Category: Pharmacy, PBMs, and Pharma costs

Sep
9

The state of the industry – pharmacy management in workers’ comp.

Posted by Joe Paduda on Thursday, September 9th, 2021 | Comments

29 payers responded to this year’s Survey, ranging from very large TPAs to small state funds, from small guarantee associations to large insured employers and insurers. As always, no individually-identifiable information is disclosed or contained in the Survey report.

Here’s the key takeaways from our 17th Annual Survey of Prescription Drug Management in Workers’ Comp.

  • Total work comp drug spend for 2020 was about $3 billion, or about 10% of total medical spend.
  • That’s down from $4.8 billion a decade ago.
  • Opioid spend decreased 19.3% from 2019 to 2020
  • Pharmacy management remains important despite these decreases, primarily due to respondents’ view that drugs have a disproportionate influence on claim outcomes and disability duration.

You can download your copy of this year’s Survey here – just click on “resources” at the top. Previous Surveys are also listed and all are free to download.

Note that the public version at the link is not as extensive or detailed as the respondent version. As respondents invest time, energy, and brain power helping with the Survey, they get the detailed version.

 

Aug
10

Opioids, tapering, and risks – what you need to know

Posted by Joe Paduda on Tuesday, August 10th, 2021 | Comments

WorkCompCentral’s Mark Powell penned an excellent piece on just-released research on tapering long-term opioid patients.

One finding demands our attention; researchers found a statistically significant increase in overdoses and mental health crises in the 12 months after tapering was concluded. On average, these adverse events (science talk for bad stuff) happened 6 months after tapering concluded.

From the JAMA article:

In the current study, tapering was associated with absolute differences in rates of overdose or mental health crisis events of approximately 3 to 4 events per 100 person-years compared with nontapering. These findings suggest that adverse events associated with tapering may be relatively common and support HHS recommendations for more gradual dose reductions when feasible and careful monitoring for withdrawal, substance use, and psychological distress. (emphasis added)

The study included 114,000 patients who had been on stable, higher doses (50+ morphine equivalents) of opioids over an 11-year period. It came on the heels of two chronic pain studies published earlier this year; one addressed opioid treatment for chronic pain and the other was a meta-analysis of 190 studies focused on non-opioid treatment. I wrote about both here.

Tapering is an opioid management approach involving a steady decrease in opioid dosage over a prescribed time. The decreases in dosage and how fast patients were tapered varied significantly among the patient population; patients who were on higher doses before tapering were at increased risk for adverse events.

There were some limitations in the study including; the population was Medicare Advantage and commercially insured; individual patient tapering may have varied after the initial decrease; and the data didn’t indicate if the prescriber or patient initiated the tapering.

A thoughtful and detailed discussion of tapering is here…in part the paper states:

The authors emphasize that any medical action taken should involve as much patient buy-in as possible and should not be driven by rigid opioid dose cutoff s and misinterpreted guidelines. The authors of this paper also support sustaining patients on their existing medication at its existing level if patients are continuing to benefit from use, are not experiencing significant side effects, and express the desire to remain on their current medication as opposed to pursuing a taper. In such cases, the risks of a taper would outweigh the potential benefits.

Regardless, this is a wake-up call to the industry. Yes, workers’ comp – once the addiction creation industry – has made great progress in reducing inappropriate opioid usage and some progress in helping long-term opioid patients reduce or eliminate opioids.

That said, there are a variety of opioid management approaches, and we should be considering – and open to – any and all.  Medication-assisted therapy involving methadone or buprenorphine, physical therapy, acupuncture, yoga, and talk therapy are among the approaches that have shown promise.

I’ll end quoting myself from a post back in 2019;

we need to make very sure we are doing the right thing for patients. In some instances this will involve telling patients what they don’t want to hear; we need to be prepared to do that and help them thru the process, while understanding that process is very difficult.

Jul
20

Transparency in drug pricing

Posted by Joe Paduda on Tuesday, July 20th, 2021 | Comments

One of the top issues in work comp pharmacy – heck in all pharmacy – is transparency.

More than half of the 27 respondents to our latest Survey pf pharmacy management in workers’ comp want more transparency, while several others “need more transparency as I don’t feel comfortable not knowing if pricing is fair.”

The question is – what exactly is “transparency?

Is it the customer knowing what the PBM paid for the drug?

What about rebates?

Is it knowing what the pharmacy “charged” the PBM for that drug (which may or may not be what was paid)?

What about MAC pricing (Maximum Allowable Cost), where the PBM fixes the price it pays for a type of drug, say ibuprofen 800 mg, at a flat rate regardless of the drug manufacturer’s AWP price (there are lots of companies making ibuprofen 800mg)?

Net is “transparency” isn’t quite transparent.

What does this mean for you?

If you are evaluating PBMs, make very sure you understand exactly how they define transparency.  The best way to compare is to have them reprice specific drugs from the same pharmacy dispensed on the same day.

 

Jul
16

What’s the end game for Injured Workers’ Pharmacy?

Posted by Joe Paduda on Friday, July 16th, 2021 | Comments

IWP has been a pain in the butt for work comp payers for years. The company’s business model is predicated on getting prescribing doctors and claimant attorneys to have their patients/clients get their meds from IWP.

There are a bunch of potential issues with this, including:

  • there’s no opportunity for the payer to prevent an inappropriate or even dangerous script;
  • clinical management may be significantly compromised;
  • prices can much higher than a similar medication at a retail drug store; and
  • IWP’s billing creates huge headaches for adjusters, clinical managers, bill processors.

While IWP has claimed it manages the clinical aspects of drugs, it also paid $11 million to settle charges filed in Massachusetts ; Attorney General Maura Healey said:

“They  [IWP] dispensed thousands of prescriptions for dangerous drugs, including opioids like fentanyl, with a shocking lack of regard for whether those prescriptions were legitimate,”

WorkCompCentral’s William Rabb wrote an excellent summary of the MA case here;  Rabb noted IWP allegedly “paid referral fees to doctors, claimants’ attorneys and others in exchange for the names of injured workers who were candidates for pain medication…” [I also mentioned this here.]

Just last month, Business Insurance reported Bridgewater, Massachusetts-based Keches Law Group P.C.:

admitted in a consent judgment filed in Suffolk Superior Court that it referred about 800 of its clients and potential clients to Injured Workers Pharmacy LLC to fill prescriptions in exchange for about $90,000,

Keches allegedly entered into two agreements with IWP in which the pharmacy paid for the firm to participate in an X1 racing event and a yacht outing, and picked up the $24,000 tab for a holiday lunch in exchange for referrals, according to court documents.

A Louisiana case involving a $13,111 bill submitted by IWP provided other insights into IWP; according to the article in WorkCompCentral an attorney for IWP’s opponent “said claimants attorneys like to use OWP because they know it will inflate drug prices, thus increasing the value of medical benefits and, as a result, their own fees, which are 20% of benefits awarded.”

While some payers in some states have successfully challenged IWP’s demands for payment, overall the company has more often than not gotten paid for scripts it claims were dispensed to claimants – and in some cases won legal judgments to that effect.

At some point its owner will want to sell and move on. The question is, who will buy it?

I don’t see a PBM buying IWP; the PBM’s clients would likely not be pleased, unless the PBM promised to reform things.

But – and its a really big BUT – if the PBM, or any other buyer for that matter, substantially changed IWP’s business model to make it more “payer friendly” that may well reduce IWP’s cash flow and profits. IWP’s owners’ expectations for a sale price would be based on IWP’s earnings – earnings that may well suffer if the business model changes.

Then there’s the company’s legal history; investors hate potential future legal problems almost as much as a business model that isn’t sustainable [not saying IWP’s isn’t, but not if a PBM buys it]. Given the most recent legal situation was just last month, any buyer is going to be very very careful.

Most PE firms look to exit and make 3+ times their original investment. That looks to be a very heavy lift. Of course, IWP could change its business model to be more payer friendly and a bit less…enthusiastic about compensating docs and attorneys. But any move like this would take a lot of time, require extremely careful planning and execution, and is not guaranteed to preserve profits.

What’s weird about this is CEO Michael Gavin was a good friend, someone I liked, admired and respected. I haven’t spoken with Michael in years…it would be awkward at best.

What does this mean for you?

Be wary of business models that work until they don’t.

Jul
14

Latest data on WC drug spend, opioids, generics and PBM ratings

Posted by Joe Paduda on Wednesday, July 14th, 2021 | Comments

27 payers were kind enough to participate in this year’s Annual Survey of Prescription Drug Management in Workers’ Compensation.  I’m working thru the data now…here are a few highlights. (The Survey falls under CompPharma, a workers’ comp pharmacy consultancy; as always, responses are confidential and not shared with anyone or any entity)

Overall, pretty darn positive (but premature as some data is still coming in) results…

Opioids

Across all 27 respondents, opioids accounted for 18.7% of drug spend, a drop of half a point over the last 2 years.  That’s good news indeed…but there are caveats which we will get into in a future post.

One thing to note – there was a good bit of concern last year that the COVID thing might/would increase opioid usage; that didn’t happen. Again, good news.

Drug spend 

Overall drug spend decreased 12.3% from 2020 to 2021; about half of the respondents attributed the drop at least in part to fewer claims. In turn, most tied the drop in claim count to COVID.

Over the last decade, work comp pharmacy costs have dropped 9 out of the ten years.

Generics

Generic drugs accounted for 89.3% of all scripts, with generic efficiency ( the percentage of all drugs dispensed as generics that could have been generics) averaging just under 98%.

Again, an improvement over 2018’s 87% generic fill percentage.

PBM ratings

Once again respondents rated myMatrixx as the top PBM with 3.7 out of a possible 5 points, with market-share leader Optum trailing by a half-point. Mitchell is tied with Optum, while Coventry’s First Script lags another half-point behind. (Mitchell recently acquired Coventry)

Again, data is preliminary and subject to change.

More to come; as always a big thank you to the respondents who will each received a detailed copy of the Survey report; a public version will also be prepared and available at no cost to all.

Note – myMatrixx is an HSA consulting client; myMatrixx was not involved in conducting the Survey.

Jun
17

Thursday catch-up

Posted by Joe Paduda on Thursday, June 17th, 2021 | Comments

Doing my best to avoid work on Fridays…so moving this occasional catch-up post to Thursdays…

COVID

Promising news on the effectiveness of a drug to help infected patients fight off the virus was reported by the Economist. The good news – Regen-Cov:

saved the lives of many of those unable to make their own antibodies in response to SARS-CoV-2. Such “seronegative” individuals constituted about a third of the 9,785 hospital patients in the study…compared to a control group given standard treatment … 20% more patients survived

The bad news – it’s stupid expensive, and supply chain issues are hampering production.

A study conducted by the National Institutes of Health indicates COVID may have been in circulation earlier than originally thought. Blood samples from Illinois, MassachusettsMississippi, Pennsylvania and Wisconsin indicate the virus was in those states in December 2019. An earlier CDC study found similar evidence in California, Oregon, and Washington.

These findings indicate a better and more thorough process to identify disease outbreaks may well be warranted.

Comp drugs

WCRI is hosting a timely webinar on Interstate Variations and Trends in WC Drug Payments on June 24. Register here. Gotta say I’m darn impressed by the researchers’ ability to obtain, analyze, and report on payments as recent as Q2 2020. This makes WCRI’s information much more actionable for regulators, clinicians, and payers alike.

Dr. Vennela Thumula and Dongchun Wang of WCRI will be guiding us thru their findings; the webinar is free.

I am finishing up the latest Annual Survey of PBM in WC which will have 2020 and 2019 data; last chance to participate and receive a detailed, respondent-only version of the report. If you want to participate let us know in the comment section below (there’s no cost to participants).

Couple interesting – and very preliminary – takeaways…

  • growing interest in transparency, along with an increased awareness that this isn’t a simple issue.
  • spend continues to decrease, with respondents attributing some of the decrease to COVID.
  • opioid spend continues to drop, but most respondents are still struggling to help chronic pain patients/long-time users of opioids reduce usage.
  • there’s a growing awareness that the PBM pricing model needs to change. With spend declining and a push for transparency, knowledgeable payers understand that paying PBMs less year after year is not sustainable.

Previous public versions of the Survey Report are available here for download at no cost.

 

 

 

 

 

 

 

Hospital pricing

Hospitals are supposed to be publishing their prices – at least Federal regulations require them to. But those smart, sneaky administrators are figuring out all kinds of ways to avoid telling you how much it will cost for that MRI, drug, band-aid, or lung transplant.

From JAMA:

hospitals must publish discounted cash prices (applicable to uninsured patients) and payer-specific negotiated rates. Second, hospitals must display price data, including expected out-of-pocket costs, for “shoppable services” that can be scheduled in advance (eg, office visits) in a consumer-friendly manner that facilitates service-specific comparisons across hospitals (eg, price estimator tools). [emphasis added]

As of early March, only 17 of 100 randomly selected hospitals were complying with the regulations. The penalty for non-compliance is…wait for it…

$300 a day.

Perhaps if the Feds charged hospitals the same way hospitals they charge us, we’d have a bit more compliance. 

How about…the Feds tell the hospitals after the fact what the cost will be, based on a “compliance chargemaster” that takes into account the hospital’s margin, quality scores, number of collection suits it has filed, and medical error rate.

Thanks to the estimable David Deitz MD PhD for the head’s up.

Wellness works

Finally, HealthAffairs reports wellness programs don’t really improve population health, reduce healthcare spending, or improve employment outcomes. 

Almost 40 years ago, I was halfway through a Master’s of Science in Health/Fitness Management when it became obvious this was NOT going to be a lucrative career…quite the opposite. Not saying I was prescient, just that employers sensed this was a nice-to-have and not a got-to-have, and that lack of importance showed in salaries.

Dodged that bullet.

And really finally, congratulations to my favorite baseball team – the White Sox have the best record in baseball after taking 2 of 3 from Tampa Bay. I

know my friends in the Bay area will be heckling me when the Rays surge again…hey, you gotta take advantage of good news when it comes!

May
27

The latest on work comp pharmacy

Posted by Joe Paduda on Thursday, May 27th, 2021 | Comments

I’m almost halfway thru the 17th (!!) annual survey of Pharmacy Benefit Management in Workers’ Comp.  Here are some VERY preliminary results (which are almost certain to change).

If you are a WC payer and want to participate, drop me a note in the Comments section.  Public versions of past surveys are here, respondents receive a much more detailed version.

Findings

All but one respondent saw a drop in drug spend from 2019 to 2020; the biggest cost reduction driver was fewer claims.

Despite a 7+ year trend of declining drug costs, respondents view prescription drug issues as somewhat more important than other medical issues. This is likely driven by drugs’ impact on recovery and return to work.

Transparency remains a significant concern, with only 2 respondents having full visibility into drug costs. Most want more transparency and no one is really comfortable with AWP.

Opioid spend continues to decline...which is the good news.  Not-so-good is the continued problem of helping long-term users reduce or eliminate opioids. Prescriber intransigence is the major obstacle followed by attorneys blocking access to patients.

Few payers have audited their PBM and those that have are (mostly) just checking AWP pricing compliance.

Several noted out-of-state mail order pharmacies – mostly IWP and entities in Pennsylvania – continue to be a sore spot, adding cost, negatively affecting clinical management, and wasting adjuster time.

What does this mean for you?

Costs are down, but pharmacy is about much more than the price of the pill. 

 

May
26

Have work comp payers given up on physician dispensing?

Posted by Joe Paduda on Wednesday, May 26th, 2021 | Comments

It sure looks like they/you have.

WCRI’s latest report finds:

  • Physician-dispensed drugs (PDDs) accounted for more than half of drug costs per claim in Q1 2020 in four states – Florida, Georgia, Illinois, and Maryland.
  • In 12 states, doc-dispensed dermatological agents accounted for most payments for this drug class.
  • Louisiana is worst-off, with employers paying $190 per claim for dermo drugs in the 1st quarter of 2020…Illinois is right behind at $181.
  • Kansas and Connecticut saw payments for those dermo drugs triple from Q1 2017 to Q1 2020.

That profit-sucking prescribing by docs in Connecticut is why total drug spend increased 30% in the Nutmeg State – making it one of two states that had drug spend increases. Florida – the home state of PDD – was the other. (Across all subject states, drug costs dropped 41%.)

Having lived in CT for over 20 years, I’m really stumped by the precipitous increase in skin care drugs.

What could POSSIBLY be driving this massive need for occupationally-driven skin care/topicals?

Did sun spots create a pandemic of skin cancer but somehow only affect the second-smallest state?

Did a massive refinery accident expose tens of thousands of workers to burns or skin infections?

Did a hyper-virulent new breed of poison ivy run rampant, affecting thousands of landscaping and municipal workers?

Did the emerging cannabis industry fail to protect its workers from fertilizer burns, exposing thousands of workers to painful blisters?

Did everyone in Connecticut suddenly become unable to swallow a pill?

Of course not.

The real question is this:

why haven’t insurers, TPAs, and self-insured employers used CT’s Medical Care Plan to ban physician dispensing? Payers including the Workers’ Comp Trust of CT have pretty much eliminated physician dispensing.

It’s not just Connecticut.  PDD costs are outrageous, and all credible research indicates PDD is totally unnecessary, increases medical costs, and prolongs disability.

WCRI’s research should be a call to action.  Legislators, regulators, and payers are doing their policyholders and clients a disservice by failing to aggressively attack physician dispensing.

And those clients and policyholders are equally at fault – it is up to you to work with your PBM and payer to stop this rampant profiteering. 

What does this mean for you?

Yeah, I know it’s hard. Most important things are. Get to it.

 

 

 

 

 

May
21

One is not like the others.

Posted by Joe Paduda on Friday, May 21st, 2021 | Comments

Hospital in patient and outpatient, surgery, DME/home health, PT, pharmacy, imaging, lab…

Which one is NOT like the others??

That’s easy – when it comes to impact on legacy/older claims, it’s all about pharmacy. The older a claim is, the greater the percentage of spend is for drugs.

The older and more costly the claim, the greater the percentage of spend is for drugs (except for those cat claims needing long-term home health/facility care).

And, the higher the reserves, the greater the percentage of those reserves is for drugs (except for those cat claims needing long-term home health/facility care).

Both graphs from NCCI; Medical Services by Size of Claim—2011 Update.

Updated information from NCCI...shows drugs continue to be a major driver of claim costs in older claims…excellent research by NCCI’s Matt Schutz…

especially for those really expensive claims.

But that’s only half the story.  The other half is the impact the type of drugs has on claim outcomes. Most simply, most patients on opioids after 8 years need a lot of help, assistance, patience, and support to recover functionality. Some can do well on opioids – most do not.

What does this mean for you?

So, how are you buying PBM services? 

Do you even ask how the PBM will help reduce long-term drug spend?

Do you ask to see data on their results by age of claim?

Do you dive deep into their abilities, tools, programs and approaches to addressing long-term claims?

Does their reporting support this by identifying, tracking, and quantifying results?

If you aren’t focusing on the PBM’s impact on long-term claims, you’re doing it wrong.

 

Apr
30

Work comp pharmacy and claim outcomes

Posted by Joe Paduda on Friday, April 30th, 2021 | Comments

myMatrixx’ Drug Trends Report is out  – here are my key takeaways.

Behavioral Health

Kudos to the authors for the comprehensively addressing behavioral health (BH) issues. Among the takeaways are:

  • Not addressing the mental health of injured workers can delay return-to-work, increase the risk of opioid addiction or both.
  • Although mental health conditions rarely can be proven as work-related on their own, they often arise as a result of work-related injuries. (italics added)
  • The older the claim, the more likely psychotropic medications were prescribed.

What this means

Claim closure and settlement are driven by the recovery of the patient. You are not going to get those claims closed or settled unless and until BH issues are resolved.

Opioids and benzos drive claim outcomes

The Report referenced a 2014 JOEM study noting the more dangerous drugs a patient is prescribed, the higher the claim cost – and the longer the claim is open.

While there’s certainly a severity issue at play here, the central takeaway is minimizing the inappropriate use of short- and long-acting opioids and benzodiazepines is key to patient recovery.

What this means

If your PBM and clinical staff aren’t on top of opioids and benzos – as in instantly aware of scripts and able to deploy clinical support expertise – those patients are far less likely to recover – and you’re going to pay dearly.  

Both of these issues – behavioral health and dangerous drugs – are critically important to patient recovery and claim closure.

As I noted yesterday, far too often WC payers choose vendors/partners based on the wrong criteria.

Nowhere is this more common than for pharmacy management. Price is important, and service is key – but both are secondary to the impact of pharmacy on claim outcomes.

What this means for you.

More than any other service, PBMs drive claim outcomes – for better or worse.  

note – myMatrixx is an HSA consulting client. I’m honored to work with them.