As workers' compensation insurance rates rise precipitously, risk managers and claims leaders across the country are looking for answers with an increasing sense of urgency.
The cost of getting injured workers back to work, hampered by a national pain killer medication epidemic, has gotten the attention of more and more business executives and government officials.
With that in mind, Risk & Insurance® editors, in association with Atlanta-based workers' compensation pharmacy benefit management company Healthcare Solutions, convened a roundtable discussion in Atlanta in early March in an attempt to get at the root of some of workers' compensation's most troubling issues and discuss meaningful solutions.
Participating in the roundtable were Danielle Lisenbey, the CEO of Atlanta-based TPA Broadspire, Dave Smith, divisional vice president, risk management for Family Dollar Stores, Stephen Festa, senior vice president and chief claims officer for Reno-based EMPLOYERS insurance company and David George, the CEO of Healthcare Solutions.
The two-hour panel was moderated by Dan Reynolds, the editor-in-chief of Risk & Insurance®.
As those in attendance expressed their views over the two-hour breakfast meeting, several dynamics emerged as themes. One was that the landscape for managing this risk is in constant flux, as different stakeholders move either to contain costs or identify new revenue streams.
The other was that those companies that seek to contain costs and provide a better health outcome for injured workers must improve the focus of their communication efforts, as various key states and the federal government consider legislation to manage a pharmaceutical painkiller epidemic that now claims more lives from overdoses on an annual basis than either heroin or cocaine use.
According to a study completed by the CDC, "One person is dying every 19 minutes because of this epidemic, so it is rightfully getting a lot of focus, a lot of press," EMPLOYERS' Stephen Festa said.
Indeed, the Wall Street Journal's Timothy Martin reported on March 10 that a painkiller epidemic that had been ruining lives in the South and East has now blindsided health care and law enforcement officials in the West.
"We're just in the beginning stages of grasping the full magnitude of this issue," Elisha Figueroa, Idaho's drug-policy administrator, was quoted as saying in that story.
Managing the epidemic is not easy because of the complexity of the issues involved, the Atlanta panelists agreed.
"As a PBM, our role is to provide solutions for customers that address the complexities of pharmacy management and to integrate the management of pharmacy services within our customers' overall clinical management strategy," said David George of Healthcare Solutions.
"The management of pharmacy costs begins with addressing the issues of eligibility and includes careful management of non-traditional providers such physician dispensers, specialized mail order facilities and third party billers."
Healthcare Solutions' program addresses each of these unique challenges, said George, and is fully customized based on each customer's unique clinical requirements and capabilities.
"The pharmacy environment is changing so rapidly, and there are so many different influences, that managing appropriate pharmacy utilization as a component of total medical care should be an important area of focus for all stakeholders," Danielle Lisenbey added.
"The future will be about examining pharmaceutical treatment in coordination with broader patient care in an integrated health care setting," George said.
The Rise of Medical
One of the key changes in workers' compensation risk management and insurance over the last two decades is that medical costs have grown more quickly and outstripped indemnity costs as the key driver of workers' compensation spend.
Accompanying that rise in medical costs is a skyrocketing increase in pharmacy costs as a percentage of workers' compensation medical spend. There are a lot of factors contributing to this, but a few are starting to get more and more attention.
Among a variety of things that contribute to an increase in costs is injured workers' use of multiple prescribers, as well as new channels of pharmacy distributions, such as physician dispensers who distribute repackaged drugs, compound drugs . "Left unmanaged, payers experience increased utilization without appropriate adherence to clinical guidelines and protocols," George said.
Overall, there is increased access, driven by an increase in the number of drugs available in the market, and also due to marketing on television and through other forms of advertising.
"In our industry, where we are dominantly focused on management of pain and the medications associated with that, the belief is that more is better," he added. "Proper utilization management protocols, to include specific therapies for narcotic opioids, and strategies to impact physician prescribing patterns, must be part of every payer's pharmacy program."
The industry has also seen a rise in the number of physicians who are prescribing and selling repackaged medications to their workers' compensation and group health customers, sometimes at staggering markups.
Festa provided data on some of the more egregious markups his staff has seen in this area. He quoted one example from their research of the prescribing of the anti-inflammatory drug Meloxicam, the cost to the physician of which for 60 15-milligram pills was believed to be less than $9 but for which EMPLOYERS was sent a bill for $437.48.
"Now, we didn't pay that, but that speaks to the economics of this whole issue," Festa said.
Family Dollar's Smith, who won a Risk Innovator? award from Risk & Insurance® in 2010 for his work creating a better quality of life for workers who had suffered mental or physical injury due to a traumatic event, such as a robbery, at work, can point to a program at Family Dollar that is working in containing this cost and others.
In 2007, Family Dollar identified that pharmacy spend was 21 percent of its total medical expense in workers' compensation. This was at a time when the national benchmark was more like 13 percent, he said. Later that year, Family Dollar partnered with Healthcare Solutions as its pharmacy benefit manager.
Once the company established protocols, such as using data to flag cases that were getting out of control from a pharmacy spend perspective and identifying injured workers' whose use of medications required more aggressive intervention, Smith reports that his program has now improved dramatically as measured against national trends.
Now, in 2013, Smith reports that his pharmacy spend as a percentage of medical spend is down to 11 percent, in comparison to an industry which is seeing a pharmacy spend percentage of around 19 percent.
"We've cut it almost in half of our total percentage," Smith said.
And that pharmacy spend reduction has had collateral impacts, Smith reports.
The retail industry's total medical spend on workers' compensation now sits at 60 percent, he said. Family Dollar now has that percentage down to about 37 percent.
"We've also seen our success rate increase in getting people back to work faster, a greater percentage of individuals going back to work, as well as a reduction in the average lost work days per claim ," Smith said.
So clearly, pharmacy risk management can have a big impact, not only on an employer's costs but on the productivity and life enjoyment of a company's workers.
But keep in mind that Smith is a pioneer in this regard. There are other risk managers and claims professionals that can benefit from Smith's work.
"I still have a subset of clients that have a different focus, and the rise in pharmacy costs is not on their radar," said Broadspire's Lisenbey.
"We're turning that corner through educating our client base on the benefits of managing pharmacy costs, but there is still much work to be done and I see this as a huge opportunity for our clients," she added.
Roughly speaking, Lisenbey expressed that around 40 percent of employers were becoming better educated on this issue and that 60 percent of them had more work to do. In general, early indications demonstrate that pharmacy risk management is having favorable impacts on the total claims outcomes, she said.
One of the reasons that workers' compensation and pharmacy spend are so difficult to manage is that each state regulates workers' compensation differently. The state of Texas has earned praise for its closed formulary, which holds physicians to tightly defined standards for what medications they can prescribe and which is credited with greatly reducing drug addiction and expense.
But in many states, insurers and pharmacy benefit managers find their hands tied by a lack of regulation of medications. Florida has become known in the industry as the "pill mill" state because of its lack of regulatory controls on not only physician dispensing.
The insurance industry's lobbying arm, the American Insurance Association, has identified 18 "battleground states", among them Pennsylvania, Maryland, North Carolina and Hawaii, where stakeholders would do well to seek strength in numbers and push for change, said Lisenbey.
Issues for focus on the state level and federally, according to the panel are:
* Regulating fixed average wholesale prices for medications and reasonable dispensing fees for physicians
* Banning physician dispensation outright, such as New York has done.
* Providing mandatory access to state prescription drug monitoring programs for physicians and pharmacies, something Broadspire's CEO Danielle Lisenbey said would have an effect so positive it would be like "flipping on a switch".
You can have the best risk manager or claims professional money can buy, same thing for your pharmacy benefit management company, but at the end of the day, if state regulations are too loose in the area of controlling dangerous and widely available opium-based drugs or synthetic opioids, lives will be at stake.
That's where EMPLOYERS' Stephen Festa and other members of the Atlanta breakfast panel feel more focused work is needed.
"What I would like to see is more of a focus from those participants in the industry that are trying and are working on these issues to come together more effectively and push for additional regulatory relief on these issues," Festa said.
Education and Talent Retention
As we stated above, the pharmacy fix has many pieces. Using a pharmacy benefit manager to control costs and improve outcomes can work. Getting the insurance industry and its customers to speak with a strong, unified voice on needed regulatory changes is another. But even more can be done.
Our panel members didn't condemn medical providers for their role in pushing up workers' compensation pharmacy costs. Indeed, several of them mentioned that once confronted with the issue, many physicians act reasonably and adjust their prescribing patterns. Many times, they didn't know that the patient they were seeing and prescribing for was getting opioids from different sources.
According to a recent study by the California Workers' Compensation Institute, on claims where opioid use was happening for more than the recommended period of time, the average number of providers was 3.3.
"We have discussions with physicians on a daily basis regarding prescribing patterns as it relates to injured workers under our care, and oftentimes the prescribing physician doesn't know that the patient is visiting multiple practices," Healthcare Solutions' George said.
"When we use data and evidence-based guidelines as the basis of our conversation, most physicians agree to make changes in future prescribing for that patient," he said.
"There is minimal training on the psycho-social aspects of this particular problem," EMPLOYERS' Festa said.
"I believe, very strongly that there is a need to raise the bar on this particular issue in the training of our doctors going forward," Festa said.
Another area where education can play a key role is in getting more and more scientifically and mathematically trained university graduates to join the insurance industry's talent pool. To become part of the data analytics teams that will be so crucial to managing pharmacy abuse and other workers' compensation risks going forward.
Broadspire's Lisenbey said her company is partnering with universities to bring more analytical talent not only to her company but to the industry in general.
"For us, personally, it is a very strong focus," Lisenbey said.
EMPLOYERS' Festa agreed.
"I feel very strongly on this subject that the future of our industry is going to be dependent on our ability to use analytics to make better decisions. On the pharmacy-specific end, predictive modeling can help gauge the need to initiate clinical pharmacy programs and intervention earlier in the claim cycle," he said.
"Unfortunately, I don't think there are enough people in our industry right now who have that background."
Healthcare Solutions contracted with
Risk & Insurance®
to co-produce this Executive Roundtable.
May 1, 2013
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