It’s not the price of the pill!

Some states and regulators are slashing workers’ comp pharmacy reimbursement. This is a huge mistake.

Work comp drug costs have dropped 11 percent over the last 6 years. Work comp PBMs have successfully reduced their revenues and profits, benefiting their patients, customers, employers.

(Contrast this with non-WC drug costs which have gone UP every year)

(Chart from CompPharma 2016 Survey of Prescription Drug Management in Workers’ Compensation; trend indicates decline in annual drug spend)

And for this, they are getting hammered.

Workers’ comp PBMs have done great work reducing the inappropriate use of opioids, protecting patients from deadly drug combinations, and cutting overall drug spend in the process. Fewer new patients are getting opioids and opioid spend is down significantly. Yet for reasons beyond understanding and contrary to all evidence, regulators in some states have decided that drug costs are now too high, so they are drastically slashing fee schedules.

This is not going to end well.

Managing prescription drugs is very labor- and technology-intensive, requiring

  • expert, highly trained, and very specialized staff, and
  • constant updating of critical information systems.

When regulators slash reimbursement, PBMs can’t afford the pharmacists, IT staff, business analysts, customer service personnel, legal and compliance experts, systems, and resources that have been instrumental in delivering better patient care and lower costs.

Folks, it costs money to do this. And fee schedules based on Medicaid ignore the fundamental differences between managing workers’ comp and Medicaid patients.

Without adequate reimbursement, we’re going to return to the bad old days of “fill it and bill it.”

A bit more explanation.  Work comp PBMs have dozens of clinical pharmacists focusing on:

  • developing, managing, and updating formularies for clients and individual patients
  • working with prescribers to alter patients’ drug regimens based on evidence-based guidelines
  • working with employers and insurers to develop and implement prior auth, medical management, and appeals processes
  • implementing comprehensive opioid management programs to prevent addiction and dependency
  • intervening when patients are prescribed multiple opioids, benzos, muscle relaxants, and other deadly combinations

Then there are the IT folks working on data links so claims adjusters get early, customized communications about potential issues, alerts when patients are prescribed long-acting opioids, information about multiple prescribers and/or multiple pharmacies, and dozens of other potential problems.  Problems that may kill patients, prolong disability, addict patients.

They work with PBMs’ business analysts mining data to find doctors with patterns of potentially-inappropriate prescribing patterns – such as the worthies in LA County.

Their legal and compliance teams work with insurers and employers to figure out what can and cannot be done to improve patient safety, alert law enforcement to potential fraud or diversion, and inform stakeholders of the frequent changes in all 50 states’ policies and requirements around work comp pharmacy.

And the front line – the customer service/patient communication staff that talks directly with prescribers, pharmacists, patients, adjusters, families, employers. These women and men have to be patient, kind, thoughtful, educated, knowledgeable.  It’s not like you can just put on a headset and start chatting about morphine equivalents, state regulations, the respiratory implications of increasing opioid intake, or polypharmacy. Initial and ongoing training and education is critically important.

There is much work left to do, as there are still hundreds of thousands of work comp patients taking way too many opioids. These are the most difficult, complex, time- and resource-intensive patients. They are also the patients that are going to be harmed most by the blunt instrument that is fee schedule reduction.

What does this mean for you?

Slashing fee schedules hurts patients, employers, and taxpayers.

If this continues, expect higher overall drug costs due to greater utilization, increased opioid prescribing and dispensing, and longer disability durations.

Note – as president of CompPharma, at some point I may be financially affected by big cuts in fee schedules. Hasn’t happened yet, and it may not.

3 thoughts on “It’s not the price of the pill!

  1. Well, there is another alternative, Joe. If this trend continues, those of us in the payer community who truly understand the value and work of our PBMs as I do, we should be talking more about a financial agreement that goes beyond transactional based – meaning, if the PBM fills the pill, then we pay them, if they don’t, then no pay. Seems like an unsustainable business model to me – do the right thing, don’t get paid, or maybe look the other way and get paid! That’s why we need to start getting away from these ridiculous discussions of – “how much off of AWP is your discount ?” to a more dynamic financial agreement to be our PMB professional consultants which the “good ones” in this industry are still doing despite making more money in doing it!

    • Brian – if we had more Brian Downs, we wouldn’t need any Joe Padudas.

      I completely agree with you. Alas too many work comp buyers measure value by discount below fee schedule. I keep predicting this will change, and I’ve been way too optimistic for way too many years.

  2. Brian hits the nail on the head…I can’t tell you how many discussions I have had with PBMs suggesting that they change there pricing model…..give me a pass through on pricing, give me annual fee for management and margin and an incentive structure to reward them for volume reduction/consumer satisfaction. the traditional AWP model was terrific for them…..until it wasn’t. The interesting truth is that you reduce opiates….you also end up reducing the adjuvents for opiates and the use of RX takes a nose dive…basically kills a transaction based model.

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