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Physician dispensing and auto insurance

Over the last couple weeks I’ve fielded several calls from automobile insurance companies seeking information about the big drug bills they’ve been getting for physician dispensed drugs.
This is more of an issue in states with high dollar coverage for medical costs, but there’s increasing evidence that physician dispensing is hitting more and more auto claimants in many different jurisdictions.
There’s several reasons these bad actors are pushing into auto.
1. some states are controlling the pricing of repackaged/physician dispensed medications for workers comp, so docs – and their suppliers – are looking for greener pastures.
2. many auto insurers aren’t yet aware of the practice, so they’re just paying the bills without much scrutiny
3. it’s profitable – really, really profitable.
There’s a downside for consumers as well as their insurers. In addition to the added health risks inherent in physician-dispensed medications, these inflated charges also cause insureds to reach their policy limits much faster, thereby running out of insurance coverage for their medical costs.
This is happening in Hawai’i, Michigan, Georgia, Florida, and likely many other states.
So, what’s an auto insurer to do?

I suggest you start by figuring out the size of the problem. Find out the TINs these entities are billing under, total up their charges, scripts, and your payments, and see how bad it is.
If it’s not much, that’s great – for now. That won’t last.

One thought on “Physician dispensing and auto insurance”

  1. Workers Comp has been successful in dealing with the problem and getting states to curb the practice because WC has widely adopted PBM programs. So practices are in place to deal with outliers. Auto insurers, with few exceptions, do not have programs (or data) in place to improve customer benefit or evaluate pharmacy spend impact on the business.
    It is something that will come to the fore as more medical spend continues to be pharma related.

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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