Ron Mazariegos: Ron worked in the legal industry for over twenty years, working in various capacities, from the New York City Law Department to a large defense firm. Finally, he decided he liked the claims side of being a lawyer more than the billable hours side. Today, Ron is the head of Public Entity and Non-Profit Claims for the Ambridge Group. He has been in workers’ compensation for the last fourteen years and has specifically engrained himself in Pharmacy Benefit Managers.
What are PBMs, and what makes them successful?: Pharmacy Benefit Managers (PBMs) main objectives are negotiating and obtaining cost savings and managing medications needed for workers’ compensation injuries. Ron looks at PBMs as organizations that fulfill the gatekeeper role. Along with repricing medicines, they must ensure that the request to fill complies with the different drug formularies and jurisdiction guidelines. The main success comes from the PBMs being nimble in that they are creative and resourceful in seeking out cost savings for each case. Another critical role is to be responsive to the injured workers so they feel like they are getting the care they deserve.
How can PBMs affect the outcome of a claim?: When a PBM works closely with a carrier, it can learn about commonly used medicines and pain points, which allows it to craft contracts with pharmacies that best suit the carrier and insured’s needs. Also, they look at specialty medications that specific types of claims might need. When the PBM understands the kinds of claims common to the carrier, it allows them to contract with the best pharmacy to fulfill that need. This type of relationship helps produce the best outcome for all involved.
How medicines are priced and negotiated with a PBM: Medications are priced using the AWP, the average wholesale price. Drug pricing is very subjective. Drug manufacturers base the published price on ingredient costs, development costs, and other factors. The price is published on the Metaspan and can be checked daily. Some PBMs negotiate prices based on the spread. The spread is a markup from what is initially paid for the medicine by the PBM and what is actually charged to the carrier. Ron is a proponent of a more transparent model based on the Maximum Allowable Cost (MAC). This model is the maximum cost allowed, plus an admin fee for the PBM. The PBM negotiated admin fee is how they make their profit, which can ultimately result in huge savings for the carrier.
What are rebates, and how do they affect cost? A rebate is a cost savings that comes after a sale. Carriers spend a lot of money on brand-name pharmaceuticals that often offer rebates. If you fill out a brand prescription, the payer/carrier should be eligible for the rebate. Frequently, the PBMs want to keep the rebate because it is a source of revenue. These rebates can be a significant cost savings for the carrier, so it is important to do due diligence when working with a PBM.
The devil is in the details.: The key to getting the best-negotiated rates with PBMs is paying attention to the details and asking questions until you understand all the details. Something as simple as using one pharmacy over another can be a huge savings. It is important to be diligent about picking the correct vendor that will “do the right thing.”
Pharmaceuticals and Trends in the Workers’ Compensation World: Adjusters must be diligent about specialty drugs. Often, these drugs are new on the market and very expensive. It is important to research what these drugs do and whether there is a less costly approach. Ask the question, could over-the-counter drugs do the same job? Other trends in the workers’ compensation world to keep an eye on are biopharmaceutical prescriptions and the use of legal marijuana. Do your homework and keep an eye on any red flags.