The utilization side of the story: utilization management is an increasingly important component of controlling pharmaceutical costs. No wonder workers' compensation PBMs are multiplying like rabbits

Risk & Insurance, Nov, 2007 by Maddy Bowling, David Huth

Workers' comp PBMs should have staff dedicated to monitoring all these regulations and ensure that their processes and systems maintain compliance for their clients. It is sad but telling that a new startup, CompPharma, recently began marketing these jurisdictional research and compliance services on an outsourced basis to PBMs that clearly do not have that industry expertise within their organizations. Not many payers will be comfortable with their contracted PBM outsourcing their workers' comp law interpretations. Payers should expect their PBM to be internally equipped with workers' comp industry and regulatory expertise and experience.

Workers' comp-specific expertise is also critical in helping claims adjusters truly manage the cost of prescription drugs on their claims. A company's drug utilization review program may flag questionable prescriptions based on detailed formularies or early refills. But the program doesn't help if the adjuster doesn't know enough about the drug in question to deny payment.

According to Gary Daly, vice president of sales at ScripNet, "Our job is to give the adjuster enough information and the right tools so that they feel empowered to say 'No' when it is appropriate." For that reason, many of the leading workers' comp PBMs are implementing more sophisticated tools such as "adjuster portals" that put drug reference materials, comprehensive utilization review results and detailed claim-specific prescription histories right at the adjusters' fingertips.

Workers' comp PBMs also need a strategy for dealing with third-party billets. Unlike the group health world, workers' comp patients rarely know who their workers' comp claims payer is. This means that the pharmacy often cannot determine the claimant's eligibility or where to send the invoice for the first prescription on the claim.

Since the pharmacies typically do not have the time or resources to research these claims, companies such as WorkingRx and Third Party Solutions offer to "buy" the prescription invoice--usually at a discounted amount--from the pharmacy. They then research the claim and rebill the appropriate claims payer.

Payers complain that the amounts invoiced by these third-party billers are more than they would have paid the pharmacy. They are often significantly more than the contracted rates offered by their PBMs, and therefore represent lost savings opportunities.

The fundamental challenge for PBMs is to ensure that the pharmacy knows where to send their invoices as early as possible in the life of a workers' comp claim so that they do not need to sell that bill to a third-party biller and the payer does not pay any more for the prescription than is necessary.

Many PBMs have been aggressively implementing "carded programs" in which an injured worker is given a workers' comp prescription benefit card either before or immediately following an injury so that the pharmacy will then know who to invoice and won't turn to the third-party billets.

ScripNet has taken the most aggressive stance against the third-party billers, arguing that since ScripNet has direct contracts with their pharmacies (unlike many other PBMs which merely lease access to pharmacy networks), even if a participating pharmacy sells a covered prescription to a third-party biller, the payer is only obligated to reimburse that biller for the lower contracted amount originally agreed to by the pharmacy.