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Column: Workers' Comp

Worker Pharma Choice Debatable

By: | October 12, 2017 • 2 min read
Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

This is a tale of two pharmacy models, although we can’t say it’s the best of times or the worst of times for either.

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Thanks to court records, we can say each tallied a win and suffered a loss in two state supreme court battles. The disputes were over whether workers’ compensation claimants can select prescription drug providers, bypassing typical insurer pharmacy utilization and cost-control arrangements.

That should interest most claims payers who build their workers’ comp pharmacy cost-containment programs around directing injured workers to contracted prescription distribution systems, often involving PBMs.

In one case, the Kentucky Supreme Court ruled that five claimants with similar cases can select their pharmacy under a state law allowing injured workers to choose medical providers.

The decision in Steel Creations v. Injured Workers Pharmacy resulted from medical fee disputes, which pitted five employers and their insurer, the Kentucky Employers’ Safety Assn., against employees using the services of the IWP. Plaintiffs’ attorneys referred the claimants to IWP after they complained of delays in receiving prescriptions under KESA’s existing arrangement.

According to the court decision, IWP, (which recently hired PBM veteran Michael Gavin to bolster payer relations), markets to plaintiffs’ attorneys and takes prescription orders from doctors rather than adjusters. It is a mail-order pharmacy offering next-day delivery.

By contrast, insurer KESA provides injured workers with medical cards for purchasing prescriptions. It does so through a “handshake agreement” with service provider M. Joseph.

I don’t think these two court decisions mark the end of this story. Legislative battles continue to be fought over whether workers can bypass insurer-selected pharmacies.

While the case involved drug pricing, the ruling reveals difficulties in unraveling prescription charges under such arrangements. Witnesses could not or would not testify about upcharges added to drug pricing by both pharmacy benefit management companies and “middle-man” M. Joseph.

However, the court cited evidence submitted by KESA showing significant price differences between M. Joseph and IWP on some medications. On others their prices were similar.

The second ruling, handed down by Louisiana’s Supreme Court, involved IWP and a claimant seeking $13,110, an amount the claimant’s employer refused to pay for IWP prescriptions.

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Following review, Louisiana’s Supreme Court held in Burgess v. Sewerage & Water Board of New Orleans that under its state law, pharmacy choice in a workers’ comp case belongs to the employer.

I don’t think these two court decisions mark the end of this story. Legislative battles continue to be fought over whether workers can bypass insurer-selected pharmacies.

With the increased role of drug expenses in workers’ comp, you can bet entities in the pharmacy business will keep fighting, hoping to make it the best of times for their operations. &

More from Risk & Insurance

More from Risk & Insurance

Black Swans

Black Swans: Yes, It Can Happen Here

In this year's Black Swan coverage, we focus on two events: An Atlantic mega-tsunami which would wipe out the East Coast and a killer global pandemic.
By: | July 30, 2018 • 2 min read

One of the most difficult phrases to digest without becoming frustrated or judgmental is the oft-repeated, “I never thought that could happen here.”

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Most painfully, we hear it time and time again in the aftermath of the mass school shootings that terrorize this country. Shocked parents and neighbors, viewing the carnage, voice that they can’t believe this happened in their neighborhood.

Not to be mean, but why couldn’t it happen in your neighborhood?

So it is with Black Swans, a phrase describing unforeseen events, made famous by the former trader and acerbic critic of academia Nassim Nicholas Taleb.

We at Risk & Insurance® define these events in insurance terms by saying that they are highly infrequent, yet could cause massive damages. This year, for our annual Black Swan issue, we present two very different scenarios, both of which would leave mass devastation in their wake.

A Mega-Tsunami Is Coming; Can the East Coast Even Prepare?, written by staff writer Autumn Heisler, profiles an Atlantic mega-tsunami, which would wipe out lives and commerce along the East Coast.

On the topic of whether the volcanic island of La Palma, the most northwestern of the Canary Islands, could erupt, split and trigger an Atlantic mega-tsunami, scientists are divided.

Researchers Steven Ward, a geophysicist at UC Santa Cruz, and Simon Day of University College London, say such a thing could happen. Other scientists say Day and Ward are dead wrong; it’s an impossibility.

One of the counter-arguments is backed up by the statement that there has never been an Atlantic mega-tsunami. It’s never happened before and thus, could never happen here. See exhibit “A” above, re: mass school shootings.

Viral Fear: How a Global Pandemic Kills an Economy, written by associate editor Katie Dwyer, depicts a killer global pandemic the likes of which hasn’t been seen in a century.

Tens of millions of people died during the Spanish Flu outbreak of 1918.

Why it could happen again includes the fact that it’s happened before. The science on influenzas, which are constantly mutating, also supports just how dangerous a threat they pose to millions of people beyond the reach of antibiotics.

Should a mutating avian flu, for example, spread widely, we could see a 10 percent drop in GDP, mostly from non-physical business interruption.

As always here, the purpose is to do exactly what insurance modelers and underwriters do; no matter how massive the event, we create scenarios, quantify possible losses and discuss risk mitigation strategies. &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]