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Tag: 2015 News

Growth in Outcome Based Medical Networks Predicted for 2015

Medical treatment reimbursement schemes continue to evolve over time. Decades ago, health practitioners we paid for “procedures” no matter how well they worked. The more procedures one was able to accomplish over time resulted in more revenue. This was a disincentive for quality, and a huge incentive for simple quantity. Today the emphasis is moving in the direction of higher payment for better outcomes. A recent article in Property Casualty 360 predicts this evolution to continue into workers’ compensation this year.

Larger employers are developing outcome-based networks, not only for workers’ compensation, but for their group health as well. They’re contracting directly with the healthcare networks to ensure that their workers receive the best medical care and tying compensation to outcomes. We’re seeing a shift from a focus on price to programs with an understanding that better outcomes lead to increased productivity and overall lower costs.

Employers also are recognizing the importance of mental health to wellness. We’re seeing a wellness revolution more focused on the patient as a whole person and the importance of managing health both physically and mentally.

The evolving health care model is tied directly to an evolving viewpoint on disability management. More employers are realizing the importance of managing all disability, not just that associated with workers’ compensation claims. This integrated disability management model is reportedly the future of claims administration. Employers who retain risk on the workers’ comp side usually do the same thing with non-occupational, short-term and long-term disability.

Coventry advertises the most recent addition to its suite of network offerings, an Outcomes-based Network program aimed at identifying workers’ compensation providers who have been statistically shown to contribute to effective patient outcomes and controlled claims costs. The Outcomes-based Network was developed in response to the market’s desire for smaller occupational health focused networks whereby clients can increase utilization with doctors who are associated with their most desirable outcomes. The Outcomes-based Network claims to differ from other focused network offerings as it addresses the importance of identifying providers based on total claims outcomes.

Sedgwick embarked on a mission to create a truly outcomes-based network solution with two main components. Deploy the network solution throughout the daily claims and medical management process. Measure how medical providers are doing across a broad spectrum of data points by creating scorecards. In a recent evaluation of 107,000 claims, using high-scoring providers resulted in: 40% faster claim resolution, 61% less incurred expense, 62% less incurred medical expense and 73% less lost time days. A company white paper provides details of its approach.

Liberty Mutual has Outcomes Based Networks in fifteen states including California. Provider selection was based on an in-depth analysis of medical and return to work outcomes for point of entry providers and orthopedic surgeons and extensive field knowledge of regional medical directors and claims and managed care professionals for all other providers.

Yet others are not convinced that this new payment model will deliver as promised. Aaron E. Carroll, a professor of pediatrics who writes a column for the New York Times, said after reviewing the medical literature in 2014 that pay for performance in the U.S. and U.K. has brought “disappointingly mixed results.” Sometimes even large incentives don’t change the way doctors practice medicine. Sometimes incentives do change practice, but even when they do, clinical outcomes don’t improve. Critics say that pay for performance is a technique borrowed from corporate management, where the main outcome of concern is profit.

Responding to public backlash to managed care in the 1990s, California health care plans and physician groups developed a set of quality performance measures and public “report cards”, emerging in 2001 as the California Pay for Performance Program, now the largest pay-for-performance program in the country. Financial incentives based on utilization management were changed to those based on quality measures. Provider participation is voluntary, and physician organizations are accountable through public scorecards, and provided financial incentives by participating health plans based on their performance.

LA County Probation Officer Faces Fraud Charges

A Los Angeles County probation officer has been arrested and charged with two counts of worker’s compensation insurance fraud after allegedly altering medical documentation, authorities said Tuesday.

Raymond Milton, who is assigned to a juvenile detention camp as a deputy probation officer, is expected to face two counts of insurance fraud for allegedly altering medical documents to dupe the county Probation Department out of more than $2,300 in sick time pay, officials said.

Milton, 41, was arrested Saturday afternoon and posted bail the next day, according to Sheriff’s Department records.

The Probation Department has been cracking down on insurance fraud and employee misconduct.

“Within the last year, the department added a Special Projects Team comprised of four supervisory level investigators,” said Senior Probation Director Jennifer Kaufman. “These investigators are specially trained to recognize the signs of workers compensation and medical fraud.”

WCJ Pamela A. Pully Appointed PJ in Santa Ana

Workers’ Compensation Judge Pamela A Pulley has been appointed to the position of Presiding Judge at the Santa Ana district office of the Workers’ Compensation Appeals Board. .

Judge Pully received her undergraduate degree from Northwestern University from 1983 to 1987 and then her law degree from the University of Connecticut School of Law between 1987 and 1990.

She began her law career as an Associate Attorney with the Cantrell, Green, firm in Long Beach for ten years between 1991 and 2001 in Long Beach. She was then an Associate Attorney with Prindle, Decker and Amaro for four years between 2001and 2005

She has been a Workers’ Compensation Administrative Law Judge February 2005 until her current appointment as the Presiding Workers’ Compensation Judge

Santa Barbara Contractor Faces 43 Felonies

Santa Barbara County District Attorney Joyce E. Dudley announced the arrest of local business owner Alberto “Al” Rodriguez, his wife Maria Rodriguez, and Byron Duran. Rodriguez and his wife own United Seal Coating, also known as United Sealcoating and Slurry Seal, Inc., United Paving, and Santa Barbara Paving. Duran is a long-time employee of the company.

The complaint filed by the District Attorney’s Office alleges 42 felony counts which include violations of the California Unemployment Insurance Code, Workers’ Compensation Premium Fraud, Fraudulent Denial of Workers’ Compensation Benefits, and Wage Theft. All three suspects are scheduled to appear for an arraignment in Department 8 of the Santa Barbara Superior Court on January 30, 2015.

The three suspects were arrested by detectives from the California Department of Insurance along with members of local law enforcement on January 14, 2015. The arrest of the three suspects was the result of an investigation by the California Department of Insurance Fraud Division, the Santa Barbara County District Attorney’s Office, the Franchise Tax Board, the Employment Development Department, and the Division of Labor Standards Enforcement.

California Claim Frequency Continues Relentless Increase

The WCIRB has released an update to its Analysis of Changes in Indemnity Claim Frequency report which was originally published in 2012 and last updated in December 2013. In prior reports, WCIRB researchers explored potential causes for the increases in claim frequency in California that have persisted since 2010 and that differ from the claim frequency experience of other states. Prior frequency reports have identified a number of factors influencing claim frequency including increases in cumulative injury claims, increases in smaller non-cumulative injury claims that may have been reported as medical-only in the past, increases in the proportion of indemnity claims relative to total claims, and increases in late-reported indemnity claims and the proportion of medical-only claims that later transition to indemnity.

In this latest update, WCIRB researchers studied the influencing factors driving recent claim frequency based on the most up-to-date data available. The WCIRB’s principal findings include:

1) Unlike in most other states over the last several years, California indemnity claim frequency has continued to increase as WCIRB data currently indicates increases of 3.2%, 3.9% and 0.9% in 2012, 2013, and 2014, respectively.
2) The number of late reported indemnity claims continues to increase, whereas the percentage of medical only claims reported after 18 months has generally remained stable since 2007.
3) The level of cumulative injury claims has continued to increase. Approximately 13% of indemnity claims are estimated to involve a cumulative injury in 2013 compared to approximately 8% in the 2005 to 2007 period.
4) The growth in cumulative injury claims beginning in 2009 has been concentrated in claims involving more serious injuries and multiple injured body parts. Both the proportion of cumulative injury claims involving indemnity benefits and the proportion involving injuries to multiple body parts have increased significantly since 2010.
5) Based on WCIRB surveys of cumulative injury claims, both the proportion of cumulative injury claims involving multiple insurers and the proportion involving attorney representation has increased in recent years. In addition, approximately two-thirds of surveyed claims were initially denied in part or in whole by the insurer and approximately 40% of claims, despite long-standing statutory limitation on the compensability of post-termination claims, were reported post-termination.
6) Shifts to a less hazardous composition of industries in California (“industrial mix”) have historically driven claim frequency downward. The recent economic recovery in higher hazard industries such as construction and manufacturing has had the opposite impact. In 2013, rather than dampening claim frequency, shifting industrial mix is increasing claim frequency by approximately 1%.
7) The 2010 increase in frequency was greatest in industries that were most impacted by the recession (e.g. construction and real estate). Since 2010, relativities for higher-frequency industries such as agriculture, construction, and entertainment have increased while those for the lower-frequency industries such as real estate, professional services, and finance have declined.
8) The 2010 indemnity claim frequency increase was generally experienced across all California regions. Since that time, the increases have been concentrated in the Los Angeles area. Indemnity claim frequency increased an estimated 9% in the Los Angeles Basin region from 2010 to 2013 while, similar to the pattern shown in many other states, other California regions showed modest declines. By comparison, indemnity claim frequency in the Bay Area declined by 7% over the same period. The Los Angeles area also has experienced significantly higher numbers of cumulative injury claims and claims involving multiple body parts than other regions of California.
9) As the economy recovers, newer workers enter the system and are often more likely to be injured on the job than more experienced workers. The proportion of injured workers with less than 2 years of experience at their current job has grown by 8% from 2010 to 2014, suggesting the economic recovery is a significant driver of recent claim frequency increases.

The full Analysis of Changes in Indemnity Claim Frequency – January 2015 Update Report is available in the Research and Analysis section of the WCIRB website.

WCRI Says Physician Dispensing Reforms Ineffective

After 18 states enacted reforms to limit the prices paid to doctors for prescriptions they write and dispense, this WCRI study finds that physician-dispensers in Illinois and California discovered a new way to continue charging and to get paid two to three times the price of a drug when compared with pharmacies. The study identifies the mechanism that allows doctors in Illinois and California to dispense drugs from their offices at much higher prices when compared with pharmacies. Although this study uses data from two large states, it raises questions for all states where physician-dispensing prices are regulated.

The data used for this report came from payors that represented 46 and 51 percent of all medical claims, respectively, for California and Illinois. The detailed prescription transaction data were organized by calendar quarter so that for each quarter, all prescriptions filled for claims with dates of injury within 24 months of the observation quarter were included. On average for each of the quarters reported, WCRI included 219,572 prescriptions paid for 60,448 claims in California. The same figures were 43,034 prescriptions paid for 12,714 claims in Illinois. The detailed prescription data cover calendar quarters from the first quarter of 2010 though the first quarter of 2013.

Insurers More Aggressive on Drugmakers

The world’s biggest drugmakers face a new reality when it comes to U.S. pricing for their products as insurers use aggressive tactics to extract steep price discounts, even for the newest medications says an article in Reuters Health. Big Pharma executives acknowledged the depth of change this week during public presentations and interviews with Reuters at the J.P. Morgan Healthcare conference in San Francisco. Drugmakers have long relied on their ability to charge whatever they deemed appropriate in the U.S., the world’s most expensive healthcare system.

Industry advocates have defended those U.S. prices in the past as a way to recoup the billions of dollars spent on experimental drugs that fail and to offset discounts offered overseas. “There has definitely been increased price competition … if a product is viewed as a commodity,” Derica Rice, chief financial officer at Eli Lilly and Co, said in an interview. “Our goal is clinical differentiation.”

Pascal Soriot, chief executive of AstraZeneca Plc warned investors that the pressure exerted by health insurers has expanded from medicines used to treat common maladies to the specialized fields, like cancer, where drugmakers have been able to charge their highest prices. “Payers will try to leverage their strengths to try and get pricing concessions because those agents are very expensive,” Soriot said.

Many say the tide shifted with a campaign by insurers and pharmacy benefits companies against Gilead Sciences Inc’s $84,000 hepatitis C treatment Sovaldi. The drug represented the first effective cure for hepatitis C and quickly raked in billions of dollars in sales within its first few months on the market in 2014. Sovaldi’s cost is based on a 12-week treatment regime and amounts to $1,000 a pill. By contrast, the treatment costs about $57,000 in the U.K As soon as U.S. regulators approved Sovaldi’s competitor, a treatment from AbbVie Inc last month, the country’s largest pharmacy benefits manager Express Scripts Co dropped reimbursement for the Gilead drug. Express Scripts said it had received a substantial discount from AbbVie, a departure from industry practice of pricing new competing drugs close to the incumbent for as long as possible. It didn’t say how much the discount was. Express Scripts said this week it sought similar opportunities for discounts in new cancer medications, and was looking closely at a new class of cholesterol-fighting drugs aimed at millions of patients who can’t tolerate or get enough benefit from widely-used statins. Amgen Inc and Regeneron Pharmaceuticals Inc are two of the companies racing to bring the new cholesterol treatments, which target a protein called PCSK9, to market. “It’s not a worry. It’s a reality that we will deal with,” Regeneron CEO Len Schleifer said of Express Scripts’ goals. “I think there will be fair pricing and healthy competition in the marketplace.”

When pressed on how they could counter the growing pressure from insurers, large drugmakers say they are relying on strategies long employed in the marketplace, focusing research on diseases that don’t have adequate treatments and finding ways to differentiate their products from competitors in terms of effectiveness and convenience. But some industry experts believe they will have to become far more selective even when entering a new treatment area. The hepatitis C example shows how insurers have been able to play just two competitors off one another to wrest a discount.

Gilead Chief Operating Officer John Milligan said that in recent weeks, more health plans are asking the company to drop its hepatitis C drug price more in line with AbbVie in order to keep both drugs on their reimbursement lists. “Payers are starting to move beyond hand-wringing to real action,” said Glen Giovannetti, head of global life sciences at Ernst & Young. “We are starting to see (pharmaceutical) companies deciding which therapeutic options they want to compete in.”

Nils Behnke, a partner with Bain and Co’s global healthcare and strategy practices, noted that even for the most new promising classes of medications, there are often three or four companies pursuing similar development programs. “Companies that were heavily into specialty indications thought they were immune, but it is now clear that they are not,” he said

Merck and Co CEO Kenneth Frazier acknowledged that U.S. prices for diabetes drugs remain under pressure. “We need to identify a value proposition … show that over time we can reduce costs,” he said in an interview.

Smaller biotech Isis Pharmaceuticals Inc said it is already taking into account potential competition when deciding which research programs to pursue. CEO Stanley Crooke said the company abandoned its PCSK9 program when it became clear the drug would reach the market only after several others. “We are working on diseases for which there are no real treatments — Parkinson’s, Alzheimer’s, ALS,” said George Scangos, CEO at Biogen-Idec. “In the future, we will see more correlation between value that drugs deliver and the way they are reimbursed.”

Modesto Prescription Drug Ring Arrested

A three-month investigation ended this week with the arrests of a doctor’s office manager, a pharmacy technician and two other suspects in connection with a prescription drug ring that authorities say put more than 50,000 prescription narcotic pills on the streets of Modesto in the past year. According to the report in the Modesto Bee, blank prescription pads were being stolen from a pain management clinic, forged by members of the ring and filled at a Modesto CVS Pharmacy, said Chris Adams, an officer with the Modesto Police Department Narcotics Enforcement Team. The pills, most of them highly addictive, opiate-based drugs such as oxycodone and hydrocodone, were then sold on the street, police say. “Hydrocodone has a street value of $3 to $5 (per pill), and oxycodone can sell for up to $40 for an 80 mg pill,” Adams said.

After an anonymous tip in November, investigators learned that nearly 300 fraudulent prescriptions had been filled in the past year using six fictitious names and eight real names. Tuesday, MNET officers, with the assistance of the police Street Gang Unit, detectives and agents of the federal Drug Enforcement Administration, served search warrants at the CVS Pharmacy in McHenry Village, Central Valley Pain Management on Mable Avenue, and three homes in Modesto and one in Hughson. During the searches, officers seized more than 2,800 prescription pills, two loaded firearms, a high-capacity magazine, $1,000 in cash and several fraudulent and blank prescription pads, Adams said.

Arrested were Christina Martinez, 27; Lance Wilson, 30; and Mona Chavarin, 43, all of Modesto; and Lenele Nunez, 31, of Hughson. All are out of custody on bail. Chavarin is a licensed pharmacy technician, according to public records from the Department of Consumer Affairs, Board of Pharmacy.

Dr. Patrick Rhoades, owner of Central Valley Pain Management, said Wednesday that he is “in shock” over the arrest of his office manager, Nunez. “I had complete and total trust in her,” he said. “I thought she would never be the type of person who would do that. This is just beyond me.” Nunez had worked at Central Valley Pain Management for a number of years, starting out analyzing drug tests, advancing to become Rhoades’ medical assistant, then being promoted to office manager several years ago. “She had gained my trust greatly,” Rhoades said. “In the last few years, she was performing admirably, many things in our office were running smoother than ever before.” He said Nunez came to work in the morning Tuesday but then said she had to leave to address an issue with her children. She never returned.

Sgt. Kelly Rea, who supervises MNET, said prescription medication abuse and theft are on the rise. “We are seeing more and more of these cases come through our office,” he said. “It’s alarming how many people are becoming addicted to these pills, and moving right into other highly addictive drugs, such as heroin.”

Mike DeAngelis, a spokesman for CVS Pharmacy, responded by email to The Bee’s request for comment. “Prescription fraud is a serious criminal offense that we work hard to prevent,” he wrote. “We have been and continue to fully cooperate with the authorities in the investigation of our employee’s alleged activities. As this is an ongoing investigation, we cannot comment further on the allegations and defer to the Modesto Police Department for any additional comments.”

All of the suspects were arrested on 286 counts of forged prescriptions, 286 counts of prescription fraud, 286 counts of fraud, 286 counts of commercial burglary, 181 counts of identity theft and conspiracy, authorities said. Martinez also was arrested on suspicion of possession of a controlled substance for sale, transportation of a controlled substance, being armed in the commission of felony, and felony child endangerment because one of the guns seized was accessible to a child. Wilson also was arrested on suspicion of possession of a controlled substance for sale, being armed in the commission of felony, being a felon in possession of a firearm and possession of high capacity magazine.

FSK Employment Law Conference Set for January 30

Floyd, Skeren and Kelly is pleased to announce our 2015 Northern California Employment Law Conference, set for January 30, 2015 at the Hilton Garden Inn, 1800 Powell Street Emeryville. We will feature as our Keynote Speaker Dale Brodsky, Esq., Councilmember of the California Fair Employment and Housing Council.

The Conference will cover important workplace topics related to the Interactive Process, Disability Leave, Pregnancy Leave, the Affordable Care Act, Workers’ Compensation and the crossover issues related to the Fair Employment Act, and much more. Some of the topics covered are:

1) Understanding the Numerous, and Often Overlapping, California Leave Laws
2) An Overview of Proposed Regulatory Changes to the California Family Rights Act
3) Guidance on Preventing a Straightforward Workers’ Compensation Case from Turning Into a FEHA Nightmare
4) Mastering the Complexities of Pregnancy Leave: How Much Time is Required by Law and Why it Could be More Than 7 Months
5) An Affordable Care Act Update for Employers: What Changed as of January 1, 2015, Employer Responsibilities
6) Overview of New California Employment Laws in Effect as of January 2015
7) Reduce Work Comp Costs: Avoid Seven Common Mistakes

This conference will include helpful information for employers, supervisors, managers, claims adjusters, risk managers, attorneys and any other professional associated with human resources and employment law. For more information and to register visit us at: FSK HR TRAINING.

This program, has been approved for 7 (HR (General)) recertification credit hours toward PHR, SPHR and GPHR recertification through the HR Certification Institute. We will release the program number the day of the training in your materials, please be sure to note the program ID number on your recertification application form. For more information about certification or recertification, please visit the HR Certification Institute website at

Health Care Workers Continue to Struggle With Safety

Workers compensation claim frequency for health care workers declined by about 1% in 2014, but comp claim severity among medical workers increased 2% last year as health systems say they struggle with safety procedures that can reduce worker injuries, Aon Risk Solutions said in a report released Tuesday.

The findings were published in Aon’s annual Health Care Workers Compensation Barometer report, which surveyed 44 health care systems representing 1,150 medical facilities nationwide.

Among health care employers surveyed by Aon, 42% said their largest workplace safety concern is patient management, which includes lifting and handling of patients. About 74% of respondents said they have a safe patient handling program in place to help protect patients and employees from accidents, while 26% said they have no such program. Home Health Care Aide occupation has the highest average indemnity cost among workers compensation claims. This is potentially due to patient management.

“Health care systems with successful safe patient handling programs have found they can significantly reduce the number of employee injuries and lost work days from injuries,” the report said. “Safe patient handling has been associated with not only fewer injuries but also a decrease in the severity of injuries.”

Among health care employers that have safe handling programs, 88% said they are satisfied with the program but are concerned about the sustainability of such initiatives, Aon said. Twelve percent of respondents said they’re not satisfied with their safe patient handling programs.

“Many safe patient or resident mobility programs stall because they fail to realize the importance of following a continuous improvement platform and drive greater results for all aspects of the program,” the report said. “Any program should follow a defined process and strive to continually improve.”

Among the eleven states profiled within the report, California ($2.18) has the highest projected loss rate for 2015; Tennessee ($0.48) has the lowest projected loss rate for 2015. For the 2015 accident year, Aon projects that health care facilities will experience an annual loss rate of $0.75 per $100 of payroll. This projection applies at the countrywide level and is made assuming a $500,000 per occurrence limit.