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Claims adjusters scrutinize doctor drug dispensing and help rein costs

Doctor Drug Dispensing Costs

Despite a trend of linking workers compensation bill review services with pharmacy benefit manager technology, individual claims adjuster creativity remains critical for curbing doctor-dispensed medication costs.

That is because the technology has not eliminated the adjusters' role in following up on claims for prescriptions dispensed by doctors, observers say.

After the potential expense associated with claimants' addiction to narcotic pain medications, the pharmacy management issue that concerns payers most is the cost implications of doctors dispensing prescription drugs, according to a survey of claims payers released last month.

Tampa, Fla.-based CompPharma L.L.C., a for-profit consortium of pharmacy benefit managers, produced the survey of insurers, third-party administrators and employers who collectively tallied $473 million in pharmaceutical costs during 2011.

Payers say doctor dispensing, which includes providing “repackaged” drugs and compound formulas, concerns them because physicians can look to increase revenues by charging more for medications than pharmacies do.

They also are concerned because medications provided in doctors' offices bypass point-of-sale measures linking retail pharmacies with pharmacy benefit managers. Those measures help prevent potential problems, such as dangerous interactions with other medications a claimant is consuming.


“If a physician has a financial incentive to provide or refer a particular service, then there is a risk of overutilization, and that is certainly the case with (doctor) dispensing.” said Dr. Jacob Lazarovic, chief medical officer in Sunrise, Fla., at third-party administrator Broadspire Services Inc.

A 2011 report by workers comp ratings and research organization NCCI Holdings Inc. stated that “the volume of prescription drugs dispensed by physicians to workers compensation claimants has risen sharply in recent years — putting upward pressure on (workers comp) costs.”

That is where claims adjusters can jump in to try to rein in costs.

For years, many payers have directly routed injured workers' retail pharmacy store bills to pharmacy benefit managers, who can scrutinize prescription utilization to apply cost-containment measures and safety checks.

But payers eventually learned that routing bills for prescription medications from doctors to a pharmacy benefit manager was problematic, said Joe Paduda, principal and workers comp managed care consultant at Health Strategy Associates in Madison, Conn. Those bills can go directly to adjusters or payers rather than to a pharmacy benefit manager.

In the payer claims systems, physician-dispensed pharmaceutical expenses are typically stored or coded as “professional services” rather than as line item pharmacy expenses, making it difficult for payers to know how big of an issue it really is, said Brian Carpenter, Tucson, Ariz.-based vice president of pharmacy benefit clinical services at Coventry Workers' Comp Services.


It is challenging for adjusters, who are not pharmacy experts, to scrutinize such bills, particularly when large caseloads prevent looking at each line item for every claim, sources said. But “over the last couple of years, payers have grown more expert” at routing doctor-dispensed drug bills to a pharmacy benefit manager, Mr. Paduda said. “More payers are now sending those bills (to their pharmacy benefit manager), but I would say … probably less than half of the payers are now doing that.”

Over the past 18 months or so, there has an been an increasing trend where pharmacy charges on medical provider bills are flagged by “bill review engines” for more specialized review, Mr. Carpenter said. The resulting prescriptions are then analyzed with pharmacy benefit manager “clinical and pricing rules” to ensure clinical appropriateness, and price reductions are applied when permitted by state laws, he said.

“It's become the standard now,” Mr. Carpenter said.

The technology has not eliminated the adjusters' role, though. They can still employ several strategies, depending on state laws such as those regarding fee schedules and the directing of injured workers' medical care.

For doctors in a payer's medical provider network, for example, the adjuster can notify them that if they charge excessive fees for medications, they will be excluded from the network, Mr. Paduda said.

“Adjusters are looking for creative ways to address the issue by routing patients away from those physicians or very heavily scrutinizing all medical care being delivered by those physicians,” Mr. Paduda said. “The idea is if a doctor is looking to make a lot more money off dispensing, they are probably looking to make a lot more money by over-utilizing or prescribing” other services.


Adjuster creativity also comes into play when deciding whether to call in managed care services, such as case managers or utilization review and peer review, that ultimately influence what drugs might be prescribed, Mr. Lazarovic said.

Adjusters also can discuss with claimants why they might tell their physicians that they would rather fill a prescription at a pharmacy, said Jennifer Kaburick, director of workers comp product management for St. Louis-based Express Scripts Inc. “Adjusters are the injured worker's primary point of contact,” she said. “They have established a relationship with the injured worker.”

But doctors are fighting back.

A January release from the Florida Medical Association blasted a Florida Division of Workers' Compensation report and NCCI research, calling claims that doctor dispensing drives up insurance rates “bogus.” For several years, “insurance carriers have engaged in what appears to be an anti-competitive scheme of intimidation against dispensing physicians — physicians who are simply trying to treat their patients effectively and efficiently,” the FMA said.

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