Except in California, where rates are up – and will stay there.
    The uncertain regulatory and judicial environment – at many levels and dealing with many aspects of comp – has made just about everyone nervous indeed about the financial future of the industry. Until there’s some clear direction and these ridiculous court cases are put to bed, the market is going to push prices up and availability down.
  3. Liberty Mutual will continue to de-emphasize workers’ comp.
    Which, given the company’s improved financial performance of late driven by personal lines’ profitability coupled with off-loading a huge chunk of legacy claims liability to Berkshire Hathaway, is a smart move.  However, this does open up opportunities for other insurers and those looking to deploy capital.
  4. Private equity’s role in the vendor market will decrease – a lot
    After years of intense interest, private equity investors’ interest in workers’ comp is waning rapidly.  There are several reasons for this, including the most obvious – the market has been over-heated for far too long.  In addition:

    1. Upheaval in the credit markets makes debt financing a lot harder to come by – and somewhat more expensive.
    2. The past consolidation means there are fewer decent-sized assets (>$10 million in EBITDA) to buy
    3. Strategic buyers are winning more of the deals because they can generate more earnings thru consolidation – United Healthcare buying Catamaran (owner of Healthcare Solutions) and Helios, EXAM buying various small companies, Xerox acquiring Stratacare, York buying MCMC are all examples.
    4. Partially due to strategics, prices have been historically high for a very long time. Double-digit multiples are likely unsustainable for much longer – and certainly not in a PE-driven marketplace.
    5. Some recent deals have not worked out so well.
  5. A half-dozen – or more – states will adopt drug formularies
    Here’s hoping they integrate formularies with utilization review and a very solid and efficient review process.
  6. Opt-Out will not gain much traction
    The bad behavior of bad actors will significantly hamper efforts to advance opt-out legislation.  That, and the lack of any real problems in most states’ workers’ comp systems.
  7. We will see a couple/several bundled payment pilots
    Gaining traction rapidly in Medicare and the group/individual health businesses, we can expect bundled payments for orthopedic care to take place in several locations. Initial reports indicate Illinois (!) and – of course – California may be on the leading edge.
  8. PBMs and payers will make even more progress reducing the use of opioids
    The work comp world has a lot to be proud of here.  After years of enabling opioid use, we – all of us – are doing a much better job stopping initial scripts, working to wean long-term users off opioids, and thereby really helping people and companies. Expect opioid use to drop again in 2016, especially for new claims.
  9. A couple of large, vertically integrated delivery systems will make significant moves into occupational medicine
    Work comp pays well (in most states), is a feeder for orthopedics, gets insured people into the health system, and diversifies revenue sources.  Delivery systems are looking for diversification, and their large infrastructure lends itself well to work comp.
  10. There will be big changes at OneCall
    With debt trading in the low eighties, pressure from debt holders on owners and management to deliver the numbers, management shuffles and continued challenges with customer service, I expect OCCM will go thru some significant changes this year.

That’s it – and I’ll check back in this summer to see how I’m doing.

What are your predictions?

Monday catch up

What with the HealthWonkReview Tenth Anniversary celebration at HWR HQ last week and finishing up a client project, I neglected my posting duties.

Here’s what I shoulda been writing about.

Work comp

Working with Harbor Health, the State Fund of California has launched an upgraded and updated MPN (that’s medical provider network for those not among the cognoscenti). Contracted thru Anthem, the new MPN is larger and provides more coverage in the rural areas where the State Fund has a lot of business.  While there aren’t any significant changes to how providers will interact with the State Fund, HH’s folks have determined the providers selected are higher performers.  HH will be monitoring performance on an ongoing basis.

Big news in the world of Medicare Set-Asides; NAMSAP has elected a new Board of Directors; the organization’s new leader is Gary Patureau of Louisiana Self Insured Ass’n fame.  Met Gary live for the first time last week, he’s a very experienced work comp exec; he is replacing the irreplaceable Kim Wiswell.  Rita Ayers of Tower MSA Partners is also joining the Board.

Implementing Health Reform

Contrary to the wildly wrong claims by GOP presidential candidates, employment hours have NOT changed due to ACA.  Many economists of that ideological ilk have been moaning for years that employers would cut hours to reduce the number of workers they had to insure.

Well, that hasn’t happened.  Here’s the money quote from a just-published research analysis: 

We did not see increases in 2015 in the probability of working either 25–29 hours or fewer than 25 hours per week. …We also did not observe a large reduction in 2015 (or in 2014, for that matter) in the frequency of working 30–34 hours, as one might expect if employers affected by the mandate reduced hours for workers just above the 30-hour threshold.


A few weeks ago I posted on Millennium Health’s legal problems, $260 million fine and settlement with the Feds.  What I neglected to note was the settlement was with every state AND the Feds; it addressed state and federal legal actions. There have been a few announcements from individual state Attorneys General to the effect that they’ve settled with Millennium; each one was part and parcel of the one announced a few months back.  not – MH is still a consulting client.

News of the Weird 

The Great Buffoon, Donald Trump, actually said something intelligent last week.  I know, who’da thunk it, right?

What the arrogant demagogue said was he’d save Medicare $300 billion a year by “making Medicare” negotiate drug prices. Alas, Trump doesn’t understand that this is against the law – a law passed by his own party and signed by a GOP president.

Good luck with that.

More on this here. And here.




Health Wonk Review – The Tenth Anniversary Edition!

Well, that didn’t take very long…

Hard as it is to believe, Health Wonk Review has been around for a decade.  Yup, since way back in the DSL days, before the birth of the iPhone, before the Great Recession, before health care reform, back when I had brown hair, a group of health care nerds decided to publish a biweekly synopsis of the best of the health care blog-o-sphere.

Note – this post was delayed a couple days; here at HWR Inter-Galactic Headquarters we are still recovering from a mammoth 10th Anniversary Party.


The 200+ editions have been hosted by a who’s who of health care; physicians, health policy gurus, health care economists, workers’ comp pros, health insurance brokers, consultants, academics, not-for-profit execs, and even real journalists.  We owe a big thank you to all of you – and to Julie Ferguson, the expert who keeps things on schedule.

Throughout our loooong history, HWR has brought you perspectives from all political stripes – from hard-core free-marketeers to socialist single-payers; ultra-conservatives to hyper-liberals.

Fortunately, we haven’t had much of this..


And today is no exception!

With that – here’s what’s been on the blogs of the best-and-brilliantest this last biweek…

Ideas don’t die, they just take a long time to come to fruition.  That’s one view of single payer.  Linda Bergthold’s contribution from is a reminder that single-payer advocates haven’t gone away and are delighted indeed that Presidential candidate Bernie Sanders is giving full-throated voice to their cause.  The Bern’s campaign includes a Medicare-for-All proposal that would make consumers’ lives gigantically easier.


Dismiss it if you will – but not before you consider that universal health reform, an idea long derided as a non-starting never-happen, has been the law of the land for going on seven years…

A counterpoint to Bernie’s Single Payer comes from Hank Stern’s InsureBlog. Authored by Mike Feehan, the IB post says efforts to advance single payer in several states have been unsuccessful because it costs way too much. 

In fairness, I’d suggest that there cannot be “single payer” in any state, as Medicare alone accounts for more than a quarter of spend in many jurisdictions.  I’d also note that in defense of Sen Sanders, he has been quite up-front on the cost…

And this just in from the galaxy’s leading expert on ACA sign-ups, Charles Gaba. Charles was on the fence about Sanders’ candidacy for president, until Sanders released his single payer plan.

Now, Charles is off that fence and firmly in Clinton’s camp.  If you want to know why this single-payer fan is not favoring the single-payer candidate, click here.  Spoiler alert – Charles really, really understands this – and so will you after you read the entire piece…

My entry this fortnight attempts to cut thru the noise surrounding United Healthcare’s yet-to-be-followed-up-on threat to pull out of the Exchanges and the Rubio-induced death of many Co-Op plans.  It’s important to understand what UNH does – and does not – bring to the table; it’s also important to think of this in the context of what’s really going on.

Fixing an industry that accounts for one-sixth of the nation’s GDP is not going to be smooth, trouble-free, or painless.  Considering how change affected our industrial heartland, what we’ve seen in health care is minor indeed.

Sticking to the impact-of-tectonic-changes-in-healthcare beat, we welcome Roy Poses, MD.  Roy has been with us from the start; he is one of the leading voices identifying, criticizing, and educating us all on conflicts of interest, self-dealing, and, dare I say it, borderline corruption in the US health care delivery, device, pharma, and payer industries. Roy’s post details efforts by physicians at a not-for-profit, religiously-based hospital system in the Pacific Northwest to unionize.


Fed up with corporate BS and “managerialism”, the move by these docs may well be the harbinger of events to come.

With it’s foray into blogging, Health Affairs was one of the early adopters among the hard-copy research publishers; they have continuously improved and deepened their commitment.  Their latest is timely indeed, focusing on dramatic improvements in outcomes – and much lower costs – associated with early identification and treatment of mental illness.  

One key finding – 79 percent of high cost mental health patients were under 60 – almost the direct opposite of other high cost patients…

There are big claims for the benefits of wellness by fans – and equally strident derision of those claims by naysayers.  Jaan Sidorov MD sheds some much needed light on the “discussion” – citing studies that indicate a very strong association between wellness programs and total shareholder return. 

Jay Norris, one of the most insightful small-group brokers around, consistently provides insights into the real world of health reform.  His post this week is one of those adding much-needed color to the national discourse on ACA implementation; Jay’s job is to help employers and individuals navigate the system, and his advice and insight provide a real world perspective “policy makers” would do well to carefully consider.

One of the many pros who have been with us from the start is Jason Shafrin aka The Healthcare Economist.  Serendipitously, the good doctor is also celebrating the ten-year anniversary of his most-excellent blog. Jason’s contribution is a compendium of readers’ favorite posts.  Whether it’s comparing the US health care system to Canada’s; opining on other nation’s health care economies, outcomes, and services; defining ACOs or diving deep into the alphabet soup of medicare reimbursement policy, Jason’s the go-to guru.

David Williams of Health Business asks a knotty question – are supplements and food additives that are “Generally Regarded as Safe…safe? Given the dramatic improvements in safety testing, “maybe it’s time to reconsider the cost/benefit of cardiac safety testing at least for certain food additives.”

Pharma costs are high, going higher, and seemingly unstoppable.  Many – including your devoted author – believe direct-to-consumer (DTC) advertising is a major contributor. That’s been allowed under interpretation of freedom-of-speech protections.  Journalist Peggy Salvatore thinks that interpretation is the correct one – and even drug advertising is banned, digital health messaging/marketing will likely make a ban on DTC futile.

From the brains behind HWR – Julie Ferguson – comes the truly frightening news that there are 19 Texas facilities storing more than 10,000 pounds of ammonium nitrate within a half-mile of a school, nursing home, or hospital. Recall that an explosion at a similar facility in West, Texas killed 12, leveled structures all around the facility, caused $230 million in damages – $1 million of which was insured.


photo credit Mike Stone, Reuters

Julie’s message – training, education, and preparation for local emergency responders would have saved many lives – but Federal funding for the program that ensures local emergency responders know what they are responding to was eliminated in 2012.

HWR has been a labor of love – for all of us. Thanks for reading, and join us again next biweek!

Co-Ops fail, United pulling out of Exchanges; ACA’s death knell?

The demise of many co-ops and United Healthcare’s threat to pull out of the Exchanges due to some $700 million in past and forecast losses has generated more speculation that ACA, the Exchanges, and health reform in general are in dire straits.

Deep breath here, folks.

First, historically United has not been known for expertise – or much interest – in the individual marketplace.  Afer entering the Exchange markets late, it was operating in about 60% of the rating areas, an indication that the huge insurer jumped in to the market belatedly and then with both feet.

Second, United’s “big” losses are an estimate – UNH reported it lost around $500 million on ACA plans in 2015 (although it’s a bit early to come up with any number) and, depending on which source you read, is predicting it will lose hundreds of millions more this year. Given the huge insurer’s inability to predict financial returns on the front end, I’d suggest that these current predictions be taken with the proverbial grain of salt.

Third, the dominant low-cost insurers in the vast majority of health insurance rating regions are either Blues plans or Medicaid managed care organizations.  So, while the Co-Ops Rubio-induced failure is a major issue, it by no means is a harbinger of system-wide collapse.

Remember, the health care financing and delivery system accounts for 17% of our GDP.  It is going thru huge and wrenching changes, changes that mimic what we’ve seen in manufacturing, heavy industry, shipping, commodity production.  If anyone thought this was going to be smooth, simple, easy, and predictable they were naive beyond belief.

Change is always destructive for some, an opportunity for others, and unpredictable at best.  The genius of our economic system is that smart, adaptable, well-positioned companies will survive and thrive.

So, let’s not get too upset about United’s theoretical $720 million loss.  That accounts for  a whopping 0.42% of the company’s total revenue of $167 billion.

And, United’s departure from Exchanges opens opportunity for other health plans.

What does this mean for you?

Opportunity favors the prepared, and change is opportunity.

OneCall’s new CEO

is Dale Wolf.

Wolf, OCCM’s executive chair, was named CEO yesterday after serving as the interim CEO since Joe Delaney’s departure last summer.

Wolf’s history includes a stint running the small group health insurance business at the Travelers (where he was a client of mine), a series of progressively responsible executive slots at Coventry Healthcare, and a couple years working in the private equity world. Wolf’s tenure at Coventry concluded with former CEO Allen Wise removing his former protege from the CEO position after a series of underperforming quarters due to high medical loss ratios.

The announcement came after OneCall’s sales meeting in Jacksonville where close to 300 sales staff heard about a realignment that reportedly reflects a shift from field to corporate sales.  While many will not be directly affected by the change, the overall mood was, according to some, “muted”.

Word is OCCM will soon have the vacant CFO position filled, the last of the executive slots sitting open.

Where the company goes from here is a great question, and one of intense interest among OCCM’s debt and shareholders.  With its debt reportedly trading well below par and returns in the mid-teens there is, depending on your perspective, significant upside or a lot of risk.  Much will depend on the ability of leadership to staunch the bleeding from Align as that subsidiary is coming off a tough year with significant client defections; more are rumored over the next few months.

Meanwhile, changes in state fee schedules for imaging, especially in California, have reduced the profitability of that business line somewhat.  It remains to be seen if other states follow suit, although I do NOT expect future changes to have anywhere near the impact of California.

The net is Wolf has a tough row to hoe indeed.


Friday catch up

Made it home from warm and sunny Baton Rouge yesterday just in time to escape the travel disaster unfolding across the east coast.  Hope you and yours are warm and snug and home.

The big news-that-wasn’t was the completion of the acquisition of work comp PBM and specialty services firm Helios by OptumRx, United Healthcare’s PBM and ancillary business entity.  If you were looking for an announcement, there wasn’t one.  Although the deal was likely in the $1.5 billion range, Optum alone generated $67 billion in revenue last year, while the entire company totaled $157 billion in sales. Helios might be a blockbuster deal for work comp folks; it is not for United.

I was honored to speak at the Louisiana Workers’ Comp conference earlier this week, focusing on formularies and other tools payers use to ensure patients get the right drugs and don’t get the wrong drugs.  The audience was engaged, very knowledgeable, and had lots to say.  Good people looking to do the right thing despite what can be a very challenging environment.

Health care evolution

The canary-in-the-coal-mine that is California provides more insight into what will happen in your market – rapid and deep consolidation of health care providers into vertically-integrated delivery systems.  One market – the greater San Francisco Bay area – provides a view into the future for others.

This is especially important because these huge provider networks are critical to health care delivery, financing, access and cost and quality improvement.  Which raises the question – are they getting so big they are “too big to fail?”

Not surprisingly, a conservative view is the government is behind this, and the risk is high. The logic of that argument, while superficially valid, fails in the face of understanding.  What the author fails to note is the Co-Ops were established precisely to foster competition in a market dominated by hundred-billion dollar plus organizations.  More importantly, market consolidation has been going on for years – and while the ACA has likely sped up the process, this is an inevitable result of a maturing market.  This isn’t a government thing, this is a business thing.

Of course, if Sen Rubio et al hadn’t strangled the Co-Ops by cutting off their risk payments, there would be more competition…


Interesting research published by the Pharmacy Benefit Management Institute, detailing the state of the PBM world over the last couple of years.  Not only does it have a cool picture of a women’s eight at the catch (that’s rowing talk), the pub has a wealth of information on what’s happening in the real world of pharmacy management. A few highlights:

  • driven by a near-20 percent jump in specialty med costs, overall trend was up over 10 percent.
  • most of the cost control efforts appear to be financial, with more payers adopting multi-level tiers for copays and the expansion of deductibles and other cost-sharing approaches.
  • the top goal across all respondents was managing the cost of specialty meds.
  • “The generic dispensing rate at retail pharmacies in 2002 was only 40%; today it is 78%”

Costs are going up at double digit rates despite more aggressive cost-sharing and a doubling of generic dispensing.

Work comp

NCCI is working on research aimed at tracking potential impacts of ACA on work ; their work includes monitoring time-to-treatment for comp claimants.  Kudos to Barry Lipton et al for this needed research.

Back at it next week – hope your team wins this weekend!

Workers’ comp; where the smart money is(n’t)

Earlier this month the fine folk at CWCI published a two-page briefing on NAIC’s workers’ comp insurer financial returns.  One could be excused for thinking the document detailed halcyon days of overflowing corporate coffers, treasuries stuffed with profits gleaned by jacking up rates and screwing employers and patients.

Shockingly, despite two terrific years of solid financial results, the work comp industry is only half as profitable as the rest of American industry.

I know, I was stunned too.

But the numbers don’t lie; US workers’ comp insurers’ 2014 return on net worth was 7.5% – while the US industry average was 14.3%.

And that wasn’t atypical. Over the decade ending in 2014, work comp insurers’ delivered an average return on net worth of 6.8% compared to the all-industry average of 13.9%.

Digging deeper into the numbers, there were only two years where WC hit a net worth return in the double digits – while the rest of US industry did that  e v e r y year.

Now, thanks to ProPublica, we KNOW you work comp carriers are totally and completely focused on jacking up profits by screwing workers. Clearly, you guys and gals are just NOT getting it done.

What does this mean for you?

Time to get cracking!

The NAIC report is available here.

How to reduce medical costs the easy way

Here’s one very effective way to reduce medical spend.

  1. Identify low-cost providers.
  2. Send your patients to them.

Do NOT send your patients to providers because they give a discount.

Do NOT send patients to providers because those providers are “in network.”

Fact is, there is wide variation between and among providers in the same geographic area – for the same procedure.

Another fact is, there’s no correlation between cost and “quality”.

There you have it.