unique & creative plan design suggestions to help control costs our pharmacy director : armand...

Unique & Creative Plan Design Suggestions to Help

Control Costs

Our Pharmacy Director:Armand Dilanchian, R.Ph., President, Integrated Health

Concepts

Our Medical Director: David Rearick, DO, MBA, VP of Medical Management ,

SBSContents are proprietary and confidential. Copyright 2009 Benefits Advisor Network 1

Prescription Drug Benefit Update

Armand Dilanchian, R.Ph.

President

Integrated Health Concepts

2Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network

3

Topics

Traditional Rx Benefit Design

Rx Benefit Design and Clinical Management

Consumer Driven Rx Benefit Design

Specialty Drug Benefit Design

Value Based Rx Benefit Design

Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network

4

Traditional Rx Benefit Design

Member Cost ShareSignificanceDesign informed by client’s utilization data

Common Design StructureCo-paymentCo-insuranceDeductibleDistribution point (Retail vs. Mail)


Design with DataMembership History* Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Δ Prior Quarter Annual Trend

Average Members 4,661 3,963 3,191 2,923 2,645 -9.5% -43.3%

Average Employees 2,028 1,781 1,488 1,392 1,278 -8.2% -37.0%

% Utilizing Members 47.1% 43.3% 42.1% 43.9% 44.0% 0.2% -6.5%

Financial History* Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Δ Prior Quarter Annual Trend

Total Paid by Plan $563,038 $428,133 $398,436 $412,509 $329,677 -20.1% -41.4%

Avg. Paid/Rx $49.38 $55.53 $65.13 $69.57 $66.35 -4.6% 34.4%

Avg. Paid/Day of Therapy $1.57 $1.57 $1.73 $1.85 $1.71 -7.4% 9.3%

Plan Paid PMPM $40.27 $36.01 $41.62 $47.04 $41.55 -11.7% 3.2%

Plan Paid PEPM $92.54 $80.13 $89.26 $98.78 $85.99 -13.0% -7.1%

Plan Paid PMPM minus Specialty $35.02 $29.85 $34.10 $38.83 $36.26 -6.6% 3.5%

Plan Paid PEPM minus Specialty $80.50 $66.43 $73.13 $81.53 $75.05 -8.0% -6.8%

Member Share Overall 27.9% 26.8% 24.7% 23.8% 26.5% 11.3% -4.9%

Member Share Retail 32.9% 35.5% 32.8% 32.6% 35.4% 8.4% 7.7%

Member Share Mail 20.9% 19.3% 18.4% 17.6% 20.8% 18.0% -0.6%

Member Share Retail minus Specialty 34.3% 36.6% 34.8% 33.0% 36.6% 11.0% 6.9%

Member Share Mail minus Specialty 24.7% 23.9% 22.6% 22.2% 23.7% 6.9% -4.2%

Utilization History* Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Δ Prior Quarter Annual Trend

Total Rx 11,402 7,710 6,118 5,929 4,969 -16.2% -56.4%

Mail Order Rx 1,770 1,572 1,447 1,465 1,345 -8.2% -24.0%

Mail Order % 15.5% 20.4% 23.7% 24.7% 27.1% 9.5% 74.4%

Rx PMPY 9.8 7.8 7.7 8.1 7.5 -7.4% -23.2%

Rx PEPY 22.5 17.3 16.4 17.0 15.6 -8.7% -30.8%

Total Days of Therapy 359,586 273,128 229,888 223,367 192,676 -13.7% -46.4%

Days of Therapy/Member 77 69 72 76 73 -4.7% -5.6%

Generic Utilization Overall 72.2% 74.5% 74.5% 74.8% 75.2% 0.6% 4.2%

Generic Utilization Retail 75.2% 79.6% 79.9% 81.0% 81.6% 0.7% 8.5%

Generic Utilization Mail 55.8% 54.4% 57.4% 55.6% 58.0% 4.2% 3.9%

Generic Substitution Retail 98.0% 98.8% 98.4% 98.9% 98.8% -0.1% 0.8%

Generic Substitution Mail 89.4% 88.5% 91.7% 91.5% 90.8% -0.7% 1.6%

F Opportunity F Exceeds Goals * History begins with Q1 '08


Common Design Elements

CopaymentTwo tier vs. three tierSpread between tiers

Co-insuranceMinimums and maximumsHigh cost drugs

DeductibleIndividual, Family, Retail and Mail

Retail vs. Mail Mail incentive vs. mandatorySpread between retail and mail$4 generic drug programs


Rx Benefit Design and Clinical Management

Clinical programs as management tools Prior authorizationStep therapyQuantity limitationsControlled substances monitoringDrug utilization review

Benefit design to promote appropriate utilization

GenericsSecond tierChronic drug adherence (value-based)


Consumer-Driven Rx Benefit Design

Deductibles integrated with medical PBM/Carrier connectivity

Preventive drug listOpen to interpretationNot consistent among PBMs/CarriersCost share designs for preventive drugs


Specialty Drug Benefit Design

Benefit DesignRetail vs. Traditional Mail vs. Specialty PharmacyDays supply limits (just-in-time inventory)Copay/Co-insurancePrescription benefit vs. medical benefit


Value Based Rx Benefit Design

How it worksA design to encourage adherence to medications when clinical benefits exceed the costBuilt-in incentives to reduce barrier to medication use

Common errors in designZero cost share or significant reductionAdoption of design without evaluating adherence dataAdoption of design where evidence is weak


Summary

Effective benefit design can reduce plan costs and promote appropriate drug utilizationRx benefits should be based on client-specific data All designs should incorporate clinical managementCost share must be balanced


Questions ?


Value Based Insurance Designs

Presented by:

David A. Rearick, DO, MBA, CPE

Armand Dilanchian, PharmD


14

David A. Rearick, DO, MBA

BAN Medical Director VP of Medical Management for

SBS 30+ years Physician Executive Host of Good Health Is Good

Business radio show (www.healthybusinessradio.com)


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Value Based Insurance Design - Why?

Drive Behavior Change

End Entitlement Culture

Improve Quality of Care

Clinically Approach to Employee Cost

Based on Healthcare Value vs. Cost


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What’s in a Name

Value Based Benefit DesignValue Based FormularyBiometric Based Insurance DesignEvidence Based DesignBenefit Based Co-Pays


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How is VBID done?

• Medication therapy is the most common

Goal is to increase adherence with medications and hence improve health outcomes and reduce overall health care cost

Focused primarily on a few therapeutic areas: diabetes, cardiovascular, respiratory, depression

Coupled with disease management programs and other corporate wellness initiatives

Drive evidence-based interventions with proven value

Annual eye exams in patients with diabetesContents are proprietary and confidential. Copyright 2009 Benefits Advisor Network

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Unlimited Different Benefit Designs Which conditions or drug classes?

- Diabetes- Cardiovascular: All conditions or a subset- Asthma: All drugs or only long-term controllers- Other

For whom?- All members taking a drug in a therapeutic class- All members enrolled in a disease or wellness program taking a drug in

the identified therapeutic class- Members with a particular diagnosis

What’s the change in co-pay?- All drugs in the class are lowered to the same co-pay

generic or $0- A differential is kept between preferred and non-preferred brands &

between generic and preferred brands- Some non-essential medications may be up-tiered


MEDCO’s Experience

19

96%

86%

78% 78%75%

50%

33%

26%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Encourage use ofgenerics &

preferred drugs

Encourage use ofmail order

Provide membersoptions for

managing care

Membereducation &

empowerment

Wellness &disease

managementprogram

Shift greatershare to

members

Offer consumer-directed health

plan

Use of a value-based plan

design


MEDCO’s Experience

20

6

19 19

6

16

17

2

1

3

0

5

10

15

20

25

30

35

40

2006 2007 2008 2009 2010 (est)

DM/HMTotal


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Examples of Value Based Benefits

ClientClient ChannelChannel Co-pay ChangeCo-pay ChangeDecrease in Decrease in member costmember cost

Client A Retail All drugs at generic co-pay47% - 70%

Mail All drugs at $0 co-pay

Client B Retail Generic and formulary brands at generic co-pay

2% - 29%Non-formulary, slight decrease

Mail Generic and formulary brands at generic co-pay

Non-formulary, slight decrease

Client C Retail Generics at $0

30% - 56%Formulary brands, slight decrease

Mail No change

Client D Retail Generics at $0 co-pay12% - 30%

Mail Generics at $0 co-pay

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Medication Adherence 1/1/08 –

6/10/08

Therapeutic Therapeutic Resource Resource

CenterCenter

Medication Medication ClassClass

PBM Adherence PBM Adherence ProgramsPrograms

Retail Retail AdherenceAdherence

Relative Relative DifferenceDifference

Diabetes Diabetes 75.6% 46.6% 62.2%

Blood Pressure 81.3% 53.4% 52.2%

Lipid Lowering 76.5% 52.0% 47.1%

Cardiovascular Anti-platelet 88.6% 73.9% 19.9%

Blood Pressure 80.3% 54.6% 47.1%

Lipid Lowering 76.0% 53.4% 42.3%

Medication Adherence - 4 clients

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-2%

-1%

0%

1%

2%

3%

4%

5%

6%

A B C D

DiabetesHigh BPLipids

Change in medication possession ratio, MPR compared with control


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Plan and Do the Data Analytics Look at where are the dollars being spent, for pharmacy costs, and where available,

total healthcare costs (medical and pharmacy).Review adherence in the targeted classes and compare with peer data and national benchmarks

Evaluate current co-pay and cost-share from the member’s perspective

Model the financial impact of various plan designs

Consider additional ways to increase compliance and improve outcomesMember education of medication effects, expectations and ways to manage Education and awareness, especially for management of chronic conditionsFacilitate medication filling from the most effective channelAutomated reminders to members to fill scripts; automatic refills of chronic medicationsOnline tools to influence member behavior

Promote a culture of health in the workplaceCoordination across all health benefitsDisease management programsWellness and disease prevention programs

Cost-sharing is just one piece of the puzzleCost-sharing is just one piece of the puzzleCost-sharing is just one piece of the puzzleCost-sharing is just one piece of the puzzle


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Observations From Four Case Studies

Structure of the VBPD determines member savings and plan cost increases

Not all plan designs are providing clear savings to members Total as well as plan drug trend and spend increase

Increase in compliance, is not guaranteed, and is usually small 0% - 6%

What is the impact of this level of increased compliance on overall medical spend?

For diabetes, for each 20% increase in compliance there can be a decrease of ~$1,000 in overall healthcare spend.*

*Sokol et al. Medical Care 43: 521-530, 2005 *Sokol et al. Medical Care 43: 521-530, 2005


Questions ?

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