Opioid Paradox: The Drugs Can Cause Pain
Research suggests that the long-term use of opioid pain medications can paradoxically induce or worsen chronic pain instead of relieving it.
It is one more reason to cheer recent report findings that the nationwide rate of opioid consumption may no longer be trending upward, although it has not decreased significantly.
By now, everyone in the workers’ comp industry should know that opioid pain killers are associated with longer claims durations, addiction, and overdose deaths.
But there is also a growing body of research on a phenomena called opioid-induced hyperalgesia that is associated with the long-term use of the pain medications. Marcos A. Iglesias, M.D., medical director for Midwest Employers Casualty Co., discussed this recently at the Risk and Insurance Management Society Inc.’s annual conference.
“A lot of claimants who are on high doses of opiods are still in a lot of pain. A big reason for that is the opioids. Once they are weaned off the opioids, they feel much better and their pain will actually decrease. So ironically, one of the ways to help their pain is to take away their painkiller.” — Marcos A. Iglesias
The condition is also called “paradoxical hyperalgesia” because a patient may experience more pain resulting from their opioid treatment rather than a decrease in pain. The phenomena can encourage dangerous dose escalation as doctors struggle to control a patient’s chronic pain.
It can also be difficult to distinguish whether a patient continues to experience chronic pain because of an increasing dose tolerance or because of opioid-induced hyperalgesia, according to literature on the topic.
The literature also states that opioid-induced hyperalgesia can worsen with increased opioid doses.
Dr. Iglesias said that opioid-induced hyperalgesia is another reason to stop providing the pain medications to certain patients.
“A lot of claimants who are on high doses of opiods are still in a lot of pain,” he said. “A big reason for that is the opioids. Once they are weaned off the opioids, they feel much better and their pain will actually decrease. So ironically, one of the ways to help their pain is to take away their painkiller.”
The good news, though, is that recent workers’ comp drug trend reports produced by pharmacy benefit managers show decreases in the amount of opioids prescribed to workers’ comp claimants.
St. Louis, Mo.-based Express Scripts, for instance, released its 2013 Workers’ Compensation Drug Trend Report in April. The report states that the “per-user-per-year” utilization of opioids decreased 3 percent from 2012 to 2013. Express Scripts attributed the decline to government, payer, and pharmacy benefit manager attention to opioid consumption.
Similarly, a 2014 Workers’ Compensation Drug Trend Report released in April by Westerville, Ohio-based Progressive Medical Inc. and PMSI states that 62.1 percent of injured workers prescribed medications in 2013 used opioids. That was down from 64.2 percent during the prior year.
The decrease is a “true success,” considering opioid consumption had been increasing during past years, said Robert Hall, M.D. and medical director for Progressive Medical and PMSI. But increased accountability and awareness on the part of prescribes as well as improvement in medical quality have helped counter the problem, he added.
“Based on where things were headed [and] what we were seeing across the country, definitely the [growth] trend being stopped and taken in a different direction is a positive,” Dr. Hall said.
Yet the trend in opioid consumption can also be viewed as not having changed much.
Cambridge, Mass.-based Workers Compensation Research Institute recently looked at long-term opioid use in 25 states and compared the 2008/2010 time period to 2010/2012. It found a decrease within 2 percent in most of the states studied, but concluded that change amounted to “little reduction in the prevalence of longer-term opioid use.”
Wal-Mart’s Workers’ Compensation Litigation Strategy
Wal-Mart Stores Inc. benchmarks attorney performance as part of its workers’ compensation-litigation strategy.
The “outcomes-based” approach to litigation management the employer embarked on relies on claims data analysis and metrics to consolidate the number of workers’ comp attorney firms it hires, while forming tighter relations with a smaller number of lawyers it partners with, speakers told the Risk and Insurance Management Society Inc.’s annual conference held April 27-30 in Denver.
“The very first thing that you need to have a good litigation strategy is to have a strong partnership with your attorneys,” said Janice Van Allen, director, risk management at Wal-Mart in Rogers, Ark.
Litigated claims are among the most complex and costly workers’ comp files employers face as the claims age and grow, said Misty Price, director of analytics at Westlake Village, Calif.-based law firm Adelson, Testan, Brundo, Novell, & Jimenez.
“They become the tail that wags the dog,” she said.
Typically, however, workers’ comp litigation is managed one claim at a time by adjusters working without an overall litigation strategy, Price said. That slows claim resolution and impedes workers’ comp program performance, she added.
“A lot of us feel like our hands are tied because the TPA sometimes decides who the attorneys are or we have carriers [who say] we have to pick from [a certain] panel. But as the employer, as the client, you really do have an opportunity to drive that and determine what firms you want to have as part of your program.” – - Janice Van Allen, Wal-Mart director, risk management.
Adjusters generally select lawyers to litigate a case based on their relations with specific attorneys. Meanwhile, employers often do not receive direct attorney feedback on a case’s progress, despite practices such as holding employer and adjuster claims reviews, Price said.
An outcomes-based litigation strategy, in contrast, relies on a multivariate analysis using an employer’s claims data. Metrics are used to benchmark attorney performance and align specific lawyers with cases, depending on claim facts and knowledge about an attorney’s skill sets and experience.
“What I can tell you [after] spending a lot of time modeling data is that a claimant attorney [selected for a case] tells you a whole lot about where that claim is going,” Price said.
Employers should take charge of selecting attorneys to partner with even though third party administrators or insurers often assume that responsibility, Van Allen said.
“A lot of us feel like our hands are tied because the TPA sometimes decides who the attorneys are or we have carriers [who say] we have to pick from [a certain] panel,” she explained. “But as the employer, as the client, you really do have an opportunity to drive that and determine what firms you want to have as part of your program.”
As part of its overall litigation strategy Wal-Mart has consolidated the number of attorney firms it works with nationwide. In California alone, for example, the retailer reduced the number from more than 20 to three “of our solid firms,” Van Allen said.
The consolidation efforts required considerable work including deciding whether the employer should leave open files with the attorneys that had been working them or transfer them to a vetted firm.
“We looked at each file individually, but for the most part we did move them,” Van Allen said. “In doing that we have seen huge results over the last few years, improving our litigation, lowering the number of files we have currently in litigation.”
Other aspects of Wal-Mart’s strategy include avoiding litigation by taking care of its employees with quality care early on. But for litigated cases, knowing a law firm’s practices, such as their case load and lawyer compensation arrangements, is vital, Van Allen said.
Wal-Mart has also found success in requiring its selected law firms in large states such as California and Florida to cooperate with each other in a “one team approach.”
“They are all representing us, we are the client,” Van Allen said. “We want to make sure it doesn’t matter which firm we are going to that they have the same philosophy, the same strategy and understand what our expectations are and we are working toward the same common goal.”
Global Program Premium Allocation: Why It Matters More Than You Think
Ten years after starting her medium-sized Greek yogurt manufacturing and distribution business in Chicago, Nancy is looking to open new facilities in Frankfurt, Germany and Seoul, South Korea. She has determined the company needs to have separate insurance policies for each location. Enter “premium allocation,” the process through which insurance premiums, fees and other charges are properly allocated among participants and geographies.
Experts say that the ideal premium allocation strategy is about balance. On one hand, it needs to appropriately reflect the risk being insured. On the other, it must satisfy the client’s objectives, as well as those of regulators, local subsidiaries, insurers and brokers., Ensuring that premium allocation is done appropriately and on a timely basis can make a multinational program run much smoother for everyone.
At first blush, premium allocation for a global insurance program is hardly buzzworthy. But as with our expanding hypothetical company, accurate, equitable premium allocation is a critical starting point. All parties have a vested interest in seeing that the allocation is done correctly and efficiently.
“This rather prosaic topic affects everyone … brokers, clients and carriers. Many risk managers with global experience understand how critical it is to get the premium allocation right. But for those new to foreign markets, they may not understand the intricacies of why it matters.”
– Marty Scherzer, President of Global Risk Solutions, AIG
Basic goals of key players include:
- Buyer – corporate office: Wants to ensure that the organization is adequately covered while engineering an optimal financial structure. The optimized structure is dependent on balancing local regulatory, tax and market conditions while providing for the appropriate premium to cover the risk.
- Buyer – local offices: Needs to have justification that the internal allocations of the premium expense fairly represent the local office’s risk exposure.
- Broker: The resources that are assigned to manage the program in a local country need to be appropriately compensated. Their compensation is often determined by the premium allocated to their country. A premium allocation that does not effectively correlate to the needs of the local office has the potential to under- or over-compensate these resources.
- Insurer: Needs to satisfy regulators that oversee the insurer’s local insurance operations that the premiums are fair, reasonable and commensurate with the risks being covered.
According to Marty Scherzer, President of Global Risk Solutions at AIG, as globalization continues to drive U.S. companies of varying sizes to expand their markets beyond domestic borders, premium allocation “needs to be done appropriately and timely; delay or get it wrong and it could prove costly.”
“This rather prosaic topic affects everyone … brokers, clients and carriers,” Scherzer says. “Many risk managers with global experience understand how critical it is to get the premium allocation right. But for those new to foreign markets, they may not understand the intricacies of why it matters.”
There are four critical challenges that need to be balanced if an allocation is to satisfy all parties, he says:
Across the globe, tax rates for insurance premiums vary widely. While a company will want to structure allocations to attain its financial objectives, the methodology employed needs to be reasonable and appropriate in the eyes of the carrier, broker, insured and regulator. Similarly, and in conjunction with tax and transfer pricing considerations, companies need to make sure that their premiums properly reflect the risk in each country. Even companies with the best intentions to allocate premiums appropriately are facing greater scrutiny. To properly address this issue, Scherzer recommends that companies maintain a well documented and justifiable rationale for their premium allocation in the event of a regulatory inquiry.
Insurance regulators worldwide seek to ensure that the carriers in their countries have both the capital and the ability to pay losses. Accordingly, they don’t want a premium being allocated to their country to be too low relative to the corresponding level of risk.
Without accurate data, premium allocation can be difficult, at best. Choosing to allocate premium based on sales in a given country or in a given time period, for example, can work. But if you don’t have that data for every subsidiary in a given country, the allocation will not be accurate. The key to appropriately allocating premium is to gather the required data well in advance of the program’s inception and scrub it for accuracy.
When creating an optimal multinational insurance program, premium allocation needs to be done quickly, but accurately. Without careful attention and planning, the process can easily become derailed.
Scherzer compares it to getting a little bit off course at the beginning of a long journey. A small deviation at the outset will have a magnified effect later on, landing you even farther away from your intended destination.
Figuring it all out
AIG has created the award-winning Multinational Program Design Tool to help companies decide whether (and where) to place local policies. The tool uses information that covers more than 200 countries, and provides results after answers to a few basic questions.
This interactive tool — iPad and PC-ready — requires just 10-15 minutes to complete in one of four languages (English, Spanish, Chinese and Japanese). The tool evaluates user feedback on exposures, geographies, risk sensitivities, preferences and needs against AIG’s knowledge of local regulatory, business and market factors and trends to produce a detailed report that can be used in the next level of discussion with brokers and AIG on a global insurance strategy, including premium allocation.
“The hope is that decision-makers partner with their broker and carrier to get premium allocation done early, accurately and right the first time,” Scherzer says.
For more information about AIG and its award-winning application, visit aig.com/multinational.