If you are an [administrative services only (ASO)] plan sponsor, 2015 probably looked something like this with respect to your drug plan experience:
- Flat or sub-inflation cost increases from 2012, 2013 and 2014 were replaced with double-digit growth.
- Warnings about a big growth in spending for high-cost specialty drugs came true.
- Conversations about increases in your stop-loss premiums for 2016 weren’t very pleasant.
- For ASO plans that do not have collective agreements to consider: your plan’s reimbursement structure remained flat (i.e. all eligible benefits are still paid at the same level regardless of the value they provide), and the list of products covered remained roughly the same. Most of what you remember from 2015 as it relates to drug benefits was being serenaded by cries of radical new Hepatitis C therapies and the end of the world as you know it.
- For ASO plans that do have to consider collective agreements: there was little progress in mapping out a business case for responsible plan design change to ensure plan sustainability, and educating key stakeholders about what is to come. It still wasn’t a priority, or there was no awareness of how to proactively change this important narrative meaningfully.
- There was no work done in quantifying plan costs in 2016 under the current design to understand if the same (or larger) increases could be expected, and what could be done to mitigate forward-looking risks.
There is also a good chance that the kind of solutions being touted to you as meaningful included:
- A “specialty pharmacy PPN” that provides slight discounts on drug mark-ups for certain expensive medications through a PPN pharmacy.
- An agreement with a pharmaceutical manufacturer for an undisclosed discount on the cost of a single specialty drug facing new competition from a lower-cost alternative.
- Offering some form of case management (at no cost to the plan sponsor) to plan members starting on select new expensive therapies.
- Introducing the federal Common Drug Review (CDR) process to render a decision on new specialty drugs before they are considered for coverage under your plan.
- Increasing your stop-loss attachment point to combat massive premium increases.
To recap, it is likely that the arsenal of new “solutions” you were presented with to solve your plan’s specialty drug challenges was made up of: scratching a small discount on the mark-up or cost of a specialty drug; making sure a case manager that somebody pays for (who exactly, you aren’t sure) is ensuring your members are looked after (how exactly, you aren’t sure); looking at a new approach involving a 13-year-old CDR process related to approving drugs in the future (with little said about the expensive drugs already being covered); and taking on more risk by increasing your stop-loss attachment point to reduce premiums in the near-term.
How did 2015 finish for you? How is 2016 looking? Do you have any idea how these proposed solutions will impact your plan financially?
Given that it is early January, here is a suggested New Year’s resolution for ASO plan sponsors:
- Consider setting January 2017 or earlier as a target date for at least one meaningful plan design change that is responsible; in other words, a plan that benefits both the plan and its members by responsibly managing the benefit and safeguarding plan sustainability, without adversely impacting the health of members.
- For ASO plans bound by collective agreements, consider beginning to build a transparent business case for change that can be used to educate all key stakeholders (such as Union partners), one that quantifies future financial risks and the shortcomings of the current design, and outlines possible blueprints for responsible change that are win-win.
A case study of success with an active solution
One plan sponsor decided that passively nibbling on the fringes of the expensive specialty experience was going to be the equivalent of putting a patio umbrella over a snowman before a week of sunny 15-degree days to prevent Frosty from melting: easy to do, but it provides little in terms of effectiveness. The above arsenal of passive offerings didn’t meet its needs.
The solution involved responsibly managing the access to all specialty therapies, in all major disease state areas, actively at the front end by multiple stakeholders with no financial interest in either the fulfilment of a given medication or its processing/dispensing. This is a major departure from a passive solution that is being provided by stakeholders with financial interests at play that you as a plan sponsor may not fully understand on the surface.
The result: from 39 new specialty drug claims that were reviewed, $460,000 of savings was realized in the calendar year for all payers (both primary and secondary).
Details of the program included:
- 80% of these claimants received their specialty therapy.
- Although 20% of claimants weren’t approved for the specialty therapy initially prescribed because they did not meet comprehensive evidence-based criteria for coverage, they did receive guidance on what was appropriate in their case. Members were treated with the respect they deserved and provided with a course of action, with communication that was both prompt and clear.
- Nearly 45% of the savings were the result of optimization of the medication and dosage regimen requested – this wasn’t simply an exercise focused on denying claims. Remarkable.
- The savings averaged more than $11,000 per incoming claim. Remarkable.
The solution was implemented within months. It is completely transparent, and the savings can be quantified daily. Moreover, health benefits can also be quantified to allow for consideration of the bigger picture. It’s not simply a cost containment exercise. Both union- and non-union stakeholders saw the need for, and the value of, this solution.
Could your plan do something with these kinds of savings? How would these savings impact how your plan makes stop-loss decisions? How would they assist with sustainability? How could they help fund benefits in areas of greater need for a given plan that drive a much greater win-win?
Meaningful change isn’t complicated, but it absolutely cannot be obtained through passive, behind-the-scenes solutions that look good on glossy brochure or PowerPoint slide deck.
The great news for this plan: it has entered 2016 with a meaningful solution already in place and are not pushing necessary change out again for another year. Can your ASO plan afford to wait another year before solving these kinds of issues?