The Average Wholesale Prescription (AWP) cost has long been a concern to insurance carriers administering workman’s comp claims. The cost of some generic prescription drugs doubled in price in 2014, according to a study by Elsevier. In addition to the high cost of prescription drugs, proper patient utilization and adherence to prescription instructions is a growing concern among insurance carriers administering workman’s comp claims involving prescriptions. Improper patient adherence to prescription drug regimens can result in increased costs to the insurance carrier.
Pharmacy Benefit Managers (PBM) offer a solution to insurance carriers and estimators within the workman’s comp claim administration sector. According to the Pharmaceutical Care Management Association (PCMA), in a 2011 research study from Visante, PBMs are projected to help reduce prescription drug costs for consumers and commercial sponsors by a total of nearly $2 trillion over the next few years. This savings would amount to a 35 percent decrease in prescription drug costs within one decade. Corporate entities (such as insurance carriers) and their clients are projected to realize approximately $1.3 trillion of that cost savings.
The PCMA and Visante research study further analyzed cost savings potential for corporate entities based on the level of utilization of the PBM’s recommended methodologies. If an entity such as an insurance carrier implements only a partial set of tools and methods recommended by the PBM, their cost savings is projected to be around 20 percent. When a corporate entity implements the full range of tools and methods recommended by the PBM, a cost savings of 50 percent can be realized.
A PBM will create cost reductions in workman’s comp claims involving prescription drugs by implementing several changes with the insurance carrier. The PBM may be able to communicate directly with the prescription drug manufacturer in order to offer discounted pricing to the insurance carriers it partners with. The PBM will also create a network of pharmacy providers that will offer discounts to an insurance carrier and its claimants based on in-network, previously negotiated rates. There may be additional cost-saving pharmacy options available to insurance carriers contracting with a PBM, such as mail-order prescription services for rural clients. An established PBM will also have procedures in place to minimize waste and increase patient compliance with prescription drug regimens to assist estimators in ensuring better claimant outcomes, which translates into reduced cost for the insurance carrier.
As an industry-leading expert and established PBM, Northwood will bring a variety of methods to an insurance carrier to assist in reducing costs associated with workman’s comp claims involving prescription drugs. Northwood has built an accredited network of pharmacy providers to ensure insurance carriers and claimants have access to quality pharmacy service providers with discounted rates. Northwood’s network also ensures claimants will not need to pay out-of-pocket for prescriptions related to the workman’s comp claim. For more information or to speak with a representative, please contact Northwood.
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