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1 W o r k e r s C o m p e n s a t i o n I n s u r a n c e R a t i n g B u r e a u o f C a l i f o r n i a WCIRB Research Forum Patterns of Drug Dispensing in California Workers Compensation The webinar will begin shortly. Notice This presentation was developed by the Workers' Compensation Insurance Rating Bureau of California (WCIRB) for informational purposes only. The WCIRB shall not be liable for any damages of any kind, whether direct, indirect, incidental, punitive or consequential, arising from the use, inability to use, or reliance upon information provided in this presentation 2016 Workers Compensation Insurance Rating Bureau of California. All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including, without limitation, photocopying and recording, or by any information storage or retrieval system without the prior written permission of the Workers Compensation Insurance Rating Bureau of California (WCIRB), unless such copying is expressly permitted by federal copyright law. No copyright is claimed in the text of statutes and regulations quoted within this work. Workers Compensation Insurance Rating Bureau of California, WCIRB, WCIRB California, WCIRB Connect, WCIRB Inquiry, X-Mod Direct, escad and the WCIRB California logo (WCIRB Marks) are registered trademarks or service marks of the WCIRB. WCIRB Marks may not be displayed or used in any manner without the WCIRB s prior written permission. Any permitted copying of this work must maintain any and all trademarks and/or service marks on all copies. To seek permission to use any of the WCIRB Marks or any copyrighted material, please contact the WCIRB at customerservice@wcirb.com. WCIRB Research Forum Presenters Dave Bellusci EVP & Chief Actuary Greg Johnson Director, Medical Analytics Tim Basuino Medical Analytics Specialist Reserved. 1

2 How to Ask a Question During Today s Webinar Asking a Question You may submit questions using the Questions panel. 3 Overview Goal: Assess impact of physician dispensing on California workers compensation drug costs Analyzed $500 million in pharmacy payments from July 2012 through December 2015 Data collected from insurers representing 9 of California workers compensation market Divided data between physician and pharmacy recipients of drug payments 4 Reserved. 2

3 Pharmacy Payment Trends 1 st Half of 2013 through 2 nd Half of 2015 Service Period Paid Per Transaction (Ratio to Prior Half) Paid Transactions Per Claim (Ratio to Prior Half) Paid Per Claim (Ratio to Prior Half) 1 st Half % -6% -2% 2 nd Half % +4% +4% 1 st Half % -8% -3% 2 nd Half % -12% -14% 1 st Half % -5% -6% 2 nd Half % -8% -11% Cumulative Change: 2 nd Half 2012 through 2 nd Half % -3-28% 5 Drug Costs for Major Drug Types 25% Opiate Analgesics Dermatological Applications Behavioral Health Drugs Base Substances for Compounding Non-Opiate Analgesics Stomach Discomfort Drugs Musculotherapy Drugs 2 15% 1 5% 6 Reserved. 3

4 Drug Payment Shares and Cost per Transaction by Dispensing Site Physician Share of Drug Payments Pharmacy Share of Drug Payments 7 Physician Paid Per Transaction Pharmacy Paid Per Transaction $140 6 $ $80 $60 2 $40 1 $20 7 Drug Payment Shares and Cost per Transaction by Dispensing Site Opiate Analgesics 9 Physician Share of Opiate Analgesic Payments Pharmacy Share of Opiate Analgesic Payments $ $80 $60 $ $20 8 Reserved. 4

5 Drug Payment Shares and Cost per Transaction by Dispensing Site Non-Opiate Analgesics 7 $ $80 $60 $40 1 $20 Physician Share of Non-Opiate Analgesic Payments Physician Pharmacy Share of Non-Opiate Analgesic Payments Pharmacy 9 Drug Payment Shares and Cost per Transaction by Dispensing Site Dermatological Patches 7 $ $150 2 $50 1 Physician Share of Dermatological Applications Payments Physicians Pharmacy Share of Dermatological Applications Payments Pharmacies 10 Reserved. 5

6 Drug Payment Shares and Cost per Transaction by Dispensing Site Stomach Discomfort Drugs 8 $ $ $50 Physician Share of Stomach Discomfort Drug Payments Physician Pharmacy Share of Stomach Discomfort Drug Payments Pharmacy 11 Drug Payment Shares and Cost per Transaction by Dispensing Site Behavioral Health Drugs 9 $140 8 $ $80 $60 $ $20 Physician Share of Behavioral Health Drug Payments Physicians Pharmacy Share of Behavioral Health Drug Payments Pharmacy Paid per Transcation 12 Reserved. 6

7 Drug Payment Shares and Cost per Transaction by Dispensing Site Skeletal Muscle Relaxants 8 7 $90 $80 6 $ $60 $50 $40 $30 2 $20 1 $10 Physician Share of Skeletal Muscle Relaxant Payments Physician Pharmacy Share of Skeletal Muscle Relaxant Payments Pharmacy 13 Drug Payment Shares and Cost per Transaction by Dispensing Site Base Substances for Compounding 10 $450 9 $ $350 $300 $250 $150 1 $50 Physician Share of Compound Base Payments Physician Paid per Transcation Pharmacy Share of Compound Base Payments Pharmacy 14 Reserved. 7

8 Paid Shares for Ingredients, Compound Drug Bills Skeletal Muscle Relaxants, 15.01% Stomach Discomfort Drugs, 0.01% Behavioral Health Drugs, 2.43% Other Drugs, 1.52% Opiate Analgesics, 0.19% Bulk Chemicals, 27.82% Nonopiate Analgesics, 21.95% Pharmaceutical Adjuvants, 6.44% Creams and Lotions, 24.63% 15 Share of Compound Payments to Physicians and Pharmacies 1 9% 9.19% 8.98% 9.22% 8.89% Pharmacies Physicians 8.44% 8% 7.93% 7.85% Share of Total Drug Payments 7% 6% 5% 4% 3% 6.61% 4.43% 3.97% 4.06% 7.16% 2.82% 2% 2.34% 1% 16 Reserved. 8

9 Regional Drug Payment Patterns 8 Compound Drug Payments Non-Compound Drug Payments All Medical Payments % 6 Percentage of California Payments % 44.2% 19.3% 16.4% 17.3% 14.2% 11.5% 12.3% 11.8% 1 Los Angeles County Remainder of Los Angeles Basin 5.8% 5.4% 7.1% 7.5% 6.9% 3.7% 1.7% 1. San Diego County Central California Bay Area Remainder of California Region 17 Average Compound Payment per Bill by Region $1,200 $1,084 $1,000 $1,004 Pharmacy Bills Physician Bills $862 $800 Average Payment $600 $400 $276 $372 $247 $216 $372 $317 $292 $253 $229 $293 $104 Los Angeles County Remainder of Los Angeles Basin San Diego County Central California Bay Area Remainder of California Region Statewide 18 Reserved. 9

10 Paid Per Transaction, Most Frequently Prescribed Opiates $600 $500 $400 $300 Vicodin Tramadol Oxycontin Fentanyl Percocet Pharmacies Physicians 19 Paid Per Transaction, Most Frequently Prescribed Stomach Discomfort Drugs $500 $450 $400 $350 $300 $250 $150 $50 Prilosec Protonix Zofran Pharmacies Physicians 20 Reserved. 10

11 Paid Per Transaction, Most Frequently Prescribed Behavioral Health Drugs $900 $800 $700 $600 $500 $400 $300 Lyrica Cymbalta Gabapentin Abilify Pharmacies Physicians 21 Paid Per Transaction, Most Frequently Prescribed Non-Opiate Analgesics and Skeletal Muscle Relaxants $250 $150 $50 Flexeril Naprosyn Celebrex Pharmacies Physicians 22 Reserved. 11

12 Summary The drop in physician dispensing may be a contributing factor to the overall 28% reduction in California workers compensation drug costs per claim. The decline in physician dispensing is driven by a drop in utilization rather than reduced unit costs of drugs. Physicians receive higher unit payments for some opiates and stomach discomfort drugs, although therapeutically equivalent and less expensive medications are available in pharmacies. The Los Angeles Basin generates a disproportionate share of compound drug payments which are paid at a rate of $512 per bill statewide for all dispensing sites. 23 Question and Answer Period Asking a Question You may submit questions using the Questions panel. 24 Reserved. 12