strategic healthplan consulting llc€¦ · a basis in law – erisa, sec. 404(a) fundamental...

Reducing Costs. Managing Risks.

Helping Companies Actually Lower The Cost Of Healthcare – Without Changing Benefits For Employees

Strategic Healthplan Consulting LLC


Setting The Stage

• Transition – from Broker to Coach, Consultant, and Advisor

• Agency/Broker models• Definition Of Insanity• You Don’t Know What You Don’t Know



Is This Characteristic Of Your Group?

• Fixed Costs Represent 15%‐25% of Total Cost

• Claim Costs Continue To Rise As: “Claims Are Claims”

• 15% Of The Group Represents 85% Of The Claim Costs



• Partially Self Funded Or ASO

• Fixed Costs Represent 15%‐25% of Total Cost

• Claim Costs Continue To Rise As: “Claims Are Claims”



• Prescription Drug Costs Are Increasing Dramatically

• Hospital And Facility Claims Are Increasing Dramatically –Especially On Big Claims

• Good Information And Detail Is Hard To Come By



• Networks Are Incomplete With Regional and/or National Gaps

• Administrative Techniques And Processes Change With Change Of Administrators

• Your feel that your broker is doing a good job


Current Environment

• Rate increases continuing – fully insured premiums, stop loss premiums and aggregate attachment points

• Unprecedented prescription drugs increases• Hospital cost increases

• PPACA causing angst for HR• National trend towards more partial self funding• Bundled vs. Unbundled Discussion

• BUCA umbrella• Customized Best In Class Vendor Partners


Ineffective Historic Solutions• Transactional: Change Carriers / Administrators – which causes:

• Benefit Differences• Network Differences• Administrative Differences

• Cost shift increases to employees:• Higher Contributions• Higher Deductibles, Copays, And Out‐Of‐Pocket Expenses

• Increase the Specific Deductible which increases the risk levels

Einstein Authored The Definition Of Insanity: “Doing The Same Thing Over And Over And Expecting Different Results”


The ProblemWith The Solution• Employee goodwill is sacrificed• Implementation is a pain for HR• Inherent network issues• Timing of change is never good• Financial concerns

Temporary Solution To A Long Term Problem!

Apply The Rule of 72

Hospital Environment Today• Hospital and Facility Costs are one of the fastest growing areas in health plans

• NY Times Article December 2015• Hospital Charge Master• PPO Discount off of Billed Charges• Billed Charges vs Medicare Reimbursements


Prescription Drug Environment Today

Prescription Drugs are another of the fastest growing costs employers face

• Lack of Price Controls• Lengthy Patents• Limited Competition• Small Markets• R&D, Production Costs• Fewer Generics


Speakers

Woody Waters, Co‐Founder and Principal ELAP Services LLCMedicare Plus / Cost Plus Strategies

Mike Sugden, National Sales Leader, National Cooperative RxThe Essentials in Managing your Growing Pharmacy Costs!!


“the jaw dropping difference between… list prices and… costs”

Says Gerald Anderson, John Hopkins School of Public Health… “all the prices are too damn high”‐‐March 4, 2013 issue

Princeton Professor Uwe E. Reinhardt on American Employers

“…the sloppiest purchasers of health care anywhere in the world…

…have passively paid just about every health care bill that has been put before them, with few

questions asked.”

The New York Times, June 7, 2013

In Colorado, What Does a Plan Pay for……a CT Scan?

Avg. Charge Reported Cost (avg.)

Medicare Pays (avg.)

Annual units of service

Hospital #1Grand Junction $2,465 $110 $204 4,941

Hospital #2Denver

$5,920 $170 $221 2,832

Hospital #3Montrose

$1,405 $119 $208 2,498

Departmental statistics are obtained from a hospital's most recent Medicare cost report data, from American Hospital Directory –www.ahd.com

Solution

Shouldn’t a HEALTH BENEFITS PLAN

purchase medical services in the same transparent manner

that the CORPORATION buys raw materials, supplies, and services?

A Basis in Law – ERISA, Sec. 404(a)

Fundamental Obligations Imposed on Fiduciaries by ERISA:

• “…For the exclusive purpose of…” paying only the “reasonable expenses of administering the plan”

• “...with care, skill, prudence, and diligence”

If CT Scans are marked up by 12- to 28- times Cost…

Is it REASONABLE or PRUDENT to pay based on percent-off-charges?

Financial Impact‐ Average for 1st Year

$125PEPM

Claims Cost Savings

Pre‐ ELAP Post‐ ELAP

$62PEPM

Stop Loss Premium Savings

Pre‐ ELAP Post‐ ELAP

How it works

S T E P 1 ST E P 2 ST E P 3 ST E P 4 ST E P 5Change to Physician Only Services

Modify PlanDocument

Ensure Adherence to Plan (ERISA)

Protect thePlan Member

Audit Claim

Abandon traditional PPO‐network for hospitals and other facilities

Implement physician‐only network, such that doctors & professionals are paid status quo

Install smart plan language

• Cost Plusreimbursementmethodology

• ELAP asco‐fiduciary

Audit, adjudicate, and pay all in‐patient & out‐patient facility claims by applying the Cost Plus formulas, as per the plan language

ELAP handles all claim appeals on behalf of the employer and is responsible for legal defense of Plan

Engage expert attorneys to protect the Plan member from provider balance billing or collection agencies at no additional costs

PBM Provider & Consultant• Negotiate Contract with PBM• Review Plan Design• Audits• Clinical Consultation• Specialty Drug Management• Implementation Assistance• Service Support

What are Specialty Drugs?

High cost

Often produced throughDNA technological or biological processes

Treat chronic or complex

disease states

Unique handling, distribution and / or administration

requirements

Route of administrationcould be oral, inhaled,

infused, or injected

Extensive coordination of patient care, patient

condition education & frequent monitoring

May have FDA-mandatedRisk Evaluation MitigationStrategy (REMS) programas condition of approval

27

What are Specialty Drugs? A Visual Perspective

Source: http://www.gene.com/gene/about/views/followon‐biologics.html28

29

Price / Inflation Average Total Drug Cost Per Specialty Claim

Source: National CooperativeRx Member‐Owner Group Pharmacy Claims Experience with CVS Caremark’s Universal Specialty Drug List

$1,795 $1,934

$2,105

$2,375 $2,624

$3,433

$‐

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

2009 2010 2011 2012 2013 2014

Rapidly Changing Pharmacy Landscape: 2016

Rigorous cost management is crucial, with focus on high-cost specialty drugs

300% inflation for specific brands over 5 years1

Increase in copay cards from 89 to 395+ brands2

15%‐25% projected specialty trend48 of top 10 drugs will be specialty

$1 trillion in savings over the last 10 years3Generics now in all maintenance drug classes

Graph Source: CVS Caremark Analysis, CVS Caremark Specialty Analytics, 2012. 1. CVS Caremark data, 2012. 2. IMS, The Use of Medicines in the United States, April 2012. 3. Generic Drug Savings in the U.S., Generic Pharmaceutical Assn., 2012. 4.Payer Strategies to Manage High‐Cost Specialty Drug Expected to Hit Market Soon, Atlantic Information Services Webinar, August, 2012

14.5%

84%

36% BRAND

1.5%

% of $

33%

31%

GENERICS

SPECIALTY

% of Rxs

2780

What’s on the Horizon?Medicines in Development for Selected Therapeutic Areas

There are more than 5,000 drugs in development globally with 3,400 in development just in the United States. Specialty drugs are representing

more FDA approvals than non‐specialty drugs. Source: Phrma January 2013 Pharmaceutical Pipeline, http://www.phrma.org/sites/default/files/pdf/phrmapipelinereportfinal11713.pdfhttp://www.fda.gov31

Cancer, 52%

Infections, 13%Neurology, 10%

Cardiovascular, 8%

Immunology, 5%

Diabetes, 5%

Psychiatry, 4%

HIV/AIDS, 3%

Average Member Cost Shares

Source: Takeda 2014‐2015 Prescription Drug Benefit Cost and Plan Design Report; PBMI conducted this year’s survey of U.S. employers in April of2014. The survey was completed by 353 employers representing more than 29 million members (n=166 larger employers at >5,000 lives versus n=187 smaller at <5,000 lives)

32

$11 $21 $20 $30 $63 $59 $55

$119 $108 $132

$245

$198

$0

$50

$100

$150

$200

$250

$300

30 Day Retail(n=169,161,160, 47)

90 Day Retail (n=106,100,96, 18)

Mail Service (n=169,164,159, 27)

Generics Preferred Brands Nonpreferred Brands Specialty

Best In ClassSpecialty

Strategy BICEvidence-Based GuidelinesSpecialty Preferred Drug Strategies Exclusive Pharmacy Provider(s)Specialty Cost Share TierDay's Supply LimitsChannel or Medical ManagementSite of Care Management

37

Adherence

34

Source: http://www.cvshealth.com/research‐insights/cvs‐health‐research‐institute/generic‐drugs‐and‐adherencehttp://www.cvshealth.com/research‐insights/cvs‐health‐research‐institute/insights‐adherence

• Adherence starts when the Rx is written – it is estimated that up to a third of prescriptions written are never filled.

• Pharmacist counseling and support can make a difference – in fact research shows that face-to-face counseling by a pharmacist is two to three times more effective at increasing patient adherence than other interventions.

• Adherence requires innovative support tailored to the patient’s individual needs and barriers.

• Pharmacy benefit plan designs can help support adherence by reducing barriers to adherence such as cost, medication complexity and forgetfulness.

• Use of lower cost generic drugs improves adherence and better health outcomes.

Non-Adherence

35

Source: http://www.cvshealth.com/research‐insights/cvs‐health‐research‐institute/generic‐drugs‐and‐adherencehttp://www.cvshealth.com/research‐insights/cvs‐health‐research‐institute/insights‐adherenceData from American Health Association web‐site

• Attributes to 30% to 50% of treatment failures

• Results in 125,000 deaths annually

• more than 1/3 of medication-related hospital admissions are linked to poor adherence

• estimated to cost between the health care system $100 billion to $289 billion a yearRx Prescribed Rx Filled Rx Started Rx Completed

100%88%

76%

47%

Nearly half of Americans are diagnosed with at least one long‐term health condition yet these people only take their medicine as directed 50‐60% of the time.

Reasons for Non-Adherence

36

Source: Data source: The Hidden Epidemic…Boston Consulting Group and Harris Interactive (December 2003)

Forgot, 24%

Side Effects, 20%

Cost, 17%

Decided Did Not Need, 14%

Difficulties in Filling Rx, 10%

Other, 15%

Cost Share and Adherence Concerns

Example: MS Medications and Out-Of-Pocket Expenses

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

$0 ‐ $100(N=2,306)

$101 ‐$150(N=57)

$151 ‐$200(N=46)

$201 ‐$250(N=42)

$251 ‐$350(N=88)

$351 ‐$500

(N=106)

>$500(N=153)

5.80% 5.30%

10.90%

26.20% 27.30% 27.40%30.10%

% of Patients to Decline to Fill

Source: Gleason P, Gunderson B. Association of multiple sclerosis medication out‐of‐pocket expense with decline‐to‐fill rate. J Managed Care Pharmacy 2009; 15(2): 178‐179.38

Generic Dispensing RatesBest In Class Strategies

40

Strategy BICDAW 1/2 penalties; generic incentivesTiered cost sharesTier differentials of >$25 per month’s supplyLow costs genericsProportionate cost shares for generics and brandsFormulary or Utilization ManagementMember education

Strategy BICDAW 1/2 penalties; generic incentivesTiered cost sharesTier differentials of >$25 per month’s supplyLow costs genericsProportionate cost shares for generics and brandsFormulary or Utilization ManagementMember education

Let Strategic Healthplan Consulting help you by identifying and quantifying opportunities in

your plan that can lower your costs

Results

Our approach has produced compelling savings for employers without changing benefits to employees

• Manufacturer lowered their costs by $2,330 per employee per year• Ski resort lowered their costs by $1,685 per employee per year• Co‐op lowered their costs by $3,286 per employee per year• Social Services Agency lowered their costs by $1,316 per employee per year• Insurance Company lowered their costs by $1,724 per employee per year

You can do the math and quantify the potential savings for your organization


Testimonials• Frank's competence, engagement and style enabled our mid‐size business to develop and maintain a comprehensive benefit program that

enhanced employee satisfaction, protected lives, and was financially viable. In this time of significant change in benefit legislation, Frank and his team are capable of making a significant difference to any organization’s bottom‐line financially and in terms of employee satisfaction. Legal compliance will not be a source of concern with his partnership. Recommendation is unconditional.

Michael Weerts, Hospital VP HR

• I have known Frank for quite awhile and he is extremely effective in managing a company's health "insurance" costs in a creative and pro‐active way. Frank is always ahead of the curve and I highly recommend his advice and counsel.

Branch Springer, CFO

• I trust him and you can too. At the end of the day ‐ isn't that all that really matters? One of the sole reasons I endorse Frank's work is because he keeps his promises. There is more though. Frank follows through on his commitments, he finds innovative ways to solve health care financing issues, and above all else ‐ he thinks like a business owner, not simply a vendor. I highly endorse Frank's work. He's a trusted advisor in an otherwise crowded field and that has always distinguished him.

Jim Barone National VP

• Frank is an energetic, experienced and creative Employee Benefits professional. His ability to deliver innovative, employee engaging programs that mitigate the increasing cost of healthcare, go beyond just shopping for a better rate. He is someone that will become a Trusted Advisor of his client and an extension of the corporate resources charged with managing the Health and Welfare programs. The last thing I can say about Frank is, if I were looking for a Advisor/Consultant, Frank would be at the top of my list.

Greg Martin, Regional VP


strategic healthplan consulting llc€¦ · a basis in law – erisa, sec. 404(a) fundamental...

Documents