By MARK RIEGER, managing director, ProAmericas
Pharmacy benefits management service providers play an important intermediary role between the tens of thousands of pharmacies and the insurance and managed care industry. It would not be efficient, much less possible, for every carrier to negotiate pharmacy rates and develop electronic interfaces with every pharmacy.
PBMs have invested in automated tools and have created best-practice business and medical practices that take advantage of economies of scale.
But what does that really mean in terms of specific programs, tools and activities, and how does it save money for workers' comp carriers, save time for the pharmacy and make the whole process easier for the consumer in need of their prescription?
THE COST PRESSURES
According to the Journal of Health Affairs, overall pharmacy expenditures in the United States were approximately $237 billion in 2007, increasing at an annual rate that far outpaces the rate of inflation. This directly impacts the cost of drug coverage offered by managed-care organizations, health insurers, public and private self-insured employers, unions and third-party administrators.
In response to these cost pressures, these organizations have engaged pharmacy benefit management service providers to deploy electronic pharmacy networks, administer new business processes and communicate with them in real time through integrated online systems.
These activities have increased efficiencies and lowered costs for the insured, the insurance carrier and the healthcare providers (pharmacy), while improving customer service for the consumer.
PBMs manage costs by:
--Negotiating discounted prices with pharmacies that are available to the customers of insurance carriers and managed-care providers
--Encouraging the use of generic drugs rather than brand medications when medically appropriate
--Establishing formularies, which provide guidelines for which drugs are most appropriate for specific medical conditions
--Establishing retail pharmacy electronic data interchange networks with online decision support tools and enable real-time communication to authorize, adjudicate and process claims between pharmacies and carriers
--Administrating drug utilization reviews to encourage appropriate drug use
"Payers can save 20 percent to 30 percent on 'hard' drug costs through network discounts offered by workers' comp PBMs, which are below state-mandated fee schedules," said Dennis Sponer, president of PBM ScripNet.
"But they can achieve an additional 20 percent to 30 percent in 'soft' savings through the management services offered on top of those discounts by getting consumers to shop in-network, accepting generics when available, minimizing misuse, and streamlining the communication and claims administration processes.
"We had some very specific goals when we decided to utilize a PBM," said Stephanie Ganey, vice president of workers' compensation at Selective Insurance. "Obviously, we wanted to increase savings.
"Coming from a manual program, we were missing some savings that could be gained with increased in-network penetration. In addition to a reduced cost to us, we also wanted to make it easier and faster to get (appropriate) prescriptions to the injured worker with a more efficient auto-adjudication process," she said.
"We needed to automate the workflow between us and the PBM and the pharmacy. We established the formulary up front and update the claims eligibility file daily, which is communicated immediately through ScripNet to the pharmacy network," Ganey continued. "When claims are processed, including a couple of checks to make sure everything is correct, the bills flow right through to electronic payments. That saves us administrative time internally and lets us monitor, manage and report on our activities more effectively.
"By changing the workflow and automating several pieces, most of our manual input and paperwork has disappeared."
KEY ELEMENTS OF PHARMACY CLAIMS AUTOMATION PROGRAMS
Call ahead programs are designed to let injured workers know the closest locations to get their medications, pre-approve the correct prescriptions and pre-register with pharmacies to reduce delays at in-network pharmacies.
Typical programs deliver an automated message from the PBM (on behalf of their employer and insurance carrier) to injured workers. Workers can learn where their closest in-network pharmacy location is, request a pre-authorization or be redirected to a live customer service person. Otherwise, a voice mail message would be left with a toll-free call back telephone number
When original claims are approved, injured workers receive their own personal pharmacy card. This card identifies the individual patient as an approved workers' compensation claimant and provides the pharmacist with the information needed to process the prescription online. The pharmacy card contains all the information the pharmacist needs to provide injured workers with pharmacy benefits.
First-fill programs ensure that workers never go without their first fill of a medication when they are injured, even if their employer has not yet registered their injury with the workers' comp PBM. The PBM would typically go at risk for first prescriptions for a period of seven days or for $50 worth of medication.
Formulary management allows employers and insurance carriers to control the brand and type of drugs that are dispensed, including advisories on generic drugs that can be substituted for brand name drugs. Formularies assist the pharmacist in dispensing the most appropriate pharmaceuticals to injured workers, enabling employers and insurance carriers to maximize cost savings.
But they also assure that only those drugs that are appropriate for workers' compensation injuries are dispensed. With formularies, network pharmacies can be urged to make every effort to supply generic drugs (if commercially available and consistent with the retail or mail-order pharmacist's professional judgment and state and federal law). Typical generic substitution rates range between 65 percent and 70 percent.
Point of sale/online adjudication/electronic billing:
Pharmacies can be directly connected to the PBMs online adjudication system, which verifies coverage for prescriptions immediately. Point-of-sale systems virtually eliminate the flow of paper from the pharmacy to the employer or insurance company. This allows pharmacies to submit billing automatically and electronically through the PBMs POS system.
Data entry is performed once--at the pharmacy. Up to 90 percent of claims can be submitted electronically. In addition to eliminating the flow of paper claims, POS systems automatically screen for abusive claimants and misused classes of pharmaceuticals.
If an injured worker is not in the POS System, or if the requested pharmaceuticals are flagged a part of a certain high-risk class of drugs, the pharmacist can be alerted to call the PMB or provider for further instructions or to get a prior authorization if appropriate. Without online adjudication, pharmacies have to wait 30 to 60 days to receive payment for workers' compensation claims. Additionally, online connections mean less paperwork and lower administrative costs for pharmacies.
Help desk: Nationwide toll-free help lines link payers, pharmacists and claims adjusters with a PBM's help desk. Multilingual pharmacy specialists help to insure that injured workers get the medicine they need to begin the healing process 7 days per week.
Drug utilization review: PBMs offer DUR programs to manage cost containment and prevent medication errors. Workers' comp DUR programs typically check for overuse, multiple drugs in the same therapeutic class, duplicate prescriptions, early refills and "claim jumpers" (i.e., patients who go to several doctors to get more prescriptions than they really need).
DUR programs can also have a positive health impact on the injured worker, including a medically oriented review of Drug usage patterns, abuse detection/ prevention, drug-to-drug interactions, generic substitution rates, therapeutic duplications, formulary compliance, cost overrides savings calculation and overall program effectiveness.
Drug utilization review programs play a key role in helping to understand, interpret and improve medication prescribing, administration and use. Employers, physicians, claims adjusters and case managers find DUR programs to be valuable because the results are used to allocate resources more efficiently to reduce or prevent inappropriate use of pharmaceuticals.
Outcomes management reporting includes standard and customized reports to measure trends and program performance, establish goals and improve outcomes, including areas such as:
--Network penetration (the percentage of client's prescriptions that are discounted: i.e., in-network)
--Percentage of first fills captured
--Percentage of second fills captured
--Percentage of prescription filled that were generic versus brand
Any and all data that is garnered through the electronic transmission and adjudication of prescriptions, as well as the retrospective review of hard copy bills, can be queried and reported upon. Reports can be specific to claimants, regions, physicians, pharmacies or drugs or they can be general to summarize aspects of the entire program such as cost and savings analysis.
BENEFITS OF CLAIMS AUTOMATION
For the injured worker automation makes the whole process easier, faster and safer, eliminating questions and delays at the pharmacy. Workers are also more likely to get the correct medications within an approved formulary. If they prefer mail-order prescriptions, the PBM should be able to expedite that process.
Pharmacists can deal with a single source rather than hundreds of potential insurance carriers or managed care providers. They get reimbursed at a more rapid pace than if it was a direct relationship and they avoid a paper flow process which slows things down. The possibility of abuse is significantly reduced.
For the pharmacist, it also saves both time and money and, with a predetermination of the appropriate prescription, reduces confusion and stress at the pharmacy from not knowing whether the patient or a particular drug was approved before hand.
Also, there typically is no guarantee that the pharmacy will get paid for workers' compensation prescriptions. Past experience shows that up to 30 percent of those claims can be disallowed and returned unpaid. With a PBM, pharmacies should get paid in 30 days.
For workers' comp carriers, automation saves 11th hour calls for claims authorization. By getting the injured worker to an in-network pharmacy, carriers can save an average of 14 percent on brand medications and 38 percent when a generic is available. Automated systems enable insurance adjusters and risk managers to spend less time manually processing pharmacy claims, resulting in reduced overall pharmacy expense that is associated with workers' compensation.
November 1, 2008
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