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For example, a National Council on Compensation Insurance (NCCI) study reported that there was a 12 percent increase in per claim drug costs in 2009. Today, prescription drugs account for about 19 percent of workers' compensation medical costs, NCCI reported.

According to Kimberly George, senior vice president, managed care practice and client services at Sedgwick, a leading provider of claims and productivity management solutions, drivers behind these rising costs include:

-- Drug over-utilization

-- Physician dispensing

-- Costs associated with compound medications

-- An epidemic of Opioid use and abuse

-- Inconsistent national oversight of providers resulting in duplicate therapies

Ms. George explained that a few states are moving to impose legislation to address over-utilization and physician dispensing trends. But, she said, jurisdictional regulatory changes will not address the national epidemic with the speed and uniformity necessary to ensure drug safety for injured workers.

A recent NCCI update regarding narcotic use in workers' compensation concluded:

-- Per-claim narcotic costs have increased

-- There have been changes in the way narcotics are commonly used

-- Narcotic use is concentrated among a small percentage of claimants

-- Initial narcotic use is indicative of future use

So what can payers do to ensure the tricky balance between optimum medical care and rising costs? Ms. George says it takes a pharmacy program that focuses on the safety of the injured worker by providing visibility and consistent oversight for all stakeholders including employers, physicians, injured employees and drug dispensers.

"An effective prescription management approach mitigates drug utilization," said Ms. George, noting that while the NCCI average for prescription drugs is 19 percent of medical spend, Sedgwick's figure for clients is 11 percent. "Per claim narcotic costs are managed through utilization management, best-in-class pricing and mail order solutions."

Sedgwick's pharmacy benefit management network, for example, is at 93 percent penetration compared to an industry average of 70 percent. Also, it drives non-formulary point-of-sale prescription requests and adverse trends notifications to Sedgwick nurses and claims examiners for rapid, consistent intervention.

As Ms. George pointed out, adverse trend intervention by claims examiners and nurses facilitates education for injured employees and medical providers.

She noted that an injury-specific and acute to chronic formulary ensures that drugs inappropriate for both the injury type and the age of the claim are identified at the point-of-sale for claims examiners or nurses to intercede with drug management. This is particularly useful in the acute injury stage to eliminate early narcotic use where it is not appropriate.

Naturally, the initial focus must be on employee health and safety. That means educating injured employees to ensure they receive the maximum benefit from drug therapies and fostering drug safety awareness, as well.

"It means working diligently to educate providers and ensure they are following best practices," Ms. George said.

In a recent case, Sedgwick began managing 40,000 workers' compensation claims for a Mid-Atlantic state. To resolve the claims, many of which were two years old or older, Sedgwick divided its examiners and nurses into teams -- one team was dedicated solely to examining claims involving narcotics.

Some claimants suffered from spinal cord or back injuries where narcotics were clearly an appropriate therapy. However, the majority raised concerns. Recognizing that potential patterns of prescription abuse and misuse would continue to plague the client -- and others in the region -- Sedgwick's medical director personally visited every physician with aberrant prescribing patterns and showed them their individualized prescription utilization reports.

Next, nurses and other peers then provided information and education on patient safety. Within a few months, virtually every physician had significantly reduced the amount of narcotics prescribed -- some by as much as 40 percent.

"It is really about using best practices to help the industry ensure physicians make the best prescribing decisions," Ms. George said.

Along those lines, during the past few years, physician dispensing in workers' compensation has undergone increased scrutiny. There are many physicians who dispense within guidelines and within contracted rates. It is often convenient for patients to have prescriptions filled at their physician's office. Sadly, there are some providers that abuse the physician dispensing function.

"If not contracted and managed, prescriptions dispensed from physicians' offices can cost two to three times more than a network pharmacy," Ms. George explained. "In addition, often medications dispensed don't follow best practice protocols."

In states that allow companies such as Sedgwick to steer injured workers to pharmacies for prescriptions, it should be done, she added. In those that do not, a pharmacy benefit manager (PBM) must work to identify prescribers who are not following recognized guidelines and to provide education and oversight, if needed, to ensure compliance.

That way, by using internal resources and pharmacy partners, Sedgwick believes it can offer one of the most sophisticated utilization review programs in the nation.

Ms. George cites the company's pharmacy services, for example, which include a review of the injured worker's entire profile, using both in-network and out-of-network transactions to evaluate actual medication use and ensure appropriate utilization. Profiles are reviewed on a monthly basis to identify high-risk medication usage such as high doses of medications, duplications of narcotic therapy, etc.

When high-risk therapy is identified, the following interventions take place:

-- Letters are sent directly to prescribers to alert them of the injured worker's high-risk medication use

-- Claims examiners and designated nurse case managers are notified regarding injured workers with excessive high-risk or suspicion of inappropriate behavior, and a prescription management strategy is included in the claim's integrated action plan

-- Sedgwick offers a pharmacy clinical review program that includes point-of-sale intervention and a retrospective adverse trend alert program managed by our nurses who review medications prior to dispensing

"The idea is to evaluate a client's pharmacy spend trends in order to create custom nurse intervention triggers," Ms. George said. "That way, you can further mitigate inappropriate and costly physician dispensing through pharmacy benefit management partnerships."

Working in close collaboration with PBMs makes it much easier to identify physicians and occupational medical clinics with optimal prescribing history. Contracts with those providers increase prescription networks and improve utilization management.

The value of a pharmacy program is intrinsically linked to the ability to have effective tools and practices in place to ensure the utmost safety of injured workers, and to minimize out-of-network activity. Ms. George said Sedgwick worked closely with its PBM partners to develop a customized, aggressive "First Fill" program and flexible pharmacy card options that promote initial compliance and control costs at the point-of-sale.

Finally, to further capture the full potential value of its pharmacy program and maximize network penetration to control costs for clients, Sedgwick offers out-of-network bill adjudication solutions and a comprehensive conversion solution developed to strengthen network penetration throughout the life of the claim.

"Getting at the rising costs takes a balanced, multifaceted strategy," Ms. George said. "Yes, costs are rising, but with the right approach, they can be reduced. At the same time, a focus on prescription drug use can also help an injured worker on the best path to recovery."

Click here to access a full prescription drug spending white paper with more details about the recent NCCI study and Sedgwick's solution for clients.

Sedgwick Claims Management Services, Inc. is the leading North American provider of innovative claims and productivity management solutions. Sedgwick and its affiliated companies deliver cost-effective claims, productivity, managed care, risk consulting and other services to clients through the expertise of more than 10,000 colleagues in 195 offices located in the U.S. and Canada. The company specializes in workers' compensation; disability, FMLA and other employee absence; managed care; general, automobile and professional liability; warranty and credit card claims services; fraud and investigation; structured settlements and Medicare compliance solutions. For more, see www.sedgwick.com or call 800.625.6588.

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

September 5, 2012

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