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Opioid reserves in Medicare set-asides a nationwide problem

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Researchers in California were the first to quantify how many Medicare set-asides had money earmarked for opioids — 70% of closed workers compensation claims in California include cash for future pain prescriptions, they found — but experts say the problem is a national issue.

“I start to think we are making progress and we are getting somewhere and opioid use in comp is down, and then you come across something like this,” said Alex Swedlow, president of the Oakland-based California Workers’ Compensation Institute. “It’s extremely frustrating.”

The institute released its analysis on Oct. 30, finding that most federally mandated and approved California workers compensation Medicare set-aside settlements for injured workers require funding for decades of opioid use. Researchers, culling WCRI data from 7,926 cases closed between January 2015 and December 2016, also found the prescriptions were often at dangerously high dosage levels and written in conjunction with other high-risk drugs.

“This was the data sample we had access to; we have no reason to believe this problem is any different in any other state,” said co-researcher Dr. David Deitz, a managed care consultant who runs his own firm, David Deitz & Associates L.L.C., out of Westport, Massachusetts. “California is not unique in this respect.”

Medicare set-asides are insurer-paid plans in which claims administrators allocate funds from workers comp settlements to cover future medical expenses arising from a work injury that might otherwise be paid by the federal Medicare program.

The research nonprofit found that opioids are the most commonly prescribed drug for set-asides, accounting for 28% of all prescription drugs and 33% of all prescription drug allocations, which the institute says represents “significantly higher proportions than in the general workers comp population,” per the study.

The study also examined drug strength, using data on morphine milligram equivalents in approved Medicare set-aside plans to find that the comp-based plans are 45 times the cumulative morphine milligram equivalents — a standard for measuring opioid drug strength — that were used from the date of injury to claim closure in a control group of permanent disability claims with similar injuries.

For the set-aside settlements with opioids, injured workers were on average approved for a daily dose of 54.7 MME for an average of 20.9 years, with over 10% of set-aside plans with opioids having an estimated morphine equivalent dose level of over 90 MME per day, a marker of elevated risk to the patient, the study states.

“It’s a confirmation of what we believe has existed,” said Rita Wilson, CEO and co-founder of Delray Beach, Florida-based Tower MSA Partners L.L.C., which helps insurers and employers remain Medicare-compliant and began tackling the opioids in the Medicare set-asides scheme in mid-2015. The study “quantifies the concern of too much opioids in the Medicare set-asides,” she said.

The problem, as some see it, is that the federal program allows comp claims to close with cash set aside to pay for future drugs — often strong doses — with little oversight. This is unlike the typical workers comp scenario, where injured workers can rely on nurse case managers, pharmacy benefits managers, insurers, self-insured employers and others to guide the injured workers off the dangerous doses — a trend in comp spurred by regulations and treatment guidelines that now say chronic pain is not relieved by powerful pain medications.

Medicare set-asides, and the green light for future prescriptions that accompany the cash, are the responsibility of the injured workers and their treating physicians, said Michael Merlino, a Buffalo, New York-based attorney and senior vice president for Medicare compliance for Sedgwick Claims Management Services Inc.

As part of the process for closing a claim with a Medicare set-aside, the U.S. Centers for Medicare and Medicaid Services must approve an injured worker’s settlement and that the set-aside for prescriptions is based on the patient’s medical regimen, said Mr. Merlino, adding that the money is merely part of a formula the federal government uses.

Mr. Merlino added that the numbers discovered in California raised eyebrows: “CMS is approving (Medicare set-asides) with decades of opioid use … I think that has people concerned.”

Officials with the Baltimore-based CMS could not be reached for comment, although the office on Nov. 1 announced its plans to provide more treatment options for recipients who are addicted to opioids.

Joe Paduda, a managed care expert and president of Skaneateles, New York-based CompPharma L.L.C., is calling for change in the Medicare set-asides approval process, saying more oversight is necessary.

“On one hand,” he said, the federal government is calling the opioid epidemic “a public health emergency, and on the other they are saying employers need to pay for these massive amounts of opioids.”