By CYRIL TUOHY, managing editor of Risk & Insurance®
Earlier this year, Tampa, Fla.-based workers' comp pharmacy benefits management software vendor Healthesystems went live with the pharmacy benefits management program for the Wyoming Workers' Compensation Fund, which covers about 17,000 workers.
Risk & Insurance®
Managing Editor Cyril Tuohy talked with Healthesystems President Daryl Corr and Sales and Marketing Vice President Todd Pisciotti about the challenges facing the distribution of workers' comp benefits and the business models facing the industry.
Why is distributing benefits to workers' comp benefits so much more difficult and expensive than in group health?
It's a totally different animal between group health and workers' comp. In comp, when the patient shows up at the pharmacy counter, the pharmacist has to deal with a lot of unknown items that can cause delays or problems with filling the prescription. Compared with group health, over 90 percent of the time, it's easy because there isn't any sort of prior authorization required to complete the transaction and bill the appropriate party.
With an injured worker, they may not have even reported the claim before they submit the prescription. There isn't any prior information available, and the pharmacist has to figure out whom to bill, which immediately creates an eligibility issue. From the injured worker's perspective, comp is 100 percent paid by the carrier (payer), and without any copay, they don't have a vested interest in the payment outcome. So the easiest thing for the pharmacist to do is to send it to a contracted third-party biller.
You are also dealing with a different subset of prescriptions that are predominantly pain related, which frequently include highly addictive Schedule II narcotics. These types of drugs can steer a prescription treatment plan in the wrong direction, causing a negative effect on a patient's well being, not to mention the overall costs. You can't necessarily exclude them from the formulary, and you will need to allow all sorts of exceptions based upon the scenario of each individual claim. So the speed of exchanging information between the payer, pharmacy benefits manager (PBM) and the pharmacy is crucial to quickly communicate authorizations or denials and provide the pharmacist with some direction.
Just what kinds of numbers are we talking about here?
Workers' compensation prescription transactions make up less than 3 percent of all prescriptions filled by pharmacies nationally. When you split that up amongst the 60,000-plus pharmacies around the country, many may only see a small amount of workers' comp pharmacy transactions in a year. Some pharmacist may not even know what it is. It is crucial for the PBM to understand the obstacles and extra workload pharmacies encounter when handling workers' comp claims and provide them with proactive communication processes to easily authorize and dispense appropriate drugs.
They are as valued as a partner as the payer. But in many cases, the PBM community can create adversarial relationships with pharmacies if their only focus is to get the pharmacies to provide the drugs at a cheaper price. So unless all three parties--the payer, patient and pharmacy--are happy, you have not done your job.
Wyoming is a great example where you have a monopolistic state entity that is predominantly rural, with a small number of pharmacies that are fairly new to a workers' comp PBM program. The last thing they want to do as a payer is frustrate the small number of pharmacies by making this a difficult process.
Where are we with regard to state fee schedules?
The majority of states do have a fee schedule; however, the range of maximum reimbursement can vary greatly. The states that use aggressively low schedules have a challenge to find the right balance between controlling the individual price of drugs and making it feasible for the pharmacy to manage the process. Either way, that is only one part of the bigger equation. There are other more critical issues to address that can have a bigger impact reducing costs, like aggressively managing drug utilization. In other words, are patients using the right drugs? With the right dosage? Following the most appropriate treatment plan? What are you doing to manage multiple prescribers and drug-to-drug interactions?
For the most part, over the past 15 years, most PBMs have done a good job with establishing comprehensive networks and adjudicating prescriptions. Taking another leap forward requires more focus on these utilization issues and addressing the items that can't be done at the point of sale, like educating the prescriber about alternative and more effective treatment plans.
It's about proactively identifying inappropriate prescriptions of narcotics and better managing the downstream need for other powerful and expensive drugs required to counter the side effects. In some cases the patient can be doctor-shopping, or there can be fraud that needs to be addressed. Comparatively, it's a small percentage of the claims--only 7 percent to 8 percent of claimants receiving--that are driving 50 percent to 60 percent of a payers' total pharmacy costs. If you are only focusing your efforts on saving another nickel on a drug, you're missing a huge opportunity to achieve even better results.
How is technology helping to make the system more efficient?
There are a number of things that are happening to improve workers' comp pharmacy programs: The speed of communicating with the pharmacy and providing real time data specifically for appropriate authorizations after an initial reject. The more difficult or the longer the delay it is for the pharmacist to fill a script due to a reject, no matter what the reason, you create a number of issues: Either the injured workers eligible to receive prescriptions can't get them filled, or the pharmacy bills the script through a third-party biller, losing the ability for the payer to keep it in their network.
The crucial point is that if you can quickly be notified and address why it was rejected, the faster you can reach out to that pharmacist and confirm that it's valid. All of these steps need to happen instantaneously, but there are parts of the PBM industry that are still only processing this information every few hours.
In workers' comp, the initial prescription reject rate can be over 45 percent. Of that 45 percent, a large portion of those will require a phone call to somebody for prior authorization. There's too much gray area for the pharmacy, and there are hurdles for the pharmacy to jump over. So we are constantly developing ways to streamline those processes. We have already experienced a great deal of success here, and it's an area where we are putting a lot of effort today. Less than 15 percent of our interactions with customers are via the telephone, and 85 percent are electronic, where we don't necessarily have to speak with anybody. This frees up a lot of time for the claims professionals and makes it much easier for the pharmacies.
There are other new topics we are closely watching, like the implementation of e-prescribing and how that may potentially impact the workers' compensation eligibility and authorization process. Our view has always been, as long as you are taking a proactive role and engaging with the stakeholders of these new processes, similar to maintaining EDI state reporting compliance, you are better off participating with shaping these solutions than inheriting ones that may not be the most effective.
April 15, 2009
Copyright 2009© LRP Publications