PBM Legislation Worries Workers’ Comp Payers
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.”
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.
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.
BOOCS Program Could Lower Obesity-Related Injury Risk
Employers seeking to improve their employees’ health and reduce illnesses and injuries may want to look to a Japanese model. By instituting a unique health education program started in that country, health risks among obese workers were significantly reduced — up to 15 years later.
The program used a new method of health education among workers in the 1990s. A follow-up study published recently in the Journal of Occupational and Environmental Medicine may hold promise for an alternative to traditional methods to help improve the well-being of the workforce.
“The results indicate a mortality benefit by participation in [the Brain-Oriented Obesity Control System] program,” the study said. “For prevention of metabolic syndrome, effective measures are strongly needed in the future, and it is suggested that [the] BOOCS program will contribute to them as a new approach for health promotion.”
The follow-up study results were released as the prevalence of obese workers continues to increase. According to the study, the increase amounts to “25.1 percent for males and 23.9 percent for females in the United States as a body mass index of 30 or higher in 2003 to 2009, and 28.5 percent for males and 11.6 percent for females in Japan as a BMI of 25 or higher in 2011.”
Along with the increase in BMI is a higher risk of metabolic syndrome, which increases the risk of cardiovascular disease, especially heart failure, as well as diabetes. Metabolic syndrome is defined as a disorder of energy utilization and storage, diagnosed by a co-occurrence of three out of five conditions, including abdominal obesity, elevated blood pressure, elevated fasting plasma glucose, high serum triglycerides, and low high-density cholesterol levels.
“Hazard ratios were calculated with survival curves drawn to evaluate the mortality effects by the program participation,” according to the report. “The results support a protective effect on mortality by participating in [the] BOOCS program.”
Traditional approaches to behavior modification typically begin with prohibitions against unhealthy behaviors such as eating high-caloric foods, drinking alcohol, and smoking. Because of its strictness, this method “frequently results in the rebound of body weight and the appearance of [a] guilty conscience,” the report said.
BOOCS “begins with no prohibition,” the report said. It “is a unique method prioritizing the recovery from fatigue, in particular, ‘brain fatigue,’ and it eventually induces better lifestyle modification and improvement of body weight and serum lipids.”
The program includes two principles and three rules as a basis for “effective and active guidance.” The principles are “do not prohibit or order yourself as possible” and “do something pleasant for yourself.” The rules include:
- Do not practice what you dislike even if it is good for your health.
- Do not prohibit what you like even if it is bad for your health.
- Do only what you like among good things and matters for your health.
The Japanese inventor of the program has said the approach “is quite useful for making the participants fully aware of the fundamentals of health promotion and disease prevention, which leads them to modify their health behavior,” according to the study. “He also insists that prohibitive and compulsive instructions are ineffective for behavior modification, and, in particular, those people who understand [the] significance of health would result in failure through such methods and fall into vicious circle such as rebounding body weight.”
The authors do not speculate on why the program works and say more research is needed. However, they point to the study results as proof that it is effective.
Public service employees working for a municipal government in Japan were introduced to a health service organization in 1992, which included health exams, seminars and guidance, and insurance programs. The BOOCS portion of the service included 10 one-day and two-day seminars annually with lectures on health care by physicians and practical exercises by professionals such as a physical instructor, a dietician, and a psychologist.
The initial study and 15-year follow-up research into an obesity program among Japanese workers included three groups. Workers who participated in the Brain-Oriented Obesity Control System were called the intervention subjects. Among the nonparticipants, comparative obese controls were those who had a body mass index of at least 25 or health problems related to obesity while reference subjects were the remainder. In the follow-up study 15 years later, the researchers identified participants who were deceased and their causes of death.
“Compared with comparative obese controls, hazard ratios for all causes were significantly lower in participants [of the BOOCS program] at 0.54,” the report said. “The “significant mortality changes” persisted during the follow-up period. “One of the reasons for such preventive effects of [the] BOOCS program may be related to improvement of obesity during follow-up.”
The authors noted that among male participants in the BOOCS program, BMIs decreased in the first five years of the study by 1 percent to 5 percent compared to both groups of nonparticipants. “These data coincide with the previous reports that both all-cause and cancer mortality were associated with obesity,” the report said. “These effects brought by [the] BOOCS program may result in the protective effect for mortality in this study.”
The results were not seen to the same extent among females. The authors speculated that it could be due to sociological factors, saying traditional gender roles remain and many women leave the workforce upon marriage or childbirth.
In conclusion, “the standardized mortality rates for all causes and all neoplasms in comparison with the general population were statistically lower among participants [in the BOOCS program] and reference subjects, which may be due to the healthy worker effect,” the study said.
What Is Insurance Innovation?
Truly innovative insurance solutions are delivered in real time, as the needs of businesses change and the nature of risk evolves.
Lexington Insurance exemplifies this approach to innovation. Creative products driven by speed to market are at the core of the insurer’s culture, reputation and strategic direction, according to Matthew Power, executive vice president and head of strategic development at Lexington, an AIG Company and the leading U.S.-based surplus lines insurer.
“The excess and surplus lines sector is in a growth mode due, in no small part, to the speed at which our insureds’ underlying business models are changing,” Power said. “Tomorrow’s winning companies are those being built upon true breakthrough innovation, with a strong focus on agility and speed to market.”
To boost its innovation potential, for example, Lexington has launched a new crowdsourcing strategy. The company’s “Innovation Boot Camps” bring people together from the U.S., Canada, Bermuda and London in a series of engagements focused on identifying potential waves of change and market needs on the coverage horizon.
“Employees work in teams to determine how insurance can play a vital role in increasing the success odds of new markets and customers,” Power said. “That means anticipating needs and quickly delivering programs to meet them.”
An example: Working in tandem with the AIG Science team – another collaboration focused on innovation – Lexington is looking to offer an advanced high-tech seating system in the truck cabs of some of its long-haul trucking customers. The goal is to reduce driver injury and fatigue-based accidents.
“Our professionals serving the healthcare market average more than twenty years of industry experience. That includes attorneys and clinicians combining in a defense-oriented claims approach and collaborating with insureds in this fast-moving market segment. At Lexington, our relentless focus on innovation enables us to take on the risk so our clients can take on the opportunities.”
— Matthew Power, Executive Vice President and Head of Regional Development, Lexington Insurance Company
Power explained that exciting growth areas such as robotics, nanotechnology and driverless cars, among others, require highly customized commercial insurance solutions that often can be delivered only by excess and surplus lines underwriters.
“Being non-admitted, our freedom of rate and form allows us to be nimble, and that’s very important to our clients,” he said. “We have an established track record of reacting quickly to trends and market needs.”
Lexington is a leading provider of personal lines coverage for the excess and surplus lines industry and, as Power explains, the company’s suite of product offerings has continued to evolve in the wake of changing customer needs. “Our personal lines team has developed a robust product offering that considers issues like sustainable building, energy efficiency, and cyber liability.”
Most recently the company launched Evacuation Response, a specialty coverage designed to reimburse Lexington personal lines customers for costs associated with government mandated evacuations. “These evacuation scenarios have becoming increasingly commonplace in the wake of recent extreme weather events, and this coverage protects insured families against the associated costs of transportation and temporary housing.
The company also has followed the emerging cap and trade legislation in California, which has created an active carbon trading market throughout the state. “Our new Carbon ODS product provides real property protection for sequestered ozone depleting substances, while our CarbonCover Design Confirm product insures those engineering firms actively verifying and valuing active trades.” Lexington has also begun to insure new Carbon Registries as they are established in markets across the country.
Lexington has also developed a number of new product offerings within the Healthcare space. The Affordable Care Act has brought an increased focus on the continuum of care and clinical patient safety. In response, Lexington has created special programs for a wide range of entities, as the fast-changing healthcare industry includes a range of specialized services, including home healthcare, imaging centers (X-ray, MRI, PET–CT scans), EMT/ambulances, medical laboratories, outpatient primary care/urgent care centers, ambulatory surgery centers and Medical rehabilitation facilities.
“The excess and surplus lines sector is in growth mode due, in no small part, to the speed at which our insureds’ underlying business models are changing,” Power said.
Apart from its coverage flexibility, Lexington offers this segment monthly webcasts, bi-monthly conference calls and newsletters on key risk issues and educational topics. It also provides on-site risk consultation (for qualifying accounts), access to RiskTool, Lexington’s web-based healthcare risk management and patient safety resource, and a technical staff consisting of more than 60 members dedicated solely to healthcare-related claims.
“Our professionals serving the healthcare market average more than twenty years of industry experience,” Power said. “That includes attorneys and clinicians combining in a defense-oriented claims approach and collaborating with insureds in this fast-moving market segment.”
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Lexington Insurance. The editorial staff of Risk & Insurance had no role in its preparation.