Reports Shed Light on Latest Targets of PBMs

Pharmacy benefit managers are looking beyond opioids to identify other key risks negatively impacting costs and outcomes.

By: Nancy Grover | June 23, 2014

Comorbidities, aging workers, and acetaminophen overuse are among the growing concerns in the workers’ comp system, according to several pharmacy benefit management companies. Three of the larger pharmacy benefit management companies have released data on costs and outcomes among their databases. While opioids continue to dominate the PBMs’ attention, the companies are also looking at several other emerging trends that impact costs and/or outcomes.

Overuse

“Acetaminophen — Tylenol, other brands, generics — is one of the most commonly used drugs in the U.S.,” according to Express Scripts. “Effective in reducing pain and fever, acetaminophen is available in both prescription and OTC-strength products that often are used by injured workers.”

Because they are often combined with other ingredients, especially opioids, acetaminophens are sometimes taken by injured workers in doses that exceed the recommended 4,000 mg per day. Even a single overdose can cause permanent liver damage or even death.

“As a result of safety concerns, effective Jan. 14, 2014, the Food and Drug Administration requires manufacturers of prescription combination products that contain acetaminophen to limit the amount of acetaminophen to 325 mg in each dosage unit,” the report says. “In addition, the FDA plans to withdraw approval for any prescription drugs that continue to contain more than 325 mg.”

A review of approximately 400,000 injured workers last year found nearly 55 percent of the narcotic medications prescribed contained acetaminophen, according to Express Scripts. Hydrocodone-acetaminophen medications accounted for 75 percent of them.

The company says it has a program to identify injured workers who exceed the approved dose and relay the concerns to the prescribing physician.

“Results indicate that daily acetaminophen intake decreased to below 4,000 mg per day for 85.1 percent of the injured workers whose prescribing physician received an acetaminophen education letter,” according to the report.

Older Workers

“An aging workforce is the new norm,” states the drug trend analysis from Coventry/First Script. “As the workforce ages, First Script considers the age of the injured worker as a risk factor and is paying close attention to the impact medications have on older individuals in order to reduce the likelihood of injuries and to promote optimal outcomes when an injury does occur.”

Since older workers are more likely to have chronic conditions that may affect organ functions, drug metabolism can be an issue, as most medications are eliminated through the liver or kidneys. “As a result, other medications or alternative pain management modalities are often selected for pain management in older adults with poor liver or kidney function,” the Coventry/First Scripts report says.

The report also notes that medications taken for chronic conditions and comorbidities are more likely to contribute to drug interactions, and current medications must be considered when prescribing drugs for an injury. Care must be taken when prescribing muscle relaxants and opioids for older workers who are also taking sleep aids, certain antihistamines, anticonvulsants, or pain medications.

With the U.S. Bureau of Labor Statistics estimating that one in four American workers are likely to be at least 55 years of age by 2020, the company says a focus on prescription drug management for older workers is critical. The company uses various tools such as the Beers Criteria — a list of drugs with a high likelihood of serious side effects in patients older than 65.

“Expanded in 2003 and updated regularly, the Beers list is well-known and widely used today,” the report says. “It includes many medications commonly used in workers’ comp, including zolpidem (Ambien), many NSAIDs and muscle relaxants, and long- and short-acting benzodiazepines.”

The company uses the Beers list and evidence-based criteria to identify drug-age interactions and generate intervention alerts prior to the medication being dispensed. Also, prescription drug profiles can be triggered based on claimant demographics, prescriber patterns, drug utilization, and drug combinations.

“Prescription drug management in older workers requires informed choices and careful monitoring in order to increase safety, to encourage optimal treatment outcomes, and to help avoid re-injury,” the report states. “As older workers are projected to be a significant part of the workforce for decades to come, Coventry/First Script has a strategy in place with our clinical and pharmacy resources for this specific population.”

Comorbid Conditions

Depression, insomnia, and obesity can complicate and extend workers’ comp claims, explains Progressive Medical and PMSI. Each condition may prolong treatment or become compensable itself.

“Proactive management of these influences at every stage of the claim is therefore important to achieve better outcomes,” the company’s drug trend report says.

As one of the more common and disabling comorbid conditions, depression can also intensify the pain sensation. Some injured workers rely on pain medications to enhance their mood. “Unfortunately, opioid analgesics can further potentiate depressed feelings as a result of their frequent and well-known side effects, including but not limited to fatigue, nausea, and decreased libido,” according to the report. “Since depression usually has a multi-factorial origin, the key strategies to its successful treatment are early identification, eliminating or minimizing the effects of contributing factors, and establishing a multifaceted treatment program consisting of behavioral therapy and pharmacologic management. If underlying depression is not identified early and treated effectively, adequate pain relief can be hindered.”

Pain can create sleep difficulties for injured workers, which can prevent the body from getting restorative sleep. “One strategy is to ensure that the therapy regimen, both pharmacologic and non-pharmacological, accurately treats the underlying condition,” the report says. “A review of our transactional data from 2013 suggests that the use of sedatives and hypnotics is experiencing a downward trend, as the therapeutic class fell to the number eight position based on total spend.”

A higher incidence of pain, prolonged healing rates, increased depression, and anxiety are associated with obesity in the workers’ comp system, the report explains. Obesity may increase the predisposition for injury and negatively impact workers’ comp costs and lost workdays.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected].

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.

Pharmacy Trends