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Change is nothing new to workers' compensation pharmacy management. In fact, change is inherent in this industry, which is routinely affected by state legislation, trends in the pharmaceutical market, or by new standards and regulations.

Keeping up with the pace can seem daunting, especially when changes are now coming more frequently and are having a larger impact on the industry. With strategic planning and the right tools, payers and their pharmacy benefit management (PBM) providers can stay ahead of the game.

Over the past two years, dozens of important pieces of legislation--each dealing with issues directly affecting workers' comp PBM programs, and each requiring analysis and action on the part of PBM program providers--were enacted across the United States, with many more on the horizon.

By January 1, 2012, all pharmacy transactions must be fully compliant with new data standards set forth by the National Council for Prescription Drug Programs.

Since the beginning of 2010, the U.S. Food and Drug Administration (FDA) approved at least 22 new drug formulations impacting workers' comp; still more are expected throughout the remainder of 2011 and in the years ahead.

New pharmacy dispensing trends--such as compounding, repackaging and physicians' dispensing--continue to grow significantly, both in scope and geographic areas of concern.

The list of challenges payers and PBMs face is long, but just these few alone have a monumental impact. By now, a prepared payer and PBM team should already have developed and implemented smart strategies to tackle these issues while keeping a watchful eye on the future.

"None of these topics can be dealt with effectively using a wait-and-see approach," said Daryl Corr, president of Healthesystems, the Tampa, Fla.-based provider of pharmacy and ancillary cost containment solutions for the workers' comp industry. "Now more than ever, payers need to be able to rely on their PBM to proactively address new issues and challenges as they arise, bringing new ideas and solutions to the table so we can respond quickly to whatever changes come our way, whether it's legislative and industry standards, new drug therapies or from the IT community."

CAPITALIZING ON CHANGE

Take, for instance, the legislation enacted in a few states to address the significant growth in physician dispensing and the use of repackaged drugs. This trend has received a lot of attention over the past few years due to questionable and excessive pricing practices.

Several states, such as Arizona and California, and most recently Georgia, have incorporated legislation allowing payers to reimburse at the original labeler NDC AWP (or lowest cost therapeutic equivalent AWP), which frequently is much lower than the AWP of the repackaged NDC. The result is better management and cost savings for payers without compromising the quality of care for claimants.

Changes like these have certainly been beneficial and have begun to address some of the more recent prescription drug challenges, however many states haven't taken as active of an approach. This is where it is incumbent upon the PBM to take a more active role in the legislative process. "Our customers look to us for our industry expertise and to compile and offer real-world information to help legislators make sense of some of these challenging topics," Corr said.

This is often where a PBM's work really begins. Before new laws take effect, a payer/provider team needs to have the strategies and resources in place to comprehend and address the complexities of implementing the changes, while maintaining full compliance with the new legislation. "As a workers' comp PBM, this is where the heavy lifting begins. Frequently we can apply our industry expertise to develop new innovative technology or products to not only accommodate the regulatory changes but also make our programs even better," Corr said.

SUPPORTING NEW STANDARDS

By the beginning of 2012, all physicians, hospitals, pharmacies, payers and, therefore, PBM program providers are required to comply with Telecommunications Standard Version D.0, a new standard for pharmacy claims transactions mandated by the National Council for Prescription Drug Programs. Version D.0 is an update to the existing Version 5.1, both of which support the requirements of the Health Insurance Portability and Accountability Act of 1996.

Program providers that have not already begun development for Version D.0 could face significant challenges or even be unable to meet the implementation deadline.

Among the many areas covered by Version D.0, some of the data components in which a PBM program will be most affected include the modifications to Rx number, member ID and reject code data entry fields--all of which necessitate upgrades to existing software environments. There will also be new stricter requirements for how compound drugs are processed at the point of sale. In most situations, the implementation of the new D.0 standards likely won't be visible to the payer, since their PBM is managing this type of issue, however, it is important to understand the activity going on behind the scenes in order to be more aware of potential downstream challenges or benefits that could arise as a result.

As noted, one such example is the stricter requirements for processing compound drugs at the point of sale--those in which two or more prescription drugs are combined to create a customized drug treatment. Version D.0 incorporates a stricter standard to ensure pharmacies provide all the ingredient data for each point of sale compound prescription transaction.

That's very good news, because with a better defined process, PBMs can initiate more efficient procedures for managing compounds.

NEW DRUGS, NOT NEW PROBLEMS

The continuous introduction of new drugs into the pharmaceutical market presents its own set of complexities. Since no product is the same, payers and providers need an effective way to identify and address potential concerns for each one and, where necessary create strategies to effectively manage them.

In the first quarter of 2011 alone, five new drug products likely to impact workers' comp PBM programs had already been approved by the FDA, in addition to the 13 products and four generics approved in 2010. Some of these, such as Exalgo and a reformulation of Oxycontin, are powerful Schedule II narcotics.

It's not enough to simply be aware when a new drug hits the market. Each release presents multiple issues to a payer and its provider to consider and act upon:

Is the drug relevant in the payer's comp population and should it be included in the payer's drug plan?

Will the drug be less or more costly than current products used for similar treatments?

What are its therapeutic advantages or disadvantages?

What specific criteria should be used when requiring a prior authorization?

What is a particular drug's potential for abuse or fraud?

"Here's where our staff of PharmD professionals proves to be a valuable resource," Corr said. "These clinicians have the expertise necessary to analyze and understand the implications of each new drug and our clients look to them for drug information and education."

Since change is always on the horizon in the workers' comp landscape, it only makes sense to capitalize on the opportunities it presents for continuing improvement and progress.

"Though the issues are complex, the concept is not," Corr said. "It's better to act with a strategy already in place than to react to the consequences of not being fully prepared."

(The above piece is part of our continuing Perspectives series designed to highlight key products and services to our readers. This paid-for Perspectives was written and edited by Risk & Insurance® on behalf of our marketing partner. Additional Perspectives can be found on our Web site at www.riskandinsurance.com/.)

May 1, 2011

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