June 21, 2018

Jeff Miller: Rx Utilization Management: Better Results for Both the Insurer and the Insured

By Jeffrey D. Miller, COO, Paladin Managed Care Services

Jeffrey Miller, COO, Paladin Managed Care ServicesIn the first of my two articles on Rx Utilization Management (July 31, 2012), I talked about the alarming rise of prescription narcotics and described how our industry is ill-equipped to help solve the problem. The current system of pharmacy benefit management (PBM) programs offering formularies, discounts, and so on are mainly designed to control costs. What’s needed, instead, is an Rx Utilization Management approach that can also tackle the human repercussions of prescription narcotics, including their synthetic variants known as opioids.

According to the NCCI’s Workers Compensation Issues Report 2012, OxyContin, Percocet®, and the other opioids that frequent workers’ compensation claims were originally intended for end-stage cancer pain, not for the musculoskeletal injuries common to the work place.1 Yet, in the last decade, prescriptions for Class II, III, and IV drugs in workers’ compensation claims have risen almost every year, including an average annual increase of a staggering 18 percent from 2001 to 2004.2

Class II drugs are those that show a strong potential for abuse or addiction, such as opium, morphine, and their synthetic counterparts. Class III drugs (e.g., short-acting barbiturates and amphetamines) show less potential for abuse or addiction, and Class IV drugs (e.g. diazepam and chloral hydrate) even less; but misuse of drugs in these latter two groups is still serious enough to give them the status of controlled substances.3 As for Class II, there is a growing body of evidence documenting not only the high cost of opioid use, but also the many problems associated with long-term use, such as depression, impotence, addiction, brain damage, or even death.

Typical Drug Costs for a National Workers’ Compensation Insurer
At Paladin, we believe that Rx Utilization Management (RxUM) services should evaluate not only the cost but also the human impact of prescriptions for Class II, III, and IV drugs. We also believe that it takes the medical expertise of doctors to truly do this well — to completely understand why a particular drug may not be appropriate for the medical issue at hand, or for the particular patient being treated.

To put a face on all the industry data, let’s look at drug trends for one of Paladin’s more recent RxUM clients, a major national workers’ compensation insurance company. For all new clients, our RxUM program establishes benchmarks by capturing a 12- to 18-month history of certain prescriptions, namely opioids and other Class II-IV drugs, that would have triggered a Paladin review if the client had subscribed to our service. For this client, we saw that the total number of prescriptions per injured worker had remained fairly steady in the last decade. The number of Class II-IV prescriptions, however, had gone from about 20 per injured worker in 1992 to more than 250 in 2011.

Put another way, only 18 percent of the company’s total in-network prescriptions would have met our review triggers during the 18-month period we analyzed. Yet, that small percentage accounted for 31 percent of the total amount the client spent on in-network prescriptions during the same period.

Immediate Savings with Physician Review
Once this particular workers’ compensation insurance company signed up for Paladin’s RxUM service, our anesthesiologists, pain specialists, and other doctors went to work reviewing every prescription flagged for attention by our system. (I should also mention that, in addition to using doctors, our RxUM program is the only one in the country for which reviews occur before prescriptions are filled.) Paladin doctors look for pricing discrepancies, of course, but, they particularly focus on the human factors — whether the prescription is appropriate to the injury, whether it’s right for the patient in light of his or her medical history, the duration of the prescription and frequency of use, and the potential for any negative reaction from allergies or a combination of incompatible drugs.

There was never any question that our approach would save the client money. What was more interesting was the level of savings out of the gate. In the first two months, alone, our Rx Utilization Management service saved the client 21 percent of the company’s pharmaceutical costs for workers’ compensation claims. These savings emerged from reviews of 478 Class II-IV drug prescriptions before they were filled, 14 percent of which were either modified or rejected by our doctors.

Bringing Abuse Out in the Open
When doctors are used to evaluate prescriptions with both the client and patient in mind, it’s not uncommon for them to discover fraud or abuse. As just one example, a 63-year-old man suffered a lumbar vertebrae fracture in late September, received treatment, and upon discharge filled prescriptions for a 20-day supply of an oxycodone pain killer and diazepam to relieve anxiety. A mere 10 days later, the man went to one of our in-network pharmacies with prescriptions from a different prescriber for the same drugs. In the course of the review, our doctor discovered the duplicate prescriptions, called the latest prescribing physician to discuss the matter and, in the end, denied the request for both drugs.

Unfortunately, treating physicians usually don’t have the time or training to apply this level of attention to their prescriptions. Furthermore, it appears they may not even be aware of the recommended best practices for safe opioid use. As the NCCI reports4:

Along with the questions around the benefits of opioids for work-related injuries, the research indicates few prescribing physicians — a mere 1 in 20 — are complying with best practices [for prescribing opioids], namely:

  • Assessing the patient’s initial and subsequent functionality, pain level, and risk of depression
  • Requiring patients to complete and sign an Opioid Agreement
  • Ordering random urine drug tests to assess compliance and potential use of street drugs and other drugs

Obviously, if the abuse of two serious drugs by even a single patient goes unnoticed, the insurance company will pay unnecessary medical claims costs, possibly well into the future. But equally important is the damage that such abuse can wreak on patients and their families. It is our firm belief that by using doctors to evaluate both the cost and particularly the human impact of prescriptions before they are filled, Paladin’s Rx Utilization Management service may very well be saving lives and, in the process, many dollars for our clients.

About Jeff Miller
Jeff joined Paladin in 2009 with more than 25 years’ experience delivering products and services to the insurance industry, including in the areas of finance, operations, managed care, health care, and software technology. His career includes 16 years at Intracorp, a wholly owned subsidiary of CIGNA Insurance and four years at Fair Isaac Corporation as vice president of the company’s Healthcare and Insurance Services unit. During his three years at Cerius Consulting, he served as vice president of Operations. In 2007, Miller formed Amplify Consulting, where he was also an adjunct professor at California State University at Fullerton, where he taught senior-level courses in strategic and entrepreneurial management. Miller received a B.A. in Business Administration from California State University at Fullerton and an M.B.A. from the University of St. Francis.

About Paladin Managed Care Services
Paladin Managed Care ServicesPaladin Managed Care Services, a wholly-owned subsidiary of SeaBright Holdings, Inc. (NYSE: SBX), is setting the industry standard for services that reduce claims costs while improving patient care. The company’s unique approach combines physician-guided care with technology-driven efficiency to achieve better results for its clients, including insurance carriers, self-insured employers, insurance pools, municipalities, and group health organizations. As the only company that involves physicians in every service—from case management and bill review to prescription approval and telephone support—Paladin is transforming managed care and delivering extraordinary results. Located in Santa Ana, California, Paladin supplements its in-house expertise with specialists from the industry’s top performing service providers to ensure the best results for clients around the country. For more information, visit www.paladinmc.com. Follow them on twitter @paladinmcs.

1Joseph Paduda, “Wasted Dollars, Wasted Lives,” NCCI Workers’ Compensation Issues Report 2012, page 24.
2Chris Laws, “Narcotics in Workers Compensation, “ NCCI Research Brief, May 2012.
3Class I, these drugs — heroine, LSD, and the like — aren’t considered legitimate for medical use.
4Joseph Paduda, “Wasted Dollars, Wasted Lives,” NCCI Workers’ Compensation Issues Report 2012, page 24.

  • RSS
  • Twitter
  • LinkedIn