By Nikki Wilson, Senior Director, Clinical Pharmacy Services, Enlyte
Most pharmacy claims reporting across the industry (unless called out specifically) reflects in-network (retail pharmacy and mail order) pharmacy transactions that apply the benefit of pre-dispense logic including real-time rules and recommendations. However, this is not reflective of the full picture of what’s happening within workers’ comp pharmacy spend and utilization. Looking at the total view provides considerably more insight into the unique challenges existing in the out-of-network space that must be approached differently when compared to in-network dispensing.
Non-retail pharmacy dispensing channels are often out-of-network and bypass the traditional clinical and cost controls that would be applied through point-of-sale systems. Out-of-network transactions include third-party billers, clinics, physician offices, and hospitals that directly dispense drugs or give pharmaceutical injections during visits. Specialty and compounding pharmacies may also fall under this umbrella. These represent some of the typical charges that would be received on paper bills after the medication has been delivered to the patient, also known as “post-dispense.”
Across the industry, generally about one third of prescription utilization and cost comes from this out-of-network space. Depending on the particular book of business, some payers may see higher or lower volumes from out-of-network channels, and it remains imperative to maintain insight into what’s actually happening within these channels as part of optimal total pharmacy program management.
Some of the categories in the out-of-network pharmacy space come almost exclusively through physician dispensing channels and represent some of our industry’s biggest challenges. We’re seeing price opportunistic products continuously enter the market whereby manufacturers are trying to gain a competitive edge financially without adding greater proven clinical value, such as with private-label topical analgesics (PLTAs). Other common examples of price opportunists can include compounds, compound kits, convenience packs, and high-cost outlier National Drug Codes (NDCs). In addition, other challenges with these drugs include billing and coding issues, and determining how to identify items that can be difficult to capture on a paper bill. The reviewer must often know specifically what to look for and find different ways to identify these drugs as they come through varied out-of-network channels.
Topicals have been climbing in terms of spend and utilization in recent years, overtaking opioids for the No. 1 spot by cost in 2022 among all therapeutic classes across in- and out-of-network aggregate data and ranking fifth by number of prescriptions. In fact, looking at combined in- and out-of-network data for the topical class, which includes both prescription topicals such as diclofenac and lidocaine products as well as PLTAs, topicals experienced an increase in utilization (scripts per claim) of 11.8% as well as a 1.1% increase in cost per script, leading to an overall increase of 13.0% in cost per claim for the class. The number of injured workers using topical medications also rose 10.3% in 2022 to 18.2%. These increases in topical utilization and costs revealed a continued rising trend experienced over the last four years.
The industry is taking note of these dispensing channels. The Workers Compensation Research Institute (WCRI) has been performing studies for the last few years looking at cost and utilization trends across several states by juris. WCRI also noted rises in the number of prescription payments coming from physician-dispensed drugs. They highlighted Florida, Georgia, Maryland, and Michigan in their latest report, and found more than half of prescription payments were for physician-dispensed medications. Physician dispensing of topicals (classified as dermatologic agents) accounted for the majority of payments within the drug group in fifteen out of twenty-eight studied states.
Physician dispensing remains a trend that we need to watch closely, and strategies to identify and impact physician dispensing practices are essential to effective clinical management of a claim as well as to overall claim cost-containment efforts.
The Value of Aggregate Data Management
With full visibility into both in- and out-of-network transactions, clinical and intervention strategies consider everything being dispensed to develop a more complete picture of what actions could be taken. For example, we can find opportunities to implement clinical controls or make an adjustment to the pharmacy plan design or formulary, as well as apply clinical review and outreach services. Perhaps there’s a drug utilization rule, step therapy rule, safety edit, or program application that can come into play, or strategies targeting price opportunists and outliers that can be executed, including post-dispense.
Given that a good portion of price opportunist products appear in the pharmacy data post-dispense, another solution is to involve specific bill routing, which effectively takes into consideration who needs to see the bill, and who is the most appropriate person to intervene in a particular situation. Also, bill capture and routing can allow for application of additional services or identification of issues uncovered within the data to inform actions such as formal medication or peer review, when appropriate, as well as workflow optimization.
Lastly, as we consider overarching clinical programs and claim oversight, what can be done to better manage drug therapy at a higher level, and target specialty services for outreach, education, and coordination among the different stakeholders? Whether that entity is the network provider who is dispensing or the client who wants to target certain medications, risk scoring enables better identification of intervention opportunities by surfacing the most potentially impactful claims so the appropriate individual can engage early and prevent adverse outcomes.
What to Consider When Addressing Out-of-Network
It should come as no surprise to employers and payers that there is no “one-size-fits=all” solution within the workers’ comp pharmacy space. The good news is we have identified a lot of the challenges already, such as what dispensing channels are driving challenges and what categories of pharmacy spend and utilization are impacting overall claim costs, both pre- or post-dispense. However, we also need to consider some of the other important factors that aren’t as readily identifiable in the data but can help determine approach. For example, regulatory considerations such as claim jurisdiction rules and whether or not these allow for the practice of physician dispensing, direction of care, and pharmacy network enforcement can offer us the ability to continue to provide additional oversight to address leakage.
In a perfect world, the goal is to bring all prescriptions in-network where we can apply clinical and cost controls. However, in reality, many of these medications are already in the hands of the patient, making it difficult to guide care to a more clinically appropriate or cost-effective alternative. In the case of price opportunistic PLTAs which come exclusively through out-of-network channels as they are marketed directly to physicians for in-office dispensing, alternatives including over-the-counter agents with the same or similar active ingredients represent a significant cost savings.
It comes down to understanding out-of-network circumstances within a particular book of business, highlighting the benefits of network provider relationships, understanding bill review data, and determining how out-of-network transactions are impacting overall prescription utilization and spend. Pharmacy benefit management providers need to understand and determine how to address these challenges by creating a strategy in partnership with clients that identifies and impacts this out-of-network space, including drug mix and dispensing practices. These elements are essential for effective clinical pharmacy management and optimized overall claim outcomes.
About Nikki Wilson
Nikki Wilson, PharmD, MBA, provides clinical leadership and strategic direction as Senior Director of Clinical Pharmacy Services at Enlyte. As a licensed Pharmacist, Nikki has over 14 years of comprehensive industry experience through leadership roles across prescription home delivery programs, pharmacy operations and benefit management (PBM), and clinical program development. She is responsible for evolving and operationalizing strategic pharmacy initiatives as well as overseeing clinical service teams and program capabilities at Enlyte as an integral component of our full-service managed care organization. Dr. Wilson serves as a national thought leader and frequent contributor to industry presentations and publications. Dr. Wilson received her Doctor of Pharmacy and Masters of Business Administration degrees from Creighton University in Nebraska.
Enlyte is the parent brand of Mitchell | Genex | Coventry, a leader in cost – containment technology, independent medical exams (IME), provider and specialty networks, case management services, pharmacy benefit and disability management. The three businesses have aligned their joint industry expertise and advanced technology solutions into a combined organization of nearly 6,000 associates committed to simplifying and optimizing property, casualty and disability claims processes and services.
Enlyte is a WorkCompWire ad partner.
This is NOT a paid placement.