Category: Daily News

NBC Bay Area has been highly critical of the California workers’ compensation medical delivery system in a string of articles dating back to mid 2016.

Its thesis has been that “Many injured workers and their doctors say the California workers’ compensation system is dragging out their medical care, making it difficult to recover and get back on the job.”

The Investigative Report essentially was based upon anecdotal accounts of perhaps a dozen cases that it says leads to its conclusion that “Injured workers across California say the workers’ compensation system is dragging out or denying the medical care needed to get them back to work. Those workers say they feel trapped in the sprawling labyrinth of a system, battling insurance companies and navigating through red tape instead of getting well.”

But now the director tasked with administering California’s workers’ compensation system respondes to the criticism.

Christine Baker, the director of the Department of Industrial Relations, defended the system, saying reforms made four years ago improved access to medical treatment and helped contain costs. She also credits a new law enacted in January for further strengthening the system.

The major changes launched in 2013 under SB 863 emphasized evidence-based medicine and shifted treatment decisions from the courts to medical reviewers using state-approved guidelines to authorize or deny treatment requests. According to Baker, the changes are paying off.

“Benefits are going to workers, treatment has been sped up and appropriate treatment is being approved,” she said. “It is overall an improvement to the workers’ comp system, which is very complex.”

According to recent estimates, the reforms also cut costs to the nation’s most expensive workers’ comp system by more than a billion dollars per year.

NBC Bay Area responded to her assertion with more anecdotal accounts saying “many doctors and attorneys who represent injured workers told NBC Bay Area the savings have come at a price. They say denials have reached all-time highs. They believe the guidelines touted by state administrators are too rigid and don’t always keep up with modern treatment techniques”.

Baker rejects those claims.

“Ninety-five percent of medical care decisions are approved,” Baker said. “There are a few that don’t get approved and it could be that it’s inappropriate care or the doctor didn’t document the requirements for care.”

NBC refutes Baker’s claim. “But the data cited by Baker is impossible to verify. Until this year as a result of new reforms, the state has not collected data on the number of medical treatment requests that are approved or denied by insurers.”

“Instead, state administrators point to studies published by the California Workers’ Compensation Institute. The research group relies on data voluntarily provided by its members – insurance companies – which is not made available for public inspection.”

Baker said she’d have to look at these individual cases to understand why they faced denials, but reiterated the majority of the 250,000 workers who go through the system each year get satisfactory results.

“Most people are not stuck,” Baker said. “Most get back to work. Most people are getting their treatment.”

Baker said the state is also coordinating an outreach effort to help doctors understand how to properly document a request for a specific course of treatment, which she expects to further reduce denials.

“It’s an education piece and the Division of Workers’ Compensation is working hard at getting information and educational information about treatment guidelines on our website and how to use them,” Baker said. “We’re hoping the holistic approach will overall really make improvements to workers’ comp in California.”

The World Economic Forum (WEF) is a Swiss nonprofit foundation, based in Cologny, Geneva. The flagship event of the foundation is the invitation-only annual meeting held during the winter at the end of January in Davos, Switzerland, bringing together chief executive officers from its 1,000 member companies, as well as selected politicians, representatives from academia, NGOs, religious leaders, and the media in an alpine winter environment.

Among the many speakers at the 2017 Davos event was Vice President Joe Biden. Also at this years Davos event, leaders of the global pharmaceutical industry, blasted by incoming U.S. President Donald Trump for “getting away with murder” on drug prices, are putting a brave face on the challenges in their biggest market.

The following are comments from chief executives on U.S. pricing prospects, based on Reuters interviews at this week’s Forum in Davos:

JOE JIMENEZ, NOVARTIS: “The new administration has been pretty vocal about supporting innovation. They understand that when you spend money on research and you develop intellectual property there needs to be some level of return for that investment. I believe, based on who the president-elect has put in place around him, that there is a clear understanding of investment and return on investment.”

KEN FRAZIER, MERCK & CO: “Pricing will remain a challenging issue for those of us who are in the research-based pharmaceutical industry, as well as a challenge for the overall healthcare system in terms of what it can afford.” “The tweets will be what they will be, but the subject matter of the tweets has been a challenge before the election and I think it will remain a challenge after the election.”

ANDREW WITTY, GLAXOSMITHKLINE: “Clearly, the industry has an obligation to deliver value-creating innovation and it needs to price it at a level that is deemed to be acceptable.” “Industry has to price in an empathetic way. Just because you can demonstrate value doesn’t mean it is affordable.”

SEVERIN SCHWAN, ROCHE: “If you provide true medical differentiation coupled with a strong intellectual property position, I think the U.S. will continue to reward this kind of innovation. If you don’t offer that then, frankly, I think it is the right thing that prices should come down.”

OLIVIER BRANDICOURT, SANOFI: “It’s very difficult to understand what all those comments and tweets will end up being.” “It’s going to probably be very difficult to issue legislation on drug pricing.”

FLEMMING ORNSKOV, SHIRE: “I think we are in good position to prove the value of our products but, of course, there will be challenges.”

The Department of Industrial Relations filed a report this week on its anti-fraud efforts in the California workers’ compensation system, and announced it has stayed more than 200,000 liens worth a combined claim value of more than $1 billion. The liens are associated with 75 medical providers facing criminal fraud charges.

DIR’s efforts were bolstered by two new laws effective January . SB 1160 (Mendoza) requires DIR to automatically stay liens owned by providers who have been indicted or charged with crimes until the disposition of criminal proceedings. And AB 1244 requires the Division of Workers’ Compensation (DWC) Administrative Director to suspend any medical provider, physician or practitioner from participating in the workers’ compensation system when convicted of fraud. DWC has adopted provider suspension regulations and is now issuing notices of suspension to convicted providers.

DIR and the Department of Insurance convened working groups last June to gather stakeholder input and evidence of fraudulent activity. Participants offered a variety of observations on factors that facilitate fraud and strategies to combat it. DIR prepared a report on further recommendations to the Governor and the Legislature.

Proposed solutions included not only statutory and regulatory fixes, but also better enforcement of existing rules and procedural requirements, more information sharing and coordination among agencies, greater vigilance by insurers to identify and combat provider and premium fraud, more and better use of existing data, making examples of bad actors, greater education and transparency for the workers’ compensation system and system participants, and reviewing strategies used in other health-care systems.

The report notes that a “lien filer’s ability to get one foot inside the courthouse door creates tremendous pressure on the insurer to pay something in settlement, rather than taking on the expense of fighting or disproving a clearly invalid claim. A recent internal analysis showed that 10% of the state’s lien filers were responsible for 75% of the lien claims filed between 2013 and 2015. The top 1%, comprising 68 businesses, filed more than 273,000 liens, totaling $2.5 billion, and included five individuals who were being prosecuted or had already pled guilty to fraud. However, it remained possible to continue filing and settling liens notwithstanding fraud prosecutions and other lien-filing restrictions.”

“Over the past year, we have worked to prohibit criminal and indicted providers from lining their pockets through liens,” said DIR Director Christine Baker. “Removing fraudulent providers and their lien claims from the workers’ compensation system will further improve services to injured workers and ultimately reduce costs in the system.” DIR has posted information on its fraud prevention efforts online, including information on indicted medical providers.

DIR’s ongoing work to combat workers’ compensation fraud includes the creation of an Anti-Fraud Support Unit to share and track data from system participants. The department contracted with the RAND Corporation for an independent evaluation and recommendations, including a review of fraud detection in other federal and state health care programs. The study, currently in peer review, is slated for release this spring.

Physicians have been prohibited from referring workers for evaluation or treatment by another office or facility in which the physician has an ownership interest. And from having cross-referral or referral fee arrangements. DIR will be drafting financial interest disclosure rules to improve the transparency and tracking of ownership interests and referrals. DIR will then serve as a repository of information available for use by the workers’ compensation community, medical licensing boards, and other oversight agencies.

DIR is is also currently looking at filing data to identify physicians who consistently overbill for certain services, including through the use of incorrect billing codes, inflating the extent of time spent on an evaluation or treatment, and the “unbundling” of combined services (i.e., making separate claims for each element of service in order to increase the total amount charged).

The Department of Justice announced that McKesson Corporation, one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA).

The nationwide settlement requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a Drug Enforcement Administration (DEA) registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.

In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers – i.e., orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.

The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. In Colorado, for example, McKesson processed more than 1.6 million orders for controlled substances from June 2008 through May 2013, but reported just 16 orders as suspicious, all connected to one instance related to a recently terminated customer.  

In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.

This was a multi-district investigation that involved several DEA Field Divisions including the San Francisco Field Division. Several U.S. Attorney’s Offices participated in the case including the Central and Eastern Districts of California,

This is the second reported recovery by federal authorities against a drug distributor for failing to report suspicious orders in less than a month.

Last December, a drug distributor owned by Cardinal Health Inc agreed to pay $10 million to resolve claims it failed to alert the U.S. Drug Enforcement Administration to suspiciously large orders of addictive painkillers by New York-area pharmacies.

The Kinray settlement came after a DEA investigation of pharmacies in New York and elsewhere that had ordered unusually large and frequent shipments of oxycodone or hydrocodone, according to court records.

From January 2011 and May 2012, Kinray shipped the drugs to more than 20 New York pharmacy locations in amounts that were many times greater than the distributor’s average sales of controlled substances to all of its customers, the lawsuit said. Kinray ignored numerous “red flags” and did not report any suspicious orders to the DEA despite requirements that it do so for such highly regulated drugs, the lawsuit said.

The latest agreement stemmed from a 2012 settlement with the DEA in which its facility in Lakeland, Florida, was suspended from selling painkillers and other drugs for two years, according to Cardinal. The 2012 deal only resolved administrative aspects of the case, not potential fines Cardinal Health faced in Florida or elsewhere. The Dublin, Ohio-based company has set aside $44 million to cover those potential liabilities.

Cardinal Health, which announced its $1.3 billion acquisition of Kinray in 2010, said it continues to work with the U.S. Justice Department to resolve the matter.

The saga of Flint, Michigan, where residents suddenly found themselves drinking lead-poisoned tap water sets the stage for yet another pharmaceutical industry scandal. As the Flint water crisis unfolded one notorious pharmaceutical company saw a chance to cash in.

Valeant Pharmaceuticals raised the price of a drug used to treat lead poisoning by 2,700 percent after acquiring the drug in 2013. Before Valeant took control, the list price for a package of vials had been stable at $950. But in January 2014, Valeant boosted the price to $7,116. By December 2014, several more increases took the price to $26,927. Thus, by 2015 – as the issue of lead poisoning became prominent news – the price for a package of vials rose from $950 to $26,927.

This intravenous treatment, called Calcium EDTA, has been available for decades at a stable price, and is the most effective for severe and life-threatening cases of lead poisoning. The dramatic price increase has drawn the ire of poison control specialists and hospitals since it began.

The problem is, the drug does not have a long shelf life and is not needed in large quantities, since severe lead poisoning is relatively uncommon. This is precisely the excuse Valeant gives for its egregious price hikes, with a company spokesman saying, “The list price increases over the past several years have enabled us to provide to the market consistent availability of a product with high carrying costs and very limited purchase volume of 200 to 300 units per year.”

The greed of Valeant Pharmaceuticals – which does little more than buy up other pharma companies and raise drug prices – was celebrated by Wall St. for two years until an accounting scandal and congressional hearings began tarnishing its image.

By the end of 2015 Valeant raised prices on a number of critical brand-name drugs by an average of 66 percent – five times as much as its closest industry peers. These included Cuprimine, a decades-old drug that treats an inherited disorder called Wilson disease, and a diabetes drug called Glumetza.

Valeant relies on insurance companies and government programs to shield most patients from the skyrocketing costs, but this leads to higher premiums and co-payments, as well as an extra burden on taxpayers.

Doctors have complained to federal officials about the astronomical prices hikes for the lead-poisoning drug and others acquired by Valeant, but the problem is they are complaining to the very State that enables such exploitation through patent monopolies and barring drug imports from other countries.

“This is a drug that has long been a standard of care, and until recently it was widely accessible at an affordable price,” said Dr. Michael Kosnett, an associate clinical professor in the division of clinical pharmacology and toxicology at the University of Colorado’s School of Medicine and a consultant to the California Poison Control System, who has contacted Congress. “There’s no justification for the astronomical price increases by Valeant, which limit availability of the drug to children with life-threatening lead poisoning.”