Friday, December 5, 2014

What Are You Doing About Compounds?

I've been on the road visiting with customers and I'm hearing a lot about compounds.  Most of us are aware that compound medications are intended to provide certain medications in forms or dosages not commercially available, therefore necessitating a pharmacist create or mix a compound medication.  More of us are becoming aware that compounding represents a significant and growing clinical and financial risk in workers' compensation.  Only a few of us have clear and well documented processes and procedures for dealing with these prescriptions.

While compounding isn't new, the attention being paid to it is, in fact, overdue.  Recently, Express Scripts was sued by several compounding pharmacies for allegedly issuing blanket denials for over 1,000 different active ingredients in compound medications (this policy was in the group health space, not work comp).  While we know such blanket denials aren't feasible in work comp, the tug of war between the compounding pharmacies and the payer community is playing out in our space all the same.

Compounds can be medically necessary and effective, but use should be limited to situations where the oral medication has proven ineffective and/or has produced serious side effects.  Clearly, we're seeing a frequency of compound prescriptions in work comp that far exceeds what is likely medically reasonable and necessary.

So what's your strategy?  What are you doing?  Many compound pharmacies are making obscene amounts of money exploiting gaps in the claims management processes of work comp payers.  How do you plan to close those gaps?


Two post scripts:

There are a precious few compounding pharmacies trying to do this right.  You should be looking for them and putting them into your networks.

And for a more comprehensive view on compounds in work comp, I'd direct you to the excellent CompPharma white paper from earlier this year.

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1 comment:

  1. A good example why an effective provider fraud SIU is important for carriers. There are only 2 or 3 in CA that have effectively handled compounds. Blanket denials are feasible in Work Comp if your SIU has the evidence. First identify the bad apple companies and follow the money. There are only a few individuals who own dozens of these compounding pharmacies which affect majority of CA work comp. Their business model has been discussed with the FDA who acknowledge the practice identified as a violation. In addition, their billing practices of manipulating the NDC's for higher reimbursement has been identified. Doctors have been identified in kickback schemes among other issues identified and evidenced. All of the above is not common knowledge but that evidence leads to blanket denials on dozens of companies. Protect the carrier first and save by negotiating a bulk settlement which will be significantly less than any fee schedule being applied. Law enforcement takes time and is catching up as you are starting to see some indictments. Sadly, all TPA's, self-insured's and most carriers are getting hammered because they don't know how to get the above evidence and defend against these bad apples. Bulk settlements are highly effective, create a profitable SIU, reduces claims costs and many other unrealized gains which in turn measures how effective your SIU is. Lastly, yes there are legitimate times for compounds and is rare. You will know who are supplying a legitimate script for a compound and who are simply in a scheme to makes doctors a decent amount of money and millions for their pharmacies.