The Effects of Physician-Dispensing in Workers' Compensation IAIABC - - PowerPoint PPT Presentation

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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The Effects of Physician-Dispensing in Workers' Compensation

IAIABC Webinar September 2014 Prepared by Paul Kauffman and Dr. Dan Hunt

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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The views expressed in this presentation are our own and do not necessarily represent the position of Accident Fund Holdings Inc., or any subsidiaries.

Disclaimer

Accident Fund headquarters in Lansing, MI.

• Dr. Dan Hunt, Corporate

Medical Director at Accident Fund Holdings, Inc.

Dan.Hunt@accidentfund.com

Paul Kauffman, director of

Medical Program at Accident Fund Insurance Company of America Paul.Kauffman@accidentfund.com

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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100 years old - Established in 1912 in Michigan One of the largest monoline workers’ compensation carriers in the country We insure over 46,000 employers in 18 states Covering approximately 1 million workers Averaging over 20,000 claims per year Over $550 million in claim cost last year Having 90,000 treating providers in 120,000 locations

Who are We?

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Guidewire Process Innovation Award 2012 for Care Analytics – Provider Direct Best’s Review Magazine Innovation Showcase Award 2013 for Care Analytics - Early Detection IASA and Ward Group Technology Innovation Award 2013 for Care Analytics – Early Detection

Awards & Accomplishments

Featured our research on cover of the Sunday Newspaper in June 2, 2012 The Effect of Physician Dispensing on Workers’ Compensation Claims in the State of Illinois in May, 2014 The Effect of Opioid Use on Workers' Compensation Claim Cost in the State

• f Michigan published in August, 2012

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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• 1. Understand the unique nature of workers

compensation in payment for medications.

• 2. Know the history behind physician dispensing.
• 3. Identify the stakeholders of physician dispensing.
• 4. Understand the pathway of physician dispensing
• 5. Recognize impact of research results for Illinois

physician dispensing

• 6. Be aware of current and proposed solutions to

physician dispensing

Objectives of Presentation

Key Takeaways

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Our Medical Intelligence Challenge

Industry in Constant State of Flux Medical Technology Advancing Rapidly Coding/Billing Practices Evolving Providers are Entering and Leaving WC New Healthcare Legislation Economic Landscape Changes Daily Physician Groups are Consolidating Workforce is Aging Pain Medications are more Potent Our Business is Transforming

It's not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.

• Charles Darwin

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Differences State by State

Each State is Different Constraints on Medical Care Use of Evidence Based Guidelines Benefit Structure Unique Administrative System and Efficiency Governing Statues Compensation Rates Industry Mix Population and Cost of Living Levels

How can you be expected to govern a country that has 246 varieties of cheese?

• Charles de Gaulle

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Our Business Challenge

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 2002 - 1 2002 - 3 2003 - 1 2003 - 3 2004 - 1 2004 - 3 2005 - 1 2005 - 3 2006 - 1 2006 - 3 2007 - 1 2007 - 3 2008 - 1 2008 - 3 2009 - 1 2009 - 3 2010 - 1 2010 - 3 2011 - 1 2011 - 3 Accident Quarter

Distribution Of Paid Values By Accident Quarter

% Indemnity % Medical % Expense % Legal 20.7% 77.9% 0.8% 0.6%

Attributed to Change in Economy Driven by Utilization and Cost Inflation Varies by State

Medical Exceeds Indemnity 65%

Identification

• f Trend

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Medical Management Changes

Exercise in Multitasking Skills.

How Many Claims Can You Manage How Accurate Can You Estimate Cost When Do you Get Medical Staff Involved Is Treatment Appropriate and Necessary How Much Can You Document Are You Communicating with Provider Are You Communicating with Injured Worker Are You Communicating with Employer How Many and What Kind of Resources

One cannot manage too many affairs: like pumpkins in the water, one pops up while you try to hold down the other.

• Chinese Proverb

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Injury Types Remain Constant

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Accident Year

Sprain

Laceration Contusion Other Specific Puncture Fracture Burn Foreign Body Multiple Strain

Types of Injures Consistent Over Time Fluctuations +/- 2% Across all ICD Groups

30% 16% 18% 7% 7% 4% 5% 5% 5% 3%

Top 10 Injury Types by Spend

Injuries that occur today occurred in the same proportions and with the same frequency over a decade ago. No discernable shift in injury mix.

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Accident Year

Prescribing Patterns are Changing

10% increase in volume of Opioid scripts 3% increase in volume of Anti- inflammatory scripts Opioids comprise 3% of our Medical Spend and 46% of our scripts

Anticonvulsants

Top 5 Therapeutic Classes by Volume

Opiate Agonist Anti-inflammatory Antidepressants Other

46.04% 13.14% 10.67% 4.86% 1.28% 24.01%

Blood Thinners

70% of our injured workers that participated in the pharmacy benefits program were prescribed at least one narcotic script. Compared to 55-85% for industry.

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Research Collaboration between Accident Fund Holdings, Inc. and Johns Hopkins School of Medicine at beginning of 2011

Lead to a publication in the Journal of Occupational and Environment Medicine in 2012

Study #1 – Impact of Opioids

• n Claim Cost

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Opioids Increase Cost and Duration of Claim

2.04 2.51 6.89 0.91 1.23 2.25 1.36 1.76 3.94 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 Other Prescriptions vs. No Prescription SA Opioid Only Prescriptions

• vs. No Prescription

Ever LA Opioid Prescriptions

• vs. No Prescription

Odds Ratio Opioid Prescription Type

Odds Ratios and 95% Confidence Intervals of Opioid Prescriptions Associated with Final Cost >= $100,000

(Multivariate Logistic Regression Controlling for Age, Sex, Lost time, Distinct ICD 9 Codes, and Legal Involvement) Drugs Number

• f Claims

Ave Claim Cost Magnitude to No Rx No Rx 4,794 $13,295 N/A Other Scripts 4,156 $16,918 1.3x SA Only Scripts 3,063 $47,742 3.6x Ever LA Script 213 $156,748 11.8x

AFHI indemnity claims opened and closed from 1/1/2006 to 2/28/2010 in the state of Michigan.

SA = Short Acting LA = Long Acting or Extended Release Data adjusted for injury complexity.

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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14 Multi-prescribers checks Pill Mills Falsifying Best Price to Medicare Good Manufacturing Practices (GMP) Burglary and Robbery Medicaid Fraud Brand Substitution with Generics Relabeling or Misbranding Counterfeit Pharmaceuticals Addiction/Dependence Doctor Shopping Drug Diversion Purchase on Internet Calling in Prescriptions Stealing Rx Pads Altering Prescriptions Forged Prescriptions Multiple Identities Financial Incentive Limited use of EBM guidelines Lack of Utilization Controls Dispensing Repackaging Compounding No Drug Monitoring Off Label Marketing

Drug Trends in Work Comp

Injured Worker Treating Provider Pharmacy

= Most Prevalent in Work Comp from Our Experience

Major Challenge Today

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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4% 3% 7% 27% 33% 8% 18% 4% 6% 7% 57% 22% 1% 3% 0% 60% 16% 24% 0% 0% 0%

$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 Emergency Room - Hospital Pharmacy Other Physician Office Outpatient Hospital Ambulatory Surgical Center Inpatient Hospital % Total Medical Cost % Total Medical Services % Total Rx Services

Utilization & Cost by Place of Service

Price Dominated Utilization Dominated

Report Period: 1/1/2008 – 1/1/2013

Increasing Physician Dispense

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Paying for Drugs in Work Comp

Work Comp company responsible for any and all medication payments deemed necessary or appropriate by

• physician. Fee set by physician
• r pharmacy with

reimbursement limited in some states. Health Insurance Company establishes a contract with patient on what will be paid and when. Exclusions and rates are agreed upon within contract prior to execution.

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Drug Sample vs Physician Dispensing

Traditionally free samples provided as patient leaves office to get them started on medications for first few days for convenience and promotion to drug company. This is NOT Physician Dispensing as the provider does not profit directly from this.

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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History of Physician Dispensing

• Historical roots from late 19th century.
• Doctors Create Medications in their office.
• Limited access to pharmacies.
• Lack of Federal and State Regulations.
• Loophole in Work Comp revived practice in CA in 1990s.

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Traditional Prescription Method

Prescription

Pharmacy Benefit Manager Payor

Formulary Review with Fee Schedule and Pharmacy Network Reductions

Injured Worker Treating Provider Pharmacy

Preferred method is for all prescriptions to flow through pharmacy to check drug interactions, prescribing behavior, and formulary.

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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What makes Physician Dispensing Feasible

Payer

Financial Incentive Markup typically 50- 300% above AWP

Injured Worker Treating Provider Physician Office

Provider/Re-packager changes original NDC on package and dispensing at an arbitrary price inflating the drug costs. Payor obligated pay full price unless state limits re-imbursement.

Management Vendor

Re-packaged meds

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Stakeholders for Physician Dispensing

Manufacturer Re-packager Management Company Physician Payor

• Makes Drugs
• Original NDC

and AWP

• Purchase Meds
• New Lot Size
• New NDC

and AWP

• Storage
• Tracking
• Dispensing
• Accounting
• Key Link

to Patient $ $$ $$$

• 100% Funded

by Payor Injured Worker $$$$

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Real Physician Dispensing Example

Manufacturer Original NDC Re-Packager $1.67/30 pills (sold in bulk) Re-Packager New NDC Physician $12.16/30 pills Physician Management Company $106.00/30 pills (Sells Receivables) Management Co. Payor $138.00/30 pills

Profit $10.49 $93.84 $32.00

$136.33 = Total Markup

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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• Convenience and increase compliance
• Injured worker can start medications immediately
• Ensure that the injured worker receives the medications

Purported Benefits

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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• No automated safety information regarding the medications
• No automated tracking of drug interactions
• No notification of multiple prescribers
• Increase utilization of office visits
• Reduces incentive for return to work
• Increased drug expense
• Adverse Claim Outcomes (New Research)

Pitfalls of Physician Dispensing

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Research Collaboration between Accident Fund Holdings, Inc. and Johns Hopkins School of Medicine In 2013

Study #2 – Impact of Physician Dispensing on Claim Cost & Duration

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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• Focus on physician dispensing of non- narcotic

and narcotic drugs in Workers’ Compensation

• First scientific peer-reviewed journal article linking

poor outcomes

• Published findings in the Journal of Occupational and

Environmental Medicine (JOEM)

• Prior to the Illinois physician dispensing legislation
• Roughly 1 out of every 4 drugs we pay prescribed directly

from the physician’s office

Impact of Physician Dispensed Medications on Workers’ Compensation Claim Outcomes in the State of Illinois

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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• 6824 indemnity claims opened and closed from

1/1/07 to 12/31/12

• Pharmacy records containing physician and

pharmacy-dispensed medications .

• 1886 received a physician dispensed medication

within 90 days

• 452 received a physician dispensed opioid within 90 days
• Claim-related records linked to pharmacy records
• The Care Analytics On-Level Model developed by Accident Fund Holdings, Inc.

used to assign a medical complexity score to each

Study Methodology

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Physician dispensing is associated with higher claim cost and lost time days than claims utilizing pharmacy dispensing .

The top supporting findings:

• 1. Medical costs, indemnity costs and days lost from work were significantly

higher in cases when physicians, rather than pharmacies, dispensed drugs and the effect was more significant when narcotics were involved.

• 2. The number of prescriptions in the physician-dispensed claims was 2.99-3.20

times higher than in claims with pharmacy dispensed medications.

Major Research Findings

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Variables Pharmacy only within 90 days Ever Physician Dispensed within 90 Days Ratio physician /pharmacy Average of Lost Time in Days 64 85 1.34 Average of Number of Scripts 3.08 9.19 2.99 Average of Medical Cost $14,973 $20,812 1.39 Average of Indemnity Cost $16,593 $21,076 1.27 Average of Total Cost $33,328 $43,786 1.31

Physician Dispensing Impact on Claim Non-Narcotic Prescriptions

1.121 1.498 1.316 1.351

1 1.1 1.2 1.3 1.4 1.5 1.6

Indemnity>=$25k Medical>=$25k Total Paid>=$50k Lost Time>=90 days Odds Ratios Ever Phys Dispensed within 90 Days

Odds Ratios of Logistic Regression Controlling for Age, Gender, Attorney Involvement, and Medical Complexity

n = 6,824 closed indemnity claims in Illinois from 2007 to 2012

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Variables Pharmacy only within 90 days Ever Physician Dispensed within 90 Days Ratio physician /pharmacy Average of Lost Time in Days 66 122 1.85 Average of Number of Scripts 4.16 13.32 3.20 Average of Medical Cost $15,776 $28,020 1.78 Average of Indemnity Cost $17,182 $26,991 1.57 Average of Total Cost $34,755 $56,847 1.64

Physician Dispensing Impact on Claim Narcotic Prescriptions

1.485 1.741 1.707 2.153

1 1.2 1.4 1.6 1.8 2 2.2 2.4

Indemnity>=$25k Medical>=$25k Total Paid>=$50k Lost Time>=90 days Odds Ratios Ever Phys Dispensed Opioid within 90 Days

Odds Ratios of Logistic Regression Controlling for Age, Gender, Attorney Involvement, and Medical Complexity

n = 6,824 closed indemnity claims in Illinois from 2007 to 2012

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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• Physician dispensed non-narcotic drugs
• Medical costs

39%

• Indemnity costs

27%

• Lost-time days

34%

• Avg. total claim cost 31%
• # of prescriptions

2.99

• Physician dispensed narcotic drugs
• Medical costs

78%

• Indemnity costs

57%

• Avg. total claim cost 64%
• Lost-time days

85%

• # of prescriptions

3.20

Impact on Claims

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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• Does your state allow physician dispensing?
• What percentage of medications are physician dispensed?
• Are reimbursement rates established?
• Require original manufacturer NDC number ?
• Is there pending legislation ?
• How can research results and other studies influence regulations ?
• Can legislative rule modeling assist?

What is Your State of Mind

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Nationwide Acceptance

Physician Dispensing in Workers’ Compensation

Physician Dispensing Allowed but Restricted Physician Dispensing Allowed, but Repricing Regulated Physician Dispensing Banned States that allow Physician Dispensing *law prohibits physician dispensing with a few exceptions

AK AL AZ AR CO CT DC DE FL GA HI IA ID IL IN KS KY LA MA MD ME MI MN MO MS MT NC NE NH NJ NM NV OK OR PA RI SC SD TN TX * UT * VA VT WI WA WY ND OH WV CA NY *

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• Michigan physician dispensing rule effective Jan. 1st, 2013.
• Illinois physician dispensing rule effective Jan. 1st, 2013.
• Georgia and Tennessee also requiring original

manufacturers NDC for reimbursement.

• Indiana rule effective July 1st, 2014.
• Pennsylvania HB 1846 pending :
• (B) A physician seeking reimbursement for drugs dispensed by

physician shall include the original manufacturer's National Drug Code (NDC) number, as assigned by the Food and Drug Administration

• Maryland, Hawaii, Arizona, and Pennsylvania requested pre-release copies of

research to help make legislative decisions.

Riding the Wave

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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• 1. Understand the unique nature of workers compensation in payment for

medications.

• 2. Know the history behind physician dispensing.
• 3. Identify the stakeholders of physician dispensing.
• 4. Understand the pathway of physician dispensing
• 5. Recognize impact of research results for Illinois physician dispensing
• 6. Be aware of current and proposed solutions to physician dispensing

Objectives of Presentation

200 N. Grand Ave. PO Box 40790 Lansing, MI 48901-7990 www.afhi.com

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Questions