Lowering Pharmacy Costs Using Technology

In 2002 workers' compensation medical claims totaled $24.3 billion with nearly $3 billion of the claims paid going to pharmacy, according to the National Academy of Social Insurance. Gaining control of the pharmacy costs is a critical issue for employers.

Through the use of a pharmacy benefit design and management platform developed by HealthTrans, a Colorado-based pharmacy benefits administrator, Cypress Care is helping its clients gain greater control over its pharmacy costs, which results in reduced administrative time and cost savings. By using its technology, Cypress Care is bringing down the cost of pharmacy for its clients.

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For example, the seamless integration and flexibility in plan design allows Cypress Care to provide cost-effective first-fill solutions. In an industry where point-of-sale prescription claims account for approximately 30 percent of all claims submitted (70 percent being paper claims), Cypress Care has been able to achieve an 80 percent rate for POS. The resulting annual savings averages a noteworthy $580 per individual.

A pharmacy benefit manager specializing in workers' comp can play a role for employers by creating and managing a program that controls the drug costs. For example, Cypress Care customized the management platform to identify savings opportunities and problem prescriptions.

This enables Cypress Care, with support from HealthTrans, to perform clinical reviews of individual claimants, resulting in changing the frequency of dosage, reducing the quantity of medicines or even denying some prescriptions that do not qualify under Cypress Care's standards.

Online data collection and access enables detailed drug utilization review that can result in changes in utilization and product selection.Cypress Care rejects more than 25 percent of all prescriptions that are not on an approved drug list, which compares to an industry average of 10 percent. When Cypress Care combines its denial rate with its 80 percent utilization rate, the result is an annual projected savings of more than $200,000 for 1,000 injured workers who receive a total of about 2,500 prescriptions a month.

The effectiveness of technology is another element in managing costs by assuring that claims are adjudicated correctly, thus avoiding inappropriate and costly additional claims.

For example, Cypress Care recently integrated all eligibility and payment information for more than 30,000 patients in less than 90 days.

Sadly, most of the industry hasn't changed dramatically over the years.In order to get out of the Dark Ages, companies need to improve employee utilization of programs that help companies manage the costs associated with workers' comp. They also need to improve their ability to reject prescription claims for drugs not on the worker's approved drug list because what you don't pay for is as important as what you do pay for.

GARY R. BAUMAN, R.PH, is vice president of clinical services at HealthTrans, a pharmacy benefits administrator based in Greenwood Village, Colo.

March 1, 2005

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