Worker's Comp Pharmacy Programs Vary Dramatically Among Payers

While worker's compensation drug cost inflation continues to moderate, different payers have widely differing results, according to Madison, Conn.-based consulting firm Health Strategy Associates LLC, which recently conducted its "Fifth Annual Survey of Prescription Drug Management in Workers' Compensation." The survey results indicate pharmacy cost inflation has decreased to 4.9 percent from 6.5 percent last year and from 17.8 percent in 2003. However, individual payers' inflation rates varied dramatically from a decrease of 12.8 percent to an increase of 21.8 percent, HAS said.

"Last year we saw that larger, more sophisticated payers experienced lower inflation rates. This year, some of the best results were delivered by smaller insurers," said Joseph Paduda, HSA principal. "Conducting this survey in consecutive years gives insight into market evolution."

During the last five years key changes in worker's comp pharmacy management include a much greater emphasis on controlling utilization by addressing the volume and types of drugs used by claimants. The lowest rate of increase occurred at payers operating advanced drug utilization management programs that also had a detailed knowledge of their companies' drug costs and a deep understanding of industry issues and processes, HSA said.

According to Paduda, payers are increasingly relying on their Pharmacy Benefit Management (PBM) firms for knowledge and utilization management tools. "Payers are demanding that PBMs provide insights and new information about trends in comp pharmacy, take the lead in dealing with third-party billers, and provide more clinical drug management," he said.

For the third year in a row, the survey was sponsored by Cypress Care, (www.cypresscare.com), a full-service worker's compensation PBM in Atlanta. Twenty payers, including decision makers and operations staff of carriers, third-party administrators, large employers, and managed care firms participated. Respondents' 2007 drug expenses ranged from $1 million each to $147 million, and the respondents' cumulative drug spend amounted to $777 million, 18.5 percent of the total estimated worker's compensation drug spend. For more information, visit HSA at www.healthstrategyassoc.com or, for a summary of the survey results, contact Paduda at jpaduda@healthstrategyassoc.com.

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