How Your PBM Helps Manage the Growing Trend in Workers’ Comp Pricing Transparency

Because health care plays a big role in workers’ compensation, it is no surprise that the idea of pricing transparency is starting to trickle into the industry.
By: | December 16, 2019

In the health care industry, there has been increasing buzz surrounding price transparency — the idea that patients should be able to review clear information on the most effective, lowest-cost health care options available to them.

Because health care plays a big role in workers’ compensation, it is no surprise that this idea of transparency is starting to trickle into the industry.

“For health care, a push to transparency isn’t new, but it is for workers’ comp PBMs,” said Michael Geis, senior vice president of product development at myMatrixx.

“This kind of change in viewing the price of health care options is a welcome challenge,” said Geis, and this is particularly true for pharmacy benefit management (PBM) partners.

“Our clients are challenging us to show the value that we have been providing all of this time. It’s a chance for us to show all of the great things we have been doing and better articulate what that value is to our customers.”

Phil Walls, chief clinical officer, myMatrixx

“We’re taking care of our clients because it’s the right thing to do. That’s included in our current pricing model,” added Phil Walls, chief clinical officer at myMatrixx. “So much of what we already do today is considered a value add.”

Transparent pricing opens the door to show exactly what that value add is. But while this seems like a simple endeavor, it can be anything but.

“To me, the term transparency should be very simple to follow and understand, but there are several elements to review,” said Mike Cirillo, president of myMatrixx.

“There’s opportunity here to educate buyers around what transparency really means and what all the components of it are.”

Price Versus Cost

Knowing the price of the available health care options in workers’ comp is just the start. For Walls, however, it shouldn’t just be about the price tag. In workers’ comp, it’s more so about managing costs.

“It is difficult for a person, an employer or even a company to control prices — just look at the struggle the current administration and Congress are having with this issue,” he said. “But clients do have a say in how much their drug costs will be. That’s where companies like myMatrixx and other PBMs can help clients truly utilize price transparency to their benefit.”

After all, “if you’re getting a great price on a dangerous drug, you’re not really saving money,” said Geis.

“So it is about moving the conversation past just the price of the drug. Instead, the priority should be focusing on the appropriateness of the drugs and the corresponding cost. Pharmacy cost is not solely a function of drug price, it is a function of drug price times its utilization. Without effective clinical oversights and data insights you are only controlling one aspect of your pharmacy cost,” he said.

“And so, it’s about moving the conversation back to not just the price of a drug, but the drug itself and the appropriateness of its use. If we’re going to engage in a conversation about transparency, let’s talk about cost versus price,” said Geis.

So what drugs are impacting workers’ comp costs?

“Drug costs in workers’ compensation are driven by a number of factors, including certain new single-source brand drugs that offer no real clinical advantage, private-label topical drugs dispensed by physicians and newer specialty drugs like the ones used to treat Hepatitis C or HIV, to name a few,” said Walls.

“But the real cost driver in workers’ compensation is overutilization.”

The opioid epidemic is a clear example. Chronic pain from work injuries drove up the prescriptions written for opioid-based drugs. As more workers became addicted, more scripts were written, and the overall cost of workers’ comp claims increased with each drug administered.

Michael Geis, SVP, product development, myMatrixx

“Cost is really a function of price, but it’s also a function of utilization, but no one seems to be aware of or tracking that aspect” said Cirillo.

“If you take your eyes off the ball, your cost per script is going to go down but your number of scripts is going to go up.”

When employers are looking at a claim, they’re not thinking in terms of price or cost. Their first concern is the clinical outcome for that patient.

“PBMs can help manage the utilization of the drugs in a claim. We can get the worker off opioids, help do the right thing, and we now have a method of controlling our clients’ costs regardless of price,” said Walls.

Risk and Reward

Transparency in pricing doesn’t just help lower costs or help cut back on the over-utilization of specialty drugs like opioids — though both are definite benefits.

With transparency in place, “there’s never any question of ‘Are we on the same side?’ ” said Cirillo. “Everyone is partnering to drive the best outcome.”

But transparency is not without its risks.

“Trends or costs could easily go in the wrong direction,” said Cirillo.

Mike Cirillo, president, myMatrixx

“The unintended consequence of unbridled transparency and price reduction could result in increased utilization of costly drugs. There’s a lot of companies coming into the space that are touting transparent pricing as the answer to all the woes of the PBM world.

“My belief is, without consulting a full-service PBM, folks are going to buy a low, upfront price and later be subjected to higher costs down the road. All because the PBM didn’t bring all those other value-added services to further reduce costs.”

Transparency Adoption and Education

So how readily are people adopting this into their systems? According to Cirillo, two trends are starting to take shape as the idea of workers’ comp pricing transparency grows.

Larger, or more sophisticated, buyers, he said, are more hesitant.

Smaller buyers, however, seem to be more engaged and interested in exploring the topic.

What it comes down to is educating on the risks, rewards and complications associated with transparent pricing. This is another area where the right PBM can help a company excel.

Pharmacy management is not just about the pricing style or even the price paid per script, but the total aggregate value and reduction in cost over time that a PBM can bring to a client. Understanding the nuances transparency brings to the table is a key step.

Walls added that another way to gain a better understanding is to ask a pharmacist.

“I say this quite often: Ask your pharmacist. If you’re not sure about something, pick up the phone and call. Talk to a PharmD at your PBM. Ask them what the medication is used for, and even more significantly, is there a suitable alternative?”

“As it goes,” he said, “oftentimes there is.” &

Autumn Demberger is the content strategist at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance