What You Need To Know About Workers’ Compensation PBM


One part of workers’ compensation insurance that companies tend to avoid discussing is pharmacy benefit management. Pharmacy growth in the workers’ compensation sector has been declining in recent years. This is partly due to pharmacy benefit management administrators getting better at managing pharmacy costs. To run an effective workers’ compensation program, you will need to know about pharmacy benefit management.

What is Pharmacy Benefit Management or PBM?

The first thing you need to know about pharmacy benefit management is understanding exactly what it does. Although it sounds simple, there are complex formulas that go into calculating and managing pharmacy benefits.

A pharmacy benefit management administrator handles these calculations to reduce costs and maximize the best health outcomes for injured workers. Pharmacy benefit management boils down to the following:

  • Claims processing or processing of and paying for prescriptions for workers’ compensation claims
  • Managing a pharmacy network, including home network and specialty pharmacies
  • Developing and managing clinical programs and formularies to provide the best quality programs.
  • Negotiating medication pricing with drug manufacturers

Each one of these services is vital to a good workers’ compensation program. A PBM is the center of a good prescription benefit program.


What To Look for In Workers’ Compensation PBM?

Most businesses look for very specific benefits. These benefits are usually designed around the best treatment for their employees at the lowest possible cost.

Some of the key factors are:

  • Management of the opioid crisis
  • Proactive approaches to benefit management
  • Excellent actionable data collection
  • Medication pricing transparency

The best workers’ compensation PBM encompasses all of these ideals.

What Is the Value of Prescription Benefit Management?

When looking at prescription benefit management, it is impossible not to ask why it is valuable. Since prescription benefit managers act as a go-between, they negotiate with drug manufacturers, pharmacies, wholesalers and workers’ compensation health plans.

This negotiation helps to lower costs and ensures that the best prescription drug coverage is employed. Prescription benefit management generates around 1 billion dollars in healthcare savings per year. This is down around 2.2%

How Do Workers’ Compensation PBMs Compare to Group Health PBMs?

The employee purchases group health. Workers’ compensation is an entitlement granted when a worker is injured during the normal course of their work. The biggest difference here is the type of illness. For example, a group health plan covers an illness that is not part of the workplace environment, whereas worker’s compensation covers an illness due to the workplace environment.

Group health deals with issues that a worker faces and managing health issues, whereas workers’ compensation focuses on treating work-related injuries and getting the worker back to optimum health after that injury.

Workers’ compensation provides mandatory coverage for work injury-related claims. Group health plans can deny treatment for specific injuries or medications.

Workers’ compensation uses a slightly different formulary than group health insurance. States can mandate specific drugs be used while the group health insurance formula offers more choice in some cases.

How Does a Workers’ Compensation PBM Generate a Formulary for Prescription Drugs?

A formulary is a basic list of prescription drugs that are both effective and cost-effective. Doctors, pharmacists and scientists determine this.

They evaluate medications based on certain criteria. These criteria  in order are:

  1. Effectiveness for specific conditions
  2. Side-effects
  3. Drug manufacturer recommendations and research
  4. Drug interactions and contraindications.
  5. Cost

This formulary is one of the most important parts of workers’ compensation prescription benefit management. Since medicine changes constantly and new medications are continuously being developed, the formulary changes frequently. A PBM company keeps the formulary up-to-date as new medications are found and evaluated.

Although some of the formulary criteria are set by federal and state agencies, prescription benefit management administrators do have some input over most of the prescription drugs available on each plan.

Overall, workers’ compensation prescription benefit management streamlines the process of getting medications to worker’s compensation beneficiaries in the best possible way.

It focuses on providing workers’ compensation programs with a valid negotiating platform for employees receiving prescription medications due to a work-related injury. This is a necessary part of workers’ compensation treatment and the recovery of those receiving benefits from this program.