Do you have any idea if you are paying your PBM what you should?

Work comp payers’ PBM pricing is based on AWP; typically it is a percentage below AWP. Brand drugs are discounted 10-16%, and generic pricing is typically below AWP -40% .

The PBM is making its money on the “spread”; the difference between what it pays the pharmacy, and what it charges you.

Your PBM contracts with retail pharmacies, chains, food and drug purveyors (think Walmart), and independent pharmacies. In some cases third party billers are also contracted, along with physician dispensers and mail order pharmacies.

Here’s where it gets funky.

The PBM’s contracted rates with those pharmacies are all over the place and may even vary by region or drug. That’s fine; you are getting a discount, and the PBM is betting it will – overall – make a profit.

That is, it’s fine IF your average discount is equal to or better than what you were promised.

Reality is, very few workers’ comp payers review their PBM’s bills to make sure that the average discount is what they were promised. 

Workers’ comp insurers and TPAs audit claims, case management performance, reserves, bill review, hospital bills, network discounts, legal bills…pretty much everything BUT pharmacy.

The Russians said it best.

That is NOT to say PBMs purposely mess with the numbers/bills/codes to increase their reimbursement. Rather, like any entity, mistakes can be made, lapses occur, updates lag.

Unfortunately, in the audits we’ve seen these errors usually benefit the PBM.

What does this mean for you?

If you’re looking to ensure you’re paying what you should, let’s talk.

That’s the key lesson from today’s session on Dealing with legacy opioid claims at IAIABC’s 104th Convention.

BWC Ohio’s Nick Trego PharmD, State Fund of California’s Chief Medical Officer Dinesh Govindarao MD, Washington L&I Medical Director Gary Franklin MD MPH, and Sedgwick Pharmacy Director Paul Peak all documented significant reductions in long-term opioid usage in their patient populations.

That means many fewer moms without kids, husbands without wives, and kids without grandparents.

Among the takeaways…

Prevention is critical – we’re doing a very good job of preventing more Opioid Abuse Disorder (OAD) patients.

Flexible treatment options are critical – every patient is different, with some responding to Medication-Assisted Therapy and others not.  The same is true for exercise, yoga, cognitive behavioral therapy, acupuncture, and PT.

Closed physician networks, formularies and UR with teeth are critical – it’s tough to get bad docs to become good ones, so kicking them out of your panel is necessary.

Analytics are critical – to identify patients at risk of OAD, to monitor progress, to evaluate success, to learn what works and what doesn’t and why.

Full payer access to Prescription Drug Monitoring Programs is critical – but only available in a handful of states. Access to PDMPs that require physician usage would go a long way to reducing inappropriate prescribing and polypharmacy.

Results – Across the board we heard of dramatic reductions in the volume and potency of scripts prescribed and the number of patients taking opioids over the long term.

What does this mean for you?

It can be done, it is being done, and it must be done.

The reaction to yesterday’s news that pharmacy costs have dropped by over a billion dollars was a bit disappointing – and missed the key takeaway.

That is – we’ve made a ton of progress, and we still have a long way to go.

Instead, some asked “where are the savings going?”, claiming employers and patients aren’t benefiting from the reduced cost.

A Kansas legislator was among those positing that question; perhaps he was unaware that Kansas employer’s premiums dropped 7.6% this year. Kansas’ results mirrored the nation’s and other states:

• California’s rates are down 22% over the last four years.
• New York is looking at an 11.7% cut on top of last year’s 4.5% decrease.
• Maine employers will see a cut as well due to a loss cost decrease of 12%.

Of course, there are many other reasons rates and premiums are dropping across the board:

• a nine-year long economic expansion;
• a solid job market;
• continued decline in claim frequency and anecdotal reports of a drop in total claim counts;
• better control of medical costs; and
• lots of capacity in the insurance market

are the most significant contributors.

Another critic complained that “the savings are going into insurers’ pockets.” There is some truth to that, as workers’ comp insurer profits remain at near-record levels despite the continued decrease in premiums.

(Re increased benefits for patients, that is a state regulatory issue as indemnity benefits are almost all driven by a formula involving cost-of-living benchmarks)

But the key point is this – work comp has done great work eliminating opioids – and that is wonderful news by any standard.

As CompPharma’s report details, a key driver of the drop in drug costs is lower opioid utilization. That is very good news indeed; fewer patients are getting opioids, and other reports indicate dosages and treatment duration are declining as well. Moreover, the drop in opioid usage in work comp is far greater than the overall decline in drug spend, indicating we are doing a far better job than the rest of the insurance world despite the difficulties inherent in managing drug utilization in comp (no economic levers to influence consumer behavior, few states with pharmacy network direction, widely varying regulatory environments).

For fifteen years I’ve been interviewing the people most responsible for addressing the opioid crisis in work comp. While costs are important, without exception these professionals see their job as improving patient care, reducing the risks and dangers inherent in opioid prescribing, and helping patients recover quickly.

Their relentless focus is leading to healthier patients and lower costs for employers.

We have a very long way to go. While lots of work from lots of people has helped dramatically reduce the initial (or even more problematic second) opioid script, the much tougher challenge is helping long-term opioid patients reduce and end their use of the drug.

Some payers are making solid progress; you can hear from four of them at IAIABC’s annual meeting this fall. I’ll be moderating an intensive review of how these payers are successfully helping patients reduce opioid consumption and get back to being themselves.

What does this mean for you?

Congratulations on making major differences in many patients’ lives. Now the hard work begins.