Menu Close

Tag: 2015 News

Study Says U.S. Drug Costs Inflated

U.S. prices for the world’s 20 top-selling medicines are, on average, three times higher than in Britain, according to an analysis carried out for Reuters. The finding underscores a transatlantic gulf between the price of treatments for a range of diseases and follows demands for lower drug costs in America from industry critics. The 20 medicines, which together accounted for 15 percent of global pharmaceuticals spending in 2014, are a major source of profits for companies including AbbVie (ABBV.N), AstraZeneca (AZN.L), Merck (MRK.N), Pfizer (PFE.N) and Roche (ROG.VX).

Researchers from Britain’s University of Liverpool also found U.S. prices were consistently higher than in other European markets. Elsewhere, U.S. prices were six times higher than in Brazil and 16 times higher than the average in the lowest-price country, which was usually India.

The United States, which leaves pricing to market competition, has higher drug prices than other countries where governments directly or indirectly control medicine costs. That makes it by far the most profitable market for pharmaceutical companies, leading to complaints that Americans are effectively subsidizing health systems elsewhere.

Manufacturers say decent returns are needed to reward high-risk research and prices reflect the economic value provided by medicines. They also point to higher U.S. survival rates for diseases such as cancer and the availability of industry-backed access schemes for poorer citizens. In recent years, the price differential has been exacerbated by above-inflation annual increases in U.S. drug prices at a time when governments in Europe have capped costs or even pushed prices down.

In fact, U.S. prices for top brand-name drugs jumped 127 percent between 2008 and 2014, compared with an 11 percent rise in a basket of common household goods, according to Express Scripts (ESRX.O), the largest U.S. manager of drug plans.

The U.S. Pharmaceutical Research and Manufacturers of America (PhRMA) says international comparisons are misleading because list prices do not take into account discounts available as a result of “aggressive negotiation” by U.S. insurers. These discounts can drive down the actual price paid by U.S. insurance companies substantially. However, similar confidential discounts are also offered to big European buyers such as Britain’s National Health Service.

End of the Road for Lien Activation Fee Challenge

Senate Bill 863 imposed a $100 “activation fee” on liens filed prior to January 1, 2013.  Angelotti Chiropractic and other lien claimants sued in federal court challenging the constitutionality of these provisions claiming that SB 863 violates the Takings Clause, the Due Process Clause, and the Equal Protection Clause of the United States Constitution.

At first the case seemed to go their way. The trial court issued a preliminary injunction in the lien claimants’ favor as to the Equal Protection claim, but not as to the other claims.  The DIR appealed the district court’s issuance of the preliminary injunction and its denial of the motion to dismiss the Equal Protection claim. The 9th Circuit Court of Appeal reversed last June, and vacated the injunction in the published case of Angelotti Chiropractic Inc. v Christine Baker.

The panel held that the district court properly dismissed the Takings Clause claim because the economic impact of SB 863 and its interference with plaintiffs’ expectations was not sufficiently severe to constitute a taking. The panel further concluded that the lien activation fee did not burden any substantive due process right to court access and also rejected plaintiffs’ claim that the retroactive nature of the lien activation fee violated the Due Process Clause.

The lien claimants file a petition for rehearing in the 9th Circuit Court of Appeal. The 9th Circuit denied the petition last week.  It is possible but highly unlikely that the lien claimants can successfully pursue an appeal with the  U.S. Supreme Court.  This would not be the typical type of case of national significance the SCOTUS would be interested in hearing.  Thus this ruling is probably the end of the road for these lien claimants efforts to avoid SB 863 activation fees.

The California Society Of Industrial Medicine (CSIMS) is the association exclusively representing the private physician practicing occupational medicine in California, has announced a new website,, to assist lien holders to identify unresolved liens.

According to its website “unresolved liens filed prior to January 1, 2013 are subject to a $100 lien activation fee. This website will enable you to quickly and easily identify all of your unactivated liens and receive a detailed list via email. It doesn’t matter how or when your liens were filed, or if the name of the lien claimant was misspelled at the time of filing. You can find them all using our simple Lien Finder search tool.”

At this point there will be a clean up process where many of the liens will be dismissed for failure to pay an activation fee.  The few remaining will be litigated or settled, and perhaps five years after passage of  S.B. 863 the industry will achieve the desired effect of the law.

2016 – 2017 Rating Changes Outlined by WCIRB

On September 18, 2015, the California Insurance Commissioner approved numerous changes to the California Workers’ Compensation Uniform Statistical Reporting Plan – 1995 (USRP), the California Workers’ Compensation Experience Rating Plan – 1995 (ERP) and the Miscellaneous Regulations for the Recording and Reporting of Data – 1995 (Miscellaneous Regs) effective January 1, 2016. See Commissioner Issues Decision on Regulatory Filing for more information.

The WCIRB’s January 1, 2016 Regulatory Filing which was submitted to the California Department of Insurance (CDI) on June 26, 2015 and subject to a public comment period that ended on September 2, 2015. In the decision, the Commissioner approved all of the WCIRB’s proposed changes.

In 2016, changes to the Standard Classification System clarify the application of some classifications and to amend minimum and maximum payroll limitations. An amendment to the unit statistical reporting requirements to specifies that the cost of independent bill review (IBR) and independent medical review (IMR) will no longer be included as part of the medical cost containment component of allocated loss adjustment expense effective on all IBR and IMR reports paid after January 1, 2016. The cost of IBR and IMR will continue to be included in reported allocated loss adjustment expense. An amendment to the ERP to use expected loss rates rather than pure premium rates as the basis for experience rating eligibility was also approved. This change in the basis of eligibility, while not significantly impacting which employers will be eligible for experience rating, allows the WCIRB to begin issuing January 2016 experience modifications almost immediately – months sooner than previously possible.

For 2017, changes to the ERP will allow the WCIRB to issue debit experience modifications, in specified circumstances, excluding the unaudited payroll for policyholders who are uncooperative at the time of a final audit. The Commissioner also approved a significant change to the experience rating formula, replacing the fixed $7,000 primary and excess loss split point with a split point that varies based on the size of the employer. This change enhances the accuracy of the experience rating formula, especially for smaller employers; reduces volatility and provides flexibility for simplifying the experience rating formula in future years. The WCIRB conducted extensive outreach regarding this change prior to the close of the public comment period.

The WCIRB has also updated the Classification Search tool to reflect changes to classification phraseologies effective January 1, 2016.

WCRI Says Growing Capitation Model Increases Comp Costs

A major trend in contractual payment arrangements between medical providers and payers, intended to lower costs while improving the quality of care, triggers cost-shifting from group health plans to workers’ compensation, according to a new study reviewed by the CFO website. The shift hinders some employers from reaping the hoped-for cost benefits, study results suggest.

More medical providers are agreeing to full or partial capitation arrangements, under which they’re paid a set amount for each enrolled plan member assigned to them per period of time. It’s a counter to the fee-for-service model, under which providers have a financial motivation for ordering care that a patient may not actually need. Most recently, Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, announced new deals with three large health systems that “set budgets to care for patients and reward providers for keeping patients healthy and away from expensive hospital stays and procedures,” the Boston Globe reported.

Meanwhile, the prevalence of capitation arrangements is on the rise. A late-2014 study of reimbursements for care provided to 101 million people, conducted by Catalyst for Payment Reform, an employer-funded health policy group, found that 15% of what health insurers spend on medical bills is paid under capitation.

In some states, it’s a much bigger slice of the pie. For example, for Blue Cross Blue Shield of Massachusetts, 40% of its 2.1 million individual members will be, as of Jan. 1, covered under health plans that shift financial risk to medical providers.

That all sounds good – but there’s a little-discussed wrinkle. That is, for some common ailments, like soft-tissue back, knee, or shoulder pain, it’s often not clear whether the injury was work-related or non-occupational. Doctors are given a degree of discretion under workers’ compensation law to make that determination, which creates a conflict of interest, because they usually end up benefiting financially by classifying the injury as work-related.

A recent WCRI study found that soft-tissue injuries suffered by patients covered under capitated group health plans were 11% more likely to be classified as work-related. And that proportion rose to 31% in states where at least 22% of workers were covered by capitated plans. According to WCRI, if just 3% of soft-tissue-condition cases under group health plans were shifted to workers’ compensation, total workers’ comp costs would increase by $225 million in California alone. Providing two other examples, the institute said the comparable figures would be $100 million in Pennsylvania and $25 million in Iowa.

Governor Signs Comp Prescription Formulary Bill

AB-1124 passed the California legislature and has now been signed by Governor Brown.  This new law gives the DWC Administrative Director clear authority to establish a drug formulary which should help control rising prescription drug costs and limit the over-prescribing of highly-addictive opioids. Notwithstanding this new law, the DWC has already commenced public hearings on a drug formulary believing that it has authority to adopt one without further legislation.

Drug formularies have proven to be very effective at managing the cost of prescription drugs. Health plans have been using formularies in California for decades and they are commonly accepted as a useful cost control mechanism. They control costs by limiting the utilization of high priced drugs and reducing the price of drugs. Formularies are usually developed by companies known as pharmaceutical benefits managers (PBMs) who design formularies and manage prescription drug benefits for a contracting health plan. At the most basic level a formulary is a list of drugs that a health plan or insurer agrees to cover.

This new law requires the DWC Administrative Director to establish a drug formulary, on or before July 1, 2017, as part of the medical treatment utilization schedule.The Administrative Director would be required to meet and consult with stakeholders, prior to the adoption of the formulary, and publish at least 2 interim reports on the Internet Web site of the DWC. The Administrative Director is required to update the formulary at least on a quarterly basis to allow for the provision of all appropriate medications, including medications new to the market.The Administrative Director is also required to establish an independent pharmacy and therapeutics committee to review and consult with the Administrative Director in connection with updating the formulary.

The California Applicants Attorneys Association argued against the law claiming that establishing a formulary is just another in a long line of take-aways from injured workers. Business groups supported this bill and the California Labor Federation supports the concept of a formulary.

DWC Published Draft of New Benefit Notice Manual

The Audit Unit of the Division of Workers’ Compensation (DWC) has posted draft revisions to the Benefit Notice Manual and sample benefit notices to the DWC forums for public comment. The Division welcomes suggestions from the workers’ compensation community to improve the quality and clarity of the draft notices.

The purpose of this manual is to present advice for accurate and timely completion of benefit notices and mandatory forms that meet the requirements of the Administrative Director’s regulations.The “safe harbor” provision of Title 8, Cal. Code of Regulations, section 9810(f) provides that “Benefit notices using the sample notices devised by the Administrative Director and available on the Division’s website are presumed to be adequate notice to the employee and, unless modified, shall not be subject to audit penalties.”

Various events in the life of a workers’ compensation claim trigger the requirement to issue a notice to the employee or claimant. There are required contents for each notice.

These regulations are effective as of January 1, 2016 The regulations apply to all workers’ compensation dates of injury, except as otherwise noted. The Division cautions the claims community that the revised notices may not be used until the regulations take effect on January 1.

The model notices presented in this 85 page manual are in English and Spanish and are the result of a combined effort of workers’ compensation professionals from insurers, self-insured employers, third-party administrators, and employer and employee representative groups working together with the Division of Workers’ Compensation. The intent of this effort is to provide forms which, if used in conjunction with the instructions provided, will improve communication with the injured worker and make it easier for the claims administrator to comply with the regulations governing the issuance of benefit notices.The Division anticipates posting the final revised Benefit Notice Manual and sample benefits notices to the Division’s website on or about October 15, 2015.

Ultimately, the claims administrator is responsible for compliance with the regulations governing the issuance of benefit notices, regardless of whether these model notices are used.  Failure to provide a correct and timely notice is one of the most often cited offense in the audit report prepared following the mandatory routine claim audit process.  Adherence to the guidance in the Manual would likely result in a much improved audit score.

Munir Uwaydah M.D. Remains a Fugitive

Last month the L.A. County district attorney’s office announced that Munir Uwaydah M.D. had been arrested in Germany on suspicion of masterminding a massive workers’ compensation insurance fraud scheme and was awaiting extradition. For years his whereabouts have been something of a mystery. Los Angeles County prosecutors said they suspected the surgeon fled the country for Lebanon after one of his associates was arrested on a murder charge in 2010.

However, the Los Angeles Times reports today that Uwaydah is not in custody and remains a fugitive. His whereabouts remains unknown.

On Tuesday a district attorney’s spokeswoman backtracked, saying that Uwaydah remained at large. “We were previously informed by the appropriate international authorities that he was in custody in Germany,” Jane Robison wrote in a short email to several reporters. “We were subsequently advised that he is not in custody.” Robison did not provide an explanation, saying in the email that the statement would be the office’s only comment.

Indictments unsealed last month accuse Uwaydah, 49, of running one of California’s largest insurance fraud schemes. More than a dozen other people accused of taking part in the scheme are in custody. More than $150 million was fraudulently billed to insurance companies, the district attorney’s office alleged, saying those involved hid the money in shell bank accounts. Millions of dollars were transferred to accounts in Lebanon and Estonia, according to a bail motion filed by prosecutors.

The prosecution of the co-conspirators will continue to proceed through the justice system.

Governor Brown Vetoes Apportionment Limitation Bill

Governor Brown vetoed a bill (AB 305) that would have prohibited medical problems primarily affecting women from being considered pre-existing conditions when calculating workers’ compensation permanent disability and apportionment. The veto was made after signing legislation to give California women the strongest equal-pay protection in the nation.

This bill attempted to prohibit apportionment if pregnancy or menopause is contemporaneous with the injured worker’s claimed injury. This bill also required that breast cancer not be less than the comparable impairment rating for prostate cancer. It also tried to prohibit apportionment in cases of psychiatric injury caused by sexual harassment or any of the conditions listed above if the conditions are contemporaneous with the psychiatric injury. Senate Floor Amendments of 9/3/15 remove “osteoporosis casually related to menopause” from the list of conditions where apportionment would have been prohibited.

According to state Sen. Marty Block (D-San Diego), the bill was part of an effort to end gender bias in the workplace. Some proponents of the bill have argued that the AMA Guides are not objective, specifically in the area of gender-specific injuries. Specifically, proponents point to the fact that the AMA Guides rate the removal of female breasts at a WPI of 0%, while the removal of a prostate would rate a 16%-20% WPI, arguing that such a rating shows bias against women.

Opponents argued that AB 305 was an attempt to undermine an employer’s use of apportionment when determining liability for permanent disability awards. Specifically, opponents noted that apportionment is more than a decade old and ensures that employers do not need to pay for non-industrial injuries. Further, opponents pointed to case law and statute which protects injured workers from abusive apportionment, including apportionment on the basis of gender. Opponents further argue that AB 305 will increase litigation, raise indemnity costs on employers, and increase systemic instability and subjectivity.

The Democratic governor’s veto message said “The workers compensation system must be free of gender-bias. No group should receive less in benefits because of an immutable characteristic. However, this bill is based on a misunderstanding of the American Medical Associations’ evidence-based standard which is the foundation of the permanent disability ratings, and replaces it with an ill-defined and unscientific standard.”

Study Links Industrial Noise Exposure and Heart Disease

People with long-term exposure to loud noise at work or in leisure activities may be at increased risk of heart disease, according to a new study summarized in Reuters Health. Researchers found the strongest link in working-age people with high-frequency hearing loss, which is typically the result of chronic noise exposure.

“Compared with people with normal high-frequency hearing, people with bilateral high-frequency hearing loss were approximately two times more likely to have coronary heart disease,” said lead author Dr. Wen Qi Gan of the University of Kentucky College of Public Health in Lexington.

Past research has already linked noise exposure, especially in workplaces, to coronary heart disease, high blood pressure and other illnesses, Gan and his colleagues write in Occupational and Environmental Medicine. But many of these studies lacked individual information about actual noise exposure, relying instead on average decibel levels in the person’s environment. High-frequency hearing loss, the researchers say, is a better indicator of exposure to loud noise over time.

To investigate the connection with heart disease, the researchers looked at data on 5,223 participants in national health surveys between 1999 and 2004. Participants ranged in age from 20 to 69 at the time they were surveyed.Overall, people with high-frequency hearing loss in both ears were about twice as likely to have coronary heart disease compared to those with normal high-frequency hearing. Among those age 50 and under, who were also most likely to be exposed to loud noise at work, the heart disease risk was increased four-fold.

There was no link to heart disease among people with one-sided hearing loss or loss of lower-frequency hearing, the study team notes, further supporting the idea that noise exposure is the culprit.

The study only looked at people at one time point, however, and cannot prove that noise or hearing loss are direct causes of heart disease. The researchers also acknowledge that they relied on study participants’ own recollections about their work and leisure-time noise exposure.

Nonetheless, Gan said, accumulating evidence suggests that exposure to loud noise can increase the risk of coronary heart disease.

Walking Workstations Reduce Muscle Pain

A researcher at McGill University in Quebec says her study of treadmill workstations show them to be potentially more beneficial and able to help diminish work-related musculoskeletal disorders. Kinesiology researchers are studying ways to reduce or even prevent muscular and skeletal stresses and pains. The study as summarized in Reuters Health shows that walking while working on a computer may lead to healthier muscular patterns. The research was published this year in the European Journal of Applied Physiology.

“There are studies recently that show that you lose weight because you would exert more calories, but we were more interested in knowing about the muscles that do the work. The muscles in the neck/shoulder region are the ones that feel the pain and experience fatigue,” says Julie Cote, an Associate Professor in the Department of Kinesiology and Physical Education whose research focuses on biomechanics and ergonomics.

Cote’s lab asked 20 healthy participants to complete a 90-minute typing task on a computer while sitting or walking on a treadmill. This typing task measured both speed and accuracy. “We found out that in terms of performance – typing performance – there was no difference between how fast or how many mistakes people were making whether they were walking or seated,” said Cote.

For the experiment, they placed electrodes on certain parts of the body to measure muscle activity in the neck, shoulders, forearms, wrists and lower back. Cote said the electrodes collected three points of data – blood flow, muscle activity and movement or posture – with the help of motion capture. Her lab asked participants to rate their level of discomfort while performing tasks. Results showed that upper limb discomfort was higher when the subjects were sitting and increased the longer they sat.

“We found in terms of muscle activity there were patterns that seemed to be healthier in the neck and shoulder while people were walking,” said Cote. They discovered that there was lower, but more variable, muscle activity when subjects were walking compared with sitting, all of which translated into less discomfort. When people were walking, “the muscles worked together in a more independent way,” said Cote

Cote’s lab is in the process of preparing results of desk standing versus sitting, to submit for publication, but she is already convinced that the former is healthier for workers. “What I can say in terms of performance, people seem to be performing better when they were standing,” said Cote.