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Prescription Management Seen Lacking As Costs Keep Rising

Drug costs in workers comp programs have been rising by around 15% year after year and now make up nearly 10% of the total workers comp health care bill.

November 26, 2003
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Related Topics: Workers' Compensation, Health and Wellness, Compensation
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Rising prescription drug spending is forcing employers and workers comp insurers to find ways to keep costs in check.

While some strategies are showing signs of success, many others that are successful for group health plans simply can’t be used because of the special nature of workers compensation programs.

    Drug costs in workers comp programs have been rising by around 15% year after year and now make up nearly 10% of the total workers comp health care bill, experts say. As recently as 1997, drug spending represented only 7% of medical costs, according to a study released in August by the National Council on Compensation Insurance in Boca Raton, Fla.

    "The fastest-growing component of the medical expense is prescription drugs," said Joseph Paduda, principal at Health Strategy Associates, a workers comp managed care consulting firm based in Madison, Conn.

    The rising cost of drugs in the past few years has forced employers and insurers to devote attention to an issue that previously received little notice, said Ash Kilada, director of risk management and benefits at Sbarro Inc. in Commack, N.Y.

    "Insurance companies are just starting to address it in the past few years," he said.

    What’s particularly troublesome for workers comp insurers is that many of the tools available to control drug spending in group health plans are not available to them. People in workers comp programs don’t pay anything for their drugs, so it’s not possible to create a co-payment structure that encourages the use of lower-cost drugs, experts say.

    In addition, state workers comp laws often prevent the insurer from directing a patient’s care, including determining which pharmacy fills a prescription.

    As a result, many workers comp insurers often shy away from aggressively talking to physicians about the best or most cost-effective drug therapies to employ, said Dr. David Deitz, vp, national medical director at Liberty Mutual Insurance Co. in Boston.

    "We don’t want to be seen as unduly influencing prescribing patterns for doctors," he said.

    Rather than directing doctors, they prefer to educate them about various drugs and their relative costs, Dr. Deitz said. "We can only suggest," he said.

    Another proven cost-control strategy that has limited use in workers comp programs is switching prescriptions to lower-cost generic drugs.

    The majority of drug costs in workers comp are focused on a relatively small group of drugs, primarily used for pain relief, and generic use is already quite high, said Andy Mayer, senior director, workers compensation division at Express Scripts Inc. in St. Louis, Mo.

    "When there is a generic equivalent, the use of generics has been high," added George Furlong, director of medical payment products at Choice Medical Management Services L.L.C., a workers comp managed care company in Tampa, Fla.

    In fact, the NCCI study shows that, in workers comp, generic drugs are used 80% of the time when they are available. Also, half of drug costs are from drugs with no generic alternative, the study shows.

    "It’s obvious there are limited opportunities" to get much more out of generic use, said Barry Llewellyn, senior divisional executive, regulatory services for the NCCI and co-author of the study in Hoboken, N.J.

    But there are strategies that can work, experts say.

    One proven idea is providing an injured worker with a discount drug card run by a prescription benefit manager. Using the cards, workers can access a network of pharmacies offering discounts of up to 30%.

    The key to the success of any discount card is getting it into the hands of the injured worker. This is often difficult to do before the person receives a prescription, Mr. Kilada said.

    "If someone can come up with a solution, it would be great," he said.

    For those people who receive multiple prescriptions and, in particular, those with long-term drug needs, a discount card or a mail-order drug service produces significant savings, Mr. Paduda said.

    Another way to control costs is to reject claims for drugs that are considered inappropriate. For example, Express Scripts has a formulary for its workers comp customers, and any submitted drug that is not on the formulary needs special approval by the insurer’s claims adjuster, Mr. Mayer explained. Often, though, the adjusters approve the drugs.

    "We do see drugs slip through that should not be on workers comp," he said.

    Many adjusters approve the claims because they don’t understand that the drugs are not appropriate or they fear lawsuits by injured workers over the rejection.

    "The risk of litigation outweighs the cost of a drug," he said.

    But Dr. Deitz of Liberty Mutual disputes this assertion. While he acknowledges that laws limit Liberty Mutual’s claims managers’ ability to control costs, they shy away from intruding into treatment out of fear of upsetting the doctors and hurting their relationships with them, he said.

    "That is actually a bigger problem than fear of litigation," he said.

    In addition to grappling with rising costs, employers and workers comp insurers are struggling to cope with the growing use of the painkiller OxyContin. The drug, which was originally intended for people suffering from severe, long-term pain, has become one of the most used drugs by workers comp claimants. The concern with the drug stems from its addictive nature and how some users are abusing it.

    "This is a national concern with workers comp," said Roger Fries, president and chief executive officer at Kentucky Employers Mutual Insurance Co. in Lexington, Ky.

    Insurers are trying to identify those people that are abusing the drug by either receiving refills too quickly or obtaining multiple prescriptions from a variety of doctors, said Phillip Walls, vp of pharmacy services at PMSI, a workers comp PBM in Tampa, Fla.

    Another concern with OxyContin is its overuse, said Dr. Deitz of Liberty Mutual. Because it’s so powerful, it should be given only when other drugs fail to control an individual’s pain, he said.

    "It appears to be prescribed too early in the process," Dr. Deitz said.

    While he would like to see overall use of OxyContin drop, workers comp insurers cannot simply reject claims for it, he said. Instead, each case has to be reviewed for signs of abuse, he said.

    Abuse is not limited to OxyContin, though. People are also abusing pain medications containing the drug hydrocodone, such as Vicodin, Mr. Walls said.

    "Hydrocodone is just as much, if not more, of a concern as OxyContin," he said.

    To combat the abuse of OxyContin, the National Assn. of Independent Insurers has recently launched a state-level effort to pass strict guidelines for the use of the drug, said Nancy Schroeder, assistant vp of workers compensation at the NAII in Des Plaines, Ill.

    The proposed guidelines would detail when the drug could be used and the type of monitoring of its use that would be needed.

    "It’s very new. It’s an issue the industry has just become aware of," Ms. Schroeder said.

Source: Business Insurance magazine.

Workforce Management Online,December 2003 -- Register Now!

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