Allen: How Managed Pharmacy Care Can Improve Outcomes for Injured Workers

As states continue to examine options for managed or directed care in workers’ compensation, several questions arise. Does directed care drive better outcomes for injured workers? Why is the workers’ compensation industry slower to adopt these regulations than the group health or government health industries? What can we learn from the states that have implemented directed care and managed care networks?

Before we dive into these questions, let’s look at the current landscape of regulations. 

Directed Care Regulations

During this last legislative season, there were a handful of attempts in states to move away from employer-directed care for injured workers in favor of a system where the worker would be able to choose from any provider.

Currently, 26 states allow employers to direct injured workers into a managed care system for medical care. In some cases, pharmacy care can be included in a managed care system. Two notable exceptions are Texas and Florida, even though they allow for managed medical care. Texas allows for voluntary informal pharmacy networks that injured workers may be encouraged to use. Florida has a statutory provision allowing injured workers complete choice of pharmacy providers.

Despite the almost universal use of managed care in the commercial and government health arenas, workers’ compensation has been hesitant to embrace managed care widely. During every legislative season, there are a few efforts to undo current managed care regulations, and employer-directed care is frequently implicated as an erosion of the “grand bargain”, or commitment to injured workers.

However, recent studies may be shifting the opinion of managed care for injured workers.  

Research on the Successes of Directed Care

Oregon: In the 2018 fall edition of the Lewis and Clark Law Review, Daniel Walker, JD, discusses the measures Oregon used to move from one of the costliest workers’ compensation systems in the country to one of the most cost-effective systems in the country. One of the areas highlighted by Mr. Walker was the statutory requirement for employer-directed managed care. He concluded, “managed care has streamlined injured worker care and likely curbed rising medical costs far more effectively than a legislatively managed fee schedule.” 

Texas: The Texas Research and Evaluation Group (REG) released a “network report card” in September 2019. The comprehensive report covers a number of measures that include health care costs, utilization, access to care, satisfaction with care, return to work and health outcomes.  In 2010, 20% of new claims were treated within an established network. In 2019, that number had risen to 48%. Since 2015, nearly half of the injured workers were treated within a network for their medical care. 

The report found that medical costs for network care for claims at six months maturity decreased 15% from 2010 to 2019 while non-network care increased by 11%. In 2019, network care for these claims was 3.4% lower than non-network care. At 18 months maturity, network care was 8.9% lower than non-network care. 

While cost savings are important, the real proof of the value of a network should be measured in the outcomes achieved. In the REG study, looking at injured workers in Texas, found the following in regards to outcomes achieved:

• Satisfaction with care: Injured workers indicated a slightly higher satisfaction level with network care compared to non-network care, though the results varied widely based on the network. 
• Access to care: Regarding access to care, injured workers reported better access to care in most networks opposed to access in the non-network environment.
• Health outcomes: In the area of health outcomes, as measured by physical and mental functioning, nearly every network measured outperformed the non-network results.
• Return-to-work: In this category, all but one network equaled or exceeded the results of the non-network system.

The report demonstrates that the network care results in Texas exceeded the non-network care in these areas that are most impactful to injured workers. 

Now let’s look more closely at directed pharmacy care.

Directed Pharmacy Care in Workers’ Compensation: Understanding the Benefits and Access to Care

Pharmacy care is one area that is well suited for managed care. With more states looking to control the prescribing of opioids and some considering implementing drug formularies for injured workers, a managed pharmacy network is an excellent way to promote compliance with these types of initiatives.

Most workers’ compensation pharmacy networks offer broad access to care – typically 90-95% of the pharmacies in a given market are included in the network. The pharmacy network can:

• Help drive generic utilization
• Check for potentially dangerous drug interactions
• Identify potential doctor-shopping issues
• Help identify whether the medication being dispensed is related to and appropriate for the workplace injury

These network benefits help contain pharmacy costs by using less-expensive generics and carefully managing drug utilization by screening out unrelated medications and helping guide prescribing to the most effective drugs for the injury. The pharmacy benefit manager can also simplify billing and payment for both the pharmacy and payer. 

One concern in directing care is whether injured workers will lose access to necessary pharmacy care. However, in most cases, injured workers still have access to a multitude of pharmacies within the network from which to choose care. The network can also help simplify the prior authorization process in those situations where a needed drug falls outside of accepted medical treatment standards. 

Directed Pharmacy Care: Curbing Fraud and Unnecessarily High Costs

Payers and regulators can help curb abusive and fraudulent practices by using pharmacy networks. Almost every week there is a story somewhere where a compounding pharmacy, a physician or other group is being indicted for fraudulent billing practices related to prescription medications. One of the latest indictments was reported on December 4, 2019, in workcompcentral.com. In the report, the California Division of Workers’ Compensation suspended nine individuals who have been convicted or indicted on fraud charges. At least one case involved kickbacks to physicians for prescribing compound creams.

Well-designed pharmacy network rules can help guard against such abuses.

In other situations, injured workers access prescription drug care through their physicians or out-of-network mail-order outlets where the cost of the medications are significantly higher than medications obtained in the network. Additionally, these medications can evade many of the clinical tools employed by the pharmacy benefit manager when they are dispensed through non-traditional outlets that fall outside of a managed care environment.

Some have argued that there is a convenience factor for injured workers obtaining prescriptions dispensed by their doctor. However, most commercial health plans, Medicaid and other government programs typically prohibit physician dispensing of medications. Workers’ compensation is one area where it remains a common and more expensive alternative.[i] Interestingly, an injured worker returning to their physician for a refill of medication might pass several local, in-network pharmacies where the same medication could be obtained at a lower cost and without incurring the cost of an additional doctor visit. Additionally, most programs have mail-order, delivery services to both accommodate those with mobility issues and add convenience.

Upcoming Legislative Season

As we enter a new legislative season, policy makers concerned about rising drug costs in their workers’ compensation system may want to examine the benefits a managed pharmacy care program could bring to their state. Managed pharmacy care programs can provide efficient access to prescription medications, better-coordinated and potentially safer care, and may provide lower costs and greater convenience to injured workers, all while supporting the local pharmacies in their communities. As the entire health care system starts shifting focus to outcome based solutions, workers’ compensation systems can consider quality managed care options to help improve outcomes for injured workers and for the workers’ compensation system as a whole. 

Brian Allen is a nationally recognized policy expert for workers’ compensation and insurance issues across the country. Allen currently serves as Vice President of Government Affairs for Mitchell’s Pharmacy Solutions team. In this role, Allen provides insight into new legislation and regulations in the industry, authors articles and blogs for industry publications and frequently speaks at conferences across the country.

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