By David Dubrof, Chief Sales Officer, myMatrixx
Cost transparency continues to be a watchword in the PBM industry, and this certainly extends to the workers’ compensation space. But although the term implies clarity in cost, it doesn’t always equate to clarity in overall value.
Make no mistake, the larger conversation about transparency in pricing for all aspects of health care is extremely important and it’s one that needs to happen, especially in workers’ comp pharmaceuticals.
What can be misleading is the use of this concept as a selling point for PBM pricing. What you see is not always what you get. Even though a PBM may be charging clients the same price they paid the pharmacy, they may not be getting the best or lowest cost from that pharmacy for a number of reasons, including administrative fees and network contracts.
Established workers’ comp PBMs like myMatrixx, which have strong relationships with the largest pharmacy networks, will be able to negotiate better prices on medication for themselves and clients. This is coupled with uniquely positioned networks and dedicated network access for workers’ compensation. What’s more, we want our customers to look at all cost components of our offering, including administrative fees and performance guarantees, to make an objective choice on this promise of transparency.
Controlling unit transaction cost is just one aspect of the larger claims strategy picture, and transparent pricing models are themselves a relatively marginal part of cost control. For any payer, including insurance companies, TPAs, state-sponsored plans and employers, a PBM that is really doing its job should be helping execute the overall claims strategy.
Does transparency truly align with your cost control strategy?
There are several ways that we suggest that clients get the benefit of transparent pricing models, also known as pass-through models, to help meet overall cost-savings goals. However, with any PBM, it’s always important to weigh the cost and benefits of the entire program against the price of an individual medication. For example, a payer may choose a PBM that offers a lower price per-medication than the competition; say $1.00 per hypothetical pill versus $1.25.
While this seems to look good from a cost-control standpoint, what if this PBM doesn’t have the clinical programs and technology to ensure that patients aren’t receiving unnecessary prescriptions? Many businesses and industries require special formularies and systematic checks to ensure that the right treatments are being provided. Without proper technical infrastructure and clinical and administrative oversight, unnecessary prescriptions can lead to runaway costs, the potential for negative interactions and other risks. Put another way, significant cost savings can come from the medication that isn’t ever dispensed. And established clinical expertise is needed to assess and identify unnecessary or even harmful prescriptions.
If the client ends up paying for thousands of pills that aren’t really needed, or could even be harming injured workers, is transparent pricing really saving money?
With brand-name drugs, rebate discussions could be hiding the real problem
Another example would be overpaying for brand-name medications that should be generics. Payers should be cautious about discussions that heavily emphasize passing rebates, or negotiated manufacturer discounts, directly to the payer. It’s very important to be aware that rebates are nearly always exclusively for name-brand drugs.
In workers’ compensation the vast majority of prescriptions are generic, approximately 86% according to recent surveys from CompPharma. This means that rebates cannot be considered without looking at generic utilization. With generic drugs costing 85% less on average than name-brand equivalents, according to the FDA, a huge priority for any PBM should be generic efficiency. This is the measurement of the percent of generic drugs dispensed when a generic is available. In 2019, myMatrixx was able to achieve generic efficiency at or near 100% for all of our clients.
In short, a PBM that ensures generics are being used over name-brand drugs whenever possible should be a larger priority than receiving rebates on those name-brand drugs. After all, what good is saving $2.00 a pill on a hypothetical name-brand that costs $15 per pill if there is a suitable generic alternative available for $2.25?
How flat fee pricing can also hide costs
Yet another big selling point with transparent pricing is a claim that there is no markup on medications from the pharmacy network. The network is reimbursed exactly what is received from the payer and a flat administrative fee is charged for services rendered.
Here’s what may be getting left out: pharmacy networks are not so transparent about what they paid for a drug. This means that the “pass-through” can actually vary widely between PBMs. What’s more, many PBMs don’t have direct contracts with pharmacy networks and instead lease through a larger PBM. As an Express Scripts company, myMatrixx is one of the nation’s largest PBMs, and has direct contracts with major pharmacy networks. No matter what pricing structure is being offered, our network power allows us to deliver significant discounts and cost-savings on medications.
With some flat-fee structures, many payers can end up paying significantly more than the cost of the drug to PBMs that tell them they offer transparent pass-through pricing models. That’s why in terms of cost control, established PBMs that have direct contracts with the largest pharmacy networks can offer more significant value than smaller start-ups that tout transparency as a marketing buzzword.
What is your PBM transparent about?
As mentioned above, accurate cost control is really just one piece of the claims management puzzle. For injured workers, a comprehensive plan needs to prioritize patient safety, positive outcomes, experienced representatives who can provide customized solutions. Compliance with state regulations and industry standards should are also priorities in addition to being cost effective. A workers’ compensation PBM should have the clinical, operational and technological capabilities to support all of these objectives. As just one example, paying lower costs for the wrong medication is not going to save money or promote patient health and safety.
Less-established PBMs that emphasize pricing over clinical expertise, service and data analytics may end up costing a lot more in the long run — and not just in dollars. Experienced PBMs can offer true clarity in helping you develop and achieve a claims management strategy that helps injured workers achieve positive outcomes on a cost-effective basis.
If you do determine that your PBM doesn’t align with your larger strategy, the pain of same is often worse than the pain of change. Switching over to a new PBM is a big decision and comes with many considerations, but it can be well worth the investment if it’s a switch to one that is able to better meet your needs. That’s another advantage of established PBMs — they’re more likely to have the resources and experience to offer new partners a smooth and seamless transition.
Transparency is essential to any discussion of managing claims, but true transparency should include all aspects of care and the total cost of ownership. If not, you run the risk of losing focus on a patient-centric approach to medical management and undermining your long-term claims management strategy.
About David Dubrof
As Chief Sales Officer of myMatrixx, an Express Scripts company, David Dubrof oversees sales and market share growth for the workers’ compensation division. Working closely with both the sales and marketing teams, he works to create strategic managed care relationships with a broad spectrum of partners while leveraging key marketplace differentiators.
David brings more than two decades of executive management experience in sales, marketing and operations in the workers’ compensation, healthcare, and technology industries. His wide range of skills helps myMatrixx meet business goals and achieve its ongoing mission to help injured workers.
Prior to joining myMatrixx, David was the Vice President of Sales and Marketing for Genex Services, a leading managed care provider, where he was responsible for managing the technology and bill review sales team. Additionally, he served as vice president for a medical cost management provider for commercial, international, maritime and workers’ compensation payers. Previous leadership positions include president of a professional services organization and executive vice president at a privately held company offering pharmacy benefit management and ancillary health services.
David holds a Bachelor of Science in Business Administration from Florida State University and currently lives in Atlanta, Georgia.
About myMatrixx, An Express Scripts Company
myMatrixx® is a pharmacy benefit management company laser focused on workers’ compensation. The unique combination of myMatrixx and Express Scripts makes us the only workers’ compensation PBM that can deliver customized solutions and exceptional customer service while leveraging Express Scripts’ pharmacy network, comprehensive clinical team, mail order program and specialty solutions to meet the individual needs of our clients and their injured workers. For more information, visit myMatrixx.com.
myMatrixx is a WorkCompWire ad partner.
This is not a paid placement.