s i n c e 1 9 8 7 hmo-ppo digest 2016 digest 2016 sanofi / managed care digest series ... your...

30th EditionYour Online Resource for Chronic Disease Information™www.managedcaredigest.com

In this VolumeGrowth Trend Analyses for HMOs, PPOs, and ExchangesEffects of Specialty Drugs on the Rx Landscape

MANAGED CAREDIGEST SERIES®

SINCE 1987

HMO-PPO Digest | 2016

5,084,9614,167,528

3,872,4303,235,2051,741,087

1,992,40 02,901,0 067,368,458 8,846,3286,713,789

13.6%4.6%

14.3%22.8%

5.6%9.5%7.8%

10.0 %3.1%6.4%

http://www.managedcaredigest.com

HMO-PPO DIGEST 2016 SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™

Leading the Health Care Discussion

The nationally renowned Sanofi Managed Care Digest Series®—now in its 30th year—is part of our ongoing

commitment to provide you with key data on the evolution of U.S. health care. Our goal is to help you

remain on the leading edge of health care developments in America, and we hope that this information

enables you to identify trends that may assist your organization.

Sanofi is pleased to provide you with your complimentary copy of this 30th edition of the HMO-PPO

Digest, the third report in the three-part Managed Care Digest Series® for 2016. This Digest provides

long-term trended data on and analyses of health maintenance organizations (HMOs) and preferred

provider organizations (PPOs); comprehensive overviews of the medical and pharmacy benefits offered

by managed care organizations; important metrics for prescription drugs dispensed by retail pharmacies

nationwide across 12 therapeutic classes (including specialty drugs); and key insights into the reforms

brought about through the Affordable Care Act, including health insurance exchanges and the effects

of expanding government enrollment on the managed care landscape.

Your Sanofi account executive or sales representative would be happy to provide you with additional

information on our products and services. Thank you for your commitment to the quality of health care

in the United States. We look forward to working with you in this important endeavor.

Sincerely,

Garrett Ingram U.S. Country Head of Market Access sanofi-aventis U.S. LLC A SANOFI COMPANY

Managed Care digest series® 2016

Commissioned, sponsored, and underwritten by Sanofi, Bridgewater, NJ

Developed and produced by Forte Information Resources LLC, Denver, CO

Data provided by IMS Health, Parsippany, NJ

www.managedcaredigest.com

Inquiries relating to the mailing or distribution of the Managed Care Digest Series® can be addressed by calling 1-800-529-9615.

Managed Care Digest Series® is a registered trademark of Sanofi © 2016 sanofi-aventis U.S. LLC, A SANOFI COMPANY


INTRODUCTION .................................................................................................3

EXECUTIVE SUMMARY .......................................................................................4

HMOBackgrounder ..............................................................................................................................5

Demographics

HMO Enrollment Rises; Number of HMOs Is Virtually Flat ........................................................... 6

Shares of HMOs Offering Triple-Option, POS Plans Decrease .................................................. 7

Nearly Half of the Top 20 HMO Chains Grow Enrollment by 10%+ .......................................... 8

HMOs Enroll More Than Half of Hawaii’s Population ................................................................. 9

Medicaid Membership in HMOs Expands Nationwide ........................................................... 10

Integrated Health Care System-Affiliated Share of HMOs Inches Up ................................... 11

HMO-Physician Affiliation Rates Climb by More Than 10% ..................................................... 12

Utilization

Hospital Days per 1,000 HMO Members Rise for All Payers ..................................................... 13

MD Encounter Ratio Is Below Average for Staff-Model Plans ................................................ 14

Medicare Hospital-Days Ratio for Kansas Again Tops Nation’s ............................................. 15

Financials

Individual, Family HMO Premiums Are Highest in North Dakota ............................................ 16

HMO Use of Fee-for-Service to Reimburse Physicians Decreases .......................................... 17

Share of Corporate-Owned HMOs With Physician Withholds Grows .................................... 18

PMPY Drug Expenditures Climb at HMOs ................................................................................. 19

Pharmacy

Most Staff-Model HMO Members Have Tier-One Plans .......................................................... 20

Growth Is Minimal for HMO Outpatient Pharmacy Premiums ................................................ 21

Number of Medicare Rxs Filled PMPY Edges Down in 2015 .................................................... 22

Use of DUR, Other Tools to Steer Prescribing Rises Modestly at HMOs .................................. 23

Share of HMOs With In-House Pharmacies Declines Fractionally .......................................... 24

Use of Proprietary Formularies Wanes Among Largest HMOs ................................................ 25

Portion of HMO Prescriptions Filled With Generics Rises Steadily ........................................... 26

Share of HMOs Covering Smoking-Cessation Rxs Falls Again ................................................ 27

Overall Use of Step-Therapy by HMOs Drops Off Slightly ........................................................ 28

Health Insurance Exchanges

Health Insurance Exchanges Enroll 40% of Eligible Individuals ............................................... 29

Exchange Enrollment Grows for All Ages in 2016 ..................................................................... 30

PPOBackgrounder ............................................................................................................................31

Demographics

Insurance Company-Owned PPOs Expand Share of Enrollment .......................................... 32

PPO Plan Count Decreases for Fifth Straight Year ................................................................... 33

Majority of PPO Chains See Moderate Growth in Total Enrollment ....................................... 34

PPOs Expand Most Provider Contract Counts in 2015 ............................................................ 35

Growth in PPO PCP Contracts Lags That of Specialists ........................................................... 36

CO

NTE

NTS

1SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016

CONTENTS, VOL. 30

Utilization

Hospital-Owned PPOs Report Highest Medical/Surgical ALOS ............................................. 37

Hospital Days per 1,000 PPO Members Increase, but Slowly.................................................. 38

Physician Encounters PMPY Drop at All but Largest PPOs ...................................................... 39

Financials

PPOs That Do Not Use Fee Caps Are a Small Minority ............................................................ 40

Use of Managed Pharmacy Programs Inches Up Among PPOs ........................................... 41

Pharmacy

Full-Service PPOs Are Less Apt to Use PBM Drug Utilization Review ....................................... 42

PMPY Prescriptions Are High for PPOs With <20,000 Members ............................................... 43

Majority of PPOs Contract Directly With a Pharmacy ............................................................. 44

RETAIL PHARMACYBackgrounder ............................................................................................................................45

Demographics

Hypertension Prescriptions Number Close to 629 Million ........................................................ 46

Patients Aged 45–64 Fill Largest Portions of Most Profiled Rxs ................................................ 47

Hypertension Drug Lisinopril Tops 2016 Prescription Count ..................................................... 48

Third-Party Rx Counts Rise for 50% of Profiled Products ........................................................... 49

Most Profiled Specialty Rxs Grow Volume From 2015 to 2016 ................................................ 50

Utilization

Generic Shares Continue to Climb for Most Rx Classes .......................................................... 51

Prescription Ratios Exceed 1,000 in Four Drug Classes ............................................................ 52

Financials

Part D CV-Related Drug Spending Nears Third-Party Levels .................................................. 53

Majority of Brand-Name Rx Spending Is by Third-Parties ........................................................ 54

CV Drugs Make Up Majority of Top 7 PPPY Spending Classes ............................................... 55

OOP Costs per Rx Decline for 10 of 12 Classes ........................................................................ 56

Hepatitis C Retail Rx Spending Tops Other Specialty Drugs ................................................... 57

LOOKING FORWARD.......................................................................................58

RESEARCH METHODOLOGY ...........................................................................60

KEY TERMS ........................................................................................................62

REFERENCES .....................................................................................................64

Comparative information at regional, state, and local levels

is available by contacting your Sanofi account executive.

CO

NTE

NTS

2 HMO-PPO DIGEST 2016 SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™

CONTENTS, VOL. 30 (cont.)

The HMO section reviews trended data on

demographic measures for HMOs, including

enrollment, penetration, chains and networks,

and providers affiliated with HMOs. The

unprecedented growth in government

membership in HMOs is featured, as are its

potential effects on those health plans. Snapshots

of health insurance exchange data are included,

profiling the insured population’s enrollment and

demographics, as well as how exchanges are

impacting payers. Medical utilization metrics

are tracked for HMOs nationwide and by state.

Reimbursement methods for physicians and drug

expenditures provide insight into HMO financial

structures. The pharmacy benefit is profiled in

detail, as are prescription utilization for HMO

members, pharmacy benefit designs, formulary

tiers, and step-therapy implementation.

The PPO section includes analysis of important

demographic metrics, including enrollment, chains

and networks, plan types, and provider contracts.

Key utilization benchmarks, such as average

length of stay, physician visits, and hospital days,

provide an overview of how PPOs manage

care for their member population. Finally, PPO

financial measures—focusing on reimbursement

and fees—are shown, and the pharmacy benefit

offered by these managed care organizations

is tracked by analyzing managed pharmacy

programs, services provided by pharmacy benefit

managers, and prescription costs and utilization.

The retail pharmacy section features a

comprehensive overview of the national

performance of prescription drugs dispensed

by retail pharmacies for third-party, Medicare,

Medicaid, and cash payers. This section includes

demographic measures for a dozen common

therapeutic drug classes, including the numbers

of prescriptions dispensed, payer breakouts, and

commonly dispensed medications. Measures

such as brand versus generic drug shares and

prescription ratios per 1,000 patients lend insight

into retail pharmacy utilization, and financial

metrics for this section include retail dollars,

prescription spending, and out-of-pocket costs. In

addition, 14 specialty drugs across six therapeutic

classes are separated out and profiled.

Backgrounders at the outset of each section

of the HMO-PPO Digest profile the health

care component under examination, while key

takeaways on most pages provide important

perspective on individual focus topics. Yet superior

data continue to set apart the HMO-PPO Digest

and the Managed Care Digest Series®. Long-term

trends of key industry measures are featured

throughout this Digest and give historical context

to the topic at hand. Data analyzing the significant

impact of chronic disease—patient-level claims

data and diagnosis-related hospital discharge

data—likewise appear in this Digest and highlight

how the members of managed care organizations

are being treated for chronic conditions. Key

industry trends and chronic disease metrics are

often profiled at the regional, state, or MSA level

to bring focused attention to how health care

is managed and operated in various markets.

Sanofi is pleased to present volume 30 of the HMO-PPO Digest, the third report in the Sanofi

Managed Care Digest Series® for 2016. Since 1987, the Managed Care Digest Series® has focused

on helping health care organizations develop strategies, control costs, and assess value. Now in its

30th year, the Managed Care Digest Series® continues to be an essential source for the most trusted

health care data, including detailed diagnosis-related, chronic disease-specific patient claims,

and hospital discharges. Through this wide array of data-driven

offerings, the Managed Care Digest Series® lends perspective and

understanding to the complex landscape of modern health care.

Commercial insurers manage the health care of most working people

in the U.S., and the HMO-PPO Digest presents a comprehensive

overview of their most prominent models—health maintenance

organizations (HMOs), preferred provider organizations (PPOs), and

point-of-service (POS) plans—as well as their use of pharmacy benefit

managers (PBMs). This Digest also includes extensive data on, and

analysis of, retail pharmacy metrics by therapeutic class (including

specialty drugs) for third-party, Medicare, and Medicaid payers. The

three main sections (HMOs, PPOs, and retail pharmacy) are divided into four distinct

subsections of data elements: demographics, utilization, financials, and pharmacy.


INTR

OD

UC

TION

INTRODUCTION

PPO• Total enrollment in the nation’s PPOs

expanded again in 2015, to 161.5 million, a

3.2% growth from 156.4 million the prior year.

• Between 2008 and 2015, the number of primary

care providers contracted per PPO rose

56.3% (to 5,618 from 3,595), compared with

92.4% for specialists (to 13,397 from 6,962).

• In 2015, average length of stay per medical/

surgical admission was highest at hospital-

owned PPOs (4.1 days), and lowest at employer/

employer coalition-owned PPOs (3.2).

• Virtually all (96.7%) of the PPOs operating across

the nation reimbursed physicians using a fee

cap in 2015, although this share was lower

among plans with 100,000 or more members.

• The share of PPOs with a managed pharmacy

program inched up to 60.8% in 2015 from 60.7%

in 2014. Among insurance company- and

hospital alliance-owned PPOs, this portion fell.

• In 2015, the share of PPOs with direct pharmacy

contracts was highest once again, by

pharmacy type, for mail order plans (98.0%).

Retail Pharmacy• Total spending on medicine in the U.S. reached

$310 billion in 2015, an increase of 8.5% from

the previous year. Prescription drug expenses

at retail showed a similar rise, to $297.7 billion

in 2015, up 12.2% from $265.3 billion in 2014.

• From midyear 2015 to midyear 2016, third

parties dispensed the most prescriptions,

by payer, followed by Medicare Part D,

across all 12 profiled drug classes; cash

prescriptions outnumbered Medicaid

for all but three profiled drug classes.

• Patients aged 45 to 64 were dispensed the

highest portion of prescriptions, by age group,

across 11 profiled drug classes from midyear

2015 to midyear 2016. Females filled more than

half of prescriptions dispensed in eight of 10

profiled drug categories during this time.


parties increased prescription counts for 17

of 36 of the most commonly prescribed drug

products. Among those products profiled in the

selected categories, 27 were generic.

HMO• In 2015, enrollment in HMOs reached

89.3 million, a 5.2% increase from 2014

(84.8 million). HMO market penetration

likewise rose during this period, to

27.9% in 2015 from 26.7% in 2014.

• From 2014 (36.3 million) to 2015 (43.5 million),

the number of Medicaid HMO members

nationally climbed 19.7%. Such members

accounted for the largest share (48.7%) of

HMO enrollment, by payer type, in 2015.

• The overall average number of affiliated

physicians per HMO climbed 11.5%

from 2014 (11,599) to 2015 (12,937).

• Between 2014 and 2015, the average

numbers of hospital days per 1,000 HMO

members grew 6.5% for non-Medicare

members and 2.1% for Medicare members.

• Average monthly premiums for families

increased at HMOs nationwide, to $1,379.89

in 2015 from $1,312.44 in 2014. Such

premiums for individuals were relatively

stable, edging up only $0.54 per month.

• The share of HMOs overall using fee-for-

service physician reimbursement declined

by nearly one percentage point, to 57.5%

in 2015 from 58.4% the year prior.

• The share of HMO member prescriptions

filled with generic drugs rose steadily

by 2.4 percentage points, to 77.6%

in 2015 from 75.2% in 2012.

• An estimated 40% of the eligible U.S. population

(11.1 million individuals) purchased or renewed

their health care coverage via health insurance

exchanges, as of March 2016.


EX

EC

UTI

VE

SU

MM

AR

Y

EXECUTIVE SUMMARY

HMOBackgrounder

SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016 5

From 1999 to 2009, total enrollment in the nation’s

operating HMOs declined almost every year.1

Membership in these organizations fell by roughly

28% during that time, to 75.3 million from 104.6 million.

Total market penetration, meanwhile, fell to just

24.5% from 37.9%. But in 2010—the same year the

Affordable Care Act was passed—HMO enrollment

began an upward climb that continued almost

uninterrupted each year through 2015. Indeed,

in the three years from 2013 (80.1 million) to 2015

(89.3 million), HMO enrollment grew by 11.5%.

Much of this increase can be attributed directly

to government beneficiaries: from 2010 to 2015,

Medicare membership in HMOs expanded by

45.7%, to 10.8 million; Medicaid membership more

than doubled during these years, to 43.5 million,

with much of the growth occurring after Medicaid

expansion took effect on January 1, 2014.2 As of

2015, Medicaid recipients accounted for the largest

share of HMO enrollment, by payer type, at 48.7%.

Yet continued growth is not guaranteed. It remains to

be seen if HMOs will be able to manage health care

utilization for Medicaid members in the long term,

and reversals in government policies—such as those

that sometimes follow a presidential election—could

negatively impact HMO membership expansion.

HMO Enrollment and Market Penetration, 2003–20153

LONG-TERM TREND

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201560,000

70,000

80,000

90,000

100,000

20%

25%

30%

35%

40%

HM

O E

nro

llme

nt (

000)

HMO Enrollment Market Penetration

HM

O Pe

netra

tion

82,500

78,58176,721 76,330

78,281 77,11875,348

77,18779,479 80,545 80,056

84,836

89,257

28.4%26.8%

25.9% 25.5% 26.0%25.4%

24.5% 25.0% 25.5% 25.7% 25.3%26.7%

27.9%

Data source: IMS Health © 2016

1 See the HMO-PPO Digest from 2001, and the HMO-PPO Digest 2010–2011.2 Medicaid.gov (2016). Eligibility. Retrieved from https://www.medicaid.gov/affordablecareact/provisions/eligibility.html3 Enrollment data include HMO members in Puerto Rico and other U.S. territories.

https://www.medicaid.gov/affordablecareact/provisions/eligibility.html

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015400

500

600

700

800

60,000

70,000

80,000

90,000

100,000

Nu

mb

er o

f HM

Os Enro

llme

nt (000)

Number of Operating HMOs Enrollment (000)

542

504481

465 456 448 443 440 437 441 442 430 438 431 434

91,077

86,455

82,500

78,58176,721 76,330

78,281 77,11875,348

77,18779,479 80,545 80,056

84,836

89,257

HMO GROWTH TRENDS, 2001–20151,2

LONG-TERM TREND

0

80

160

240

320

Nu

mb

er o

f HM

Os

Medicare

2013 2014 2015

Medicaid Medicare Medicaid Medicare Medicaid

For-ProfitNot-for-Profit

276

216

292

216

287

227

187

89

126

90

193

99

124

92

186

101

131

96

NUMBER OF HMOs ACCEPTING MEDICARE OR MEDICAID ENROLLEES, BY OWNERSHIP TYPE, 2013–2015

1 Operating plans only. HMOs not licensed by state agencies are excluded from all totals.2 Enrollment data include HMO members in Puerto Rico and other U.S. territories.3 Centers for Medicare and Medicaid Services. (2016). National Health Expenditure Projections 2015–2025: Forecast Summary. Retrieved from

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2015.pdf

HM

O

HMO-PPO DIGEST 2016 SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™6

DEMOGRAPHICS

HMO Enrollment Rises; Number of HMOs Is Virtually Flat

• Total HMO enrollment increased 5.2% between

2014 (84.8 million) and 2015 (89.3 million),

while the total number of operating HMOs

rose a fractional 0.7% (to 434 from 431).


HMO enrollment declined 17.3%, only to

expand by 18.5% through 2015. It grew most

rapidly between 2013 and 2015 (11.5%).

Key Takeaway

The spike in Medicaid HMO enrollment from 2013 to 2015 coincided, in large part, with the

expansion of Medicaid in some states under the Affordable Care Act (ACA). Although National

Health Expenditure projections call for a slowdown in ACA-related coverage expansions beginning

in 2016,3 it could also be that Medicaid recipients will continue to drive overall HMO enrollment,

especially if additional states decide to expand their Medicaid programs. New HMOs may open to

serve this burgeoning need, further increasing the Medicaid and overall HMO plan counts.


Number of HMOs Accepting Medicare Enrollees Falls From 2014, but Still Exceeds 2013 Count

• After expanding 5.8%, to 292 in 2014 from 276

in 2013, the number of HMOs that accepted

Medicare enrollees contracted 1.7%, to 287 in

2015. The decline was among for-profit HMOs.

• The number of HMOs accepting Medicaid

recipients was flat from 2013 to 2014 (216), and

then rose 5.1% in 2015 (227). The growth occurred

among both for-profit and not-for-profit HMOs.


HMOs OFFERING TRIPLE-OPTION OR POINT-OF-SERVICE PLANS, 2014–2015% of HMOs Offering Triple-Option Plans

% of HMOs Offering Point-of-Service Plans POS Enrollment

MODEL TYPE 2014 2015 2014 2015 2014 2015

IPA 60.0% 59.1% 49.5% 46.6% 3,318,565 2,488,235

Network 45.7 44.1 35.0 33.8 1,849,025 1,520,301

Group 60.5 61.1 65.8 63.9 697,471 687,004

Staff 10.0 10.0 40.0 50.0 101,695 65,947

TAX STATUSNot-for-Profit 48.3% 45.1% 39.5% 37.9% 1,791,909 1,699,751

For-Profit 55.4 54.8 47.3 44.8 4,174,847 3,061,736

OVERALL AVERAGE 52.9% 51.4% 44.5% 42.4% 5,966,756 4,761,487

1 Kaiser Family Foundation. (2014). Employer Health Benefits 2014 Annual Survey: Market Shares of Health Plans. Retrieved from http://files.kff.org/attachment/ehbs-2014-section-five-market-shares-of-health-plans-section-five-market-shares-of-health-plans

Point-of-service plans may be separately licensed HMOs by a state department of insurance. These plans allow HMO members to use the plan’s provider network or to go outside the network to obtain services. This type of hybrid plan generally assesses a higher fee to the HMO member for going outside the provider network.Triple-option plans include a choice of HMO, PPO, or indemnity plan.

ENROLLMENT IN AND PERCENTAGE OF HMOs OFFERING POINT-OF-SERVICE PLANS, 2005–2015

12.912.5

14.2 14.513.1

11.8

9.7

7.87.1

6.04.8

61.8%60.7%

60.1%

56.1%

51.0%52.8%

51.4%

46.7%45.4%

44.5%42.4%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

4

8

12

16

40%

46%

52%

58%

64%

POS

Enro

llme

nt (

in M

illio

ns)

Perc

en

tag

e o

f HM

Os

Point-of-Service Enrollment Percentage Offering Point-of-Service Plans

DEMOGRAPHICSH

MO

SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016 7

Key Takeaway

Membership growth in high-deductible health plans (HDHPs) corresponds with declines in enrollment

share for other types of commercial plans. In 2006, HDHPs accounted for 4% of covered workers,

whereas POS and HMO plans enrolled 13% and 20%, respectively.1 By 2014, 20% of covered workers

were in an HDHP, 8% were in POS plans, and 13% were in HMOs. This shift may have occurred because

HDHPs can be less costly than POS or HMO plans for consumers, insurers, and employers alike.


LONG-TERM TREND

Slight Enrollment Fluctuations Fail to Forestall 10-Year Decline in POS Market

• In the 11 years from 2005 to 2015, the

percentage of HMOs offering POS plans

declined each year except in 2010, when

it inched up to 52.8% from 51.0% in 2009.


the number of enrollees in HMO POS plans

rose. Since then, it contracted each year,

and by a total of 66.9% from 2008 to 2015.

Shares of HMOs Offering Triple-Option, POS Plans Decrease

• The percentage of HMOs offering triple-option

plans shrank, to 51.4% in 2015 from 52.9% in 2014,

and the share offering point-of-service (POS)

plans also decreased, to 42.4% from 44.5%.

• Meanwhile, total POS enrollment fell by 20.2%, to

4.8 million from just under 6.0 million. In both years,

POS enrollment was highest, by model type,

among independent practice associations.

http://files.kff.org/attachment/ehbs-2014-section-five-market-shares-of-health-plans-section-five-market-shares-of-health-plans

TOP 20 HMO CHAINS AND NETWORKS, BY NUMBER OF PLANS, 2012 –20151

2012 2013 2014 2015 Enrollment Change (%)

COMPANY NAME HMOs Enrollment HMOs Enrollment HMOs Enrollment HMOs Enrollment 2014–2015

BlueCross BlueShield Association2 59 14,673,912 69 16,812,683 66 18,573,647 69 19,030,864 2.5%

UnitedHealthcare3 48 7,685,865 48 7,410,302 63 7,873,146 63 8,570,473 8.9

Aetna Inc. 46 4,846,351 45 4,407,236 49 4,662,163 49 4,742,294 1.7

Humana Inc.4 24 2,289,880 23 1,947,528 24 2,989,211 24 3,437,605 15.0

Cigna Health Care 23 1,407,432 31 1,601,677 22 1,080,724 22 1,203,415 11.4

Centene Corporation 13 1,879,245 14 2,034,230 17 2,961,719 21 6,737,576 127.5

WellCare Health Plans, Inc. 15 1,949,444 14 1,903,094 14 2,654,588 14 2,718,457 2.4

Molina Healthcare Inc. 9 1,702,571 10 2,031,595 12 2,478,876 12 3,385,225 36.6

AmeriHeath Caritas — — — — — — 10 1,257,190 —

Catholic Health Initiatives — — 2 93,897 7 116,478 8 108,200 –7.1

Kaiser Foundation Health Plan, Inc.2 9 8,020,900 8 7,915,669 8 8,898,228 8 9,456,373 6.3

New Universal American Corp. 2 50,337 4 101,789 4 101,889 4 114,849 12.7

Henry Ford Health System 2 430,041 2 408,717 2 367,330 3 418,545 13.9

America’s 1st Choice Holdings

3 124,538 3 133,616 3 98,117 2 107,968 10.0

Avera Health — — — — — — 2 147,772 —

AvMed Health Plan 2 136,390 2 106,467 2 101,045 2 127,901 26.6

Boston HealthNet — — — — 2 328,897 2 307,801 –6.4

CareSource Management Group — — 2 989,606 2 1,361,230 2 1,429,777 5.0

EmblemHealth (HIP Health Plans)

3 989,499 3 877,551 2 869,423 2 809,283 –6.9

Harvard Pilgrim Health Care6 — — — — 2 810,373 2 959,619 18.4

TOTAL 258 46,186,405 280 48,775,567 301 56,327,084 321 65,071,187 15.5%

1 Enrollment figures include point-of-service (POS) enrollees. Some HMOs shown without enrollment data in certain years had fewer than two plans, and therefore did not meet the definition of an HMO chain in those years.

2 Increase due to Medicaid expansion.3 UnitedHealthcare plan and enrollment numbers for 2014 and 2015 include self-funded members. Such members were not included in 2012 or 2013;

therefore, year-over-year changes in plan and enrollment numbers were more modest than appear here.4 Medicare Advantage enrollment increased.5 Increase due to Medicaid expansion and health insurance exchange membership.6 Harvard Pilgrim Health Care was added to the list in 2014.NOTE: Some data were unavailable.

TOP FIVE INDIVIDUAL HMO PLANS, BY ENROLLMENT, 2014–2015

0

1

2

3

4

Enro

llme

nt (

Mill

ion

s)

Kaiser FoundationHealth Plan ofSouthern CA

Kaiser FoundationHealth Plan ofNorthern CA

Anthem Blue CrossCalifornia

Health Netof California

CareSource

2014 2015

3.623.85

3.273.45

1.86

2.672.52

1.481.27 1.30

88

DEMOGRAPHICSH

MO


Nearly Half of the Top 20 HMO Chains Grow Enrollment by 10%+

• From 2014 to 2015, nine of the top 20 HMO chains,

by number of plans, experienced at least a

double-digit annual rate of growth in enrollment.

• The total collective enrollment in these 20 HMO

chains expanded by 15.5% during this period,

surpassing 65 million enrollees in 2015.


9

DEMOGRAPHICS

9

HM

O

SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016

HMOs Enroll More Than Half of Hawaii’s Population

• In 2015, the majority (50.9%) of Hawaii’s population

was enrolled in an HMO, up from 48.7% in 2014.

• A 6.3% enrollment gain boosted Rhode Island to

fourth place, by HMO penetration, among states.

SUMMARY OF HMO PENETRATION, BY STATE, 2014–20151

Rank2 Population(000)3 Total HMOs Penetration (%)2 Enrollment (000) Enrollment

Change (%)

STATE 2015 2015 2015 2014 2015 2014 2015 2014–2015

Hawaii 1 1,383 5 48.7% 50.9% 668 703 5.3%

California 2 38,989 35 45.5 46.5 17,589 18,128 3.1

New Mexico 3 2,074 7 42.5 45.3 881 940 6.7

Rhode Island 4 1,052 3 37.4 39.7 393 418 6.3

Utah 5 2,991 6 38.8 39.5 1,140 1,181 3.6

Massachusetts 6 6,789 12 36.9 38.5 2,484 2,617 5.4

New York 7 19,770 20 36.0 38.5 7,102 7,605 7.1

Wisconsin 8 5,768 23 37.7 38.5 2,169 2,219 2.3

Michigan 9 9,918 22 34.4 36.1 3,407 3,585 5.2

Pennsylvania 10 12,797 19 32.2 34.6 4,114 4,431 7.7

Tennessee 11 6,579 9 32.4 33.9 2,117 2,232 5.4

Maryland 12 5,977 8 31.7 33.2 1,883 1,983 5.3

Oregon 13 4,026 8 31.9 33.0 1,265 1,330 5.2

Nevada 14 2,880 8 31.3 32.9 884 948 7.3

Connecticut 15 3,584 6 30.2 31.2 1,082 1,119 3.4

Florida 16 20,203 30 27.5 29.1 5,458 5,874 7.6

Colorado 17 5,422 11 28.5 29.0 1,517 1,570 3.5

Ohio 18 11,604 19 28.0 28.8 3,248 3,348 3.1

Arizona 19 6,810 11 26.9 27.3 1,805 1,862 3.2

Washington 20 7,116 10 25.8 26.8 1,806 1,904 5.4

New Jersey 21 8,949 11 25.9 26.6 2,308 2,384 3.3

Missouri 22 6,068 14 24.2 26.5 1,461 1,611 10.2

Minnesota 23 5,487 10 24.7 25.9 1,347 1,419 5.4

Georgia 24 10,151 10 23.3 24.3 2,333 2,462 5.5

D.C. 25 669 9 23.3 24.1 153 161 5.4

Illinois 26 12,832 22 19.6 20.9 2,522 2,683 6.4

Delaware 27 942 5 19.7 20.7 183 195 6.5

Maine 28 1,328 4 18.6 19.6 247 260 5.2

New Hampshire 29 1,329 6 18.3 19.3 242 256 5.6

Virginia 30 8,272 12 18.3 19.2 1,506 1,589 5.5

West Virginia 31 1,843 6 16.7 18.1 308 334 8.4

Kentucky 32 4,407 12 16.5 17.8 727 786 8.1

Indiana 33 6,617 15 16.8 17.8 1,105 1,179 6.7

Texas 34 27,351 34 16.9 17.5 4,544 4,796 5.5

Kansas 35 2,888 8 16.5 17.4 475 502 5.8

Vermont 36 625 3 15.4 16.6 96 104 7.4

Louisiana 37 4,653 11 13.4 14.3 621 666 7.2

South Carolina 38 4,854 9 13.3 13.9 639 674 5.4

North Carolina 39 9,939 7 12.2 13.0 1,199 1,293 7.9

Iowa 40 3,123 8 11.8 12.3 365 385 5.4

Oklahoma 41 3,893 9 10.8 11.3 417 439 5.3

Arkansas 42 2,973 6 9.5 9.7 283 289 2.4

South Dakota 43 855 4 8.9 9.3 75 79 5.2

Idaho 44 1,651 5 8.6 8.9 140 148 5.6

Nebraska 45 1,890 5 8.3 8.8 155 167 7.5

Montana 46 1,029 1 4.0 4.4 41 45 9.4

North Dakota 47 750 3 3.7 4.1 27 31 14.8

Mississippi 48 2,978 6 3.7 4.1 111 122 9.5

Wyoming 49 583 1 3.8 3.9 22 23 5.4

Alabama 50 4,846 3 3.5 3.7 168 178 6.1

Alaska 51 716 — 0.3 0.3 2 2 5.2

TOTAL U.S. 320,222 434 26.7% 27.9% 84,836 89,257 5.2%

1 Only operating plans are included in this table. The number of HMOs in each state includes plans that served that state but were located outside it.2 Rank is based on HMO penetration. Penetration is calculated by dividing HMO enrollment by the state population estimate. 3 The state population is a projection based on estimates of the U.S. Department of Commerce Bureau of the Census for July 2015.4 Although some HMOs served more than one state, 434 HMOs in 2015 were physically located in the states they served.NOTE: Some data were unavailable for Alaska. Enrollment values for Alaska in 2014 and 2015 were 2,222 and 2,337, respectively.


ENROLLMENT AND PLAN COUNT OF HMOs WITH GOVERNMENT BENEFICIARIES, 2015

Medicare Risk Medicare Cost Medicaid FEHBP Total HMO Govt.2

MODEL TYPE Members (000) Plans Members

(000) Plans Members (000) Plans Members

(000) Plans Members (000) Plans

IPA 4,391 125 205 2 15,556 82 441 30 20,593 163

Network 4,129 119 15 3 24,839 121 215 31 29,199 181

Group 1,760 23 180 8 2,350 20 471 19 4,761 32

Staff 112 5 2 2 721 4 42 4 878 10

MEMBERSHIP SIZE<15,000 96 26 3 3 41 5 3 4 143 33

15,000–24,999 187 16 — 1 66 4 13 4 268 22

25,000–49,999 637 32 10 1 523 17 15 7 1,185 44

50,000–99,999 1,717 53 12 1 2,074 34 56 11 3,859 74

100,000–249,999 2,906 69 53 2 9,550 77 188 24 12,697 107

250,000+ 4,849 76 323 7 31,212 90 895 34 37,279 106

TAX STATUSFor-Profit 6,428 183 38 3 26,629 131 471 48 33,565 250

Not-for-Profit 3,964 89 364 12 16,837 96 699 36 21,865 136

TOTAL U.S. 10,392 272 402 15 43,466 227 1,170 84 55,430 386

TOTAL HMO ENROLLMENT BREAKDOWN, BY PAYER TYPE, 2012–2015

Medicare3 Medicaid Standard40%

13%

26%

39%

52%

Perc

ent

ag

e o

f Enr

ollm

ent

10.7% 12.0% —12.1%—

33.4% 35.2%

42.8%

48.7%

26.4% 25.0% 25.6% 25.8%

2012 2013 2014 2015

1010

DEMOGRAPHICSH

MO



Key Takeaway

The effects of Medicaid expansion on HMO enrollment continue. Although some of these new

members may be patients with medical needs heightened by years of deferment, Michigan plans

found that enrollment gains have offset increased medical costs, which were not always as high as

expected.5 Results vary by state, of course, and may be difficult to predict so early in expansion.

Medicaid Portion of Total HMO Enrollment Continues Upward Climb

• In 2015, 48.7% of HMO members across

the nation were Medicaid members, a

5.9 percentage-point jump from 42.8% in 2014,

and a 15.3-point growth from 33.4% in 2012.

• The standard member share of HMO enrollment

crept up in 2015, to 25.8% from 25.6% in 2014;

Medicare members accounted for fewer than

one in eight HMO members in 2015.

Medicaid Membership in HMOs Expands Nationwide

• From 2014 (36.3 million) to 2015 (43.5 million), the

number of Medicaid HMO members nationally

climbed by 19.7%.1 In 2015, such members made

up 78.4% of total HMO government enrollment.

• Growth in Medicaid HMO membership

nationally, in turn, boosted total HMO

government enrollment by 16.1% from

2014 (47.8 million) to 2015 (55.4 million).

1 See page 10 of the HMO-PPORx Digest for 2015.2 Excludes 1,831,410 enrollees in the Children’s Health Insurance Program (CHIP).3 Includes Medicare Risk and Medicare Cost enrollment.4 Does not include POS or self-funded enrollees.5 Green, J. (2016). Medicaid HMOs Grow Bottom Lines After Expansion in Michigan. Retrieved from http://www.crainsdetroit.com/article/20160417/

NEWS/160419869/medicaid-hmos-grow-bottom-lines-after-expansion-in-michiganNOTE: Some data were unavailable.

http://www.crainsdetroit.com/article/20160417/NEWS/160419869/medicaid-hmos-grow-bottom-lines-after-expansion-in-michigan

PERCENTAGE OF HMOs THAT WERE PART OF AN INTEGRATED HEALTH CARE SYSTEM, 2011–2015MODEL TYPE 2011 2012 2013 2014 2015IPA 12.6% 13.2% 13.1% 12.0% 13.0%

Network 14.3 14.6 13.6 14.2 13.3

Group 51.3 46.5 45.5 50.0 52.8

Staff 50.0 50.0 45.5 30.0 30.0

AGE OF PLAN<5 Years — — — — 1.7%

5–9 Years 10.0% 8.7% 8.7% 7.1% 2.8

10–14 Years 28.6 24.2 13.8 9.5 9.4

15+ Years 21.5 22.5 23.1 22.1 22.2

TAX STATUSNot-for-Profit 33.8% 32.9% 30.7% 29.6% 29.4%

For-Profit 9.9 10.6 10.4 9.7 10.0

OVERALL AVERAGE 17.9% 18.1% 17.4% 16.7% 16.8%

PERCENTAGE OF HMOs THAT WERE PART OF AN INTEGRATED HEALTH CARE SYSTEM, BY SIZE OF PLAN, 2013–2015

0%

6%

12%

18%

24%

Perc

en

tag

e o

f HM

Os

2013 2014 2015

<15,000 15,000–24,999 25,000–49,999 50,000–99,999 100,000–249,999 250,000+

9.2%

13.8%15.7%

14.3%15.4%13.8%

16.4%

13.0%12.7%

17.1%

13.8%15.0%

20.0%18.9%16.8%

22.5%21.0%21.7%

11

DEMOGRAPHICS

11

HM

O


Integrated Health Care System-Affiliated Share of HMOs Inches Up

• Although the percentage of HMOs that were part

of an integrated health care system expanded

fractionally from 2014 (16.7%) to 2015 (16.8%), it

remained below the 2012 share of 18.1%.

• Of not-for-profit HMOs, 29.4% were part of

an integrated health care system in 2015,

a portion nearly three times that of their

for-profit counterparts (10.0%) that year.

HMOs With Highest Membership Counts Are Most Apt to Be in Integrated Systems

• In each year shown, HMOs with 250,000 or more

members were most likely, by size of plan, to be

part of an integrated health care system. In 2015,

21.7% of such plans were in integrated systems.

• Just over one in every six (16.8%) HMOs with

between 100,000 and 249,999 members were

in an integrated system in 2015, a share that

fell each year from 2013 (20.0%) to 2015.


Key Takeaway

Aligning an HMO with an integrated health care system can be advantageous to both parties. The

system gains access to the HMO’s members, and the HMO is granted tighter associations with the

providers, who, in many ways, control the health care utilization of its members. Yet such affiliations

are not without risk. HMOs may find smaller systems too restrictive for their members in terms of

provider choices. Furthermore, it may be that only the larger plans have sufficient enrollment

counts for the purchasing system to justify the time, effort, and expense of integration.

NOTE: Some data were unavailable.

1 The total number of affiliated physicians does not always equal the sum of the numbers of primary care physicians and specialists because of averaging.

NUMBER OF HMO-AFFILIATED PHYSICIANS AND HMO ENROLLMENT, 2006–2015

NUMBER OF PROVIDERS USED PER HMO, BY MODEL, 2014–2015

IPA Network Group Staff Overall Average

PROVIDERS 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

Acute-Care Hospitals 88 89 67 74 45 42 20 21 74 77

Affiliated Physicians–Total1 13,357 12,877 11,175 14,413 6,044 7,719 4,599 6,450 11,599 12,937

Primary Care Physicians 3,882 3,735 3,380 4,328 1,718 2,248 1,336 1,908 3,422 3,820

Specialists 9,474 9,143 7,796 10,085 4,326 5,470 3,263 4,543 8,177 9,117

2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

2,500

5,000

7,500

10,000

60,000

68,000

76,000

84,000

92,000

Nu

mb

er o

f Affi

liate

d P

hys

icia

ns

HM

O Enro

llme

nt (000)1,962

4,561

2,114

4,670

2,397

5,287

2,487

5,606

2,732

6,026

2,946

6,631

3,277

7,370

3,412

7,867

3,422

8,177

3,820

9,117

76,33078,281

77,11875,348

77,18779,479

80,545 80,056

84,836

89,257

Primary Care Physicians Specialists Total Number of Members

HMO Enrollment Grows at a Slower Rate Than Does Physician Affiliation

• Overall HMO enrollment from 2006 to 2015

increased 16.9%, to 89.3 million from 76.3 million,

despite two periods of decline: one from 2007

to 2009 and another from 2012 to 2013.

• Over the same 10-year period, the average

number of physicians affiliated with HMOs

virtually doubled for specialists (99.9%) and

primary care physicians (94.7%) alike.

LONG-TERM TREND

1212

DEMOGRAPHICSH

MO


HMO-Physician Affiliation Rates Climb by More Than 10%

• From 2014 (11,599) to 2015 (12,937), the average

number of affiliated physicians per HMO grew

11.5%. Meanwhile, the number of such physicians

shrank only for IPA-model HMOs (–3.6%).

• During this same period, the overall rates

of increase in affiliated provider counts for

both primary care physicians (11.6%) and

specialists (11.5%) were virtually identical.


Key Takeaway

As enrollment counts have risen in recent years, so, too, have the numbers of primary care

physicians and specialists affiliated with HMOs. This network expansion may both accommodate

new members and make the HMO more attractive to existing members by expanding provider

choices. However, as broader networks often come with higher costs, this trend may be difficult to

maintain, as the pressure to manage health care spending intensifies.

1 See HMO-PPORx Digest for 2015, page 13.2 All HMO utilization data exclude well baby, neonatal ICU, and psychiatric patients.3 Morris, M., et al. (2015). Expanding Coverage: How Primary Care Physicians Are Accommodating the Newly Insured. Deloitte Center for Health

Solutions. Retrieved from http://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/expanding-coverage-accommodating-the-newly-insured.html

HMO HOSPITAL DAYS AND AVERAGE LENGTH OF STAY, 20152

Hospital Days per 1,000 HMO Members

Average Length of Stay per HMO Hospital Admission

MODEL TYPE Non-Medicare Medicaid Medicare Non-Medicare Medicaid Medicare

IPA 243.1 399.2 1,735.3 4.5 4.6 6.9

Network 261.7 402.1 1,674.4 4.5 4.7 6.6

Group 220.7 358.1 1,544.2 4.3 4.6 6.4

Staff 176.8 298.5 810.7 3.9 4.1 5.0

MEMBERSHIP SIZE<15,000 218.7 351.9 1,513.7 4.4 4.2 6.5

15,000–24,999 239.0 314.0 1,568.6 4.3 3.6 6.6

25,000–49,999 269.0 337.3 1,498.4 4.5 4.3 6.3

50,000–99,999 266.0 373.4 1,687.0 4.5 4.6 6.8

100,000–249,999 240.2 398.0 1,884.9 4.6 4.8 7.0

250,000+ 245.4 420.7 1,637.9 4.4 4.7 6.5

OVERALL AVERAGE 246.3 396.1 1,672.4 4.5 4.7 6.7

ALOS Climbs Notably for HMO Members Across All Profiled Payer Types

• Average length of stay (ALOS) per HMO hospital

admission expanded to 6.7 days from 6.6 for

Medicare, to 4.7 from 4.6 for Medicaid, and to 4.5

from 4.3 for non-Medicare HMO members in 2015.

• Since 2007, ALOS rose 11.7% for Medicare, 23.7%

for Medicaid, and 18.4% for non-Medicare

HMO members. For all payers, this benchmark

grew most quickly in the four years since 2011.

Key Takeaway

ALOS per HMO hospital admission rose in recent years for all payer types, which may partly reflect

a concerted effort by HMOs and hospitals alike to avoid readmissions—a costly and oftentimes

avoidable occurrence that is also tied to reimbursement rates. Moreover, elevated ALOS among

Medicaid HMO members could result from the poor health status of these newly insured recipients.3

AVERAGE LENGTH OF STAY PER HMO HOSPITAL ADMISSION, 2007–20152

2007 2008 2009 2010 2011 2012 2013 2014 20153

4

5

6

7

Ave

rag

e L

en

gth

of S

tay

(Da

ys)

Medicare Medicaid

6.0 6.0 6.0 6.0 6.1 6.16.3

6.6 6.7

3.9 3.9

3.9

4.1 4.24.4

4.6 4.7

3.84.1

4.3 4.34.5

Non-Medicare


LONG-TERM TREND

Hospital Days per 1,000 HMO Members Rise for All Payers

• The hospital-days ratios increased for non-

Medicare (to 246.3 from 231.2), Medicaid (to

396.1 from 394.7), and Medicare (to 1,672.4

from 1,638.3) HMO members from 2014 to 2015.1

• Hospital days per 1,000 HMO members, as well

as average length of stay per HMO hospital

admission, were lowest, by model type, for

staff-model HMOs, regardless of payer, in 2015.

13

UTIL IZATION

13

HM

O


http://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/expanding-coverage-accommodating-the-newly-insured.html

NUMBERS OF HMO PHYSICIAN ENCOUNTERS AND AMBULATORY VISITS, 20151,2

Physician Encounters per HMO Member Ambulatory Visits per HMO Member

MODEL TYPE Non-Medicare Medicare Medicaid Non-Medicare Medicare Medicaid

IPA 4.7 9.8 5.0 1.7 5.1 2.7

Network 4.4 10.5 4.7 2.1 5.2 3.0

Group 3.6 8.0 3.9 1.6 4.5 2.7

Staff 3.5 6.5 3.4 1.1 1.8 1.4

MEMBERSHIP SIZE<15,000 4.0 8.0 5.8 1.4 5.1 3.0

15,000–24,999 4.9 11.4 4.6 1.9 6.2 2.8

25,000–49,999 4.4 10.3 4.2 1.8 4.8 2.2

50,000–99,999 4.7 9.3 5.1 1.8 5.3 2.6

100,000–249,999 4.4 10.0 4.5 1.9 5.1 3.0

250,000+ 4.3 10.3 4.7 2.0 4.6 2.9

OVERALL AVG. 4.4 9.9 4.7 1.8 5.0 2.9

2011 2012 2013 2014 20150

3

6

9

12

Phys

icia

n En

co

unte

rs p

er M

em

be

r Non-Medicare Medicare

4.6

9.6

4.7

9.9

4.7

10.4

4.8

10.2

4.4

9.9

NUMBER OF PHYSICIAN ENCOUNTERS PER HMO MEMBER, 2011–20151,2

1 All HMO utilization data exclude well baby, neonatal ICU, and psychiatric patients.2 Ambulatory visits differ from physician encounters. Ambulatory visits are visits by an HMO member to an HMO clinic or physician’s office that do not

require the services of a physician. Such visits are usually made for tests, prescription refills, immunizations, etc. The term “physician encounter” is self-explanatory.

3 See HMO-PPORx Digest for 2014, page 14.4 Dall, T., et al. (2016). The Complexities of Physician Supply and Demand 2016 Update: Projections from 2014 to 2025. Association of American

Medical Colleges. Retrieved from https://www.aamc.org/download/458082/data/2016_complexities_of_supply_and_demand_projections.pdf

1414

UTIL IZATIONH

MO


Key Takeaway

That per-HMO member physician encounters have decreased, irrespective of payer type, suggests

the possibility that previously anticipated physician shortages are beginning to shape the ways in

which patients seek care. Indeed, as the demand for physicians is expected to outpace the supply

by an ever-widening margin over the next decade,4 alternatives such as urgent care centers and

retail clinics could become the primary site of care for a growing portion of the population.

MD Encounter Ratio Is Below Average for Staff-Model Plans

• Across the three profiled payer types, staff-

model plans had the lowest numbers of

per-HMO member physician encounters and

ambulatory visits, by model type, in 2015.

• Network-model plans, conversely, recorded the

highest numbers of ambulatory visits per HMO

member, regardless of payer, and exceeded the

corresponding overall averages that year.


LONG-TERM TREND

Physician Encounters per Non-Medicare HMO Member Fall to Six-Year Low

• In 2015, the number of physician visits per non-

Medicare HMO member dropped to 4.4 from 4.8

the prior year, marking the lowest such average

for non-Medicare members since 2009 (4.2 visits).3

• For Medicare HMO members, such encounters

also decreased, to 9.9 in 2015 from 10.2 in 2014,

albeit at a slower rate than that of their non-

Medicare counterparts (–2.9% versus –8.3%).

https://www.aamc.org/download/458082/data/2016_complexities_of_supply_and_demand_projections.pdf

1 See HMO-PPORx Digest for 2014, page 15.2 All HMO utilization data exclude well baby, neonatal ICU, and psychiatric patients.3 There were no operating HMOs physically located in Alaska in 2015.NOTE: Some data were unavailable for the selected markets.

2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

150

300

450

600

Nu

mb

er o

f Da

ys

371.6 388.4 403.9

467.1527.8

466.7

538.6 536.3575.6 588.8

15

UTIL IZATION

15

HM

O


NUMBERS OF HMO HOSPITAL DAYS AND PHYSICIAN ENCOUNTERS, 20152

Hospital Days per 1,000 Members

Average Physician Encounters

per Member

Hospital Days per 1,000 Members

Average Physician Encounters

per Member

STATE3 Non-Medicare Medicare Non-

Medicare Medicare STATE3 Non-Medicare Medicare Non-

Medicare Medicare

Alabama 277.0 1,471.7 2.9 5.3 Montana 471.7 — — —

Arizona 251.3 1,650.4 5.6 11.1 Nebraska 169.2 1,892.3 2.8 10.2

Arkansas 277.9 1,782.5 2.9 8.2 Nevada 322.7 1,405.3 3.9 10.1

California 200.3 1,098.7 3.2 6.9 New Hampshire 250.2 798.3 4.7 10.6

Colorado 222.6 874.8 4.0 7.3 New Jersey 300.5 1,991.3 5.5 10.8

Connecticut 284.3 1,854.6 3.6 11.1 New Mexico 286.5 2,389.8 5.3 10.0

D.C. 215.6 1,339.6 4.9 7.0 New York 279.2 1,891.2 5.0 12.5

Delaware 257.9 1,926.9 4.8 8.6 North Carolina 208.9 1,353.4 5.3 14.3

Florida 198.3 1,575.7 4.6 10.9 North Dakota 195.7 1,417.1 2.8 5.7

Georgia 258.4 1,482.4 4.9 10.8 Ohio 268.0 2,007.7 4.6 9.8

Hawaii 364.0 1,556.7 2.6 6.1 Oklahoma 270.2 2,181.9 4.4 7.4

Idaho 233.7 1,149.2 4.2 8.5 Oregon 283.5 1,015.0 4.2 8.8

Illinois 292.2 1,790.1 4.9 9.5 Pennsylvania 274.6 2,297.9 6.0 11.7

Indiana 240.4 2,055.7 4.8 — Rhode Island 180.5 1,914.5 2.8 10.7

Iowa 203.6 2,078.4 3.5 8.8 South Carolina 192.7 1,546.7 5.1 8.2

Kansas 273.1 2,774.2 5.4 11.4 South Dakota 212.0 1,704.1 4.1 —

Kentucky 256.9 2,068.2 5.5 14.9 Tennessee 307.4 2,353.2 4.6 10.9

Louisiana 286.3 1,816.4 6.8 11.6 Texas 202.1 1,766.8 3.5 9.8

Maine 264.9 1,287.8 5.4 11.4 Utah 185.5 1,886.0 4.1 12.3

Maryland 221.2 1,339.6 4.4 7.0 Vermont 325.9 2,115.2 3.8 —

Massachusetts 262.7 1,858.6 4.7 9.8 Virginia 239.5 1,603.3 4.8 10.2

Michigan 305.2 1,722.2 4.8 9.9 Washington 242.6 1,209.5 3.4 8.7

Minnesota 205.0 1,556.7 3.3 8.2 West Virginia 257.5 2,715.7 6.9 16.1

Mississippi 198.1 1,360.5 4.9 5.8 Wisconsin 218.6 1,645.8 4.2 10.8

Missouri 301.3 1,980.1 5.6 9.6 Wyoming 185.9 1,653.7 3.8 9.1

OVERALL AVG. 246.3 1,672.4 4.4 9.9


Medicare Hospital-Days Ratio for Kansas Again Tops Nation’s

• In Kansas, the number of Medicare hospital

days per 1,000 HMO members fell 16.8%

from 2013 (3,336.01) to 2015 (2,774.2), but

remained the highest in the nation in 2015.

• Meanwhile, HMOs serving West Virginia

reported the largest numbers for both

Medicare (16.1) and non-Medicare (6.9)

physician encounters per member in 2015.

Number of Hospital Days per 1,000 HMO Members, Pennsylvania, 2006–20152

LONG-TERM TREND

1616

FINANCIALSH

MO


AVERAGE HMO PREMIUM RATES PER MONTH, 2015

STATE1 Average FamilyPremium

Average IndividualPremium STATE1 Average Family

PremiumAverage Individual

Premium

Alabama $1,150.50 $442.50 Montana $1,327.00 $587.00

Arizona 1,512.39 615.95 Nebraska 1,333.00 615.35

Arkansas 1,146.02 445.65 Nevada 1,336.93 569.05

California 1,595.53 621.69 New Hampshire 1,688.85 523.88

Colorado 1,187.90 473.17 New Jersey 1,601.90 645.91

Connecticut 1,415.81 532.22 New Mexico 1,312.89 538.66

D.C. 1,299.65 539.19 New York 1,631.12 646.90

Delaware 1,594.43 697.70 North Carolina 1,250.19 498.54

Florida 1,295.46 528.23 North Dakota 1,971.34 747.44

Georgia 1,482.44 627.16 Ohio 1,471.07 597.72

Hawaii 1,069.26 477.30 Oklahoma 1,308.82 518.53

Idaho 1,317.76 501.61 Oregon 1,487.63 577.21

Illinois 1,372.88 561.90 Pennsylvania 1,525.43 622.46

Indiana 1,298.97 539.32 Rhode Island 1,604.92 516.33

Iowa 1,308.95 534.93 South Carolina 1,335.67 555.67

Kansas 1,407.41 593.18 South Dakota 1,568.51 650.01

Kentucky 1,290.75 543.11 Tennessee 1,676.79 668.74

Louisiana 1,301.44 540.22 Texas 1,294.83 511.98

Maine 1,523.79 553.65 Utah 1,022.78 475.10

Maryland 1,262.46 531.25 Vermont 1,748.81 615.95

Massachusetts 1,508.31 520.93 Virginia 1,380.48 552.72

Michigan 1,464.09 600.33 Washington 1,437.04 531.83

Minnesota 1,431.86 582.76 West Virginia 1,515.04 620.21

Mississippi 1,177.07 482.33 Wisconsin 1,353.01 536.87

Missouri 1,394.01 589.04 Wyoming 1,100.34 498.29

OVERALL AVG. $1,379.89 $555.39

Individual, Family HMO Premiums Are Highest in North Dakota

• Average monthly HMO premiums for both

individuals ($747.44) and families ($1,971.34)

were more expensive in North Dakota than

in any other state in 2015. Nationally, these

premiums averaged $555.39 and $1,379.89.

• Meanwhile, Vermont had the second-highest

average family HMO premium ($1,748.81), and

Delaware the second-highest such individual

premium ($697.70). Seven states reported monthly

family HMO premiums greater than $1,600.

Key Takeaway

Even as the Affordable Care Act (ACA) has increased the number of people with health insurance,

enrollment has fallen short of projections.2 Moreover, many carriers are finding that they have enrolled

a sicker population than expected, and premium rate growth beyond that of inflation seems to be

inevitable. It remains to be seen whether efforts like introducing standardized “simple choice plans”3

to the ACA marketplaces can encourage greater enrollment—especially among so-called young

invincibles—thereby expanding risk pools to offset insurers’ losses and slowing premium increases.


1 There were no operating HMOs physically located in Alaska in 2015.2 Roy, A. (2016). CBO Slashes 2016 Obamacare Exchange Enrollment Projections by 8 Million. Forbes. Retrieved from: http://www.forbes.com/sites/

theapothecary/2016/01/26/cbo-slashes-2016-obamacare-exchange-enrollment-projections-by-8-million/#2aef4654791e3 Andrews, M. (2016). “Simple Choice Plans” to Debut in 2017 Marketplace Enrollment. Kaiser Health News. Retrieved from: http://khn.org/news/

simple-choice-plans-to-debut-in-2017-marketplace-enrollment/

http://www.forbes.com/sites/theapothecary/2016/01/26/cbo-slashes-2016-obamacare-exchange-enrollment-projections-by-8-million/#2aef4654791e

http://khn.org/news/simple-choice-plans-to-debut-in-2017-marketplace-enrollment/

1 HMOs gave multiple answers. Totals add up to more than 100%. Other reimbursement methods used by HMOs included discounted fee-for-service, fee schedules, per diems, and return of risk pools/withholds.

PERCENTAGE OF HMOs USING VARIOUS PHYSICIAN REIMBURSEMENT METHODS, 20151

MODEL TYPE Salary Profit Sharing Fee-for-Service Bonus Program Capitation

IPA 2.7% 3.6% 61.8% 16.4% 70.0%

Network 2.1 4.2 54.2 18.8 59.4

Group 18.5 0.0 55.6 25.9 85.2

Staff 85.7 0.0 42.9 28.6 57.1

OWNERSHIPCorporate Owned 6.8% 2.9% 58.7% 17.0% 67.5%

Corporate Managed 0.0 0.0 0.0 0.0 100.0

Corporate Affiliated 9.1 0.0 54.5 27.3 72.7

Hospital Owned 0.0 0.0 33.3 66.7 33.3

Independent 5.3 10.5 52.6 26.3 63.2

OVERALL AVERAGE 6.7% 3.3% 57.5% 18.8% 67.1%

20%

30%

40%

50%

60%

Perc

ent

ag

e o

f Co

ntra

cts

2011 2012 2013 2014 2015

Primary Care Physician Contracts Specialist Contracts Hospital Contracts

54.6% 53.7% 53.8% 53.5% 54.0%

30.4% 31.1% 31.6% 31.6% 31.9%

39.5% 39.9% 40.5% 40.5% 41.3%

PERCENTAGE OF HMO CONTRACTS REIMBURSED THROUGH CAPITATION, 2011–2015

17

FINANCIALS

17

HM

O


Key Takeaway

As value-based payment models become increasingly popular, it is not surprising that HMOs’ use of

fee-for-service payments to physicians is declining. Many HMOs themselves are reimbursed through

pay-for-performance programs, so providing similar incentives for physicians—who are certainly at

the frontline of care delivery—aligns their goals with those of the plan.


HMO Use of Fee-for-Service to Reimburse Physicians Decreases

• The percentage of HMO plans overall

that made use of fee-for-service

physician reimbursement declined by

nearly one percentage point, to 57.5%

in 2015 from 58.4% the year prior.

• Capitation remained the most common

method of physician reimbursement

among HMO plans in 2015, with just

over two-thirds (67.1%) of them making

use of this payment model.

LONG-TERM TREND

HMOs Reimburse Just Under One-Third of Specialist Contracts Via Capitation

• Of the provider types shown, HMO specialist

contracts were least likely to be reimbursed

through capitation in 2015 (31.9%). Although

lowest in all the years shown, this share increased

by 1.5 percentage points from 2011 to 2015.

• Although the portion of capitated hospital

HMO contracts grew most quickly during this

time (1.8 percentage points, to 41.3%), primary

care physicians were still most apt to be paid by

HMOs via capitation in all five years shown.

FOR-PROFIT VS. NOT-FOR-PROFIT HMO USE OF PHYSICIAN WITHHOLDS1/RISK POOLS, 2009–2015

HMO USE OF PHYSICIAN WITHHOLDS1/RISK POOLS, 2014–20152014 2015

MODEL TYPE Percentage of HMOs HMO Enrollment2 Percentage of HMOs HMO Enrollment2

IPA 54.2% 18,738,437 58.7% 18,226,130

Network 49.4 16,198,085 48.9 19,414,265

Group 18.8 2,925,836 30.6 3,271,857

Staff 74.3 984,126 74.5 1,040,141

OWNERSHIP

Corporate Owned 48.0% 33,669,855 54.7% 36,371,706

Corporate Managed — — — —

Corporate Affiliated 45.2 2,506,054 50.0 2,594,415

Hospital Owned 22.8 333,502 33.3 390,036

Independent 33.9 2,337,072 32.0 2,596,236

TAX STATUS

Not-for-Profit 38.7% 14,721,071 44.0% 16,335,496

For-Profit 52.2 24,125,412 55.3 25,616,897

OVERALL AVG./TOTAL 46.1% 38,846,483 47.5% 41,952,393

2009 2010 2011 2012 2013 2014 201520%

29%

38%

47%

56%

Perc

en

tag

e o

f HM

Os

For-Profit Not-for–Profit

29.2%

25.7%

29.7%

33.8%

38.0%

52.2%55.3%

37.1%35.0%

38.9% 39.2% 38.3% 38.7%

44.0%

1 Physician withhold: A percentage of payments or set dollar amounts deducted from a physician’s service fee, capitation, or salary payment that may or may not be returned to the physician depending on specific predetermined factors.

2 Enrollment data for 2015 are based on 218 HMOs using physician withholds/risk pools; enrollment data for 2014 are based on 221 HMOs using physician withholds/risk pools.


For-Profit HMOs See Accelerated Increase in the Use of Withholds

• As recently as 2012, the percentage of for-profit

HMOs using physician withholds in their contracts

(33.8%) was lower than that of not-for-profit HMOs

(39.2%); in 2013, these shares nearly converged.

• However, from 2013 (38.0%) to 2015 (55.3%), the

portion of for-profit HMOs using withholds jumped

17.3 percentage points, while at not-for-profit

HMOs, this share rose from 38.3% to 44.0%.

LONG-TERM TREND

1818

FINANCIALSH

MO


Share of Corporate-Owned HMOs With Physician Withholds Grows

• From 2014 (48.0%) to 2015 (54.7%), the portion

of corporate-owned HMOs using physician

withholds rose 6.7 percentage points, and was

highest among the profiled ownership types.

• At the same time, the share of hospital-owned

HMOs using withholds increased 10.5 points,

to 33.3% from 22.8%, and that of corporate-

affiliated HMOs grew 4.8 points, to 50.0%.


HMO DRUG COSTS AS A PERCENTAGE OF OPERATING EXPENSES, BY TAX STATUS, 2013–2015

HMO EXPENDITURES PER MEMBER PER YEAR FOR DRUGS, 2010–2015

OWNERSHIP 2010 2011 2012 2013 2014 2015

Corporate Owned $564.47 $579.41 $614.40 $617.26 $662.51 $667.49

Corporate Managed 252.00 516.84 499.91 475.02 656.75 586.81

Corporate Affiliated 513.78 534.65 554.57 578.92 588.80 641.49

Hospital Owned 559.86 591.08 521.53 643.40 690.49 676.83

Independent 571.28 586.56 581.80 563.52 603.80 597.27

TAX STATUS

Not-for-Profit $528.71 $538.42 $584.90 $575.67 $646.53 $659.27

For-Profit 579.37 597.69 615.24 627.47 656.70 658.09

OVERALL AVERAGE $561.96 $577.93 $604.60 $608.97 $653.07 $658.50

2013 2014 201512%

13%

14%

15%

16%

Avg

. Ph

arm

ac

y Ex

pe

nd

iture

%

Not-for-Profit For-Profit Overall Average

13.8%

15.2%

14.7% 14.6%

15.4%15.1%

15.8%15.5% 15.6%

PMPY Drug Expenditures Climb at HMOsLONG-TERM TREND

19

FINANCIALS

19

HM

O


Key Takeaway

Pharmacy costs represent a significant portion of HMO expenditures, so managing them in light of the

increasing numbers of Medicare and Medicaid members is crucial. Plan administrators will need to

consider formulary choices carefully to provide the most effective therapies, considering not only the

pharmaceutical component, but also the cost of disease progression for both plans and patients.

• Per-member per-year (PMPY) HMO drug

expenditures rose 17.2% from 2010 ($561.96) to

2015 ($658.50). The rate of growth at not-for-profit

HMOs (24.7%) surpassed that of for-profits (13.6%).

• By ownership type, corporate-managed HMOs

realized the largest increase in such spending

during this period (132.9%), followed by

corporate-affiliated HMOs (24.9%).


Not-for-Profit HMOs See Largest Increase in Drug Costs as a Share of Operating Expenses

• From 2013 (13.8%) to 2015 (15.8%), the share

of not-for-profit HMO operating expenses

represented by drug costs rose 2.0 percentage

points, versus 0.3 points at for-profit HMOs.

• Further, drug costs as a share of operating

expenses at not-for-profit HMOs eclipsed

those at for-profit HMOs (15.5%) in 2015 after

being 1.4 percentage points lower in 2013.

PERCENTAGE OF HMO MEMBERS AND PRESCRIPTIONS DISPENSED, BY COPAY TIER DESIGN, 2015One Tier Two Tier Three Tier Four Tier Five Tier

MODEL TYPE % of Members

% ofRxs

% of Members

% ofRxs

% of Members

% ofRxs

% of Members

% ofRxs

% of Members

% ofRxs

IPA 42.1% 42.9% 11.5% 11.3% 17.0% 16.5% 12.5% 12.2% 16.9% 17.1%

Network 48.2 49.7 14.8 13.1 14.6 15.0 15.1 14.0 7.2 8.1

Group 15.3 14.3 55.6 56.3 10.7 10.8 6.3 6.4 12.0 12.2

Staff 81.4 75.9 — — 1.2 1.5 11.3 14.6 6.1 7.9

AGE OF PLAN<5 Years 53.5% 56.9% 23.0% 24.5% 6.0% 6.3% 16.9% 11.6% 0.7% 0.7%

5–9 Years 50.6 50.6 27.8 27.8 7.4 7.4 7.2 7.2 7.0 7.0

10–14 Years 44.1 44.1 2.3 2.3 2.2 2.2 34.7 34.7 16.8 16.8

15+ Years 40.0 40.4 17.5 16.2 18.5 18.6 10.5 10.6 13.4 14.2

OVERALL AVG. 42.7% 43.3% 17.6% 16.8% 15.0% 15.1% 13.0% 12.4% 11.7% 12.4%

1 Reflects the average for those who pay a fixed percentage of the drug cost.2 Fein, A. (2015). Employers Get Tougher About Pharmacy Benefits and Specialty Drug Management. Drug Channels. Retrieved from

http://www.drugchannels.net/2015/10/employers-get-tougher-about-pharmacy.htmlNOTE: Some data were unavailable.

AVERAGE HMO COPAYMENT PERCENTAGE AND AMOUNT PER PRESCRIPTION, BY TIER, 2012–20151

2020

PHARMACYH

MO


Key Takeaway

Tiered pharmacy formularies are the most common means of encouraging the use of generic

and preferred drugs to manage prescription drug spending. Indeed, as both plans and employers

look to control growth in health care expenditures, shifting costs to consumers and increasing

their responsibility in managing their own care is becoming more common through higher copay

percentages for lower-tier drugs and greater use of coinsurance for tier-four and tier-five drugs.2


Most Staff-Model HMO Members Have Tier-One Plans• In 2015, the share of staff-model HMO members

subject to a one-tier copay design (81.4%)

was notably higher than the corresponding

percentages of any other profiled HMO model.

• By comparison, the one-tier copay design shares

of IPA- (42.1%) and network-model (48.2%) HMO

members were far lower, but still represented the

most common copay design for these models.

Tier One Tier Two Tier Three 0%

8%

16%

24%

32%

Co

pa

yme

nt P

erc

en

tag

e

2012 2013 2014 2015

8.0%($4.79)

8.0%($4.30)

9.6%($4.43)

10.1%($4.36)

10.6%($20.93)

10.4%($19.21)

10.6%($20.55)

10.5%($17.83)

25.0%($51.74)

24.8%($52.62)

25.7%($51.76)

22.3%($54.13)

Difference Between Tier-One and Tier-Two Copayment Percentages Narrows

• As average tier-one copay percentages have

risen, the difference between those of tier-one

and tier-two drugs in 2015 (0.4 percentage points)

was less than half that of 2014 (1.0 point).

• Meanwhile, the average tier-three drug copay

percentage fell, to 22.3% in 2015 from 25.7% in

2014, yet average prescription cost in this tier rose,

even as it fell for drugs in tiers one and two.

http://www.drugchannels.net/2015/10/employers-get-tougher-about-pharmacy.html

INDIVIDUAL HMO PREMIUMS PMPM FOR OUTPATIENT PHARMACY BENEFITS, BY MEMBERSHIP SIZE, 2013–2015

HMO PREMIUMS PER MEMBER PER MONTH FOR OUTPATIENT PHARMACY BENEFITS, 2013–2015Individual Premiums Family Premiums

MODEL TYPE 2013 2014 2015 2013 2014 2015

IPA $42.56 $42.86 $43.30 $108.58 $109.95 $111.99

Network 41.92 40.48 40.58 102.97 99.11 98.59

Group 30.51 31.85 31.29 71.92 75.32 71.45

Staff 33.16 32.88 32.88 111.09 106.64 106.64

OWNERSHIPCorporate Owned $40.47 $40.50 $40.27 $105.92 $105.11 $104.31

Corporate Managed 21.50 21.50 21.50 75.00 75.00 75.00

Corporate Affiliated 40.60 41.76 46.05 59.19 67.26 79.68

Hospital Owned 36.00 — — 92.00 — —

Independent 45.16 45.16 49.36 107.37 107.37 117.46

TAX STATUSNot-for-Profit $41.44 $41.44 $41.44 $92.20 $92.20 $92.20

For-Profit 40.31 40.51 40.90 109.17 110.26 111.49

OVERALL AVG. $40.71 $40.84 $41.09 $103.04 $103.61 $104.32

<15,000 15,000–24,999 25,000–49,999 50,000–99,999 100,000–249,999 >250,000

Ave

rag

e P

rem

ium

s PM

PM

2013 2014 2015

$30

$35

$40

$45

$50

$40.26$39.28

$40.67

$42.76

$46.16

$38.03

$34.11$34.48

$36.77

$42.53$42.47

$36.26

$40.02$39.28

$43.13

$45.58$45.33$45.98

2121

HM

O


PHARMACY

Key Takeaway

Prescription drugs are one of 10 essential benefits for health insurance exchange plans, extending

drug coverage to an unprecedented number of people. Although many exchange plans offer less

generous prescription benefits than employer-sponsored plans,1 it is likely that this is offset, at least

partially, by cost-sharing subsidies for low-income enrollees. In spite of this expanded population

receiving coverage, HMO pharmacy benefit premiums have remained relatively stable in recent years.

Growth Is Minimal for HMO Outpatient Pharmacy Premiums• From 2013 to 2015, increases in HMO outpatient

(OP) pharmacy benefit premiums for both

individual (0.9%) and family (1.2%) coverage

were modest, and in many cases decreased.

• For example, outpatient pharmacy premiums fell

for individuals in network- (–3.2%) or staff-model

(–0.8%) HMOs, and for families in network- (–4.3%),

group- (–0.7%), or staff-model (–4.0%) HMOs.


PMPM Individual OP Pharmacy Premiums Are Costliest for Members of Largest HMOs

• In 2015, per member per month (PMPM)

individual outpatient pharmacy benefit premiums

were most expensive for individuals enrolled in

HMOs with more than 250,000 members ($45.98).

• Meanwhile, HMOs with 50,000 to 99,999 members

reported the lowest PMPM outpatient pharmacy

premiums for individuals ($36.26), followed by

those with 25,000 to 49,999 members ($36.77).

1 Buttorff, C., et al. (2015). Comparing Employer-Sponsored And Federal Exchange Plans: Wide Variations In Cost Sharing For Prescription Drugs. Health Affairs. Retrieved from http://content.healthaffairs.org/content/34/3/467.abstract


http://content.healthaffairs.org/content/34/3/467.abstract

NUMBER OF PRESCRIPTIONS DISPENSED PER MEMBER PER YEAR (PMPY) BY HMOs, 2014–20152014 2015

MODEL TYPE Non-Medicare Medicare Non-Medicare Medicare

IPA 9.1 32.5 9.2 32.6

Network 9.0 27.2 8.8 26.2

Group 9.2 27.6 9.2 28.3

Staff 7.9 40.2 7.9 40.2

OWNERSHIPCorporate Owned 8.9 29.7 9.0 29.3

Corporate Managed 6.9 — 6.9 —

Corporate Affiliated 9.7 37.1 9.6 37.1

Hospital Owned 8.9 24.2 4.1 24.2

Independent 10.0 31.4 10.3 32.9

AGE OF PLAN<5 Years 7.8 18.0 8.4 —

5–9 Years 11.4 23.0 9.2 20.5

10–14 Years 7.6 45.0 6.7 45.0

15+ Years 9.1 30.0 9.0 29.8

MEMBERSHIP SIZE<15,000 Members 9.0 31.4 9.3 29.9

15,000–24,999 8.9 31.9 8.4 33.9

25,000–49,999 8.6 29.1 8.3 31.0

50,000–99,999 9.0 31.0 8.9 26.8

100,000–249,999 9.8 30.8 9.7 32.1

250,000+ 8.7 28.1 8.8 28.4

TAX STATUSNot-for-Profit 9.2 28.8 9.1 28.8

For-Profit 8.9 30.6 9.0 30.3

OVERALL AVG. 9.0 29.9 9.0 29.7

1 Does not include administrative, prescription, or dispensing fees.NOTE: Some data were unavailable.

Average Ingredient Cost per HMO Prescription Decreases Slightly

• The average ingredient cost per prescription

dispensed by HMOs declined a fractional

0.2% from 2014 ($56.75) to 2015 ($56.65).

• Despite this decrease—the second over the

course of the 10-year span shown—such

costs increased 26.8% since 2005 ($44.68).

LONG-TERM TREND

2222

PHARMACYH

MO


Number of Medicare Rxs Filled PMPY Edges Down in 2015• From 2014 (29.9) to 2015 (29.7), the number of

prescriptions dispensed per member per year

(PMPY) by Medicare HMOs shrank fractionally,

but was unchanged for non-Medicare HMOs.

• Staff-model Medicare HMOs dispensed more

prescriptions PMPY than did IPA-, network-, or

group-model HMOs in 2014 and 2015. Those for

network models were the lowest in both years.

AVERAGE INGREDIENT COST1 PER HMO PRESCRIPTION AND ANNUAL PERCENTAGE GROWTH, 2005–2015


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015$14

$26

$38

$50

$62

–8%

–1%

6%

13%

20%

Ave

rag

e In

gre

die

nt C

ost

pe

r Rx

Dis

pe

nse

d

Average Ingredient Cost per Rx Dispensed Percentage Growth

Perc

en

tag

e G

row

th

$44.68 $45.86$48.90 $49.72

$54.04$57.92 $58.95

$55.73 $56.70 $56.75 $56.65

7.5%

2.6%

6.6%

1.7%

8.7% 7.2%

1.8%

–5.5%

1.7% 0.1% –0.2%

23

PHARMACY

23

HM

O


HOW HMOs INFLUENCE PHYSICIAN PRESCRIBING PRACTICES, 20152

MODEL TYPE No Controls

Financial Incentives

Drug Utilization Review

Quality Assurance

Second Opinion

Prior Authoriza-

tion

Practice Guidelines

IPA — 23.0% 97.3% 53.6% 1.6% 98.9% 74.3%

Network — 15.7 92.7 55.0 1.0 99.5 85.3

Group 2.9% 22.9 88.6 77.1 11.4 91.4 88.6

Staff — 10.0 80.0 70.0 10.0 90.0 70.0

OWNERSHIPCorporate Owned 0.3% 20.8% 95.1% 54.0% 2.6% 98.8% 80.9%

Corporate Managed — — 100.0 100.0 — 100.0 100.0

Corporate Affiliated — 18.8 87.5 62.5 6.3 93.8 87.5

Hospital Owned — — 83.3 50.0 — 83.3 50.0

Independent — 12.2 89.8 71.4 — 98.0 77.6

OVERALL AVG. 0.2% 19.3% 94.0% 56.6% 2.4% 98.3% 80.4%

Less Than a Fifth of HMOs Use Financial Incentives to Impact MD Prescribing

• The percentage of HMOs that used

financial incentives to drive physician

prescribing patterns decreased fractionally

from 2014 (19.7%) to 2015 (19.3%).

• Since 2007 (24.5%), this portion has fallen

5.2 percentage points. Meanwhile, the

share of HMOs that use DUR for influencing

prescribing rose 4.6 percentages points.

LONG-TERM TREND

1 See the HMO-PPORx Digest for 2015, page 23.2 HMOs gave multiple answers. Totals add up to more than 100% of the HMOs in the sample.3 LaMattina, J. (2016). “Pay for Performance” Drug Plans Could Impact Biopharma’s R&D Priorities. Forbes. Retrieved from http://www.forbes.com/

sites/johnlamattina/2016/05/18/pay-for-performance-drug-plans-could-impact-biopharmas-rd-priorities/#72bdf19d3c68

89.4% 89.5% 89.5% 90.1% 90.4%93.8% 93.9% 93.8% 94.0%

24.5% 24.5% 27.3%20.2%

32.2%

20.1% 19.7% 19.7% 19.3%

2007 2008 2009 2010 2011 2012 2013 2014 201512%

34%

56%

78%

100%

Perc

en

tag

e o

f HM

Os

Drug Utilization Review (DUR) Financial Incentives

Key Takeaway

The decreasing portion of HMOs using financial incentives to impact physician prescribing patterns

seemingly indicates that other methods have a greater impact on overall costs. Recently, payers and

drug manufacturers have experimented with alternatives—particularly for specialty drugs—such as

pay-for-performance, whereby carriers are reimbursed by manufacturers if the drugs do not generate

specific results. Indeed, it is estimated that 14% of payers now have at least one such arrangement.3

Use of DUR, Other Tools to Steer Prescribing Rises Modestly at HMOs• The shares of HMOs using drug utilization review

(DUR), quality assurance, prior authorization, or

practice guidelines to drive physician prescribing

patterns increased slightly from 2014 to 2015.1

• For example, 80.4% of HMOs used practice

guidelines to impact prescribing patterns in 2015,

versus 79.6% in 2014. The portion that applied

DUR edged up to 94.0% from 93.8% in 2014.


PERCENTAGE OF HMOs USING DRUG UTILIZATION REVIEW AND FINANCIAL INCENTIVES, 2007–20152

http://www.forbes.com/sites/johnlamattina/2016/05/18/pay-for-performance-drug-plans-could-impact-biopharmas-rd-priorities/#72bdf19d3c68

2424

HM

O


PHARMACY

WHERE PRESCRIPTION SERVICES ARE PROVIDED TO HMO MEMBERS, 2014–20151

In-House Pharmacies

Contract Pharmacies

Non-Contract Pharmacies

MODEL TYPE 2014 2015 2014 2015 2014 2015

IPA 8.5% 7.8% 99.5% 99.5% 18.5% 19.2%

Network 10.9 10.8 100.0 100.0 18.6 17.4

Group 47.4 50.0 86.8 86.1 18.4 19.4

Staff 80.0 80.0 90.0 90.0 20.0 20.0

OWNERSHIPCorporate Owned 15.2% 14.8% 98.3% 98.3% 21.3% 20.7%Corporate Managed 0.0 0.0 100.0 100.0 0.0 0.0Corporate Affiliated 18.8 18.8 100.0 100.0 12.5 12.5

Hospital Owned 25.0 33.3 87.5 83.3 0.0 0.0

Independent 8.8 7.5 100.0 100.0 7.0 7.5

AGE OF PLAN<5 Years 5.5% 3.3% 100.0% 100.0% 9.1% 6.7%

5–9 Years 3.6 8.3 98.2 97.2 16.1 22.2

10–14 Years 9.5 3.1 100.0 100.0 0.0 6.3

15+ Years 18.7 18.3 98.0 98.0 22.1 21.6

OVERALL AVERAGE 14.6% 14.3% 98.4% 98.4% 18.6% 18.4%

1 HMOs gave multiple answers. Totals add up to more than 100% of the HMOs in the sample.NOTE: Some data were unavailable.

Share of HMOs With In-House Pharmacies Declines Fractionally

• The percentage of HMOs that had in-house

pharmacies shrank to 14.3% in 2015 from 14.6%

in 2014, as did the share that used non-contract

pharmacies (to 18.4% from 18.6%).

• HMOs that did not provide prescription services

to their members via contract pharmacies

were the rare exception in 2015; 98.4% of

HMOs used such pharmacies that year.


Corporate-Owned Pharmacies Are More Likely to Have DUR Services Furnished by PBMs

• In all three years shown, corporate-owned HMOs

were more apt than those of other ownership

types to have drug utilization review (DUR)

provided by pharmacy benefit managers (PBMs).

• The share of such HMOs relying on PBMs for DUR

services declined from 2013 (60.6%) to 2014

(55.2%) and again in 2015 (53.4%). Meanwhile, this

portion climbed among independent HMOs.

Corporate Owned Corporate Managed Corporate Affiliated Hospital Owned Independent0%

16%

32%

48%

64%

Perc

en

tag

e o

f HM

Os

60.6%55.2% 53.4%

—50.0%—

—

41.2%—43.8%—

30.0%

12.5%16.7%

21.1% 23.2% 24.5%

2013 2014 2015

PERCENTAGES OF HMOs THAT RECEIVE DRUG UTILIZATION REVIEW SERVICES FROM PHARMACY BENEFIT MANAGERS, BY OWNERSHIP TYPE, 2013–20151

Key Takeaway

DUR is employed by all but a small portion of HMOs nationally as a means of monitoring

and optimizing prescribing activity by network physicians (see page 23). That the share of

corporate-owned HMOs using PBMs to perform DUR decreased in recent years perhaps indicates

that such HMOs have the resources to bring this important and complicated service in-house.

2525

HM

O


PHARMACY

Use of Proprietary Formularies Wanes Among Largest HMOs

• Despite a slight decrease, to 84.9% in 2015

from 89.0% in 2014, HMOs with 250,000 or

more members remained the most apt, by

membership size, to use a proprietary formulary.

• Meanwhile, PBM formularies were most common,

by membership size, among HMOs with fewer

than 15,000 members—a portion that increased

to 30.0% in 2015 from 26.8% the year prior.

Share of HMO Members With Closed Formularies Grows for Fourth Straight Year in 2015

• The portion of HMO members whose

prescription drug benefits were subject to

closed formularies in 2015 (70.6%) increased

by 5.3 percentage points from 2014 (65.3%).

• After falling to 45.1% in 2011 from 49.8% in

2010, this share climbed each year through

2015, rising most quickly (8.4 percentage

points) from 2011 to 2012 (53.8%).


Key Takeaway

Closed formularies are a well-established method of controlling costs. Yet plans and PBMs

alike must balance choice and access with this cost containment. In today’s value-based,

pay-for-performance care models, it is crucial that formularies are developed in a way that considers

the total cost of care—not trading lower up-front cost for higher utilization down the line.3

CONTROLLING PHARMACEUTICAL FORMULARY FOR HMOs, 2014–2015

Proprietary (HMO) PBM Modified PBM

AGE OF PLAN 2014 2015 2014 2015 2014 2015

<5 Years 76.3% 64.4% 23.7% 31.1% — 4.4%

5–9 Years 67.4 82.8 21.7 13.8 10.9% 3.4

10–14 Years 63.2 66.7 36.8 25.9 — 7.4

15+ Years 82.4 81.6 14.8 15.6 2.8 2.7

MEMBERSHIP SIZE<15,000 69.6% 68.0% 26.8% 30.0% 3.6% 2.0%

15,000–24,999 62.5 75.0 29.2 17.9 8.3 7.1

25,000–49,999 65.4 67.9 32.7 28.3 1.9 3.8

50,000–99,999 80.3 80.0 12.7 17.1 7.0 2.9

100,000–249,999 86.0 84.2 12.9 11.9 1.1 4.0

250,000+ 89.0 84.9 8.8 12.9 2.2 2.2

OVERALL AVERAGE 79.1% 78.7% 17.6% 18.0% 3.4% 3.3%

1 In an open formulary, a drug is usually covered by the HMO, even if it is not listed on formulary.2 In a closed formulary, a drug not on formulary is generally not covered, unless it goes through a prior authorization process.3 Eldin, M. (2015). Closed Formularies Hold the Line on Costs. Managed Healthcare Executive. Retrieved from http://managedhealthcareexecutive.

modernmedicine.com/managed-healthcare-executive/news/closed-formularies-hold-line-costs?page=0,1NOTE: Some data were unavailable.

2009 2010 2011 2012 2013 2014 201522%

35%

48%

61%

74%

Perc

ent

ag

e o

f Co

ntra

cts

55.1%

44.9%

50.2% 49.8%54.9%

45.1% 46.2%

53.8%

39.0%

61.0%

34.7%

65.3%

29.4%

70.6%

Open Formulary Closed Formulary

PERCENTAGE OF HMO MEMBERS BY OPEN OR CLOSED FORMULARIES, 2009–20151,2

http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/closed-formularies-hold-line-costs?page=0,1

2626

HM

O


Key Takeaway

The impacts of the “patent cliff” of 2012 seem partly manifest in the sudden growth and

subsequent stability in the percentages of generic prescriptions filled by HMO members

over the past several years.3 In 2015, however, an estimated $27.7 billion in patented

drug sales likewise faced a loss of exclusivity and became vulnerable to marketplace

competition.4 This next “cliff,” though anticipated to be less severe than that of 2012, could

trigger another uptick in the market share of generic prescriptions in the years to come.

Portion of HMO Prescriptions Filled With Generics Rises Steadily

• The share of HMO member prescriptions filled

with generic drugs increased by a moderate

2.4 percentage points over the four years

shown: to 77.6% in 2015 from 75.2% in 2012.

• Furthermore, this portion remained at a level

more than three times the corresponding

percentage of HMO member prescriptions filled

with branded drugs in each of these years.

PERCENTAGE OF HMO MEMBER PRESCRIPTIONS FILLED WITH BRANDED VS. GENERIC DRUGS, 2012–2015

0%

25%

50%

75%

100%

Branded Generic

24.8% 23.4% 22.5% 22.4%

75.2% 76.6% 77.4% 77.6%

2012 2013 2014 2015

Perc

en

tag

e o

f Pre

scrip

tion

s

1 HMOs gave multiple answers. Totals add up to more than 100% of the HMOs in the sample.2 Other payment arrangements include members paying a copayment on brand-name drugs or paying the difference plus a copayment for the

branded drug.3 See the HMO-PPORx Digest for 2014.4 Optum. (2016). 2016: a “Mini-Cliff” for Drug Patents. Retrieved from https://www.optum.com/resources/library/2016-mini-cliff-for-drug-patents.html

Share of HMOs Allowing Members to Choose Branded Rxs at No Additional Cost Increases

• In 2015, 31.4% of all HMOs did not require their

members to pay an additional charge for

choosing branded drugs over generics, a slight

jump from 28.5% the previous year.

• Meanwhile, the portions of HMOs with a higher

copayment for choosing branded drugs, or

that required members to pay the difference

between branded drugs and generics, fell.

PHARMACY

PAYMENT REQUIREMENTS FOR HMO ENROLLEES CHOOSING BRANDED OVER GENERIC DRUGS, 2013–20151

All HMOs HMOs With In-House Pharmacies

PAYMENT 2013 2014 2015 2013 2014 2015

Pay No Additional Charge 29.2% 28.5% 31.4% 14.5% 14.8% 14.8%

Pay Difference Between Branded and Generic

74.5 74.8 73.9 80.0 79.6 79.6

Pay Higher Copayment 82.4 82.6 82.0 89.1 88.9 88.9

Pay Entire Cost of Branded Drug 9.7 10.2 10.1 18.2 18.5 18.5

Other Payment2 11.6 12.1 12.1 10.9 11.1 11.1


https://www.optum.com/resources/library/2016-mini-cliff-for-drug-patents.html

27

PHARMACY

27

HM

O


Key Takeaway

The share of HMOs covering oncology drugs under the medical benefit continued to fall in

2015, possibly a result of the increase in orally administered medications available in that class—

indeed, nine of the 18 new cancer drugs approved by the Food and Drug Administration in

2015 were orals.1 With many patients preferring oral over intravenous drugs,2 this trend will likely

continue, and may extend to other prescription classes once confined to the medical benefit.

Share of HMOs Covering Smoking-Cessation Rxs Falls Again

• The percentage of HMOs covering

smoking-cessation prescriptions under

the pharmacy benefit decreased each

year from 2011 (76.8%) to 2015 (72.6%).

• In spite of this decline, such prescriptions

remained the second most likely (behind oral

contraceptives) among the six profiled to be

covered under the pharmacy benefit in 2015.


• HMOs were more apt to cover oncology drugs

under the pharmacy benefit in each year from

2011 to 2015. Nine out of 10 HMOs covered

such prescriptions under the pharmacy benefit

in 2015, versus just 70.6% under the medical.

• The percentage of HMOs that covered

oncology drugs under the plans’ medical

benefit fell in 2015, to 70.6% from 71.5% in 2014.

From 2011 to 2015, this share dropped an

average of 1.7 percentage points annually.

PERCENTAGE OF HMOs THAT COVERED CERTAIN PRESCRIPTION DRUGS UNDER THE PHARMACY BENEFIT, 2014–2015

Experimental Drugs

Cosmetic Use

AnorexiantsSmoking

CessationFertility Drugs

Oral Contraceptives

MODEL TYPE 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

IPA 0.5% 0.5% 3.0% 3.2% 20.7% 21.1% 75.3% 73.7% 46.5% 46.3% 96.0% 96.8%

Network 0.5 0.5 1.1 1.0 27.5 26.3 72.5 70.6 35.7 34.5 98.9 99.0

Group 0.0 0.0 0.0 0.0 36.8 36.1 73.7 72.2 44.7 47.2 100.0 100.0

Staff 0.0 0.0 0.0 0.0 40.0 40.0 90.0 90.0 30.0 30.0 100.0 100.0

TAX STATUSNot-for-Profit 0.7% 0.7% 0.7% 0.7% 35.5% 34.9% 78.9% 78.3% 45.4% 44.7% 99.3% 99.3%

For-Profit 0.4 0.4 2.5 2.5 19.9 19.8 71.7 69.4 39.1 38.5 96.7 97.5

OVERALL AVG. 0.5% 0.5% 1.9% 1.9% 25.5% 25.1% 74.3% 72.6% 41.4% 40.7% 97.7% 98.1%

64%

72%

80%

88%

96%

Perc

en

tag

e o

f HM

Os

2011 2012 2013 2014 2015

Medical Benefit Pharmacy Benefit

77.5%74.9%

72.9%71.5% 70.6%

91.4% 91.4% 91.3% 91.6% 91.9%

PERCENTAGE OF HMOs COVERING ONCOLOGY DRUGS, BY SOURCE OF BENEFIT, 2011–2015

HMOs Are More Likely to Cover Oncology Rxs Under the Pharmacy BenefitLONG-TERM TREND

1 Egerton, N.J. (2016). In-Office Dispensing of Oral Oncolytics: A Continuity of Care and Cost Mitigation Model for Cancer Patients. American Journal of Managed Care. Retrieved from http://www.ajmc.com/journals/supplement/2016/improving-patient-access-to-critical-therapies-in-the-age-of-cost-sharing/in-office-dispensing-of-oral-oncolytics-a-continuity-of-care-and-cost-mitigation-model-for-cancer-patients

2 Eek, D., et al. (2016). Patient-Reported Preferences for Oral Versus Intravenous Administration for the Treatment of Cancer. Journal of Patient Preference and Adherence. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5003561/

http://www.ajmc.com/journals/supplement/2016/improving-patient-access-to-critical-therapies-in-the-age-of-cost-sharing/in-office-dispensing-of-oral-oncolytics-a-continuity-of-care-and-cost-mitigation-model-for-cancer-patients

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5003561/

LEVEL OF IMPLEMENTATION OF STEP-THERAPY AMONG HMOs, BY OWNERSHIP, 2015

Corporate Owned Corporate Managed Corporate Affiliated Hospital Owned Independent0%

25%

50%

75%

100%

Perc

en

tag

e o

f HM

Os

94.2%

32.3%

100.0%

50.0%

90.9%

27.3%

100.0%

20.0%

82.9%

26.8%

Physician Pharmacist

2828

PHARMACYH

MO



Corporate-Managed HMOs Have High Rate of Pharmacist-Implemented Step-Therapy

• In 2015, exactly half (50.0%) of corporate-

managed HMOs relied on pharmacists

to implement step-therapy, a share that

topped those of the other four HMO

ownership types by more than 17%.

• Hospital-owned HMOs were the least apt,

by ownership type, to use pharmacist-

implemented step-therapy (20.0%) in 2015.

However, all hospital-owned HMOs relied on

physician-implemented step-therapy.

• The share of HMOs using pharmaceutical step-

therapy programs dipped in 2015, to 94.2% from

94.7% in 2014. Despite this decline, this portion has

increased 3.8 percentage points since 2009.

• Matching the share from the previous

year (87.5%), corporate-affiliated

HMOs in 2015 were least likely, by HMO

ownership, to rely on step-therapy.

Key Takeaway

More than nine in 10 (93.0%; data not shown) HMOs relied on physicians to implement

step-therapy in 2015, evidence of their important position as the first line of defense in adhering

to established guidelines for safe, cost-effective therapy. By comparison, around 30% of HMOs

implemented step-therapy at the pharmacist level in 2015, a share that could increase as

the responsibilities and role of pharmacists expand, and available medications—and their

interactions—become increasingly complex to manage.

PERCENTAGE OF HMOs USING PHARMACEUTICAL STEP-THERAPY, 2009–2015MODEL TYPE 2009 2010 2011 2012 2013 2014 2015

IPA 95.0% 94.5% 97.6% 98.0% 97.5% 97.5% 96.4%

Network 87.1 90.2 92.9 94.4 93.5 94.0 93.8

Group 86.1 83.8 84.6 88.4 88.6 86.8 88.9

Staff 69.2 69.2 78.6 83.3 81.8 80.0 80.0

OWNERSHIPCorporate Owned 92.8% 92.7% 94.8% 96.5% 95.2% 95.4% 95.0%

Corporate Managed 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Corporate Affiliated 89.5 90.0 86.4 89.5 88.2 87.5 87.5

Hospital Owned 78.6 75.0 83.3 90.9 100.0 100.0 100.0

Independent 79.3 85.9 93.4 89.7 91.2 91.2 90.6

OVERALL AVERAGE 90.4% 91.2% 93.9% 95.1% 94.5% 94.7% 94.2%

Overall Use of Step-Therapy by HMOs Drops Off SlightlyLONG-TERM TREND

15.0–19.9%

20.0–24.9%

25.0–29.9%

30.0–34.9%

35.0–39.9%

40.0–44.9%

45.0%+

2929

HM

O


HEALTH INSURANCE EXCHANGES

Enrollment in Health Insurance Exchange Plans Is Highest in Florida

• More than 1.5 million Floridians had purchased a

marketplace plan as of March 2016, the highest

number of such enrollees, by state, and a 16.5%

increase from the 2015 enrollment period.3

• Although nearly 1.1 million Texans purchased

health care coverage through the health

insurance exchange marketplace, that number

amounted to just over a third of eligible enrollees.

Health Insurance Exchanges Enroll 40% of Eligible Individuals

• As of March 2016, 11.1 million individuals had

purchased or renewed their health care

coverage via health insurance exchanges, an

estimated 40.4% of the eligible U.S. population.

• In Massachusetts, 58.7% of qualified individuals

had selected a health insurance exchange

plan; in Iowa, only 19.8% of those who could

purchase via the exchange had done so.

Data source: Centers for Medicare & Medicaid Services and Kaiser Family Foundation © 2016

TOP FIVE STATES BY HEALTH INSURANCE EXCHANGE ENROLLMENT, 20161,2

MARKET

Number of Individuals Who Have Purchased a

Marketplace Plan

Estimated Number of Potential

Marketplace Enrollees

Percentage of Potential Marketplace

Population Enrolled

Florida 1,531,714 2,654,000 57.7%

California 1,415,428 2,986,000 47.4

Texas 1,092,650 3,084,000 35.4

North Carolina 545,354 1,008,000 54.1

Georgia 478,016 1,169,000 40.9

NATION 11,081,330 27,438,000 40.4%

STATE SPOTLIGHT

PERCENTAGE OF POTENTIAL ELIGIBLE POPULATION ENROLLED IN HEALTH INSURANCE EXCHANGES, 20161,2

1 Kaiser Family Foundation. (2016). Marketplace Enrollment as a Share of the Potential Marketplace Population. Retrieved from http://kff.org/health-reform/state-indicator/marketplace-enrollment-as-a-share-of-the-potential-marketplace-population-2015/

2 Data include individuals who have enrolled in a marketplace plan, have paid their first month’s premium (“effectuated” enrollment), and who have an active policy.

3 See the HMO-PPORx Digest for 2015, page 29.

http://kff.org/health-reform/state-indicator/marketplace-enrollment-as-a-share-of-the-potential-marketplace-population-2015/

3030

HM

O


ESTIMATED ENROLLMENT IN HEALTH INSURANCE EXCHANGES, BY AGE RANGE, 2015–20161

1 Data for 2016 represent cumulative marketplace enrollment-related activity for November 1, 2015, through February 1, 2016, and generally account for individuals who have selected, or been automatically re-enrolled into a 2016 plan through the marketplaces, with or without payment of premium. Medicare beneficiaries with only Part B coverage, or who were paying a premium for Part A coverage, are allowed to select a marketplace plan.

2 Financial assistance percentages represent individuals who have been determined eligible for advance premium tax credits and/or cost-sharing reductions.

3 Data include individuals who have enrolled in a marketplace plan, have paid their first month’s premium (“effectuated” enrollment), and who have an active policy.

4 Department of Health and Human Services (2016). Health Insurance Marketplaces 2016 Open Enrollment Period: Final Enrollment Report. Retrieved from https://aspe.hhs.gov/sites/default/files/pdf/187866/Finalenrollment2016.pdf

5 Johnson, C. (2016). Health-Care Exchange Sign-ups Fall Far Short of Forecasts. Washington Post. Retrieved from https://www.washingtonpost.com/business/economy/health-care-exchange-sign-ups-fall-far-short-of-forecasts/2016/08/27/3d93f602-6895-11e6-99bf-f0cf3a6449a6_story.html

HEALTH INSURANCE EXCHANGES

Key Takeaway

Even though the Department of Health and Human Services counted almost 4.9 million new

consumers among those selecting plans on health insurance exchanges,4 estimates show that

total exchange enrollment still fell well below expectations. This shortfall led many plans to exit the

exchange in some markets due to financial losses.5 If this trend continues, the program may need

significant changes to secure its future as a central tenet of the Affordable Care Act.

Exchange Enrollment Grows for All Ages in 2016

• Across all age ranges, the numbers of

individuals who selected a plan via health

insurance exchanges increased from 2015 to

2016; the sharpest growth was among those

aged 65 or older (up 30.5%, to 97,603).

• Individuals between the ages of 55 and 64

accounted for 3.3 million of enrollees on the

exchange, the largest number, by age range

in 2016. Those under the age of 35 made up

approximately 36% of the 12.7 million enrollees.

Mississippi Exchange Enrollees Are Most Apt to Receive Financial Assistance

• In Mississippi, of the nearly 80,000 exchange

enrollees as of March 2016, 94.2% received

an advanced premium tax credit (APTC) and

77.6% received a cost-sharing reduction (CSR).

• Likewise, 11.1 million individuals nationwide

purchased a plan through the health insurance

exchange, of whom 84.7% received an APTC

and more than half (57.3%) received a CSR.

<18 18–25 26–34 35–44 45–54 55–640

900

1,800

2,700

3,600

Nu

mb

er o

f En

rolle

es

(000

)

890.01,068.6

1,269.81,370.0

1,982.52,155.5

1,940.2 2,043.9

2,559.32,682.8

2,947.73,262.2

74.8 97.6

≥65

2015 2016

TOP FIVE STATES BY PERCENTAGE OF HEALTH INSURANCE EXCHANGE ENROLLEES WITH FINANCIAL ASSISTANCE, 20162,3

MARKET

Total Number of Marketplace

Enrollees

Percentage of Total Marketplace Enrollees

Receiving APTCs

Percentage of Total Marketplace Enrollees

Receiving CSRs

Mississippi 77,747 94.2% 77.6%

Florida 1,531,714 93.3 73.5

Louisiana 184,403 92.6 64.3

Wyoming 22,076 92.0 55.4

Alabama 165,534 91.9 75.8

NATION 11,081,330 84.7% 57.3%

Data source: Department of Health and Human Services © 2016

Data source: Centers for Medicare & Medicaid Services and Kaiser Family Foundation © 2016

https://aspe.hhs.gov/sites/default/files/pdf/187866/Finalenrollment2016.pdf

https://www.washingtonpost.com/business/economy/health-care-exchange-sign-ups-fall-far-short-of-forecasts/2016/08/27/3d93f602-6895-11e6-99bf-f0cf3a6449a6_story.html


LONG-TERM TREND

From 2014 (156.4 million) to 2015 (161.5 million),

total enrollment in the nation’s PPOs expanded

3.2%. Among the factors that could be contributing

to this growth—the sharpest annual rise in PPO

enrollment during the seven years shown—is an

overall decrease in unemployment across the

nation. Since peaking at 10.0% in October 2009, the

unemployment rate among U.S. residents age 16

and over fell to 4.9% as of August 20161, thereby

increasing the number of people able to enroll in

PPOs through their employer. Furthermore, PPOs’

availability on the health insurance exchange may

also be fueling participation, though this particular

source of members may soon dry up as major plans

pull out of this marketplace due to claimed financial

losses.2 Indeed, despite this enrollment growth, the

number of operating PPOs actually contracted to

451 in 2015 from 456 in 2014. Even if the Department

of Justice proves successful in blocking the pending

Anthem/Cigna and Humana/Aetna mergers, it is

likely that PPO consolidation trends will continue,

both within the exchange and in the market overall.

PPOBackgrounder

476481

469

467 465

456451146,763

146,135

149,968

151,604152,798

156,409

161,475

2009 2010 2011 2012 2013 2014 2015425

450

475

500

525

140,000

146,000

152,000

158,000

164,000

Num

be

r of P

POs

PPO En

rollm

en

t (000)

Number of PPOs3 PPO Enrollment


Number of PPOs and Total PPO Enrollment, 2009–2015

1 Bureau of Labor Statistics. (2016). Labor Force Statistics From the Current Population Survey. Retrieved from http://data.bls.gov/timeseries/LNS14000000

2 Olen, H. (2015). What’s Happening to Obamacare’s PPOs? Retrieved from http://www.slate.com/articles/business/moneybox/2015/12/ppos_are_disappearing_from_obamacare_why.html

3 Includes specialty-only PPOs.NOTE: Throughout this Digest, PPO measures include enrollees of all payer types.

http://data.bls.gov/timeseries/LNS14000000

http://www.slate.com/articles/business/moneybox/2015/12/ppos_are_disappearing_from_obamacare_why.html

NUMBER OF PPOs, BY PLAN TYPE, 2014–2015General

Medical/Surgical Specialty Full Service

TYPE OF OWNER 2014 2015 2014 2015 2014 2015

Employer/Employer Coalition 2 2 0 0 0 0HMO 26 26 0 0 0 0Hospital 2 2 0 0 0 0Hospital Alliance 28 28 1 0 10 10Independent Investor 19 23 11 11 12 14Insurance Company 280 261 10 10 19 17Multi-ownership 7 19 2 2 5 4Physician/Hospital Joint Venture 9 9 0 0 2 2Physician/Medical Group 6 6 1 1 0 0Other 1 1 1 1 0 0

SIZE OF PPO: MEMBERS1–19,999 102 98 0 0 4 220,000–99,999 122 122 3 2 11 12100,000–499,999 100 100 1 1 15 17500,000–999,999 32 32 3 3 9 81,000,000+ 24 25 19 19 9 8TOTAL 380 377 26 25 48 47

ENROLLMENT IN OPERATING PPOs, BY OWNER TYPE, 2013–2015Total PPO Enrollment1

2013 2014 2015

TYPE OF OWNER Number Percentage Number Percentage Number Percentage

Employer/Employer Coalition 271,894 0.2% 357,121 0.2% 328,854 0.2%HMO 3,002,370 2.0 3,741,513 2.4 3,984,325 2.5Hospital 197,903 0.1 194,360 0.1 202,600 0.1

Hospital Alliance 5,146,321 3.4 4,474,617 2.9 4,298,158 2.7Independent Investor 33,711,177 22.1 30,949,430 19.8 27,620,633 17.1Insurance Company 101,217,152 66.2 109,198,507 69.8 115,919,006 71.8

Multi-ownership 6,715,628 4.4 5,333,916 3.4 5,753,200 3.6Physician/Hospital Joint Venture 1,968,093 1.3 1,444,205 0.9 2,621,693 1.6Physician/Medical Group 512,766 0.3 670,863 0.4 700,152 0.4

Other 55,000 0.0 44,000 0.0 46,000 0.0

TOTAL 152,798,304 100.0% 156,408,532 100.0% 161,474,621 100.0%

3232

DEMOGRAPHICSP

PO


Key Takeaway

Even as high-profile mergers among major chains face opposition by U.S. regulators,2 the trend toward

consolidation continues in the PPO market, in part because larger membership sizes can provide PPOs

with greater leverage to negotiate lower prices with physicians, hospitals, and other entities.

Medical/Surgical, Specialty, and Full-Service PPO Plan Counts Dip in 2015

• Across all three plan types, the numbers of PPOs

declined from 2014 to 2015; general medical/

surgical plans accounted for the vast majority

(84.0%) of all PPOs in 2015, at 377.

• Among general medical/surgical PPOs, insurance

company-owned plans were the most numerous

in 2015, at 261, though this represented a 6.8%

decline from 280 plans in 2014.

Insurance Company-Owned PPOs Expand Share of Enrollment


total enrollment in insurance company-owned

PPOs jumped by 14.5%; as of 2015, such plans

accounted for nearly 72% of all PPO enrollment.

• Meanwhile, membership in independent investor-

owned PPOs—the second-largest segment of

PPO enrollment, by type of owner—declined by

18.1%, to 27.6 million from 33.7 million.


1 Total excludes enrollment in specialty-only PPOs.2 Picker, L., and Abelson, R. (2016). U.S. Sues to Block Anthem-Cigna and Aetna-Humana Mergers. The New York Times. Retrieved from

http://www.nytimes.com/2016/07/22/business/dealbook/us-sues-to-block-anthem-cigna-and-aetna-humana-mergers.html?_r=0

http://www.nytimes.com/2016/07/22/business/dealbook/us-sues-to-block-anthem-cigna-and-aetna-humana-mergers.html?_r=0

33

DEMOGRAPHICS

33

PP

O


ENROLLMENT COMPARISON, HMOs VS. PPOs, 2012–2015

TOTAL NUMBERS OF OPERATING PLANS, PPOs VS. HMOs, 2003–2015

80.5 80.184.8 89.3

151.6 152.8 156.4161.5

2012 2013 2014 201560

90

120

150

180

Enro

llme

nt (

Mill

ion

s)

HMO Enrollment PPO Enrollment1

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Num

be

r of P

lans

PPOs1 HMOs680

666

596583

572

539

476 481469 467 465 454 451

481465 456 448 443 440 437 441 442 430 438 431 434

400

475

550

625

700

PPO Plan Count Decreases for Fifth Straight Year

• For the fifth consecutive year, the total number

of PPOs operating nationally declined in 2015,

to 451 from 454 the prior year. From 2003 (680)

through 2015, the PPO plan count fell by 33.7%.

• After a slight drop from 2013 (438) to 2014 (431),

the total number of HMOs inched up in 2015

(434). In the 13 years from 2003 (481) to 2015,

there was a 9.8% reduction in the U.S. HMO count.

LONG-TERM TREND

Membership Counts Rise Rapidly at HMO and PPO Plans Alike

• HMOs and PPOs both recorded significant

increases in enrollment from 2012 to 2015.

Collectively, PPOs added 9.9 million members

during this time; HMOs grew by 8.8 million.

• Although HMOs shed members from 2012 to 2013,

they still outpaced PPOs in terms of proportional

growth from 2012 to 2015: HMO membership

climbed by 10.9% versus 6.5% for PPOs.


1 Includes specialty-only PPOs.

Key Takeaway

As their membership count grows, PPOs will likely be subjected to increasing levels of scrutiny by

the employers and other stakeholders who are sponsoring enrollees. Much as Medicare is making

Star rating data available for beneficiaries seeking to enroll in Medicare Advantage plans, private

companies will also be seeking to compare patient satisfaction, outcomes, and other comparative

measures for their health care insurers, in addition to monthly premiums.

1 The total in this column reflects the change in the number of total enrollment between 2014 and 2015, if any, for the 12 chains for which data are available.

2 Total covered lives overstated in 2013.3 Total covered lives understated in 2013.NOTE: Some data were unavailable.

CORPORATE PPO CHAINS REPORTING, 2013–2015Number of

PPOs Total Enrollment

COMPANY NAME / HEADQUARTERS 2015 2013 2014 2015 % Change 2014–20151

MultiPlan Inc. / New York, NY 113 61,858,770 65,286,834 65,487,541 0.3%

BlueCross BlueShield Association / Chicago, IL 70 74,844,972 74,759,210 75,656,926 1.2

UnitedHealthcare / Hopkins, MN 47 49,887,771 50,649,185 50,583,665 –0.1

Aetna Inc. / Hartford, CT2 47 18,862,735 17,129,958 16,782,265 –2.0

Cigna Health Care / Bloomfield, CT3 26 2,594,809 4,020,827 4,084,124 1.6

Humana Inc. / Louisville, KY 22 8,819,627 9,867,480 10,420,055 5.6

Stratose / Atlanta, GA 4 9,469,225 9,563,250 9,016,718 –5.7

Health Net / Woodland Hills, CA2 4 5,609,813 3,611,075 3,644,409 0.9

VentureNet Healthcare / Phoenix, AZ 2 — — 676,928 —

Summa Health System / Akron, OH 2 435,315 437,160 447,000 2.3

Medica Health Plans / Minnetonka, MN 2 539,168 342,000 342,000 0.0

Catholic Health Initiatives / Englewood, CO 2 395,400 267,447 274,500 2.6

Universal Health Services / King of Prussia, PA 2 — 92,639 93,980 1.4

NUMBER OF PPOs, BY CHAIN, 2010–2015

3434

DEMOGRAPHICSP

PO


Aetna Records Largest Long-Term Growth in PPO Count Among Top Five Chains

• From 2010 to 2015, three of the top five PPO

chains, ranked by number of plans, increased

their PPO counts. Of these chains, Aetna Inc.

added the most plans during this period—a 38.2%

growth rate, bringing their count to 47 PPOs.

• However, among these same five chains, Aetna

Inc. recorded the largest annual decrease in their

PPO counts (–6.0%) from 2014 to 2015. During this

year, such plan counts also fell for both MultiPlan

Inc. (–5.8%) and UnitedHealthcare (–4.1%).

Majority of PPO Chains See Moderate Growth in Total Enrollment

• Eight of the 13 PPO chains shown recorded

growth in total enrollment from 2014 to 2015. Of

these eight chains, Humana Inc. recorded the

highest such increase in enrollment (5.6%).

• Conversely, three of the profiled PPO chains

experienced a decrease in total enrollment

during this period: Stratose (–5.7%), Aetna Inc.

(–2.0%), and UnitedHealthcare (–0.1%).


LONG-TERM TREND

34 32

47 49 50 47

Aetna Inc.

70 67 69 67

44

70

BlueCross BlueShieldAssociation

0

35

70

105

140

Num

be

r of P

POs

117 114 113 112120

113

46 48 46 47 49 47

—25— 24 —26—

2010 2011 2012 2013 2014 2015

MultiPlan Inc. UnitedHealthcare Cigna Health Care

1–19,999 20,000–99,999 100,000–499,999 500,000–999,999 1,000,000+0

12,000

24,000

36,000

48,000

Nu

mb

er o

f Co

ntra

cts

2014 2015

4,904 5,271

12,66515,672

22,43925,452

33,624 35,29539,331

43,897

AVERAGE NUMBER OF PHYSICIAN CONTRACTS, BY SIZE OF PPO, 2014–2015

1 See the HMO-PPORx Digest for 2015, page 35.2 “Primary care physicians” include family practitioners, internists, OB/GYNs, and pediatricians.3 The numbers in this column do not always equal the sums of the numbers of primary care physicians and medical/surgical specialists because

of averaging.

Key Takeaway

As the total number of physicians under contract at PPOs increased by nearly 1 million between

2014 and 2015 (data not shown), plan counts decreased (see page 32), leading to the notable

rise in per-plan physician contracts. With expansive networks being an attractive characteristic—

indeed, often the defining feature—of PPOs, these increases will likely continue.

35

DEMOGRAPHICS

35

PP

O


Across All PPO Sizes, Average Numbers of Physician Contracts Increase

• From 2014 to 2015, the average numbers of

physician contracts per PPO rose, regardless of

PPO size. Plans with 20,000 to 99,999 enrollees

saw the sharpest such increase (23.7%).

• After growing by 11.6% from 2014 (39,331),

PPOs with 1 million or more members

recorded 43,897 physician contracts, on

average, in 2015—the most, by plan size.


PPOs Expand Most Provider Contract Counts in 2015

• The overall average numbers of primary

care physician, specialist, total physician,

and ancillary provider contracts per

PPO increased from 2014 to 2015.1

• Meanwhile, the overall average number of

hospital contracts per PPO decreased, to 172

from 186. At full-service PPOs, this number fell

notably, to 388 from 569 the prior year.1

AVERAGE NUMBER OF PROVIDER CONTRACTS PER PPO, 2015

TYPE OF OWNER Primary Care Physicians2 Specialists Total

Physicians3Ancillary Providers Hospitals

Employer/Employer Coalition 3,105 7,245 10,350 495 63

HMO 8,310 16,672 26,616 2,417 390

Hospital 6,394 14,919 21,313 1,378 82

Hospital Alliance 4,553 11,523 16,076 2,370 103

Independent Investor 10,684 25,898 36,582 5,196 409

Insurance Company 4,882 11,926 17,072 1,665 130

Multi-ownership 7,509 16,446 29,001 3,447 214

Physician/Hospital Joint Venture 3,860 9,237 13,097 2,938 78

Physician/Medical Group 4,247 9,608 13,854 2,410 137

Other 1,500 3,600 5,100 1,000 23

TYPE OF PPOMedical/Surgical 5,247 12,457 18,300 1,957 145

Full Service 8,824 21,437 30,260 4,162 388

OVERALL AVERAGE 5,618 13,397 19,542 2,189 172

NUMBER OF PROVIDERS UNDER CONTRACT PER 1,000 PPO MEMBERS, 2015

TYPE OF OWNER Primary Care Physicians1 Specialists Total

Physicians2Ancillary Providers Hospitals

Employer/Employer Coalition 19.5 45.5 65.0 3.6 0.4

HMO 77.8 249.7 275.1 30.2 6.8

Hospital 82.9 193.5 276.4 15.1 1.0

Hospital Alliance 49.9 141.6 202.8 28.9 1.5

Independent Investor 60.5 159.7 220.2 25.5 1.1

Insurance Company 89.4 248.3 338.3 39.4 2.7

Multi-ownership 119.3 297.8 434.9 32.2 3.2

Physician/Hospital Joint Venture 30.3 77.5 107.8 19.1 2.8

Physician/Medical Group 70.7 162.4 233.1 39.2 2.3

Other 32.6 78.3 110.9 21.7 0.5

SIZE OF PPO: MEMBERS1–19,999 181.7 518.2 701.3 86.2 6.8

20,000–99,999 91.8 248.1 335.9 37.0 2.7

100,000–499,999 36.2 87.1 123.3 10.5 0.7

500,000–999,999 17.7 44.9 62.6 5.3 0.4

1,000,000+ 10.3 24.0 34.3 4.5 0.2

TYPE OF PPOMedical/Surgical 86.0 238.2 323.2 38.0 2.9

Full Service 49.5 134.9 184.4 15.5 1.1

OVERALL AVERAGE 81.8 226.5 307.4 35.5 2.7

1 “Primary care physicians” include family practitioners, internists, OB/GYNs, and pediatricians.2 The numbers in this column do not always equal the sums of the numbers of primary care physicians and medical/surgical specialists because

of averaging.

3636

DEMOGRAPHICSP

PO



Nearly Three-Quarters of PPO-Contracted Physicians per 1,000 Members Are Specialists

• In 2015, PPOs averaged 307.4 total physicians

under contract per 1,000 members. Roughly

227 (74%) of these providers were specialists,

while 82 (26%) were primary care physicians.

• PPOs with fewer than 20,000 members

averaged 181.7 PCPs and 518.2 specialists per

1,000 members. PPOs with more than 1 million

enrollees averaged 10.3 and 24.0, respectively.

NUMBER OF PROVIDER CONTRACTS PER PPO, 2008–2015

6,9628,231

9,390 9,70711,095 10,715

12,05913,397

3,595 3,805 4,155 4,527 4,970 4,753 5,0235,618

1,757 1,944 1,967 2,009 2,100 2,032 2,136 2,189

156 160 176 180 190 193 186 172

2008 2009 2010 2011 2012 2013 2014 20150

3,500

7,000

10,500

14,000

Ave

rag

e N

umb

er o

f Co

ntra

cts

Specialists PCPs Ancillary Providers Hospitals

Growth in PPO PCP Contracts Lags That of Specialists

• From 2008 to 2015, the number of primary care

providers (PCPs) contracted per PPO rose

56.3% (to 5,618 from 3,595), compared with

92.4% for specialists (to 13,397 from 6,962).

• Meanwhile, PPOs contracted with 24.6% more

ancillary providers, on average, reaching 2,189

in 2015. The number of hospitals contracted per

PPO increased 10.3% during this period, to 172.

LONG-TERM TREND

AVERAGE LENGTH OF STAY (DAYS), 2008–2015

AVERAGE LENGTH OF STAY (DAYS) PER PPO HOSPITALIZATION, 2013–2015

Medical/Surgical1 Psychiatric/Substance Abuse

TYPE OF OWNER 2013 2014 2015 2013 2014 2015

Employer/Employer Coalition 3.2 3.2 3.2 6.5 6.5 6.5

HMO 3.8 3.9 3.9 6.5 6.3 6.3

Hospital 4.1 4.1 4.1 5.3 5.3 5.3

Hospital Alliance 3.8 3.8 3.7 8.4 8.7 7.7

Independent Investor 3.8 3.7 3.8 8.8 8.4 8.3

Insurance Company 3.8 3.8 3.8 6.5 6.5 6.5

Multi-ownership 3.7 3.7 3.6 10.2 11.8 9.2

Physician/Hospital Joint Venture 3.6 3.7 3.7 9.1 9.1 9.1

Physician/Medical Group 3.7 3.7 3.7 5.8 5.8 5.8

TYPE OF PPO

Medical/Surgical 3.8 3.8 3.8 6.8 6.8 6.7

Full Service 3.8 3.9 3.9 7.7 7.7 8.0

OVERALL AVERAGE 3.8 3.8 3.8 6.9 7.0 6.9

2008 2009 2010 2011 2012 2013 2014 20153.50

3.75

4.00

4.25

4.50

Ave

rag

e L

eng

th o

f Sta

y (D

ays

)

HMO ALOS per Non-Medicare Admission PPO Med./Surg. ALOS per Admission

4.4

4.2

4.1 4.1

4.2 4.2

4.34.5

4.2

4.0

3.9

3.8 3.8 3.8 3.8 3.8

1 Excluding psychiatry.

37

UTIL IZATION

37

PP

O


Hospital-Owned PPOs Report Highest Medical/Surgical ALOS

• In 2015, average length of stay (ALOS) per

medical/surgical admission was highest at

hospital-owned PPOs (4.1 days), and lowest at

employer/employer coalition-owned PPOs (3.2).

• From 2013 to 2015, average length of stay

per hospitalization decreased only at PPOs

with hospital-alliance (to 3.7 days from 3.8)

or multiple owners (to 3.6 days from 3.7).

Key Takeaway

Medical/surgical ALOS per PPO hospital admission remained flat from 2011 to 2015, in spite of

PPOs adding 11.5 million new members over this time (see page 31). With much of this enrollment

growth a result of lower unemployment nationwide, it would appear that these new PPO members

likely did not have the same deferred health care needs as the newly insured HMO population.


PPO Medical/Surgical ALOS Remains Well Below That of Non-Medicare HMOs

• In 2015, ALOS per PPO medical/surgical

admission (3.8 days) was 0.7 days lower than

that per non-Medicare HMO admission (4.5),

and has remained stable since 2011.

• Even though both categories of ALOS fell

from 2008 to 2010, non-Medicare HMO ALOS

began rising from 2011 (4.1 days) to 2012

(4.2), and grew nearly half a day by 2015.

LONG-TERM TREND

NUMBER OF INPATIENT HOSPITAL DAYS PER 1,000 PPO MEMBERS, 2013–2015

TYPE OF PPO 2013 2014 2015

Medical/Surgical 234.1 236.4 236.8

Full Service 237.4 238.0 244.5

SIZE OF PPO: MEMBERS

1–19,999 251.6 289.9 266.2

20,000–99,999 227.8 225.4 233.0

100,000–499,999 235.7 241.4 239.8

500,000–999,999 238.7 229.4 233.4

1,000,000+ 231.7 228.6 232.3

OVERALL AVERAGE 234.4 236.5 237.6

2008 2009 2010 2011 2012 2013 2014 2015210

225

240

255

270

Ho

spita

l Da

ys p

er 1

,000

Me

mb

ers

Hospital Days per 1,000 Non-Medicare HMO Members Hospital Days per 1,000 PPO Members

228.3

243.7

238.2

224.3

239.1 239.1

231.2

246.3

231.9

256.8253.2

232.0

230.4234.4

236.5

237.6

NUMBER OF HOSPITAL DAYS PER 1,000 MEMBERS COMPARISON, 2008–2015

3838

UTIL IZATIONP

PO


Key Takeaway

The numbers of hospital days per 1,000 members fell at both non-Medicare HMOs and PPOs in

the midst of the Great Recession, but rose again in 2012 and 2013, respectively. Even though their

offerings are often tailored to different populations, overall utilization may be affected by factors

such as the economy. Growth in the PPO hospital-days ratio has been modest, but consistent,

since 2012; this ratio for non-Medicare HMOs has fluctuated over the same time, and the increase

from 2014 to 2015 may reflect the impact of expanded Medicaid enrollment in HMOs.

Hospital Days per 1,000 PPO Members Increase, but Slowly

• From 2013 (234.4) to 2015 (237.6), the number

of hospital days per 1,000 PPO members rose

by just 1.4%. By PPO type, growth was higher

for full-service PPOs (3.0%) than for medical/

surgical PPOs (1.2%) during this period.

• Meanwhile, the hospital-days ratio actually

decreased 2.2% for PPOs with 500,000 to

999,999 members. However, PPOs with fewer

than 500,000 members or 1 million or more

members reported increases in this ratio overall.


LONG-TERM TREND

Non-Medicare HMO Hospital-Days Ratio Jumps Past PPO Mark

• From 2014 to 2015, the number of hospital days

per 1,000 non-Medicare HMO members grew

6.5%, to 246.3 from 231.2, and surpassed the

corresponding rate for PPOs (237.6) in 2015.

• Following a 10.3% drop in the PPO hospital-days

ratio from 2009 (256.8) to 2012 (230.4), PPOs

have since reported a gradual increase of 3.1%

from 2012 to 2015, or around 1% annually.

NUMBER OF PHYSICIAN ENCOUNTERS PER MEMBER PER YEAR, BY SIZE OF PPO, 2013–2015

1–19,999 20,000–99,999

100,000–499,999

500,000–999,999

1,000,000+ All PPOs0

2

4

6

8

Phys

icia

n E

nc

ou

nte

rs p

er M

em

be

r 2013 2014 2015

3.4 3.53.2

4.04.4

4.0

4.95.3

4.95.3

6.1

5.2 5.0 4.85.3

4.7

NUMBER OF PHYSICIAN ENCOUNTERS PER MEMBER PER YEAR COMPARISON, 2006–2015

2006 2007 2008 2009 2010 2011 2012 2013 2014 20152

3

4

5

6

Phys

icia

n E

nc

ou

nte

rs p

er M

em

be

r Physician Encounters per Non-Medicare HMO Member Physician Encounters per PPO Member

3.3

3.84.0

4.2

4.7 4.6 4.7

4.7

4.8

4.4

4.3

4.85.1

4.4

4.6 4.5

4.0

4.7

4.7

4.7

PPO PMPY Physician Encounters Exceed non-Medicare HMO Mark in 2015

• PMPY physician encounters at PPOs remained

constant at 4.7 from 2014 to 2015, while those at

non-Medicare HMOs fell to 4.4 from 4.8, creating

the largest disparity in this metric since 2012.

• From 2006 to 2015, PMPY physician encounters

grew at both PPOs (to 4.7 from 4.3) and non-

Medicare HMOs (to 4.4 from 3.3). During this

period, only in 2008 did this measure exceed 4.8.

LONG-TERM TREND

39

UTIL IZATION

39

PP

O


Physician Encounters PMPY Drop at All but Largest PPOs

• From 2014 to 2015, the number of physician

encounters per member per year (PMPY) fell

at PPOs of all membership sizes, excluding

those with 1 million or more members. Across all

PPOs, this metric has remained flat since 2013.

• PPOs with 1 million or more members also

reported the highest number of physician

encounters PMPY in 2015 (5.3). The average

number of such encounters for PPOs overall

was 4.7 in each year from 2013 to 2015.

Key Takeaway

Since 2009, the numbers of physician encounters PMPY for PPO and non-Medicare HMO enrollees

have tracked closely, with a notable exception in 2012 and a smaller divergence in 2015. Having

settled into a fairly consistent rate of encounters per year before the introduction of the Affordable

Care Act, it appears that, at least initially, neither mandates to cover preventive-care services nor an

expanded Medicaid population have driven up the numbers of PMPY physician visits significantly.


4040

FINANCIALSP

PO


PPOs That Do Not Use Fee Caps Are a Small Minority

• Virtually all (96.7%) of the PPOs operating

nationally reimbursed physicians using a fee

cap in 2015, although this share was lower

among plans with 100,000 or more members.

• Just over half (50.4%) of PPOs paid physicians

via a discount from billed charges in 2015. Just

12.9% of PPOs with 1 million or more members

paid physicians in this manner that year.


Monthly Fees Fall for PPOs With 100,000–499,999 Members, but Climb for Others

• Contrary to the overall trend, PPOs with 100,000

to 499,999 members reduced total monthly fees

by 9.7% from 2013 ($6.00) to 2015 ($5.42).

• Meanwhile, PPOs in the other size categories

increased per member per month fees by at

least 11.8% and as much as 48.5%.

TOTAL FEES CHARGED PER MEMBER PER MONTH, BY PPO SIZE, 2013–2015

$0.00 $2.50 $5.00 $7.50 $10.00Fees Charged (Dollars)

Overall Average

1,000,000+

500,000–999,999

100,000–499,999

20,000–99,999

1–19,999

2013

2014

2015

$5.40$7.88

$8.02

$6.00$6.64

$7.04

$6.00$5.40$5.42

$6.40$8.25

$8.80

$5.82$7.13

$7.07

$6.00$6.52

$6.71

PERCENTAGE OF PPOs PAYING PHYSICIANS BY VARIOUS METHODS, 2014–20151

Fee Cap Capitation Package Price per Episode

Discount From Billed Charges Combination

SIZE OF PPO:MEMBERS

2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

1–19,999 100.0% 100.0% 6.9% 9.5% — — 87.1% 83.2% 94.1% 92.6%

20,000–99,999 99.1 99.2 10.3 8.4 1.7% 1.7% 50.9 54.6 62.1 63.9

100,000–499,999 93.4 93.5 2.8 1.9 0.9 0.9 35.9 37.0 36.8 38.0

500,000–999,999 95.0 95.0 2.5 5.0 — — 22.5 25.0 25.0 27.5

1,000,000+ 90.9 90.3 3.0 3.2 6.1 6.5 15.2 12.9 21.2 19.4

OVERALL AVERAGE 96.7% 96.7% 6.1% 6.1% 1.3% 1.3% 50.3% 50.4% 56.3% 56.5%

PERCENTAGE OF PPOs PAYING HOSPITALS BY VARIOUS METHODS, 2014–20151

Discounted Charges Per Diem Usual/Customary

Charges DRG-Based Combination

SIZE OF PPO:MEMBERS

2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

1–19,999 95.9% 94.4% 96.9% 95.6% — — 91.8% 88.9% 97.9% 96.7%

20,000–99,999 87.5 89.0 86.5 88.1 3.9% 2.8% 65.4 67.0 87.5 89.0

100,000–499,999 61.0 61.3 59.1 58.5 2.9 2.8 48.6 50.0 68.6 68.9

500,000–999,999 48.7 52.6 46.0 50.0 2.7 2.6 46.0 52.6 51.4 55.3

1,000,000+ 69.7 64.5 75.8 74.2 3.0 3.2 63.6 58.1 75.8 71.0

OVERALL AVERAGE 76.9% 76.7% 76.6% 76.5% 2.4% 2.1% 65.4% 65.2% 80.3% 80.2%

1 See HMO-PPO DigestRx for 2011, page 56.NOTE: Some data were unavailable.

41

FINANCIALS

41

PP

O


Use of Managed Pharmacy Programs Inches Up Among PPOs

• The share of PPOs with a managed pharmacy

program increased fractionally, to 60.8% in 2015

from 60.7% in 2014. Among insurance company-

and hospital alliance-owned PPOs, this portion fell.

• General medical/surgical PPOs were most likely,

by PPO type, to have a managed pharmacy

program, at 61.1%, though the majority (58.7%) of

full-service PPOs also had such programs.

PERCENTAGE OF PPOs WITH A MANAGED PHARMACY PROGRAM, 2013–20151

PERCENTAGE OF PPOs WITH A MANAGED PHARMACY PROGRAM, 2014–20151

TYPE OF OWNER 2014 2015

Employer/Employer Coalition 100.0% 100.0%

HMO 100.0 100.0

Hospital 100.0 100.0

Hospital Alliance 50.0 47.2

Independent Investor 41.9 56.8

Insurance Company 61.5 59.0

Multi-ownership 58.3 78.3

Physician/Hospital Joint Venture 30.0 30.0

Physician/Medical Group 33.3 33.3

Other 100.0 100.0

TYPE OF PPOGeneral Medical/Surgical 61.4% 61.1%

Full Service 55.3 58.7

SIZE OF PPO: MEMBERS1–19,999 17.9% 19.0%

20,000–99,999 62.1 58.6

100,000–499,999 85.8 84.5

500,000–999,999 80.5 90.0

1,000,000+ 81.8 78.1

OVERALL AVERAGE 60.7% 60.8%

1 Based on 431 respondents in 2013, 425 in 2014, and 421 in 2015.

0% 25% 50% 75% 100%Percentage of PPOs

Overall Average

1,000,000+

500,000–999,999

100,000–499,999

20,000–99,999

1–19,999

2013

2014

2015

17.7%17.9%19.0%

65.7%62.1%

58.6%

84.6%85.8%

84.5%

92.5%80.5%

90.0%

75.7%81.8%

78.1%

61.0%60.7%60.8%

Large Portion of PPOs with 500,000 to 999,999 Members Use Managed Pharmacy Programs

• In 2015, 90.0% of PPOs with 500,000 to

999,999 members had a managed pharmacy

program, the largest share, by size of PPO.

• Less than one in five (19.0%) PPOs with fewer than

20,000 members had these programs, though this

percentage expanded from 17.7% in 2013.


4242

PP

O



Key Takeaway

Following two years of decline from 2011 to 2013, the percentage of PPOs using a PBM

for formulary management increased in both 2014 and 2015. Although likely attributable

to a number of factors, pharmacy benefit cost containment is perhaps chief among

them: PBMs are able to leverage their scale and negotiating position to achieve lower

pricing for drugs, which may in turn help offset pharmaceutical costs at the plan level.

Full-Service PPOs Are Less Apt to Use PBM Drug Utilization Review

• In 2015, the percentage of full-service PPOs

that used a pharmacy benefit manager

(PBM) for drug utilization review (59.3%) was

much lower than the corresponding share

of general medical/surgical PPOs (85.1%).

• Full-service PPOs were also less likely than their

general medical/surgical counterparts to use

a PBM for administration (77.8% versus 89.6%),

dispensing (81.5% versus 93.2%), or mail-service

processing (59.3% versus 91.9%) that year.

PHARMACY

PERCENTAGE OF PPOs USING PBMs FOR VARIOUS SERVICES, 2011–2015

PERCENTAGE OF PPOs USING PHARMACY BENEFIT MANAGERS FOR VARIOUS SERVICES, 2015

TYPE OF PPO Administration Dispensing Drug Utilization Review

Rx ClaimsProcessing

Mail-Service Processing

General Medical/Surgical 89.6% 93.2% 85.1% 99.5% 91.9%

Full Service 77.8 81.5 59.3 100.0 59.3


1–19,999 94.7% 100.0% 78.9% 100.0% 94.7%

20,000–99,999 87.5 91.7 76.4 100.0 83.3

100,000–499,999 87.5 92.7 86.5 99.0 87.5

500,000–999,999 94.4 94.4 86.1 100.0 94.4

1,000,000+ 80.0 80.0 80.0 100.0 92.0

OVERALL AVERAGE 88.3% 91.9% 82.3% 99.6% 88.3%

Share of PPOs Using PBMs for Formulary Management Increases

• The percentage of all PPOs that used a

PBM for formulary management rose from

2014 (68.1%) to 2015 (73.8%), and surpassed

70% for the first time since 2011 (70.5%).

• After holding steady at 85.0% in 2013 and 2014,

the percentage of all PPOs using a PBM for mail-

service processing grew to 88.3% in 2015, and was

up 7.2 percentage points from 2011 (81.1%).

LONG-TERM TREND

Dispensing Formulary Management Mail Service Processing60%

70%

80%

90%

100%

Perc

en

tag

e o

f PPO

s

2011 2012 2013 2014 2015

88.6%90.4%

92.7% 92.9% 91.9%

70.5%68.6% 67.7% 68.1%

73.8%

81.1%83.9% —85.0%—

88.3%

4343

PP

O


PHARMACY

Key Takeaway

The rise—albeit fractional—in the generic share of PPO prescriptions suggests that health

plans continue to rely on generics as a means of managing costs. Indeed, from 2014

($44.31) to 2015 ($44.23), PPOs recorded a decrease in the average prescription cost

per member per month—the first such decline since 2009.1 Should the push toward

consolidation among PPOs continue, it remains to be seen whether larger enrollment sizes

could potentially be used as leverage by PPOs to further this downward cost trend.


PMPY Prescriptions Are High for PPOs With <20,000 Members

• For PPOs with fewer than 20,000 members,

the number of prescriptions per member

per year (PMPY) inched up from 2014 (16.8)

to 2015 (17.1). In the latter year, this mean

exceeded the overall average (11.8) by 44.9%.

• In addition to rising slightly from 2014 ($51.11),

per-member per-month prescription costs

for PPOs with more than 1 million members

in 2015 ($52.03) were higher than those

for PPOs of any other membership size.

AVERAGE NUMBER OF PPO PRESCRIPTIONS AND AVERAGE PRESCRIPTION COST, 2014–2015Number of Prescriptions per Member per Year

Prescription Cost per Member per Month

TYPE OF PPO 2014 2015 2014 2015

General Medical/Surgical 11.9 11.8 $44.10 $44.01

Full Service 10.9 11.4 46.32 46.21


1–19,999 16.8 17.1 $33.50 $32.90

20,000–99,999 11.5 11.3 36.53 36.13

100,000–499,999 11.4 11.4 47.27 47.08

500,000–999,999 10.9 10.8 50.55 50.23

1,000,000+ 11.8 11.9 51.11 52.03

OVERALL AVERAGE 11.8 11.8 $44.31 $44.23

PPO Members Are Twice as Likely to Receive Generic Rxs Than Branded

• Despite remaining virtually flat from 2013 to 2015,

the share of PPO prescriptions accounted for

by generic drugs was more than double that of

branded drugs in each of those three years.

• From 2010 to 2015, the generic percentage

of PPO prescriptions increased at a pace

that was more modest than that of HMOs

(5.7 percentage points versus 15.6, respectively).

LONG-TERM TREND

PERCENTAGE OF HMO AND PPO RXs FILLED WITH BRANDED VS. GENERIC DRUGS, 2010–2015

HMO: Branded Drugs PPO: Branded Drugs HMO: Generic Drugs PPO: Generic Drugs20%

35%

50%

65%

80%

Perc

en

tag

e o

f Pre

scrip

tion

s

2010 2011 2012 2013 2014 2015

38.0%37.7%

24.8%23.4%

22.5%22.4%

37.8%35.1%

33.6%32.3%

32.2%32.1%

62.0%62.3%

75.2%

76.6%77.4% 77.6%

62.2%

64.9%66.4%

67.7%67.8%

67.9%

1 See HMO-PPO DigestRx for 2011, page 56.NOTE: Some data were unavailable.


PP

O

PHARMACY

0%

25%

50%

75%

100%

Perc

en

tag

e o

f PPO

s

Retail Drug Chain Local Pharmacy

2011 2012 2013 2014 2015

86.1%80.5%

86.5%80.8%

88.3%83.3%

88.4%83.4%

89.1%85.9%

PERCENTAGE OF PPOs WITH DIRECT PHARMACY CONTRACTS, BY TYPE OF PHARMACY, 2015

Size of PPO: Members Card Program Retail Pharmacy Drug Chain Local Pharmacy Mail Order Plan

1–19,999 63.2% 94.7% 89.5% 100.0%

20,000–99,999 56.4 84.6 84.6 94.9

100,000–499,999 68.4 90.8 82.7 99.0

500,000–999,999 80.6 88.9 91.7 100.0

1,000,000+ 60.0 92.0 92.0 100.0

Overall Average 65.2% 89.1% 85.9% 98.0%

Majority of PPOs Contract Directly With a Pharmacy

• In 2015, the percentages of PPOs that had a

direct pharmacy contract with a mail order

plan (98.0%), local pharmacy (85.9%), retail

pharmacy drug chain (89.1%), or card program

(65.2%) each inched up fractionally from 2014.1

• By enrollment, PPOs with 20,000 to 99,999

members were least likely to have a

direct contract with a mail order plan

(94.9%), a card program (63.2%), or

retail pharmacy drug chain (84.6%).

Key Takeaway

The percentages of PPOs that contract directly with retail drug chains or local pharmacies rose

each year between 2011 and 2015, expanding member choice in local markets. These contracts

also increase access to pharmacist services, which can significantly impact population health

given the role these providers increasingly play in creating extended communities of care.

PERCENTAGE OF PPOs WITH DIRECT PHARMACY CONTRACTS, BY TYPE OF PHARMACY, 2011–2015

Nearly All PPOs Contract With a Retail Pharmacy Chain or Local Pharmacy

• Each year from 2011 to 2015, the percentages of

PPOs that had a direct pharmacy contract with

a retail pharmacy chain or local pharmacy each

surpassed 80%—and continued to rise each year.

• During this period, the share of PPOs that

contracted with retail pharmacy chains

exceeded that of PPOs that contracted with

local pharmacies each year.


1 See HMO-PPO DigestRx for 2015, page 44.

PERCENTAGE CHANGE IN TOTAL NUMBER OF RXs DISPENSED, 2015–20164

1 IMS Health (2016). IMS Health Study: U.S. Drug Spending Growth Reaches 8.5 Percent in 2015. Retrieved from http://www.imshealth.com/en/about-us/news/ims-health-study-us-drug-spending-growth-reaches-8.5-percent-in-2015

2 Centers for Medicare and Medicaid Services. (2016). National Health Expenditure Projections 2015–2025. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2015.pdf

3 Express Scripts. (2016). Express Scripts 2015 Drug Trend Report. Retrieved from http://lab.express-scripts.com/lab/drug-trend-report 4 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.NOTE: Throughout this report, ACS is acute coronary syndrome, and AMI is acute myocardial infarction.



The IMS data included in this Digest now provide

more detailed product descriptions that align with

FDA Orange Book classifications, and, as such,

were restated over the last three years. In 2015, IMS

reported that total spending on medicine in the

U.S. reached $310 billion, an increase of 8.5% from

the previous year.1 National Health Expenditure

data that tracked prescription drug expenses

at retail showed a similar rise, to $297.7 billion in

2015, up 12.2% from $265.3 billion in 2014.2 Both

IMS and the Centers for Medicare and Medicaid

Services project that these costs will continue to

rise in the next few years.1,2 Although heightened

utilization is surely a factor in continued spending

growth—as evidenced by surges in the total

number of drugs dispensed at retail for several

key classes in 2016—the introduction of new drugs

that treat hepatitis C and cancer also played a

role.2 These new medications, and the thousands

more that are in development,3 will continue to

shift pharmacy spending into high-cost specialty

medications designed to treat conditions for

which few therapeutic options existed previously.

As pharmacy costs mount, payers, providers,

and patients will no doubt look for evidence

that they are maximizing every dollar spent.

Data that track outcomes for patients on a

particular therapy will likely become even more

important, as will information that monitors how

well patients adhere to their prescribed therapies.

RETAIL PHARMACYBackgrounder

Rheumatoid Arthritis

Prostate Cancer

Osteoarthritis

Multiple Sclerosis

Hypertension

Diabetes

Depression

Cholesterol

Breast Cancer

Asthma

AMI

ACS

–12% –6% 0% 6% 12%Percentage Change

–2.1%

–0.9%

0.1%

–1.9%

–2.5%

2.8%

4.5%

–0.2%

12.0%

1.0%

–6.8%

0.0%

http://www.imshealth.com/en/about-us/news/ims-health-study-us-drug-spending-growth-reaches-8.5-percent-in-2015


http://lab.express-scripts.com/lab/drug-trend-report

PERCENTAGE OF TOTAL RXs DISPENSED, BY PAYER, 2015–20161

Third Party Medicare Part D Medicaid Cash

DRUG CLASS 2015 2016 2015 2016 2015 2016 2015 2016

ACS 53.0% 52.9% 37.9% 38.9% 2.6% 2.3% 6.5% 5.9%

AMI 54.2 54.3 35.9 36.6 2.7 2.4 7.2 6.7

Asthma 67.3 67.3 20.9 22.0 8.2 7.2 3.7 3.5

Breast Cancer 66.0 66.3 24.1 24.4 2.8 2.5 7.2 6.9

Cholesterol 57.0 56.3 37.0 38.2 1.8 1.6 4.2 3.9

Depression 64.6 65.2 23.2 23.7 6.4 5.9 5.8 5.2

Diabetes 57.1 57.6 33.8 33.9 3.0 2.7 6.1 5.8

Hypertension 54.9 55.0 36.2 36.8 2.5 2.2 6.5 6.1

Multiple Sclerosis 52.1 52.6 36.5 37.4 7.0 6.1 4.3 3.9

Osteoarthritis 65.8 66.3 21.9 22.4 5.0 4.4 7.2 6.9

Prostate Cancer 67.8 68.6 20.3 19.8 2.2 2.0 9.7 9.7

Rheumatoid Arthritis 66.7 67.2 20.8 21.4 4.9 4.3 7.6 7.2

1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients. 2 Barnett, J., and Vornovitsky, M. (2015). Health Insurance Coverage in the United States: 2015. U.S. Census Bureau. Retrieved from

http://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-257.pdfNOTE: On pages 46–57, “third party” refers to commercial HMOs and PPOs, and the PBMs that provide them with pharmacy services.

TOTAL NUMBER OF RXs, BY PAYER, 20161

DRUG CLASS Third Party Medicare Part D Medicaid Cash TOTAL

ACS 169,298,571 124,263,548 7,297,497 18,942,036 319,801,652

AMI 210,408,188 141,690,907 9,140,782 26,117,968 387,357,845

Asthma 96,492,168 31,504,406 10,360,032 5,080,478 143,437,084

Breast Cancer 16,999,720 6,272,173 629,397 1,757,790 25,659,081

Cholesterol 126,375,951 85,827,259 3,636,485 8,736,390 224,576,085

Depression 187,647,735 68,097,437 16,881,904 15,087,019 287,714,095

Diabetes 110,186,850 64,902,969 5,075,199 11,043,742 191,208,761

Hypertension 345,551,826 231,291,740 13,795,447 38,086,277 628,725,290

Multiple Sclerosis 4,147,027 2,948,939 482,725 310,241 7,888,931

Osteoarthritis 92,679,950 31,298,954 6,208,874 9,583,976 139,771,753

Prostate Cancer 7,439,285 2,143,420 211,988 1,055,939 10,850,632

Rheumatoid Arthritis 87,044,040 27,674,782 5,555,411 9,292,803 129,567,037

46

DEMOGRAPHICSR

ETA

IL P

HA

RM

AC

Y


Third Parties Cover Increasing Percentages of Many Classes of Prescription Drugs

• From 2015 to 2016, the third-party shares of

prescriptions inched up in nine of the 12 profiled

categories, most notably for prostate cancer

drugs (0.8 percentage points).

• Medicare portions climbed in 11 of the 12 drug

classes shown (prostate cancer excepted).

Medicare’s percentage of cholesterol drugs grew

by 1.2 percentage points, and asthma by 1.1.


Key Takeaway

Thanks, perhaps, to relatively low unemployment rates, the percentage of U.S. residents insured

through private insurers increased by 1.2 percentage points from 2014 to 2015.2 This growth may be

helping to drive up the third-party share of prescription activity in 2016.

Hypertension Prescriptions Number Close to 629 Million

• In 2016, drugs indicated for hypertension

accounted for nearly 629 million prescriptions, the

highest number, by drug class, followed by drugs

for acute myocardial infarction (387.4 million).

• For all 12 drug categories, third parties dispensed

the most prescriptions, by payer, followed by

Medicare Part D; cash prescriptions outnumbered

Medicaid for all but three profiled categories.

CHRONIC DISEASE

http://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-257.pdf

PERCENTAGE OF TOTAL RXs DISPENSED, BY GENDER, 20161

ACS AMI Asthma Chol-esterol

Depres-sion

Diabetes Hyper-tension

MultipleSclerosis

Osteo-arthritis

RheumatoidArthritis

0%

18%

36%

54%

72%

Sha

re o

f To

tal R

xs D

isp

en

sed

49.7%

50.3%50.8%

49.2%

42.1%

57.9%51.4%

48.6%

31.3%

68.7%

49.2%

50.8%

46.4%53.6%

38.3%

61.7%

36.2%

63.8%

36.9%

63.1%

Male Female

8.1%

46.0%

45.1%

Asthma BreastCancer

Chol-esterol

Depression Diabetes Hyper-tension

MultipleSclerosis

AMI Osteo-arthritis

ProstateCancer

Rheum-atoid

Arthritis

0%

25%

50%

75%

100%

Sha

re o

f To

tal R

xs D

isp

en

sed

30.2%

16.3%

31.8%

21.6%

3.0%15.2%

52.4%

29.2%

0.2%6.6%

48.0%

45.0%

10.5%

26.9%

42.6%

19.8%

2.3%11.3%

49.0%

37.1%

1.9%9.6%

44.2%

44.1%

5.2%

23.7%

48.5%

22.4%

9.9%

24.3%

43.8%

21.8%

1.4%12.9%

59.7%

25.8%

10.8%

24.3%

43.1%

21.7%

0–24 25–44 45–64 65+

ACS

0.5%6.7%

44.5%

48.0%

0.6%

PERCENTAGE OF TOTAL RXs DISPENSED, BY AGE, 20161

1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.

DEMOGRAPHICS

47

RE

TAIL P

HA

RM

AC

Y


Patients Aged 45–64 Fill Largest Portions of Most Profiled Rxs

• For 11 of the 12 profiled drug categories

(ACS excluded), patients between the ages

of 45 and 64 received the highest shares of

prescriptions dispensed, by age group, in 2016.

• The aged 45–64 share of prescriptions

dispensed was highest, by drug product, for

prostate cancer (59.7%) and breast cancer

(52.4%), but lowest for asthma (31.8%).


Key Takeaway

As patients under the age of 65 continue to fill the majority of prescriptions in key drug categories,

the payers—both private and public—who underwrite their prescriptions will be increasingly held

accountable to control these expenses. Effective management of pharmacy expenses will likely take

into account not only the price of the drug, but associated therapy adherence and outcomes as well.

Females Fill the Majority of Prescriptions Dispensed in Eight of 10 Drug Classes

• In 2016, females filled more than half of

prescriptions dispensed in eight of 10 profiled

drug categories; nearly 69% of depression drugs

were filled by females that year.

• Meanwhile, males received the majority of

AMI (50.8%) and cholesterol (51.4%) drugs, but

less than 40% of those for depression, multiple

sclerosis, osteoarthritis, and rheumatoid arthritis.

CHRONIC DISEASE

48

DEMOGRAPHICSR

ETA

IL P

HA

RM

AC

Y


COMMON RXs DISPENSED, BY DRUG CLASS, 2014–20161

Total Number of Prescriptions

DRUG CLASS/PRODUCT Brand/Generic 2014 2015 2016

AsthmaMontelukast Sodium Generic 30,310,968 32,041,251 34,193,690Proair HFA Brand 31,092,508 30,964,399 27,447,716Ventolin HFA Brand 19,126,702 18,769,965 20,555,779Albuterol Sulfate Generic 14,357,207 14,413,892 13,510,591Advair Diskus Brand 14,143,349 11,901,156 10,849,585

Breast CancerEstradiol Generic 7,728,053 7,596,211 7,473,064Methotrexate Generic 5,400,850 5,298,358 5,350,501Medroxyprogesterone Aceta Generic 2,599,237 2,558,478 2,502,545Premarin Brand 4,151,395 3,235,023 2,621,615Anastrozole Generic 2,396,215 2,526,398 2,694,741

CholesterolAtorvastatin Calcium Generic 66,500,341 73,858,793 83,498,762Simvastatin Generic 68,400,372 60,902,949 53,431,913Pravastatin Sodium Generic 32,393,740 29,177,477 27,102,508Crestor Brand 21,495,080 18,317,937 15,994,294Fenofibrate Generic 10,682,586 10,485,138 10,431,605

DepressionSertraline HCL Generic 38,638,848 39,283,430 40,829,666Escitalopram Oxalate Generic 23,643,403 26,379,530 29,006,184Fluoxetine HCL Generic 27,789,632 28,134,019 28,589,738Citalopram Hydrobromide Generic 35,033,870 32,399,964 30,315,966Trazodone HCL Generic 24,449,630 25,527,795 27,055,703

HypertensionLisinopril Generic 93,753,512 92,458,267 93,446,902Amlodipine Besylate Generic 67,550,767 69,537,788 73,115,300Hydrochlorothiazide Generic 46,501,216 44,693,594 43,934,501Losartan Potassium Generic 33,786,598 37,926,695 40,210,028Metoprolol Succinate ER Generic 36,240,874 35,943,587 37,343,872

Multiple SclerosisBaclofen Generic 6,047,074 6,854,650 7,705,589Copaxone Brand 76,395 64,904 58,857Tecfidera Brand 9,051 17,096 19,345Gilenya Brand 14,424 15,546 17,399Avonex Brand 36,713 23,808 18,228

OsteoarthritisIbuprofen Generic 39,851,123 40,993,111 41,551,552Meloxicam Generic 24,747,190 26,016,298 27,221,964Duloxetine HCL Generic 8,524,742 18,005,759 19,817,695Naproxen Generic 17,180,222 17,062,760 16,574,703Diclofenac Sodium DR Generic 6,886,797 7,281,466 7,576,996

Rheumatoid ArthririsIbuprofen Generic 39,851,123 40,993,111 41,551,552Meloxicam Generic 24,747,190 26,016,298 27,221,964Naproxen Generic 17,180,222 17,062,760 16,574,703Diclofenac Sodium DR Generic 6,886,797 7,281,466 7,576,996Celecoxib Generic — 3,540,405 6,584,278


• The hypertension medication lisinopril had

the highest number of prescriptions of the 36

individual products shown in 2016, at 93.4 million,

followed by atorvastatin calcium (83.5 million).

• From midyear 2014 to midyear 2016, the total

number of prescriptions increased for 18 of the

36 products; of those 18, only three (Ventolin

HFA, Tecfidera, and Gilenya) were branded.

Hypertension Drug Lisinopril Tops 2016 Prescription Count

CHRONIC DISEASE

1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.NOTE: Some data were unavailable. Drugs were categorized by indication, and so may appear across multiple classes.

DEMOGRAPHICS

49

RE

TAIL P

HA

RM

AC

Y


COMMON THIRD-PARTY RXs DISPENSED, BY DRUG CLASS, 2014–20161

Number of Third-Party Prescriptions per Year

DRUG CLASS/PRODUCT Brand/Generic 2014 2015 2016

AsthmaMontelukast Sodium Generic 21,686,455 22,964,060 24,469,962Proair HFA Brand 19,480,621 19,387,271 16,975,165Ventolin HFA Brand 15,183,494 15,166,522 15,961,102Albuterol Sulfate Generic 9,551,629 9,969,675 9,483,312Advair Diskus Brand 7,825,746 6,421,390 5,780,642

Breast CancerEstradiol Generic 5,345,291 5,288,772 5,249,946Methotrexate Generic 3,380,317 3,277,976 3,267,197Medroxyprogesterone Aceta Generic 1,914,827 1,911,914 1,897,492Premarin Brand 2,852,455 2,232,402 1,856,148Anastrozole Generic 1,349,861 1,416,724 1,528,560

CholesterolAtorvastatin Calcium Generic 38,212,245 43,371,574 48,667,407Simvastatin Generic 38,110,366 33,605,599 29,081,791Pravastatin Sodium Generic 17,265,519 16,014,760 14,628,367Crestor Brand 13,437,608 10,820,090 8,879,658Fenofibrate Generic 6,572,647 6,390,855 6,405,530

DepressionSertraline HCL Generic 26,559,608 27,033,870 28,205,990Escitalopram Oxalate Generic 17,297,872 19,283,814 21,274,858Fluoxetine HCL Generic 18,122,738 18,701,455 19,370,249Citalopram Hydrobromide Generic 21,698,936 20,247,408 19,188,968Trazodone HCL Generic 13,712,639 14,338,499 15,289,667

HypertensionLisinopril Generic 53,813,254 53,761,677 54,328,958Amlodipine Besylate Generic 35,960,070 37,154,525 38,966,381Hydrochlorothiazide Generic 27,218,672 26,498,761 26,179,596Losartan Potassium Generic 19,008,312 21,315,749 22,567,364Metoprolol Succinate ER Generic 20,882,392 20,379,142 20,781,069

Multiple SclerosisBaclofen Generic 3,095,790 3,594,075 4,080,554Copaxone Brand 31,480 25,926 20,741Tecfidera Brand 5,707 8,894 9,304Gilenya Brand 5,088 5,463 6,219Avonex Brand 15,119 8,366 5,652

OsteoarthritisIbuprofen Generic 28,060,160 29,349,003 30,057,391Meloxicam Generic 15,077,251 15,970,980 16,786,472Duloxetine HCL Generic 5,366,465 11,081,088 12,125,737Naproxen Generic 11,516,147 11,570,304 11,370,352Diclofenac Sodium DR Generic 4,478,845 4,810,116 5,050,750

Rheumatoid ArthririsIbuprofen Generic 28,060,160 29,349,003 30,057,391Meloxicam Generic 15,077,251 15,970,980 16,786,472Naproxen Generic 11,516,147 11,570,304 11,370,352Diclofenac Sodium DR Generic 4,478,845 4,810,116 5,050,750Celecoxib Generic — 2,180,799 3,928,298

• Third parties increased prescription counts from

2014 to 2016 for 17 of the 36 profiled individual

drug products; this growth was highest for the

osteoarthritis drug duloxetine HCL, at 126.0%.

• Among these 36 most commonly prescribed drug

products in the selected categories, 27 were

generic. The numbers of third-party prescriptions

grew from 2014 to 2016 for 14 generic products.

Third-Party Rx Counts Rise for 50% of Profiled Products

CHRONIC DISEASE


1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.NOTE: Some data were unavailable. Drugs were categorized by indication, and so may appear across multiple classes.

50

DEMOGRAPHICSR

ETA

IL P

HA

RM

AC

Y


PERCENTAGE OF TOTAL RXs DISPENSED FOR SELECTED SPECIALTY RXs, BY PAYER, 20161

DRUG CLASS Product Third Party Medicare Part D Medicaid Cash

Hepatitis C Harvoni 38.7% 51.8% 6.8% 2.6%

Sovaldi 41.7 47.5 8.1 2.6

Viekira Pak 51.5 24.3 18.8 5.3

HIV/AIDS Complera 69.8 17.3 10.7 2.3

Prezista 49.9 36.4 11.6 2.1

Reyataz 52.3 33.7 11.9 2.1

Stribild 70.3 15.8 11.3 2.6

Truvada 66.2 21.5 9.9 2.3

Multiple Sclerosis Gilenya 35.7 50.2 10.8 3.2

Tecfidera 48.1 37.5 11.1 3.3

Osteoporosis Forteo 26.2 68.7 1.7 3.4

Pulmonary Arterial Hypertension

Revatio 40.9 22.8 27.9 8.3

Rheumatoid Arthritis Enbrel 44.6 42.3 8.3 4.8

Humira 48.0 39.8 8.4 3.7

Third-Party Shares Are Higher Than Others for Most Featured Specialty Products

• For 10 of the 14 profiled specialty products,

third-party insurers covered the largest portions of

prescriptions dispensed, by payer, in 2016.

• Medicare Part D covered more than half of

Harvoni (51.8%), Gilenya (50.2%), and Forteo

(68.7%) prescriptions that year.


TOTAL NUMBER OF SPECIALTY RXs, 2014–20161

DRUG CLASS Product 2014 2015 2016 % Change 2014–2016

Hepatitis C Harvoni — 85,543 104,872 —

Sovaldi 222,262 138,854 28,110 –87.4%

Viekira Pak — 3,685 8,949 —

HIV/AIDS Complera 263,542 339,736 349,681 32.7

Prezista 598,394 629,800 527,374 –11.9

Reyataz 514,687 441,364 325,923 –36.7

Stribild 245,166 426,485 505,551 106.2

Truvada 1,246,837 1,347,720 1,507,195 20.9

Multiple Sclerosis Gilenya 14,424 15,546 17,399 20.6

Tecfidera 9,051 17,096 19,345 113.7

Osteoporosis Forteo 204,858 129,799 115,561 –43.6


Revatio 8,485 4,558 6,249 –26.4

Rheumatoid Arthritis Enbrel 195,954 148,183 129,063 –34.1

Humira 142,727 114,665 116,028 –18.7

1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.NOTE: Some data were unavailable for the selected drug classes.

• For five of the 14 profiled specialty drugs,

the total numbers of prescriptions dispensed

nationally increased from 2014 to 2016; eight

grew prescription volumes from 2015 to 2016.

• After growing 20.9% from 2014 (1.2 million) to

2016 (1.5 million), the total number of Truvada

prescriptions dispensed nationally exceeded

those of any other specialty drug shown.

Most Profiled Specialty Rxs Grow Volume From 2015 to 2016

CHRONIC DISEASE

BRANDED VS. GENERIC SHARES OF TOTAL RXs DISPENSED, BY PAYER, 20161


DRUG CLASS Brand Generic Brand Generic Brand Generic Brand Generic

ACS 8.2% 91.8% 8.5% 91.5% 8.1% 91.9% 4.8% 95.2%

AMI 1.0 99.0 0.9 99.1 3.3 96.7 1.9 98.1Asthma 62.0 38.0 70.5 29.5 64.7 35.3 57.1 42.9Breast Cancer 11.9 88.1 10.9 89.1 13.8 86.2 6.1 93.9

Cholesterol 11.7 88.3 12.7 87.3 10.7 89.3 4.9 95.1

Depression 3.3 96.7 3.1 96.9 9.9 90.1 2.1 97.9

Diabetes 39.8 60.2 40.3 59.7 48.2 51.8 17.0 83.0

Hypertension 3.7 96.3 3.2 96.8 2.6 97.4 1.7 98.3

Multiple Sclerosis 1.6 98.4 3.1 96.9 3.5 96.5 2.5 97.5Osteoarthritis 4.4 95.6 7.2 92.8 3.3 96.7 3.0 97.0

Prostate Cancer 26.3 73.7 31.1 68.9 36.2 63.8 9.6 90.4


OVERALL PERCENTAGE OF RXs FILLED WITH GENERIC DRUGS, 2014–20161

DRUG CLASS 2014 2015 2016

ACS 90.4% 91.3% 91.9%

AMI 98.7 98.9 98.9

Asthma 34.4 35.6 36.1

Breast Cancer 83.2 86.5 88.7

Cholesterol 83.2 86.6 88.2

Depression 90.5 94.3 96.4

Diabetes 63.6 62.4 61.1

Hypertension 94.0 95.9 96.6

Multiple Sclerosis 96.6 97.3 97.7

Osteoarthritis 82.7 92.3 95.1

Prostate Cancer 65.5 70.3 74.2

Rheumatoid Arthritis 91.6 95.0 97.7

UT IL IZATION

51

RE

TAIL P

HA

RM

AC

Y


Key Takeaway

Regardless of payer, relatively comparable, and high, rates of generic drug prescriptions were filled

across 12 common drug classes in 2016. This seems to indicate that both private and government

payers’ formularies place similar emphasis on such drugs. However, in drug classes such as asthma

and diabetes, branded shares are higher, which may indicate that innovative therapies can alter

prescription patterns in the future.

Generic Shares Continue to Climb for Most Rx Classes

• Between 2014 and 2016, the overall percentages

of prescriptions filled with generics increased for

11 of 12 profiled drug classes; the generic share

of diabetes drugs fell by 2.5 percentage points.

• Of the 12 profiled drug classes, the generic

share of AMI prescriptions dispensed was

highest (98.9%), followed by those of multiple

sclerosis and rheumatoid arthritis (both 97.7%).

Third-Party Payers Have Highest Generic Rx Percentages in Four Profiled Drug Classes

• In 2016, third-party patients filled the largest

generic shares, by payer, of drugs in the asthma

(38.0%), diabetes (60.2%), multiple sclerosis

(98.4%), and prostate cancer (73.7%) classes.

• Meanwhile, Medicaid’s generic shares were

highest of the payers for ACS (91.9%), cholesterol

(89.3%), hypertension (97.4%), osteoarthritis

(96.7%), and rheumatoid arthritis (98.1%) drugs.


1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.

CHRONIC DISEASE

TOTAL NUMBER OF RXs PER 1,000 PATIENTS, BY PAYER, 20161

DRUG CLASS Third Party Medicare Part D Medicaid Cash

ACS 1,440.3 2,649.1 407.8 236.4

AMI 1,790.1 3,020.6 510.8 325.9Asthma 820.9 671.6 578.9 63.4Breast Cancer 144.6 133.7 35.2 21.9

Cholesterol 1,075.2 1,829.7 203.2 109.0

Depression 1,596.4 1,451.7 943.4 188.3

Diabetes 937.4 1,383.6 283.6 137.8

Hypertension 2,939.8 4,930.7 770.9 475.3

Multiple Sclerosis 35.3 62.9 27.0 3.9Osteoarthritis 788.5 667.2 347.0 119.6

Prostate Cancer 63.3 45.7 11.8 13.2Rheumatoid Arthritis 740.5 590.0 310.4 116.0

1 Data are as of midyear 2016, and represent the percentages of prescriptions dispensed, by drug class, to all patients.

52

UTIL IZATIONR

ETA

IL P

HA

RM

AC

Y


Key Takeaway

The numbers of prescriptions filled for cardiovascular-related drugs point to a need for ongoing

interventions in all age ranges to address risk factors such as high cholesterol and hypertension.

At the same time, the prevalence of depression is also a significant concern, especially as this

condition can impact patients’ medication therapy adherence and behavior-modification efforts,

and thus has the potential to negatively impact treatment of other chronic diseases.

Medicare Part D Records Two Top Rx Ratios Among Profiled Drug Classes

• By drug class and payer, the greatest number

of prescriptions per 1,000 patients was for

hypertension medications dispensed to

Medicare Part D enrollees (4,930.7) in 2016.

• The corresponding Medicare Part D ratio

for AMI drugs was second highest of the

12 profiled drugs (3,020.6), exceeding the

third-party ratios of all 12 drug classes shown.


ACS AMI Asthma BreastCancer

Choles-terol

Depres-sion


MultipleSclerosis

Osteo-arthritis

ProstateCancer

RheumatoidArthritis

0

600

1,200

1,800

2,400

Nu

mb

er o

f Pre

scrip

tion

s

1,205.1

1,459.6

540.5

96.7

846.2

1,084.2

720.5

2,369.1

29.7

526.7

40.9

488.2

TOTAL NUMBER OF RXs PER 1,000 PATIENTS, 20161

• In 2016, the total number of prescriptions

per 1,000 patients surpassed 1,000 in the 12

profiled classes only for drugs used to treat

ACS (1,205.1), AMI (1,459.6), depression

(1,084.2), and hypertension (2,369.1).

• The corresponding ratios for drugs in the

breast cancer (96.7), multiple sclerosis

(29.7), and prostate cancer (40.9) classes

were all below 100 in 2016, while that of

rheumatoid arthritis (488.2) was under 500.

Prescription Ratios Exceed 1,000 in Four Drug Classes

CHRONIC DISEASE

TOTAL RX SPENDING PER YEAR, BY PAYER, 20161,2

DRUG CLASS Third Party Medicare Part D Medicaid Cash TOTALACS $10,849,917,962 $10,406,060,925 $400,359,055 $755,499,729 $22,412,288,022AMI 8,247,276,420 8,009,656,515 373,292,373 711,522,170 17,342,080,670Asthma 11,645,036,810 5,619,888,615 1,330,382,931 631,632,686 19,227,310,163Breast Cancer 1,408,129,527 1,030,003,461 109,411,254 138,671,848 2,686,246,998

Cholesterol 11,677,441,907 10,576,255,562 313,954,215 666,310,465 23,234,475,286Depression 15,070,261,144 6,827,222,238 2,545,411,098 1,039,854,127 25,483,380,997Diabetes 25,715,896,395 16,314,213,607 1,295,292,674 1,101,063,824 44,427,751,982Hypertension 11,144,533,238 9,387,565,894 405,019,962 1,036,413,691 21,973,998,922

Multiple Sclerosis 711,242,347 874,255,262 153,641,244 74,623,623 1,813,777,647Osteoarthritis 6,717,163,046 2,690,762,996 312,972,647 433,671,479 10,154,790,606Prostate Cancer 539,793,978 401,536,991 26,592,384 56,403,724 1,024,335,671Rheumatoid Arthritis 7,382,760,725 3,758,406,293 537,987,406 534,755,980 12,214,066,014

1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients. 2 The total full price the pharmacy charges the patient for the product, regardless of copayment situation.

PERCENTAGE CHANGE IN THIRD-PARTY AND MEDICARE PART D SPENDING, 2014–20161

FINANCIALS

53

RE

TAIL P

HA

RM

AC

Y


Part D CV-Related Drug Spending Nears Third-Party Levels

• Total Medicare Part D spending for prescription

drugs in the ACS ($10.4 billion), AMI ($8.0 billion),

and cholesterol ($10.6 billion) classes was nearly

as high as that of third-party payers in 2016.

• The only profiled drug class for which Medicare

Part D prescription spending exceeded that

of third-party payers in 2016 was multiple

sclerosis ($874 million versus $711 million).

0%

30%

60%

–60%

–30%Perc

en

tag

e C

ha

ng

e

–9.2%

7.3%

–12.0%

0.8%5.8%

17.8%

–0.2%

12.7%

–12.7%

8.3%

–5.8%–4.9%

54.3%48.7%

–10.1%–2.5%

32.7%

48.0%

–1.0%

–23.2%

–1.8%

8.4%

20.4%17.7%

Third Party Medicare Part D


Cholesterol Depres-sion


MultipleSclerosis

Osteo-arthritis

ProstateCancer

RheumatoidArthritis


Third-Party Prescription Drug Spending Declines in Eight of 12 Drug Classes

• From 2014 to 2016, third-party prescription

spending dipped for medications used to treat

ACS, AMI, breast cancer, cholesterol, depression,

hypertension, osteoarthritis, and prostate cancer.

• During this period, Medicare Part D prescription

drug spending fell in just three of the 12 profiled

drug classes (depression, hypertension, and

osteoarthritis) and rose by double digits in five.

Key Takeaway

Prescription drug spending for depression is particularly high for third-party payers, second only to

diabetes of the profiled drug classes. As providers and payers work to improve overall population

health, greater focus on this condition’s connection to chronic disease is likely merited.

CHRONIC DISEASE

TOTAL SPENDING (IN $ MILLIONS) PER YEAR FOR BRAND-NAME RXs, BY PAYER, 20161,2


ACS $3,651 $3,039 $124 $157 $6,970AMI 259 128 57 24 467Asthma 9,161 4,805 1,050 458 15,474Breast Cancer 519 353 65 63 999

Cholesterol 4,891 4,228 111 198 9,429Depression 3,013 1,259 1,349 190 5,811Diabetes 23,285 14,694 1,205 922 40,108Hypertension 2,473 1,486 68 141 4,169

Multiple Sclerosis 394 588 103 63 1,147Osteoarthritis 2,625 405 48 116 3,194Prostate Cancer 408 313 22 34 777Rheumatoid Arthritis 4,026 1,903 349 286 6,564

TOTAL SPENDING (IN $ MILLIONS) PER YEAR FOR GENERIC RXs, BY PAYER, 20161,2


ACS $7,199 $7,367 $276 $599 $15,442AMI 7,989 7,882 316 688 16,875Asthma 2,484 815 281 173 3,754Breast Cancer 889 677 45 75 1,687

Cholesterol 6,786 6,348 203 468 13,806Depression 12,058 5,568 1,196 849 19,672Diabetes 2,430 1,620 90 179 4,320Hypertension 8,671 7,901 337 895 17,805

Multiple Sclerosis 318 286 51 12 666Osteoarthritis 4,092 2,286 265 318 6,961Prostate Cancer 132 88 4 23 247Rheumatoid Arthritis 3,357 1,855 189 249 5,650

1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.2 The total full price the pharmacy charges the patient for the product, regardless of copayment situation.

54

FINANCIALSR

ETA

IL P

HA

RM

AC

Y


Majority of Brand-Name Rx Spending Is by Third Parties


parties accounted for more than 50% of the

total spending per year for brand-name

medications in 11 of the 12 profiled drug classes.

• For brand-name multiple sclerosis drugs, the

sole exception, Medicare Part D covered the

majority of such spending that year (51.3%). Cash

payers accounted for less than 7% in all classes.

Key Takeaway

In seven of the 12 profiled drug classes, total spending per year for generic medications surpassed

that of brand-name drugs. Indeed, the push toward generics over their brand-name counterparts

remains a popular means of curbing health care spending. However, the steadily increasing costs

for generic drugs could potentially dilute the outcomes of such cost-saving efforts.

Total Spending for Generic Depression, Hypertension Rxs Top All Other Profiled Drug Classes

• For third parties and Medicaid alike, as

well as overall, total spending per year for

generic prescriptions from midyear 2015

to midyear 2016 was highest, by profiled

drug class, for depression medications.

• For Medicare Part D and cash payers, total

spending for generic hypertension drugs eclipsed

that of any other profiled drug class that year.

Overall, such spending for these medications

($17.8 billion) was second highest by drug class.


CHRONIC DISEASE


Cholesterol Depres-sion


MultipleSclerosis

Osteo-arthritis

ProstateCancer

RheumatoidArthritis

$0

$42

$84

$126

$168

Rx S

pe

nd

ing

$84.45

$65.35$72.45

$10.12

$87.55$96.02

$167.41

$82.80

$6.83

$38.26

$3.86

$46.02

TOTAL RX SPENDING PER PATIENT PER YEAR, 20161,2

TOTAL RX SPENDING PER PATIENT PER YEAR, BY PAYER, 20161,2


ACS $92.31 $221.84 $22.37 $9.43 $84.45AMI 70.17 170.75 20.86 8.88 65.35Asthma 99.07 119.81 74.34 7.88 72.45Breast Cancer 11.98 21.96 6.11 1.73 10.12

Cholesterol 99.35 225.47 17.54 8.31 87.55Depression 128.21 145.54 142.24 12.98 96.02Diabetes 218.78 347.79 72.38 13.74 167.41Hypertension 94.81 200.13 22.63 12.93 82.80

Multiple Sclerosis 6.05 18.64 8.59 0.93 6.83Osteoarthritis 57.15 57.36 17.49 5.41 38.26Prostate Cancer 4.59 8.56 1.49 0.70 3.86Rheumatoid Arthritis 62.81 80.12 30.06 6.67 46.02

1 Data are as of midyear 2016, and represent the percentages of prescriptions dispensed, by drug class, to all patients. 2 The total full price the pharmacy charges the patient for the product, regardless of copayment situation.

FINANCIALS

55

RE

TAIL P

HA

RM

AC

Y


Medicaid PPPY Prescription Spending Is Lower Than That of Third-Party Payers

• In 10 of 12 profiled drug classes (depression

and multiple sclerosis excepted), Medicaid

PPPY prescription spending was lower

than that of third-party payers in 2016.

• Meanwhile, PPPY prescription spending for

Medicare Part D enrollees was higher in all

of the profiled drug classes than for patients

with third-party or Medicaid coverage.


Key Takeaway

Medicaid expansion provided millions of new patients with prescription drug coverage, yet Medicaid

PPPY prescription spending generally remains far below that of individuals with third-party coverage.

This may suggest that the prescription benefit designs of Medicaid HMOs, in which the vast majority of

Medicaid recipients are enrolled, are effective in holding down prescription drug spending.

CV Drugs Make Up Majority of Top 7 PPPY Spending Classes

• Drugs treating cardiovascular conditions (ACS,

AMI, cholesterol, and hypertension) accounted

for four of the top seven classes by per patient

per year (PPPY) prescription spending in 2016.

• Meanwhile, PPPY retail prescription spending

in the profiled drug classes was highest for

diabetes ($167.41) medications, and lowest

for prostate cancer ($3.86) prescriptions.

CHRONIC DISEASE

AVERAGE OUT-OF-POCKET COSTS PER RX, 20161

AMIHypertension

Multiple SclerosisRheumatoid Arthritis

OsteoarthritisACS

DepressionCholesterol

Breast CancerProstate Cancer

AsthmaDiabetes

$0 $7 $14 $21 $28

Out-of-Pocket Costs

$27.06

$24.71

$20.54$16.61

$15.62

$11.33$11.09

$11.05

$10.60$9.88

$8.65

$7.44

AVERAGE OUT-OF-POCKET COSTS PER RX, BY PAYER, 2015–20161


DRUG CLASS 2015 2016 2015 2016 2015 2016 2015 2016

ACS $13.48 $12.75 $8.70 $8.63 $1.86 $1.72 $18.27 $21.23

AMI 9.25 8.44 5.93 5.62 1.74 1.61 13.72 14.01Asthma 24.88 25.62 21.28 22.27 3.22 2.71 65.99 74.15Breast Cancer 17.04 16.79 15.99 16.15 2.36 2.19 23.18 22.84

Cholesterol 18.01 16.98 12.97 12.89 2.16 1.91 33.12 39.12

Depression 13.70 12.63 8.28 7.69 2.16 1.75 22.50 25.34

Diabetes 27.13 29.15 21.99 23.68 2.97 2.76 32.35 37.81

Hypertension 10.55 9.78 7.14 6.77 1.80 1.67 13.76 14.33

Multiple Sclerosis 12.18 11.43 7.90 8.41 2.18 1.83 21.01 18.38Osteoarthritis 11.97 11.86 11.23 9.03 1.97 1.75 16.08 17.73

Prostate Cancer 20.28 20.43 24.90 23.29 2.56 2.36 18.76 16.97


56

FINANCIALSR

ETA

IL P

HA

RM

AC

Y


• From midyear 2014 (data not shown) to midyear

2016, average out-of-pocket (OOP) costs per

prescription fell in 10 of the 12 drug classes shown.

• OOP costs for osteoarthritis medications

decreased by the largest percentage (–22.8%)

over these two years (to $11.05 from $14.31).


Key Takeaway

Despite a trend toward greater cost-sharing in health plans, OOP costs per prescription declined in the

majority of profiled drug classes. This may reflect a continued emphasis on generics in plan designs,

complemented by a stronger provider focus on high-risk patients. Such interventions are intended to

minimize disease progression, which may obviate more expensive therapies complex patients require.

Third-Party OOP Costs per Prescription Decrease for Majority of Drug Classes

• From 2015 to 2016, third-party OOP costs

per prescription fell in eight of 12 profiled

drug classes, but rose for asthma, diabetes,

prostate cancer, and rheumatoid arthritis.

• Meanwhile, corresponding Medicare Part D OOP

costs declined in eight of the 12 drug classes,

while those of Medicaid dropped in all 12. Cash

payers’ OOP costs grew in nine of the 12.

1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.NOTE: “Out-of-pocket cost” is the actual amount paid by the patient for the individual prescription. This cost mainly includes copayments, but can also include tax, deductibles, and cost differentials where applicable.

OOP Costs per Rx Decline for 10 of 12 Classes

CHRONIC DISEASE

AVERAGE OUT-OF-POCKET COSTS FOR SELECTED SPECIALTY RXs, BY PAYER, 20161

DRUG CLASS Product Third Party Medicaid Medicare Part D Cash

Hepatitis C Harvoni $180 $2 $746 $436

Solvaldi 151 2 661 10

Viekira Pak 178 3 510 —

HIV/AIDS Complera 147 3 90 2,721

Prezista 87 2 50 1,294

Reyataz 87 2 49 1,368

Stribild 196 3 96 3,238

Truvada 97 3 62 1,543

Multiple Sclerosis Gilenya 210 3 194 3,085

Tecfidera 239 3 329 —

Osteoporosis Forteo 203 4 158 2,604


Revatio 162 3 60 1,649

Rheumatoid Arthritis Enbrel 169 5 130 4,081

Humira 150 3 120 3,918

AVERAGE RETAIL SPENDING AND TOTAL RETAIL DOLLARS FOR SELECTED SPECIALTY RXs, 2014–20161,2

Average Retail Spending per Prescription

Total Retail $ (in Thousands)

DRUG CLASS Product 2014 2015 2016 2014 2015 2016

Hepatitis C Harvoni — $32,632 $32,440 — $2,791,445 $3,402,036

Solvaldi $27,884 28,371 28,795 $6,197,437 3,939,478 809,414

Viekira Pak — 28,230 28,159 — 104,026 251,991

HIV/AIDS Complera 2,149 2,271 2,480 566,439 771,562 867,163

Prezista 1,233 1,319 1,420 737,759 830,853 748,750

Reyataz 1,248 1,349 1,453 642,302 595,542 473,583

Stribild 2,608 2,724 2,882 639,446 1,161,784 1,456,961

Truvada 1,392 1,453 1,585 1,735,515 1,958,183 2,388,285

Multiple Sclerosis Gilenya 5,448 5,961 6,952 — 92,666 120,964

Tecfidera 4,893 5,704 6,614 — 97,518 127,950

Osteoporosis Forteo 1,518 1,917 2,520 311,026 248,814 291,177


Revatio 2,369 3,330 5,398 — 15,175 33,733

Rheumatoid Arthritis Enbrel 2,733 3,219 3,988 535,456 477,005 514,673

Humira 2,979 3,658 4,549 — 419,398 527,860

FINANCIALS

57

RE

TAIL P

HA

RM

AC

Y



Hepatitis C Retail Rx Spending Tops Other Specialty Drugs

CHRONIC DISEASE

• In midyear 2016, the average retail spending

per prescription for hepatitis C drugs Harvoni

($32,440), Sovaldi ($28,795), and Viekira Pak

($28,159) surpassed those of the other profiled

specialty drugs shown by at least a factor of four.

• At the same time, third-party average out-of-

pocket costs for multiple sclerosis drugs Gilenya

($210) and Tecfidera ($239) were highest among

the profiled specialty drugs, including Harvoni

($180), Sovaldi ($151), and Viekira Pak ($178).

1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.2 The total full price the pharmacy charges the patient for the product, regardless of copayment situation. NOTE: “Out-of-pocket cost” is the actual amount paid by the patient for the individual prescription. This cost mainly includes copayments, but can also include tax, deductibles, and cost differentials where applicable. Some data were unavailable for the selected drug classes.

58

LOO

KIN

G F

OR

WA

RD


Insurers Focus on HMOs as a Path to Success on ExchangesAs health insurance exchanges approach their

fourth open enrollment period, a sense of stability in

the marketplace—which many insurers had hoped

to see around the year-three mark—has yet to come

to fruition. Citing financial losses as a determining

factor, UnitedHealthcare and Aetna, among others,

have thus opted to drastically reduce participation

in the exchanges or exit entirely in 2017, resulting in

nearly 700 counties nationwide—predominantly in

rural markets—where just one insurer is lined up to

offer plans in their market in the coming year.1

Furthermore, the types of plans available to health

insurance exchange enrollees are likewise in a

state of flux. A survey of 18 states and Washington,

D.C., found that HMOs are set to become the most

prominent model type offered to health insurance

exchange consumers, accounting for 62% of all

available plans in the profiled markets; conversely,

PPO plan offerings will continue to diminish.2

Such shifts are linked, at least in part, to the growing

evidence that HMOs, which function on narrower

networks and increased coordination of care, have

proven more effective than PPOs in containing

losses on the health insurance exchanges.3

For enrollees, meanwhile, there is a financial benefit

as well: a comparison of the lowest-priced silver

model plans revealed that premium rates for

managed care models grow at roughly half the rate

of non-managed care models.4

The question that lingers, however, is whether

rallying around HMO models will provide a pathway

to a period of stability in the health insurance

exchange market. Should it prove a more uniformly

financially successful strategy, there is hope that

next year’s open enrollment period could be one

characterized by its notable insurer entries rather

than its exits.

LOOKING FORWARD

Data: The Key Driver as Payers Shift to Value-Based Care and PHM The U.S. health care market is experiencing a shift

from traditional payer-based fee-for-service (FFS)

care management to value-based, provider-driven

population health management (PHM)—a care

model that aims to keep communities of patients

healthier through collaboration between and

among providers and payers. This new paradigm is

rapidly altering how payers do business: data, and

the ability to analyze and share them, become

essential to understanding patient characteristics

and informing care decisions.

Many payers are already in the midst of this

transformation. For example, in January 2016,

BlueCross BlueShield expanded value-based

payment contracts from its HMO plans to its

PPO offerings.5

Such transitions hinge on payers’ ability to collect

the data necessary to stratify their patient

population into subgroups according to risk, and

to design care strategies that accommodate

those needs. PPOs, in particular, will need to ensure

that sufficient metrics are still captured when

the patient receives care outside of the payer’s

established network, a challenge with which

accountable care organizations are still grappling.

Traditionally, HMOs and PPOs were mainly

responsible for patient health risk assessments,

setting and collecting premiums, analyzing claims,

and making payments to their providers. Their data

collection and analysis were geared more toward

administrative than clinical purposes; payers will

now have to use technology to develop new

ways of intelligently processing complete clinical

and cost data—including lab, pharmacy, and

outcomes information—and turn it into usable

information that will drive health care decisions—

a costly endeavor.

1 S. Kliff, et al. (2016). Big Insurers Have Quit Obamacare. That Means More Shoppers Only Get One Choice. Vox. Retrieved from http://www.vox.com/a/obamacare-competition-2017

2 Mathews, A.W. (2016). Insurers Move to Limit Options in Health-Care Exchange Plans. The Wall Street Journal. Retrieved from http://www.wsj.com/articles/insurers-move-to-limit-options-in-health-care-exchange-plans-1472664663

3 Gregory, J. (2016). Report: Insurers’ Losses on ACA Exchanges Don’t Amount to “Death Spiral.” HealthExec. Retrieved from http://healthexec.com/topics/finance/insurers’-losses-aca-exchanges-don’t-amount-‘death-spiral’-report

4 McKinsey Center for U.S. Health System Reform. (2016). 2017 Exchange Market: Emerging Plan Type Trends. Retrieved from http://healthcare.mckinsey.com/sites/default/files/2017%20OEP%20Plan%20Type%20Trends%20Infographic%20vF_19%20states.pdf

5 McCluskey, P. (2016). Three Insurance Issues to Track in 2016. The Boston Globe. Retrieved from: https://www.bostonglobe.com/business/2016/02/04/three-health-insurance-issues-track/QJ03XgGmJav4zxvgHZxdqM/story.html

http://www.vox.com/a/obamacare-competition-2017

http://www.wsj.com/articles/insurers-move-to-limit-options-in-health-care-exchange-plans-1472664663

http://healthexec.com/topics/finance/insurers%E2%80%99-losses-aca-exchanges-don%E2%80%99t-amount-%E2%80%98death-spiral%E2%80%99-report

http://healthcare.mckinsey.com/sites/default/files/2017%20OEP%20Plan%20Type%20Trends%20Infographic%20vF_19%20states.pdf

https://www.bostonglobe.com/business/2016/02/04/three-health-insurance-issues-track/QJ03XgGmJav4zxvgHZxdqM/story.html

59

LOO

KIN

G FO

RW

AR

D


Private Payers Are Now Facing Consolidation Skepticism Consolidation of hospital systems and providers has

been a dominant trend in health care in recent

years. These mergers and acquisitions are driven by

a variety of factors, including economies of scale,

emerging integrated care-delivery models, and

access to patients. Not inconsequentially, larger

systems and networks are also presumed to attain

greater leverage in negotiating rates with payers.

In the last year, though, proposed consolidation

among four major health plans (Aetna and Humana,

in one merger, and Anthem and Cigna in another)

has received widespread attention. In particular,

concerns over the consequences of diminished

competition are being raised, as they have with

provider consolidation. The carriers likewise point

to greater efficiencies and lower costs as primary

drivers of these deals, but gaining leverage with an

increasingly consolidated provider base likely is also

an important motivation.1

Adding further complexity to the relationships

between providers and payers is the formation

of plans by systems and networks. Moreover, the

introduction of the Next Generation ACO model—

which encourages providers to assume full financial

risk for their covered populations—potentially could

put integrated care networks in another form

of competition with traditional payers that offer

lucrative Medicare Advantage plans.

Indeed, Medicare Advantage market shares among

plans in the two proposed mergers are a significant

factor in the deals. So, too, are the market positions

of Medicaid plans, which are increasingly attractive

to payers following the Affordable Care Act’s

expansion of the program.2

Going forward, it is unclear what balance will

be struck between private payers and provider

organizations regarding rates and coverage

offerings. Of significance to health insurance

consumers will be whether the Triple Aim goals of

improved outcomes, reduced costs, and improved

patient experience are advanced by consolidation

among either payers or providers.

LOOKING FORWARD

The Era of Specialty Drugs Brings New Challenges to Health CareThe era of specialty drugs has begun in earnest.

According to Express Scripts, nearly 38% of drug

spending today is on specialty medications, a

portion that is projected to increase to 50% by

2018. This share is expected to continue to grow,

driven largely by the thousands of potential drugs in

development, most of which are intended to treat

cancer, neurologic disorders, or infectious diseases.3

These drugs are, by definition, injectable, infusible,

oral, or inhaled drugs that generally require special

storage or handling, and require close monitoring

of the patient’s therapy. These factors, coupled

with the generally high financial outlay necessary to

research specialty drugs and bring them to market,

often place a large premium on such prescriptions.

Even patients with prescription drug coverage such

as Medicare Part D can still pay thousands of dollars

out of pocket for specialty drug treatments, even

after they have reached the catastrophic spending

limit.4 Yet such medications often treat chronic

diseases that may not respond to other forms of

therapy, making them a necessity for patients who

have exhausted all options.

Payers and providers are taking steps to get the

most out of their specialty drug spend, including

adherence programs to guarantee that patients

are filling their prescriptions. Others are developing

clinical guidelines to help answer questions about

when to switch to a specialty medication. Still others

are leaning more heavily on pharmacy benefit

managers (PBMs), such as Express Scripts, or even

forming their own PBMs or specialty pharmacies.5

The long-term effects of these efforts, like those of the

drugs themselves, remain to be seen.

1 Von Ebers, P. (2016). Mega Health Insurance Mergers: Is Bigger Really Better? Health Affairs Blog. Retrieved from http://healthaffairs.org/blog/2016/01/22/mega-health-insurance-mergers-is-bigger-really-better/

2 Hensely, S. (2015). Anthem Deal For Cigna Would Hasten Health Insurance Consolidation. National Public Radio. Retrieved from http://www.npr.org/sections/health-shots/2015/07/24/425885225/anthem-deal-for-cigna-would-hasten-health-insurance-consolidation

3 Express Scripts. (2016). Express Scripts 2015 Drug Trend Report. Retrieved from http://lab.express-scripts.com/lab/~/media/e2c9d19240e94fcf893b706e13068750.ashx

4 Kodjak, A. (2015). Specialty Drugs Can Prove Expensive Even With Medicare Coverage. NPR. Retrieved from http://www.npr.org/sections/health-shots/2015/12/03/458216778/specialty-drugs-can-prove-expensive-even-with-medicare-coverage

5 Van Dyke, M. (2015). Right-Sizing Drug Spending. HFMA. Retrieved from http://www.hfma.org/Leadership/Archives/2015/Summer/Right-Sizing_Drug_Spending/

http://healthaffairs.org/blog/2016/01/22/mega-health-insurance-mergers-is-bigger-really-better/

http://www.npr.org/sections/health-shots/2015/07/24/425885225/anthem-deal-for-cigna-would-hasten-health-insurance-consolidation

http://lab.express-scripts.com/lab/~/media/e2c9d19240e94fcf893b706e13068750.ashx

http://www.npr.org/sections/health-shots/2015/12/03/458216778/specialty-drugs-can-prove-expensive-even-with-medicare-coverage

http://www.hfma.org/Leadership/Archives/2015/Summer/Right-Sizing_Drug_Spending/


RE

SEA

RC

H M

ETH

OD

OLO

GY

RESEARCH METHODOLOGY

General HMO and PPO Data

The data derive from information gathered by

telephone and email surveys between January

and May of 2016. Each state’s Department of

Insurance was contacted for a list of licensed HMOs

(where applicable). Each plan was subsequently

provided a survey containing questions relevant to

all data in the HMO-PPO Digest. Questionnaires

are refined every year to reflect changes in industry

operations and include, for example, questions

specific to the Medicare and Medicaid managed

care populations.

HMOs supplied data for their plan as they operate

it. For some organizations, one license may be

held, but several local plans operate from that

one license. For others, an entire state or two or

more overlapping states may be served by only

one organization. The data are not representative

of individual product lines. This is important to

understand when using data at the metropolitan

statistical area (MSA) level (available through your

Sanofi account executive), because data are

often supplied by the plan at a broader level. For

example, enrollment or premiums are at the state or

full-plan level.

Nearly all of the data that appear in this Digest are

from a census of the HMO and PPO industries. When

data were not available from all plans, a smaller

sample was used.

Medicare and Medicaid managed care information

was gathered from operating HMOs and other types

of managed care organizations (MCOs) recognized

by the Centers for Medicare & Medicaid Services

(CMS). IMS Health used CMS’s 2014 Medicaid

Managed Care Enrollment Report to capture the total

number of Medicaid recipients in HMO programs.

The Medicaid HMO demographic data shown in this

Digest are as of midyear 2015.

IMS Health often validates the reported information

by contacting HMOs and PPOs by telephone or

email. IMS Health also compares its data with

those published in other sources, including trade

associations in the managed care industry,

periodicals and journals, and state regulatory

agencies. IMS Health does this to ensure that its

database includes an accurate count of all operating

HMOs and PPOs in the nation.

A final review process takes place, before and during

the production of this report, between IMS Health

and Forte Information Resources, a leading provider

of publishing products and services for the health

care industry.

Sanofi, as sponsor of this report, maintains an

arm’s-length relationship with the organizations that

prepare the Digest and carry out the research. The

desire of Sanofi is for the digests to be completely

independent and objective.

Most data for the HMO-PPO Digest were gathered by IMS Health, Parsippany, NJ, a leading provider

of innovative health care data products and analytic services. The information was gathered from

the following sources:

• Each state’s Department of Insurance

• Surveys of every licensed HMO

• Where applicable, in HMOs that offer more than one operating plan under one license, multiple plans’

data may exist

Primary and secondary research is conducted, compared, and verified against historical data.

HMO REGIONS STATESPacific Alaska, California, Hawaii, Oregon, Washington

Mountain Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming

West North Central Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota

East North Central Illinois, Indiana, Michigan, Ohio, Wisconsin

South Central Alabama, Kentucky, Mississippi, Tennessee

Southwest Arkansas, Louisiana, Oklahoma, Texas

New England Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont

Mid-Atlantic New Jersey, New York, Pennsylvania

South Atlantic Delaware, D.C., Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia


HMO-PPO Market Definitions

As part of the survey process, HMOs supplied

a definition of their service area by county.

This information was rolled up to the MSA, the

consolidated MSA (CMSA) and the state in order

to provide the health plans that are displayed when

a market is identified. The HMOs that appear in

each of the markets include those plans that serve

the counties in that market. However, the data are

adjusted to include only those plans that cover at

least 50% of the counties in their respective MSA. For

those MSAs that have fewer than five plans, the report

automatically defaults to the state level. This is to

ensure the integrity of the data.

Some of the managed care content used for analysis

is obtained from quarterly and annual financial

statements submitted by insurance companies,

as required, to a state’s department of insurance.

These statements have been collected and made

available by the National Association of Insurance

Commissioners (NAIC). Although the NAIC has

permitted use, they do not endorse any analysis or

conclusions based upon the use of its data.

For questions about the terms used in this Digest,

please consult the Key Terms section (pages 62–63).

Long-Term Trends

Recognizing the value of long-term

trending in the formulation

of business intelligence, the

Managed Care Digest Series® for 2016 often

features up to three decades of data, identified by

the Long-Term Trend icon.

National Pharmacy Data

The Retail Pharmacy section, which begins on page 45,

presents a comprehensive overview of the national

performance of prescription drugs dispensed by retail

pharmacies. National-level retail pharmacy data

across a dozen therapeutic drug classes are organized

according to major chronic disease category. Drug

categories are determined by clinical indication, so

specific products may appear in multiple categories.

This section also features utilization metrics across

these 12 drug classes for four payer types. Retail

spending metrics represent the full price that the retail

pharmacy charges the consumer for the product,

regardless of copayment.

Average out-of-pocket (OOP) cost measures, by

therapeutic drug class, are likewise examined.

These costs represent the amount patients are

required to pay the retail pharmacy for their

individual prescription drug. The cost mainly includes

copayments, but can also include tax, deductibles,

and cost differentials, where applicable (everything

the patient paid at the point of sale).

The retail pharmacy drug analysis extends to data on

14 common specialty products within 6 drug classes

(pages 50 and 57).

The prescription metrics derive from IMS Health’s

Vector One®: Payer (VOPA) platform. Through

agreements with a variety of data providers, the

IMS Health data warehouse receives billions of

prescription claims per year.

VOPA is IMS Health’s projected prescription and

patient-centric database. The only database of its kind,

it provides projected retail pharmacy prescription and

longitudinal metrics at various levels of aggregation,

including state, region, and national levels. IMS

Health uses a unique and patented algorithm for

de-identification of patients, ensuring compliance with

HIPAA regulations.

IMS Health uses projection territories aligned to balance

coverage proportional to prescribing activity. These

territories are stratified by payment type and the sample

is expanded to the universe by strata, census division,

and class of trade. IMS Health reconciles the results

to produce a single projection factor for each claim.

This factor is used to project prescriptions and patients

filling a prescription. Patient counts will be unique at the

focus diagnosis level by gender, age, and payer type

(including Medicare Part D). These factors are used

to project prescriptions and patients in each territory.

Regional and national projections are created by

rolling up from the prescriber to the geographic area of

interest. These data are current as of midyear 2016 and

are trended over three years. Data for 2014 and 2015

have been restated.

RE

SEA

RC

H M

ETH

OD

OLO

GY

RESEARCH METHODOLOGY

Download the complete methodology at www.managedcaredigest.com.

LONG-TERM TREND



KE

Y T

ER

MS

KEY TERMS

Accountable Care Organization (ACO): An ACO is

an associated network of primary care physicians,

specialists, and hospitals that actively coordinates the

delivery of care to effect higher-quality outcomes.

ACOs report on quality measures, and the providers,

who likewise are accountable for maintaining a high

standard of individual performance, are rewarded

for their participation.

Affordable Care Act (ACA): The ACA was signed into

law by President Obama in March 2010 as part of the

administration’s comprehensive health care reform

legislation. The ACA is aimed primarily at decreasing

the number of uninsured Americans, reducing

the overall costs of health care and improving

quality. In June 2012, the Supreme Court upheld

the constitutionality of most of the ACA, and many

reforms have already taken effect.

Ancillary Services: Supplemental services, including

laboratory, radiology, physical therapy, and

inhalation therapy that are provided in conjunction

with medical or hospital care.

Capitation: A fixed per capita payment made

periodically to a medical service provider (such

as a physician) by a managed care group (such

as an HMO) in return for medical care provided to

enrolled individuals.

Children’s Health Insurance Program (CHIP): CHIP is

Title XXI of the Social Security Act and is a state and

federal partnership that targets uninsured children

and pregnant women in families with incomes too

high to qualify for most state Medicaid programs,

but often too low to afford private coverage. Within

federal guidelines, each state determines the design

of its individual CHIP program, including eligibility

parameters, benefit packages, payment levels for

coverage, and administrative procedures.

Cost Plans: Cost plans are paid a predetermined

monthly amount per beneficiary based on a total

estimated budget. Adjustments to that payment are

made at the end of the year for any variations from

the budget. Cost plans must provide all Medicare-

covered services but do not provide the additional

services that some risk plans offer.

Coverage Gap (“Donut Hole”): The Medicare Part D

coverage gap, often referred to as a “donut hole,”

refers to a period of time during the coverage year

when the beneficiary is responsible for a larger portion

of drug costs. The ACA aims to close the coverage

gap by 2020, gradually introducing manufacturer

discounts and subsidies from the Centers for

Medicare and Medicaid Services to lower costs for

Part D enrollees.

Generic Substitution: The pharmacist-initiated act

of substituting one pharmaceutical equivalent for

another in order to decrease the drug product cost.

Group-Model HMO: There are two types of group-

model HMOs: (1) the closed panel plan, in which

medical services are delivered in the HMO-owned

health center or satellite clinic by physicians who

belong to a specially formed but legally separate

medical group that serves only the HMO; and

(2) the plan in which the HMO contracts with an

existing, independent group of physicians to deliver

medical care.

Health Insurance Exchange: A key provision of the

ACA is the creation of health insurance exchanges,

or marketplaces, in each state in which individuals

and small businesses can choose from a variety of

qualified health insurance plans. If a state chooses

not to establish its own exchange, the federal

government will establish one for it. States may

also elect to set up a partnership marketplace, in

which the state and federal governments jointly run

the exchange.

Independent Practice Association (IPA)-Model HMO:

In IPA-model HMOs, physicians practicing in their own

offices participate in a prepaid health care plan. The

physicians charge agreed-upon rates to enrolled

patients and bill the IPA on a discounted fee-for-

service or capitated basis.

Integrated Health Care System: An organization

made up of two or more facilities that have a formal

agreement (or an intent to develop one) to integrate

or share the delivery of health-related services.

Mail-Service Pharmacy: Mail-service pharmacies

are used by many plans as a cost-saving and

convenient alternative to retail pharmacies.

Members typically order their drugs via fax, email,

or the Internet. Prescriptions can be paid for with a

personal check or credit card. Once a prescription

order is transmitted to the mail-service pharmacy,

members usually receive their prescription within two

to four days.


KE

Y TE

RM

S

KEY TERMS

Managed Pharmacy Program: A distinct service or

group of services designed to optimize therapeutic

outcomes for individual patients. These services

include, but are not limited to, the following:

performing or obtaining necessary assessments of

patient health status; formulating a medication

treatment plan; performing a comprehensive

medication review to identify, resolve, and prevent

medication-related problems, including adverse

drug events; and coordinating and integrating

medication therapy management services within the

broader health care management services being

provided to the patient.

MedPAC: The Medicare Payment Advisory

Commission (MedPAC) is an independent

Congressional agency established by the Balanced

Budget Act of 1997 to advise the U.S. Congress on

issues affecting the Medicare program.

Network-Model HMO: A network-model HMO is an

organizational form in which the HMO contracts for

medical services with a network of medical groups.

Patient-Centered Medical Home (PCMH): A PCMH

is a care delivery model whereby patient treatment

is coordinated through their primary care physician

to ensure the patient receives the appropriate care

when and where they need it, in a manner they

can understand.

Retail Pharmacy: A pharmacy in which drugs are

sold directly to patients, as opposed to a hospital

pharmacy. Also known as a community pharmacy.

Risk Plans: Risk plans are paid a per capita premium

set at approximately 95% of the projected average

expenses for fee-for-service beneficiaries in a given

county. Risk plans assume full financial risk for all care

provided to Medicare beneficiaries. Risk plans must

provide all Medicare-covered services, and most

plans offer additional services such as prescripti on

drugs and optometry.

Self-Funded Plan: A plan offered by employers who

directly assume the major cost of health insurance

for their employees. Some self-insured plans bear the

entire risk; other self-insured employers insure against

large claims by purchasing stop-loss coverage.

Specialty Drugs: Specialty drugs are high-cost

injectable, infused, oral, or inhaled drugs that

generally require special storage or handling and

close monitoring of the patient’s drug therapy. Most

specialty drugs are used to treat chronic diseases.

Staff-Model HMO: A staff-model HMO consists

of a group of physicians who are either salaried

employees of a specially formed group practice

that is an integral part of the HMO plan, or salaried

employees of the HMO. Medical services in staff plans

are delivered at HMO-owned health centers.

Step-Therapy: The practice of beginning drug therapy

with the most cost-effective and safest treatment and

progressing to other more costly or risky therapies,

only if necessary, with the aim of controlling costs and

minimizing risks.

Definition sources:

ACA: http://thomas.loc.gov/cgi-bin/

bdquery/z?d111:HR03590:@@@D&summ2=m&

ACO: http://content.healthaffairs.org/cgi/content/full/26/1/w44

Ancillary Services: https://www.plexishealth.com/

glossary/?glossary_letter=A#.VhQA3XthraY

Capitation: http://www.merriam-webster.com/medical/capitation

CHIP: http://www.medicaid.gov/chip/chip-program-information.

html

Cost Plans: CMS Financial Report, Fiscal Year 2011

Coverage Gap/Doughnut Hole: http://healthinsurance.about.

com/od/medicare/f/donuthole.htm

Generic Substitution: http://www.drugs.com/dict/generic-

substitution.html

Group-Model HMO: Glossary of Terms Used in Managed Care,

1994, Medical Group Management Association

Health Insurance Exchange: http://www.cbpp.org/files/CBPP-

Analysis-on-the-Status-of-State-Exchange-Implementation.pdf

IPA-model HMO: Glossary of Terms Used in Managed Care, 1994,

Medical Group Management Association

Integrated Health Care System: http://www.imshealth.com

Mail-Service Pharmacy: https://www.urac.org/accreditation-

and-measurement/accreditation-programs/all-programs/

mail-service-pharmacy/

Managed Pharmacy Program: http://www.pstac.org/aboutus/

profsvc.html

MedPAC: http://www.medpac.gov/-about-medpac-

Network-Model HMO: Glossary of Terms Used in Managed Care,

1994, Medical Group Management Association

PCMH: https://www.acponline.org/running_practice/delivery_

and_payment_models/pcmh/understanding/what.htm

Retail Pharmacy: http://www.ncbi.nlm.nih.gov/pmc/articles/

PMC2720370/

Risk Plans: Einstein, A. B., et al., Cancer Economics: Contracting

With a Medicare HMO, 1997.

Self-Funded Plan: http://www.bls.gov/ncs/ebs/sp/healthterms.pdf

Specialty Drugs: http://content.healthaffairs.org/cgi/content/

full/25/5/1319

Staff-Model HMO: Glossary of Terms Used in Managed Care, 1994,

Medical Group Management Association

Step-Therapy: http://www.medterms.com/script/main/art.

asp?articlekey=40302

http://thomas.loc.gov/cgi-bin/bdquery/z?d111:HR03590:@@@D&summ2=m&

http://content.healthaffairs.org/cgi/content/full/26/1/w44

https://www.plexishealth.com/glossary/?glossary_letter=A#.VhQA3XthraY

http://www.merriam-webster.com/medical/capitation

http://www.medicaid.gov/chip/chip-program-information.html

http://healthinsurance.about.com/od/medicare/f/donuthole.htm

http://www.drugs.com/dict/generic-substitution.html

http://www.cbpp.org/files/CBPP-Analysis-on-the-Status-of-State-Exchange-Implementation.pdf

http://www.imshealth.com

https://www.urac.org/accreditation-and-measurement/accreditation-programs/all-programs/mail-service-pharmacy/

http://www.pstac.org/aboutus/profsvc.html

http://www.medpac.gov/-about-medpac

https://www.acponline.org/running_practice/delivery_and_payment_models/pcmh/understanding/what.htm

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2720370/

http://www.bls.gov/ncs/ebs/sp/healthterms.pdf

http://content.healthaffairs.org/cgi/content/full/25/5/1319

http://www.medterms.com/script/main/art.asp?articlekey=40302


HMO and PPO

Assistant Secretary of Health. (2016). About the

Multiple Chronic Conditions Initiative. HHS.gov.

Retrieved from http://www.hhs.gov/ash/about-ash/

multiple-chronic-conditions/about-mcc/index.html#

Bureau of Labor Statistics. (2016). Labor Force Statistics

From the Current Population Survey. Retrieved from


Centers for Medicare and Medicaid Services. (2016).

National Health Expenditure Projections 2015–2025:

Forecast Summary. Retrieved from https://www.cms.

gov/Research-Statistics-Data-and-Systems/Statistics-

Trends-and-Reports/NationalHealthExpendData/

Downloads/Proj2015.pdf

Dall, T., et al. (2016). The Complexities of Physician

Supply and Demand 2016 Update: Projections from

2014 to 2025. Association of American Medical

Colleges. Retrieved from https://www.aamc.org/

download/458082/data/2016_complexities_of_

supply_and_demand_projections.pdf

Eldin, M. (2015). Closed Formularies Hold the Line on

Costs. Managed Healthcare Executive. Retrieved

from http://managedhealthcareexecutive.

modernmedicine.com/managed-healthcare-

executive/news/closed-formularies-hold-line-

costs?page=0,1

Spurlock, B., and Shannon, M. (2015). The New Era

of Narrow Networks: Do They Come at the Cost

of Quality? Health Affairs. Retrieved from http://

healthaffairs.org/blog/2015/10/13/the-new-era-

of-narrow-networks-do-they-come-at-the-cost-of-

quality/

LaMattina, J. (2016). “Pay for Performance” Drug

Plans Could Impact Biopharma’s R&D Priorities.

Forbes. Retrieved from http://www.forbes.com/sites/

johnlamattina/2016/05/18/pay-for-performance-

drug-plans-could-impact-biopharmas-rd-

priorities/#72bdf19d3c68

Pharmacy

Centers for Medicare and Medicaid Services. (2016).

National Health Expenditure Projections 2015–2025.

Retrieved from https://www.cms.gov/Research-

Statistics-Data-and-Systems/Statistics-Trends-and-

Reports/NationalHealthExpendData/Downloads/

Proj2015.pdf

Health Research Institute. (2015). Top Health Industry

Issues of 2015. Retrieved from http://www.pwc.com/

us/en/health-industries/top-healthindustry-issues/

assets/pwc-hri-top-healthcare-issues-2015.pdf

IMS Health (2016). IMS Health Study: U.S. Drug

Spending Growth Reaches 8.5 Percent in 2015.

Retrieved from http://www.imshealth.com/en/

aboutus/news/ims-health-study-us-drug-spending-

growth-reaches-8.5-percent-in-2015

Worth, T. (2015). The Rising Cost of Generic

Prescriptions. Medical Economics. Retrieved from

http://medicaleconomics.modernmedicine.com/

medical-economics/news/rising-cost-generic-

prescriptions?page=full

Looking Forward

Express Scripts. (2016). Express Scripts 2015 Drug Trend

Report. Retrieved from http://lab.express-scripts.com/

lab/~/media/e2c9d19240e94fcf893b706e13068750.

ashx

Hensely, S. (2015). Anthem Deal For Cigna Would

Hasten Health Insurance Consolidation. National

Public Radio. Retrieved from: http://www.npr.org/

sections/health-shots/2015/07/24/425885225/anthem-

deal-for-cigna-would-hasten-health-insurance-

Kodjak, A. (2015). Specialty Drugs Can Prove

Expensive Even With Medicare Coverage. NPR.

Retrieved from http://www.npr.org/sections/health-

shots/2015/12/03/458216778/specialty-drugs-can-

prove-expensive-even-with-medicare-coverage

Mathews, A.W. (2016). Insurers Move to Limit Options in

Health-Care Exchange Plans. The Wall Street Journal.

Retrieved from http://www.wsj.com/articles/insurers-

move-to-limit-options-in-health-care-exchange-

plans-1472664663

McKinsey Center for U.S. Health System Reform.

(2016). 2017 Exchange Market: Emerging Plan Type

Trends. Retrieved from http://healthcare.mckinsey.

com/sites/default/files/2017%20OEP%20Plan%20

Type%20Trends%20Infographic%20vF_19%20states.pdf

S. Kliff, et al. (2016). Big Insurers Have Quit

Obamacare. That Means More Shoppers Only Get

One Choice. Vox. Retrieved from http://www.vox.

com/a/obamacare-competition-2017

Von Ebers, P. (2016). Mega Health Insurance Mergers:

Is Bigger Really Better? Health Affairs Blog. Retrieved

from: http://healthaffairs.org/blog/2016/01/22/mega-

health-insurance-mergers-is-bigger-really-better/

RE

FER

EN

CE

S

REFERENCES

http://www.hhs.gov/ash/about-ash/multiple-chronic-conditions/about-mcc/index.html#



https://www.aamc.org/download/458082/data/2016_complexities_of_supply_and_demand_projections.pdf

http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/closed-formularies-hold-line-costs?page=0,1

http://healthaffairs.org/blog/2015/10/13/the-new-era-of-narrow-networks-do-they-come-at-the-cost-of-quality/

http://www.forbes.com/sites/johnlamattina/2016/05/18/pay-for-performance-drug-plans-could-impact-biopharmas-rd-priorities/#72bdf19d3c68


http://www.pwc.com/us/en/health-industries/top-healthindustry-issues/assets/pwc-hri-top-healthcare-issues-2015.pdf

http://www.imshealth.com/en/aboutus/news/ims-health-study-us-drug-spending-growth-reaches-8.5-percent-in-2015

http://medicaleconomics.modernmedicine.com/medical-economics/news/rising-cost-generic-prescriptions?page=full

http://lab.express-scripts.com/lab/~/media/e2c9d19240e94fcf893b706e13068750.ashx

http://www.npr.org/sections/health-shots/2015/07/24/425885225/anthem-deal-for-cigna-would-hasten-health-insurance-

http://www.npr.org/sections/health-shots/2015/12/03/458216778/specialty-drugs-can-prove-expensive-even-with-medicare-coverage

http://www.wsj.com/articles/insurers-move-to-limit-options-in-health-care-exchange-plans-1472664663

http://healthcare.mckinsey.com/sites/default/files/2017%20OEP%20Plan%20Type%20Trends%20Infographic%20vF_19%20states.pdf

http://www.vox.com/a/obamacare-competition-2017

http://healthaffairs.org/blog/2016/01/22/mega-health-insurance-mergers-is-bigger-really-better/


Sanofi offers the information presented in the Managed Care Digest Series® for general educational and informational

purposes only. This information is not intended as a substitute for advice or recommendations from relevant professionals.

Care has been taken to confirm the accuracy of the information presented. However, Sanofi is not responsible for errors

or omissions or for any consequences from application of the information in the Managed Care Digest Series®, and

makes no warranty, expressed, or implied, with respect to the currency, completeness, or accuracy of the contents of the

publication. Application of this information in a particular situation remains the professional responsibility of the user.

Uses for This Digest

These digests are used by health care providers, associations, insurers, consultants, employers, and

policy analysts. Feel free to use this publication’s contents in any way you like, provided that you

credit the Sanofi Managed Care Digest Series® HMO-PPO Digest and IMS Health, which copyrights

all its data. Digest statistics are often used for:

• Speeches and presentations

• Planning and budgeting

• Strategic forecasting

• Comparison of industry standards with individual company performance

• Benchmarking for quality analysis and improvement

• Market projections

• Disease-state analysis

Providing you with the latest,

most essential information on the

evolution of health care.www.managedcaredigest.com

Bridgewater, NJ 08807

© 2016 sanofi-aventis U.S. LLC, A SANOFI COMPANYUS.NMH.16.10.007

MANAGED CAREDIGEST SERIES®

SINCE 1987


s i n c e 1 9 8 7 hmo-ppo digest 2016 digest 2016 sanofi / managed care digest series ... your...

Documents