Transcript The Four Dynamics That Drive The Power of SmartPartnersTM

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 ,
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
1
Prescription Drug Benefit
Update
Armand Dilanchian, R.Ph.
President
Integrated Health Concepts
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
2
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
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3
Traditional Rx Benefit
Design
Member Cost Share
Significance
Design informed by client’s utilization
data
Common Design Structure
Co-payment
Co-insurance
Deductible
Distribution point (Retail vs. Mail)
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4
Design with Data
Membership
History*
Average Members
Q1 '08
Q2 '08
Q3 '08
Q4 '08
4,661
3,963
3,191
2,923
Q1 '09 Δ Prior Quarter Annual Trend
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%
Q1 '08
Q2 '08
Q3 '08
Q4 '08
Q1 '09 Δ Prior Quarter Annual Trend
$563,038
$428,133
$398,436
$412,509
$329,677
-20.1%
-41.4%
$49.38
$55.53
$65.13
$69.57
$66.35
-4.6%
34.4%
9.3%
Financial
History*
Total Paid by Plan
Avg. Paid/Rx
Avg. Paid/Day of Therapy
$1.57
$1.57
$1.73
$1.85
$1.71
-7.4%
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%
Q1 '08
Q2 '08
Q3 '08
Q4 '08
Q1 '09 Δ Prior Quarter Annual Trend
11,402
7,710
6,118
5,929
Utilization
History*
Total Rx
4,969
-16.2%
-56.4%
-24.0%
Mail Order Rx
1,770
1,572
1,447
1,465
1,345
-8.2%
Mail Order %
15.5%
20.4%
23.7%
24.7%
27.1%
9.5%
74.4%
9.8
7.8
7.7
8.1
7.5
-7.4%
-23.2%
Rx PMPY
Rx PEPY
22.5
17.3
16.4
17.0
15.6
-8.7%
-30.8%
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%
89.4%
88.5%
91.7%
91.5%
90.8%
-0.7%
1.6%
Total Days of Therapy
Generic Substitution Mail
F Opportunity F Exceeds Goals
* History begins with Q1 '08
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
5
Common Design Elements
Copayment
Two tier vs. three tier
Spread between tiers
Co-insurance
Minimums and maximums
High cost drugs
Deductible
Individual, Family, Retail and Mail
Retail vs. Mail
Mail incentive vs. mandatory
Spread between retail and mail
$4 generic drug programs
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
6
Rx Benefit Design and Clinical
Management
Clinical programs as management tools
Prior authorization
Step therapy
Quantity limitations
Controlled substances monitoring
Drug utilization review
Benefit design to promote
appropriate utilization
Generics
Second tier
Chronic drug adherence (value-based)
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
7
Consumer-Driven Rx Benefit
Design
Deductibles integrated with medical
PBM/Carrier connectivity
Preventive drug list
Open to interpretation
Not consistent among PBMs/Carriers
Cost share designs for preventive drugs
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
8
Specialty Drug Benefit
Design
Benefit Design
Retail vs. Traditional Mail vs.
Specialty Pharmacy
Days supply limits (just-in-time
inventory)
Copay/Co-insurance
Prescription benefit vs. medical
benefit
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
9
Value Based Rx Benefit
Design
How it works
A design to encourage adherence to
medications when clinical benefits
exceed the cost
Built-in incentives to reduce barrier
to medication use
Common errors in design
Zero cost share or significant
reduction
Adoption of design without evaluating
adherence data
Adoption of design where evidence is
weak
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10
Summary
Effective benefit design can reduce
plan costs and promote appropriate
drug utilization
Rx benefits should be based on
client-specific data
All designs should incorporate
clinical management
Cost share must be balanced
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11
Questions ?
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
12
Value Based Insurance
Designs
Presented by:
David A. Rearick, DO, MBA, CPE
Armand Dilanchian, PharmD
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
13
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)
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
14
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
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
15
What’s in a Name
Value Based Benefit Design
Value Based Formulary
Biometric Based Insurance
Design
Evidence Based Design
Benefit Based Co-Pays
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
16
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 diabetes
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
17
Unlimited Different Benefit
Designs

Which conditions or drug classes?
-

For whom?
-
-

Diabetes
Cardiovascular: All conditions or a subset
Asthma: All drugs or only long-term controllers
Other
All members taking a drug in a therapeutic class
All members enrolled in a disease or wellness program taking a drug in
the identified therapeutic class
Members with a particular diagnosis
What’s the change in co-pay?
-
All drugs in the class are lowered to the same co-pay
generic or $0
A differential is kept between preferred and non-preferred brands &
between generic and preferred brands
Some non-essential medications may be up-tiered

-
-
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18
MEDCO’s Experience
100%
90%
80%
70%
96%
86%
78%
78%
75%
60%
50%
50%
40%
30%
33%
26%
20%
10%
0%
Encourage use of Encourage use of Provide members
Member
generics &
mail order
options for
education &
preferred drugs
managing care empowerment
Wellness &
disease
management
program
Shift greater
share to
members
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
Offer consumerdirected health
plan
Use of a valuebased plan
design
19
MEDCO’s Experience
DM/HM
Total
40
35
30
16
25
6
20
3
15
10
1
5
0
2
2006
17
19
2008
2009
19
6
2007
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
2010 (est)
20
Examples of Value Based Benefits
Client
Channel
Co-pay Change
Client A
Retail
All drugs at generic co-pay
Mail
All drugs at $0 co-pay
Retail
Generic and formulary brands at generic co-pay
Client B
Decrease in
member cost
47% - 70%
Non-formulary, slight decrease
Mail
Generic and formulary brands at generic co-pay
2% - 29%
Non-formulary, slight decrease
Client C
Retail
Generics at $0
Formulary brands, slight decrease
Client D
Mail
No change
Retail
Generics at $0 co-pay
Mail
Generics at $0 co-pay
30% - 56%
12% - 30%
21
Medication Adherence
Therapeutic
Resource
Center
Diabetes
Cardiovascular
Medication
Class
1/1/08 – 6/10/08
PBM Adherence
Programs
Retail
Adherence
Relative
Difference
Diabetes
75.6%
46.6%
62.2%
Blood Pressure
81.3%
53.4%
52.2%
Lipid Lowering
76.5%
52.0%
47.1%
Anti-platelet
88.6%
73.9%
19.9%
Blood Pressure
80.3%
54.6%
47.1%
Lipid Lowering
76.0%
53.4%
42.3%
22
Medication Adherence - 4
clients
6%
5%
4%
3%
Diabetes
High BP
Lipids
2%
1%
0%
-1%
-2%
A
B
C
D
Change in medication possession ratio,
MPR compared with control
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
23
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 outcomes
Member education of medication effects, expectations and ways to manage
Education and awareness, especially for management of chronic conditions
Facilitate medication filling from the most effective channel
Automated reminders to members to fill scripts; automatic refills of chronic medications
Online tools to influence member behavior
Promote a culture of health in the workplace
Coordination across all health benefits
Disease management programs
Wellness and disease prevention programs
Cost-sharing is just one piece of the puzzle
24
Contents are proprietary and confidential. Copyright 2009 Benefits Advisor Network
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
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25
Questions ?