UR Nation End of Month Regulatory News Summary

| | Technology & Integration, Utilization Review

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announcement-updated_4-1-15
AB 44 Amendment Would Not Provide UR Exemption

Assemblywoman Eloise Reyes, herself a former applicant attorney, sponsored AB 44 to prohibit utilization review (UR) for those who suffered from a terrorist attack or were the victim of workplace violence. Ms. Reyes made claims that this was necessary because the victims of the San Bernardino terrorist attack had been unreasonably denied treatment via UR.

However, A.D. George Parisotto found that the overwhelming majority of requests for treatment were approved, and in a statement to the Press Enterprise, the County of San Bernardino said it had reviewed 775 requests for authorization submitted by providers treating the survivors. Of the 775 requests, only 12 percent were denied by way of the UR process. And of those denied, 33 were reviewed by IMR, and IMR upheld 32 of the 33 requests. That’s an IMR uphold rate of 97 percent. In a statement, the county said that the IMR uphold rate proves that the denials were based on sound medical review and not an effort to save money. The county further said that it requires employers to have UR plans to protect injured workers from being taken advantage of by their care providers through excessive, inappropriate or harmful treatment.

Recently, Ms. Reyes amended AB 44. Instead of exempting their treatment requests from UR, victims of terrorist attacks or workplace violence would be afforded “advocacy services for employees” to help them obtain medical treatment. Furthermore, the proposed statute would only apply when the governor has declared a state of emergency related to a terrorist act.

AB 1697 Would Create Fraud Investigation Unit Within DWC

On April 19, the Assembly Insurance Committee heard testimony regarding AB 1697, which if passed, would create a fraud fighting unit inside DWC. The new unit would act as a clearinghouse for fraud fighting activities, including analyzing claim data and serving as the point of contact between DWC, law enforcement and other agencies. The hope is that the new unit can use data to indentify bad actors in the system, which will lead to those bad actors being suspended from participating in the California comp system.

CA DWC Continues to Suspend Providers Even Though Process is Being Challenged

Doctor Michael Barri pled guilty to one count of conspiracy to commit mail fraud in 2016. The case involved $206,500 in kick backs he received between 2009 and 2013 for referring patients to Pacific Hospital. Via the kickbacks, he got 15 percent from Pacific Hospital out of all the money Pacific received from insurance carriers. Fast forward to January of 2017. Provisions of SB 1160 and AB 1244 require the DWC to suspend providers who have committed crimes involving fraud from participating in the California workers’ comp system.

In late January DWC notified Dr. Barri he would be suspended. Barri challenged it and requested a hearing on Feb. 24th. At the hearing, the administrative law judge took testimony from both DWC officials and Dr. Barri. Just recently, the administrative law judge suspended Dr. Barri from participating in the California workers’ comp system. The suspension is indefinite, and at present there is no vehicle by which Dr. Barri can attempt to reinstate his practice.

Prior to the ruling by the administrative law judge, Dr. Barri sought a writ from the 1st District Court of Appeal to halt the DWC suspension process. Dr. Barri has over $3 million in liens outstanding to various groups and wants to collect on those liens. Not surprisingly, the Court of Appeal dismissed Dr. Barri’s writ petition as premature – since at that time CA DWC had not yet suspended him. The legal concept is that courts can only hear actual cases or controversies and do not give “advisory opinions.”

Dr. Barri’s case is now ripe for review. The argument he has is that the DWC suspension process is an unconstitutional ex post facto law that retroactively increases a penalty for a wrongdoing. The legal theory is that when Dr. Barri pleaded guilty to conspiracy, he did not know, nor could he have known, that he would not be able to collect on his $3 million in liens because SB 1160 and AB 1244 came after his guilty plea. This appears to be a pretty solid argument. We at UR Nation would not be shocked to see the Court of Appeal side with Dr. Barri.

E Cigarette Use May Have Implications in Comp

While smoking has long been recognized as a co-morbidity in workers’ comp, so far the use of e-cigarettes or “vaping” has not. But many in comp say that could change. This is especially true in light of the FDA announcing in 2016 that e-cigarettes are subject to the Food, Drug and Cosmetic Act and the Family Smoking Prevention and Tobacco Control Act. For example, this means that the FDA has the power to restrict e-cigarette sales to persons under 18. And the FDA has already sent 55 warning letters to tobacco retailers warning them to refrain from selling e-cigarettes or e-liquids to minors.

Workers’ comp defense attorney Michael Weier, of Reinisch, Wilson, & Weier, said e-cigarette use should be documented in a workers’ comp claim. He gave an example in which an injured worker who uses e-cigarettes takes in formaldehyde-releasing agents into their lungs, which increases the likelihood of asthma or chronic obstructive pulmonary disease. He said this was especially true in cases where there are respiratory issues as part of the claim.

As more is learned about e-cigarettes in the coming years, we at UR Nation would not be surprised to see this as part of an injured worker’s medical record and possibly being recognized as a co-morbidity as with traditional tobacco use.

Express Scripts Report Shows Opioid Prescriptions Dropped 11 Percent in 2016

The war on opioids is going well in that traditional opioid prescriptions are dropping. As further evidence of this, Express Scripts recently published a report showing opioid prescriptions were down 11 percent per patient in 2016. This resulted in a opioid spending decrease of 13.4 percent in 2016. Express Scripts attributed the drop to clinical solutions, including aggressive client management, and state and federal opioid regulatory trends. While down, opioids remain the most expensive therapy class, costing an average of $391 per user per year.

In other news, the drug prescribed the most to injured workers last year was Lyrica, the brand name for anti-seizure medication pregabalin, which is used to treat neuropathic pain. The cost per user per year was $102.56. Lastly, the overall drug spend for 2016 was down 7.6 percent compared to 2015. Court Orsborn, president and company officer at Donn & Co. in San Francisco, a workers’ comp managed care advisory and research firm, said workers’ comp pharmacy spending has benefitted in recent years from patent expiration of three brand named drugs: Cymbalta, Lidoderm and Celebrex.

HHS Announces $485 Million in Grants to Fight Opioid Addiction

The U.S. Dept. of Health and Human Services (HHS) announced that the agency will soon dispense the first round of grants authorized by the 21st Century Cures Act to fight opioid addiction. The act allowed HHS to earmark $485 million to help states and territories fund addiction prevention, treatment and recovery initiatives. The money will be dividend up based upon each state’s overdose death rates.

So far HHS has sent letters to the governors of California, Texas, Ohio, New York, Florida and Pennsylvania. Each of these states is slated to receive at least $25 million in funding. Secretary of Health and Human Services Tom Price said that HHS plans to tackle opioid abuse and addiction by: improving access to addiction treatment, promoting naloxone (Narcan) to reverse overdoses, close monitoring of opioid-related health trends, supporting research on effective pain management as it relates to opioid addiction, and rethinking pain management practices. For a complete breakdown of the exact amount of money afforded to each state, click here.

Joe Paduda and Others Blast NY Formulary Language

Joe Paduda, principal of Health Strategy Associates and co-owner of CompPharma, has blasted the language in the N.Y. formulary as “poorly worded, vague… and outside the scope of workers’ compensation.” As background, the formulary language consists of 172 words out of more than 200,000 words that make up the 343 page $153 billion budget that Governor Andrew Cuomo signed into law on April 10. To read the 172 words click here and scroll down to page 161. You will see “Subpart C” Section 13-p.

Paduda, never afraid to speak his mind, said “The people drafting the language didn’t understand what they were doing. What does ‘establish’ (by Dec. 31 2017) mean?” Paduda went on to describe how they should have used the word “implement,” stating, “’Establish’ isn’t nearly as definitive.” Paduda also blasted the language that calls for a “tiered list” of high quality drugs. Paduda said this is appropriate for group health, where you have different co-pays for different “tiers.” In group health, the idea is to try to keep costs down by making patients pay more for more expensive drugs. But workers’ comp has no co-pay, ever, so it doesn’t make any sense. Paduda also had similar comments for the language that called for a “rebate program.” Drug companies give rebates for new high priced drugs. That helps the new high priced drugs compete with lower cost drugs like generics. But again, that’s something seen in group health, not workers’ comp.

Lastly, talking about the timetable for implementation, Paduda said that to develop your own formulary, from scratch, instead of adopting an existing one like ODG, “takes two years” to develop. He said, talking about the December 31, 2017 date, “It will be impossible to develop a new formulary in the time available.” Other experts, including Mark Pew and Ken Eichler, vice president at ODG, have voiced similar opinions. So it will be interesting to see how N.Y. responds in light of these harsh comments.

Tom Swiatek

Tom Swiatek

As Assistant Vice President of Regulatory Services, General Counsel, and Editor in Chief of UR Nation, Tom Swiatek draws on his experience as an insurance attorney on both the general liability side, as well as on workers’ compensation matters. As a California Workers’ Compensation Section Member, Tom is leading the discussion with respect to the regulatory challenges and opportunities facing the workers’ compensation system.