Pharmacy Benefits Companies Hone Strategies to Contain Costs and Improve Quality:Long

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Pharmacy Benefits Companies Hone Strategies to Contain Costs and Improve Quality

Mari Edlin

[Healthplan 42(3):66-68, 2001 © 2001 AAHP]

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It is programs like Prescription Solutions' Generic Sampling, a six-month pilot garnering a 12 percent per member per month in savings, that earn pharmacy benefit managers (PBMs) their due. Once functioning solely as claims adjudicators and eligibility managers, PBMs have moved into the role of case managers, whose objectives are to cut costs and improve quality.

PBMs now support disease management programs; collect, analyze, and report data; deliver aggressive drug utilization, prior authorization, and step care programs; create benefit design solutions; and monitor drug trends. High on their list of priorities is creating partnerships with health plans through information sharing and case management.

Alan Muney, MD, executive vice president and chief medical officer of Oxford Health Plans in Trumbull, Conn., sees the PBM's role as one of integrator, bringing plans and physicians together to improve prescribing and overall quality. Express Scripts, a large PBM with headquarters in St. Louis and Minneapolis, has recently educated physicians on testing Oxford members with ulcers for H.pylori so the bacteria can be treated appropriately and on the use of steroid inhalers for asthma to reduce office visits.

"A PBM's role is more than just saying, 'Here's a drug benefit,'" says Todd Meek, president and CEO of NevadaCare, a Las Vegas-based HMO. "With its reporting and management capabilities, a PBM serves as an early warning system for patients who should be in case management."

While a Towers Perrin study estimated drug costs increase for managed care plans at a rate of 17 percent annually, Meek praises his sister company, R/xx Pharmacy Solutions, for keeping a lid on pharmacy costs while offering a formulary with a wide range of drug choices. Drug costs for NevadaCare have not risen over the last year.

When M*Plan, a 165,000-member HMO based in Indianapolis, decided to switch PBMs, it sought one that would offer care management, not just cost management. "Working with Prescription Solutions has allowed a plan of our size to continue to understand new products and look at different benefit designs for employers," says Joe Fox, M*Plan's medical director and vice president of pharmacy services. "We are not looking to the PBM as an answer to pharmacy problems but as a partner with tools, such as reporting capabilities, to support our efforts in clinical management."

Rob Seidman, vice president, pharmacy at Wellpoint Health Networks in Thousand Oaks, Calif., appreciates the easy use of data generated by WellPoint's PBM subsidiary, WellPoint Pharmacy Management. Among other advantages, the data help determine what should go on the formulary and which drugs produce the best outcomes.

Generics Take Center Stage

Although promoting generics as Prescription Solutions does is just one of many strategies for cost savings, it has proven to be a popular and successful one for PBMs and health plans. The Generic Sampling Program, started as a pilot at four Southern California-based medical groups, provided free samples of first-line medications -- generics and cost-effective branded prescription drugs -- prescription guidelines, and patient education materials to encourage the use of these drugs. The pilot program realized an annual combined net savings for all groups of $120,000.

The company's new Migraine Management Program, also focusing on generics, is directed at both physicians and patients. The program increases awareness of different therapies to treat migraines, such as less expensive over-the-counter medications, as well as ways to prevent the headaches. It also identifies patients who are taking expensive migraine medications and the physicians who prescribe them.

Prescription Solutions is not the only PBM with a generic program. Merck-Medco, a PBM based in Franklin Lakes, N.J., sponsors Generics First, a two-year pilot program in which pharmacists visit with physicians monthly to educate them about the safety and efficacy of generics. Merck-Medco then makes the generic samples available through mail order. (See March/April 2001, "Pharmaceutical Costs Drop When Plans, Employers Use Generics First"). Like Prescription Solutions' program, the goal is to get physicians to prescribe generics rather than their more expensive brand-name counterpart.

Glen Stettin, MD, vice president for clinical products for Merck-Medco, says that every two percent increase in the use of generics lowers the overall costs of prescription drugs by about one percent.

Further, Boston-based Harvard Pilgrim has added a new facet to its benefit design, which also addresses the use of generics. The plan has established capitated rates for ten therapeutic categories no matter what drug is dispensed in the category. San Diego-based MedImpact, Harvard Pilgrim's PBM, averages the price for each category by blending generic and brand costs and then sets the bar slightly lower to encourage generic prescribing.

"The program aligns incentives for both the plan and pharmacies," says Bob Da Silva, senior vice president of sales and marketing for MedImpact, "allowing both to share in cost savings if generics are prescribed. The pricing also creates a closer relationship between provider pharmacies, the plan, and the PBM, which enables us to build other patient care programs."

Harvard Pilgrim's drug costs have remained flat between April 2000 and February 2001, and generic prescribing overall has increased two percent due to the pricing program.

Making Patient Care a Priority

PBMs offer a wealth of other programs that aim to improve quality, from three- and even four-tier benefit designs, including lifestyle drugs, to patient/physician education and drug utilization strategies.

AdvancePCS, a large PBM based in Irving, Texas, has focused on safety in the geriatric population. Seniors frequently use many different kinds of drugs prescribed by multiple physicians and filled at more than one pharmacy -- increasing the risk of adverse interactions. With that in mind, AdvancePCS contacts physicians of senior patients to help reduce duplications and side effects of multiple drugs. The PBM conducted a demonstration project with members of a Washington, D.C.-based union plan administered by a health and benefit trust fund. Alice Sloan, vice president, account services for AdvancePCS, says that 25 percent of the physicians were able to reduce the number of drugs per patient in the union plan.

Merck-Medco emphasizes the use of larger dose tablets instead of multiple, lower doses. "It's easier to be compliant and costs less," says Stettin. Another Merck-Medco program, Smart Start, addresses the problem of waste. Many first prescriptions -- maintenance drugs that may not work and are then replaced with another medication -- are discontinued, so the program tailors the quantity to prevent waste, which can result in significant savings, Stettin says. Merck-Medco estimates that this type of waste constitutes two percent of total drug cost at retail.

Express Scripts has designed consulting services targeting patients and physicians. Plan members taking five or more medications a month are invited to bring their medications to a health professional to review and ensure they are appropriate and cost-effective. Sue Sommer, vice president/general manager, says that of the more than 7,000 members reviewed, each received an average of three-and-a-half recommendations, 60 percent of which were quality or clinically based, such as moving from a brand to a generic or avoiding a drug interaction. Plan savings are estimated at 14 cents per member per month. Express Scripts' physician education services have resulted in average savings of $500 per targeted physician.

Neighborhood Health Plan (NHP), a Boston-based plan that caters to 107,000 Medicaid members, has contracted with Express Scripts since last December. Since then the PBM has identified the plan's high users of drugs who may be getting prescriptions from multiple physicians and filling them at more than one pharmacy; placed quantity limits on certain medications that are used short-term (potentially saving $2 million); and developed step therapy strategies.

"To gain access to 'big gun' drugs, a physician has to demonstrate that the patient has already tried more standard therapy and that it doesn't work. The doctor is often under duress to write the prescription for the more expensive drug and since formularies don't apply to Medicaid beneficiaries, you need some other strategy to promote lower cost drugs," says Paul Mendis, MD, medical director for NHP.

National Prescription Administrators (NPA), a PBM in East Hanover, N.J., has proved the benefits of disease management through appropriate drug utilization in its Asthma Patient Health Management® Program. The program was applied to 5,527 patients with asthma in a study conducted by NPA and Rutgers University College of Pharmacy and published in Disease Management and Health Outcomes. The physician/patient education and compliance program resulted in a 17 percent decrease in total treatment costs, with inpatient hospital admission costs down 13 percent, emergency room visits reduced by 29 percent, physician office costs down 36 percent, and asthma medication prescription costs decreasing 18 percent.

Owned vs. Independent

PBMs owned by health plans believe they have a distinct advantage over the independents.

"We understand what's going on in managed care by being part of a plan. We look at drugs and drug therapy with a managed care focus," says Alex Gilderman, director of clinical pharmacy services for Prescription Solutions, which is owned by PacifiCare of California in Santa Ana. The PBM started as a department in PacifiCare and then became a separate unit in 1994.

Fox at M*Plan agrees. The plan chose Prescription Solutions in March and credits its understanding of the managed care environment and its managed care experience due to its relationship with PacifiCare.

Meek of NevadaCare believes that bringing R/xx, a subsidiary of i/mx Information Management Solutions in Phoenix, in house has provided better management control and customer service. "We can provide effective services to HMOs because we are a managed care company," says Ken Diamond, president of R/xx. "Pharmacy shouldn't been seen as a silo but rather as providing a continuum of care."

Seidman at WellPoint Health Networks says that having its own PBM provides efficiencies, among them the ability to easily identify patients who are in need of more appropriate drugs, the flexibility to create new disease management programs and benefit designs, and readily available pharmacy and medical data. He believes that stand-alones are short-lived.

Whether they are independent or owned by health plans, PBMs "are involved in all levels of health improvement and are forming more robust relationships with plans by offering strategic direction," Sloan of AdvancePCS concludes.


Going Electronic

While few can refute the benefits of linking physicians, PBMs, pharmacies, and plans electronically -- benefits that include point-of-care information, reduced costs and errors, and more convenience -- the connection is not yet widely in practice. To jumpstart physicians' use of electronic prescribing, however, Merck-Medco, Express Scripts, and AdvancePCS have joined forces to create RXHub, a clearinghouse for physician transactions.

As RXHub develops full capabilities, a physician will be able to enter a prescription that is then checked by the PBM for coverage and sent to the pharmacy for dispensing. The system will enable physicians to access information on other prescriptions a patient is taking to check for interactions, duplications, and compliance, and to identify the member's benefit coverage and eligibility.

"It makes sense because physicians contract with different plans who use different PBMs and have different formularies," says Alice Sloan of AdvancePCS.

As electronic prescribing and transfer of pharmacy/medical information become a reality, the Health Insurance Portability and Accountability Act (HIPAA) will have an effect on PBMs. Allan Zimmerman, senior executive vice president and general manager of National Prescription Administrators, is concerned that HIPAA will restrict PBM pharmacists' ability to contact members' physicians when they engage in utilization review and activities to uncover aberrant prescribing behaviors and improper protocols. "Should member consent be required for every physician intervention, the avoidance of clinical misadventures and improvements in quality of care realized through a PBM's activities may be seriously jeopardized," he says.

Janice Forsyth, corporate compliance officer for Express Scripts, praises HIPAA's standardization of drug codes and claims transmission, but admits that those standards can be costly for payers to meet. She is also concerned about who should have access to confidential information about a patient's drug history revealed in a claim, which physician should be called if several have prescribed contraindicated medications for the same patient, and how one defines "necessary" information that can be shared with a physician. "We are sensitized to these issues but haven't yet reached a solution," she says.


Mari Edlin, based in Mill Valley, Calif., is a freelance writer specializing in health care.

In addition, I see Independence Blue Cross screening innappropriate frequent refills of bronchodilator meds. They then contact the PCP, offer to place the patient in Asthma or COPD program which includes 2 SN Teaching visits within 1-2month interval for education re triggers, med use and disease management education. While I see the benifits as a Home care RN, i also see Big Brother watching. This requires CAREFUL oversight.....see down the road this as way to deny client as being member of a healthplan is too much services utilized or flip side will make patients more responsible for their health....

What controls should be in place to avoid this??? Karen

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