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A study found that while workers' compensation drug cost inflation continues to moderate, different payers are seeing significantly differing results.

Outcomes in comp pharmacy programs vary significantly from payer to payer

A study found that while workers' compensation drug cost inflation continues to moderate, different payers are seeing significantly differing results.

Michigan: Drug costs low due to fewer prescriptions, pharmacy prices (08/16/10)
Average comp pharmacy spending jumps 6.5 percent, report finds (08/26/10)
Deal With the Chronic-Pain Dichotomy (08/31/10)
Massachusetts: Workers' comp prescription drug costs per claim lower than most states (08/02/10)
Do $4 Generics Fit Into the World of Workers' Compensation? (06/25/09)

The study, by Health Strategy Associates LLC, found that pharmacy cost inflation decreased from 6.5 percent to 4.9 percent in 2007. That figure was down from 17.8 percent in 2003. However, researchers said individual payers' inflation rates varied significantly -- from a decrease of 12.8 percent to an increase of 21.8 percent.

"Last year we saw that larger, more sophisticated payers experienced lower inflation rates," said Joseph Paduda, principal of HAS, a national consulting firm for insurers, employers and health care providers. "This year, some of the best results were delivered by smaller insurers."

Paduda said conducting the report, Fifth Annual Survey of Prescription Drug Management in Workers' Compensation, in consecutive years has given HAS insight into the evolution of the market.

During the last five years, he said, key changes in workers' comp pharmacy management have included a much greater emphasis on controlling utilization by addressing the volume and types of drugs used by claimants.

The study found that the lowest rate of increase occurred at payers who operated advanced drug utilization management programs that also had detailed knowledge of their companies' drug costs and a deep understanding of industry issues and processes.

Paduda said payers are increasingly relying on their pharmacy benefit management firms for knowledge and utilization management tools.

"Payers are demanding that PBMs provide insights and new information about trends in comp pharmacy, take the lead in dealing with third-party billers, and provide more clinical drug management," he said.

For the third year in a row, the survey was sponsored by Cypress Care, a workers' compensation PBM based in Atlanta. Participants in the survey included third-party administrators, large employers, managed care firms and payers -- including decision-makers and operations staff of carriers. Respondents said their 2007 drug expenses ranged from $1 million each to $147 million, and that their cumulative drug spend amounted to $777 million -- 18.5 percent of the total estimated workers' comp drug spend.

For more information, visit the Health Strategy Associates Web site at www.healthstrategyassoc.com or contact Joseph Paduda at jpaduda@healthstrategyassoc.com.

July 15, 2008

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