The Risks of Opioid Mismanagement Identifying and Managing Your Exposure from Opioids Good afternoon, everyone. We’re delighted to be here and appreciate the opportunity to speak with you today. Our topic for today is medical management and the TPA model. Our approach for the conversation may be a bit unique. Here’s how we’ve segmented the presentation: The first thing we’re going to discuss is an employer’s typical program goals for workers’ compensation. By a show of hands, how many employers do we have here today? How many attorneys? Vendors? The second thing we’re going to discuss is a quick snapshot of some industry trends and how they are impacting your ability to achieve your goals. The third thing we’re going to discuss is hopefully what you were expecting to hear – what are some of the solutions available to help us achieve our goals. © 2013 CorVel Corporation.

Key Terms Opioid: psychoactive chemical used as an analgesic PBM: Pharmacy Benefit Management NDC: National Drug Code UR: Utilization Review Clinical Modeling: In-depth look at claimant’s behaviors to determine risk and next steps

Workers’ Comp Pharmacy Costs At the same time we’ve seen a recent increase in lost time claims, and continuing increase in severity of the past decade, we’ve seen certain components rise much more rapidly than others. Rx has moved from 5-6% of medical to 10-12%, to an estimated 19% of total medical expenses. This was from a report released by NCCI in just the last few weeks.

Pharmacy Exposure and Medical and Other Exposure Known and expected Pill Price (location, inflation, brand/generics, physician dispensing) Utilization Behavior (prescriber and patient – dependency & addiction) Extending employer exposure Addiction and third party liability Addiction and reputational exposure

Narcotics on the rise What is your exposure? 627% Increase © 2011 CorVel Corporation. At the same time we’ve seen a recent increase in lost time claims, and continuing increase in severity of the past decade, we’ve seen certain components rise much more rapidly than others. Rx has moved from 5-6% of medical to 10-12%, to an estimated 19% of total medical expenses. This was from a report released by NCCI in just the last few weeks. 296% Increase National Vital Statics System, multiple cause of death data set and DEA ARCOS system, 2007 opioid sales figure is preliminary

Drug Overdose Death Rate At the same time we’ve seen a recent increase in lost time claims, and continuing increase in severity of the past decade, we’ve seen certain components rise much more rapidly than others. Rx has moved from 5-6% of medical to 10-12%, to an estimated 19% of total medical expenses. This was from a report released by NCCI in just the last few weeks. National Vital Statics System, multiple cause of death data set and DEA ARCOS system,

Drivers of addictive pain meds “Fix me” Lack of physician prescriber education Lawsuits over withholding “needed pain meds” Big Pharma profits Pain meds in comp are easy to attain and “free” Doctor shopping

How many of my claimants are addicts? Expected outcomes and costs of addicted claimants in comp – beyond the pill price Delayed return to work Fatal overdoses = death benefit Non-fatal overdoses = long term care How many of my claimants are addicts?

The Heffernan Decision Mr. Heffernan suffered chronic pain from a compensable 2002 lower back injury. At some point between 2002 – 2007, he became addicted to his pain meds. The Heffernan Decision December 2011, PA appellate court upheld death benefit June 2007 U/R ruling. No more Dr. Rodriguez! 10 am Dr. R appt. Need new script for pain meds OMG – meds denied! I need my meds! Call Dr. R at his home #. 8:30 am Appt. w/ Dr. R’s sister, Daisy WHERE ARE THEY! Fed Ex here Thank God! 4 – 6 pm Heffernan Wake Boyle Funeral Home 10 am Funeral Mass St. Agnes 9 am Meeting with lawyer The Decision In December 2011, PA appellate court upheld death benefit.

The Appellate Court’s Rationale It did not matter that the fatal dose was denied by U/R. U/R is not a defense. Retro U/R is not enough. Employer has a duty/responsibility to take care of the addicted claimant Clear extension of employer/payor liability http://www.leagle.com/xmlResult.aspx?xmldoc=In% 20PACO%2020111202462.xml&docbase=CSLWAR3- 2007-CURR

What does this mean for my organization? You might have to defend your company Drug addicts causing mayhem is big news Potential exposure: Potentially no statutory limits to third party liability Damage to reputation/brand

What your PBM may not be telling you What I am going to do about all the transactions I don’t see? PBMs are losing traction every year Ok. Now we know our goals. Is everyone comfortable with our goals? Pretty simple and straightforward. Now, let’s look at the trends as it relates to our goals.

Dispensing channels

The view of the work comp PBM

What’s wrong with my doctor dispensing drugs? Growing annually in SC 2007 / 2008 = 12% of scripts 2010 / 2011 = 18% of scripts

Total Exposure Management Solutions Total Exposure Management Ok. Now we know our goals. Is everyone comfortable with our goals? Pretty simple and straightforward. Now, let’s look at the trends as it relates to our goals.

Real-time Integration with PBM and Bill Review More resources 100% visibility to timely and actionable Rx data Maximize prospective management and stop the penetration games Retro U/R is not enough

Clinical Profiling and Peer to Peer Intervention Assess the risk of all your claims with 100% of the pharmacy data set Pharmacist reviews have limited value Most treating physicians need help Board certified pain management physicians Address the needs of the patients, functional and behavioral

This is an example of a patient that was identified after we took over a program managed by another organization. Medical incurred was $358K. But, look at the Rx ratio to the medical spend ratio. We have over a dozen triggers, and our clients are able to select the weighting of those triggers. This particular patient met 7 of those triggers, including narcotics dispensed by multiple parties. I don’t know the specifics of the follow-up on this claim, but I can imagine it may have involved more than an adjustment in the patients treatment plan.

Summary Pharmacy exposure continues to increase, and your exposure goes far beyond unit cost PBMs are critical for managing your exposure, but . . . they have limits Integration with bill review and PPO yields better results Leverage data and clinical resources

Tracy Snell Account Manager CorVel Corporation (O) 803.451.3404 Tracy_snell@corvel.com