PBMs Under Scrutiny

PBM Legislation Worries Workers’ Comp Payers

Legislation to regulate group health pharmacy benefit managers could impact workers' comp payers.
By: | February 5, 2014
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Legislation introduced in several states seeking to impose new regulatory authority over group health pharmacy benefit managers could harm workers’ compensation PBMs and claims payers, sources said.

Introduction of similar bills in 11 states has raised concerns among workers’ comp insurers, third party administrators, and some large employers, said Brian Allen, VP of government affairs for Progressive Medical, a workers’ comp PBM.

“We have had customers calling us every day worrying about how it is going to impact us and them,” Allen said. “These are big insurance companies … they are nervous about it and want to know how it’s going to impact them.”

Brian Allen, VP of government affairs for Progressive Medical

Brian Allen, VP of government affairs for Progressive Medical

Overall, it appears the bills seek greater transparency in the way group health PBMs set their pricing, said Joe Paduda, principal at Health Strategy Associates. But group health PBM practices differ substantially from those of workers’ comp PBMs and the bills seek to address issues that “have nothing to do with workers’ comp,” he added.

Yet while the bills appear aimed at practices among PBMs serving the group health industry and not workers’ comp PBMs, Allen and others say a spillover into workers’ comp is possible. So several organizations want language inserted into the bills that would clearly exempt workers’ comp PBMs.

“It appears that workers’ compensation PBMs are not the target of this legislation,” the American Insurance Association said in a statement. “That said, AIA supports efforts to include clear exemptions for workers’ compensation PBMs in these bills in order to clarify legislative intent and avoid any confusion down the road.”

“Community” pharmacies seeking more revenue from products they dispense are supporting the bills that would put PBMs under certain state regulatory agencies, such as pharmacy boards, Allen said.

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State workers’ comp commissions or insurance departments already regulate workers’ comp PBMs, depending on the jurisdiction, Allen explained. But the legislation could add oversight from additional agencies such as state pharmacy boards.

Complying with regulations developed by two distinct agencies with potentially conflicting goals could cause an administrative burden for workers’ comp PBMs, Allen added.

“We want to make sure we are not swept up into crazy regulatory schemes that would be difficult to manage,” he said.

A new oversight body could also decide to impact workers’ comp PBM pricing, which is already regulated by state fee schedules, Allen said.

“If for some reason the pharmacy board said, ‘you have to pay pharmacists more money,’ that potentially would impact our customers because we would have to pass that cost onto payers,” Allen said.

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.
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Risk Insider: Frank Russo

Hire for Integrity

By: | May 26, 2016 • 3 min read
Frank is the Senior Vice President of Risk and Legal Affairs and Privacy Officer for Silverado Senior Living, a nationally recognized provider of memory care assisted living, home care and hospice services. He can be reached at [email protected]

As risk managers we are all too familiar with being awakened by calls in the dead of night involving major incidents, accidents, injuries or events. The root cause of many of these misfortunes is often our employees and — unfortunately — their bad habits.

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In more cases than we’d like to see, the bad outcome may have been caused by a negligent, careless, hostile, disgruntled or even criminal employee.

Yes, we all have (or should have) strong safety protocols and policies and procedures in place to prevent these accidents from occurring. In addition, we all provide (or should provide) risk management and safety training to our employees, especially after these serious events occur.

But all the training in the world won’t offset a bad hire. So what if we had a risk management time machine? What if we could go back in time and prevent that disastrous event from happening by not hiring the employee who was responsible? What would that be worth to you and your organization?

What if we could go back in time and prevent that disastrous event from happening by not hiring the employee who was responsible? What would that be worth to you and your organization?

At Silverado, we assessed our hiring process to determine if we could mitigate and reduce risk based on how we hire. Our conclusion? Yes, we absolutely could.

We looked at traits common to what we would consider “bad hires,” and the shared traits of employees who were terminated for cause and/or caused or contributed to an avoidable accident.

Several years after making the decision to include risk management in our hiring practices, our claims data and new safety culture has validated our initial belief.

The Importance of Integrity

Warren Buffet said, “In looking for people to hire, you look for three qualities; 1. Integrity, 2. Intelligence, 3. Energy.” At Silverado, we incorporated an integrity screen for ALL new hires companywide a couple years back. To work for Silverado, you must pass this test.

I understand we all need to be profitable to survive. So adding an extra step and upfront expense may seem unnecessary or even impractical, especially for something that isn’t a state or federal requirement.

But we concluded early on that it was the right thing to do in order to employ the safest and highest integrity employees possible.

In our case, these employees are providing care to thousands of vulnerable memory-impaired individuals whom we are entrusted with every single day. Knowing care is being provided by high integrity people is extremely important to us.

We also know that any cost or time associated with it will be paid back tenfold by a reduction in claims (and related hard and soft costs). And we have the data to prove it.

Two years after making integrity screens part of the Silverado culture, we wanted to look at the effect on our risk data.

The University of Arizona ran an in-depth two-year independent study on our employees who took the integrity test and those who didn’t. This study specifically addressed workplace injuries (workers’ compensation claims) and focused on frequency and severity. The results showed even greater impact that we anticipated.

  • Incidence of any claim being filed is nearly 3 times as strong among non-test takers.
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  • Incidence of a claim exceeding $5K is nearly 4 times as strong among those who never took the test.
  • Incidence of a claim exceeding $20K is nearly 12 times as strong among those who never took the test.
  • Internally we also found that hiring for Integrity positively affected our turnover rate as well as our professional liability frequency.

At Silverado we have found that higher integrity equals lower risk. By hiring for integrity we have successfully been able to mitigate risk from the initial hiring process and prevent many injuries (and associated costs) before they ever occur.

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Sponsored Content by IPS

Compounding: Is it Coming of Age?

Prescription drug compounding is beginning to turn a corner in managing chronic pain.
By: | April 28, 2016 • 5 min read
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The WC managed care market has generally viewed the treatment method of Rx compounding through the lens of its negative impact to cost for treating chronic pain without examining fully the opportunity to utilize “best practice” prescription compounds to help combat the opioid epidemic this nation faces. IPS stands on the front lines of this opioid battle every day making a difference for its clients.  

After a shaky start cost-wise, prescription drug compounding is turning the corner in managing chronic pain without the risk of opioid addiction. A push from forward-thinking states and workers’ compensation PBMs who have the networks and resources to manage it is helping, too.

Prescription drug compounding has been around for more than a decade, but after a rocky start (primarily in terms of cost), compounding is finally coming into its own as an effective chronic pain management strategy – and a worthy alternative for costly and dangerous opioids – in workers’ compensation.

According to Greg Todd, CEO and founder of Integrated Prescription Solutions Inc. (IPS), a Costa Mesa, Calif.-based pharmacy benefit manager (PBM) for the workers’ compensation and disability market, one reason compounding is beginning to hit its stride is because some states have enacted laws to manage it more effectively. Another is PBMs like IPS have stepped up and are now managing compound drugs in a much more proactive manner from an oversight perspective.

By definition, compounding is a practice through which a licensed pharmacist or physician (or, in the case of an outsourcing facility, a person under the supervision of a licensed pharmacist) combines, mixes, or alters ingredients of a drug to create a medication tailored to the needs of an individual patient.

During that decade, Todd explains, opioids have filled the chronic pain management needs gap, bringing with them an enormous amount of problems as the ensuing addiction epidemic sweeping the nation resulted in the proliferation and over-consumption of opioids – at a staggering cost to both the bottom line and society at large.

As an alternative, compounded topical cream formulations also offer strong chronic pain management but have limited side effects and require much reduced dosage amounts to achieve effective tissue level penetration. In fact, they have a very low systemic absorption rate.

Bottom line, compounding provides prescribers with an excellent alternative treatment modality for chronic pain patients, both early and late stage, Todd says.

Time for Compounding Consideration

IPS_SponsoredContentThat scenario sets up the perfect argument for compounding, because for one thing, doctors are seeking a new solution, with all the pressure and scrutiny they’re receiving when trying to solve people’s chronic pain problems using opioids.

Todd explains the best news about neuropathic pain treatment using compounded topical analgesic creams is the results are outstanding, both in terms of patient satisfaction in VAS pain reduction but also in reduction potentially dangerous side effects of opioids.

The main issue with some of the early topical creams created via compounding was their high costs. In the early years, compounding, which does not require FDA approval, had little oversight or controls in place. But in the past few years, the workers compensation industry began to take notice of the solid science. At the same time, medical providers also were seeing the same science and began writing more prescriptions for compounding – which also offers them a revenue stream.

This is where oversight and rigor on the part of a PBM can make a difference, Todd says.

“You don’t let that compounded drug get dispensed when you’re going to pay for it without having a chance to approve it,” Todd says.

Education is Critical

IPS_SponsoredContentAt the same time, there is the growing, and genuine, need to start educating the doctors, helping them understand how they can really deliver quality pain management to a patient without gouging the system. A good compounding specialty pharmacy network offering tight, strict rules is fundamental, Todd says. And that means one that really reaches out to work with the doctors that are writing the prescriptions. The idea is to ensure that the active ingredients being chosen aren’t the most expensive sub-components because that unnecessarily will drive the cost of overall compound “through the ceiling.”

IPS has been able to mitigate costs in the last couple years just by having good common sense approach and a lot of physician outreach. Working with DermaTran Health Solutions and its national network of compounding pharmacies, IPS has been successfully impacting the cost while not reducing the effectiveness of a compounded prescription.

In Colorado, which has cracked down on compounding profiteering, Legislative change demanded no compound could be more than $350.00 period. What is notable, in an 18-month window for one client in Colorado, IPS had 38 compound prescriptions come through the door and each had between 4 and 7 active ingredients. Through its physician education efforts, IPS brought all 38 prescriptions down 3 active ingredients or less. IPS also helped patients achieve therapeutic success (and with medical community acceptance). In that case, the cost of compound prescriptions was down to an average of $350, versus the industry average of $788. Nationwide IPS has reduced the average cost of a compound prescription to $478.00.

Todd says. “We’ve still got a way to go, but we’ve made amazing progress in just the past couple of years on the cost and effective use of compound prescriptions.”

For more information on how you can better manage your costs for compound prescriptions, please call IPS at 866-846-9279.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with IPS. The editorial staff of Risk & Insurance had no role in its preparation.




Integrated Prescription Solutions (IPS) is a Pharmacy Benefit Management (PBM) and Ancillary Services partner to W/C and Auto (PIP) Insurance carriers, Self Insured Employers, and Third Party Administrators who specialize in Workers Compensation benefits management.
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