The Achilles heel in Medicare Set-Aside compliance in workers' compensation settlements has always been self-administration. For cases within the CMS' “review threshold,” carriers and self-insureds have procured Medicare Set-Aside allocation reports at no small expense. They file for CMS approval, insisting that settlement documents provide for separate set-aside funding. Then, in 99% of the cases, the money is turned over to the claimant with little or no direction other than to go forth and administer your own set-aside account.
Most of us would be unable to keep track of the moving target of which medical goods and services Medicare will pay for. We’re not so good at submitting annual reports, either. According to the Pew Research Center, only about a third of Americans even prepare their own tax returns. Yet, insurers and self-insureds leave themselves open to Medicare Set-Aside reimbursement liability by trusting that the injured workers will be up to the self-administration task.
Finally, CMS has seen the problem and done something about it. On March 21, 2014, CMS published a Self-Administration Toolkit for Workers’ Compensation Medicare Set-Aside Arrangements. This booklet guides the self-administering former claimant through the steps, which are numerous and not all easy.
For many on both sides of the negotiating table, review of this booklet may be the deciding factor in choosing professional administration. The problem is that many settlements are too small to make custodial administration cost-effective. Some carriers and third party administrators have access to the Medicare Secondary Payer Charitable Foundation, which provides no-cost professional administration. Its account starting minimum is $25,000. Parties should check on the availability of this option before finalizing the settlement.
The purpose of Medicare Set-Asides is to prevent a double-dip: The U.S. taxpayer should not be paying medical bills for which the claimant already received advance payment through insurance. Publication of the toolkit is an important further step toward that goal.
In nearly every workers' compensation program, cases that are referred to as “legacy files,” “dog files” and a myriad of other names (some of which are not appropriate for print) represent high-exposure claims that drive costs. Identifying and resolving these cases early can reduce exposure and overall costs.
The first part of this three-part series will look at what can trigger those important cases.
Generally speaking, a few cases represent the vast majority of the cost of a workers’ compensation program. Many are driven by the medical treatment necessary to cure or relieve the effects of the injury. While the indemnity aspect (permanent partial and permanent total disability) can be important, typically it is much easier to quantify these benefits than it is to determine the medical costs.
The high-exposure claims fall into two categories: acute and chronic.
Some examples of acute cases are quadriplegics, paraplegics, severe burns, amputations and head traumas. These injuries are severe and occur immediately as a result of the initial injury. In most instances, there is a significant initial cost, and the continuing care is substantial.
Chronic catastrophic cases, on the other hand, are much more difficult to identify. They typically start off in benign fashion (lumbar strain, knee strain, etc.) and deteriorate into multiple surgeries, lengthy periods of lost time and permanent disability. Chronic cases typically develop about five years after the injury.
A variety of metrics can be used to identify these cases and bring them to the forefront of a settlement initiative.
A case review can reveal numerous medical conditions that affect potential future exposure, including hypertension, obesity, diabetes, nicotine usage and excessive alcohol consumption. In many instances, these conditions are considered non-industrial and are not identified as cost drivers for the workers’ compensation claim. They are, nonetheless, extremely important in the healing process.
For example, the failure rate of spinal fusions is 20% to 30% in cigarette smokers, nearly double that in non-smokers. The failure of a spinal fusion typically results in one or more additional procedures, including: 1) a repeat fusion; 2) trial/implantation of a spinal cord stimulator; or 3) trial/implantation of an intrathecal pump (commonly referred to as a morphine pump). The costs associated with a failed fusion are payable by the claim, significantly increasing its duration and the cost.
Similarly, high glucose levels in diabetics can cause poor circulation, diabetic neuropathy and deficiencies in the immune system–all factors in recovering from injuries and surgeries. When an injured worker needs lower extremity surgery (foot, ankle, knee, etc.) and his diabetes is not well-controlled, significant medical problems can develop, including delayed recovery, infections and, in extreme cases, amputation. Again, whether or not the diabetes pre-dated the industrial injury, it can drive medical, indemnity and expense costs. Further, in some jurisdictions, a defendant may become liable for treatment of the diabetic condition if there is evidence that the condition was exacerbated or “lit up” as a result of the industrial injury.
These are just two examples of many nonindustrial co-morbid conditions that can have a significant impact on the cost and duration of a claim.
Life Expectancy and Inflation
In identifying cases that may become high-exposure claims, it is critical to determine the life expectancy of the injured worker. According to the Department of Labor, the median age of the workforce today is 42 years. Based on figures from the National Center for Health Statistics, that would result in a remaining life expectancy of 38 years, on average between men and women. So, it could be necessary to provide medical benefits for an extended period.
The rate of medical inflation is typically 8% a year, so the cost of medical care for an individual will double approximately every eight years. We refer to this as The Rule of 8. If an individual is consuming $5,000 a year in treatment today, a doubling every eight years would mean the medical cost would exceed $80,000 annually as he approaches the end of life (see Chart I below). The figures do not consider any deterioration in the medical condition.
Prescription and consumption of medications is escalating. In severe cases, the individual becomes dependent, and the physician is left with few other treatment options. We see instances where medications are prescribed, then additional prescriptions are viewed as necessary to counteract side effects.
New medications are approved by the FDA on a regular basis and are often prescribed in workers’ compensation claims. More and more, a physician will prescribe an “off label” medication (one that has been approved by the FDA for a specific condition or purpose not consistent with the diagnosis). Because of patents, there are no generics, and the medications can be costly. An example is Actiq. This medication was approved by the FDA for the treatment of pain in Stage IV cancer patients. But, in recent years, physicians have prescribed Actiq for the treatment of chronic spine pain. The medication can cost upward of $4,000 to $6,000 a month.
Addition of Body Parts
We all remember the old “Dem Bones” song: “The knee bone’s connected to the thighbone, the thighbone’s connected to the …” Well, nothing could be more accurate in the world of workers’ compensation. In catastrophic cases, additional body parts are almost universally alleged as part of the industrial injury. A cervical injury expands into the upper extremities. A knee injury expands to the back and ankle because of an altered gait. Medications prescribed for chronic pain cause internal complaints.
These triggers, and others, can make a case spiral into a high-exposure claim. Part II of this series will discuss, in detail, approaches that can be used to assess these types of cases and focus on strategies to mitigate the exposure and move the cases toward resolution.
At a cost of more than $1.4 billion annually, narcotics and opioids have rapidly become one of the highest-cost therapeutic categories for workers’ compensation injuries.* They are also among the most difficult to manage. No employer wants to have injured workers in undue pain or discomfort – and narcotics do alleviate pain. However, there are serious issues to consider with regard to prescription abuse and misuse, especially for opioids such as Oxycontin and Vicodin.
How can employers help injured workers while ensuring appropriate use of narcotics and reducing unnecessary costs? Comprehensive, clinically based narcotic management programs can help.
Over the past 10 years, opioids, a type of narcotic, have become more commonly used to treat chronic to severe pain associated with workers’ compensation injuries. Known by the generic names of morphine or codeine, and now more frequently by the brand names Oxycontin and Vicodin, opioids are powerful pain relievers.
However, many of these medications were initially intended for end-stage cancer, not for common workplace injuries. While there is likely some benefit in some cases for the use of such medications to treat workers’ compensation injuries, clinicians note that those benefits are typically seen by just a small percentage of patients. There is little evidence to support their long-term or widespread use in standard workers’ compensation injuries. In fact, a study reported by the American Insurance Association found that only a minority of workers with back injuries improved their level of pain (26%) and function (16%) with the use of opioids.** What’s more, there is a high risk for abuse, dependency, and overutilization with this classification of drugs. Indeed, the strongest predictor of long-term opioid use was when it was prescribed within the first 90 days post-injury; that means that every prescription – especially the first one – must be scrutinized to ensure appropriate utilization and optimal benefit. Employers are also concerned about the cost of narcotics. While narcotic use is concentrated among a small percentage of claimants, per-claim costs for narcotics have increased more than 50% over the past decade
- From 1997 to 2007, the milligram per person use of prescription opioids in the U.S. increased from 74 milligrams to 369 milligrams – that’s an increase of 400%.
- In 2000, retail pharmacies dispensed 174 million prescriptions for opioids; by 2009, 257 million prescriptions were dispensed – an increase of more than 40%.
- Opioid overdoses, once almost always because of heroin use, are now increasing because of abuse of prescription painkillers.
White House Office of National Drug Control Policy
Managing narcotics is not about removing viable medications for mitigating pain from the therapies available to providers – it is about ensuring the best possible medications for workers’ compensation injuries are used.
As a result, claims examiners should be trained to look for red flags, such as:
- Higher-than-normal physician dispensing.
- Lower-than-average generic dispensing.
- Higher-than-average prescribing of opioids such as Fentanyl Citrate.
But prescribing medications is a complex issue – reports and percentages alone don’t tell the whole story. So, it’s crucial to look beyond simple prescribing reports to uncover additional information that could indicate why prescribers’ patterns are outside the norm. For example, use of amphetamines could indicate that a patient has a traumatic brain injury, where such medications are a standard treatment protocol.
Drugs that are not suitable for the injury type and the age of the claim need to be identified at the point-of-sale, so claims examiners or nurses are alerted before a prescription that is outside the formulary is filled at the retail pharmacy and can intercede with drug management, if needed. This is particularly useful in the acute injury stage to eliminate early narcotic use where it is not appropriate. If a narcotic is prescribed, the injured worker’s entire medical history needs to be reviewed, using both in-network and out-of-network transactions and non-occupational associated medications to evaluate actual medication use and ensure appropriate utilization.
Follow-up appointments should be required, and only a few days of treatment should be authorized initially. This helps determine whether the medication has improved pain control and function.
Another critical step to managing narcotics is to thoroughly educate employees as to the benefits, dangers, and alternatives for narcotics. The education should include:
- Training the injured workers about their medication, adverse side effects, and alternative medication options.
- Required screenings for risk of addiction or abuse (history of drug or alcohol abuse, or regular use of sedatives).
- Opioid use agreement/contract with urine drug screenings and avoidance of other sources for medication, such as emergency rooms.
A number of factors should trigger a review:
- Narcotic-class medications for the treatment of pain (Oxycontin, Demerol, etc.).
- Use of multiple medications excessively or from multiple therapeutic classes.
- Using medications not typical for the treatment of workers’ compensation injuries.
- High-cost medications.
- Receiving high doses of morphine equivalents daily for treatment of chronic pain.
- Using three or more narcotic analgesics.
- Receiving duplicate therapy with NSAIDs, muscle relaxants or sedatives.
- Using both sedatives and stimulants concurrently.
- Using compounded medications instead of commercially available products.
* “Narcotics in Workers Compensation,” NCCI Research Brief, Dec. 2009
Defying the conspicuously silent logic of the hoary adage that “what happens in Vegas, stays in Vegas,” disavowing any apostolic compulsion to confess, we herewith reveal the transparent composition of our recent presentation before the National Workers’ Compensation and Disability Conference and Expo, held in Las Vegas from Nov. 20, 2013, through Nov. 22, 2013, with apologies and atonements to David Letterman, he of the infamous Top Ten, as well as Alan Pierce, Esquire, our tactfully laconic moderator during our Vegas session on Nov. 22, allowing our panel, and our attentive audience, to review and identify the following potential causes as reasons injured workers seek attorney representation in workers’ compensation matters:
1. Claim Denial
- This is the number one reason why injured workers hire attorneys;
- Denials are often, but not always, triggered by claim investigation;
- Multiple factors influence claim denials, including medical evaluations, work restrictions, availability of alternative-duty work, prior claim history, and employer input.
2. Injured Worker Represented In Prior Claim
- The existence of a prior attorney-client relationship, obviously dependent upon prior claim outcome, will usually result in an injured worker retaining attorney for a new claim.
3. Confusing State Forms
- Certain jurisdictions, Pennsylvania being one of them, employ compensation forms that even judges, experienced counsel, and the most highly sophisticated claims adjusters struggle to understand, in terms of their effect on compensability, disability, and related issues;
- Receipt of a state form, accompanied by a form letter, can be confusing to an injured worker unskilled in compensationitis;
- The same form can be the impetus for the Google keystroke, the counterpoint being to use simple, direct, and non-insulting directions for form execution and return.
4. Cessation/Termination of Claim Benefits
- Stopping benefits, absent agreement to the stoppage, generally results in attorney retainage;
- Employer-filed WC litigation seeking to cease/terminate claim benefits drives injured workers to attorneys.
5. Process Overwhelms and Confuses
- Although not rocket science, it is a not uncomplicated process to secure or retain workers’ compensation benefits, particularly when potentially related to other alphabet soup statutes, such as FMLA, ADA, and Unemployment Compensation, as well as private disability coverage.
6. Dissatisfaction with Medical Care
- Cannot get medical treatment authorized;
- Does not like employer-designated health-care practitioner;
- Disagrees with, or will not follow through with, treatment recommendation;
- Cannot get the claims adjuster to answer questions regarding medical compensation benefits.
7. Third-Party Liability
- The existence of third-party liability typically results in the involvement of personal injury attorneys, with referral to workers’ compensation claimant attorneys;
- Potential third-party liability triggers potential subrogation lien interests of the employer/insured.
8. Google It
- In general, the ability to find and retain skilled legal representation, in any kind of practice area, is only a computer keystroke away;
- It is also there on the radio, on the drive to the doctor’s office;
- It is ubiquitous;
- It is splattered all over public transportation;
- It is emboldened by numerous publications and periodicals.
9. Unpaid Medical Bills
- Collection notices for unpaid medical bills drive injured workers crazy, resulting in attorney involvement.
10. I Hate My Job Almost as Much as I Hate My Boss
- It happens!
- This evidences a lack of trust, not to be confused with pure retaliation;
- It is the perception that has festered, infecting claim dispositions.
11. Referrals by Medical Care
- Particularly true with chiropractors, as well as physical therapists, as they tend to be quicker referral sources than other practitioners;
- It is a symbiotic medico-legal universe.
12. Fear of Being Fired
- Are we surprised?
- The fear of being fired, besides producing cold sweats and trepidation, produces psychological crisis, resulting in confrontation.
13. Family Prodding
- It is the nudge while watching TV;
- It is the frustrated “when are you going to do something about this?”;
- It is the stuck at home, no paycheck, no ride to the doctor, no work, and no taking out the trash, no doing house chores, building a base of friction and frustration.
Is there a moral to our story?
Anyone attending the National Workers’ Compensation Disability Conference and Expo heard numerous presenters characterize workers’ compensation systems and procedures as having, at their core, the function of restoring injured workers’ physical and psychological capabilities to return to work to achieve pre-injury status. Several NWCDC panelists underscored the humanitarian policies upon which workers’ compensation statutes and systems are structured, placing great emphasis on the moral obligation of all workers’ compensation stakeholders to employ fairness in the administration of claims. The following tips are suggested for all, in the course of dealing with injured workers:
- Be courteous;
- Be polite;
- Be truthful;
- Be fair;
- Be direct;
- Be responsive;
- Be informed;
- Be civil;
- Avoid argument;
- Avoid making assumptions about claim facts and claim personas;
- Be credible;
- Be yourself;
- Be real.
In short, even in disputed claims, it is critically important to treat others, including the claimant, claimant’s counsel, the employer, any third parties involved in the claims administration process, defense counsel, and the administrative fact finder, as you would want others to treat you.
- The right medical care at the right time is always in the best interest of the injured worker and almost always will result in the lowest claims costs.
- The right medical care at the right time will (almost always) result in an earlier return to work with less permanent residual disability.
- Evidence-based medicine is the right care for the legitimately injured workers. (There is a hierarchy on how to apply evidence-based medicine).
- To control worker's compensation medical costs requires both a fee schedule and an ability to control the frequency and the appropriateness of treatment. One without the others usually results in massive increase in medical costs for the system.
- The medical treatment fee schedule should be clear, easy to use, accurate and reflect the latest technology.
- A fee-for-service system may result in incentives for physicians to over-treat, inappropriately.
- In many jurisdictions Worker's Compensation is generally the last fee-for-service system.
- As long as workers compensation uses a fee-for-service system, medical utilization review is needed to make sure that the physicians will treat adhering to evidence-based medicine.
- Pharmacy utilization is problematic because of the “Medicalization” of the general population. (Medicalization is the direct advertising of symptoms and diagnoses to the general population by drug manufacturers, resulting in an overuse and/or misuse of some types of drugs and therapies).
- There is a significant problem with “off label use” of drugs in the worker's compensation system. (Off Label is the use of a drug for treatment that was not the reason for its approval from the FDA).
- Medical decisions should be made by medical professionals. Most Workers' Compensation judges, attorneys, and claims adjusters have little to no formal medical training and are not medical professionals.
- Poorly (inappropriate) placed incentives will result in poor medical outcomes. (There are several studies that demonstrate that allowing physicians to do self-referrals or to dispense pharmacy goods from their offices will usually result in a utilization of unnecessary services or inappropriate usage of drugs).
- Even if the doctor is not dispensing the drugs, opiates require regular visits to the doctor for renewal of the prescription and also may involve expensive drug testing; so there is a financial interest on the part of some doctors to prescribe opiates.
- Some physicians who prescribe opiates do not fully appreciate the addictive power of the drugs that they are using or the difficulty in detoxing the patients.
- There are currently enough treating physicians and specialty physicians in most urban areas; however there are not enough physicians (treating, orthopedic or neurosurgeons, etc.) in the rural areas to meet the demand. This problem will only get worse as the population ages and more doctors retire. It will also get worse if physicians leave workers' compensation due to the demand for their services due to the implementation of the federal universal health care programs.
- Many surgeons and other physicians want to perform their craft (do surgery, provide injections, etc.). They truly believe that their surgery or injections will work even if the prior treatments have not been successful or if current evidence-based medicine says surgery is not appropriate.
- Every patient looks like a good candidate for an MRI when there is an MRI machine in the doctor's office.
- Not every person with a surgical or potentially surgical condition is a good surgical candidate. Though pre-surgical psychiatric evaluations are required for spinal cord stimulators (post spine surgery), the same is not true for many other surgeries.
- It is difficult for a patient who is in intractable pain to believe that strong medications (including opiates) are not appropriate or are not good.
- It is difficult for a patient who is in intractable pain to believe that not having back surgery will have the same ultimate result as having surgery when the surgeon is saying (with confidence) that the surgery will cure all. Even though current evidence-based medicine says differently.
- Because “doing something is better than doing nothing” when the patient is in intractable pain, if the surgeon says surgery will not be successful, the injured worker will attempt to find someone who will say that the surgery “will be more successful than not having surgery,” and will then attempt to have the surgery.
- Patient advocacy is the application of appropriate treatment and patient encouragement that allows the patient to remain as functional and productive as possible.
- Patient advocacy does not always mean the pursuit of treatment a patient desires.
- Patient advocacy may require the physician to decline to do the treatment sought by the patient when that treatment is inappropriate.
- In Workers'Compensation, there are many (known and unknown) underlying non-industrial, psyche/social issues that may hinder or completely stop optimum medical recovery.