Tag Archives: tanabe

Physician Dispensing Skirts Controls

A new report from the Workers Compensation Research Institute (WCRI) found evidence of frequent physician dispensing of new drug strengths and a new formulation at much higher prices. This phenomenon was observed in several states that recently instituted reforms aimed at reducing the prices for physician-dispensed prescriptions. Skirting the goals of those reforms, dispensing increased for new formulations of drugs that carried higher prices. That trend led to substantial increases in average prices for some common physician-dispensed drugs.

“When prices are reduced by regulation, the regulated parties―in this case physician-dispensers―sometimes find new ways to retain the higher revenues they had prior to the reforms,” said Dr. John Ruser, president and CEO of WCRI. “The results raise questions about the effectiveness and sustainability of the price-focused reforms. The study also provides lessons for those states where physician dispensing is permitted.”

See Also: Novel Controls on Physician Dispensing

This report, Physician Dispensing of Higher-Priced New Drug Strengths and Formulation, is part of a series of WCRI studies that examine the effects of regulatory or legislative changes to the rules governing reimbursement for physician-dispensed prescriptions. In the past decade, many states in the U.S. have enacted reforms to cap prices paid to physicians by tying the maximum reimbursement amount to the average wholesale price (AWP) set by the original manufacturer of the drug. However, new strengths and formulations of drugs are labeled as being made by generic manufacturers, not merely as being repackaged, a technical distinction that lets the new strengths and formulations avoid the new reimbursement rules — the generic “manufacturer” gets to set its own, much higher AWP.

The study reported several drugs that exhibited this phenomenon and highlighted several states where physician dispensing of these new drug products was prevalent. Take cyclobenzaprine, a muscle-relaxant. The 7.5-milligram new strength was not seen in the market until 2012. For many years, the most common strengths were 5 and 10 milligrams. The manufacturer of this new strength assigned a new AWP, which was much higher than the AWPs for the 5- and 10-milligram products. Below are some examples from the study of the frequent physician dispensing of higher-priced new strengths.

  • California: The average prices paid to physicians for cyclobenzaprine of 5 and 10 milligrams ranged from $0.38 to $0.39 per pill in the first quarter of 2014. The 7.5-milligram product, introduced in 2012 and almost always dispensed by physicians, cost $3.01 per pill in the same quarter. The percentage of physician-dispensed cyclobenzaprine prescriptions that were for the 7.5-milligram strength increased from 0% prior to 2012 to 55% in the first quarter of 2014.
  • Florida: The average prices paid for physician-dispensed cyclobenzaprine of 5 and 10 milligrams were $1.75 and $1.29 per pill, respectively, in the first quarter of 2014. The 7.5-milligram new strength was seen prior to Florida’s 2013 reform, but the frequency of dispensing increased substantially post-reform—from 16% in the pre-reform second quarter of 2013 to 49% in the first quarter of 2014. When physicians dispensed the 7.5-milligram new-strength product, they were paid an average of $4.11 per pill.
  • Illinois: The average prices paid to physicians for cyclobenzaprine of 5 and 10 milligrams were $1.55 and $1.25 per pill, respectively, in the first quarter of 2014. Prior to Illinois’ 2012 reforms, the 7.5-milligram new strength was rarely seen in the market, but, by the first quarter of 2014, 22% of all physician-dispensed cyclobenzaprine prescriptions were for the new strength. When physicians dispensed the new strength, they were paid on average $3.86 per pill.
  • Tennessee: Ten-milligram cyclobenzaprine was the most-commonly dispensed drug strength by physicians in the state, which cost $1.08 per pill on average in the first quarter of 2014. The 7.5-milligram product was not seen in the initial post-reform quarters until the fourth quarter of 2013. By the first quarter of 2014, 19% of physician-dispensed cyclobenzaprine prescriptions were for the 7.5-milligram new strength. When physicians dispensed the new strength, it cost $3.97 per pill on average.

The data used for this report came from payers that represented 31–70% of all medical claims across 22 states studied and covered detailed prescriptions based on calendar quarter from the first quarter of 2012 though the first quarter of 2014. The 22 states in the study are Arizona, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Missouri, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Virginia and Wisconsin.

To purchase this study, visit here.

Do Healthcare Costs Shift to Work Comp?

A new study―Do Higher Fee Schedules Increase the Number of Workers’ Compensation Cases?―from the Workers Compensation Research Institute (WCRI) explores to what extent workers’ compensation reimbursement rates influence the decision by the medical provider on whether to classify an injury as work-related.

According to previously published WCRI research, in many states, workers’ compensation pays higher prices for treatment than group health does. For example, one study found that workers’ compensation prices were two to four times higher than group health prices in some states. And, in most states, workers’ compensation systems rely heavily on the treating physician to determine whether a patient’s injury is work-related.

”Physicians may call an injury work-related in order to receive a higher reimbursement for care he or she provides to the patient,” said Dr. Olesya Fomenko, the author of the report and an economist at WCRI.

See Also: Are Your Health Cost Savings an Illusion?

The study found, among other things:

  • If the cause of injury is not straightforward (e.g., soft tissue conditions), case-shifting is more common in the states with higher workers’ compensation reimbursement rates. In particular, the study estimated that a 20% increase in workers’ compensation payments for physician services provided during an office visit increases the number of soft tissue injuries being called work-related by 6%.
  • There was no evidence of case-shifting from group health to workers’ compensation for patients with conditions for which causation is more certain (e.g., fractures, lacerations, and contusions).

This analysis relies principally on workers’ compensation and group health medical data coming from a large commercial database. This database is based on a large national sample of patients where the data were provided by health insurers and self-insured employers. It includes individuals employed by mostly large employers and insured or administered by one of approximately 100 group health plans. The database is unique in that, for a given employee, it shows whether a given medical encounter (visit) was paid for by group health or workers’ compensation.

For more information about this study, visit here.

Will ACA Shift Claims to Workers’ Comp?

Hundreds of millions of dollars of claims could shift from group health to workers’ compensation as accountable care organizations (ACO) expand under the Affordable Care Act (ACA), according to our new study: Will the Affordable Care Act Shift Claims to Workers’ Compensation Payors?

Although pundits have written about “cost shifting” to workers’ compensation, a significant and underappreciated effect of the ACA is “case-shifting” from group health to workers’ compensation.

The ACA seeks to greatly expand the use of ACOs-where providers are rewarded for meeting cost and quality goals. This effort will expand the use of “capitated” health insurance plans. Under these plans, providers are paid a fixed insurance premium per insured regardless of the amount of care provided to a given patient during the year. Under traditional fee-for-service insurance plans, providers are paid for each individual service rendered.

The question addressed in the study is to what extent do the financial incentives facing providers and their healthcare organizations influence whether a case is deemed to be work-related. In other words, how many cases will get moved to workers’ comp, which covers fees for each additional service, from group health, where the fixed fee under capitation means providers wouldn’t get any additional payment.

The study found that a back injury was as much as 30% more likely to be called “work-related” (and paid by workers’ compensation) if the patient’s group health insurance was capitated rather than fee for service. The study can be extrapolated to different states-for example, the study predicts about a $100 million increase in workers’ compensation costs in a state like Illinois if the share of capitated patients rises from 12% to 42%.

Case-shifting was more likely in states where a higher percentage of workers were covered by capitated group health plans. In a state where at least 22% of workers had capitated group health plans, the odds of a soft tissue case being called work-related were 31% higher for patients covered by capitated plans than for similar workers covered by fee-for-service group health plans. By contrast, in states where capitation was less common, there was no case-shifting seen. This is more than just the result of having fewer capitated patients seeking care. It also appears that, when capitation was infrequent, the providers were less aware of the financial incentives.

This study relies on workers’ compensation and group health medical data coming from a large commercial database. This database is based on a large sample of health insurers and self-insured employers. It includes individuals employed by mostly large employers and insured or administered by a variety of health plans. The database is unique in that, for a given employee, it contains information on both the group health services used and the workers’ compensation services used.

For more information about this study, visit http://www.wcrinet.org/result/will_aca_shift_wc_result.html.

Loophole for Doctors on Drug-Dispensing

After 18 states enacted reforms to limit the prices paid to doctors for prescriptions they write and dispense, a new study from the Workers Compensation Research Institute (WCRI) finds that physician-dispensers in Illinois and California discovered a new way to continue charging and to get paid two to three times the price of a drug when compared with pharmacies.

“When prices are reduced by regulation, the regulated parties — in this case physician-dispensers — sometimes find new ways to retain the higher revenues they had prior to the reforms,” said Dr. Richard Victor, WCRI’s executive director. “Although this study uses data from two large states, it raises questions for all states where physician-dispensing prices are regulated.”

The study — Are Physician-Dispensing Reforms Sustainable? — identifies the mechanism that allows doctors in Illinois and California to dispense drugs from their offices at much higher prices when compared with pharmacies. It involves the creation of an opportunity to, once again, assign a much higher average wholesale price (AWP) to a physician-dispensed drug – a practice targeted by the earlier reforms enacted in many states using language limiting reimbursement to a price based on the AWP assigned by the manufacturer of the original drug.

Consider a drug where the most common strengths are 5 milligrams and 10 milligrams. If a new strength, say 7.5 milligrams, comes to market, the manufacturer of that new strength can assign a new AWP. According to the report, the AWP of the new strength was much higher than the 5-milligram and 10-milligram AWPs set by their original manufacturers.

In Illinois, the average prices paid for cyclobenzaprine HCL of 5 and 10 milligrams ranged from $0.99 to $1.74 per pill. Before 2012, 7.5-milligram cyclobenzaprine HCL was rarely seen in the market. The 7.5-milligram product was introduced in 2012, and almost all were dispensed by physicians at an average price of $3.79 per pill in post-reform Illinois. The market share of physician-dispensed cyclobenzaprine HCL of 7.5 milligrams increased from 0% in the third quarter of 2012 to 21% in the first quarter of 2013.

Similarly, in California, before 2012, 7.5-milligram cyclobenzaprine HCL was rarely seen in the market. The average prices paid for 5- and 10-milligram cyclobenzaprine HCL, the two common strengths, ranged from $0.35 to $0.70 per pill. Since the introduction of the 7.5-milligram product in 2012, the market share of physician-dispensed cyclobenzaprine HCL of 7.5 milligrams increased from 0% in the fourth quarter of 2011 to 47% in the first quarter of 2013, when it became the strength of the drug most commonly dispensed by physicians. The average price paid for the new strength was $2.90 to $3.45 per pill.

From these patterns, the study’s authors infer that the shift in strength was unlikely to be driven by new evidence about superior medical practices. Rather, it is likely that financial incentives drove some physicians to choose the strength for their patients. The study cites several reports that provide evidence of behavioral changes in response to price regulations.

For more information about this study, visit http://www.wcrinet.org/result/are_phy_disp_reforms_sustainable_result.html.

The data used for the report came from payers that represented 46% for California and 51% for Illinois. The detailed prescription transaction data were organized by calendar quarter so that, for each quarter, all prescriptions filled for claims with dates of injury within 24 months of the observation quarter were included. On average, for each of the quarters reported, WCRI included 219,572 prescriptions paid for 60,448 claims in California. The same figures were 43,034 prescriptions paid for 12,714 claims in Illinois. The detailed prescription data cover calendar quarters from the first quarter of 2010 though the first quarter of 2013.

 

Cutting Prices of Drugs Dispensed by Doctors

A new study from the Workers Compensation Research Institute (WCRI) showed that Georgia’s changes to the reimbursement rules for physician-dispensed drugs reduced the average price per pill paid by 25% to 40% for most of the drugs commonly dispensed by physicians. However, the post-reform prices paid for physician-dispensed drugs were still 20% to 40% higher than the prices paid to pharmacies for the same drug.

“In many states across the country, policymakers are debating whether doctors should be paid significantly more than pharmacies for dispensing the same drug,” said Dr. Richard Victor, WCRI’s executive director. “Policymakers in Georgia adopted new rules to narrow the price difference, and the research continues to show the new regulations did not discourage physicians from continuing to dispense these drugs at lower prices, which was a concern.”

The study, Impact of Physician Dispensing Reform in Georgia, 2nd Edition, is an update to the 2013 WCRI study that examined the early results of Georgia’s reform using pre- and post-reform data. With an additional year of data, the study found that there was little change in the prevalence of physician dispensing in the second post-reform period after an initial drop (from 36% pre-reform to 28% in the first post-reform period and 27% in the second post-reform period) while the share of drug costs for physician-dispensed prescriptions had a further five-percentage-point decrease (from 49% to 34% and now 29%).

Georgia’s rule changes, effective in April 2011, capped the reimbursement amount for physician-dispensed prescriptions to the average wholesale price (AWP) of the original drug product used in the repackaging process if a repackaged drug is dispensed. The reform did not limit physicians’ ability to dispense prescription drugs. Georgia is one of the 16 states that have made legislative or regulatory changes to address cost issues related to physician dispensing.

Before the rule change, for example, a prescription for hydrocodone-acetaminophen was paid at $0.48 per pill when filled at a pharmacy, but $1.06 per pill when filled at the doctor’s office—a price difference of 121%. In the two post-reform periods, the price difference for the same drug was significantly reduced but still at 34% to 39%.

The data used in this analysis of Georgia’s pharmacy fee schedule reform came from payers in Georgia that represented 46% of the claims in the state workers’ compensation system. The pre-reform data consist of claims from 3,851 injured workers with more than one week of lost time. These claims arose between April 1, 2010, and Sept. 30, 2010, with 24,672 prescriptions filled through March 31, 2011. The data for the first post-reform period consist of 3,960 claims that arose between April 1, 2011, and Sept. 30, 2011, with 24,925 prescriptions filled through March 31, 2012. The data for the second post-reform period consist of 4,164 claims that arose between April 1, 2012, and Sept. 30, 2012, with 25,325 prescriptions filled through March 31, 2013.