Limited Networks

I was reading Charlie Baker’s post on Narrow Networks, and it made me think about this concept from a pharmacy perspective.

In general, this is a default solution for mail pharmacy.  You can’t chose between Medco’s mail pharmacy and Express Scripts.  You have one or the other.

And, Mandatory Mail is an expansion on this.  It not only limits the network size, but it forces you to use the network in certain ways (i.e., if you have a maintenance drug you have to fill it at the lowest cost location).

In specialty pharmacy, this has certainly been the trend.  More and more companies are limiting the choice of specialty pharmacies that you can choose from.  In some cases, this is dictated by the manufacturer who limits distribution of their drug to only certain pharmacies.  And, then Mandatory Specialty will drive you to a specific mail site for your specialty medications.

Within the retail network, this has been tried a few times, but without much adoption.  That being said, I found retailers very willing to offer lower prices to clients if they were part of a limited network (where they expected to get more marketshare).  Another option is to treat the network like a formulary (or drug list) with tiers and where members pay more to use certain pharmacies (which likely are higher cost or offer lower quality / service).

In this economy, I have to believe that we will see this take off.  Of course, consumers don’t like it, but it’s better than losing your benefit all together.  It seems like a logical change to the benefit…you limit choice without impacting outcomes in order to save money.  There are some times when it may not make sense.  For example, excluding CVS from the retail network in Boston would be a very difficult sell.  It’s all a question of marketshare, options, and ultimately the savings per disrupted (or upset) member.

Of course, the pharmacy network is very different than physicians.  I would think you could basically have any primary care physician, but everything else could be limited short of emergency care.

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