The Formulary Season
It’s the formulary season, and you should be in the home stretch for your Health Plan Management System (HPMS) submission. What’s on the formulary and what changes were made to the formulary are among the top reasons why members either enroll in or disenroll from a health plan. Manufacturer price increases over the past two years and the number of high-cost specialty drugs released to market make formulary decisions and utilization increasingly difficult and significant to the health plan’s bottom line. With an average generic medication utilization rate of 80-85%, there is limited movement to improve. Some thoughts to consider:
Custom vs. Template
Offering a custom formulary targeted to treat a subset of enrollees with a chronic condition seems to be the wave of the future through value-based insurance design. Counterarguments center around a probable increased cost for the Pharmacy Benefit Manager (PBM) administering a custom formulary as well as increased compliance risks for the maintenance and updating of a custom formulary.
Cost-Sharing
Monthly member out-of-pocket cost-sharing for commonly used formulary brand and generic drugs varies widely across Part D plans; for five of the ten top brands, monthly costs can vary as much as $100. Medications (including the specialty tier) with the highest cost share are generally non-formulary brand medications. Non-formulary specialty medications are sometimes ten times higher if they are non-formulary.
Utilization Management
The number of prior authorization (PA) edits approved through the coverage determination request process should be assessed by the plan. If over 90% of the requests are approved, is it really cost effective for the plan (especially if coverage determinations are delegated to the PBM) to continue to utilize the edit? That expense may be better utilized in performing retrospective reviews to ensure medications are being used for approved indications.
Coverage Gap
For 2017, members are responsible for 40% of the cost of brand name drugs and 51% of the cost of generic drugs in the coverage gap. Plans should determine the potential medical costs (emergency room, physician visits, hospitalizations) of members not taking their chronic medications or only taking a subset that they can afford in this coverage gap period. Providing additional gap coverage for medications makes sense in some benefit/risk scenarios.
Resources
The rapid changes to Part D regulations make the tracking and implementation of these CMS requirements exceptionally difficult — to say nothing of actually managing to them. Gorman Health Group’s broad array of services can assist you in post-audit remediation, implementation of best practices, PBM contracting and implementation, interim staffing, clinical process re-engineering, Star Ratings improvement, and claims and PDE assessment and adjustments. Visit our website to learn more >>
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