Transcript A Better Way To Navigate Pharmacy Benefits

A Better Way to Navigate the
Complex World of Pharmacy
Benefits
July 18, 2016
Michele V. Handzel, Esq.
Dr. Mark Jones
NYS Prescription Drug Purchasing Coalition
 A shared service designed by BOCES to leverage
two important components needed to effectively
manage cost;
• BUYING VOLUME
• INDUSTRY SPECIFIC EXPERTISE
Why build a pharmacy management service?
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The Great Recession starting circa
2009.
Global and National economies in
crisis;
 Credit crunch-subprime mortgage
failures;
 GDP in steep decline;
 Jan. 2009 unemployment rate at
7.6%, the highest in 15 years;
 275,000 jobs lost per month
•
NYS Schools in distress
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State Aid to schools in decline
 2008-09
$20.889
 2009-10
$19.829
 2010-11
$19.320
 2012-13
$19.258
 2013-14
$20.006
Why focus on Pharmacy?
Prescription Drug Inflation
Drug maker consolidation, price hikes ahead of impending patent
expirations and hyperinflation on older medications.
The Prescription Price Index shows rapid inflation in the price of
medications, with the average price of brand name drugs increasing
16.2% in 2015 and 98.2% since 2011.
One-third of branded products experienced 2015 price increases
greater than 20%.
Source: 2015 Drug Trend Report prepared by Express Scripts, Inc.
Drug Trend Forecast -2016-2018
• 2016 +6.8%
• 2017 +7.3%
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What does this mean in dollars?
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Currently Rx is approx. 17% of
health total care cost according to
the Center for Medicaid and
Medicare Services.
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For a school w/ $10 million in
health care costs, the Rx portion
can be to grow from $1.7 to over
$2.0 million by 2018
• 2018 + 8.4%
• A total of 22.5% over 3 years
Source: 2015 Express Scripts Drug Trend Report
Our Response to the
Extreme Recessionary Conditions-Step #1
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Department of State Efficiency Grant
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EXPLORED a partnership using the BOCES sharing model to see
to what extent there were cost savings opportunities in the area
of self insured pharmacy, when purchased in large volumes.
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Grant monies were used to hire pharmacy specific experts to
write and evaluate responses to an RFP for Self insurance of Rx.
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Evaluation in 3 Critical areas; Finance (commodity pricing),
Quality of clinical program and PBM contract analysis.
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Requested Step Pricing based on the number of employees in
the coalition.
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The result…..an estimated 10-20% savings opportunity.
Our Response to the
Extreme Recessionary Conditions-Step #2
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Department of State Implementation Grant -$434,000
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Developed a BOCES CoSer for service coordination and program
development
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Awarded RFP to Keenan Pharmacy Associates
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Keenan was running the exact same program in California for schools and
municipalities
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Operating with a transparent pricing model, using a “BY US-FOR US”
philosophy, encompassing 400,000 lives
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Keenan Pharmacy Associates lead by team of Rx experts whose focus is
SOLEY pharmacy
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PBM contract experience, pharmacy audit experience and clinical experience
Our Response to the
Extreme Recessionary Conditions-Step #3
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Signed an exclusivity agreement w/Keenan Pharmacy Experts
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Purpose
 Build unity and consistency for all schools
 Build volume under one master contract
 Same Transparent pricing and volume discounts
 Leverage niche specific expertise
The Results to date
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Client groups are seeing an average of 10-20% reduction in Rx costs.
Client I
Client 2
Client 3
Client 4
Client 5
Client 6
Client 7
Client 8
Client 8
TOTAL ALL GROUPS:
Capital Region BOCES NY State Coalition (NY MPPC-powered by KPPC)
Department of State
February 2016
*January 1 2016
CR BOCES
Total
Contract
Monthly CR BOCES
CR BOCES
CR BOCES
Improvement
CR BOCES
Lives
2012/2013 2013/2014
2014/2015
Additional
Effrective Date
(E&D)
Savings $
Savings $
Savings $
Savings
7/1/2012
1,399 ($557,109)
($735,284)
($959,770)
($219,083)
7/1/2013
608
($401,504)
($507,641)
($97,351)
7/1/2013
5,442
($1,147,401) ($1,398,008)
($814,693)
3/1/2014
4,793
($598,844)
($721,637)
($504,803)
7/1/2014
1,533
($595,396)
($226,613)
7/1/2014
1,370
($387,343)
($152,195)
7/1/2015
2,425
($860,000)
($693,917)
7/1/2015
11,150
($1,530,716)
($1,281,513)
1/1/2016
6,281
$0
($920,114)
35,001 ($557,109) ($2,883,033) ($6,960,511)
($4,910,282)
Client Grand Total
Savings From
Effective Date
($2,471,246)
($1,006,496)
($3,360,102)
($1,825,284)
($822,009)
($539,538)
($1,553,917)
($2,812,229)
($920,114)
($15,310,935)
Legislation
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Group health plans can be regulated at both the federal and state
level
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Federal-level regulation of group health plans comes largely from
ERISA and the ACA
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State-level regulation of group health plans comes largely from
state insurance regulations
Self Funded Plans - Generally
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Self-insured or self-funded group health plans are those in which the
employer assumes the financial risk for providing health care benefits
to its employees
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Self-funding allows employers to customize plans to meet specific
health care needs of its workforce
•
Self-funding leaves the employer free to contract with the providers or
provider network best suited to meet its employees’ health care needs
•
Self-funding allows plans operating in multiple states to avoid being
subject to possibly conflicting state-level health insurance regulations
and benefit mandates because self-funded plans are instead subject
only to ERISA regulations
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Many self-funded plans also buy stop-loss insurance to guard against
catastrophic costs (more on this later)
New York State Regulation of Insurance
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The New York State Insurance Law regulates the insurance industries
in New York, and the Public Health Law also has provisions that
regulate HMOs
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Articles 32, 43, 48 and 49 of the Insurance Law give health insurance
consumers a host of rights against their health insurer:
New York State Regulation of Insurance
Insurers must disclose certain information to consumers, including
information on their coverage, information on their financial
responsibility, general information on the grievance procedure,
information on the utilization review procedures when services are
denied, information on access to care, as well as information on
contacting the health plan. (Insurance Law §§ 3217-a, 4324)
New York State Regulation of Insurance
Access to care rights, including the right to go out-of-network
when the consumer’s health plan does not have an in-network
provider, the choice of a primary care doctor, the right to
request a standing referral to a specialist, continuation of care,
network adequacy, and gag clause prohibitions on health plans
prohibiting doctors from discussing all treatments for a medical
condition with the consumer. (Insurance Law §§ 3217-a, 3217b, 3217-d, 3241, 4306-c, 4324, 4325 and 4804)
New York State Regulation of Insurance
Consumers have appeal rights against insurers, including a
grievance procedure wherein for when a benefit is denied for
other than medical necessity reasons, when a consumer is denied
a referral, or a consumer has a complaint concerning plan
determinations other than medical necessity; and consumers
have rights to a utilization review procedure for decisions on
medical care. (Insurance Law §§ 3217-d(a), 4306-c(a), 4802 and
Article 49)
New York State Regulation of Insurance
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Stop-loss limitations for small group plans
 As of January 1, 2016, small group plans, or those
with fewer than 100 employees, are prohibited from
purchasing stop-loss insurance. Insurance Law §§
3231(h) and 4317(3).
New York State Regulation of Insurance
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New York State Insurance Law regulates “Municipal
Cooperative Health Benefit Plans” (Insurance Law Article 47)
 Means any plan established or maintained by two or
more municipal corporations pursuant to a municipal
corporation agreement for the purpose of providing
medical, surgical or hospital services to employees or
retirees of such municipal corporations and to the
dependents of such employees or retirees (Insurance
Law § 4702(e))
New York State Regulation of Insurance
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Legislative findings of cooperative health risk-sharing
agreements include:
 Allowing public entities to share the costs of self-funding
employee health benefit plans
 Providing municipal corporations with an alternative
approach to stabilize health claim costs
 Lower per unit administration costs
 Enhanced negotiating power with health providers by
spreading such costs among a larger pool of risks
New York State Regulation of Insurance
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Article 47 requires Municipal Cooperative Health Benefit Plans
to obtain a certificate of authority from the Department of
Financial Services, the application for which requires that an
applicant establish a process for claims review, dispute
resolution and appeal procedures, as well as obtain required
stop-loss coverage and establish premium equivalent rates
sufficient to satisfy certain reserve and surplus requirements,
among other requirements.
Other Applicable Laws
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In addition to ERISA, a self-insured group health plan might still
fall under other applicable federal laws, including, but not limited
to:
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Health Insurance Portability and Accountability Act (HIPAA)
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Public Health Services Act
Americans with Disabilities Act (ADA)
Pregnancy Discrimination Act
Age Discrimination in Employment Act
Civil Rights Act
Various budget reconciliation acts
Internal Revenue Code (IRC)
Legislation and Trends
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Limitations on the use of Maximum Allowable Costs (MAC).
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This is a national trend, with legislation in several states and in
Congress.
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Last year, NY passed a law that, starting in March of this year,
allows a pharmacy to appeal a PBM’s payment of the MAC for a
particular drug. This is likely to exert upward pressure on drug
reimbursement, and lessen pharmacies’ incentive to get the best
possible wholesale price for drugs.
Legislation and Trends
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Legislation that limits the use of first fail protocols.
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This has been a national trend for several years, and NY is
right there.
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Right now, there are three NY bills that would limit the use
of first fail protocols by health plans that cover
pharmaceuticals—A. 2834, S. 3419 and A. 3124.
Legislation and Trends
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Legislation seeking to regulate a PBM or health plan’s ability to
use incentives to promote compliance with the plan’s formulary
or other guidelines for drug selection.
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In the current session, A. 4871 would do this. The bill is
described as one which would prohibit a plan from switching a
patient’s prescription to a different drug (except for generics.)
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While it does prohibit providing incentives for switching, it also
contains a provision which would prohibit other payment
methodologies, such as withholds, that are designed to create
incentives for health care provider compliance with formularies
or other prescribing guidelines.
Legislation and Trends
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Legislation to exempt retail pharmacies from the same
terms and conditions a payer imposes on mail service and
specialty pharmacy. We believe this legislation undermines
mail order pharmacy, and could result in less safety, less
adherence and higher costs. The bills pending on this are S.
2530 and A. 6194.
Legislation and Trends
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Protection of self-insurance. Many proponents for the ACA at both
a state and federal level have long been skeptical of self-insurance
and see it in part as a way for employers to evade state regulation
of insurance as well as a potential existential threat to the
Exchanges. A few years ago, there were moves in many states to
limit the amount of stop-loss a self-funded health plan could
purchase (thereby limiting the ability of some employers to selffund.) Those efforts had died down somewhat, and the selfinsurance industry (through SIIA) and the Council of Insurance
Agents and Brokers (CIAB) have worked with Congress to increase
understanding of the importance of preserving the ability of
employers to self-insure. There is pending legislation in Congress
(H.R. 1423/S. 775) that would clarify that stop-loss is not health
insurance.