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By LORI DAUGHERTY, president of Pharmacy Services for PMSI, one of the largest national full-service providers of services for pharmacy, medical services, and equipment and settlement solutions devoted exclusively to the workers' compensation and liability markets

In the workers' compensation arena, it's no secret that pharmaceutical costs continue to rise at an alarming rate.

Despite overall decreases in annual injury rates, PMSI's 2009 Annual Drug Trends Report for Workers' Compensation showed that medication costs increased 5.4 percent in 2008, continuing a multiyear trend of increased pharmacy spending. In addition, National Council on Compensation Insurance (NCCI) data indicates that costs associated with prescription medications and medical products and supplies make up more than 50 percent of the total medical spend, especially as the claim ages.

Many pharmacy benefit management (PBM) providers generally offer reporting programs that manage "in-network" spend. However, in many instances transactions that could be considered in-network are not captured in the program, and therefore network penetration is lowered.

The challenge is capturing prescriptions that fall out of network--some programs can reach as little as 30 percent network penetration.

The conversion of out-of-network to in-network transactions could result in lowered pharmacy spend as well as reduced administrative burden, reliable and complete aggregated data being located all in one place, the ability to have clinical oversight and intervention, and improved injured worker care.

When reviewing pharmacy costs, payers could also consider other important sources of data, such as bill-review organizations. The ability of these organizations to report detailed pharmacy spend varies, though, as they may only be capturing those elements of detail required to recommend an allowance or denial of payment. Bill-review companies might not always flag pharmacy line items that have been bundled with office visits and other medical costs, as is often the case with doctor dispensation of prescriptions for workers' compensation claims. Frequently, it is left to the payor to piece together these various reporting elements, which are often misaligned and not well captured in the first place.

To create a more unified stream of information and a more end-to-end approach to better manage their workers' compensation claims, payers should consider migrating to comprehensive conversion solutions offered by leading PBMs.

THE VALUE OF A COMPREHENSIVE CONVERSION SOLUTION

For a payer, the value of a PBM program is intrinsically linked to its ability to minimize out-of-network spend. The best of these new comprehensive conversion solutions strengthen network penetration throughout the life of the injured workers' claim.

Through a comprehensive conversion solution, the PBM takes all the nontraditional pharmacy spend, aggregates the data and negotiates a discount on the bills to lower medical pharmacy spend, helping payers manage cost by electronically adjudicating transactions and driving optimal in-network penetration.

The solution commonly includes aggressive compliance programs, the direct re-indexing of claims, third-party biller arrangements, and the adjudication of prescriptions dispensed in a clinic and mail order pharmacy settings.

A combination of all or many of the following programs, as part of a comprehensive conversion solution, will result in strong network penetration.

Compliance Programs: Flexible card and cardless programs can promote initial compliance while offering payers flexibility and choice. In addition, these programs work with network pharmacies to identify claims earlier in their lifecycle and process them through a PBM's retail network. These techniques strengthen program penetration and enrollment, while producing demonstrated savings on future prescription fills.

Automated Re-Indexing Solutions: Working with large pharmacy chains, PBMs can perform an automated, retroactive adjudication of transactions that were not identified at point of sale as a PBM customer. This seamless adjudication applies all edits as if transactions were processed at the time of dispensing and ensures almost complete network compliance.

Third-Party Biller Solution: Recognizing the significant need to mitigate the impact of third-party billers for payers, leading PBMs are partnering with third-party billing service providers to adjudicate pharmacy transactions prior to paper bills being sent. This lowers out-of-network costs and administrative costs by significantly reducing out-of-network paper bills.

Connections to Clinics: By joining with national clinic networks to provide comprehensive pharmacy benefit management services, clinical programs and real-time claims management technology, leading PBMs are able to achieve reduced costs and improved efficiencies by capturing first fill opportunities in these frequently used workers' compensation care settings.

Direct-Mail Pharmacy Partnerships: By partnering with direct-mail pharmacy providers that are traditionally out-of-network billers, PBMs can process transactions online, provide pharmacy benefit management review for the claims, and be able to provide additional information to payers on claimants and treating physicians.

AGGREGATED DATA CREATES SIGNIFICANT BENEFITS

By aggregating the data from nontraditional pharmacy channels and creating a seamless stream of information, these programs provide full visibility into claimants' medication history and medication compliance, allowing for better insight. With a repository of complete medical profiles, payers stand to gain the ability to analyze injured workers' pharmacy spend, manage the therapeutic implications of their employees' complete medication profile and participate in more robust clinical programs.

In addition, these programs minimize paper bills as well as phone calls from third-party billers and pharmacy billing companies.

These programs also remove the need for one-off claims payment processes and offer the ability to lower administrative costs associated with paper bills. That's because the PBM negotiates a discount on the nontraditional pharmacy channels, pays channels on behalf of the payer and processes subsequent prescriptions at the lower pre-negotiated rates with the information that has been provided.

PBMs that offer comprehensive conversion solutions offer payers the advantage of innovative partnerships to better capture nontraditional pharmacy spend. The key, however, is providing your PBM with as much data as possible. By providing all the information in one place, payers then have the data to better manage workers' compensation claims and injured workers' entire medication profile, which in turn means dramatically lowering pharmacy cost and decreasing administrative burden.

January 11, 2010

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