Reducing Narcotics Abuse in Workers Compensation

On-the-job injuries often involve chronic pain and long-term liability for workers compensation payors. Many times, pain from a chronic injury is treated with narcotics. According to the 2010 Progressive Medical Drug Spend Analysis, narcotic spending accounts for 34 percent of workers compensation medication expenses.1 While narcotics can be beneficial in the treatment plan for a patient in pain, there are serious risks involved when they are not used properly.
The Centers for Disease Control (CDC) and the Substance Abuse and Mental Health Services Administration (SAMHSA) both indicate increasing misuse and abuse of narcotics over the past decade. SAMHSA data shows there was a significant increase from 2000 to 2006 in the treatment of substance abuse cases related to abuse of opioid analgesics.2 In addition, another study co-released by CDC and SAMHSA found emergency room visits linked to nonmedical use of narcotics rose 111 percent between 2004 and 2008.3
As the cost of prescriptions, including narcotic medications, directly impacts the cost of a workers compensation claim, insurers are looking for ways to quickly get control of cases of misuse and abuse. One of the most efficient ways to manage narcotic use in a claimant population is to partner with a pharmacy benefit manager (PBM). A PBM can clearly define a strategy for proactively and effectively monitoring narcotics. These plans and strategies help payors ensure injured worker safety and reduce expenses. (WCxKit)
The Workers Compensation Narcotics Quandary
Narcotics, also referenced as opioids or opiates, have a long history of being used to therapeutically treat pain resulting from on-the-job injuries. They are often prescribed to alleviate pain after an injury first occurs, when other drugs are ineffective for acute pain and in chronic pain cases.
And, while narcotics are considered safe and effective if used properly, they have the potential for leading to addiction and abuse if not monitored and controlled. Misuse and abuse of narcotics represent three areas of particular concern for workers compensation insurers including:
1.      Potential for serious health risks.
2.      Higher percentage of medical expenses as claims age.
3.      Risk of litigation.
Potential for Serious Health Risks
The United States Food and Drug Administration (FDA) has recognized serious risks associated with narcotics use including respiratory depression, central nervous system depression, addiction, and death. Some of these risks are associated with improper dosing, indication, patient selection, abuse, and addiction. As a result of these adverse events, the FDA has begun to take serious steps to monitor whether the benefits of narcotic medications outweigh the risks associated with short- and long-term usage.4
These steps include an FDA-led panel developing Risk Evaluation and Mitigation Strategy (REMS) for long-acting narcotics. The purpose of REMS is to ensure that prescribers are educated regarding the proper use of narcotics and that benefits outweigh risks associated with:
1.      Abuse.
2.      Misuse.
3.      Overdose, both accidental and intentional.
Narcotics, including methadone tablets, fentanyl patches and extended-release medications containing morphine, oxymorphone, and oxycodone are among the medications effected by the REMS requirement. Narcotics on the FDA’s list are provided in a table at the end of this article.5
Recently, the FDA proposed plans to further address the increasing misuse and abuse of narcotics specifically related to extended-release (ER) and immediate-release (IR) opioid analgesics. While a panel committee agreed the goals of the REMS are appropriate, the individual components of the REMS are insufficient to address the misuse and abuse of ER opioid analgesics. It was agreed that these particular REMS plans be tabled until there is a stronger proposal in place.6
Higher Percentage of Medical Expenses as Claims Age
While narcotics account for more than a quarter of workers compensation medication spending, even more troubling is the allocation of that spending. In a recent study released by the National Council on Compensation Insurance, narcotics’ total share of medication expenses increases as claims age – from 15 percent in year one to as much as 35 percent in the fifth year of service.7
The role narcotics play in total workers compensation claims expenses has not gone unnoticed by state workers compensation funds. For example, the Arizona State Compensation Fund noted they were easily able to pinpoint over-prescribing of narcotics as a key source of inflated medical costs.8
What’s more, the longer an injured worker is on narcotics, the longer the delay in the injured worker’s ability to return to work in a timely fashion. There is also an increased likelihood the payor will need to pay for rehabilitation programs for addiction.
Risk of Litigation
Narcotic abuse poses serious legal risks for workers compensation payors. While much of the litigation to date has been targeted against physicians and pharmacies, there are many experts who believe workers compensation payors will be next. This is because payors have access to data showing patterns of abuse and misuse and may have the duty to warn injured workers and prescribers in cases involving potential misuse.9
Workers compensation payors who choose not to take proactive measures to monitor utilization or communicate with physicians could face lawsuits for negligence. This is especially critical in cases where one or more narcotics are prescribed for more than six months at a time. (WCxKit)
With respect to paying questionable claims, many payors have done so rather than face the expense and time of litigation. Morally, this poses a key question for insurers. Is it acceptable for insurers to settle fraudulent claims or does it position them as aiding and abetting the perpetrator? This could change if payors become defendants in lawsuits related to narcotic abuse.
1. “2010 Workers Compensation Drug Spend Analysis.” Progressive Medical, April 2010.
2. “Risk Evaluation and Mitigation Strategies for Certain Opioid Drugs; Notice of Public Meeting,” Federal Register, Volume 74, Number 74; Notices, Pages 17967-17970, Department of Health & Human Services, Food and Drug Administration, Docket No: FDA-2—0-N-0143.
3. “Trends in Emergency Department Visits Involving Nonmedical Use of Narcotic Pain Relievers,” Substance Abuse and Mental Health Services Administration and Centers for Disease Control,
4. Gardiner Harris, “FDA to Place New Limits on Prescriptions of Narcotics,” New York Times, February 9, 2009.
5. “Opioids Products Chart,” U.S. Food and Drug Administration,
6. “Opioid Drugs and Risk Evaluation and Mitigation Strategies (REMS),” U.S. Food and Drug Administration,
7. Barry Lipton, Chris Laws and Linda Li, “Narcotics in Workers Compensation,” NCCI Research Brief, December 2009 p.5.
8. “Sky High Out of Control Drug Costs A Threat,” State Compensation Fund of Arizona.
9. “Prescription for Peril,” December 2007, Coalition Against Insurance Fraud, p. 43.

Brand Name Opioid Products
Generic Name
Trade Name
Duragesic Extended Release Transdermal System
Ortho McNeil Janssen
*Palladone Extended Release Capsules
Purdue Pharma
Dolophine Tablets
Avinza® Extended Release Capsules
King Pharms
Kadian® Extended Release Capsules
MS Contin Extended Release Tablets
Purdue Pharma
Oramorph Extended Release Tablets
Xanodyne Pharms
OxyContin Extended Release Tablets
Purdue Pharma
Opana® Extended Release Tablets
Endo Pharma
*No longer being marketed, but is still approved.
Generic Opioid Products
Generic Name
Drug Name
Fentanyl Extended Release Transdermal System
Fentanyl Extended Release Transdermal System
Lavipharm Labs
Fentanyl Extended Release Transdermal System
Mylan Technologies
Fentanyl Extended Release Transdermal System
Teva Pharms
Fentanyl Extended Release Transdermal System
Methadose[O1]  Tablets
Methadone HCL Tablets
Methadone HCL Tablets
Morphine Sulfate Extended Release Tablets
Morphine Sulfate Extended Release Tablets
KV Pharmaceuticals
Morphine Sulfate Extended Release Tablets
Morphine Sulfate Extended Release Tablets
Watson Labs
Oxycodone Extended Release Tablets
**Oxycodone Extended Release Tablets
Impax Labs
**Oxycodone Extended Release Tablets
** Discontinued products.

Author Tron Emptage, who holds a BS in Pharmacy, is Chief Clinical & Compliance Officer with Progressive Medical. Mr. Emptage has overseen Pharmacy Services, Clinical Services, National Account Management served as Vice President of Strategic Initiatives and Executive Vice President of Business. His 20-year plus experience in pharmaceutical and managed care defines him as a key player in moving the company forward in the arena of national pharmaceutical managed care. Contact him: or 800.777.3574 or visit Progressive Medical.

About Progressive Medical
Progressive Medical offers cost management services and programs to the workers compensation industry. By combining its clinical expertise with access to an expansive network of pharmacies, home health care services and medical equipment and supplies, the company enables its clients to manage costs while providing quality care to injured workers. Learn more at Progressive Medical or call 866.939.5365.

Book: Manage Your Workers Compensation Program: Reduce Your Costs 20-50%

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

NCCI Publishes 2010 Workers Comp Prescription Drug Study Update

NCCI Holdings Inc. recently unveiled an updated study that shows that the volume of prescription drugs dispensed to workers compensation claimants has risen sharply—putting upward pressure on costs.
The volume of prescription drugs dispensed by physicians to workers comp (WC) claimants has risen sharply in recent years—putting upward pressure on WC costs. This updated NCCI study investigates the increase and other issues associated with WC prescription drug (Rx) costs. (WCxKit)
Key Findings
1.      WC costs due to physician-dispensed drugs rose dramatically in 2008.
2.      Three-fourths of WC repackaged drug costs originate from physicians
3.      Lower than expected emergence of Rx costs has prompted us to lower our projected ultimate Rx share of total medical from 19% to 18%.
4.      After two seemingly abnormal years in which price change was the dominant factor affecting per-claim WC Rx cost increases, utilization change has once again taken its historically dominant role.
5.      OXYCONTIN® has become the top prescribed (in terms of paid dollars) WC Rx. A successful patent defense, which resulted in the removal of the extended release generic version of OXYCONTIN® from the market, is likely the major contributing factor.
In addition to a new look at physician-dispensed drugs NCCI has updated prior analyses for:
6.      The prescription drug share of total medical costs by injury year
7.      Changes in price, utilization, and cost
8.      Prescribing patterns
9.      Drug rankings by overall cost
Prescription drugs have been a significant driver of WC medical costs for many years.
NCCI first examined WC Rx issues in 2003 and found that utilization (as opposed to price) increases were the significant force behind Rx cost increases at that time. In 2007, NCCI found that state cost differences were driven mostly by the mix of drugs prescribed (as opposed to price or number of scripts). Several drugs, such as ACTIQ® and MOBIC® have shown significant changes in market share over the course of these prior studies. (WCxKit)
For further historical details, see the previous five studies—available for download at

The moral of the story …. make sure you have a good PBM program. Ask your TPA to do a dog and pony show about their current service so you can learn more about it.


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.  See for more information. 

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.

©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

Implementing a Clinically Driven Pharmacy Benefits Program

In speaking with Danielle Lisenbey, Chief Operating Officer of Broadspire's Medical Management Services, I learned how important a good pharmacy benefit management program is and what to look for when shopping for a PBM (pharmacy benefit management) program. Lisenby also updated on how the cost of pharmcacy costs has increased.
The 2010 Annual
Drug Trends Report for Workers Compensation indicates pharmacy costs in 2009, rose 6.5% with workers taking an average of 11.1 prescriptions per injury.
Employers may want to implement a clinically driven model to reduce pharmacy costs – one targeting these areas: (WCxKit)

1.     Delivering appropriate medications to your injured workers.

2.     Managing escalating prescription costs.

3.     Reducing opioid misuse or abuse.

4.     Helping return employees to productivity.

A pharmacy benefit management program uses evidence-based medicine designed to help employers gain more control over costs associated with workers compensation claims. These key points need to be in your program:

1.     Utilization management experts assess medications for appropriate use in work related injuries.

2.     Examine pharmaceutical data to discover possible misuse or abuse.

3.     A clinical review team of nurses and doctors help control prescription costs by working to eliminate:

a. Inappropriate fills.

b. Duplicate prescriptions from multiple providers.

c.   Prescription overuse beyond claim guidelines.

d.     Multiple prescriptions that counteract or adversely affect one another.

Think in broad terms by giving employees access to multiple pharmacies in a reputable pharmacy management network and mail order service. Look for providers that link to pharmacies in real-time and immediately approve medications at the counter to reduce out-of-pocket expenses for your injured employees. The technology is efficient, with rejected scripts saving employers over 48% of costs in 2009. Look for a provider wtih 24/7 service and toll free access to a pharmacy customer care line. Patient care advocates, bill processors and registered pharmacists should be available to answer any questions that arise. The center also must track orders, prescriptions and other pharmacy program information for every claim. (WCxKit)
A pharmacy program integrates fully with claim, medical bill review and utilization management departments. This close connection helps promote early enrollment for injured workers and allows employers to take greater advantage of the cost saving potentials.

Contributor: Broadspire provided content about their workers compensation medical management services.
For more information, contact Broadspire at 1-866-625-1662 or emailing; www.choosebroadspire

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

20 Things to Look for in a Pharmacy Benefits Manager (PBM)

The cost of drugs is the fastest growing component of medical care cost and often one of the most neglected areas of workers compensation cost control. It is estimated that workers compensation pays $5 billion in drug cost each year. While there are numerous pharmacy benefit managers (PBM) in the work comp arena, they are often either totally ignored or only partially utilized by the insurers, self-insureds and third party administrators (TPA). Other areas of medical cost control like fee bill schedules, medical provider networks, medical management and utilization review get more attention than PBM, but proper utilization of PBM can result in substantial savings in the cost of work comp.

What PBM Can Do?


Unfortunately, many claim adjusters think of PBM only as a way of saving money by getting a discount on the cost of prescriptions. With some PBM that is all they do. However, if the insurer (or the self-insured employer who is paying attention to the factors in the cost of their work comp coverage) shops around among the PBM providers, they should be able to locate a PBM that has a national presence and a focus on proactive utilization control. Key service points and cost control solutions to consider for a PBM include:1.      The flexibility to coordinate the medical prescription benefit in the most efficient manner between the employee, the pharmacy and the medical provider with minimal involvement of the adjuster


  1. The ability to comply with all the workers’ compensation rules and regulations of each state, which can vary tremendously from state to state, and to stay current/up to date
  2. The technology to process the prescription in real time – without delay when presented by the employee to the pharmacy – with the appropriate pricing         (WCxKit)
  3. A national network covering most of the 70,000+ pharmacies in the United States. This will provide convenience and hassle-free access for the employees regardless where they live (also to prevent non-compliance with the required use of the PBM). The PBM network should definitely include the three major chains – Walgreens, CVS Pharmacies and Rite-Aid
  4. A comprehensive standard formulary that can be customized and injury-specific and/or patient-specific to manage utilization (even customized down to the ICD-9 codes)
  5. A pre-negotiated price (network discount) for each drug (a 25% discount off a price that is 50% higher than it should be is not a cost savings)
  6. The ability to provide home delivery by the Postal Service, Fed Ex or UPS at minimal extra cost
  7. The willingness to provide 24 hours a day, 7 days a week customer support service
  8. The ability to identify generic substitution opportunities

10.The identification of newer drugs that provide greater benefit

11.The ability to process – approve or deny – the off-label use of a drug

12.Utilization review — before the prescription is filled – to prevent of overuse of narcotics – consumption faster than manufacturer recommendations or faster than the medical provider’s prescription amount

13.The prevention of multi-physician (“doctor shopping”) prescriptions from being processed for the same drugs or duplicate use drugs

14.The prevention of multi-pharmacy involvement in filling the same prescription (for example – the employee takes the paper prescription to one pharmacy to be filled, then called the medical provider, claims to have lost the prescription and has the prescription called into another pharmacy)

15.The technology to recognize when inappropriate or non-compensable medication is being dispensed (for example – a non-injury related medication is being presented to the pharmacy) and the ability to stop it from being filled

16.The ability to be electronically integrated with the insurers’, TPAs or self-insured’s bill review system to eliminate the manual processing of individual prescription payments

17.The ability to provide ancillary services like durable medical equipment (nice to have, but not absolutely essential)

18.The ability to provide reports on cost savings, utilization and trending

19.The ability to provide correct pricing for any drugs dispensed from the doctor’s office which often are over billed

  1. Accreditation by the Utilization Review Accreditation Committee reflects the PBM promotes quality and efficiency of health care delivery



A Growing Problem:


The use of PBM does result in a reduction in the abuse of pain medications. However, some employees who become pain medication junkies have found a way to circumvent the PBM. A growing problem is the medical providers who will perform office injections for the employee. The medical provider gets paid for multiple office visits and the pain medication junkie keeps on abusing the pain medication. (WCxKit)




The appropriate management of medications by the PBM can lower the overall cost of medical care and shorten the return to work time. The employee benefits from the PBM by receiving the necessary medications locally (or home delivery) while the employer benefits from the employee receiving the appropriate medications in a timely manner. The insurer or self-insured benefit from the medical savings the PBM provides.

Author Rebecca Shafer, 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. .





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


Prescription Monitoring Programs and Workers Comp

The medical costs  resulting from workers’ compensation claims have risen for decades and now exceed indemnity costs. Prescriptions represent a significant portion of those medical costs and with maintenance drugs, many claims carry lifetime cost potential at a very high price. Pharmacy Benefit Management companies (PBMs) go a long way toward controlling costs by establishing formularies specifying which drugs will be authorized and requiring generics when possible. Mail order services offered by the PBM can also save money. 

Another area
 for control of potentially addictive medications considered “controlled substances” that are part of a particular class of drugs rests in legislation enacted at the state level by way of a Prescription Monitoring Program (PMP). Prescribing physicians and dispensing pharmacists subscribe and participate in these programs designed to prevent the abuse or misuse of certain medications. 

, 38 states have PMPs in place or in progress.   The 32 states with operational programs include AL, AZ, CA, CO, CT, HI, ID, IL, IN, KY, LA, ME, MA, MI, MS, NV, NM, NY, NC, ND, OH, OK, PN, RI, SC, TN, TX, UT, VA, WA, WV and WY. The 6 pending full operation are AK, IA, KS, MN, NJ and VT.   See:

The way the program
 works is the participating prescribing physician and dispensing pharmacist are required to report weekly to the PMP all applicable drugs within certain classes prescribed or dispensed that week. The prescribing physician and dispensing pharmacist have access to the patients’ drug history of the applicable “controlled substances” so that they’re able to detect “Dr. Shopping” for the “controlled substances” from multiple sources.  

The pharmacist
 or physician uses this information for early identification of patients at risk for addiction and to initiate appropriate medical intervention. This is not a mandatory program in all states for prescribing physicians and dispensing pharmacists. There are states planning to implement interstate agreements to share prescription information with neighboring states to identify doctor shopping patients who cross state lines. (workersxzcompxzkit)

How can this help
 your workers’ compensation costs? Encourage your occupational medicine providers and specialists utilized in treating your injured employees to participate in this program. If you have injured workers with a substance abuse problem, the physician should be able to detect the problem and take appropriate steps in getting your employee the help he or she needs to remain a successful and productive member of your workforce.

Podcast/Webcast: How To Prevent Fraudulent Workers' Compensation Claims Click Here

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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.
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact

Five Things to Consider When Selecting a Pharmacy Benefit Management Program

So, you’ve  watched your prescription costs rise beyond the consumer price index and surpass other medical cost increases and realize a Pharmacy Benefit Management (PBM) component to your managed care program is the way to go.

Several questions to ask your broker or insurance company are: What percentage of medical costs are related to pharmacy costs. Ask for a report. Do a full evaluation of the program currently in place, if there is one. Determine if you are in a “mandatory” state where substitution of generics is mandatory. If not, you’ll ask the PBM how substitution is monitored.

Before choosing  a vendor, do your homework and review several programs to compare services.  Three important considerations are:

1.  Program penetration and what the PBM will do to increase program usage.  Your employees have to use the program for it to be effective.  Most PBMs mail cards, some provide a letter or card to be handed to an employee at the time of injury designed to cover a first-fill  up to a set dollar amount and others offer further personalized service to increase penetration. 

2.  Ease of use  for the adjuster.  The more automated the process, the better. 

3.  Advanced technology and what it can do for you all the way from seamless transactions to management reports.  Online access to data with an agile system allowing you to dissect and analyze information will go a long way in helping manage pharmacy costs.  You should have the ability to detect high cost claimants and prescribers, be confident employees are given the proper medication in accordance with your formulary and know non-compensable prescriptions will be refused.  Be sure to have a conversation with your TPA to inquire about data interface. 

4. Run a pilot  program for 60-90 days to confirm there will be actual savings as promised in the sales presentation.  Savings reports should be based on reductions below any applicable fee schedule and generics should replace brand name drugs whenever possible.  Your PBM should produce benchmarking and industry comparisons as well, at your request.  

Once you’ve  selected a program, your TPA is on board and electronic interface is accomplished, work with the claim staff to be sure processes are in place to notify the PBM of claim denials, settlements or if prescriptions are no longer covered for whatever reason.  Establishing a predetermined period the card can be used and allowing the adjuster to extend or limit that period is an effective management tool.  Be sure to capture the first fill to maximize savings. 

5. Prospective and retrospective components — your program should have both. An example of a prospective component  is: formulary, prior authorization programs (clinical team makes recommendation to adjuster or medical advisor who approves). Examples of Retrospective components are: targeted medication review, intervention programs such as in network and out-of-network transactions, risk assessments, prescriber “alerts” about employee going to other doctors and obtaining multiple RX, screening for fraud and abuse and comprehensive medication reviews.

Using a PBM as part of your overall managed care program is an excellent tool to reduce pharmacy costs.  Choose the best provider for you and encourage employee participation.  Be sure to use the management reports to spot areas for further attention such as the high cost prescribers and monitor your savings!  (workersxzcompxzkit)

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, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: or 860-553-6604.

By: Private investigator with 25 years experience.

We accept articles about WC cost containment. Contact us at:

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.

©2009 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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