Drug costs in workers comp – and the answer is

I’ve just about completed compiling results of the Fifth Annual Survey of Prescription Drug Management in Workers Comp. While the report won’t be completed for a couple weeks, here are a few factoids that are rather compelling.
Drug trend continues to moderate, with inflation in 2007 coming in at 4.3%. That’s a big improvement over last year’s 6.5%, which was a big improvement over the previous year’s 9.5%…
Generic fills (the percentage of scripts that are filled with generics) looks to be in the high seventy percent range, with generic efficiency around 90% (that’s the percentage of scripts that could be filled with generics that are).
New this year is a question about first fill capture rate, defined as the percentage of initial scripts that are routed through the PBM’s network. This is starting to get attention, with the average respondent rating it just under ‘very important’. That doesn’t mean they have the data – about half of the twenty payers surveyed couldn’t identify their first fill rate. Of those who could, the numbers indicate about one-fifth of initial scripts are in-network.
Many of the survey respondents (primarily large and mid-size carriers, state funds, and TPAs) have a lot more insight into their drug spend, know what the cost drivers are, and the ones with the lowest inflation have all put programs in place to clinically manage drugs.
Thanks to all the folks who set aside time to help with the survey – you know who you are.


A few facts about Pharmacy Management in Workers Comp

I’m knee deep in my annual survey of pharmacy management in workers’ comp, and if I look at one more column of data I’m going to need a few class 2’s myself.
So in the interest of my sanity, here are a few early findings from the survey.
Inflation looks to be down from last year’s 6.5%, marking the fifth consecutive year of ‘decreases in the rate of increase’. More detail to follow on what’s causing the decline, but preliminary review indicates the focus on utilization is continuing to reduce the volume and type of drugs dispensed. As NCCI has noted, utilization is significantly more important cost driver than price.
Clinical programs are getting better, more targeted, more sophisticated, and more effective. A focus on addressing high cost claimants is almost universal among the best performing payers – this may seem blindingly obvious, but requires one to have data, know what to look for, and be able to develop and implement programs to attack the issue.
I try to use the same questions each year so we can track trends and changes in the industry. But new things, points of interest, and queries come in each year which requires that some old and not-as-interesting-any-more questions have to get dropped to make room for the new stuff.
This year we added questions on generic efficiency and fill rates. While the analysis is not yet complete, and a couple more respondents are going to send their data in, the preliminary figures indicate the average generic fill rate is right around 70%, with generic efficiency (the percentage of scripts that could be filled with generics that are) around 90%.
This is an average – types of business written and managed, jurisdictional nuances, data availability, accuracy, and consistency all make this stat somewhat questionable.
That said, better to start asking then to wait for perfection.
Thanks to Cypress Care for sponsoring the survey for the third consecutive year.


What’s going on in Pennsylvania?

It’s 2008. There are thousands of really smart people working to change the delivery of health care, reduce inappropriate use, and improve outcomes.
But in one state, things aren’t getting better – they are getting worse. (I’m not picking on Pennsylvania; they just have the misfortune of being in the news more than other states lately)
A study of admission rates in Pennsylvania found that patients with chronic conditions are being admitted to the hospital more often. The analysis focused on HMO members with diabetes, asthma, and/or hypertension and the result is particularly troubling as these conditions are responsible for a large percentage of US health care costs.
Notably, these HMOs have also been lauded for their effectiveness in delivering preventive care, care that should help reduce the number of admissions for these conditions.
Previous studies indicate that effective primary care can dramatically reduce the number of admissions for these conditions. And further reductions can be achieved by implementing quality improvement programs, programs that have well-documented results.
So we’re left with the conclusion that despite the fact that we know how to keep patients with chronic conditions out of the hospital, admission rates are going up. And Pennsylvania is not particularly bad – there are a dozen other states that spend a lot more money on inpatient chronic care than the national average.
Can you sense the frustration?


Wasted dollars

Alex Swedlow and the good folks at CWCI have published a study that clearly demonstrates the amount of waste in the US health care system, waste generated by nothing other than greed and lousy medicine. While the analysis focused on workers comp, the lessons cross all coverage.
The great thing about workers comp is that unlike health insurance, payers are actually concerned about and financially motivated to ensure claimants get the amount and type of care needed to help them recover and get back to work. And there is a wealth of data to evaluate the effects of medical treatment on RTW.
California changed its workers comp rules a few years ago to limit the number of physical or occupational therapy or chiropractic visits a claimant would get covered by workers comp. The limit was 24 (for each, not together), which all the data suggest is more than adequate to take care of 90%+ of WC medical conditions – surgical or non.
So, what happened?
The average number of PT, OT, or chiro visits per patient dropped by almost half, and the number of patients with more than 24 visits dropped from 30.4% to 9.7% (a decline of 68%). Costs declined dramatically as well.
But did this lead to poorer outcomes?
The results, while encouraging, are not as clear.
While there are data from California that appear to show reductions in the length of disability, the results are muddled by a cap on benefit payments that was also part of the WC reforms. The duration of disability (the length of time claimants were out of work) did decline post-reform. Comparing disability duration two years post-injury, the median length of disability declined by 21.4% (average was down 17.4%).
My sense is the reduction in physical medicine visits contributed to the drop in disability duration – without endless visits to PTs and Chiros to receive ‘care’ that was not helping them recover but merely extending the process, claimants were more likely to be released to return to work.
There’s a lesson here for the non-workers comp world, and policy wonks in particular. It is this – providers overtreat, to the detriment of the patient and the payer. Draconian measures such as flat limits on the amount of treatment do work.
With health reform on the horizon, here’s a great example of the waste in our health care ‘system’, waste that benefits the provider.


How does Oregon do it?

Oregon’s workers comp system is a success.
It is 42nd lowest in insurance rates and among the highest benefits for injured workers in the nation.
Premium rates have not gone up for eighteen (18) years.
Costs have declined 50% during that time.
Here are some of the factors behind that success.

Continue reading How does Oregon do it?