Agenda. CWCI: Background
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1 California Orthopedic Association Current Issues in the California Workers Compensation System Alex Swedlow EVP, Research California Workers Compensation Institute Exhibit 2 CWCI: Background Established in 1964; Private, nonprofit organization of self-insured employers and insurers representing over 90% of premium dollars; Dedicated to improving the California workers compensation system through four primary functions: Education Information Representation Research Exhibit 3 Agenda CWCI Research Primer Data, Benchmarks and Scorecards Current Industry Trends Examples of System Cost Drivers - Back Injuries, Surgery and Surgical Hardware - Schedule II Opioids
2 Exhibit 4 Agenda Industry Claim Information System (ICIS) Voluntary Data Submissions Collaborative Research Model Industry Trends and Benchmarks Exhibit 5 Industry Claim Information System (ICIS) ICIS Database Segments A. Segment: Policy Employer Characteristics B. Segment: Claim Employee Characteristics Injury Characteristics C. Payment Transactions Temp Disability Perm Disability Voc Rehab Litigation D. Segment: Medical Services Outpatient Inpatient Exhibit 6 Measuring Trends and Benchmarks Scorecard Series - Injury and Industry Outcomes Cost Drivers - Injury Rates and Descriptors - Litigation - Return-to-Work - Regional Differences - Medical Utilization and Cost - Pharmacy
3 Exhibit 7 Trends and Benchmarks Leading Injury Categories: Back Injuries Exhibit 8 Trends and Benchmarks Spine Injuries: Causes of Injury Exhibit 9 Injury Trends and Benchmarks Other System Dynamics
4 Exhibit 10 Total Loss Development (Insured Employers) Estimated Ultimate Total Loss Per Indemnity Claim - as of Sept % $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 Source: WCIRB 42,741 45,872 50,017 49,190 51,612 45,652 44,944 37,977 39,936 38,656 33,162 27,847 58,418 61, Exhibit 11 Medical Development (Insured Employers) $50,000 $40,000 $30,000 $20,000 $10,000 Estimated Ultimate Medical Per Indemnity Claim - as of Sept ,834 24,189 27,223 27,580 29,584 26,108 24,453 25,346 18,958 13,070 15,728 34, % 39,475 42, Source: WCIRB Exhibit 12 Sub-Category of Average Medical Benefits Paid $12,000 Medical Treatment, Indemnity Claims +40% $8, % $4, M $5,433 $4,970 $4,439 $4,376 $4,879 $5,480 $6,038 $6, M $8,522 $8,229 $6,741 $6,939 $8,107 $8,734 $9,438
5 Exhibit 13 Sub-Category of Average Medical Benefits Paid $2,400 $1,800 Medical Management, Indemnity Claims +100% +143% $1,200 $ M $412 $505 $639 $623 $871 $1,051 $1,290 $1, M $649 $809 $908 $971 $1,296 $1,572 $1,818 Exhibit 14 Medical Management Utilization Review as a Percent of 24M 40% 30% 31.6% 34.2% 23.2% 20% 18.8% 10% 8.9% 8.6% 0% Exhibit 15 Managing Medical Management Why is workers compensation medical so much harder to manage? 1. Rules, regs and institutional memory 2. Benefit variation 3. Lack of supply and demand side controls: Co-payments & deductibles Contractual language Dispute resolution 4. Liens
6 Exhibit 16 Changes in Inpatient Utilization Follow-up to 2001 study Utilization of Inpatient Services Analysis of Back Surgery Comparison to other health systems - Group Health - MediCare - Medi-Cal Surgical Implants Source: CWCI 2008 Exhibit 17 Changes in Inpatient Utilization 40,000 Inpatient Admissions CY ,000 31,348 30,736 29,247 27,542 26,552-15% 20,000 10,000 0 Source: CWCI Exhibit 18 Changes in Inpatient Utilization 15,000 Medical and Surgical Back Admissions CY ,000 11,237 10,640 9,920 9,021 8,385-25% 5, Source: CWCI 2008
7 Exhibit 19 WC vs. Non-WC Inpatient Surgical Back Profile 5 Case-mix Adjusted Discharge Outcomes LOS All Proc Surg Proc WC All Other Source: CWCI 2008 Double Payment for Surgical Implants Inpatient Hospital Fee Schedule pays 120% MediCare s global FS (includes surgical implants) Plus Pass-through payment for surgical implants Documented paid cost plus 10% Studies suggests pass-through diminishes incentives to manage selection or cost of implants Formula under review for revision Cost Analysis of Surgical Implants: Preliminary Results Special database with implants ( ) Compare implant costs against 2001 Study 1 OSHPD discharge database Back DRGs Eligible for Pass-through Combined Anterior/Posterior Fusion Spinal Fusion Except Cervical w cc Spinal Fusion Except Cervical w/o cc Cervical Spinal Fusion w cc Cervical Spinal Fusion w/o cc 2006 Cases Kominsky & Gardner, CHSWC, ,776
8 DRG Combined Anterior/Posterior Fusion Range of Surgical Implant Payments Preliminary Results $63, $8,000 $8,821 $16,000 0 Source: Kominsky & Gardner 2001 CWCI 2009 LOW HIGH CWCI s 45th Annual Meeting of Members Range of Surgical Implant Payments $70,000 Preliminary Results $60,000 $50,000 $40,000 $30,000 $20,000 $10, DRGs LOW $8,821 $4,450 $1,431 $3,185 $2,643 $6,137 MEAN $25,478 $13,092 $16,416 $14,239 $10,870 $15,409 HIGH $63,890 $44,436 $55,716 $34,387 $42,266 $49,304 Source: CWCI 2009 Prior Example of Excess Cost Variation Outpatient Surgery Facility Payments $7,500 Carpal Tunnel Range of Outpatient Surgery Facility Payments (2001) $5,804 $5,000 $2,500 $1,782 $191 Source: CWCI 2001 Low Mean High
9 Average Facility Payment Pre-Fee Schedule (2001) & Fee Schedule (2005) $2,000 $1,782 $1,899 $1,500 $1,000 $983-45% $1,120-41% $500 Source: CWCI 2005 Carpal Tunnel Adj 2001 FS 2005 All Procedures Exhibit 26 Areas of CWCI Rx Research Changing Role of Rx in Workers Compensation 1. Growing use of pharmaceuticals 2002: 5% of medical benefits 2010: 13% of medical benefits (NCCI estimate) 2. Reforms in pricing and fee schedules 3. Growing influence of pain management practices 4. Legislative, administrative and payor responses Exhibit 27 Areas of CWCI Rx Research 1. Repackaged Drugs 2. Opioids & Schedule-II Rx
10 Exhibit 28 Repackaged Drugs (pre-reform) Exempt from MediCal fee schedule Reimbursement level reverts to prior FS 110% of AWP for brand 140% of AWP for generics Repackagers set AWP Source: CWCI 2005 Before $300 $250 $200 Pharmacy vs. Repackaged Drugs Average Paid per 100 Units (2006) $ % $150 $100 $50 $25.90 $25.64 $ % Ranitidine Naproxen Source: CWCI 2006 Pharmacy Repackaged Exhibit 30 Repackaged Drugs Update DWC regulation implemented March 2007 Eliminates the repackage loop-hole Sets price at pharmacy fee schedule
11 After $50 $40 Pharmacy vs. Repackaged Drugs Average Paid per 100 Units (2008) $45.43 $40.69 $37.44 $30 $20 $ % -18% $10 Source: CWCI 2008 Ranitidine Pharmacy Repackaged Naproxen Exhibit 32 Pharmaceutical Utilization & Cost: Repackaged Drugs 1 60% 40% 20% -95% -93% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Pcnt Scripts 57.6% 53.8% 39.5% 18.9% 15.6% 12.9% 11.3% 9.6% 8.1% 6.5% 6.1% 3.7% Pcnt Pymts 57.5% 57.5% 43.3% 13.1% 11.5% 8.6% 7.9% 5.9% 5.0% 3.9% 3.9% 2.5% 1 Calculations are on a calendar year basis Exhibit 33 Pharmaceutical Utilization & Cost Schedule-II Opioid Drugs 1 25% +521% 20% 15% 10% +414% 5% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Pcnt Scripts 1.4% 1.8% 2.2% 3.1% 3.4% 4.1% 5.0% 5.4% 5.4% 5.7% 5.7% 7.2% Pcnt Pymts 3.8% 4.3% 5.2% Calculations are on a calendar year basis
12 Schedule-II Drugs by Active Ingredient CWCI Research Spotlight Report (Sept 2009) Schedule II Prescription & Payments in CA Workers Comp Schedule II Drug Category Oxycodone Morphine Fentanyl Methadone Hydromorphone Oxymorphone Other Schedule II % Schedule-II Prescriptions 53.1% 18.6% 14.6% 6.3% 3.7% 1.7% 1.6% % Schedule-II Prescription $ 45.4% 16.9% 32.2% 0.6% 1.3% 2.8% 0.8% Exhibit 35 Background on Pain Management 100% Opiod Prescriptions on Low Back Claims Pcnt of All Claims with Narcotics 75% 50% 25% Low back injuries w/ opiods typically receive 5.2 prescriptions per injury 0% Scripts per Claim Exhibit 36 ACOEM Insights on Opioids - Opioids in the management of chronic pain do not consistently and reliably relieve pain. - It also overall demonstrates a decrease in quality of life and functional status - The use of opioids during the sub-acute and chronic phases of an injury, especially in the absence of an objectively identifiable pain generator, cannot be recommended. Genovese, Harris, Korevaar 2007
13 Exhibit 37 Rx & Pain Management Report to the Industry What is the association between the use of opioids on low back pain on: Average Benefit Costs - Medical - Indemnity Return To Work Exhibit 38 Pain Mgt and the Use of Opioids Study Population 166,336 California injured workers Medical back conditions without spinal cord involvement Dates of Injury: 2002 through 2005 A total of 854,244 opioid prescriptions were dispensed Controls (morphine equivalents) for different types of opioids Case-mix adjusted outcomes Source: CWCI 2008 Pain Mgt and the Use of Opioids Exhibit 39 Average Benefit Cost Outcomes $25,000 $20, % $15,000 $10, % +209% $5,000 Source: CWCI 2008 Total Benefits Medical Indemnity No MEs $6,733 $3,207 $3,526 Level 1 $6,499 $2,938 $3,561 Level 2 $10,550 $4,411 $6,139 Level 3 $14,950 $6,356 $8,594 Level 4 $20,389 $9,488 $10,901
14 Pain Mgt and the Use of Opioids Exhibit 40 Return to Work: Paid Temp Disability Days % % Source: CWCI All Claims Indemnity Claims No MEs Level Level Level Level Exhibit 41 Pain Mgt and the Use of Opioids Summary of Results Opioid use back injury frequently exceeded recommended guidelines High levels of opioids were associated with detrimental effects on injured workers with medical back conditions. The preponderance of evidence suggests that prolonged administration of opioids impedes, rather than facilitates, injured workers recovery from disabling back conditions. Exhibit 42 Pain Mgt and the Use of Opioids Analysis of: 1. Injury Characteristics 2. Physician Prescribing Patterns 3. Injured Worker Characteristics PBM and ICIS Data: 16,890 Claims 9,174 Prescribing physician DEA code 233,276 Prescriptions Script, dosage and days Pharmaceutical characteristics DOS, billed and paid amount ER and EE characteristics
15 Exhibit 43 Injury Categories w/ Schedule II Opioids Diagnostic Category Pcnt of S-II Opioid Claims Pcnt of S-II Opioid Scrips Pcnt of S- II Opioid Pymnts Medical Back w/o Spinal Cord Invlvmnt 35.7% 47.1% 50.2% Spine Disorders w/ Spinal Cord or Root Invlvmnt 11.3% 15.1% 16.1% Cranial & Peripheral Nerve Dis 5.0% 6.5% Degen, Infect & Metabol Joint Dis 9.3% 6.1% 5.4% Other Injuries, Poisonings & Toxic Effects 5.5% 5.9% Ruptured Tendon, Tendonitis, Myositis & Bursitis 6.0% 3.6% 2.7% Sprain of Shoulder, Arm, Knee or Lower Leg 3.2% 2.8% Wound, FX of Shoulder, Arm, Knee or Lower Leg 6.3% 2.7% 1.6% Other Mental Disturb 1.2% 1.7% 1.5% Other Diagnoses of Musculoskeletal Sys 1.5% 1.4% 1.1% Exhibit 44 Injury Categories w/ Schedule II Opioids Diagnostic Category Pcnt of S-II Opioid Claims Pcnt of S-II Opioid Scrips Pcnt of S- II Opioid Pymnts Medical Back w/o Spinal Cord Invlvmnt 35.7% 47.1% 50.2% Spine Disorders w/ Spinal Cord or Root Invlvmnt 11.3% 15.1% 16.1% Cranial & Peripheral Nerve Dis 5.0% 6.5% Degen, Infect & Metabol Joint Dis 9.3% 6.1% 5.4% Other Injuries, Poisonings & Toxic Effects 5.5% 5.9% Ruptured Tendon, Tendonitis, Myositis & Bursitis 6.0% 3.6% 2.7% Sprain of Shoulder, Arm, Knee or Lower Leg 3.2% 2.8% Wound, FX of Shoulder, Arm, Knee or Lower Leg 6.3% 2.7% 1.6% Other Mental Disturb 1.2% 1.7% 1.5% Other Diagnoses of Musculoskeletal Sys 1.5% 1.4% 1.1% Exhibit 45 Injury Categories w/ Schedule II Opioids Diagnostic Category Pcnt of S-II Opioid Claims Pcnt of S-II Opioid Scrips Pcnt of S-II Opioid Pymnts Medical Back w/o Spinal Cord Invlvmnt Spine Disorders w/ Spinal Cord or Root Invlvmnt Cranial & Peripheral Nerve Dis Degen, Infect & Metabol Joint Dis Other Injuries, Poisonings & Toxic Effects Ruptured Tendon, Tendonitis, Myositis & Bursitis Sprain of Shoulder, Arm, Knee or Lower Leg 35.7% 11.3% 5.0% 9.3% 5.5% 6.0% 47.1% 15.1% 6.1% 5.9% 3.6% 3.2% 50.2% 16.1% 6.5% 5.4% 2.7% 2.8% 51% of Claims 60% of S-II Prescriptions 62% of Payments Wound, FX of Shoulder, Arm, Knee or Lower Leg 6.3% 2.7% 1.6% Other Mental Disturb 1.2% 1.7% 1.5% Other Diagnoses of Musculoskeletal Sys 1.5% 1.4% 1.1%
16 Exhibit % Cumulative Percentage of Schedule II Prescriptions ( 10% of S-II Prescribing Physicians) 80% 60% 40% 33.1% 54.9% 61.3% 46.2% 77.3% 79.2% 72.7% 75.2% 69.7% 66.0% 20% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Exhibit 47 Cumulative Percentage of Schedule II Payments ( 10% of S-II Prescribing Physicians) 100% 80% 60% 40% 85.1% % 83.1% 80.1% 76.3% 70.8% 64.7% 55.8% 42.4% 20% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Exhibit Average S-II Opioid Scripts per Claim per MD ( 10 % Prescribers) Median: % 2% 3% 4% 5% 6% 7% 8% 9% 10%
17 Exhibit 49 5 Average S-II Opioid Prescribing Physicians per Claim (Injured Worker) Median: st- 10th 11th- 20th 21st- 30th 31st- 40th 41st- 50th 51st- 60th st- 70th 71st- 80th 81st- 90th 91st- 100th Exhibit Average S-II Opioid Scripts per Claim (Injured Worker) Median: st- 10th 11th- 20th st- 30th st- 40th st- 50th st- 60th 61st- 70th 71st- 80th 81st- 90th 91st- 100th Exhibit 51 Summary Rapid growth in S-II opioids use ; The top 3 percent S-II prescribing MDs account for: More than half the S-II prescriptions, 2 out of 3 morphine equivalents and payments; 10 percent of injured workers obtain scripts from 3.4 different physicians. Over half of S-II prescriptions are for minor back injuries that ACOEM describes as typically not useful in the sub-acute and chronic phases. Growing interest in state-wide and federal intervention.
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