mostly because insurers and employers have a been asleep at the switch.

Republishing a post with minor edits from two years ago…LOTS more on the sleazy business of physician dispensing here…

WCRI’s latest report finds:

• Physician-dispensed drugs (PDDs) accounted for more than half of drug costs per claim in Q1 2020 in four states – Florida, Georgia, Illinois, and Maryland.
• In 12 states, doc-dispensed dermatological agents accounted for most payments for this drug class.
• Louisiana is worst-off, with employers paying $190 per claim for dermo drugs in the 1st quarter of 2020…Illinois is right behind at $181.
• Kansas and Connecticut saw payments for those dermo drugs triple from Q1 2017 to Q1 2020.

That profit-sucking prescribing by docs in Connecticut is why total drug spend increased 30% in the Nutmeg State – making it one of two states that had drug spend increases. Florida – the home state of PDD – was the other. (Across all subject states, drug costs dropped 41%.)

Having lived in CT for over 20 years, I’m really stumped by the precipitous increase in skin care drugs.

What could POSSIBLY be driving this massive need for occupationally-driven skin care/topicals?

• Did sun spots create a pandemic of skin cancer but somehow only affect the second-smallest state?
• Did a massive refinery accident expose tens of thousands of workers to burns or skin infections?
• Did a hyper-virulent new breed of poison ivy run rampant, affecting thousands of landscaping and municipal workers?
• Did the emerging cannabis industry fail to protect its workers from fertilizer burns, exposing thousands of workers to painful blisters?
• Did everyone in Connecticut suddenly become unable to swallow a pill?

Of course not.

The real question is this:

why haven’t insurers, TPAs, and self-insured employers used CT’s Medical Care Plan to ban physician dispensing? Payers including the Workers’ Comp Trust of CT have pretty much eliminated physician dispensing.

It’s not just Connecticut.  PDD costs are outrageous, and all credible research indicates PDD is totally unnecessary, increases medical costs, and prolongs disability.

WCRI’s research should be a call to action.  Legislators, regulators, and payers are doing their policyholders and clients a disservice by failing to aggressively attack physician dispensing.

And those clients and policyholders are equally at fault – it is up to you to work with your PBM and payer to stop this rampant profiteering. 

What does this mean for you?

Yeah, I know it’s hard.

Stop whining and get serious.

In work comp services, far too many buyers focus solely on the price of the service.

That’s the wrong metric..it isn’t the Price, it’s the Cost (we’ll leave aside the RoI/Value/…for more on that see this.)

Price is what you pay per unit.

Cost is the total expense that you pay.

Example…

Some PBMs are trying to buy business by offering amazing prices – as in AWP-80% for generic drugs.  Sounds great…right?

Sure, until you have to explain to your boss why drug spend went up even though your discounted price went down…

While workers comp payers have (mostly) figured out that the price of the pill is a lousy way to decide on a PBM, every now and then I get a call from a payer who’s just been offered a GREAT price from a PBM, and is either a) gleeful that they have been so smart and such a cunning negotiator; or b) panicked because their boss wants to change PBMs and the vendor manager knows it’s going to blow up.

Okay, let’s walk thru this.

The price of the pill is important, but it is only ONE part of the equation. Which is as follows:

Price per pill x number of pills per script x percentage of scripts processed in the PBM’s network.

Price per pill is determined by the definition of generic and brand, discount below AWP, brand:generic mix, and, most importantly, by the type of pills dispensed.  If a PBM does a crappy job managing the clinical aspects of the pharmacy program, you’re going to pay for far too many pills, and for the wrong kind of pills.

I’ve also read PBM contracts with quite creative definitions of “generic”…some so creative that what any normal person would say is a generic is – for price purposes – a “brand” drug.

Since brand prices are typically AWP-10-15%, a mis-categorized generic is going to be super-profitable.

Next, if the price is too good to be true, it isn’t.

A PBM cannot afford to pay for pharmacist support, bill review fees, call center costs, compliance/state reporting, IT connections and customer service if it is charging AWP-80% for what are REALLY generics.

So, it’s safe to say you’ll be paying for lots of opioids, fenoprofen, convenience kits, and other highly-questionable-if-not-downright-harmful-drugs.

But hey, at least you’re getting them for cheap!

Lets say you don’t care about the kind and volume of pills, you just want the deep discount.  Even then, you will likely find the cheap PBM delivers crappy results.  Here’s why.

PBMs that pitch really low per-pill pricing are likely using a group health-contracted pharmacy network, which leads to big-time problems with paper bills and administrative hassles for adjusters.  You may not see these costs as they are buried in bill review “savings”, and may not show up in your pharmacy report.

But they are most definitely there.

Oh, and Rule #1 in work comp services – do NOT piss off your adjusters.

Regardless, the network penetration for the cheapo PBMs tends to be pretty low compared to real WC PBMs.  There’s a bunch of reasons for that which I won’t get in to here.

What does this mean for you?

Do you want to explain to your boss why drug spend – and the combined ratio – are higher even though you got a great price from your PBM?

Yesterday we posted on top takeaways from our 18th Survey of Prescription Drug Management in Workers’ Comp.

Today, I’M responding to several readers’ questions about physician dispensing (PDD) and mail order pharmacies (twin sons of different mothers) and why they are rearing their unfathomably ugly heads once again.

Mostly because payers have pretty much neglected the issue for more than a decade. Meanwhile the profiteering dispensing industry has been contributing big dollars to politicians, coming up with new and ever-more creative ways to get around regulations, and learning how to get reimbursement from payers – one at a time.

The work comp payer industry is fat dumb and hugely profitable for insurers and some (non PBM) vendors/service entities. Why expend energy on PDD when you’re making bank, employers aren’t complaining, and claim counts are going to continue to decline?

Unfortunately, injured workers are the victims, as are employers and tax payers.

• PDD are rarely subjected to utilization review (by the time the payer finds out a drug has been prescribed and dispensed by PDDs, it’s way too late to do anything about it.
• PDDs may conflict with other medications, duplicate other medications, or be contra-indicated for the patient.
• PDDs are hugely expensive – and often unnecessary or duplicative. Profit margins likely exceed 90%.

The net is payers are usually demanding PBMs “fix” the problem of PDD – instead of partnering with PBMs, employers, and other stakeholders to build and implement a long-term strategy to stop PDD.

What does this mean for you?

If you aren’t fighting the good fight, you are the problem.

Our report on the audit of the Department of Labor’s federal employee (FECA) work comp pharmacy program is now public.

Key findings…during the audit period (FY 2015 – FY 2020):

• • 1330 oral fentanyl scripts were dispensed and paid for without evidence of required cancer diagnosis (remember Actiq and Fentora?)
    • that does NOT include any such scripts that were dispensed and paid for BEFORE the audit period
  • over 25,000 scripts that should not have been filled were.
  • Agencies, Departments, and taxpayers spent $300+ million more than they should have because they didn’t use competitive pricing metrics and methods
  • DOL failed to address opioids and compounds in a timely manner…in both cases DOL was years behind the private sector and state government comp programs
  • The FECA program – which is the biggest single work comp payer in the nation – didn’t have a full time medical director OR clinical pharmacist.

Before you ask…we did not assess or otherwise study the potential impact of these findings on injured workers as that was outside the scope of the project.

The audit covers Fiscal years 2015 – 2020; the analysts and pharmacists at HealthPlan Data Solutions did the analytical heavy lifting, crunching data on millions of scripts and reimbursements. HDS handled the clinical questions as well. CompPharma provided a lot of the qualitative assessment and program operational benchmarks. (Thanks to all who participate in our Annual Survey of Drug Management in WC.)

CPA firm HRK was the lead on this (they speak Federalease and have the right credentials to navigate the Federal contracting system).

Note – Haven’t been able to post for days due to server problems (I’m blaming Putin’s hackers)…and as many of you told me (thanks!) the blog site was down for a while as well. Thanks for your patience and keep those emails re service outages coming.

What does this mean for you?

Audits can be really useful.