Tag: 2017 News

A new study on the California workers’ compensation independent medical review (IMR) process established by state lawmakers to resolve medical disputes finds that in the first half of this year, more than 91% of all utilization review (UR) physicians’ modifications or denials of treatment that were reviewed by an IMR physician were upheld, and after increasing steadily since 2013, IMR volume appears to be leveling off.

California law requires workers’ comp claims administrators to have a Utilization Review (UR) program to assure that care provided to injured workers is backed by clinical evidence outlined in medical guidelines adopted by the state. Most treatment requests are approved by UR, but in 2012 state lawmakers adopted IMR to give injured workers a chance to get an independent medical opinion on treatment requests that UR physicians deny or modify.

Use of IMR has grown sharply since 2013, but in its new study, the California Workers’ Compensation Institute (CWCI) tallied 86,066 IMR decision letters issued in the first half of this year in response to applications submitted to the state after a UR physician modified or denied a medical service request. At that rate, the volume of IMR letters in 2017 will decline 2.2% from the 2016 level, while the number of individual treatment requests decided in those letters will be down 0.6 percent – the first time IMR volume has not increased since the process took effect in 2013.

CWCI’s analysis of the 2017 IMR decisions found that after reviewing the patient’s records and other information provided to support the request, IMR physicians upheld the UR doctor’s modification or denial of the service 91.3% of the time, which was virtually identical to the 91.2% uphold rate in 2016.

As in prior years, pharmaceutical requests accounted for almost half of the 2017 IMR decisions, led by opioids, which represented 28.8% of all 2017 prescription drug IMRs, even though IMR doctors have consistently upheld the UR decision in 90% of the opioid requests.

Requests for physical therapy; injections, durable medical equipment; and MRIs, CTs and PET scans together comprised another 29% of the 2017 IMRs, but no other medical service category accounted for more than 4% of the disputed requests. Among the various service categories, uphold rates in 2017 ranged from 80.4% for evaluation/management services (primarily consultations) to 94.6% for chiropractic manipulation.

The Institute study also confirmed that a relatively small number of physicians continue to account for most of the disputed medical services that go through IMR. A breakdown of IMR volume among high-volume physicians showed that the top 10% of physicians who were named in IMR decision letters issued between July 2016 and June 2017 (1,114 doctors) accounted for 85% of the disputed service requests during that period, while the top 1% (111 providers) accounted for 45% of the disputed services.

Additional details and graphics from the study are available in a CWCI Spotlight Report, “Independent Medical Review Decisions: January 2014 Through June 2017.”

Arizona’s provider of workers’ compensation insurance since 1925, announced a definitive agreement to acquire Pacific Compensation Insurance Company (PacificComp), a California-based workers’ compensation carrier, from Alleghany Insurance Holdings LLC, a wholly-owned subsidiary of Alleghany Corporation (NYSE: Y), for $150 million in cash. The combined book of underwriting business for the two companies will represent approximately $400 million in premium and a combined asset base of nearly $4.1 billion, with $1.5 billion in policyholder surplus.

CopperPoint was founded in 1925 and is headquartered at CopperPoint Tower in Phoenix and has a presence statewide. Today it provides workers’ compensation insurance to more than 12,000 businesses, as well as offers other business insurance products, including property and casualty coverage.  It holds $1.35 billion in surplus and more than $3.4 billion in assets with no debt.  The family of CopperPoint Insurance Companies and its subsidiaries are rated A- Excellent XII by A.M. Best.

CopperPoint was privatized and converted to a mutual insurance company in 2013 with a vision of geographic expansion and product diversification. In 2016, Marc Schmittlein, a 30-year veteran of The Travelers, was brought on by the board of directors as CopperPoint CEO to help the company take the next step in its journey to become a regional mutual commercial lines company.

Pacific Compensation Insurance Company provides workers’ compensation insurance coverage exclusively through independent insurance brokers for California companies. The company was formerly known as Employers Direct Insurance Company and changed its name to Pacific Compensation Insurance Company in April 2010. The company was incorporated in 2002 and is based in Westlake Village, California with an additional address in Agoura Hills, California. Pacific Compensation Insurance Company operates as a subsidiary of Alleghany Insurance Holdings LLC.

The acquisition of PacificComp represents a significant milestone in CopperPoint’s geographic expansion and diversification initiatives. PacificComp brings a proven track record, strong underwriting discipline and focused approach to serving businesses in the California market. The two companies share complementary strengths, including expertise in workers’ compensation and a commitment to providing the highest quality customer experience through select independent agents.

“We are creating a family of insurance companies built on strong business relationships and best-in-class service,” said Marc Schmittlein, President & CEO of CopperPoint. “PacificComp brings experienced professionals with deep California market expertise and a solid book of business that will undoubtedly provide us with a sound platform for growth.”

“In joining CopperPoint, we have found an ideal strategic and cultural fit for our employees, broker partners and policyholders that will allow us to continue our service to the market without interruption and provide us with the ability to expand the products and services we offer,” said Jan Frank, CEO of PacificComp. “Our companies share a strategic vision for the continued expansion of the business and an approach to the marketplace that makes me and the PacificComp management team excited to become part of the CopperPoint family of companies.”

Schmittlein added, “A key tenet of our value proposition comes from our proximity to customers, their business, their markets and their communities. Acquiring PacificComp builds on that core strength and is a natural fit for our policyholders growing West, particularly into California.”

Upon closing, PacificComp will continue to operate under its current name as part of the broader CopperPoint family of companies. Terms of the agreement include the purchase of adverse development reinsurance cover on PacificComp’s pre-acquisition claims. The transaction is expected to close at the end of the year subject to customary closing conditions and regulatory review and approvals.

The Division of Workers’ Compensation (DWC) has posted an order adjusting the Official Medical Fee Schedule (OMFS) to conform to changes in the Medicare payment system as required by Labor Code section 5307.1.

The Physician and Non-Physician Practitioner Fee Schedule update Order adopts the following Medicare changes:

1) Centers for Medicare and Medicaid Services (CMS) Medicare National Physician Fee Schedule Relative Value File RVU17D October 1, 2017 quarterly update

2) National Correct Coding Initiative Physician/Practitioner Services CCI Edits October 1, 2017 quarterly update

3) National Correct Coding Initiative Medically Unlikely Edits October 1, 2017 quarterly update

The order adopting the OMFS adjustments is effective for services rendered on or after October 1, 2017 and can be found on the DWC website.

Entrepreneurs have always had an eye on the benefits of doing business within the Sovereign Immunity protection of recognized American Indian Tribes. Generally, recognized tribes are exempt from most state and federal law. A recent California example was attempts to form “staffing” companies that claimed to be a tribal enterprise that acted as an employer claiming to be exempt from the costly California workers compensation insurance requirements.

Now, there is a new twist to an old idea.

Reuters Health reports that a groundbreaking deal between Allergan Plc and a Native American tribe to shield the company’s patents in administrative proceedings could also be used be to protect them from challenges in federal court, legal experts said, potentially dealing a blow to generic competition.

Allergan said it had transferred patents on its blockbuster dry eye medicine Restasis to the St. Regis Mohawk Tribe, which will exclusively license the patents back to the company in exchange for ongoing payments. The deal takes advantage of the fact that the tribe is treated as a sovereign nation immune to civil lawsuits.

In announcing the deal, Allergan said it believed the Restasis patents would no longer be subject to review by the U.S. Patent Trial and Appeal Board, an administrative court empowered to cancel patents through a process called inter partes review. The company said it would not claim immunity in an ongoing lawsuit in federal court by generic manufacturers seeking to revoke the same patents.

“This was directed at and only affects the flawed IPR process,” Allergan Chief Executive Brenton Saunders said in an interview.

But judges across the country have found tribal immunity applies to litigation in federal court. That means other brand-name drug companies could be motivated to follow Allergan’s lead and transfer their patents to tribes, severely limiting generic manufacturers’ ability to challenge those patents.

Drugs made by brand-name manufacturers like Allergan, Pfizer Inc and Merck & Co are usually protected by patents for up to 20 years after they are introduced. But generic companies can bring their versions to market earlier if they can successfully sue to have those patents invalidated. The price of a drug drops dramatically once generic versions enter the market. Restasis sales were $1.4 billion last year.

The Patent Trial and Appeal Board, which Congress created in 2011 to make it easier and cheaper to challenge patents, has been embraced by generic drug companies. Earlier this year, the board invalidated some of the patents held by Abbvie Inc on its $16 billion immunosuppressant Humira, raising the possibility of low-cost competition for the country’s best-selling drug.

Challenging patents in federal court is slower and more expensive, though generic companies certainly do it. Teva Pharmaceuticals Inc and other generic drug companies are suing Allergan in federal court seeking a ruling that the latter’s Restasis patents should not have been granted in the first place because they cover obvious concepts.

Michael Carrier, a professor at Rutgers Law School, said drug companies may fear a public outcry if they use tribal immunity to remove their patents from scrutiny by both the board and federal court. A spike in drug prices, for example, could lead Congress to pass a law limiting the scope of that immunity in such cases.

Trinity County is the state’s fourth-smallest, and ended last year with an estimated population of 13,628 people.

Its residents also filled prescriptions for oxycodone, hydrocodone and other opioids 18,439 times, the highest per capita rate in California.

Places like West Virginia, Ohio and rural New England have become synonymous with prescription painkiller abuse, a scourge blamed for more than 183,000 deaths from 1999 through 2015.

California, though, is far from a bystander to the crisis. There were 1,925 opioid-linked overdose deaths in California last year, according to recently updated state data, and thousands of emergency room visits.

The story in the Sacramento Bee reports that problem also has a decidedly geographic dimension in California. In rural and semi-rural parts of the state, where the demographics resemble Appalachia more than Anaheim, prescription drug use and death rates vastly exceed the state average, state data show.

Besides Trinity, other counties with more prescriptions than people include Lake, Shasta, Tuolumne and Del Norte counties. In the Sacramento region, El Dorado, Placer and Sacramento counties had prescription rates above the statewide average, with Yolo County slightly below the state average.

A county’s prescription total represents all opioids dispensed via prescriptions filled at a pharmacy and tracked by the state. Statewide, 15 percent of Californians were prescribed opioids in 2016, ranging from 7.3 percent of residents in tiny Alpine County to almost 27 percent in Lake County.

“The following characteristics were associated with higher amounts of opioids prescribed: a larger percentage of non-Hispanic whites; higher rates of uninsured and Medicaid enrollment; lower educational attainment; higher rates of unemployment; (small-town) status; more dentists and physicians per capita; a higher prevalence of diagnosed diabetes, arthritis, and disability; and higher suicide rates,” concluded the authors of a Centers for Disease Control and Prevention study released in July.

The National Institute on Drug Abuse last month awarded nine grants to address the opioid crisis in rural places. Oregon doctor Todd Korthuis, an expert on opioid abuse in the state, is the only grant recipient west of the Mississippi River. “What you’re seeing in California is what you’re seeing in many parts of the country, including Oregon,” Korthuis said. “There are still a lot of rural counties around the U.S. that are awash in prescription opioids.”

The state data also compiles prescriptions by ZIP code. In Sacramento County, for example, ZIP codes with the highest rates of prescription opioids include Galt’s 95632, Del Paso Heights’ 95838, and Rio Linda’s 95673.

The country’s opioid abuse epidemic tracks a quadrupling of prescription drug sales from 1999 to 2014. Once prescribed mainly for short-term pain relief, prescription painkillers increasingly are taken for chronic pain.

Young people are among the biggest abusers. Although overall teen drug use has declined nationally, prescription drugs are second only to marijuana in teen drug abuse. One in five teens has abused a prescription pain medication, according to the Partnership for Drug-Free Kids.

In California, residents aged 15 to 29 got 1.7 million prescriptions in 2016, representing 7.2 percent of the state total. That’s down from the 1.9 million prescriptions in 2015, which represented about 7.8 percent of the state total. The age range that featured the largest prescription rate increase were 70- to74-year-olds, whose prescriptions grew from almost 1,354 per 1,000 people in 2015 to 1,394 per 1,000 people in 2016.

The worsening crisis has prompted state legislation, although few bills on the subject seem likely to pass this year. A measure by Assemblywoman Marie Waldron, R-Escondido, to require California to create a public-awareness campaign about opioid abuse passed the Assembly without a dissenting vote. It was held last week in the Senate Appropriations Committee because of the cost. And a bill by Assemblyman Kevin McCarty, D-Sacramento, to levy a new fee on opioid manufacturers would have generated an estimated $88.1 million to pay for treatment and prevention efforts. It did not advance.

One of the few prescription painkiller bills still moving would require the state Department of Public Health to convene a working group to craft guidelines for the prescribing of opioid pain relievers. It has had no opposition.