Maximize the Value of Your Pharmacy Benefits Manager


PBMs Can Be More Than Discounted Prescriptions
Insurers and self-insured employers often utilize Pharmacy Benefit Managers (PBM) to manage the cost of prescription medications in their workers’ compensation claims.  The contracts that PBMs have with the national drug store chains reduce the cost of each individual prescription given to an injured employee. Unfortunately, that is where many insurers and self-insured employers stop utilizing their PBM.  Often more, or even much more, can be done by insurers and self-insured employers to control the cost of medications.
Most Doctors Disconnected From Cost of Workers Comp Claim
Most doctors treating injured employees have little or no direct contact with the employers and adjusters handling the workers’ compensation claim.  The doctor’s office staff will handle all telephone calls, emails or faxes from employers, nurse case managers or adjusters. The limited contact the doctors have with anyone besides the employee will be brief discussions with the nurse case manager. For the most part, doctors work absent of any input from other parties involved in the workers’ compensation claim and are oblivious to the cost control activities on the claim.
The goal of the treating doctor is to assist the injured employee in regaining as much functionality as possible.  The treating doctor will normally prescribe all necessary diagnostic testing, medical treatment and medications without concern for the cost. 
Lack of Involvement Leads to Higher Costs
This lack of involvement in the cost of medications often leads the doctor to make medication choices that cost more, but are no more beneficial to the injured employee than alternative choices.  For instance – doctors will often write a prescription with the notation “DAW”.   DAW stands for ‘dispense as written’ which tells the pharmacist not to substitute a generic drug for the name brand drug.   As many drugs have a generic version that is biochemically and therapeutically equivalent, the DAW adds additional cost to the prescription, but does not provide any additional benefit to the injured employee.
The PBM should contact the medical provider’s office and inquire why the DAW is needed when there is a generic equivalent.  If your PBM is not doing this when the medical provider writes the prescription for the name brand drug, you should request they start doing so.  Also, a follow up letter should be sent by the PBM to the medical provider asking for all future prescriptions to be for the generic version of the medication.  If your PBM is not doing this, again you should request they do so.
PBM Should Push for Generics
If the medical provider continues to write prescriptions for the name-brand drugs when generic equivalents are available, a Letter of Medical Necessity should be generated by the PBM and sent to the medical provider before the PBM authorizes the pharmacist to dispense the medication.  The Letter of Medical Necessity will ask the doctor to provide documentation as to why the name brand drug must be used and not the generic equivalent.  Often there is no reason for the name brand drug other than that is what the doctor has always prescribed for the particular medical need.  When the doctor has to respond to the Letter of Medical Necessity, the prescription usually gets changed to the generic version.  This is not to say that there are no situations where the name brand drug is a better option.  The Letter of Medical Necessity does not dispute the use of the name brand drug, but does ask why.
If neither an inquiry as to why a prescription is written as DAW nor a Letter of Medical Necessity changes the behavior of the treating doctor, the employer, nurse case manager or adjuster should request a Peer-to-Peer Review, which may make a difference. 
Your PBM Should Have Medical Opinion to Review All Prescriptions
Your PBM should have on-staff, or at least on retainer, a doctor who can discuss with the treating doctor the reason a particular prescription is being written (especially with narcotics and other medications which are utilized on a long-term basis).  The treating doctor may have a valid reason why the more expensive (or most expensive) option is necessary.  The Peer-to-Peer Review will frequently result in the treating doctor recognizing that cost is a factor in the medical treatment, resulting in the treating doctor writing prescriptions that provide the needed medical care while controlling cost.
We recommend you confirm with your PBM they are questioning all DAW prescriptions, sending a letter to the doctor asking for future prescriptions to be generic, sending a Letter of Medical Necessity when generics are not used, and utilizing Peer-to-Peer Reviews when needed to control the cost of medications.

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:


Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. Contact






Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.


©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at:

IOSH Project Enhances Submariner Safety

Hazardous industry experts from the world’s largest organization for health and safety professionals have recently played a part in improving submarine safety, according to the Institution of Occupational Safety and Health.
(IOSH) Hazardous Industries Group (HIG) worked together with the Submarine Enterprise on a Peer Review, to improve the safety of submariners who work with nuclear energy, chemicals and other major hazards on a daily basis. (WCxKit)
The Peer Review Implementation Team made use of HIG’s experience of Peer Review to develop a process that helped enhance safety culture. Its aim was to further reduce risks to individuals and prevent the possible degradation of layers of protection upon which submarine safety depends.
This arose out of IOSH HIG’s overall peer review project, which is aimed at developing teams of professionals to go into each other’s companies and share best practices, helping to change and develop safety strategy.
Royal Navy Commander Mark Westwood and Dave Mason, IOSH HIG committee member, worked collaboratively to encourage the highest standards of safety across the Submarine Enterprise.
Mason, who is also a founding member of IOSH HIG Peer Review project, said, “The key to our Peer Review process is to define what excellence looks like, to engage leaders in ‘walking the talk,’ to observe what people really do and to identify an organization’s opportunity for strategic development of safety.
“Submariners have one of the most dangerous jobs in the world. So the fact that this process has been integrated into such a diverse and complex industry shows how flexible and powerful a tool it is.”

was invited to work with the Submarine Enterprise to develop the Peer Review process, in a bid to help enhance its safety culture and maintain high standards of safety.(WCxKit)
The companies involved included Ministry of Defence (MoD) Defence Equipment and Support, Royal Navy – Navy Command, Atomic Weapons Establishment (AWE) Plc, Babcock Marine, Rolls Royce and BAE Systems Submarine Solutions – all of whom agreed to exchange information, encourage communication, and emulate each other’s best practices.

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See for more information. Contact:


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact

Ten Medical Cost Containment Strategies To Reduce OVERALL Costs

There are many available techniques to control medical cost in workers compensation.
A search of the internet for Medical Cost Containment will provide a tremendous amount of information but each website is focused on the product(s) or service(s) provided by the particular company. There are many and varied means of controlling medical cost in workers compensation which span a broader range of services than almost any single company can provide.
To be truly effective in controlling the medical cost of workers compensation, employers and insurers should not limit their medical cost containment efforts to only one or a few areas. While state statutes may limit or bar the use of some the methods of controlling cost, the employer or the insurer should utilize as many medical cost containment strategies as possible. All of the following medical cost containment strategies have been shown to save money for the employer or the insurer. (WCxKit)  Spend now to achieve overall lower workers compensation costs. This is how to hold costs down over the long term. This is referred to as the TLC (total loss costs).
Top 10 Medical Cost Containment Strategies
1.  A SUPERIOR Medical Provider Network is a group of doctors, hospitals and other medical providers with whom an insurer or a self-insured employer has prearranged for medical treatment for employees injured on the job AND provides better results than other providers – lower litigation rates, better medical outcome, faster return to work. 
2. Nurse Triage  is used as the very first phone call that is made (after the supervisor). The employee calls an RN who discusses the severity of the injury and the probably type of treatment that will be needed. These aren’t just any nurse, but specially trained ones using medical algorithms and overseen by sophisticated protocol to ensure appropriate referrals are made the the Emergency Dept, clinical treatment or self-care. If every injury is called in to Nurse Triage, the number of lost time claims will be reduced by 40%. The ROI is huge! I’ve toured the Medcor operation and was amazed at the efficiency and the training (I sat in the training room to view the type of training the RNs receive.) I was a guest of Broadspire who uses Medcor for their sophisticated medical protocol partner.  
3. Medical Management is the practice of having an experienced nurse case manager to coordinate and managed the medical care received by the employee. This includes both the senior nurse reviewer who may be dedicated to an account handling all lost time or serious medical claims for that company. They review all care and treatment for injured employees to insure it is appropriate and timely. If additional tests are needed they will advise the doctors. Their priority is getting the employee back to full recover.
4. Utilization Review is the independent confirmation of the need for a medical service. Utilization review includes precertification reviews before the medical care is provided, concurrent reviews while the employee is in the hospital or during on-going medical care, and retrospective reviews to verify the needs for the medical services already provided.
5. Medical Bill Reviews are normally done by companies that specialize in reviewing the medical bill to verify the accuracy of the medical bill diagnostic codes and medical bill charges. The medical bill charges are either compared to the state fee bill schedule or with what are reasonable and customary charges for the medical services provided. Medical bill reviews include both the audits of doctor bill and hospital bill auditing.
6. Pharmacy Benefit Managers are companies that specialize in managing and controlling the cost of medications prescribed for the employee. This includes both obtaining discounts on medications plus providing drug utilization reviews to prevent the excessive use of narcotics and other medications. Using physicians to actively review claims results in proactive pharmacy benefits management, rather than after the fact review of medications already taken, can stop overuse before it occurs.
7. Independent Medical Examinations occur when the employee is sent to another medical provider for a second opinion. Independent medical examinations are most often used when the employee’s medical recovery progress is slower than normal.
8.  Peer Reviews is the practice of sending the medical reports and diagnostic reports to another medical provider for a review of the medical information for the purpose of confirming the appropriateness and quality of the medical care being provided. Using physician review is in my opinion one of the most useful tools an employer can use. They can read he medical reports to find what’s NOT there. They look for other possible causes of injury, appropriateness of care and make sure employees go to the correct specialists.  This service may be called Peer-to-Peer.
9.  The era of computers has created the ability to use technology to obtain information that would not otherwise be available including:
1.      Predictive Modeling is used to identify early on those claims that have a high probability of becoming expensive claims so they can be acted upon quickly.
2.      Data Mining is used to identify high cost medical providers; medical providers who are slow to return the employee to work and to identify other claim related information that impacts claim cost.
3.      Benchmarking is using the known information about your workers’ compensation claims to compare your cost control results against others employers or insurers. (WCxKit)
10. Send me your ideas for YOUR favorite Medical Cost Containment Strategy. Let me know if it’s OK to share your ideas. Please write up to 200 words.

Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.  Contact:

Workers Comp Resource Center Newsletter

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact

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