Author: WorkCompAcademy

George Parisotto, administrative director of the DWC, spoke about the state of the California Workers Compensation system with Insurance Journal. The system has undergone numerous changes since the implementation of the sweeping reforms that started in 2013 with Senate Bill 863.

In the last few years medical provider fraud has been addressed by subsequent new laws, a plague of liens that burdened the system are being addressed, and there’s even a new drug formulary. Mr. Parisotto provided his views on some of these changes.

He admits that not everyone likes the changes. One has no further to look that public comments on new rulemaking proposals by the the Division of Workers’ Compensation, which some providers have called unfair and overly burdensome. And there is a shortage of qualified medical examiners – who are an essential backbone of how workers’ comp medical reviews are dealt with in the system.

Mr. Parisotto equates what it takes to make changes as “almost like turning a cruise ship. It takes a lot of time, and it takes a lot of effort, and it takes a lot of understanding on the part of people.”

Among the many task on his plate, – he wants to make sure is that the new drug formulary is up to date and reflects the best evidence based medicine that is there. The legislation, which is in the labor code, also mandates implementation a pharmacy and therapeutics committee that will give advice as to what is going on of evidence-based medicine, new drugs, how they are used.

He is also proud of the rule-making at the end of last year which updated all of the treatment guidelines to the current chapters that are used by ACOEM.

SB 1160 added provisiona that provided a faster route to adopt newer guidelines so the DWC does not have to go through the regular rulemaking process. “What we have now is we have a process where, if there’s a new guideline – we send out a notice, we provide a 30-day period for written comments, we have a public hearing. We have to respond to those comments.”

“That’s important. One thing I wanted to say is that this expedited process that we’re using now, we certainly allow public input and public comment into it. Once we have our hearing, we respond to the comments, and we can adopt those chapters. Again, we want to have a process that makes our treatment guidelines more living documents, something that can be changed just to reflect what’s going on out there.”

With respect to the drop in the size of the QME list, he wants to “see how we can step up our recruitment efforts. Generally we just post a notice, as a matter of fact I think we did that today, about our new exam that’s coming up. We want to reach out to various associations to help, to see what they can do to recruit.”

He concluded by saying “I think it all kind of comes back into what we need to do, what can we consider to make our system better, to make it more efficient. I think once we move in that direction, I think we’ll see how our QME system is at that point. Whether it’s sustainable.”

The DWC has suspended 11 more medical providers from participating in California’s workers’ compensation system, bringing the total number of providers suspended to 274.  Administrative Director George Parisotto issued suspension orders against the following providers:

– James Chen, Palmdale pharmacy owner, pled guilty in federal court in 2017 to health care fraud for pharmacy processing and billing approximately $62 million in fraudulent prescriptions for compounded medications. The California Department of Health Care Services suspended him from the Medi-Cal program on October 6, 2017.
– Abdul Garba, Van Nuys owner and operator of ITC Medical Supply, a supplier of durable medical equipment, primarily power wheelchairs, was found guilty of health care fraud in May 2015 for submitting false claims to Medicare for care and services. He was sentenced to 21 months in prison and ordered to pay $814,446 in restitution. The California Department of Health Care Services suspended him from the Medi-Cal program on September 6, 2016.
– Taliaferro Harris, Los Angeles, was convicted in federal court of health care fraud in 2008 for his involvement in an illegal scheme to defraud the Medicare program by overbilling for services. Harris was sentenced to 3 years of probation and ordered to pay $88,015 in restitution.
– Errol and Thelma Lat of La Verne, owners and operators of Star Home Health Resources, Inc., were convicted in federal court in 2017 of conspiracy to pay and receive illegal remunerations for health care referrals and paying illegal remunerations for health care referrals. Star Home Health Resources, Inc. paid illegal referral fees to physicians for Medicare referrals. They and suspended provider Elaine Lat were involved in an illegal scheme that billed Medicare more than $4 million.
– Nick Nikbakht, Sherman Oaks co-owner of Diagnostics Corporations, pled guilty in federal court in 2016 to mail fraud and conspiracy to commit money laundering for his involvement in an illegal scheme to defraud private insurers by overbilling for services that were not medically necessary. Nikbakht and his co-conspirators billed private insurers at least $3 million.
– Fernando Valdes, Garden Grove durable medical equipment provider, pled guilty in federal court in 2017 to conspiracy to commit honest services mail fraud. Valdes was involved in an illegal scheme with suspended provider George Reese to defraud the California worker’s compensation system by overbilling for equipment and services.

The following providers surrendered their medical license or had their medical licenses revoked:

– Michael Basco, Maryland obstetrician/gynecologist, had his license revoked on November 10, 2016, after the Maryland State Board of Physicians concluded he was guilty of unprofessional conduct in the practice of medicine.
– Rodney Davis, San Diego physician assistant, had his license revoked on June 20, 2016, after a decision by the Medical Board of California, Department of Consumer Affairs. It was determined that he had practiced medicine, specifically related to liposuction, without a license.
– Luis Antonio Lomeli, Ontario physician, surrendered his license, effective November 23, 2016, based on accusations that he suffers from a mental/physical illness ailment that inhibits his ability to safely practice medicine.
– Irineo Mallari, Morgan Hill registered nurse, surrendered her license, effective June 13, 2017, for failure to comply with a probation program and for failure to function as a registered nurse.

Prescription drug wholesalers, drug store chains and pharmacy benefit managers generally have seen their stock prices tumble this year, even as the overall S&P 500 healthcare sector has gained 6 percent.

Uncertainty over potential actions to reduce prescription drug costs and competitive threats have taken a toll this year on shares of companies in the U.S. pharmaceutical supply chain. They get their chance to change investor sentiment with quarterly earnings reports in the coming days.

Six S&P 500 stocks – CVS Health, Walgreens Boots Alliance, AmerisourceBergen, McKesson, Cardinal Health and Express Scripts Holding  – collectively recently traded a third below their average valuation of the past five years, based on price-to-earnings estimates, according to Thomson Reuters Datastream.

Fears the U.S. government will take actions to rein in prescription drug prices, an issue trumpeted by U.S. President Donald Trump, have cast a cloud over the stocks.

Just last week, the shares were rattled as the Trump administration proposed a rule to scale back protections that allow rebates between drug manufacturers and insurers and pharmacy benefits managers, among the industry’s so-called middlemen.

Amazon’s designs on health care, in particular its planned acquisition of online pharmacy PillPack, also are pressuring the stocks, as are moves by drugmakers such as Pfizer Inc and Merck & Co to cut some drug prices or roll back increases.

McKesson, which reports results on Thursday with other companies following in next two weeks, has had its shares fall about 15 percent this year. Shares of rival drug wholesalers, Amerisource and Cardinal, have fallen nearly 9 percent and 20 percent, respectively. Drug store chains CVS and Walgreens have dropped about 9.5 percent each. CVS is also a large pharmacy benefit manager (PBM).

Express Scripts shares have climbed more than 6 percent this year. The PBM’s stock price has benefited from the company’s March agreement to be bought by insurer Cigna Corp (CI.N). Even so, the stock recently traded at only 8.3 times earnings estimates for next 12 months, a discount to its five-year average of 12 times.

A joint enforcement strike force issued over $200,000 in administrative fines to nine Contra Costa County restaurants for failing to provide workers’ compensation insurance.

Investigators from the Contra Costa District Attorney’s Office, Department of Industrial Relations’ Labor Commissioner’s Office, and Employment Development Department conducted surprise inspections at Contra Costa County restaurants suspected of deliberately evading the obligation to provide workers’ compensation insurance to employees.

The citations issued by the Labor Commissioner’s Office allege that the restaurants cumulatively employed 55 workers without providing insurance coverage in the event of an injury on the job. The restaurants failed to respond to a warning letter from the District Attorney’s Office in July of 2017.

The nine restaurants who were cited are::
– Meson Azteca, 2237 & 2239 Morello Ave., Pleasant Hill ($71,668)
– New Lim’s Garden, 4340 Clayton Rd., Concord ($51,262)
– Dragon City Restaurant, 71 Sand Creek Rd., Brentwood ($28,500)
– La Mordida, 607 Gregory Lane, Ste. 140, Pleasant Hill ($16,500)
– Sushi One, 3111 Balfour Rd., Brentwood ($15,000)
– Sunshine Café, 1908 Oak Park Blvd. Pleasant Hill ($7,500)
– Tacos El Patron, 2290 Monument Blvd., Pleasant Hill ($7,500)
– Grant Street Pub and Pizzeria, 1822 Grant St., Concord ($6,500)
– Sunshine Café, 2227 Railroad Ave, Pittsburg ($4,500)

The Labor Code requires employers to provide workers compensation insurance to cover employees in the event of an on-the-job injury.

District Attorney Diana Becton said, “The District Attorney’s Office is committed to protecting the workers of Contra Costa County. Operations like these are an important part of obtaining compliance before an employee finds out the hard way that their employer did not have coverage for a severe injury.”

“This operation protects employers who are playing by the rules from being undercut by those who don’t,” said California Labor Commissioner Julie A. Su. “We also issued these citations because employees are entitled to workers’ compensation insurance if they are hurt on the job.”

Willful failure to provide the insurance is punishable by substantial fines and misdemeanor criminal prosecution. Employees that do not know whether they are covered can check their employer’s notices board or ask a manager. Labor Code section 3550 requires the employers to post a notice identifying the current insurance at a conspicuous location.

Generic medicines for many common health problems like high blood pressure and diabetes may cost Medicare patients less when they pay cash instead of using their health insurance.

Researchers compared out-of-pocket costs for 30-day supplies of 27 different medications for conditions related to cardiovascular disease. They looked at how often these prescriptions cost more than $4 – the amount charged by Wal-Mart’s drug discount program – when people used one of 622 different standalone Medicare drug plans or one of 1,533 different health insurance plans known as Medicare Advantage.

Half of the time – across all the different medications and types of coverage – at least 21 percent of the Medicare plans required patients to spend more than $4 for covered generic prescriptions.

“We already know from consumer reports that beneficiaries can sometimes get better deals by paying the cash price (without using insurance) at a pharmacy or at a generic drug discount program, rather than paying the co-pay using their insurance, but there wasn’t good data on how this varied across plans,” said senior study author Dr. Joseph Ross, a professor of medicine and public health at Yale University in New Haven, Connecticut.

“Our results demonstrate that a surprising percentage of plans – particularly Medicare Advantage plans – have cost-sharing structures in place that may not give the cheapest option to their beneficiaries for common generic cardiovascular drugs,” Ross said by email. “We know that higher costs lead to lower patient adherence to their medication treatments, which can worsen management of these common cardiovascular conditions if patients are delaying refills because of costs.”

For all of the drugs in the study and all of the various plans, half of the time the out-of-pocket cost was just $2, researchers report in the Annals of Internal Medicine.

Out-of-pocket costs might be lower with Medicare’s stand-alone drug plans than with Medicare Advantage plans, the study also found.

With generic drugs in what’s known as tier one – the lowest-cost prescription drugs – half of the medications cost at least $2 with Medicare Advantage. But with the Medicare drug plans, half of the drugs cost no more than $1.

On higher tiers of benefits that mean higher out-of-pocket costs, medicines cost at least $10 half of the time with Medicare Advantage, compared with $3 for stand-alone drug plans.