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Pharmacy Trends

Attitudes Shift on Medical Marijuana

A growing number of industry stakeholders are keeping an open mind about reimbursing claims for the medical use of cannabis.
By: | May 24, 2016 • 7 min read

The tide is turning towards paying workers’ compensation claims involving medical marijuana, but many payers remain reticent.

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Industry professionals would prefer that the federal government stop classifying the drug as an illegal controlled substance before paying such claims.

Four states — Connecticut, Maine, Minnesota and New Mexico — approved workers’ comp reimbursement for the use of medical marijuana, at least publicly, according to Mark Pew, senior vice president at PRIUM in Duluth, Ga.

Courts in New Mexico ruled that carriers must pay for marijuana if a doctor in that state recommends it as part of a claimant’s treatment.

However, some carriers are defying the state court’s order, arguing that it’s illegal under federal law. Still, there seems to be an ongoing shift in risk management and insurance toward paying claims that involve marijuana use.

Mark Pew, senior vice president, PRIUM

Mark Pew, senior vice president, PRIUM

“I think increasingly, more people with whom I’ve spoken are open to the possibility — that includes physicians, nurses, claims adjusters, and those that influence decisions,” he said.

“They will review based on the clinical efficacy for that particular patient.”

However, not everyone is convinced, as the studies conducted on marijuana are not as definitive as those for FDA-approved drugs, Pew said.

Moreover, professionals still point to the fact that marijuana is classified as illegal by the federal government.

Paying claims for its use could create a legal quandary.

“I think those that not convinced are still the majority of the workers’ comp industry,” Pew said.

“It is a loaded question, because marijuana is a divisive and partisan issue, and personal biases of individuals within the workers’ comp system influence their perceptions on it.”

On top of this, payment decisions based on utilization reviews (UR) are problematic because there are no medical guidelines for medical marijuana, Pew said. In some states UR is the arbiter, in other states UR is but an opinion, and in still others, UR is not supported.

Within workers’ compensation, the two treatment guidelines most used by states are Official Disability Guidelines and ACOEM, although some states have created their own. None currently recommend the medical use of marijuana, regardless of condition.

As such, if UR decisions rely on those guidelines, “the answer would be ‘no’ ” on payment for the drug use, Pew said.

But when reimbursement decisions are made outside of UR, individual biases on the subject of marijuana could have an impact, he said.

“Some will absolutely not consider marijuana as medicine and refuse reimbursement,” Pew said.

“Others may have personal experience or know someone that cannabis helped and be willing to consider it.”

“At no time in our history has a state government required the reimbursement for use of a substance that is illegal under in the eyes of the federal government.” — Nichole Wilson, director, pharmacy product development, Coventry Workers’ Comp Services

When it comes to evaluating the clinical efficacy of medical marijuana, practitioners should look at whether benefits exceed the risks, level of function and activity, quality of life, and whether the addition of medical marijuana could help discontinue the use of such dangerous drugs such as OxyContin, Alprazolam, Xanax and Soma, he said.

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“In other words, evaluate the appropriateness of cannabis as you would any other drug or treatment — does it work or not for that specific patient? That has been the case in the four states where reimbursement is being done, and the way in which the tide seems to be turning,” Pew said.

The use of medical marijuana for chronic pain is growing more and more popular — as of February 2016, 26 percent of all registered medical cannabis patients in New Mexico usde it for chronic pain, Pew said.

Moreover, 46 percent of registered patients use it for PTSD.

These numbers include all registered patients, not just injured workers, but those conditions are obviously applicable to workers’ comp.

Chronic pain is typically included as a qualifying condition for medical cannabis programs around the country, with Minnesota adding a very narrowly defined “intractable pain” to its list of approved uses as of Aug. 1.

“All of this means that medical cannabis is a burgeoning issue, with evolving science and opinions, and is absolutely pertinent to workers’ comp both now and into the future,” Pew said.

“And if marijuana is ever made legal and/or rescheduled at the federal level, the conversation changes dramatically.”

Lisa Anne Forsythe, senior consultant, regulatory business consulting and analysis, at Coventry Workers’ Comp Services in Sacramento, Calif., said “the tide is definitely turning.”

She has been working on the issue from a regulatory, legal and financial/billing perspective.

There were no medical marijuana claims whatsoever until after the recent appellate rulings in New Mexico, the first state in the country to allow medical marijuana as a compensable benefit.

“It simply wasn’t an issue from a legal, regulatory and financial standpoint until then,” Forsythe said.

Paucity of Evidence

Don Lipsy, Coventry’s manager, pharmacy regulatory communications in Tucson Ariz., said there are “burgeoning pockets” of utilization of medical marijuana related to workers’ comp injuries. While Coventry has not had claims, they’ve heard secondhand of claims being paid by others.

“We’re seeing an expansion of use as an alternative to opioids, and my concern is that we might be trying so hard to address the opioid epidemic that we are treating medical marijuana as a silver bullet,” Lipsy said.

“I’m not so sure we aren’t trading one issue for another.”

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From a clinical perspective, there are still a lot of people on the fence on whether or not marijuana is useful, said Nichole Wilson, Coventry’s director of pharmacy product development in Omaha, Neb.

“The evaluation of benefits versus risks are on most clinicians’ minds,” Wilson said.

“Since it’s still classified by the federal government as an illegal Schedule 1 controlled substance, there is not a preponderance of clinical evidence evaluating the drug, and that is a challenge to the medical community.”

“The tide is turning towards public acceptance of medical marijuana, with 169 million people living in the jurisdictions that have legalized it.” — Gregory McKenna, vice president and counsel for governmental affairs, Gallagher Bassett Services

Moreover, there’s a lot of concern about possible interactions of medical marijuana might have with other treatments as well as its potential benefits, Forsythe said.

“But there is also comparatively little discussion on the practical, legal and financial implications associated with the adoption of medical marijuana as a compensable benefit at this time, and that is something that really needs to be talked about,” she said.

“That was definitely one of the larger topics within the New Mexico bill. When we tell an insurance company that medical marijuana is a mandated covered benefit, this is precedent-setting — at no time in our history has a state government required the reimbursement for use of a substance that is illegal under in the eyes of the federal government.”

The Federal Conundrum

The liability implications of paying for an illegal substance need to be more thoroughly examined, experts said.

For example, the use of the federal banking system to pay for the illegal drug could that trigger federal criminal action under the Racketeer Influenced and Corrupt Organizations Act (RICO), Forsythe said.

“Financial institutions are loathe to potentially run afoul of RICO and have avoided doing business with dispensaries, etc., due to liability concerns,” she said. “Insurance companies face a similar exposure.”

Gregory McKenna, vice president and counsel for governmental affairs, Gallagher Bassett Services

Gregory McKenna, vice president and counsel for governmental affairs, Gallagher Bassett Services

Gregory McKenna, vice president and counsel for governmental affairs for Gallagher Bassett Services in Itasca, Ill., said the TPA’s workers’ comp resolution managers “are on the front line,” since they decide whether medical marijuana is a compensable treatment.

First, since federal banking restrictions make it illegal for providers of medical marijuana to use FDIC-approved banks, payment to them has to be made in cash, McKenna said. As such, the claimant needs to pay the provider in cash, and then the claimant has to be reimbursed by check.

“Payors have to make decisions to proceed with a reimbursement to the claimant, which is further complicated by a series of federal criminal statutes related to marijuana transactions,” he said.

“This is out of the realm of what we do normally, so it is a new frontier.”

Another significant challenge lies in the fact that the industry has few decision-support tools for medical marijuana, such as clinical intervention to alert workers’ comp decision-makers to potential interactions between medical marijuana and other medications or medical bill review processes to ensure proper dosage or utilization.

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“However, the tide is turning towards public acceptance of medical marijuana, with 169 million people living in the jurisdictions that have legalized it,” McKenna said.

“Because of that volume of people, now the DEA and other federal agencies are taking a very careful look at reclassifying medical marijuana to make it legal.”

The agencies are also looking at naming very specific components of marijuana, to determine whether there may be some additional benefits to those components. That could open up additional research to take a clinical look at the efficacy of medical marijuana.

“This and decriminalization could lead to more workers’ comp payments within the industry,” he said.

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Report: Manufacturing

More Robots Enter Into Manufacturing Industry

With more jobs utilizing technology advancements, manufacturing turns to cobots to help ease talent gaps.
By: | May 1, 2018 • 6 min read

The U.S. manufacturing industry is at a crossroads.

Faced with a shortfall of as many as two million workers between now and 2025, the sector needs to either reinvent itself by making it a more attractive career choice for college and high school graduates or face extinction. It also needs to shed its image as a dull, unfashionable place to work, where employees are stuck in dead-end repetitive jobs.

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Added to that are the multiple risks caused by the increasing use of automation, sensors and collaborative robots (cobots) in the manufacturing process, including product defects and worker injuries. That’s not to mention the increased exposure to cyber attacks as manufacturers and their facilities become more globally interconnected through the use of smart technology.

If the industry wishes to continue to move forward at its current rapid pace, then manufacturers need to work with schools, governments and the community to provide educational outreach and apprenticeship programs. They must change the perception of the industry and attract new talent. They also need to understand and to mitigate the risks presented by the increased use of technology in the manufacturing process.

“Loss of knowledge due to movement of experienced workers, negative perception of the manufacturing industry and shortages of STEM (science, technology, engineering and math) and skilled production workers are driving the talent gap,” said Ben Dollar, principal, Deloitte Consulting.

“The risks associated with this are broad and span the entire value chain — [including]  limitations to innovation, product development, meeting production goals, developing suppliers, meeting customer demand and quality.”

The Talent Gap

Manufacturing companies are rapidly expanding. With too few skilled workers coming in to fill newly created positions, the talent gap is widening. That has been exacerbated by the gradual drain of knowledge and expertise as baby boomers retire and a decline in technical education programs in public high schools.

Ben Dollar, principal, Deloitte Consulting

“Most of the millennials want to work for an Amazon, Google or Yahoo, because they seem like fun places to work and there’s a real sense of community involvement,” said Dan Holden, manager of corporate risk and insurance, Daimler Trucks North America. “In contrast, the manufacturing industry represents the ‘old school’ where your father and grandfather used to work.

“But nothing could be further from the truth: We offer almost limitless opportunities in engineering and IT, working in fields such as electric cars and autonomous driving.”

To dispel this myth, Holden said Daimler’s Educational Outreach Program assists qualified organizations that support public high school educational programs in STEM, CTE (career technical education) and skilled trades’ career development.

It also runs weeklong technology schools in its manufacturing facilities to encourage students to consider manufacturing as a vocation, he said.

“It’s all essentially a way of introducing ourselves to the younger generation and to present them with an alternative and rewarding career choice,” he said. “It also gives us the opportunity to get across the message that just because we make heavy duty equipment doesn’t mean we can’t be a fun and educational place to work.”

Rise of the Cobot

Automation undoubtedly helps manufacturers increase output and improve efficiency by streamlining production lines. But it’s fraught with its own set of risks, including technical failure, a compromised manufacturing process or worse — shutting down entire assembly lines.

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More technologically advanced machines also require more skilled workers to operate and maintain them. Their absence can in turn hinder the development of new manufacturing products and processes.

Christina Villena, vice president of risk solutions, The Hanover Insurance Group, said the main risk of using cobots is bodily injury to their human coworkers. These cobots are robots that share a physical workspace and interact with humans. To overcome the problem of potential injury, Villena said, cobots are placed in safety cages or use force-limited technology to prevent hazardous contact.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them.” — David Carlson, U.S. manufacturing and automobile practice leader, Marsh

“Technology must be in place to prevent cobots from exerting excessive force against a human or exposing them to hazardous tools or chemicals,” she said. “Traditional robots operate within a safety cage to prevent dangerous contact. Failure or absence of these guards has led to injuries and even fatalities.”

The increasing use of interconnected devices and the Cloud to control and collect data from industrial control systems can also leave manufacturers exposed to hacking, said David Carlson, Marsh’s U.S. manufacturing and automobile practice leader. Given the relatively new nature of cyber as a risk, however, he said coverage is still a gray area that must be assessed further.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them,” he said. “Therefore, companies need to think beyond the traditional risks, such as workers’ compensation and product liability.”

Another threat, said Bill Spiers, vice president, risk control consulting practice leader, Lockton Companies, is any malfunction of the software used to operate cobots. Then there is the machine not being able to cope with the increased workload when production is ramped up, he said.

“If your software goes wrong, it can stop the machine working or indeed the whole manufacturing process,” he said. “[Or] you might have a worker who is paid by how much they can produce in an hour who decides to turn up the dial, causing the machine to go into overdrive and malfunction.”

Potential Solutions

Spiers said risk managers need to produce a heatmap of their potential exposures in the workplace attached to the use of cobots in the manufacturing process, including safety and business interruption. This can also extend to cyber liability, he said.

“You need to understand the risk, if it’s controllable and, indeed, if it’s insurable,” he said. “By carrying out a full risk assessment, you can determine all of the relevant issues and prioritize them accordingly.”

By using collective learning to understand these issues, Joseph Mayo, president, JW Mayo Consulting, said companies can improve their safety and manufacturing processes.

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it.” — Joseph Mayo, president, JW Mayo Consulting

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it,” Mayo said. “They can also use detective controls to anticipate these issues and react accordingly by ensuring they have the appropriate controls and coverage in place to deal with them.”

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Manufacturing risks today extend beyond traditional coverage, like workers’ compensation, property, equipment breakdown, automobile, general liability and business interruption, to new risks, such as cyber liability.

It’s key to use a specialized broker and carrier with extensive knowledge and experience of the industry’s unique risks.

Stacie Graham, senior vice president and general manager, Liberty Mutual’s national insurance central division, said there are five key steps companies need to take to protect themselves and their employees against these risks. They include teaching them how to use the equipment properly, maintaining the same high quality of product and having a back-up location, as well as having the right contractual insurance policy language in place and plugging any potential coverage gaps.

“Risk managers need to work closely with their broker and carrier to make sure that they have the right contractual controls in place,” she said. “Secondly, they need to carry out on-site visits to make sure that they have the right safety practices and to identify the potential claims that they need to mitigate against.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]