Pharmacy 201 Session 2

Transcription

1 Pharmacy 201 Session 2

2 Session 1 Assignment 1 Does the Client/Prospect Have a Pharmacy Contract? 2 How Long is the Term of the Contract or Agreement? 3 Is the Client/Prospect currently in a carved-in or carved-out arrangement? 4 Does the arrangement provide audit rights or allow for a market check? 3

3 Introductions Kristen Boyd Director of Training, Development and Engagement Robert Lewis Business Development Executive 4

4 Agenda 1 Pharmacy Contracts 2 Pharmacy Analysis 3 Best Candidates and RxBenefits Differentiators 4 Q&A 5

5 PBM Contracts: Key Considerations in Pharmacy Pricing 6

6 A Contract is Only as Good as the Sum of Its Parts 7

7 Pharmacy Pricing Key Considerations Client-Held Contract OR Carrier-Held Contract One Year Length OR Multi-Year Length Traditional OR Transparent (or Pass Through) All-In Discounts OR Discounts based on PBM Definitions Exclusive Specialty OR Open Specialty Aligned Formulary OR Non-Aligned Formulary Rebate Credits OR Administrative Fee Credits Zero Balance Logic (ZBL Off) OR Zero Balance Logic (ZBL On) Audit Rights OR Not Eligible for Audit 8

8 What is the length of the contract term (number of years)? How do you protect yourself? Vast majority of PBM contracts are long-term three year arrangements with harsh penalties to terminate early Why is this bad? Stale pricing in second and third year Inability to respond to the rapidly changing pharmacy marketplace Costly to exit contract early Two roads to protect yourself: Three year contracts with annual market checks One year price contracts 9

9 Who Holds the Contract? Client-Held Contract Carrier-Held Contract Client-Held (Direct) Contract with PBM Vary greatly depending upon the PBM and arrangement Client-centric contracts Protect clients from inadequate terms and conditions Can provide client-level guarantees vs book of business guarantees Provide great accountability Carrier-Held (Or Indirect) Contract with PBM through Carrier or TPA Client has indirect relationship with PBM since Carrier holds the contract Relying on the holding party to look out for client s best interest No audit rights Limited PBM accountability: i.e. estimated discounts, book of business rates, aggregate not client specific, etc. 10

10 What Pharmacy Arrangement is Best? Traditional Transparent (Or Pass Through) PBM agrees to set pricing terms PBMs has broader sources of revenue (may receive revenue from spread pricing, mail order, % rebate retention, data sales, ancillary fees, etc.) PBMs may receive revenue from spread pricing, mail order, % rebate retention, data sales, ancillary fees, etc. Transparent/Pass Through Contract All retail discounts and rebates are passed along to the group in return for high administrative fees PBM has limited sources of revenue (admin fee, mail order, data sales, ancillary fees, etc.) PBMs offer less aggressive guarantees because they have zero upside. 11

11 How are Brand & Generics Defined? What s best for the client? All-in Discounts? OR Discounts Based on PBM Definitions? General pricing tactic in which PBMs classify brand and generics based on the PBM's proprietary algorithms or definitions. These classifications generally result in a brand or generic being reclassified Result: Easier for the PBM to meet their pricing guarantees during reconciliation. Best approach: Drug Classification is determined by Medispan Prescription Pricing Guide. This accurately places drugs in the proper categories. 12

12 How are Single Source Generics (SSGs) Defined? What are the contract pitfalls? Single source generic status is assigned to generic manufacturer who receives an exclusive approval to market as first time generic 6-month exclusivity period In a typical contract, instead of the SSG drug getting a deep generic discount (74%), they get a typical discount of 35% 13

13 Which is the Best Deal? Value of SSGs & DSGs in the Generic Discount Contract 1 Contract 2 Contract 3 AWP-78.00% AWP-77.50% AWP-77.00% Generic pricing applies to drugs with more than 2 manufacturers. SSGs & DSGs are included in the brand guarantee Generic pricing applies to drugs with more than 1 manufacturer. SSGs are included in the brand guarantee All-in Generic Guarantee SSGs & DSGs are reconciled with generics Actual Effective Rate Performance AWP-72.00% AWP-74.00% AWP-77.00% NOTE: Dual source generics (DSG ) refer to generic with only two manufacturers 14

14 How is Specialty Being Purchased? What specialty network options can impact pricing? Exclusive Specialty is accessed through an exclusive network Generally deeper discounts Some PBMs provide greater clinical support for members Open Specialty Specialty can be accessed through open network Discounts not as deep Adherence and clinical support can be more difficult for members 15

15 How Can Formulary Impact Pharmacy? What is a Formulary? The purpose of the formulary is to encourage the use of safe, medically appropriate and cost-effective medications that results in improved health care outcomes at a reasonable cost. Each PBM will have their own tailored and unique formulary that they will agree to cover. Why Formularies Matter? Successful formularies are able to: Encourage generics, Maintain clinical integrity, Secure competitive pricing, Incorporate rebates to maximize overall value, & Adapt to the changes of the marketplace Plans with open formularies: Receive lower rebates, Less competitive pricing, More difficult to clinically manage pharmacy, & Assume greater risk 16

16 Understanding Rebates How do you discuss rebates with your customers? Rebate Credits? or Administrative Fee Credits? Rebates may approach 15%-20% of a client s gross drug costs. Rebates represent a significant financial opportunity for the employer Typical optics related to rebates: PBM retains the majority of the rebate dollars. Carrier shares a small portion of the rebates in the form of an admin credit. Rebates based on only a subset of brand claims (rebate-able brand drugs). Defining rebates as a percentage with no per brand guarantees. Days Supply Caveats 17

17 What is Zero Balance Logic (ZBL) How does Zero Balance Logic impact plan performance? A zero balance claim is a claim where the member pays for in its entirety and the employer pays zero often times because the pharmacy s cash price (U&C) is lower than copay. ZBL impacts effective rates. If a PBM uses an AWP-100% discount on ZBL claims instead of the actual discount, the PBM will inflate the overall discount performance to help them meet their guarantees. 18

18 How ZBL Can Impact Members If ZBL is Turned On Benefits the PBM; Tactic allows pharmacy to charge up to the copay when the discounted claim cost is less than the copay. For example: Discounted claim cost = $4 Usual & Customary (Cash Price)= $15 Copay = $10 Member will pay $10 (the lower of U&C or copay). The PBM then benefits from the extra $6. If ZBL is Turned Off (RxB standard) Benefit to Client; Tactic allows employees to pay the lowest possible price by paying the lowest of U&C, copay, or discounted claim cost. For example: Discounted claim cost = $4 Usual & Customary (Cash Price)= $15 Copay = $10 Member will pay $4 ( lower of the discounted claim cost, U&C, or copay). The member benefits from always paying the lowest available cost. 19

19 Does your contract have Audit Rights? Audit Rights X Not Eligible for Audits Must translate to a monetary recovery process to recover any shortfalls in the pharmacy contract performance Pricing terms on paper are not always what a client s actual performance is Periodic audits can ensure client are receiving the full guarantees and value of the contract Very rare to have any monetary recovery for underperformance Clients have general discount rates Little can be done to address discounts performing below the stated discounts 20

20 Case Study Check-In How do PBM contracts and pricing considerations impact the customer you have identified for your case study? 21

21 Pharmacy Analysis 22

22 What is the Value in Completing a Pharmacy Analysis? Full visibility into how the current contract is performing Measure the current arrangement against others to see if your contract is truly competitive RxBenefits can compare against other pharmacy offerings as well (Current, Renewal Offer, plus three RxBenefits PBM partners) Proactive approach to pharmacy - current clients can either confirm the value of their pharmacy arrangement or transition the client to a better option before it becomes an issue Average Overall Savings % 24.17% Carved-In Groups analyzed with average savings of 24.24% Carved-Out Groups analyzed with average savings of 23.98% 23

23 The Overall Value of Data Analysis Contract Checkups at No Cost for Your Clients/Prospects Offense vs. Defense Safeguard Your Clients/Prospects Gain Valuable Insight into Current Arrangement Compare against Other National PBMs Let RxBenefits Help You Play Offense 24

24 Customized Data Request Letter Detailed Analysis Requirements Current contract pricing terms and copy of contract (if available) providing: Brand AWP Discount Generic AWP Discount Brand Dispensing Fee Generic Dispensing Fee Specialty Discounts Rebate Credits Claim File Detail Timeframe Most recent 12 months of Rx claims history Rx Claim File Data Elements Member Copay/Coinsurance Fill Date Ingredient Cost Brand/Generic Indicator AWP Etc. 25

25 How It All Comes Together the Process 1 Initiate Strategy Call Needs Assessment 2 Collect Data for Analysis (estimate 2 weeks) 3 Detailed Analysis of Contract Performance & Effective Rates (Estimate 8-10 business days for completion) 4 Analysis Illustrates Client Results- NDA required to release 5 Review Customer Analysis Results with Consultant 6 Present Analysis Results to Customer 7 Client s Decision Process 26

26 Key Metrics of Differentiation & Savings: Sample Pharmacy Analysis Executive Summary Contract Comparison Plan Design Claim Distribution by PBM Claim Statistics Reprice by Channel and Drug Type Clinical and Utilization Programs Formulary Disruption (Group & Member) Effective Discount Comparison 27

27 Case Study Check-In What questions/concerns do you have for completing a pharmacy analysis for the customer you ve identified for your case study? 28

28 Best Candidates Discussion 29

29 Things to Consider Self -Insured vs. Fully-Insured Carve-In vs. Carved-Out Under 10,000 EEs Single Pharmacy Plan / Locations vs. vs. Over 10,000 EEs Multiple Pharmacy Plans / Locations Other Considerations: Industry TPA/Carrier Connectivity Formal RFP Process Implementation Timeline 30

30 Why RxBenefits? 31

31 Market Niche THERE IS A VOID IN THE MARKET Three largest PBMs earn $200 billion in combined revenue. Majority of resources focused around health plans, governmental and large commercial employers. Best resources assigned or reallocated to larger payor market. Choose not to quote on smaller groups. Approach has created a void in the marketplace. RxBenefits is uniquely positioned to fill this void with our advanced capabilities and dynamic, personalized service approach. 32

32 RxBenefits Model Delivers Rx Aggregate Purchasing for All Employers Meaningful Analytics Full Suite of Services Real Program Savings Client-Facing Services Core PBM Services Contracting Data Analytics Billing Clinical Management Independent Audits Performance Reviews Pharmacy Networks Mail Order Clinical Resources Mobile App Account Management Performance Guarantee/Oversight Account Management Performance Guarantee/Oversight 33

33 The Ongoing Value of RxBenefits in the Numbers Our clients not only experience real savings in year one, but ongoing value through evergreen pricing that ensures our clients contracts remain highly competitive. 20%+ 9% 90%+ Average Savings over Previous Contract for RxBenefits Prospects Average Contract Price Improvement Year over Year Clients Had a Surplus of Savings over Contract Guarantees NOTE: Statistics based on national consulting firm book of business with RxBenefits 34

34 Our Approach to Serving C2 Clients 35

35 RxBenefits Service Model IMPLEMENTATION TEAM DATA MANAGEMENT CONCIERGE SERVICES Strategic Oversight & Expertise acting as an Extension of HR MEMBER SERVICES CLINICAL SERVICES PLAN PERFORMANCE 36

36 Account Management Approach Proactive Resource Team & Consulting Partner to Support HR Each Client has an assigned Strategic Account Executive with one or more Account Managers to support all account-related activities 30+ Seasoned team Extensive experience Monthly Customized plan reporting Customized Clinical recommendations Service standards employed to ensure client satisfaction 37

37 Member Services Individualized High Service Approach for Members with Better Support RxAssure In-house Member Service Reps Dedicated service team to respond to s Average 8+ years experience Individualized High Touch Service Hands-on approach and 1st call resolution Emergency access to Pharmacist Supports Member s Rx Management Member access 24/7 Dedicated and toll-free number for members Saves member time and money Service standards employed to ensure client satisfaction 38

38 Client and Member Services Teams Issue resolution for clients, consultants, and members For HR and Consultants: , For Members: , Client Services Stacy Bell, Manager Specialized team supporting the daily needs of clients, consultants and account management teams Member Services Latrina Hicks, Manager Experienced, highperforming call center team delivering superior level of service to members Client Services Case Manager Member Services Supervisors Client Services Associates Member Services Representatives 39

39 Open Discussion: Questions from the Field Thinking of your case study, how will you position RxBenefits based on your clients needs? What additional questions do you think your customer will have? What additional information do you need in order to close this sale? 40

40 What s Next? Complete the Top 10 Pharmacy Questions worksheet Complete Part 2 Prepare to discuss with your customer Complete the course evaluation You will receive the evaluation through Your thoughtful feedback is very valuable to us Think Pharmacy Integrate pharmacy into your planning and customer conversations Consider the impact Rx has on your customer s total spend 41

41 Questions? 42