Tag Archives: drugs

Hey, Pharma! It’s Time for a Change

As Bruce Buffer, voice of the UFC, would say, “IIIIIIIIIIIIIIIIIIIIIIIT’S TIME!”

In this case, it’s time for big pharma to stop just defending its prices and to start to tap into the consumerism that is transforming healthcare.

Check out these stats (mostly from Google and Decisions Resources Group):

  • One in 20 online searches is for health-related questions.
  • According to comScore, health topics are the No. 1 search category on mobile.
  • 72% of people with pre-existing conditions searched for medical info online.
  • Half of all patients and caregivers already turn to digital channels to look up formulary or dosing information.
  • After a diagnosis, 84% of patients searched for options.
  • In a report by Decision Resources Group of 1,000 physicians, more than 50% reported their patients are more actively involved in treatment decisions — and these doctors called on pharma to support affordable options, provide relevant information and make online information more understandable.

The latest survey from Medical, Marketing & Media (MMM) shows 76% of pharma respondents use digital marketing, but the channel segregation below shows respondents devoted the greatest percentage of their marketing budgets to professional meetings/conferences and sales reps/materials. Digital channels — including websites, digital advertising and social media — lagged behind.

More surprising is that only half of both large and small pharmaceutical companies see the growth of consumerism in healthcare as an opportunity. But that’s EXACTLY where the opportunity for growth lies. To thrive in the new era of value-based care, pharma companies will need to change their marketing strategy toward partnering and will certainly need to focus far more on the individual consumer.

See also: Checklist for Improving Consumer Experience  

Trying to scare politicians away from lower-price reforms with the “It will kill our R&D” excuse is becoming the “BOO!” that no longer scares the grown-ups. Both 2016 presidential candidates, Hillary Clinton and Donald Trump, plan to stimulate price competition through imports — and there is bipartisan pressure to lift the ban on Medicare’s negotiating drug prices. Apart from trade groups and shareholders, high-priced pharma doesn’t have many friends.

Payer pressure is bad enough, but if you don’t get into the value-based care game, you are going to be on the wrong side of a very emotional equation.

Patients have greater financial burdens because of higher deductibles and greater cost-sharing requirements, with varying medication tiers. Providers are ever-burdened with less time, and, now, a greater level of risk is being put on them to deliver higher-quality care, better outcomes and greater patient satisfaction — all at a lower price.

Patients are not just seeking advice from providers. They are increasingly online, and at all hours. Plus, we’re going to start to see greater levels of patient-generated healthcare data with wearables and digital technology. And, as we have seen, half of consumers spend their online time on social media. (HINT: Tap into consumers’ behaviors and beliefs, show that you genuinely care and engage them in ways that let them feel as though you are part of their health team.)

The writing is on the wall. Consumers are practically screaming out what they want and need from you. Partner with wearable and EHR companies. Start developing ways to capture and interact with your customers — specific to individuals, at the best times to engage. Find ways you can partner with hospitals, physicians and affordable care organizations (ACOs) to get into their care pathway in ways that help them lower costs to patients and payers.

See also: Stop Overpaying for Pharmaceuticals  

Say “yes” to predictive modeling, big data, analytics, lots of testing and customer segmentation. “Yes” to retaining some of the traditional marketing. Most of all, become human in your approach. Put yourself out there and let people know that you are no longer on an island, separate from everyone else. Let them know your port and beaches are open to more boats and more people than ever before.

pill

The PBM vs. the Drug Manufacturer

In today’s American healthcare system, employers can’t order Lipitor directly from Pfizer fortheir employees. Instead, employers and employees are forced to buy drugs through a middleman, the pharmacy benefits manager (PBM).

Fingers have long been pointed in both directions to blame the other for the high cost of prescription drugs. The PBMs blame the drug manufacturers, and the drug manufacturers blame the PBMs, not unlike two children arguing on the playground.

Eli Lilly, one of the world’s largest drug manufacturers, recently claimed that the average price increase on Humalog, its injectable insulin used to treat diabetes, has only been a modest 1% to 2% annually over the last five years. Tim Walbert, the CEO of small drug manufacturer Horizon Pharmaceuticals, said in a recent interview, that he expects the company’s actual price increases to be 4% or less over the next year.

PBMs, on the other hand, portray the drug manufacturers as greedy price gougers that fail to keep prescriptions costs under control. Anthem, one of the nation’s largest health insurers, works hard to convince its employer clients to leverage the buying process by joining Anthem’s negotiated PBM program with Express Scripts Inc. (ESI) instead of negotiating a direct deal with a PBM. This month, however, Anthem came out swinging, accusing its partner ESI of more than $3 billion in overcharges – all of which were passed along and paid by clients.

Who should the employers believe is at fault? Employers are aware of their prescription benefit bills. They clearly see that costs are escalating at an unprecedented rate. What can they do about the problem? How can they succeed if a buyer as large as Anthem failed for its thousands of employer clients?

Today’s healthcare market only permits employers to buy the employee drugs from two different platforms. They can choose to buy through a PBM partnership (Anthem partnered with ESI) or a large benefits broker’s partnership with a PBM. Secondly, they can choose to work with a consultant for high-level advice and contract directly with a PBM.

Regardless, the employer always gambles that it knows more about the PBM’s 120-page contract, pricing calculations and methodology than Anthem apparently did. It is a monumental sign of the times that Anthem publicly blamed ESI for its failure to contract effectively with the company, leading to overcharges for its clients.

Our healthcare system today is broken by design – not necessity – and virtually everyone in the chain lacks the incentive to fix it. In fact, people are financially motivated to maintain the status quo. Until drugs can be purchased directly from the manufacturers for a direct discounted price, employers are trapped in our national prescription benefit system.

Novel Controls on Physician Dispensing

As you know, I’m not a fan of physician dispensing. In limited cases, there can be benefits from patient compliance and convenience and from immediate treatment. However, my opinion is that in most cases physician dispensing creates a motivation to continue prescribing (because revenue to the physician is at stake) and causes patient safety issues (by bypassing the people who really understand drugs — pharmacists and pharmacies — and possibly not taking into account drug interactions).

On top of that, physician dispensing can increase lost time by an injured worker, as documented in a study of Illinois. When evaluating the differences between physician-dispensed and non-physician-dispensed medications, the study found:

  • For physician-dispensed, non-narcotic drugs — medical costs ▲ 39%, indemnity costs ▲ 27%, lost-time days34%, average total claim ▲ 31%, # of prescriptions = 2.99
  • For physician-dispensed narcotic drugs — medical costs ▲ 78%, indemnity costs ▲ 57%, lost-time days ▲ 85%, average total claim ▲ 64%, # of prescriptions = 3.20

Several states have tried to combat inappropriate physician-dispensing over the past few years, using fee schedule and rules and even felonies as countermeasures. Some efforts have been successful, while others have just created a continuing cat-and-mouse game for repackagers and physicians vs. payers.

Well, effective Jan. 1, 2016, Nevada instituted its own type of reform, specific to workers’ comp. The bill does not appear to be ambiguous or up for interpretation. The bill (SB 231) was signed by the governor on May 27, 2015, but the intended (and unintended) ripple effects started last Friday. Read the entire act here. To highlight:

  • Section 1.1.a – A “provider of healthcare” can only provide an initial 15-day supply of Schedule II or III controlled substances to an injured worker. Note that this excludes pharmacists and hospitals, both reasonable carve-outs. Any subsequent such controlled substances must be dispensed by a pharmacy. Excellent.
  • Section 1.1.b – The “provider of healthcare” dispenser must include the original manufacturer’s national drug code (NDC) on bills and reports. Good. This doesn’t necessarily fix the issue of repackagers becoming “manufacturers” of unique (previously unnecessary) dosages and inflating prices, but …
  • Section 1.1.c – A repackaged drug must not be used. Booyah.
  • Section 1.1.d – For outpatient care, a non-prescription drug will not be reimbursable. Excellent.

While not all dangerous or clinically inappropriate drugs are Schedule II or III, these new rules should certainly make a dent in direct dispensing of those that are. This bill does not outlaw physician dispensing, but it does remove revenue motivation so a “provider of healthcare” will focus on the most clinically appropriate care (which may not be a drug). Working as a team, the “provider of healthcare” and the pharmacist should determine what, if any, drugs are clinically appropriate for the injured worker/patient.

It will be interesting to see how the repackaging industry responds. For an example of the state of the industry in Nevada, check out this website. (Nine uses of the word “revenue” on the repackager’s home page. Hmmmm.)

If you operate in Nevada, keep your eyes and ears open. And if you see reactions, please let us all know!

Rental Car Waiver: To Buy or Not to Buy?

When I Googled “should I buy the rental car damage waiver, I got 40.6 million hits. Needless to say, much has been written about this issue. But much of what has been written is BAD (aka horrible and dangerous) advice.

If you have auto insurance, is that good enough? What about credit card coverage? This article explores the issues and suggests some answers, at least one of which you might not like. (Note: This article builds on an article I first published in 1998, titled “Top 10 Reasons to Purchase the Rental Car Damage Waiver.”]

The vast majority of consumer articles suggest that the purchase of the loss damage waiver (LDW) is not necessary if you have auto insurance or credit card coverage. For example, in a 2014 article in U.S. News & World Reports titled “7 Costly Car Rental Mistakes to Avoid,” the very first “mistake” involves buying insurance you don’t need. The article says your auto insurance policy “may” cover collision and quotes someone who says, “The credit card coverage will kick in for anything your personal policy doesn’t cover.” Needless to say, “may” and “will” are two different things.

While many auto policies and some credit cards may provide coverage for damage to a rental car, it is almost certainly not complete, and four- to five-figure uncovered losses are not at all uncommon. The purchase of the LDW (with caveats), along with auto insurance, provides a belt and suspenders approach to risk managing the rental car exposure.

Let’s explore the value and deficiencies of auto insurance, credit card coverage and loss damage waivers.

Personal Auto Policies

In the article I wrote in 1998 and have since updated, I enumerate many reasons why buying the loss damage waiver is a good idea. I won’t repeat those reasons in their entirety, but I’ll highlight the more important issues that have resulted in uncovered claims that I’m personally aware of, based on more than 20 years of managing such issues. We’ll start with the current 2005 ISO Personal Auto Policy (PAP) as the basis of our discussion, with some references to non-ISO auto policies.

The ISO PAP extends physical damage coverage to private passenger autos, pickups, vans and trailers you don’t own if at least one declared auto on your policy has such physical damage coverage. But physical damage coverage does not extend to a motor home, moving truck, motorcycle, etc. that you are renting.

Damage valuation is on an actual cash value (ACV) basis, while most rental agreements require coverage for “full value” (translation: whatever the rental car company says is the value), and most PAPs exclude any “betterment” in value.

Many non-ISO PAPs have an exclusion or dollar limitation on non-owned autos or specific types of rental vehicles such that rental, for example, of an upscale SUV or sports car may have limited or even no coverage.

Many PAPs limit or do not cover the rental company’s loss of rental income on a damaged auto. There is often an option to provide increased limits for this coverage, but many price-focused consumers may decline such coverage. Even where this coverage is provided, many insurers may only be willing to pay for the usage indicated by fleet logs while the rental agency wants the full daily rental value. In one claim, the renter was charged $2,000 more than his insurer was willing to pay. In another claim involving a luxury car that was stolen from his hotel parking lot, the renter was hit with the maximum daily rental rate of $300, for a total loss of use charge of $9,000 (that he negotiated down to $4,500). In still another claim, following the 2011 tsunami that hit Japan, replacement parts for a rental car were unavailable for several months, and the renter incurred a $6,000 loss-of-use charge by the rental car company.

Probably the most significant deficiency in the PAP is the lack of coverage for diminished value claims. That’s the #1 reason I always buy the LDW. I’m personally aware of uncovered diminished value charges of $3,000, $5,000, $7,000 and $8,000 and read about one from a reliable source that totaled $15,000 on an upscale SUV rental.

In one case, a Florida insured traveled to Colorado for a rock-climbing vacation. He passed on purchasing the LDW for his four-day rental because “I’m an excellent driver, and I’ve got car insurance and credit card coverage.” Apparently, the driver of the vehicle that sideswiped his rental car while it was parked was not an excellent driver. The damage totaled $4,400 for repairs, $370 for administrative fees, $620 for loss of use and $3,100 in diminished value. Of the $8,490 total, $3,990 was uninsured and not covered by his credit card, the biggest component being the $3,100 diminished value charge. In addition, the driver ended up having to hire a Colorado attorney to assist in resolving the claim. The cost of the LDW for the entire trip would have been less than $100, a small fraction of the total cost of his vacation trip.

When insureds travel on business or vacation, a rental car is often valet-parked at a hotel or restaurant. The ISO PAP extends physical damage coverage for non-owned autos “while in the custody of or being operated by you or any ‘family member’.” So, the question is whether the vehicle is still in the custody of the insured while it’s being valet-parked or otherwise in the custody of the valet service. If you don’t know and you’re relying on your PAP for coverage, the best advice is probably to not valet-park a rental car.

There are many other deficiencies in the ISO PAP that apply, and you can read about them in the previously mentioned “Top 10” article on our website. The last point I’ll make is a reminder that the majority of auto policies in the marketplace are not “ISO-standard” forms. (To learn more about that, Google “independent agent magazine price check.”) Despite what you may be led to believe by auto insurance advertisements or articles that imply that all auto policies and insurers are the same, there are potentially catastrophic differences, including coverage deficiencies with regard to rental cars. There are unendorsed non-ISO policies that don’t cover non-owned autos, period; others that exclude business use of such autos or non-private passenger vehicles (this one shows up in policies of major national carriers, not just “nonstandard” auto insurers); others that exclude vehicles that weigh more than 10,000 pounds; and so on.

Conclusion? An auto policy simply is not adequate to cover the rental car physical damage exposure.

Credit Card Coverages

Read a few of the many articles on the Internet about using credit card programs to fund damage to rental cars, and you would think that little more is needed to adequately address the exposure. Unfortunately, credit card programs have as many, or more, deficiencies as does the PAP alone. Anyone relying on auto insurance and credit cards would be well-advised to study the credit card programs. In his article, “Rental Car Agreements, LDWs, PAPs, and Credit Cards,” David Thompson, CPCU writes:

“Many major credit cards provide some limited, free coverage for rental cars. Most post the provisions related to rental cars on the card issuer’s web site. While these can run several pages, three specific conditions [that] limit, restrict or invalidate the free coverage are show-stoppers. For example:

“The following conditions limit, restrict, void or invalidate the auto rental damage waiver (DW) coverage provided by your credit card:

“(1) This auto rental DW supplements, and applies as excess of, any valid and collectible insurance. For coverage to apply, you must decline the DW offered by the rental company.

“(2) The following losses are not covered by this auto rental DW coverage: (a) Any loss [that] violated the rental agreement of the rental company; (b) Any claim for diminished value of the rental car.

“(3) Any loss or damage to certain types of vehicles—see list.”

In other words, (1) credit card coverage is excess over ANY collectible insurance, (2) you must decline the rental company’s LDW, (3) violation of the rental agreement precludes coverage, (4) like the PAP, there is no coverage for diminished value, which we’ve seen can total thousands of dollars and (5) certain types of vehicles are excluded. Excluded vehicles may include pick-up trucks, full- sized vans and certain luxury cars.

And these are only part of the full list of limitations often found in these programs. Another common limitation is that loss of use is only paid to the extent that the assessment is based on fleet utilization logs. One major credit card only covers collision and theft even though the rental agreement typically makes the user almost absolutely liable for all damage, including fire, flood and vandalism. Some credit cards offer broader optional protection plans, but typically they also exclude coverage if there is a violation of the rental agreement and don’t cover diminished value.

Another issue with reliance on credit cards is that the rental company may charge uncovered fees that max out the credit limit on the card. If you’re 1,000 miles from home on vacation with a maxed-out credit card, that can present problems.

Loss Damage Waivers

Many people don’t buy the rental car company’s LDW because they think they have “full coverage” between their auto policy and credit cards. Many see what can be a significant charge and choose not to buy the LDW on the premise, “This’ll never happen to me.”

I rarely rent cars on business trips or vacation, but I experienced a major claim with a hit-and-run in a restaurant parking lot the night before a 6 a.m. flight. I had bought the $12.95 LDW for my four-day trip, so I simply turned in the vehicle at the airport with little more than a shrug.

Thompson, who rents cars fairly often, says he has walked away from damaged cars three times. Returning a rental at the Ft. Lauderdale airport, Thompson asked the attendant how many cars a month are returned with damage. She responded that, in her typical 12-hour shift, 15 cars are returned with damage and, in most cases, the damage was allegedly caused by someone else, not the renter. She estimated that only about 15% of renters buy the LDW.

The cost of the LDW admittedly can be significant, especially if you extrapolate what the effective physical damage insurance cost would be at that daily rate. But that’s only one way to view the investment in peace of mind, not to mention the avoidance of what can be significant claims.

On an eight-day vacation last year, the LDW cost me more than the actual rental and, in fact, more than my airline ticket. But I considered the LDW part of the cost of the vacation.

Is the LDW all you need? Is it foolproof? Well, kind of, as long as you follow the rental agreement. If you violate the rental agreement, you are likely to void the LDW. Many rental agreements consider the following to be violations:

  • Driving on an unpaved road or off-road (often the case in state or national parks or states like Alaska and Hawaii).
  • Operation while impaired by alcohol or drugs.
  • Any illegal use (parking violations?), reckless driving, racing or pushing or towing another vehicle.
  • Use outside a designated territorial limit.
  • Operation by an unauthorized driver.

This illustrates the advantage of using the belt and suspenders approach of the PAP plus the LDW. The ISO PAP does not exclude the first three rental agreement violations, and the territorial limit is usually broader than any restrictive rental agreement territory outside of Mexico.

As for unauthorized drivers, some rental companies may automatically include a spouse or fellow employee or authorize them to drive for a fee. More often, the renter never reads the rental agreement and presumes anyone on the trip can drive. In one claim, a father and son were on vacation, and the father rented a car. The son had a driver’s license but was too young under the rental agreement to drive the car. The rental clerk made this clear at the time of rental. Despite knowing this, the father allowed the son to drive, and he wrecked the vehicle. Not only was the LDW voided, the father’s non-ISO PAP excluded the claim because the son was not permitted to drive the car.

A special case of unauthorized drivers could be-valet parking at a hotel or restaurant. Some agreements might except valet parking, so it’s important to determine at the time of rental whether valet parking is covered.

A note on third-party LDWs: In 2011, a fellow CPCU rented a car through Orbitz or Expedia, which offered an LDW at the time of the reservation. He mistakenly assumed this was the same LDW offered by the rental car company, but it was underwritten by a separate entity. During his trip, the rental car was damaged by a deer on a rural Montana road. To make a long story short, the third-party LDW was not a true “no liability” LDW warranty of the type offered by the rental car agency, and the result was, after negotiations on the uncovered portion of the charges (including diminished value), he had to pay in excess of $1,000 out of pocket.

Conclusions

When I rent a car on a business trip or vacation, I price the rental to include the LDW and make my decision, in part, on that basis. The peace of mind alone is invaluable, and, again, I consider the cost to be comparable to my decision to stay in a decent, secure hotel.

If you rent cars frequently, consider negotiating a price including LDW with one or more rental car agencies. Otherwise, caveat emptor. If you are an insurance professional giving advice to consumers about whether to purchase the LDW, it would likely be in your and your customer’s best interest to recommend consideration of the LDW. Your E&O insurer will appreciate it.

The ‘CURES’ for Work Comp Claims

When an injured worker submits a claim, it initiates processes aimed at returning the injured worker to gainful and sustainable work at the earliest possible time. In this journey, checkpoints and milestones are the best means to monitor progress. Checkpoints generally relate to visits with a medical practitioner where medical conditions are checked against expectations and, if necessary, treatments are adjusted. Milestones are associated with reaching a goal.

At the first medical appointment, the physician is required to prepare a report for the claims administrator based on a comprehensive medical examination of the injured person, including a review of the medical history. At the same time, the physician can access CURES (Controlled Substance Utilization Review and Evaluation System) to check whether the patient has received any scheduled controlled substances in the prior 12 months. Through this access, the physician can identify an at-risk patient and accordingly establish a treatment plan that considers both medications and adjunctive treatments. Also, if a patient is identified as an addict, he can be referred for rehabilitation and social re-integration. With subsequent medical appointments, the physician can again use CURES to check for any changes to the patient’s scheduled controlled substances usage since his last visit.

The importance of a physician using CURES to check a patient’s use of scheduled controlled substances cannot be overemphasized, especially in workers’ compensation, where a patient may not be forthcoming in sharing comorbidity information because of a lack of trust. Not knowing if a patient is currently taking scheduled controlled substances, the physician could jeopardize the patient by prescribing inappropriate medications.

In addition to the medical profession, CURES is available to Department of Justice investigators and law enforcement agencies to identify persons who visit a number of physicians to obtain supplies of scheduled controlled substances for abuse and diversion (i.e. physician shopping). Pharmacists and numerous regulatory boards from the medical board to the veterinary board also have access to CURES, providing them with the opportunity to monitor the medical profession for aberrant prescribing of scheduled controlled substances.

While states like Florida implemented a PDMP (prescription drug monitoring program) as late as 2011, California has monitored Schedule II controlled substances since 1940 and with the introduction of CURES in 1996 extended its monitoring to include Schedule III and IV controlled substances. Online access to CURES has also been available to the medical profession since 2009. Consequently, California has not experienced the abuse and diversion that Florida has with its “pill mills.”

Access to CURES by claims administrators or their representatives (i.e. third party payers) will not deliver improved quality of care or reduce prescription drug fraud and abuse and will add unnecessary costs through duplication of efforts already being performed by others using CURES. Close monitoring of checkpoints, however, by the claims administrator will provide benefits. Monitoring is accomplished through what is commonly referred to as “encounter data” and includes diagnoses, services performed and medications dispensed along with amounts charged and paid. Diagnoses, medical procedures and pharmaceuticals translated into coding systems such as ICD-10 (International Classification of Disease, 10th revision), HCPCS (HeathCare Common Procedure Coding System) and NDC (National Drug Code) provide excellent opportunities to automate the monitoring of encounter data.

Have claims administrators been able to implement technology solutions to automate the monitoring of encounter data and achieve outstanding results? Over the past two decades, many claims administrators have opted to outsource the management and control of critically important functions such as utilization review, medical bill review and pharmacy monitoring. Many of the outsource organizations only focus on that part of the encounter data that directly applies to their function — for example, pharmacy benefit managers only monitor the pharmacy. But using all the encounter data can promote a vibrant synergy very capable of achieving outstanding outcomes and results for the injured worker.

Losing control of encounter data eliminates the claims administrator’s ability to establish and monitor adherence to best evidence-based practices. When physicians have not adhered to their proposed treatment plans, opportunities to trigger yellow and red flags for investigation are lost.

Claims administrators who have automated the monitoring of their encounter data can assist states in reducing abuse and diversion by monitoring the quantities of medications being dispensed in a progressive or step therapy pain management plan, for example, and encouraging unused supplies to be returned to the physician at the next appointment. This can be achieved at no additional cost to the claims administrator and reduces the quantities of unused or unneeded prescription medications in circulation, which has been the focus of the DEA’s (U.S. Drug Enforcement Agency) “take back” initiatives. To date, the DEA has collected in excess of 1,400 tons of unused medications, which could otherwise have found their way into the illicit drug market.

For as long as the U.S. remains the biggest licit and illicit drug market in the world, claims administrators will remain challenged to deliver on their workers’ compensation claims handling obligations.

With a changing workforce, claims administrators will need to move more and more toward a biopsychosocial approach to managing medical conditions. They must provide quality care at the lowest possible cost, which can only be achieved through the fine analytics of consolidated encounter data.

Capturing encounter data through the claims administrator’s processes and fine analytics will consistently yield the best claims outcomes, from earlier return-to-work to lower costs associated with medical treatment through to automated overseeing of a claim, including provider performance monitoring and evaluation. All of these are the essence of superior workers’ compensation claims management.