Tag Archives: managingdisability.com

Are MPNs Hindering Quality Care?

Have medical provider networks (MPNs) lived up to expectations of improving access to quality of care while reducing medical costs? Recent accusations raised against Janak K. Mehtani, M.D. (“Mehtani”) before the Medical Board of California, Department of Consumer Affairs, would suggest not. (Specific details relating to case # 02 2012224474, effective Jan. 13, 2015, are available on the Medical Board of California website, under the option “Verify a License.” At time of writing, a hearing had not been held, and the case status description states, “The physician has not had a hearing or been found guilty of any charges.”

Following the investigation of a lodged complaint relating to this case, the executive director of the Medical Board of California raised the following accusations (1) gross negligence, (2) repeated negligent acts, (3) prescribing dangerous drugs without appropriate examination or medical indication, (4) failure to maintain adequate and accurate medical records and (5) general unprofessional conduct.

These accusations relate to three workers’ compensation claims for services provided between 2008 and 2013. Two claims were identified as belonging to State Compensation Insurance Fund (“SCIF”) (patients JC and RW) while the insurer for the third claim, involving a non-English-speaking 47-year-old female with a history of hypertension and chronic pain (patient GC), was not identified.

This article reviews the claims administrators’ implementation of MPNs with reference to patient GC in the Mehtani case.

Insurers promote their MPNs as being quality medical providers who have undergone extensive credentialing before selection, with continuing quality assurance control of their services. Yet a random sample of insurers’ MPN lookup facilities showed Mehtani — a psychiatrist with a practice Sacramento — being currently available to provide treatment, even though there are very serious accusations currently lodged against him. There is no warning, link or reference to the medical board website to alert an injured employee or the employer.

Information shown on claims administrators’ MPN websites to assist an employee in selecting a provider or medical specialty, such as a psychiatrist, is limited to basic contact details, such as address, phone number, distance from a specified location (such as city or Zip code), gender and language. In the case of Mehtani, there is inconsistency in the list of languages spoken; some MPNs list Hindi and Punjabi, while others include Spanish. Does providing only minimal information limit the opportunity for correctly “matching” the patient (i.e., injured employee) to the medical provider, potentially compromising the physician-patient relationship?

Additional information in psychiatry would provide better opportunities for matching patient with psychiatrist. Sub-specialties such as psychosomatic medicine, addiction medicine or administrative psychiatry play key roles in the selection process. So do special interests such as psychopharmacology and pain management and additional training in psychoanalysis at institutes such as the American Psychoanalytic Association (APsaA). Rapport between the psychiatrist and patient is of paramount importance and is assisted further when matching is based on race, ethnicity and cultural groups.

While a review identified 120 psychiatrists located within two miles of the central business district of Sacramento (CBD), a random selection of insurers’ MPNs identified only one psychiatrist, in this case Mehtani, as being within 200 miles of the CBD. Can this list be considered adequate for the employee to choose a psychiatrist, let alone attempt to “best match” a patient to a psychiatrist?

Some researchers suggest that, in patients with chronic pain, a psychiatrist may be the person best qualified to distinguish between medical comorbidity and concomitant somatic complaints and that the patients require careful multidisciplinary treatment, in which psychiatry can play an important role. Patient GC experienced a number of work-related injuries commencing in 2003 and was first seen by Mehtani in 2008, after experiencing depression and anxiety for two to three years. In line with a multidisciplinary treatment plan, Mehtani referred patient GC out for pain management and to a therapist for cognitive behavior management. Mehtani was to manage medications and provide supportive psychotherapy once a month for 12 months.

But who was responsible for approving and selecting the providers’ Pain management providers are generally listed on MPN lists, but a random selection of MPNs found that cognitive behavior therapists and others providing cognitive behavior therapy, such as psychologists, mental health nurses and psychiatrists, were either not listed or not identified as providing cognitive behavior therapy. This lack further demonstrates the limitations of MPNs in selecting medical providers.

In the multidisciplinary or multidimensional approach to addressing chronic pain, an interdisciplinary approach is also required to maximize a psychiatrist’s role in the treatment plan, where all parties involved work in a coordinated fashion. The overall responsibility of ensuring the multidisciplinary team adheres to a common objective rests with the claims administrator. In the case of patient GC, the claims administrator should have been responsible for all the activities performed by the psychiatrist (Mehtani), the pain management provider, the therapist providing cognitive behavior therapy, the primary treating physician and the pharmacist in cases where medications were being dispensed by an insurer’s pharmacy network or a pharmacy was linked to an insurer’s pharmacy benefit manager (PBM). Pharmacists and pharmacies can be held accountable for failing to identify and verify red flags that may appear when a prescription is presented. In the Mehtani case, the issue of prescribed medications is being raised in the accusations.

Documentation required by psychiatrists has been an issue of contention for some time, with many psychiatrists believing that they do not need to perform the same level of documentation generally required for “physiology-based medicine.” Lack of documentation has also been raised in the Mehtani case.

Quality assurance controls for providers can be accomplished in many ways, including automation. Technology is available to monitor diagnoses (DSM-5, ICD-9 and ICD-10), treatments rendered (CPT codes) and pharmaceuticals dispensed through the National Drug Code (NDC) to track treatment and recovery progress, as well as monitor each provider’s contribution to the objectives set by the claims administrator.

Patient GC had 40 visits for “medical psychoanalysis” with Mehtani between 2010 and 2013. All visits would have been invoiced by Mehtani and would have required documentation before payment was made. As lack of documentation was mentioned in the accusation document for all three patients, how was the claims administrator monitoring treatment progress and determining payment for services rendered over the period that Mehtani treated patient GC and the others?

The current health status of all three patients and whether they have returned to normality has not been stated in the accusation document. Patient GC was first injured in 2003, patient JC was injured in 1989, and no injury date was recorded for patient RW. Regardless of the outcome of the Mehtani hearing, could the injured employees file a tort claim against the insurer as to lack of quality care provided by their MPNs? Could a tort claim be filed by the employer against the insurer with regard to lack of controls to vet and verify costs associated with providing medical treatments by their MPNs? Although tort claims by the employee against the employer are not permitted under the workers’ compensation agreement, the insurer and claims administrator are not direct parties to this agreement.

The question remains unanswered, of whether current workers’ compensation medical treatment practices based on group health managed care programs, such as MPNs, are diametrically opposed to the workers’ compensation ethos of “return to work” where “utmost good faith” between interested parties is the aspiration. This article however, suggests that they most probably are diametrically opposed.

For a more detailed outline of the processes and procedures claims administrators can utilize to manage and monitor their medical providers, refer to the article titled, “Treating Pain Pharmacologically,” available from the website managingdisability.com under the Dialogue tab.

An Argument for Physician Dispensing

A January 2015 Workers’ Compensation Research Institute (WCRI) study that focused on three new medication strengths has again questioned the practice of physicians dispensing medications.  Some analysts argue that the new strengths are designed to skirt price controls and generate exorbitant profits for doctors and drug manufacturers and repackagers. But another explanation is possible: that doctors and drug companies have identified new strengths that patients want. In any case, competition will, over time, drive down prices on the new medications just as it did on ones that have been in the market for a long time.

The study titled, “”Are Physician Dispensing Reforms Sustainable?” prompted Michael Gavin, president of PRIUM, a subsidiary of Ameritox, to write an article titled “Physician Dispensing: I’ve Changed My Mind” on this website. He said: (1) ”that drug repackagers in California created novel dosages of certain medication to evade the constraints of the physician dispensing regulations”; (2) “allowing repackagers to create new NDC codes and charging exorbitant amounts of money for drugs that would have been substantially cheaper had they been secured through a retail pharmacy”; and (3) “Worse, utilization of these medications skyrocketed as a result of the revenue incentives for physicians (my conclusion, not WCRI’s)”.

This article analyzes the Cyclobenzaprine HCL medication, with emphasis on the new generic 7.5mg strength that was reviewed in the WCRI study and cited in the article, “Loophole for Doctors on Drug Dispensing,” that Ramona Tanabe from WCRI wrote for this website.

The 7.5mg Cyclobenzaprine HCL was first made available as a generic by the pharmaceutical company “KLE 2 Pharmaceuticals” ((www.kle2.com). The company’s mission statement reads: “It is our goal to provide new therapies via unique strengths, delivery methods and/or new formulations.” KLE 2 identified a marketing opportunity to meet the needs of those who found that the 5mg strength was not effective enough and that the 10mg was too strong. There is evidence on the Internet of people attempting to split a Cyclobenzaprine HCL tablet to reduce its strength, with limited success.

From late 2011 through early 2013, KLE 2 was the only manufacturer of the generic Cyclobenzaprine HCL 7.5mg strength, which was included in the Medi-Cal formulary and used for California workers’ compensation claims. In April 2013, the manufacturer Mylan released a generic 7.5mg strength, and it was also included in the Medi-Cal formulary. KLE 2 has a Medi-Cal price of $3.2153 per tablet; Mylan, $3.99. The brand name “Fexmid,” by Sciele Pharma, owned by Shionogi, has a Medi-Cal price of $4.4383 per tablet.

Pharmaceutical pricing in the U.S. is unregulated; the more manufacturers there are, the lower the price to the consumer. In the case of the 7.5mg strength Cyclobenzaprine HCL, there are currently only two manufacturers, so the price will remain high until more manufacturers produce this strength or there is less demand for it. The 10mg strength, in comparison, has currently around 17 manufacturers. The average Medi-Cal price for 10mg is $0.1035. The lowest Medi-Cal price is $0.0468, from the manufacturer KVK Tech. (Refer to page 7 of “Understanding Pricing of Pharmaceuticals,” available here under the Dialogue tab, for a Medi-Cal price comparison of 10mg Cyclobenzaprine HCL).

The 5mg strength is manufactured by about 11 pharmaceutical companies. The average Medi-Cal price is $0.1586 — that is down from Mylan’s price of $1.3616 in 2006. The current lowest Medi-Cal price for a 5mg strength tablet is $0.0468, again from KVK Tech.

I mentioned earlier that attempts to split either a 5mg or 10mg tablet in half have not been successful. It has been well documented that the coating applied to the 5mg and 10 mg Cyclobenzaprine HCL tablets does not allow them to be easily cut, regardless of the device used. The opportunity therefore for cutting a 5mg in half to take 1½ tablets of 5mg of Cyclobenzaprine HCL and accurately administer a strength of 7.5mg is not possible. The release of the 7.5mg strength addresses this need.

Although the 5mg, 10mg and now 7.5mg strengths are the most commonly dispensed Cyclobenzaprine HCL medications, there are also other strengths, such as the 15mg and 30mg extended-release capsules manufactured by Mylan, which have a Medi-Cal price of $8.7899 per capsule. There are also the brand name “Amrix” extended-release 15mg and 30mg capsules manufactured by Cephalon, a subsidiary of Teva Pharmaceuticals, which have a Medi-Cal price of $25.0163 per capsule for both strengths. These 15mg and 30mg strengths further illustrate how a lack of competition for a specific medication leads to higher prices.

Medi-Cal prices apply to all dispensers of California workers’ compensation medications, including pharmacies and physicians, and the same Medi-Cal maximum price has applied since 2007, as explained in my article, “The Paradox on Drugs in Worker’s Comp.” But the average prices paid, according to the WCRI study, are significantly higher than the Medi-Cal prices. The WCRI said prices paid for the 5mg and 10mg strengths were 35 to 70 cents a tablet, yet we find that the average Medi-Cal price was 10 cents for 10mg and 16 cents for 5mg. This discrepancy requires further clarification, because it appears that claims administrators have been paying significantly more than Medi-Cal’s maximum price.

The WCRI reported a range of between $2.90 and $3.45 for the 7.5mg strength. The $2.90 price is lower than Medi-Cal’s prices and indicates that a competitive price was paid by claims administrators.

If, as some have suggested, new strengths such as the 7.5mg are medically inappropriate, have claims administrators moved to remove the doctors who prescribe those strengths from their medical provider networks (MPNs)? Have claims administrators reported those doctors to the California Fraud Assessment Commission?

Gavin said in the second point I pulled from his article that medications dispensed by physicians cost more than those in retail pharmacies, but obtaining prices of Cyclobenzaprine HCL from a number of retail pharmacies on the website goodrx.com are higher than the average Medi-Cal price paid for the same medications to dispensing physicians. (Prices on the website can change at any time and cited here for illustration purposes only. The Medi-Cal formulary can also change at any time in both its suppliers of medications and prices paid.)

This analysis of the Cyclobenzaprine HCL medication further reinforces the need for claims administrators to be vigilant when dealing with pharmaceuticals. Let the buyer beware, too, when interpreting studies produced by organizations such as the WCRI.

The Paradox on Drugs in Workers’ Comp

Pharmaceuticals remain a large component of both total claims and medical costs in treating workers’ compensation injuries and illnesses. On the plus side, pharmaceuticals lower medical costs by decreasing demand on other health resources, improve health outcomes, including treatment safety, and provide earlier opportunities to return to work. On the negative side, prices can be very high.

States have been trying to address that negative through numerous efforts for many years, yet costs keep climbing. A study finds that a solution exists, if claims administrators become aware at the most granular level about the sources of medications and the prices that suppliers charge.

Background

Pharmaceutical pricing in the U.S. is unregulated. Pharmaceuticals are manufactured through two sources, (1) the originator (i.e. the inventor) of the medication and (2) the generic manufacturer. The originator markets the medication through a brand or trademark name and has sole marketing rights for a period. This period varies from country to country, but the norm is from five to 10 years. On expiration, generic pharmaceutical manufacturers are allowed to produce the medication and introduce price competition into the market. Pharmaceutical Research and Manufacturers of America (PhRMA) reports that generic medications account for 80% of dispensed medications in the U.S.

In an effort to control pharmaceutical pricing in California workers’ compensation, a number of legislative changes were introduced.

2002 – Claims administrators could use pharmacy benefit managers (PBMs) and pharmacy benefit networks (PBNs) to establish contract prices below the maximum price established by the legislature and to scrutinize prescribed medications at the time of dispensing. A reduction in pharmaceutical costs was expected, yet a report prepared by the California Workers’ Compensation Institute (CWCI) in October 2014, titled “Report to the Industry: Are Formularies a Viable Solution for Controlling Prescription Drug Utilization and Cost in California Workers’ Compensation?” showed the average pharmacy cost for the first year of treatment for an indemnity claim increased from $390 in 2002 to $430 in 2003 (an increase of more than 10%).

2004 – The pharmacy formulary (i.e. list of medications) established by California’s Medicaid welfare program, called “Medi-Cal,” was introduced into workers’ compensation. The formulary and price schedule are based on the state’s negotiated price with suppliers. By contrast, most other workers’ compensation jurisdictions use schedules based on the supplier’s average wholesale price (AWP), with a plus or minus percentage adjustment to establish the maximum price (e.g., AWP + 10% or AWP – 5%). Both the Medi-Cal price and the AWP are established before any off-invoice discounts, rebates or other incentives are applied by the pharmaceutical supplier. Price differences between Medi-Cal and the AWP can vary significantly. For example, paying the lowest Medi-Cal price of 4 cents per unit for the generic medication Meloxicam 7.5mg tablet, instead of paying the AWP, provides a saving of as much as 98%. Once again, expectations for a significant reduction in pharmaceutical costs were anticipated, but, according to the CWCI, the cost only dropped from $321 in 2004 to $282 in 2005 (a reduction of 12%), before increasing to $352 in 2006 (an increase of almost 25%).

2005 – In an effort to control total medical costs, claims administrators in California were allowed to establish their own medical provider networks (MPN). The intent of this legislation was to curtail the adversarial relationship between the medical profession and claims administrators and also provide an opportunity for establishing contract rates with physicians, below the mandated maximum prices, for both services rendered and medications dispensed. This time, the expectation was to see a reduction in costs for both medical treatments and medications dispensed by a physician. Instead, the CWCI showed an increase from $282 in 2005 to $352 in 2006 (almost 25%) and then to $412 in 2007 (a further increase of 17%).

2007 – Legislation was enacted to require that the maximum price paid for a supplier’s medication that was not listed in the Medi-Cal formulary be equivalent to similar medications listed in the Medi-Cal formulary; the prior practice was to use the supplier’s AWP to calculate the price.

The Medi-Cal formulary includes a number of suppliers providing the same medication. PBMs, PBNs and physicians dispensing medications also have formularies that may have different suppliers to Medi-Cal, especially where a large number of suppliers are involved. For example, Gabapentin is available from more than 55 suppliers, which may include the originator, the generic manufacturers and companies that repackage others’ medications in various package sizes. Hydrocodone-Acetaminophen is available from at least 45 suppliers in different strengths and package sizes.

Again, the legislation was expected to lead to a significant decrease in costs, because a number of physicians were dispensing medications from suppliers that were not listed in the Medi-Cal formulary. The cost, however, increased by almost 7%, from $412 in 2007 to $440 in 2008. This percentage increase is baffling. The National Council on Compensation Insurance (NCCI), in its September 2013 report titled “Workers’ Compensation Drug Study: 2013 Update,” ranked Meloxicam as the highest physician-dispensed medication by dollars paid. By applying the Medi-Cal price, instead of the AWP, cost savings should have been as high as 98%. The savings for Tramadol HCL, the second highest ranked physician dispensed medication by dollars paid, were 89% based on the Medi-Cal price of 9 cents per unit.

So, legislation enacted in California from 2002 through 2007 provided all the means to control and curtail pharmaceutical costs. Yet, according to the CWCI, the average first year pharmaceutical cost per indemnity claim reached $953 in 2012 from $390 in 2002 (an increase of 144%).

The Study — Huge Range in Prices

This paradox initiated an independent study into pricing based on the medications listed in the NCCI report. The study identified that prices offered by manufacturers of generic medications varied significantly, and that a lack of awareness by claims administrators could be a leading factor in the high cost of pharmaceuticals in workers’ compensation. The study excluded repackagers’ prices, which are often associated with physician-dispensing. The report published from this study listed the following medications:

  • Meloxicam 7.5mg tablet — prices ranged from four cents through to $5.73.
  • Gabapentin 300mg capsule — six cents through to $1.75.
  • Lidocaine 5% transdermal patch (30 patches) — $102.98 through to $258.97.
  • Hydrocodone-Acetaminophen (“APAP”) — from 22 cents through to $2.69 per unit, depending on the strength. The price for Acetaminophen with Codeine ranged from 15 cents through to 90 cents per unit.
  • Omeprazole 20mg — from 29 cents through to 65 cents.
  • Cyclobenzaprine HCL 10mg tablet — from four cents through to $1.13.
  • Oxycodone HCL — from 23 cents through to $1.57 depending on strength.
  • OxyContin — a brand name extended release or long acting Oxycodone HCL, only manufactured by Purdue Pharma and currently under a protection period, ranged from $2.27 through to $14.51 per unit based on strength.

The Solution

For claims administrators to influence a downward trend in pharmaceutical costs associated with pricing, consideration should be given to the following initiatives:

  1. Know the suppliers of the medications in the PBM/PBN’s formulary.
  2. Compare the suppliers of the PBM/PBN’s formulary to the Medi-Cal formulary to ensure at least the lower prices available from Medi-Cal suppliers are being paid.
  3. Pay only the “no substitute allowed” price when a prescribed medication is not included in the PBM/PBN’s formulary.
  4. When an MPN’s physician dispenses medications, ensure that (a) the “no substitute allowed” price is not paid and (b) the lowest available price is paid for a medication from a supplier listed in the Medi-Cal formulary, unless a lower contracted rate is already in place within the MPN.
  5. Analyze the paid price for pharmaceuticals on at least a monthly basis to ensure the lowest price for a medication has been paid regardless of supplier and monitor medications most frequently dispensed along with their quantities to ensure PBMs/PBNs and physicians are dispensing the lowest cost medication identified in the Medi-Cal formulary, unless a lower contracted rate is already in place.

A claims administrator’s processes and technologies to manage the pharmacy vendor relationships, pre-authorizations and bill reviews must be seamlessly integrated and be able to capture data at the most granular level, which in the case of pharmaceuticals in the U.S. is the National Drug Code (NDC). Without this detailed integration, pharmaceutical costs associated with pricing will continue to increase, as illustrated in California, regardless of legislation changes enacted in the future.

The report relating to this study is available in PDF format from the website managingdisability.com under the Dialogue tab.