Industry Group Calls for Opioid Restraint in MSAs
Medicare set-asides are the latest battleground for the effort to stem opioid abuse. A nonprofit organization that helps companies with the process for adhering to the Medicare Secondary Payer statute is calling on a government agency to set limits on the duration and doses of the drugs.
Despite research showing the ineffectiveness and risks of opioids for most injured workers, the Centers for Medicare and Medicaid Services continue to seek large payments for opioids in MSAs. The National Alliance of Medicare Set-Aside Professionals is asking CMS to instead use evidence-based guidelines in considering the costs for opioids included in MSAs.
“CMS’ own opioid overutilization policy recommends Part D sponsors lower their safety edits to set red flags for beneficiaries taking a 120 mg morphine equivalent daily dose for more than 90 days and with prescriptions from more than three prescribers/pharmacies,” NAMSAP said in a statement.
“So why do workers’ compensation MSA approvals often include future prescription allocations with Morphine Equivalent Dosages in excess of 120, 200, or even 500 per day, over the beneficiary’s full life expectancy? And what message does a workers’ compensation MSA supporting these high opioid dosages over a patient’s entire life expectancy send to the addicted patient?”
“Why do workers’ compensation MSA approvals often include future prescription allocations with Morphine Equivalent Dosages in excess of 120, 200, or even 500 per day, over the beneficiary’s full life expectancy?” — statement from the National Alliance of Medicare Set-Aside Professionals
The organization is asking CMS to limit projected costs of opioids in MSAs by using a hard cap of 90 MED based on CDC guidelines for no more than one month when the MSA includes a surgical projection and/or a hard cap of 40 MED for no more than one month followed by a 10 percent per week mandatory tapering and weaning plan, as recommended by the CDC, until fully weaned from opioids.
The request comes on the heels of the Centers for Disease Control and Prevention’s recently released opioid guidelines.
“With all the attention [on opioids], you have the Medicare set-aside and you have the requirements from CMS in terms of preparing that set-aside that require you to take current medical and pharmacy treatment and project the cost of that over the life expectancy of the beneficiary,” said Rita M. Wilson, a NAMSAP board member and CEO of Florida-based Tower MSA Partners.
“In a real-world example of a person taking 20 mg of Oxycontin three times per day, what CMS will expect you to do is to project the cost of 20 mg of Oxycontin over the life expectancy of the beneficiary. So if the person is 50 and will live to 82, that’s 32 years. While on one hand it’s a dollar value, on the other hand it absolutely violates every treatment guideline we know of.”
NAMSAP cites various studies showing that long-term use of opioid medications for chronic, non-cancer pain is “ineffective, counterproductive and, if left unchecked, deadly.” It says the risk of disability at one year doubles for patients using opioids for more than seven days, and many of those prescribed opioids for more than three months will still be on the drugs in five years.
“Opioids are not intended for long-term use, they are not intended to manage chronic pain. They are for acute pain and intended for the short term,” Wilson said. “We’re saying, in a real-world situation, in practice, you’d never allocate for these, you’d never allow this to continue for 20 or 30 years; yet CMS is basically doing that.”
NAMSAP suggests MSA vendors and CMS work together to address the opioid epidemic. “While we recognize the ultimate goal is to come up with a dollar value that adequately considers Medicare’s claim, the treatment that is being applied to create that number is treatment that is in conflict with its own guidelines.”
N.C. Drug Formulary Could Save $9 Million
If a drug formulary was implemented for injured state employees, North Carolina could potentially see significant savings, says a new study. The state is considering formularies to curb abuse and reduce costs in its workers’ comp systems.
The Massachusetts-based Workers Compensation Research Institute reviewed approximately 14,000 claims with 183,000 prescriptions over a three-year period from January 2012 through December 2014. They applied a drug formulary and developed several scenarios to determine the potential impacts of each.
“Over the three-year period, the state paid approximately $29 million for prescription drugs filled by injured state employees,” the study said, “and there may be potential to save $1.4 million to $8.7 million with adoption of a Texas-like formulary under a range of scenarios.”
The authors found the biggest potential savings would occur if physicians in the state adopted prescribing patterns similar to those in Texas when the formulary was adopted there. Physicians in Texas reduced prescriptions for non-formulary drugs by 70 percent and “infrequently” substituted formulary drugs for them.
“Where physicians [in North Carolina] adjust to a closed formulary in ways that are similar to what we saw with Texas physicians, we estimate large effects of adopting such a formulary,” the report said. “We estimate reductions from 22 -23 percent to 6-7 percent of all prescriptions that are for non-formulary drugs and a 30 percent reduction in total prescription costs or close to $8.7 million over the three-year period.”
“There may be potential to save $1.4 million to $8.7 million with adoption of a Texas-like formulary under a range of scenarios.”
In a second scenario, North Carolina physicians reduced their use of non-formulary drugs but fully substitute formulary drugs from the same drug group. In that case, the estimated reduction in prescription costs was 8 percent to 9 percent.
In the third scenario, North Carolina physicians reduce the use of non-formulary drugs by just 25 percent but did not often substitute formulary drugs. In that situation, the authors estimate cost reductions of 12 percent.
Finally, the authors considered the possibility that North Carolina physicians reduce their non-formulary drug prescribing by 25 percent but fully substitute them with formulary medications. For that scenario, they estimate the percentage of all prescriptions for non-formulary drugs could decrease from 22-23 percent to 16-17 percent.
Overall, non-formulary drug use accounted for 23 percent of all prescriptions and 39 percent of total prescription costs filled in calendar year 2014 for the state workers. The top 10 most commonly prescribed non-formulary drugs in calendar year 2014 accounted for more than half the costs. Several on the list are long-acting Schedule II opioids of which all are considered non-formulary drugs in Texas.
“This category of medications accounted for 23 percent of non-formulary drug prescriptions and 33-34 percent of non-formulary drug payments across the three years,” the report said. “Thirteen to 15 percent of total prescription drug costs paid for North Carolina state employees were for long-acting opioids between 2012 and 2014. Adoption of a Texas-like formulary may decrease opioid use, particularly for long-acting opioids in the state.”
Helping Investment Advisers Hurdle New “Customer First” Government Regulation
This spring, the Department of Labor (DOL) rolled out a set of rule changes likely to raise issues for advisers managing their customers’ retirement investment accounts. In an already challenging compliance environment, the new regulation will push financial advisory firms to adapt their business models to adhere to a higher standard while staying profitable.
The new proposal mandates a fiduciary standard that requires advisers to place a client’s best interests before their own when recommending investments, rather than adhering to a more lenient suitability standard. In addition to increasing compliance costs, this standard also ups the liability risk for advisers.
The rule changes will also disrupt the traditional broker-dealer model by pressuring firms to do away with commissions and move instead to fee-based compensation. Fee-based models remove the incentive to recommend high-cost investments to clients when less expensive, comparable options exist.
“Broker-dealers currently follow a sales distribution model, and the concern driving this shift in compensation structure is that IRAs have been suffering because of the commission factor,” said Richard Haran, who oversees the Financial Institutions book of business for Liberty International Underwriters. “Overall, the fiduciary standard is more difficult to comply with than a suitability standard, and the fee-based model could make it harder to do so in an economical way. Broker dealers may have to change the way they do business.”
As a consequence of the new DOL regulation, the Securities and Exchange Commission (SEC) will be forced to respond with its own fiduciary standard which will tighten up their regulations to even the playing field and create consistency for customers seeking investment management.
Because the SEC relies on securities law while the DOL takes guidance from ERISA, there will undoubtedly be nuances between the two new standards, creating compliance confusion for both Registered Investment Advisors (RIAs)and broker-dealers.
To ensure they adhere to the new structure, “we could see more broker-dealers become RIAs or get dually registered, since advisers already follow a fee-based compensation model,” Haran said. “The result is that there will be likely more RIAs after the regulation passes.”
But RIAs have their own set of challenges awaiting them. The SEC announced it would beef up oversight of investment advisors with more frequent examinations, which historically were few and far between.
“Examiners will focus on individual investments deemed very risky,” said Melanie Rivera, Financial Institutions Underwriter for LIU. “They’ll also be looking more closely at cyber security, as RIAs control private customer information like Social Security numbers and account numbers.”
Demand for Cover
In the face of regulatory uncertainty and increased scrutiny from the SEC, investment managers will need to be sure they have coverage to safeguard them from any oversight or failure to comply exactly with the new standards.
In collaboration with claims experts, underwriters, legal counsel and outside brokers, Liberty International Underwriters revamped older forms for investment adviser professional liability and condensed them into a single form that addresses emerging compliance needs.
The new form for investment management solutions pulls together seven coverages:
- Investment Adviser E&O, including a cyber sub-limit
- Investment Advisers D&O
- Mutual Funds D&O and E&O
- Hedge Fund D&O and E&O
- Employment Practices Liability
- Fiduciary Liability
- Service Providers D&O
“A comprehensive solution, like the revamped form provides, will help advisers navigate the new regulatory environment,” Rivera said. “It’s a one-stop shop, allowing clients to bind coverage more efficiently and provide peace of mind.”
Ahead of the Curve
The new form demonstrates how LIU’s best-in class expertise lends itself to the collaborative and innovative approach necessary to anticipate trends and address emerging needs in the marketplace.
“Seeing the pending regulation, we worked internally to assess what the effect would be on our adviser clients, and how we could respond to make the transition as easy as possible,” Haran said. “We believe the new form will not only meet the increased demand for coverage, but actually creates a better product with the introduction of cyber sublimits, which are built into the investment adviser E&O policy.”
The combined form also considers another potential need: cost of correction coverage. Complying with a fiduciary standard could increase the need for this type of cover, which is not currently offered on a consistent basis. LIU’s form will offer cost of correction coverage on a sublimited basis by endorsement.
“We’ve tried to cross product lines and not stay siloed,” Haran said. “Our clients are facing new risks, in a new regulatory environment, and they need a tailored approach. LIU’s history of collaboration and innovation demonstrates that we can provide unique solutions to meet their needs.”
For more information about Liberty International Underwriters’ products for investment managers, visit www.LIU-USA.com.
Liberty International Underwriters is the marketing name for the broker-distributed specialty lines business operations of Liberty Mutual Insurance. Certain coverage may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds. This literature is a summary only and does not include all terms, conditions, or exclusions of the coverage described. Please refer to the actual policy issued for complete details of coverage and exclusions.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty International Underwriters. The editorial staff of Risk & Insurance had no role in its preparation.