Managing Workers' Compensation Pharmacy Costs

In this economic downturn, workers' compensation insurers are struggling to contain costs and remain profitable while continuing to provide quality care to injured parties. As payers investigate various cost-containment measures, many are reviewing pharmacy expenses, which account for seven to 12 percent of total workers' compensation costs, according to a recent study by the Workers' Compensation Research Institute.

Managing pharmacy costs is especially challenging with long-term claims. According to a recent study on workers' compensation industry prescription drug spending, prescription drugs typically amount to only three percent of medical costs in a claim during the first year. After seven years, however, these costs can account for almost 31 percent of overall drug costs, with drug spending alone potentially averaging $27,000 annually (Source: 2007 National Council on Compensation Insurance report).

One strategy for reducing pharmacy expenses may be to conduct an in-depth clinical review of claims with a history of utilization issues. This allows clinical professionals to identify inappropriate utilization, which typically results in overspending of up to 15 percent per claim. This strategy also helps monitor for problematic drug-to-drug interactions and allergies to ensure the safety of injured parties.

Leveraging Utilization Programs

Drug costs associated with workers' compensation claims can be decreased using a variety of methods. However, savings are irrelevant if the medication should not have been dispensed in the first place. By putting a drug utilization review (DUR) program into place, insurers could receive significant incremental savings -- usually between 10 to 15 percent above prescription cost savings, according to a recent internal audit of Progressive Medical clients.

There are several different types of drug utilization reviews, including prospective, concurrent and retrospective:

• A prospective DUR process allows all involved parties to prepare for future outcomes with up-front information and planning. Clinicians are involved in development of plans and processes to assist with outcomes, thus reducing the need for claims professional intervention on every case.
• Concurrent DUR typically occurs in real-time at the pharmacy. When an injured party from a workers' compensation claim fills a prescription, it is audited for appropriateness, duplication, multiple physicians, excessive dosage, drug-to-drug interactions, and other similar criteria.
• A retrospective DUR process takes place after medications are filled. Using historical data, clinical experts can look for appropriate medication usage, potential drug-to-drug or drug-to--disease interactions, therapy duplication, and over-utilization by the injured party.

Additionally, formulary management involves taking steps to ensure that the medication filled is specific to the work-related injury claimed. For workers' compensation payers, it is imperative to address the nature and expected duration of the injury when determining which medication is appropriate for treatment.

A DUR program should provide the payer with accurate reporting and recommendations to improve appropriate drug usage and quality of care for the injured parties. This may include recommendations for alternative or amended drug therapy, uncovering medication plan inconsistencies, and suggestions for restricting an injured party to treatment with only one physician or a small team of physicians.

Additional Savings

With the costs of medications for workers' compensation claims rising, it may be valuable to have prescriptions reviewed by a pharmacist, physician or both. Obtaining clinical reviews can help payers identify potential usage issues, drug-to-drug interactions, drug allergy complications, and compliance with state regulations.

When incorporated into a drug utilization program, clinical reviews can help ensure appropriate usage of drugs, enable payers to proactively plan for future medication needs, and ultimately reduce total pharmacy costs per claim, potentially by tens of thousands of dollars.

Typically, there are three types of claims best suited for a clinical review:

• Claims with excessive medications
• Claims more than three years old
• Claims pending litigation and/or settlement

A clinical review can also identify other red flags such as:

• Multiple physicians
• Multiple pharmacies
• Generic availability within current therapy
• Causal relationship to compensable conditions
• Duplication of therapy
• Excessive duration or length of medication use
• Appropriate medication doses and refill intervals

Improving Treatment

Injured parties also benefit when doctors and pharmacists review their claims because of their expertise in improving therapeutic outcomes. Changes in drug therapy should be based on evidence-based clinical guidelines, peer-reviewed medical journals, professional experience, and state regulatory guide requirements.

Here's an example of how a clinical review works: A woman suffered a right-elbow injury on the job and filed a workers' compensation claim. After undergoing multiple surgeries, she still had chronic pain in her elbow and shoulder as well as limited elbow movement. She required five medications that caused subsequent conditions of depression and anxiety.

After a comprehensive review of the injured party's medical records and prescription history by a clinical pharmacist, it was determined that the individual was inappropriately being treated for insomnia. The clinical pharmacist and physician recommended the elimination of a drug from her regimen and that she might benefit from being treated for insomnia and depression with non-drug therapy. As a result, by reducing a medication and incorporating non-pharmacologic therapy, the insurer reduced its annual cost significantly for this injured party.

Summary

Today's economic conditions continue to bring challenges to insurers and to drive them to look for ways to reduce costs while maintaining quality clinical outcomes for their injured parties. More than four million workers are injured on the job each year, according to U.S. Bureau of Labor Statistics, making these cost-containment efforts critical. One approach to contain pharmacy expenses is to get more control of claims with over- or under-utilization issues. Engaging in a comprehensive DUR program that includes in-depth clinical review can result in significant cost savings. This approach also ensures that injured parties receive appropriate medications to help them get back to work more quickly.

Tron Emptage, RPh, MA, is executive vice president of business development at Progressive Medical, Inc. He oversees the clinical services department, which provides drug formulary design and management, clinical review by a pharmacist and/or physician, drug utilization review, and Ask-a-Pharmacist and Ask a PMI Nurse call-in hotlines for pharmacy-related questions. He may be reached at Tron.Emptage@progressive-medical.com or 800-777-3574.