What payers are saying about comp drug costs

This is the fourth year my firm has surveyed workers comp payers on prescription drug management. We’ve learned a lot every year, and 2007 is no exception.
If you want a copy of the survey report, email me at jpadudaAThealthstrategyassocDOTcom.
Meanwhile, here are a few highlights.

1. Inflation moderated, with 2006 costs increasing 6.5% over 2005. Respondents attributed this ‘decrease in the rate of increase’ to lower claims volume, more assertive utilization management, and a deeper understanding of cost drivers.
2. Some payers, notably the most sophisticated ones, saw an outright decrease in drug costs. In comparison, a few payers saw cost increases in the 15% – 18% range.
3. The focus on managing utilization (the volume and type of drugs dispensed) has intensified. Payers are much more aware of the importance of utilization and are working diligently to ensure claimants are receiving the right drugs in the right quantities for the covered diagnosis.
4. Payers’ tolerance for third party billers has declined markedly. No longer do some payers consider TPBs to be a potential part of the solution.
5. Pharma manufacturers’ price increases in January and May of last year resulted in higher costs for payers. The price increases, which appear to be related to the rollout of the Medicare Part D program, resulted in a per-pill price jump of 4-6%.
6. Once again, the treating physician was rated as the stakeholder “most responsible for drug costs.” Payers recognize that physicians are the single most influential party in the process. While excellent docs can use drugs quite effectively, docs with less experience and/or expertise in pain management can keep a patient off work much longer than necessary due to over-prescribing of certain medications.
The net?
Payers that understand how to work with treating docs to manage the volume and type of drugs dispensed are seeing very low increases in drug costs.