One of the driving factors in workers’ compensation cost containment is pharmaceutical waste. This waste is having a significant impact on the medical costs associated with claims. Seeking partners that have solutions to reduce waste can lead to a more effective program and benefit all interested stakeholders.
Waste in Pharmacy Benefits Defined
The concept of “waste” can be defined as the extra amount of money spent with no incremental gain in health outcomes. In the area of pharmacy benefits, this most often takes place when prescription medications are dispensed through more expensive methods of delivery to the injured worker, for example through the physician’s office directly. It can also be the result of inexperienced healthcare consumers—the injured worker—making misinformed decisions on where to receive their prescription medications.
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Trends in Work Comp Pharmacy Benefits Costs
According to Express Script’s Workers’ Compensation Drug Trend Report, payers spend 58% more for physician-dispensed medications than for pharmacy-dispensed medications. Also, medications dispensed via home delivery will often realize a greater discount than pharmacy-dispensed medications.
The 2016 NCCI Workers’ Compensation and Prescription Drugs Research Brief states “recent Rx findings include the countrywide 2014 physician‐dispensed share of prescription drug costs was 10%…in highly regulated states the physician‐dispensed share of prescription drug costs was less than 2%…if not highly regulated…costs exceeded 20%.”
Convenience and Safety
The most attractive feature of physician dispensing for the injured worker is convenience. However, it is important to recognize that medications dispensed from a physician’s office are not subject to the same safety controls and oversight as in retail or home delivery pharmacy.
Do Not Allow Physician Dispensing
If the employee’s medical provider has been dispensing medication to the injured employee from the provider’s office, send a letter to the employee, employee’s attorney, and the doctor advising that the PBM should provide all medications through the pharmacy benefit card provided to the employee. The letter to the employee should detail the safety concerns, as well as highlight the benefits and potential to eliminate waste. In addition, encourage PPOs to create policy forbidding network physicians to dispense drugs.
Reasons to avoid physician dispensing:
- Cost of drugs is significantly higher
- Dispensing from physicians office bypasses all of the safety measures of prospective and retrospective review by the PBM.
- Misaligned financial incentives for prescribing physician
Consider Home Delivery For Long-Term Medications
Home delivery is the most convenient, safe, and cost-effective delivery channel when an injured worker is taking long-term medications for their injuries. The use of home delivery a successful model that can meet the needs of all interested stakeholders in a workers’ compensation program.
- Insurance Carriers and TPAs: Home delivery meets the needs of this stakeholder by reducing costs associated with pharmacy claims and reducing waste. It allows for the easy monitoring of what prescription medications are being ordered to avoid issues associated with addiction. It can also reduce dispensing costs and streamlines billing purposes. This is especially the case of self-insured employers or those who use TPAs to administer their workers’ compensation programs; and
- Injured workers: Home delivery is the most convenient mechanism for an injured worker to receive their long-term prescription medication. It is predictable, reduces waste, and utilizes state-of-the-art technology, checkpoints, and automation to virtually eliminate errors that error retail pharmacy.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center.
Contact: [email protected].
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