Enabling Healthy Decisions

A colleague recently forwarded a local article on employers and plan sponsors seeking alternative avenues for cost savings – tackling dependent eligibility audits to generate plan savings.

And the trend is catching on as benefits consultant groups like Mercer, Watson Wyatt, Hewitt can attest and as Mercer recently shared that it anticipates a doubling in its private sector dependent audit business since 2008. Similarly, if one were to look at the number of state and municipal government groups looking to audit their employees this year over last, it has at least doubled.

So why are dependent audits largely considered the final frontier and why are more employers just doing audits now? Well, as all of us who read the various health care blogs and are in the business know, cost-shifting is approaching its limits– employers have only so much latitude remaining with their employees relative to increased member responsibilities with deductibles and co-insurance without cutting benefits (even though many are forced to cut regardless in this economy).

Furthermore, creative cost-saving plan design options are pretty much exhausted (though we’re seeing some innovations in pockets). So what’s left if the employer is still to offer employees the more traditional health care coverage? Some estimate that anywhere from 3 – 20% of dependents are ineligible for health coverage (most say 3-8%). Employers are taking on these audits as a means to identify dependents who clearly should not be enrolled – divorced spouses, deceased spouses (yes, they are still enrolled), older children, boyfriends – you get the idea. At anywhere from $4,700 to $12,000 total average premium PMPY (excluding any medical costs on top of premiums) there are meaningful dollars to be saved that can be the difference between continuing, trimming or altogether dropping employer-sponsored health benefits. Whether you be large or small employer group, the cost savings can be significant – well north of $1mm for many groups. So the ROI is clear and delineating who is eligible, or not, should be a relatively straightforward proposition, right?

Well, not so fast. Getting employees to comply with audits as well as send in all the necessary documentation (e.g. marriage certificates, adoption paperwork, etc.) can be tedious and cumbersome for the employer. But despite the pain of an audit for both employee and employer, there is sufficient ‘green’ in those ineligibles that employers, small and large, are launching eligibility audits.

Once an employer is determined that an audit is necessary what are the keys to a successful audit? Fundamental program design and seamless execution are critical because as a few as one irate employee can brew a firestorm in employee relations. Here are the fundamentals…

1. Education and communication
2. Data analytics to find higher-risk employees
3. Access to Information and resources during the audit
4. Ease of document submission
5. Verification and results

So where to begin? Granted each employee population is different so flexible communication and engagement tactics should reflect this, but the evidence behind dependent eligibility audits is clear so you need to think now on how to execute and execute quickly before open enrollment season is upon us. Here at Silverlink, we are offer comprehensive communication solutions that include multi-channel outreach, inbound solutions, web tools, data management, analytics and comprehensive program management so clients can optimize their outreach goals and realize substantial cost savings so that there are no surprises during open enrollment.

Lastly, in some ways the spike in dependent eligibility audits seems too little too late for plan sponsors and it is bewildering why this is only coming onto the radar now with some gusto when eligibility verification should be a fundamental part of enrollment, shouldn’t it?

This posting was written by Cassandra Price, Payor Operations Subject Matter Expert for Silverlink Communications. Cassie has held leadership positions in managed care organizations and healthcare IT solution providers in strategic product management and client services including UnitedHealth Group, McKesson Health Solutions and Concentra, Inc.. Her healthcare background also includes private equity/M&A, care management software solution design, CRM design and implementation and managed care analytics and outcomes research.

Cassie’s work at Silverlink Communications focuses on designing multi-channel communication solutions for managed care organizations and self-insured employers where driving operational efficiencies and cost-savings are critical. Solutions areas include coordination of benefits programs, enrollment & eligibility campaigns, broker communication programs, member and provider call center call obviation solutions, and various other member, provider and employer communication programs. Cassie has her MBA in finance from Babson and an A.B. in History from Hamilton College.

I must admit that I have been reading these reports by Walgreens for less time than those by Express Scripts, Medco, and CVS Caremark so there were a few more questions that jumped out in my mind here. From the beginning, one thing that I noticed was that Michael Nameth signed the introductory letter. I only pull that out to wonder how that compared to Express Scripts and CVS Caremark (which are the other two 2009 reports currently available).

• The Express Scripts report was signed by George Paz (CEO).
• The CVS Caremark report doesn’t have an opening letter.

Their trend numbers were:

• 5.6% including specialty
• 4.1% without specialty

They rolled out a new 90-day program called Walgreens90 which matches the Maintenance Choice program from CVS Caremark.

• Member pay the same at mail or Walgreens store for 90-day Rx.
• Same cost to the payor at either channel.

A semantical issue for me was that they call their program “step care therapy” versus the rest of the industry that calls it “step therapy”. Are they implying a level of care in the intervention that is different from others?

In the opening section, they talk about some general data which I found interesting:

• 1 in 7 Americans went without a prescription in 2007 because of cost related concerns
• 1 in 10 working age adults with private insurance also went without a prescription

  (Both stats from study by the Center for Studying Health System Change)

Their PMPY costs were $912 including specialty. $812 excluding specialty.

78.1% of their members take a prescription medication.

Their population had 13.6 Rxs PMPY.

Members aged 60 years and older used 2.6x as many Rxs as the younger members.

I was surprised that they claim that a 1% increase in generic fill rate produces a 2% savings for their clients. This is double what CVS Caremark claims. I always thought it was between 0.75% and 1.5%. Is their pricing different or is there something else that generates this increased savings per percentage?

The average annual member cost was $178.40 (PMPY).

They say the average ingredient cost was $146 for a brand and $26 for a generic. The brand price seems really high to me.

Their generic fill rate was 65.6%.

Members paid 16.6% of brand drug costs and 29.8% of generic drug costs (or 19.6% overall).

They say that 37.4% of all their prescriptions were filled as 90-day Rxs (retail or mail), but they lost me when they broke it down.

What surprised me (and maybe it shouldn’t) is that 7.4% of their clients drug spend is on 3 drugs that have easy savings programs associated with them:

• Lipitor – split the drug or target it for therapeutic substitution with generic Zocor (simvastatin)
• Prevacid and Nexium – step therapy for generic Prilosec (omeprazole) or move people to Prilosec OTC

Specialty drugs accounted for 0.5% of total Rxs but 10.9% of total spend.

The average specialty drug was $2,032. [for a 30-day supply I assume]

They provide a few case studies, but they point you to www.walgreenshealth.com/casestudies for more information.

One thing that jumped out for me in one of the case studies was their mention of different copays based on whether a member went to an in-network pharmacy. I wonder if (as a retailer) they have a smaller network or actually used a tiered network design. Most plans (that I’m familiar with) seem to have all (or the majority) of retail pharmacies in the network.

In their end section on the landscape, they mention new combination drugs. I would be very interested in their opinion on these…should they be covered? Are they a waste of money?

Finally, at the end, I looked at the methodology. A few things caught my eye:

• They excluded managed care clients. Why? Wouldn’t they be the most aggressive?
• They excluded Medicare Part D clients. (which is consistent with Express Scripts and CVS Caremark)
• They excluded clients with a custom formulary. Again, why?

They use a discounted AWP to calculate total cost, but they don’t tell what the discounted rate is.

In my whitepaper, I talked about the fact that plan design as a tool for managing trend is “dying”. There isn’t room to shift more cost to the consumer. PBMs and plans have to actually activate consumers and get them to take preventative action and cost saving actions.

There are still plenty of people out there that I will call “plan design bigots”. They believe that the only way to drive behavior is to implement plan design – limit the formulary, change copays, put in utilization management programs, implement POS edits. Those things work…don’t get me wrong. But, if that was all there was to it, this would be easy. It isn’t.

You have to find ways to engage the consumer, get them to care, and get them to take action.

I would layout 3 challenges:

1. Cutting through the “noise” or “communication clutter” that people have in their lives.
2. Delivering personalized information (right message, right time, right channel).
3. Getting them to act (AND sustaining that action over time).

Just look at adherence. Reducing copays to $0 improves adherence, but only about 5-10%.

While I am usually a big Smart Money fan, I think this article is over the top. It’s sensationalist. It pulls random criminal examples and makes them sound normal. I’m not a pharmacist but I was offended for my friends that are.

Here are their points with my comments in brackets.

1. I’m overworked and stressed out [Who isn’t these days? Maybe part of health reform should look at the right staffing levels for health professionals and put an hour maximum on them like airline pilots or truck drivers.]…note that there were 3.8B Rxs filled in 2007.
2. …which means I’m more error-prone [more than what…I would bet technology has improved the error rate compared to the past. But, a 1% error rate would mean 38M errors per year. The question of course is errors that leave the pharmacy. The bigger issue is finding time for them to counsel patients where there would be a final safety check and discussion around the medication to minimize patient errors.]
3. I don’t understand all my merchandise [Isn’t this what technology is for? With 10,000+ drugs today plus all the over-the-counter drugs, this is an impossible task. And, the article complains about their ability to catch OTC interactions…well that’s pretty hard when they aren’t tracked. A great opportunity for PHRs.]
4. My drug-swapping could make you sick [While the article says it’s fine “most of the time”, it sounds like they are talking about NTI (narrow therapeutic index) drugs which aren’t switched by many pharmacists that I know. It’s a short list of drugs and probably less than 1% of the prescribed medications in the US. Talking about causing unnecessary worry…someone must have gotten their information from a brand pharma rep.]
5. Frankly, your private records aren’t all that private [Come on. First they talk about drug companies sponsoring programs. So what…they don’t get patient data. The only way they know who uses their drug is when consumers sign up on their websites for coupons or to receive information. Then, the article goes on to talk about electronic records and electronic prescribing. That’s a very safe process with lots of protection. Don’t make people afraid of the future.
6. I can be pretty sneaky sometimes [I am sure this is true in every profession, but they talk about some old issues like charging more than the copay or having a higher cash price than a NEGOTIATED price from your insurer. And, buying and selling samples…that would be illegal so I’m pretty sure that’s not a “common” practice.]
7. Paying out-of-pocket? The price of your prescription just went up. [Yes. Nothing new here. It’s the same issue in medical costs. So, go somewhere else. I’m not saying it’s right to gouge someone, but costs vary and stores have a right to charge a different price.]
8. The medication is stale [Here they quote a case from 1991. Nothing more recent than a criminal from the early 90s.]
9. I don’t just sell drugs. I make them. [Here they talk about compounding which I think is a really small percentage of the time. I have never heard of a pharmacist compounding a drug that they could take off the shelf and give to a patient.]
10. You can get any prescription you like online. [I don’t get their point here. If you have a prescription, you can use the Internet to order refills from your pharmacy (in many cases). There are lots of legitimate online stores for OTC products.]

There is always new “slang” popping up, but it seems to happen more lately (or I’m just getting old). Here are a few things from an article in Delta Sky Magazine (April 09) and today’s USA Today.

1. Blackberry Jam – delay caused by a person walking slowly, nose glued to PDA.
2. Defaced – deleted from someone’s list of Facebook “friends”.
3. Designated Texter – someone who receives and responds to the driver’s text messages to ensure passenger safety.
4. Kthxbi (OK – Thanks – Bye) – Fast end to an online conversation that going nowhere.
5. ShyPod – Someone who won’t share his or her iPod for fear of being exposed as a disco/country/Neil Diamon lover.
6. Hashtag – users can disclose the topic of their tweet by prefixing a word with a hash symbol (#health).
7. Tweet – a short update of 140 characters or more.
8. Tweetup – when Twitter users meet face-to-face.
9. Following – when you receive someone tweets, you are considered their follower.