Tag Archives: medical bills

Are Your Health Cost Savings an Illusion?

The New England Journal of Medicine carried an excellent article by David Casarette, MD, on the topic of healthcare illusions and medical appropriateness. Click here to read the full article.

Casarette observes that humans have a tendency to see success in what they do, even if there is none. Casarette writes, “Psychologists call this phenomenon, which is based on our tendency to infer causality where none exists, the ‘illusion of control.’” This illusion applies in all walks of life, especially in politics and parenting, and it includes medical care.

In medical care, the phenomenon has been referred to as “therapeutic illusion,“ and it affects both doctors and patients. Undoubtedly, therapeutic illusion is why placebos can be so effective.

In one clinical study, faux surgery worked as well or better than an actual surgery for the treatment of specific conditions. If patients perceive they need surgery, e.g. for knee pain, even though it may not be medically appropriate some will search for a surgeon who can validate the need and perform the surgery.

Casarette writes, “Physicians also overestimate the benefits of everything from interventions for back pain to cancer chemotherapy.”

Casarette’s article is most interesting to us. Why? We’ve often felt that doctors who perform unnecessary surgeries have ethical problems. The reality may be a little more complicated. The surgery decisions may have a subconscious influence.

Toomey had an interesting conversation with the chief medical officer (CMO) of a major health system. The CMO relayed that his wife was having pain in her hand, so they scheduled an appointment with one of their system’s highly recommended specialists. The specialist looked at the wife’s hand and, after a few minutes, stated that she needed surgery. The specialist did not know he was taking to a physician, and the CMO questioned how the specialist could arrive at a diagnosis from just looking at a hand. The response was, “years of experience.” The CMO and his wife got a second opinion and opted for the recommended therapy rather than surgery, and the therapy solved her issue.

The attention today is on value-based contracting and data analysis. A group of 20 national employers have come together to share data, so they can assess the healthcare supply chain. But, as noted in our last blog post, analyzing the data is complex, especially because claims data are just a collection of medical bills. How are employers assessing medical appropriateness? What reports can be generated to assess a need for care?

In 2014, one state’s Medicare costs were $6,631 per capita while another’s were $10,610. A big driver was the variation in the volume of procedures, and cognitive biases among doctors can help drive those volumes.

Healthcare involves people – patients, physicians, and other providers — and the human element makes it even more complex. So how do those involved in healthcare address the variation in medical care that is driving up costs?

We are biased – we believe the employers are the catalyst to drive change for increased consistency by working collaboratively with suppliers (think Six Sigma).

In any case, it’s time for change.

Promoting Peace of Mind in Work Comp

An employee’s peace of mind is equal in concern with the physical injury when it comes to a worker’s comp claim. An upset employee can lose motivation, incur a bad attitude and rationalize the over-use or abuse of WC benefits. I am adamant that employee satisfaction is as key a factor in WC claim outcomes as it is in overall employee productivity and job performance.

It is not the adjuster’s primary role to manage an employee’s peace of mind at the start of a new report. While we expect good “bedside manner” from an adjuster, she must reserve a defensive position and be a “bad-cop” if necessary. An astute employer sees the opportunity in meeting an employee’s concerns at the time of an injury. It is like adding another critical brick to strengthen the foundation of employee satisfaction.

The immediate task can be simple. A little bit of confident communication goes a long way. Step one is to put yourself in the injured employee’s shoes and imagine being faced with an inability to work. It is not a comfortable feeling.

Quick Tip: Prepare a “Top-10” Information Sheet for Quick Use

Concept: Include a quick-reading “Frequently Asked Questions” checklist as part of an overall information packet for new WC claimants.

Suggested Top 10 and Recommended Answers:

1) Which doctor do I use? – Identify the preferred list, contracted clinic or emergency facility. Explain degrees of employee choice if any does exist in your jurisdiction.

2) What if I can’t do my job? – “If the doctor determines you cannot perform your job, we will try to match you with a temporary alternate assignment. If there is no ability for you to work, your wages will be paid as a WC benefit.”

3) How much will I be paid? – Provide the statutory calculation formula for the comp rate and specify that the employee’s specific rate will be determined by the claims adjuster within 48-72 hours.

4) When do I start getting checks? – Explain the jurisdictional waiting period.

5) How do medical bills get paid? – “All bills will be paid directly to the doctors/providers. You do not pay any bills for accepted and covered treatment.”

6) Do I need an attorney? – “We will help facilitate your benefits. An attorney is not necessary unless you face a disputed issue and want it to be heard by a judge. However, it is your option and right to consult an attorney at any time.”

7) What do I do next? – Explain any other internal steps and forms; explain that an adjuster will make contact and go over additional information. If you have a designated adjuster, provide a name and contact info.

8) What about my health benefits / 401k contributions, etc? – Explain your policies and the jurisdictional requirements that continue benefits during a WC claim

9) Will I lose my job or be fired? – Explain that filing a WC claim is not a basis for termination but also reserve the right for progressive discipline because of safety violations, attendance, job abandonment, fraud and any internal policies that might relate to WC situations.

10) What if I have other questions? – Provide a designated internal WC contact with an open-door policy.

State-by-State Look at Small Medical Claims

Should an employer pay small medical claims or turn them in to the workers compensation insurance company?

That is the most common question an insurance agent gets from employers. The answer to this question is not simple. It can depend on several factors, including:

  • Whether the state has approved the experience rating adjustment (ERA) in the experience modification formula.
  • Whether the employer has expertise in paying according to the state fee or reasonable and customary schedule, and whether the employer has access to discounted medical networks, as insurance carriers do.
  • Whether a small deductible to handle small medical claims might beappropriate and assist in complying with state rues.
  • State rules and penalties where the employer is located.
  • Whether the state of operation has a favorable alternative option for handling small medical claims.
  • How organized and detailed the employer is?

Experience Rating Adjustment (ERA)

For years, insurance agents recommended that employers pay small workers compensation medical claims out-of-pocket and not submit them to their insurance carrier. The rationale was that frequency affects the experience modification formula more than severity does, so frequent claims would produce a higher experience modification and increase costs.

When the experience rating formula was created, assumptions were built into it. One assumption is that one large claim should not have as much effect as a number of smaller claims that total the same amount. For example, a single $90,000 claim should not have the same impact as five $18,000 claims. One large claim may not reflect the insured’s overall operations. However, five $18,000 claims indicate a problem with safety or other issues. In addition, studies have shown frequency often leads to severity.

The practice of employers not reporting small claims in an attempt to keep their experience modification low troubled many of the workers compensation stakeholders (insurance companies, actuaries, OSHA, National Council of Compensation Insurance [NCCI] and other state independent advisory organizations). The lack of reporting meant that the database of loss experience was not complete, possibly leading to poor statistical analysis.

To address this issue, an experience rating adjustment (ERA) was introduced into the formula. In states where ERA is approved, medical-only claims (injury code 6 claims) are reduced by 70% before being used to calculate experience rating. Also, the expected loss rate and discount ratio, used to compute expected losses and expected primary losses, have been changed to reflect that medical-only claims will be reduced by 70%. Many feel the incentive to not report medical-only claims has been eliminated in states where ERA is approved.

The ERA-approved states are: Alabama, Alaska, Arkansas, Arizona, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, North Carolina, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia and Wisconsin. The District of Columbia has also approved ERA.

Those that have not approved ERA are: California, Colorado, Delaware, Massachusetts, Missouri, New Jersey, New York, North Dakota, Oregon, Ohio, Pennsylvania, Washington, Wyoming and Texas.

After analyzing “what if” scenarios on employers either reporting to the carrier or paying medical-only claims on their own, studies conclude that the employer did not save money by paying medical-only claims. This was even truer in ERA states, particularly if the employer does not know how to apply the state fee schedule or has no access to discounted networks like those developed by insurance carriers.

The above illustration is representative of the reduction that would be realized on the $13,981 in medical bills had they been applied against the state fee schedule and insurance company network discounts. After these discounts, the total claims in the modification formula at 30% would be $1,846 ($6,152 x .30 = $1,846), reducing the modification from 1.275 to 1.20 vs. the 1.18 experience modification without reporting medical-only claims. No doubt reporting no medical claims produces a lower modification; however, many employers have no knowledge of how to apply the workers compensation state fee schedules and will not have access to insurance carrier discount networks. This often results in the employer paying higher medical costs and higher overall worker compensation costs.

Employers could arrange with a third-party fee schedule company to assist with state fee schedules, but this would depend on the volume of work. It may be awkward to engage a fee-schedule company without a formalized program to allow the employer to pay its own medical claims under a deductible program. Alternatively, the employer can look up the fee schedule amount by procedure code and fee schedule.

The employer will have to know how to create an “explanation of benefits” for the medical provider. In summary, some knowledge is required if an employer is going to take advantage of state fee discounts in paying its own medical claims.

Potential Risks and Penalties

Clearly, an employer paying its own medical claims in non-ERA states presents a more attractive option than doing so in ERA states, as the impact on the experience modification is greater. However, there are several factors to consider. There is always a risk the claim could become more serious. Many states have distinct periods of time that allow for a claim denial. If the claim becomes problematic or significant medical is needed, or if an employee becomes disabled (and the condition can be tied back to the original medical claim), the employer may lose the ability to have the claim denied at a later date because of the state’s statutes.

In addition, many states have penalties that apply if the employer does not report the claim to the carrier or the state. Arkansas issued bulletin warning employers, insurers and other workers compensation stakeholders against the practice of businesses paying small workers compensation claims directly, saying the practice was in violation of Ark. Code Ann. Section 11-9-106(a), which deals with making materially false representations for the purpose of avoiding payment of the proper insurance premium. The law authorizes insurers to offer a deductible to policyholders, but the law does not authorize direct payments, with or without a valid deductible program. The bulletin emphasized that even with an authorized deductible program all claims must be submitted for “first dollar” payment by the insurer. Other states require all incidents must be reported even if “notice only.” In other states, the doctor reports the claim to the state with a copy to the carrier of record so the opportunity to pay your own medical claims is certainly more challenging. An employer must also be aware of penalty situations in its states regarding timeliness of payment. For instance, in Michigan, as in many other states, the bill must be paid within 30 days of receipt.

Small-Deductible Programs

Most states have approved the use of small-deductible plans. Currently, 36 states (Alabama, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota and Tennessee) have state-approved small-deductible rules ranging from $500 (Oregon) to $25,000 (Missouri, Ohio and Texas) for medical and indemnity.

In some states, an insurer is not required to offer a deductible if the employer’s ability to make payment of the claims under the deductible is in doubt. Some states have specific requirements for small-deductible plans while others allow insurers to file their own plans. In Arizona, Idaho, Louisiana, Michigan and Mississippi, insurers are permitted to file small-deductible programs, but most carriers haven’t. North Dakota, Washington and Wisconsin are notable exceptions as states not allowing small-deductible plans.

In return for assuming a deductible applicable to every claim, the employer receives a premium credit. These plans are extremely popular as a cost-cutting tool for many employers, especially contractors. Sometimes, underwriters use deductibles as a defensive tool, or the employer reluctantly accepts a deductible, as it may have been the only way to obtain a competitive premium. A deductible is simple to manage from the employer’s standpoint. Claims are submitted to the carrier.

The carrier pays the claims after applying the state fee schedules and other network discounts. The employer is billed at the end of the month for reimbursement of the claims under the deductible amount.

Selecting a small deductible is not always a pricing consideration. A company may be more attractive to a carrier if it is willing to take on a small deductible. This is especially true of contractors.

Whether the claims under the deductible go into the experience modification depends on the state the employer is located in. Currently there are 15 NCCI states offering net deductible options for small deductibles: Alabama, Colorado, Florida, Georgia, Hawaii, Iowa, Kansas, Kentucky, Maine, Missouri, New Mexico, Oklahoma, Rhode Island, South Carolina and South Dakota.

Small-Deductible-Programs Reference Table

The following NCCI table provides a summary of the small deductible programs in the states where the Basic Manual applies. For complete details regarding the rules of any program, refer to the appropriate state pages.

Alaska, District of Columbia, Idaho, Louisiana, Mississippi and Oregon have not filed programs with NCCI.

So what does net vs. gross mean? Assume the employer is in Kentucky, a net small-deductible state. The employer signs up for a small deductible and gets a small premium credit. It sends the bills to the carrier, and the carrier bills for the amounts under the deductible at the end of the month. When the claims activity for this employer is reported to the NCCI, it is reported “net” AFTER the deductible has been applied. If the employer had a $500 deductible, a $400 claim would show up at the NCCI as $0 and a $1,000 claim would show up as $500. (Remember this is after the state fee schedules and carrier cost containment networks have been applied, so it could have started out as a $3,000 medical claim).

Some states require insurers to report losses on a gross basis, which is the full amount paid by the insurer, irrespective of deductible reimbursements received from the employer. In a gross state, say Indiana, an employer can sign up for a small deductible and get a small premium credit. When this employer’s claims are reported to the NCCI, they are reported “gross” — as if no deductible existed.

Assuming the same claim scenario — a client with a $500 deductible — the $400 claim is reported to NCCI as $400 and a $1,000 claim shows up as $1,000 for experience modification purposes even though the insured is reimbursing some of the claim under the deductible.

Gross means reported without regard to the deductible. Net means reported after the deductible is applied. Net reporting of losses may allow an employer to receive a premium discount up front and favorably affect its experience modification factor by eliminating all losses below the deductible from experience rating.

So what does it mean when a state is a gross and net state? The NCCI Basic Manual will refer you to the state pages for further explanation. It can be for several reasons:

  • In Florida, for instance, only a $2,500 deductible is “net.”
  • Some states are net for medical-only and gross for indemnity.

With so many states offering small deductibles for medical-only claims, it is difficult to understand — particularly in an ERA state — why any employer would not formalize a small-deductible plan and take the advantages of the state fee schedule and carrier network medical bill discounts as well as the carrier premium credit allowed for small deductible plans. This is especially true in those states that have approved ERA, have net deductible plans and also give a credit for the deductible program. These include Kansas, Kentucky and New Mexico.

With the expanded format of the unit statistical report approved in most states, losses are reported on both a gross and net basis. Thus, insurers report the same information in all states regardless of whether gross or net losses are used to calculate experience modifiers.

State-Specific Variances

There is usually a reason why a state did not approve ERA. Some states have a mechanism in place to handle employers paying small medical claims that reduce medical claims included in the experience rating calculation.


Employers are allowed to pay the first $15,000 of any medical-only claim. Ohio also allows employers “salary continuation” which allows an employer to pay an employee his or her regular wages after a workplace injury or illness occurs. No salary continuation payments or medical-only claims paid by the employer under the $15,000 go into the modification calculation.


Oregon has a medical reimbursement option that allows interested employers to reimburse medical-only claims up to $1,500. Any reimbursed medical losses are removed (or reduced) from the experience rating.


Missouri law allows employers the right to direct the medical care for their injured workers and to pay first-aid-type claims that are $1,000 or less out-of-pocket. By paying claims under $1,000 out-of-pocket, the frequency and cost of these claims are not included in the calculation of the experience modification. There is a special NCCI endorsement that is attached to the policy.

The bill is submitted to the carrier. The carrier reprices the medical bill according to the state fee schedule and network discounts. This is true even if a bill is $1,200 but ends up being $800 after re-pricing. The claims under $1,000 do not get reported on the experience modification.

Some carriers operating in Missouri that have a higher deductible plan (i.e., $2,500) in place with an employer will allow the employer to reimburse the bill and not report the entire bill to the experience modification. They count the first $1,000 under the Missouri law and the balance of the deductible as subrogation. Any lost time claim or a claim where it is known that a permanency rating will apply (i.e., fracture) must be reported even if under $1,000.

The Missouri system has worked well for employers. It is an example of how an employer may have a different approach to paying small medical claims or decide not to pay them at all depending on the state they are located in.


Medical-only claims are subject to a deduction equal to twice the average medical-only claim cost. The amount changes each year (2014 is $2,610). The claim cost will be deducted from the loss amount before beginning any other calculations on the claim. Ultimately it reduces the regular experience modification calculation.

No employer’s experience modification can increase or decrease more than twenty-five percent during any one year. However, if an employer’s experience modification factor is calculated to be below 1.00 without this twenty-five percent limitation and that employer had an experience modification factor greater than 1.333 in the previous year, then the experience modification factor shall be set to 1.00


California employers have an option to self-pay certain workers compensation claims. Specifically, first-aid claims. Even though there is no premium reduction to pay first aid claims out-of-pocket, this practice may have a positive effect in minimizing the impact on future experience modifications, and reduce the future cost of premiums.

Several states – Alabama, Kansas, Kentucky, New Mexico, Oklahoma and Rhode Island) offer a unique opportunity in that they approved ERA (70% discount for medical-only claims), they allow a credit for the small deductible and they do not include claims under the deductible in the experience modification.

Advanced Monitoring of the Experience Modification

It is important to note that the 70% reduction applied to medical claims for the experience modification in ERA states is only for a medical-only claim. As soon as an indemnity (lost wages) payment is included, the entire medical portion of the claim goes into the experience modification formula. Once the waiting period has passed to collect lost wages (anywhere from 3 to 7 days depending on the state) lost wages are paid back to day one. There are occasions when a claim may result in only 5 or 7 days off or $300 to $900 of indemnity payment but the medical is high (i.e. $10,000). Hernia operations are an example of short time off but large medical expense. If the employer were to continue to pay this individual for the week or two off and report only the medical to the carrier, only $3,000 of the medical would apply to the experience modification.

This feature of the formula highlights the importance of returning employees to work as soon as medically possible and when not medically possible, managing that one-to-three week period of wages. There is software available that can calculate a variety of “what ifs” to determine the cost saving advantages to paying close attention to this issue.

Once again the employer and agent must be aware of what the state of operation allows. Wisconsin issued a warning to employers that they cannot pay wages to injured workers to lower their experience modification. The claims must be paid by the workers compensation carrier. Wisconsin does not allow deductible plans and this action constitutes use of a deductible which has not been filed by the bureau and approved by the Office of the Commissioner of insurance for use in Wisconsin. The office warned it will pursue appropriate enforcement action about any practices noted as improper.

Medicare — Responsible Reporting Entity

In addition, employers must now contend with the rules from the Center for Medicare and Medicaid Services (CMS). But first, a little history. Federal Medicare set-aside has been in force for many years. What is in place is a process that was activated when a workers compensation settlement on a claim was imminent on an individual who was collecting Medicare because they were of Social Security age or disabled or when there was a reasonable expectation an individual would be eligible for Medicare within 30 months of the settlement time.

When these circumstances existed on a settlement of a workers compensation claim, the carrier or TPA was required to assemble medical records on this individual and send them to a company that would assess the future medical and prescription drug use only relative to the workers compensation injury (not everything covered by Medicare is covered by workers compensation).

When the employee receives his/her lump-sum workers compensation settlement a non-interest bearing bank account is also set up with the assessed amount for future medical and prescription (but no indemnity or impairment). The settlement “set-aside” (hence the name) pays bills and the employee keeps receipts. Any medical bills not paid but eligible for Medicare are then paid by Medicare.

The Secondary Payer Act was passed by Congress under George Bush. Medicare was always intended to be a secondary payer not primary but the only time this was getting done was in workers compensation settlements. Usually a denial or a delay (by way of lawsuit) of a workers compensation, general liability or automobile claim sent an eligible individual to Medicare. Medicare conditionally pays with the expectation of being reimbursed if and when a lawsuit is resolved with the workers compensation, general liability or automobile carriers.

Unlike workers compensation settlements set-aside, there was no formal method to recover what Medicare paid when the lawsuit settled. Medicare is now requiring reporting of all open general liability, automobile and workers compensation claims if another primary source of recovery is available for Medicare eligible claimants.

So this brings us to employers paying their own small medical-only claims or lost wages. An employer risks becoming the responsible reporting entity with all the burdensome reporting requirements when paying their own claims unless they adhere to the strict rules where workers compensation is exempt under ongoing responsibility for medicals (ORM) for minor incidents.

Workers compensation claims are excluded from reporting indefinitely if they meet all the following criteria:

  • Claim is for “medicals” only.
  • The associated “lost time” for the worker is no more than the number of days permitted by the applicable workers compensation law for a “medicals only” claim (or 7 calendar days if the applicable law has no such limit).
  • All payments have been made directly to the medical provider.
  • Total payment for medicals does not exceed $750.

The employer needs to evaluate whether saving a few dollars on their experience modification is worth tracking and carefully following these rules. If the employer pays any medical over $750 and the employee is Medicare eligible the employer could be creating more headaches with reporting/tracking etc than the experience modification savings is worth by paying the bills instead of sending to the carrier.

The carriers and TPAs have experts that have implemented these new rules and will have this streamlined. There are many companies now offering reporting services. Failure to report a claim carries a $1,000-a-day per claim penalty.


The variances among states dictate that there is no one, simple answer to the employer’s quandary of whether to pay small medical-only claims or turn them in to the insurance carriers for payment. An employer must weigh the advantages and disadvantages of paying small medical claims after:

  • Obtaining a complete understanding of their state’s laws.
  • Understanding the CMS rules.
  • Evaluating the staff’s ability to effectively manage their own medical bills.
  • Reviewing the insurance alternatives available (small deductibles) that take paying small medical claims into consideration.

Information in this article is provided as a reference only. While I strive for accuracy, the workers compensation world is constantly changing. Consultation with the governing authority or an attorney for verification is advised.

Winning the War Against Opioid Addiction and Abuse

As we move forward with winning the war against opioid addiction, it can sometimes be challenging to read the daily headlines and stay positive, especially around the holidays. A December article titled “Drug Abusers May be Injuring Pets to Get Pain Killers” shared how police officers and community leaders informed the Ohio attorney general’s office that people have been abusing drugs rightfully prescribed to pets. The US News HealthDay story titled “Secure Your Prescription Drugs When Hosting Holiday Parties” warned readers about the importance of securing prescription drugs in a safe location before guests arrive. When stories deteriorate to addicts intentionally harming their dogs and to people worrying about holiday guests raiding medicine cabinets, rock bottom isn’t far away.

However, 2013 positioned us well for achieving improved results during 2014. Some of last year’s positive developments include:

1.   State law changes establishing clearer standards of care, reporting and tracking of controlled narcotics, bans on abused narcotics, etc.

2.   State and federal agencies aggressively prosecuting individuals who prescribe opioids illegally or  operate “pill mills,” revoking registrations of some pharmacies and compelling healthcare providers and pharmacies to surrender or forfeit their medical licenses to state medical/pharmacy boards

3.   Physician-led education efforts like the Physicians for Responsible Opioid Prescribing

4.   Medical boards actively addressing the inappropriate and illegal dispensing of drugs

5.   Heightened awareness of the neonatal abstinence syndrome crisis in the U.S.

6.   Workers’ compensation insurers leveraging advanced analytics, physician education efforts, evidence-based pain diagnoses and utilization reviews to reduce injured worker reliance on addictive prescription drugs

7.   The Food and Drug Administration’s Risk Evaluation and Mitigation Strategy

8.   The issuance of the October 2013 Trust for America’s Health report titled “Prescription Drug Abuse: Strategies to Stop the Epidemic”

9.   Continuing prosecution and sentencing of healthcare providers

10. Efforts by national medical organizations

The first eight developments were addressed in the authors’ first quarter 2013 Physician Insurer magazine article titled “The Opioid Abuse Epidemic, Turning the Tide” and our Dec. 2, 2013 Property Casualty 360 Claims Magazine article titled “10 Strategies to Combat the Rx Abuse Epidemic – An Insurers Perspective.”

This article will expand on the last two developments and share some thoughts on what may be in our future when it comes to winning the war on opioid addiction and abuse.

Prosecution and sentencing of healthcare providers

2013 was marked by the successful prosecution and sentencing of healthcare professionals involved in various forms of prescription drug diversion. Arguably the most notable of these was the 39-year prison sentence given to David Kwiatkowski, the former New Hampshire hospital technician who caused dozens of people to become infected with hepatitis C when he injected himself with pain killers using syringes that were then used on patients. Kwiatkowski admitted in August to stealing the drugs and leaving used syringes for hospital use for years, despite knowing he was infected with hepatitis C. His case drew national attention to the problem of prescription drug diversion among healthcare workers; caused a number of institutions to finally take a fresh look at their human resource policies and systems being used to detect diversion; and, has, we hope, sent a strong message of deterrence to all healthcare drug diverters — it is only a matter of time before you get caught!

Efforts by national medical organizations (NMOs)

On an extremely positive note, we are beginning to see NMOs join the fight to help stem the opioid epidemic. On Dec. 10, 2013, the American College of Physicians released a position paper titled “Prescription Drug Abuse: A Policy Position Paper From the American College of Physicians.” The goal of the paper was to provide physicians and policy-makers with 10 recommendations to address the significant human and financial costs related to prescription drug abuse. The recommendations include support for additional education, a national prescription drug monitoring program, establishment of evidence-based nonbinding guidelines regarding recommended maximum dosage and duration of therapy, consideration of patient-provider treatment agreements and the passage of legislation by all 50 states permitting electronic prescription for controlled substances.

In turn, in January 2014, the American Academy of Pediatrics (AAP) Committee on Drugs and Section on Anesthesiology and Pain Medicine issued a report titled “Recognition and Management of Iatrogenically Induced Opioid Dependence and Withdrawal in Children.” The clinical report recommended guidelines for prescribers to follow when weaning children from opioids. As noted by lead author Jeffrey Galinkin, MD, “[t]he key reason the AAP was keen to publish this paper and go forward with this guideline is that people are unaware that patients can get drug-specific withdrawal symptoms from opioids as early as five days to a week after having been on an opioid chronically.”

This recommendation was immediately followed by the Centers for Medicare and Medicaid Services (CMS) Jan. 10, 2014, Federal Register Volume 79, Number 7 publication of proposed rules revising the Medicare Advantage (MA) regulations and prescription drug benefit program (Part D) regulations to help combat fraud and abuse in these programs. The proposed rules include requiring prescribers of Part D drugs to enroll in Medicare, a feature that CMS believes will help ensure that Part D drugs are prescribed only by qualified individuals. As reported by Medscape Medical News, CMS is also seeking the authority to revoke a physician’s or eligible professional’s Medicare enrollment if:

• CMS determines that he or she has a pattern or practice of prescribing Part D drugs that is abusive and represents a threat to the health and safety of Medicare beneficiaries or otherwise fails to meet Medicare requirements; or

• His or her Drug Enforcement Administration certificate of registration is suspended or revoked; or

• The applicable licensing or administrative body for any state in which a physician or eligible professional practices has suspended or revoked the physician or eligible professional’s ability to prescribe drugs.

Furthermore, CMS proposes employing data analysis to identify prescribers and pharmacies that may be engaged in fraudulent or abusive activities. In Table 14 of Federal Register Volume 79, Number 7, CMS’ Office of the Actuary estimates the savings to the federal government from implementing its proposed provisions will be $83 million in calendar year 2015, $132 million in 2016, $171 million in 2017, $364 million in 2018 and $589 million in 2019.

Source: CMS

Innovation in our future

In addition to the above efforts, companies continue to innovate and research new ways to address historical challenges.

Vatex Explorations is building a real-time individual-dose monitoring system called Divert-X to reduce drug trafficking, misuse and addictions that result from routine medical care. Divert-X monitors a patient’s individual doses through the electronic transmission of data identifying the time of dose access, location and other measures. The analysis of the data in real time helps physicians and pharmacists identify drug-taking behaviors that fall outside of norms, allowing early intervention before misuse or addiction set in.

In 2012, the Food and Drug Administration approved an ingestible sensor that can be used to track real time data about your pill consumptions habits. The sensor, developed by Proteus Digital Health, was first approved for use in Europe before coming to the U.S. The ingestible sensor is part of the digital health feedback system, which includes a wearable sensor and secure app and is largely focused on serving the transplant population and patients with chronic illnesses. The authors could envision a day when the system could help in the battle against opioid addiction.

Insurance companies are doing a better job of leveraging advanced analytics to understand their opioid-exposed population and the prescribing habits of the physicians treating their injured workers. Through the review of medical bills (e.g., date and types of service and payment, ICD-9 diagnosis codes, CPT-4 procedure codes, etc.) and pharmacy data (e.g., bill frequency,  aggressive refills, NDC drug codes, quantity used, generic vs. brand, supply days, use of prescriber, pharmacy name, etc.), insurance companies can identify usage and treatment patterns that fall outside of expectations using cluster analyses, association rules, anomaly detection and network “link” analyses.

Law enforcement continues to push the envelope in finding innovative ways to combat drug diversion. Take, for example, the strategy developed in consultation with the National Association of Drug Diversion Investigators and Oklahoma Bureau of Narcotics to curb false reporting of the loss or theft of prescription drugs in Stillwater. According to a police spokesman, most physicians in Stillwater require patients to obtain a police report before they will write a replacement prescription for lost or stolen medications. This requirement resulted in an increase in the number of police reports filed, but a new problem emerged. How could anyone determine whether those police reports were legitimate? In response, the Stillwater police department created a database to record the names of any individual who reported the loss or theft of a prescription drug. The department now requires the individual to take a polygraph test before it will accept any subsequent report of a lost or stolen prescription drug. Fail that polygraph, and criminal prosecution may follow. Query: If this strategy were employed nationwide, would the medicine cabinet at home be guarded more closely?


There is no doubt we have come a long way in the battle against opioid addiction in a relatively short time. Although there is a lot of road left to travel, 2014 is well-positioned to carry forward the effective efforts from last year. Given the innovative spirit of the U.S. and passion of everyone involved in winning this fight, a better long-term solution could be just around the corner.

Top Reasons Why Injured Workers Seek Attorneys

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.

Practical Tips

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.