By Dr. Mitch Freeman and Brian Allen, Mitchell
The pandemic has shifted how businesses and consumers approach the world, including in the workers’ compensation industry. Although pharmacies have remained open throughout stay at home orders, they have adjusted how they provide services, by encouraging drive-thru usage or home delivery services and enforcing distancing measures.
As states slowly open up, will consumers opt for increased home and mail order delivery options or will they still prefer to go into a pharmacy? Moreover, when they pick up those prescriptions, how can we continue to ensure they receive safe and effective medications?
The answer to the first question, based on insights from our PBM, is that with strict health measures in place, many patients will continue to pick up their medications in-store.
The second question can be addressed through direction of care protocols. Some states have embraced direction of care while others have shied away. Let’s take a look at some of the reasons why.
What is Direction of Care?
Direction of pharmacy care is the ability for an insurer to mandate the use of a chosen pharmacy network provider. Typically, this network is administered through a PBM. Most workers’ compensation PBMs have extensive networks that include local, independent, large chain and specialty pharmacies.
Need more of a refresher on direction of care? Here’s a quick overview.
Concerns Surrounding Direction of Care
Direction of care regulations vary and many states do not allow payers to direct care into a network of pharmacies. There are a few reasons for this:
- State legislators and regulators are concerned that payers would exclude independent or small retail pharmacies from the networks. It was thought that these independent pharmacies might not have the scale to accept the lower reimbursement rates that larger chains may be able to absorb.
- These states also want to allow all pharmacies to have an equal opportunity to provide care to patients.
- Additionally, there is concern that direction of pharmacy care could limit access to pharmacy care if a network was employed, especially in rural areas.
However, the absence of the ability to direct pharmacy care can lead to unintended consequences for pharmacies, insurers and the injured worker receiving care. These consequences may include an increased level of fraud, waste, abuse and potentially compromised safety of injured workers from prescription care provided by non-network pharmacies.
Let’s look at how directed pharmacy care can benefit injured workers, pharmacies and insurers.
Directed Pharmacy Care Promotes Safety for Injured Workers
When a patient goes to a network pharmacy to receive their medication, PBMs apply built-in safety checks to evaluate the prescription for potential drug interactions, duplications, unsafe dosing, high opioid doses and other factors. These protective services occur across all pharmacies in the network, meaning the patient could have prescriptions filled at multiple network pharmacies and these therapy issues would still be identified and addressed. Enforcing the patient’s use of a network pharmacy helps to ensure the patient is receiving safe and effective medications. However, when insurers do not utilize direction of care protocols or it is not permissible by state regulation, out-of-network dispensing can circumvent or delay the evaluation of medications for these issues, potentially leading to fraud, waste or abuse from out-of-network pharmacies including national mail order facilities.
These delays inhibit the work insurers do to make sure injured workers are receiving the most appropriate care. For example, an injured worker may be prescribed an opioid and a benzodiazepine from two separate physicians who are unaware of the other prescription. These two drugs are a dangerous combination, and if the injured worker fills them out-of-network, the following issues arise:
- The insurer and PBM are not aware of the injured worker receiving the drug until after the fact (often when they receive the out-of-network invoice 30 days after the fill occurred)
- The injured worker has received a dangerous medication combination weeks before it can be identified, putting the worker at risk
- The insurer’s costs may increase unnecessarily, as out-of-network prescriptions do not receive the same level of discounts provided by network pharmacies, which have lower pricing when used by patients
Creating a directed care network means that the PBM and adjuster would have a better ability to flag this dangerous medication combination before it is dispensed, providing an increased level of clinical management and patient care.
Directed Pharmacy Care Does Not Inhibit Patient Access
A major argument against direction of pharmacy care is the potential lack of access to local pharmacies, creating an undue burden on patients. However, this is generally untrue. Workers’ compensation PBMs have extensive pharmacy networks covering national retail pharmacies, regional food/drug stores and independent pharmacies. Most networks have more than 70,000 pharmacy locations, providing patients with convenient access to an in-network pharmacy very close to them, which may include their existing local pharmacy.
If a pharmacy is not in-network already, PBMs generally will work with an insurer to add pharmacies to maximize coverage, or the PBM can include “any willing provider” language in its network requirement to allow any licensed pharmacy that accepts the network’s standard reimbursement to join the network.
Lack of Directed Pharmacy Care May Actually Drive Care Away from Local Pharmacies
Ironically, the scenario that states were trying to prevent by limiting or prohibiting direction of care to network pharmacies has in fact become a problem for local pharmacies.
By manipulating the patients’ right to choose their pharmacy, many physicians and attorneys encourage the use of out-of-network, and frequently out-of-state, mail order pharmacies. In many jurisdictions, the majority of out-of-network activity originates from these out-of-state pharmacies. By not allowing the workers’ compensation system to direct care to in-network pharmacies, the local, in-state pharmacies actually miss the opportunity to serve these patients.
A directed care pharmacy network that includes these local pharmacies ensures that patients are not receiving their medications from non-network billers, which brings that business back to the local retail pharmacies.
Lack of Directed Pharmacy Care May Promote Abuse of the System
From the insurers’ perspective, preventing direction of care means that costs can rise exorbitantly. Without controls in place, out-of-network pharmacies can choose higher cost brand drugs, compounds or formulations that have no clinical value over their less costly versions, putting the burden on the insurer to determine what is clinically appropriate or compensable instead of having these managed by the PBM. Insurers and their PBMs have spent time to create formularies that not only comply with state laws, but also make sure that the drugs dispensed have proven efficacy. Many compounds have not been FDA approved. Rather, in some cases they have been chosen specifically to maximize AWP and profits without benefiting the injured worker. When drugs or combinations of drugs are inflated for profit, it can also open the system up to fraud and abuse.
With directed pharmacy care in place, PBMs can more effectively ensure that dispensed medications are safe and effective. Networks can help control fraud and abuse through contract provisions and stop suspected fraudulent prescriptions before they are dispensed at the point-of-sale.
Direction of Care Can Promote Better Outcomes
Overall, a directed care approach that includes an extensive network of pharmacies can promote injured workers receiving the right medications, insurers having greater visibility over their claims, and local pharmacies not losing local business. As the country reopens, there is an opportunity to support directed pharmacy care as an effective way to improve outcomes for workers across the country.
For more information from our experts, please visit Mitchell mPower.
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