Sophisticated Tools Cut Comp Pharmacy Costs
Sophisticated cost controls are reducing workers’ compensation pharmacy costs, according to Health Strategy Associates’ “Fourth Annual Survey of Prescription Drug Management in Workers’ Compensation.” For the second consecutive year, Atlanta-based Cypress Care sponsored the survey of large and medium workers’ compensation payers.
Twenty-one respondents, whose combined 2006 drug spend of $1.01 billion represents one-quarter of all workers’ compensation drug costs, reported a pharmacy cost increase of 6.5 percent between 2005 and 2006, compared with an 18 percent increase cited in 2003. Despite significant price increases in 2006, there was a three-point decrease in the rate of pharmacy cost inflation from 2005 across all respondents.
“Investing in utilization management tools, more and better data mining and analysis, and addressing third-party billers is paying off,” observed HSA’s Principal Joseph Paduda.
One participant actually decreased its drug spend by eight percent, while another reported a 20 percent increase. Payers experiencing higher costs attributed inflation to higher utilization, physician prescribing behavior, the over-use of pain medications, and higher unit prices. The inability to capture the initial prescription in-network, off-label dispensing of high-powered pain medications, physician dispensing and repackaged drugs, and third-party billers (TPBs) also directly affected total drug costs.
Certain practices appear linked to the dramatically improved results enjoyed by some payers. Medical advisors addressing problematic scripts and prescriber behavior, providing adjusters and clinical staff with basic training on drug issues and trends and access to high-level clinical support when needed, carded programs, and processing all scripts through a Pharmacy Benefit Manager (PBM) to consolidate data, enhance network steerage and penetration, and identify non-compliant pharmacies, were proven cost controls.
About Cypress Care
Privately-held Cypress Care www.cypresscare.com provides pharmacy benefits management and health care benefits to multiple industries including workers’ compensation, Medicare Set Aside and auto markets. Its award-winning best practices help insurance carriers, third-party administrators, governmental entities, and self-insured employers achieve the best financial and clinical outcomes by helping individuals return to work. The company was the Winner of the 2005 PBMI Rx Benefit Innovation Award.
About HSA
Led by Joseph Paduda, HSA (www.healthstrategyassoc.com) is a national consulting firm serving insurers, employers and health care providers. Pharmacy costs and similar issues are covered in Paduda’s blog, www.ManagedCareMatters.com and study results are available by contacting helen@kingknight.com or 813-837-1701.