unique & creative plan design suggestions to help control costs our pharmacy director : armand...
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Unique & Creative Plan Design Suggestions to Help
Control Costs
Our Pharmacy Director:Armand Dilanchian, R.Ph., President, Integrated Health
Concepts
Our Medical Director: David Rearick, DO, MBA, VP of Medical Management ,
SBSContents are proprietary and confidential. Copyright 2009 Benefits Advisor Network 1
Prescription Drug Benefit Update
Armand Dilanchian, R.Ph.
President
Integrated Health Concepts
2Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
3
Topics
Traditional Rx Benefit Design
Rx Benefit Design and Clinical Management
Consumer Driven Rx Benefit Design
Specialty Drug Benefit Design
Value Based Rx Benefit Design
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
4
Traditional Rx Benefit Design
Member Cost ShareSignificanceDesign informed by client’s utilization data
Common Design StructureCo-paymentCo-insuranceDeductibleDistribution point (Retail vs. Mail)
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
Design with DataMembership History* Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Δ Prior Quarter Annual Trend
Average Members 4,661 3,963 3,191 2,923 2,645 -9.5% -43.3%
Average Employees 2,028 1,781 1,488 1,392 1,278 -8.2% -37.0%
% Utilizing Members 47.1% 43.3% 42.1% 43.9% 44.0% 0.2% -6.5%
Financial History* Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Δ Prior Quarter Annual Trend
Total Paid by Plan $563,038 $428,133 $398,436 $412,509 $329,677 -20.1% -41.4%
Avg. Paid/Rx $49.38 $55.53 $65.13 $69.57 $66.35 -4.6% 34.4%
Avg. Paid/Day of Therapy $1.57 $1.57 $1.73 $1.85 $1.71 -7.4% 9.3%
Plan Paid PMPM $40.27 $36.01 $41.62 $47.04 $41.55 -11.7% 3.2%
Plan Paid PEPM $92.54 $80.13 $89.26 $98.78 $85.99 -13.0% -7.1%
Plan Paid PMPM minus Specialty $35.02 $29.85 $34.10 $38.83 $36.26 -6.6% 3.5%
Plan Paid PEPM minus Specialty $80.50 $66.43 $73.13 $81.53 $75.05 -8.0% -6.8%
Member Share Overall 27.9% 26.8% 24.7% 23.8% 26.5% 11.3% -4.9%
Member Share Retail 32.9% 35.5% 32.8% 32.6% 35.4% 8.4% 7.7%
Member Share Mail 20.9% 19.3% 18.4% 17.6% 20.8% 18.0% -0.6%
Member Share Retail minus Specialty 34.3% 36.6% 34.8% 33.0% 36.6% 11.0% 6.9%
Member Share Mail minus Specialty 24.7% 23.9% 22.6% 22.2% 23.7% 6.9% -4.2%
Utilization History* Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Δ Prior Quarter Annual Trend
Total Rx 11,402 7,710 6,118 5,929 4,969 -16.2% -56.4%
Mail Order Rx 1,770 1,572 1,447 1,465 1,345 -8.2% -24.0%
Mail Order % 15.5% 20.4% 23.7% 24.7% 27.1% 9.5% 74.4%
Rx PMPY 9.8 7.8 7.7 8.1 7.5 -7.4% -23.2%
Rx PEPY 22.5 17.3 16.4 17.0 15.6 -8.7% -30.8%
Total Days of Therapy 359,586 273,128 229,888 223,367 192,676 -13.7% -46.4%
Days of Therapy/Member 77 69 72 76 73 -4.7% -5.6%
Generic Utilization Overall 72.2% 74.5% 74.5% 74.8% 75.2% 0.6% 4.2%
Generic Utilization Retail 75.2% 79.6% 79.9% 81.0% 81.6% 0.7% 8.5%
Generic Utilization Mail 55.8% 54.4% 57.4% 55.6% 58.0% 4.2% 3.9%
Generic Substitution Retail 98.0% 98.8% 98.4% 98.9% 98.8% -0.1% 0.8%
Generic Substitution Mail 89.4% 88.5% 91.7% 91.5% 90.8% -0.7% 1.6%
F Opportunity F Exceeds Goals * History begins with Q1 '08
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Common Design Elements
CopaymentTwo tier vs. three tierSpread between tiers
Co-insuranceMinimums and maximumsHigh cost drugs
DeductibleIndividual, Family, Retail and Mail
Retail vs. Mail Mail incentive vs. mandatorySpread between retail and mail$4 generic drug programs
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Rx Benefit Design and Clinical Management
Clinical programs as management tools Prior authorizationStep therapyQuantity limitationsControlled substances monitoringDrug utilization review
Benefit design to promote appropriate utilization
GenericsSecond tierChronic drug adherence (value-based)
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Consumer-Driven Rx Benefit Design
Deductibles integrated with medical PBM/Carrier connectivity
Preventive drug listOpen to interpretationNot consistent among PBMs/CarriersCost share designs for preventive drugs
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Specialty Drug Benefit Design
Benefit DesignRetail vs. Traditional Mail vs. Specialty PharmacyDays supply limits (just-in-time inventory)Copay/Co-insurancePrescription benefit vs. medical benefit
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Value Based Rx Benefit Design
How it worksA design to encourage adherence to medications when clinical benefits exceed the costBuilt-in incentives to reduce barrier to medication use
Common errors in designZero cost share or significant reductionAdoption of design without evaluating adherence dataAdoption of design where evidence is weak
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Summary
Effective benefit design can reduce plan costs and promote appropriate drug utilizationRx benefits should be based on client-specific data All designs should incorporate clinical managementCost share must be balanced
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Questions ?
12Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
Value Based Insurance Designs
Presented by:
David A. Rearick, DO, MBA, CPE
Armand Dilanchian, PharmD
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David A. Rearick, DO, MBA
BAN Medical Director VP of Medical Management for
SBS 30+ years Physician Executive Host of Good Health Is Good
Business radio show (www.healthybusinessradio.com)
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Value Based Insurance Design - Why?
Drive Behavior Change
End Entitlement Culture
Improve Quality of Care
Clinically Approach to Employee Cost
Based on Healthcare Value vs. Cost
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What’s in a Name
Value Based Benefit DesignValue Based FormularyBiometric Based Insurance DesignEvidence Based DesignBenefit Based Co-Pays
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How is VBID done?
• Medication therapy is the most common
Goal is to increase adherence with medications and hence improve health outcomes and reduce overall health care cost
Focused primarily on a few therapeutic areas: diabetes, cardiovascular, respiratory, depression
Coupled with disease management programs and other corporate wellness initiatives
Drive evidence-based interventions with proven value
Annual eye exams in patients with diabetesContents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
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Unlimited Different Benefit Designs Which conditions or drug classes?
- Diabetes- Cardiovascular: All conditions or a subset- Asthma: All drugs or only long-term controllers- Other
For whom?- All members taking a drug in a therapeutic class- All members enrolled in a disease or wellness program taking a drug in
the identified therapeutic class- Members with a particular diagnosis
What’s the change in co-pay?- All drugs in the class are lowered to the same co-pay
generic or $0- A differential is kept between preferred and non-preferred brands &
between generic and preferred brands- Some non-essential medications may be up-tiered
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MEDCO’s Experience
19
96%
86%
78% 78%75%
50%
33%
26%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Encourage use ofgenerics &
preferred drugs
Encourage use ofmail order
Provide membersoptions for
managing care
Membereducation &
empowerment
Wellness &disease
managementprogram
Shift greatershare to
members
Offer consumer-directed health
plan
Use of a value-based plan
design
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
MEDCO’s Experience
20
6
19 19
6
16
17
2
1
3
0
5
10
15
20
25
30
35
40
2006 2007 2008 2009 2010 (est)
DM/HMTotal
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Examples of Value Based Benefits
ClientClient ChannelChannel Co-pay ChangeCo-pay ChangeDecrease in Decrease in member costmember cost
Client A Retail All drugs at generic co-pay47% - 70%
Mail All drugs at $0 co-pay
Client B Retail Generic and formulary brands at generic co-pay
2% - 29%Non-formulary, slight decrease
Mail Generic and formulary brands at generic co-pay
Non-formulary, slight decrease
Client C Retail Generics at $0
30% - 56%Formulary brands, slight decrease
Mail No change
Client D Retail Generics at $0 co-pay12% - 30%
Mail Generics at $0 co-pay
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Medication Adherence 1/1/08 –
6/10/08
Therapeutic Therapeutic Resource Resource
CenterCenter
Medication Medication ClassClass
PBM Adherence PBM Adherence ProgramsPrograms
Retail Retail AdherenceAdherence
Relative Relative DifferenceDifference
Diabetes Diabetes 75.6% 46.6% 62.2%
Blood Pressure 81.3% 53.4% 52.2%
Lipid Lowering 76.5% 52.0% 47.1%
Cardiovascular Anti-platelet 88.6% 73.9% 19.9%
Blood Pressure 80.3% 54.6% 47.1%
Lipid Lowering 76.0% 53.4% 42.3%
Medication Adherence - 4 clients
23
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
A B C D
DiabetesHigh BPLipids
Change in medication possession ratio, MPR compared with control
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Plan and Do the Data Analytics Look at where are the dollars being spent, for pharmacy costs, and where available,
total healthcare costs (medical and pharmacy).Review adherence in the targeted classes and compare with peer data and national benchmarks
Evaluate current co-pay and cost-share from the member’s perspective
Model the financial impact of various plan designs
Consider additional ways to increase compliance and improve outcomesMember education of medication effects, expectations and ways to manage Education and awareness, especially for management of chronic conditionsFacilitate medication filling from the most effective channelAutomated reminders to members to fill scripts; automatic refills of chronic medicationsOnline tools to influence member behavior
Promote a culture of health in the workplaceCoordination across all health benefitsDisease management programsWellness and disease prevention programs
Cost-sharing is just one piece of the puzzleCost-sharing is just one piece of the puzzleCost-sharing is just one piece of the puzzleCost-sharing is just one piece of the puzzle
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Observations From Four Case Studies
Structure of the VBPD determines member savings and plan cost increases
Not all plan designs are providing clear savings to members Total as well as plan drug trend and spend increase
Increase in compliance, is not guaranteed, and is usually small 0% - 6%
What is the impact of this level of increased compliance on overall medical spend?
For diabetes, for each 20% increase in compliance there can be a decrease of ~$1,000 in overall healthcare spend.*
*Sokol et al. Medical Care 43: 521-530, 2005 *Sokol et al. Medical Care 43: 521-530, 2005
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Questions ?