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Category: Daily News

PBM Drug Prices Increased 11% in 2016

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Express Scripts’ Prescription Price Index shows continued inflation in the price of medications, with the average list price of the most commonly used brand drugs increasing nearly 11 percent in 2016. From the base price of $100.00 set in January 2008, in December 2016 prices for the most commonly used brand medications increased to $307.86 (in 2008 dollars), a nearly 208 percent increase.

Medications that treat inflammatory conditions and diabetes remain the costliest therapy classes. One of every five dollars spent on prescription drugs was for medication to treat an inflammatory condition or diabetes.

Employers paid, on average, $3587.83 per prescription for a medication to treat an inflammatory condition, such as rheumatoid arthritis. Humira® (adalimumab) and Enbrel® (etanercept) were major trend drivers for the class, with unit cost increases between 10 and 18 percent. Despite having more than 15 available therapies in the class, these two medications accounted for approximately 70 percent of the market share in 2016.

Biosimilar competition in this class could significantly ease spending for employers; however delays in biosimilar availability have limited payers’ ability to achieve much relief.

Spending on diabetes medications increased 19.4 percent in 2016, driven by a 14.1 percent increase in unit cost. Total spending on insulins — which account for 40 percent of all diabetes spending — increased nearly 10 percent between 2015 and 2016. The average patient out-of-pocket cost for insulin was $36.69 per prescription (adjusted for difference in days’ supply), just $1.63 more than 2015.

In 2016, spending on oncology medications increased nearly 22 percent, making it the third-costliest class. Despite savings from generics, including imatinib, the generic for Gleevec®, unit costs for oral oncology medications increased 9.6 percent in 2016. List prices for oral oncology medications, which are not rebated or discounted to any significant extent, have doubled between 2011 and 2016, from $20 per unit to $40 per unit.

One in five people filled a prescription for a pain medication in 2016. Despite a 95 percent generic fill rate for this class of drugs, spending was driven by just two brand-name medications: Lyrica® (pregabalin) and OxyContin® (oxycodone). Pain medications are the fifth costliest class of drugs.

While the Pharmacy Benefit Management companies claim credit for holding down drug, prices, some are critical of the PBM industry.

Three PBMs – Express Scripts, CVS Health and Opitmum RX, a division of UnitedHealth Group – control about 70 percent of the market. The Fortune 500 list gives a sense of their enormous size. UnitedHealth Group and CVS Health are numbers six and seven on the list, while Express Scripts shows up at number 22. J.P. Morgan Chase, Boeing and Microsoft all trail Express Scripts on the Fortune list as do the largest pharmaceutical manufacturers.

Critics of the big PBMs say their pricing practices and a lack of transparency are driving up costs and causing insurers to pay inflated prices without knowing it – eventually passing those costs on to their members. The alleged tactics include keeping an undisclosed amount of the rebates they negotiate while offering their clients a much smaller cut, and charging a “spread” on each prescription that gets processed.

Rebates and spread pricing are agreed upon in the contracts signed by their clients and are very clear about who gets what, the PBMs say. But critics argue the door is open for price gouging without more transparency and if health plan sponsors aren’t savvy in negotiating those contracts.

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AB 2883 Fallout – Premiums Double for Many Small Businesses

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The fallout from the Aug. 26 signing of Assembly Bill 2883 eventually became the defining topic of discussion during the fourth quarter among insurance agencies, carriers and most notably business owners who now find it more challenging to exclude themselves from their own workers comp policies. Most industry insiders got their first heads-up in mid-October, just a couple months ahead of the Jan. 1 effective date.

According to the article in the Central Valley Business Journal, the legislation requires all officers, members and partners to be covered under the workers compensation policy unless more restrictive qualifications are met.

To compound the matter, language delaying the application of the bill for in-force policies was omitted from the text. This omission, coupled with the narrower definition of who can be excluded from coverage, caused a massive disruption for the industry as a whole.

If your business is set up as a corporation, you must be an officer or director owning at least 15 percent of issued and outstanding stock on Jan. 1, 2017 to qualify for exclusion.

You must also execute a waiver of your rights to workers comp coverage, certifying under penalty of perjury that you are a qualifying officer or director with the requisite stock ownership.

If your business is organized as a partnership or LLC, you must now be a general partner of a partnership or a managing member of an LLC to qualify for exclusion (no minimum amount of ownership required).

The bill was supported by the American Insurance Association and the Association of California Insurance Companies, who contended the election process for opting out of coverage was not clear and led to abuses of the system.

In a handful of cases, certain employers gamed the system by claiming that employees with no real stake in the entity were officers, then excluding them from coverage.

As is often the case, small to middle-market businesses are experiencing the most devastating impact of the new legislation. Previously excludable individuals are covered as of Jan. 1, and premium for those individuals is accumulating.

In the worst cases, owners who do not perform strictly office work are being assigned to more costly classification codes. Many small businesses are seeing premiums double now that key employees are no longer excludable.

At a minimum, employers who exclude individuals from coverage now have additional paperwork to file with insurance carriers. Some entities have convened roundtable discussions with their insurance agents, accountants and lawyers to restructure corporate shares or reorganize the business to accommodate for continued exclusion of key employees.

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Spine care in 2017 – Spine Surgeons Make Predictions

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Ask Spine Surgeons – is a weekly series of questions posed by Becker’s Spine Review to spine surgeons around the country about clinical, business and policy issues affecting spine care. Here are two responses to the question “What are the most exciting spine industry trends you expect to see in 2017?”

Kevin Ju, MD. Spine Surgeon at Texas Back Institute (Plano) says that Spine surgery is an ever-changing landscape. Throughout 2017, he expects that we will continue to see interest in motion-preserving procedures as an alternative to spinal fusion.

As a field, we have seen the development and emphasis of several techniques and technologies over the years that are meant to effect neurological decompression while preserving spinal motion. Examples include laminoplasty over laminectomy and fusion, cervical and lumbar total disc replacement over ACDF or lumbar fusion as well as various interlaminar spacers.

Some of these have been very successful while others have been less so.

In addition to new technical advancements, there will also be more research on when fusion surgery is beneficial. For example, in the last several months two papers were published in the New England Journal of Medicine that investigated the benefits and risks of spinal fusion in addition to decompression for degenerative spondylolisthesis. Throughout 2017, we will likely continue to see an emphasis on trying to avoid spinal fusion surgery when it’s appropriate.

On a related note, something that he hopes to see in the upcoming year is more attention on bone health and osteoporosis.

As our population ages, this issue is becoming an increasingly prevalent problem. We need to team up with our medical colleagues and ask our patients about recent bone density tests, history of fragility fractures and prior osteoporosis treatments.

Not only can we help diagnose this problem, but if the patient ultimately requires surgery down the road, optimizing bone health preoperatively is ideal as we all know the perils and complications that plague instrumenting osteoporotic bone.

Early detection and treatment of osteopenia and osteoporosis is key to improving these patients’ lives.

Brian R. Gantwerker, MD. Founder of the Craniospinal Center of Los Angeles said he was most keyed in on endoscopic spine.

He had the opportunity to meet a colleague from South Korea where they are doing some amazing things through a scope. He expects it to become pretty hot in the coming year as we focus on outpatient surgery.

Also, we will likely see more instrumentation being done on an outpatient basis, especially with cervical arthroplasty and interspinous stabilization.

Lastly, deformity correction is becoming more and more important in the inpatient setting. I think the focus will be on faster and safer surgeries, possibly with robotic assistance.

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State Bar Suspends Defense Attorney Over PQME Dispute

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This was defense attorney Kimberly Allyson Hansen’s third discipline proceeding. It arises from her representation of two defendants before the Workers’ Compensation Appeals Board. The WCAB imposed sanctions against Hansen and three other attorneys from her law firm after concluding that they had intentionally misled the Board, causing it to take unwarranted action.

According to the 23 page State Bar Opinion (Designated for Publication) “At all times relevant to this matter, she worked as a vice-president at the law firm of Stockwell, Harris, Woolverton & Muehl and was an experienced workers’ compensation attorney.”

Louis Speight, an employee of Vulcan Materials Company, Western Division, submitted a workers’ compensation claim for work-related injuries. During the course of litigation, it took defense attorneys three attempts to obtain a QME panel. The Medical Unit denied the first QME Request “due to the lack of all necessary information.” The Medical Unit also informed Hansen that her first QME Request had been filed prematurely. Hansen was directed to “resubmit [her] request as soon as possible…” The Medical Unit notified Hansen it was rejecting her second request because it also lacked “all necessary information. ” One week later, on July 28, 2009, Hansen submitted a third QME panel request to the Medical Unit.

Between the second and third QME request, the Speight case was set for conference. The WCALJ overruled defense objections and set the matter for trial. But a defense Petition for Removal was granted on the issue of the QME panel. However defendants “failed to disclose to the WCAB that the Medical Unit had timely advised Hansen that the First and Second QME Requests were deficient.”

Three weeks after the Petition for Removal was filed and before the WCAB ruled on it, the Medical Unit issued a QME panel in response to Hansen’s third QME Request. “The WCAB granted the Petition for Removal on December 21, 2009, on the grounds that the ALJ should have ordered the matter off calendar to allow the Defendant to obtain a QME panel. Still, Hansen did not notify the Board that a QME panel had already been assigned three months earlier, and she again remained silent when the WCAB issued a second order on March 9, 2010, rescinding the ALJ’s trial-setting order and directing the Medical Unit’s Medical Director to issue a QME panel.”

Three weeks later, the WCAB learned of the true state of affairs when the Medical Director filed a verified Petition for Reconsideration, a Petition to Reopen the Record, and an Offer of Proof, which disclosed that the Medical Unit had in fact timely responded to Hansen, advising her that the First and Second QME Requests had been denied for procedural deficiencies and that the Third QME Request had been granted and a panel had been issued several months earlier.

The WCAB did not take lightly the fact that its orders to the ALJ to vacate the trial setting order and to the Medical Unit to issue a QME panel were based on “a distorted version of the record.” The WCAB concluded its hotly contested sanction hearing by saying the “problem was not that the attorneys zealously represented their client; it was that they did so by misleading the WCAB, by concealing material facts, and by supporting their position with half-truths.”

As a consequence of the WCAB’s actions, the Office of the Chief Trial Counsel of the State Bar (OCTC) initiated disciplinary proceedings against Hansen and her colleague Kevin White, an associate with the Stockwell firm, who attended a mandatory settlement conference. The hearing judge in the disciplinary matter determined against Hanson that “Hansen’s participation in the workers’ compensation case involved acts of dishonesty constituting moral turpitude. She further found three factors in aggravation (two prior records of discipline, significant harm, and lack of insight) and two factors in mitigation ( cooperation and good character).”

Both Hansen and the Office of the Chief Trial Counsel of the State Bar (OCTC) appealed. Hansen asserts that this case should be dismissed because she made no misrepresentations to the WCAB, but rather was merely zealously representing her clients. OCTC supports the hearing judge’s culpability findings, but requested a finding of more aggravation and less mitigation, and that after appeal there be a recommend disbarment.

Having independently reviewed the record it was found that “Hansen is culpable of acts of moral turpitude, in violation of Business and Professions Code section 6106.” However it agreed “with the hearing judge that an 18-month actual suspension is appropriate.”

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DWC Posts DMEPOS Fee Adjustments

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The Division of Workers’ Compensation has posted an order adjusting the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) section of the Official Medical Fee Schedule (OMFS) to conform to changes in the Medicare payment system as required by Labor Code section 5307.1.

The Centers for Medicare and Medicaid Services (CMS) initially released the DMEPOS Fee Schedule 2017 zip file update in December of 2016. The DMEPOS update was adopted by the DWC Acting Administrative Director’s order of December 15, 2016. Subsequently, CMS issued a revised DMEPOS Fee Schedule zip file for 2017 in order to implement changes required by the 21st Century Cures Act.

The Acting Administrative Director has adopted the revised DMEPOS Fee Schedule zip file for services rendered on or after February 1, 2017.

The update order is effective for services rendered on or after February 1, 2017, and can be found at the DWC website’s OMFS page.

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Yates Memo Takes Down Another Executive

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The new DOJ guidelines, issued September 9, 2015 and referred to informally as the “Yates Memo” articulated several changes to DOJ policy. In substance the Memo promised that “Americans should never believe, even incorrectly, that one’s criminal activity will go unpunished simply because it was committed on behalf of a corporation.” The new policy seeks to hold corporate officers responsible for acts of their corporate employers.

And it seems that the Yates Memo has found a new target. A former senior executive of Tenet Healthcare Corp has been indicted on charges that he participated in a scheme to pay bribes for patient referrals, enabling the U.S. hospital chain to fraudulently bill state Medicaid programs for $400 million.

John Holland, a former senior vice president, was charged in an indictment filed in federal court in Miami with four counts of mail fraud, health care fraud and major fraud against the United States, the U.S. Justice Department said on Wednesday. The charges came after Dallas-based Tenet and two of its Atlanta-area units reached a settlement with the Justice Department and agreed to pay more than $513 million to resolve criminal charges and civil claims in a related settlement.

“These charges underscore our continued commitment to holding both individuals and corporations accountable for their fraudulent conduct,” said Acting Assistant Attorney General Kenneth Blanco said in a statement.

Holland, 60, of Dallas, pleaded not guilty during a court hearing in Miami. Richard Deane, his lawyer, said he believed “the company’s resolution should have ended the matter.” “Mr. Holland is not guilty and we now look forward to presenting this case to a jury,” Deane said in a statement.

Prosecutors said Holland beginning in 2000 was chief executive of Tenet-owned North Fulton Medical Center Inc in Roswell, Georgia, and served as senior vice president of operations for Tenet’s southern states region from 2006 to 2013.

The indictment said that from 2000 to 2013, Holland and others engaged in a scheme to pay over $12 million in bribes and other illegal inducements to the owners and operators of a firm that operated clinics in Georgia and South Carolina. In exchange, the clinics, which provided prenatal care to mostly undocumented Hispanic women, referred patients to Tenet hospitals and arranged for services to be provided to patients and their newborns at Tenet hospitals. Prosecutors said Holland sought to conceal the scheme by circumventing internal accounting controls and falsifying records.

Prosecutors said the scheme enabled Tenet hospitals to fraudulently bill the Georgia and South Carolina Medicaid Programs for over $400 million, and allowed Tenet to obtain more than $149 million in Medicaid and Medicare funds.

The indictment said Holland also made false statements to the U.S. Department of Health and Human Services’ Office of Inspector General about its compliance with the terms of a 2006 agreement reached as part of an earlier settlement.

The case is U.S. v. Holland, U.S. District Court, Southern District of Florida, No. 17-cr-20054.

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Researchers Say Health Records Have Poor Histories

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It is not uncommon for histories in medical records to be inconsistent with the history provided by a claimant in a hearing or in a deposition.

Now a small study by researchers explored why symptoms that patients describe to doctors may not always be documented in electronic medical records.

To test out how well the records match reality, researchers compared symptoms that 162 patients checked off on paper-based questionnaires with the information entered in patients’ electronic charts at eye clinics.

Researchers report in an article published in JAMA Ophthalmology that roughly one-third of the time, data on blurry vision from paper questionnaires did not match the electronic records. Symptom information also did not match for glare 48 percent of the time and was discordant in 27 percent of cases for pain and 25 percent for redness.

“Because the electronic health record allows researchers, payers and administrators to extract information from the medical record in a way that has never been previously possible, the implications of capturing patient data in the most accurate way becomes much more imperative,” said study co-author Dr. Paula Anne Newman-Casey, an ophthalmologist at the University of Michigan’s Kellogg Eye Center in Ann Arbor.

In theory, the promise of electronic health records is that they can help improve the quality of care and lower costs in part by reducing room for errors. Most U.S. doctors and hospitals now use electronic records, though paper remains common for patient symptom questionnaires.

For the study, researchers examined paper copies of eye symptom questionnaires completed by patients visiting eye clinics between October 2015 and January 2016.  Patients rated the severity of common eye issues within the previous week.

Blurry vision was the most common complaint, but when patients reported blurry vision on the questionnaires, the electronic health record correctly noted this in 60 cases but failed to include it in 25 cases.

For patients who didn’t report blurry vision, the electronic records accurately noted this in 26 cases but mistakenly identified this as a problem for 29 patients.

Mismatches were also common for redness, pain, glare, itching, gritty sensation and sensitivity to light. More often than not, the error involved electronic records failing to capture symptoms patients noted on the paper questionnaires.

The study is small and only included patients within a single clinic system, the authors note.  Still, the results suggest that electronic health records may not always be reliable tools for clinicians treating patients or for researchers mining data, the authors conclude.

When patient symptoms are missing from electronic records, it can also prompt clinicians to go in the wrong direction looking for a diagnosis and delay patients getting the care they actually need, Dr. Christina Weng of the Cullen Eye Institute and Baylor College of Medicine in Houston writes in an accompanying editorial.

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DWC Sets QME Examination Next April

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The Division of Workers’ Compensation will administer the next Qualified Medical Evaluator (QME) Competency Examination on Saturday, April 29, 2017.

Physicians who wish to take the exam on that date must submit a completed original Application for Appointment as Qualified Medical Evaluator (QME Form 100). Send all documentation/fees required and complete the Registration for the QME Competency Examination (QME Form 102).

The application and all required documentation must be reviewed and approved by the DWC before a physician can be registered for the exam (Title 8, California Code of Regulations §§10, 11). The application must be postmarked by March 16, 2017 in order to qualify for this exam. Qualified registrants will receive a confirmation letter along with a Candidate Information Booklet by email/mail. The DWC is not responsible for late or lost applications.

All physicians are required to pay a non-refundable/non-rollover $125.00 fee to sit for any upcoming QME examination (Title 8, California Code of Regulations § 11(f)(2)). Before appointment as a QME, the physician shall complete a 12 hour course in disability evaluation report writing approved by the Administrative Director (Labor Code § 139.2). The DWC will assess the annual QME fee after the candidate has successfully passed the QME Competency Exam in order to activate the QME status.

The primary purpose of this examination is to demonstrate the competence of a physician in evaluating medical issues in the workers’ compensation system and to evaluate competency with respect to current California Workers’ Compensation System terminology, laws, rules, regulations, and medical-legal procedures. The examination is designed to ensure that there is a commonly understood body of knowledge and common language for QMEs which will increase the probability of ratable and impartial medical/legal evaluations of injured workers in California.

The test questions are now organized into four categories:

1) Clinical Assessment/Evaluation and Medical Treatment
2) Disability Issues/QIW/Vouchers/P&S
3) Causation and Apportionment
4) .Basic Laws and Regulations and Report Writing Elements

Candidates will not be asked any questions that assess specific knowledge of medical treatment (e.g., psychology, orthopedics). However, candidates should be familiar with the existence of the DWC evaluation guidelines and AMA Guides.

Please call 1-800-794-6900 or (510) 286-3700 or email QMETest@dir.ca.gov for further assistance. For additional information regarding the qualifications to become a QME, please visit the DWC website.

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POTUS Meets with Drug Company CEOs

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President Trump on Tuesday told a group of drug company executives gathered for a meeting at the White House that they need to “get prices down.”  Trump has been a critic of high drug prices, and has endorsed measures like allowing Medicare to negotiate prices.

But the president also called for reducing regulations to allow for faster approvals of new drugs and to allow drug companies to bring jobs back to the U.S.  “We’re going to be cutting regulation at a level nobody’s ever seen before,” Trump said in the meeting with executives.

“You can’t get approval for the plant and then you can’t get approval to make the drug, other than that you’re doing fantastic,” he said.  

Trump called drug prices “astronomical.”  “U.S. drug companies have produced extraordinary results for our country, but the pricing has been astronomical for our country,” he said.

Still, he also offered to make the Food and Drug Administration’s approval of new drugs “much faster.”

Executives from Merck, Johnson & Johnson, Celgene, Amgen, Eli Lilly, and the PhRMA trade group joined Trump at the meeting. House Energy and Commerce Chairman Greg Walden (R-Ore.) was also on hand.

The Pharmaceutical Research and Manufacturers of America (PhRMA), the main lobbying group for the drug industry,  described the White House meeting as positive and productive. “Our industry takes seriously the concerns raised about the affordability and accessibility of prescription medicines, and we have expressed our commitment to working with the administration to advance market-based reforms,” said Stephen Ubl, PhRMA’s president and CEO, in a statement.

“The current system needs to evolve to enable the private sector to lead the move to a value-driven health care system. To do this, we need to reform existing laws and regulations that are currently preventing private companies from negotiating better deals and paying for medicines based on the value they provide to patients and our health care system.”

Trump’s calls for government action to address drug prices could face resistance in a Republican-controlled Congress that is far less willing to take action on drug prices than he appears to be.

At the meeting on Tuesday, Trump also spoke out against what he called “price-fixing” in Medicare. “I’ll oppose anything that makes it harder for smaller, younger companies to take the risk of bringing their product to a vibrantly competitive market,” Trump said. “That includes price-fixing by the biggest dog in the market, Medicare, which is what’s happening. But we can increase competition and bidding wars, big time.”

Trump slammed drug companies at a press conference earlier this month, declaring they are “getting away with murder.”

“Pharma has a lot of lobbies, a lot of lobbyists, a lot of power. And there’s very little bidding on drugs,” he said.

“We’re the largest buyer of drugs in the world, and yet we don’t bid properly and we’re going to start bidding and save billions of dollars over a period of time.”

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2016 Claim Audit Penalties Were Nearly $1.5 Million

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The Division of Workers’ Compensation has posted the 2016 DWC Audit and Enforcement Unit annual report on its website. The annual report provides information on how claims administrators audited by the DWC performed and includes the Administrative Director’s ranking report for audits conducted in calendar year 2015.

The annual report details the results of audits conducted in 2015 and provides the name and location of each insurer, self-insured employer and third-party administrator audited during that time.

As a result of PAR/FCA audits conducted during calendar year 2015, the Audit and Enforcement Unit found and cited 5,255 violations against claims administrators, with administrative penalties totaling $1,476,147.00. Not all administrative penalties are subject to collection. Under the Labor Code, no penalties are assessed on those “cited” violations unless the audit subject fails the audit at a specific level.

This report to the Legislature summarizes audits conducted in accordance with Labor Code §§129 and 129.5 to assure that injured workers, and their dependents in the event of their death, are provided with all benefits due them in an expeditious manner. The audit findings, by law, must detail the number of files audited, the number and type of violations cited and the amount of an undisputed compensation found due and unpaid to the injured worker.

The DWC Administrative Director’s 2016 Audit Ranking Report lists, in ascending order by performance rating, the administrators audited in calendar year 2015. Performance of insurers, self-insured employers, and third party administrators subject to profile audit review and full compliance audit is rated in accordance with the performance standards set annually by the Administrative Director.

The DWC Audit and Enforcement Unit completed a total of 43 profile audit reviews (PAR audits). Compliance officers audited 2729 claim files.Thirty-five audit subjects (81%) met or exceeded the performance standard and therefore had no penalty citations assessed.

Congratulations to all who passed the audit. The following were the top 10 who easily exceeded the PAR Standard set for the year.

1) Schools Insurance Authority \ Sacramento
2) Keenan & Associates \ Pleasanton
3) Warner Bros. Studio Facilities \ Burbank
4) RICA and RICC \ Encino
5) Zenith Insurance Company \ San Diego
6) TriStar Risk Management \ Fresno
7) U.S. Concrete \ San Jose
8) Intercare Holding Insurance Services, Inc. \ Orange
9) Solar Turbines, Inc. \ San Diego
10) Tokio Marine & Nichido Fire Insurance Company \ Pasadena

At the other end of the list, eight audit subjects (19%) failed to meet or exceed the PAR standard, and their audits expanded into a full compliance audit of indemnity claims. Six of the eight audit subjects failed to meet or exceed the FCA 2015 performance standard. These audit subjects were assessed administrative penalties for all penalty citations.

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