Creativity and determination lead to better outcomes for MEMIC

On average, pharmaceuticals comprise about 19 percent of each dollar spent on medical costs in the workers' comp system, according to NCCI. But a Maine-based insurer reports its percentage is less than one-quarter of that.

"It's actually down to 4.1 percent," said John Leonard, president and CEO of MEMIC. "It was 4.5 percent the previous year."

Leonard says MEMIC's nearly 15-year effort to reduce unnecessary expenditures for medications and curb the misuse of opioids among injured workers came about "with an awful lot of effort." By educating, empowering, and collaborating with case managers, medical rehabilitation specialists, and physicians, the company has become what insiders call a success story.

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"There's no magic to it, but it's a very determined attitude and action list. We want that attitude to translate to action steps," said Ralph Rousseau, director of disability management. "When you think we paid $60 million in medical and 4.1 percent is drugs, that's impressive. That's not just the number from the pharmacy benefit manager but also includes the third-party biller numbers."

About the company. MEMIC's creation dates back to 1993, shortly after the adoption of workers' comp reform legislation. Initially called the Maine Employers' Mutual Insurance Company, MEMIC was developed as a private company charged with serving as the guarantor of workers' comp insurance for Maine companies.

The company now includes two subsidiaries, MEMIC Indemnity Company and MEMIC Casualty Company, and is licensed to provide workers' comp insurance in all but those jurisdictions with monopolistic systems. A network of field offices serves clients outside of Maine with Tampa, Fla., and Tysons Corner, Va., the latest additions.

Drug control program. "The war on pharmaceuticals dates back to 1999," Leonard says. "The person heading our claims department detected a great deal of interest in physicians prescribing Celebrex and Vioxx. It had the potential to grow within the company."

As company officials explain, costs for medications were creeping up. They began what they describe as the sentinel effect.

"We needed to do a better job of letting physicians and injured workers know we were looking at this topic because we were seeing it get out of control," Rousseau said. "We started to look at ourselves as a pharmacy benefit manager."

Internal PBM. In addition to working with their PBM, MEMIC created an internal system to maintain additional control over its drug spend.

"We did narcotics reviews. We made sure claims handlers had the technology to see every drug written on that claim, which they had not been able to do," said Deb Lander, professional services consultant. "Other companies are relying solely on their PBM vendor. Internally, we have it set so we have an administrative person who deals directly with the injured worker and pharmacy and serves both as a gatekeeper and sentinel."

The process involves an internal MEMIC employee having access to the PBM's system. When a pharmacy calls, the employee can look at the injured worker's file to see if prescriptions were sent to a third-party biller, and if so, have the pharmacy reprocess the invoice.

Additionally, "each of our claimants has a prescription card which allows them to [purchase medications] at no charge," Lander said. "They can go into any pharmacy in the country. If they move, it is not a problem."

Sending out activated cards to injured workers immediately after their injury has made a significant impact on third-party biller intervention, Lander said. From 2011 to 2012, it resulted in a 29 percent decrease in the dollars paid to third-party billers.

"A big part to keep costs contained within PBM programs is to keep them away from third-party billers," Leonard said. "Look at the split between what goes into the PBM vendor and third-party bill payers. We've captured about 80 percent. Twenty percent is still out there, but we continue to narrow that gap between the amount charged by the stores and what we've actually paid, saving about 56 percent."

These savings off the usual and customary amount charged by pharmacies is up from the 48 percent in savings just two years ago. "The only reason it is up to 56 percent is by decreasing the amount of third-party billers where we get zero discounts," Rousseau explained. "We really work hard to find that half or three-quarters of a million dollars from third-party billers."

"It really is a team effort," Lander said. "We've done training over 10 years with adjusters and nurses, telling them 'you have the power to say no completely.' We've given them the authority to question physicians on treatment and to speak with our injured workers. It's become second nature [for them] to not randomly pay for these drugs."

Working with physicians is a key part of the drug control program. That may mean contacting the physician to let them know a particular drug costs $2,000 a month.

"A lot of times physicians have no idea of the cost," Lander said. "Some physicians won't change their prescribing habits ever, but others will."

Read more at the WorkersComp Forum homepage.

March 4, 2013

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