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  • PHARMACY BENEFIT PROGRAMS VS. MEDICAL BENEFIT PROGRAMS

    The average wholesale price (AWP) of prescription drugs has been on the rise in recent years, with no foreseeable cap in sight. The American Pharmacists’ Association reported in 2015 that spending in the United States for pharmaceuticals totaled nearly $374 billion the year prior. Insurance companies are faced with even higher price tags when claimants injured in a traffic accident or while on the job require specialty pharmacy medications.

    These specialty prescriptions carry with them a unique set of challenges when it comes to cost management. Within the workers’ compensation and automobile no-fault claims fields, there is some debate regarding how best to manage claims involving prescription drugs. Specifically, insurance companies are faced with the task of choosing a pharmacy benefit program or a medical benefit program, and each option carries pros and cons.

    The first priority of any insurance company is to indemnify its injured claimants. Typically a very close second priority is the need to reduce costs associated with claims, especially those claims involving prescriptions that necessitate supplementary equipment in order to be properly utilized by a claimant. When insurance companies choose to manage claimant prescriptions under a medical benefit program and a claimant’s prescription contains multiple supplies and services, split billing becomes a concern. This situation creates two or more claims for the same service and generates additional costs as well as additional time burdens for the insurance company. Insurance companies choosing to administer claims under the pharmacy benefit program will greatly reduce these instances of split billing, therefore reducing overall claims costs and cycle times.

    When claimants’ prescriptions are managed under a pharmacy benefit program, the use of J-codes under the Healthcare Common Procedure Coding System (HCPS) does pose the potential for problems. In general, J-codes are a more generic procedure code that allow more margin for error in both prescription and billing; this is one drawback of the pharmacy benefit program. To combat this weakness and ensure the highest level of accuracy and cost reduction, insurance companies should consider partnering with a Pharmacy Benefit Manager (PBM) such as Northwood.

    Northwood’s extensive experience with pharmaceutical services in regard to worker’s compensation and auto no-fault claims works on behalf of the insurance company to hold down claims costs. By implementing a pre-authorization process for each claim, Northwood eliminates excess costs that are non-injury-related. Northwood also employs proven processes to ensure the appropriate use of HCPCS procedure codes, therefore significantly reducing split billing and further trimming claims costs for insurance companies. A credentialed network of pharmaceutical providers cultivated by Northwood also provides discounted rates for the insurance companies it partners with.

    Representatives at Northwood are available to answer any questions and speak with your company regarding the benefits of partnering with them as a PBM.

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