10 Pharmacy Terms Employers Need to Know

MedCost pharmacistBy Zafeira Sarrimanolis, PharmD, MedCost Clinical Consultant

Pharmacy terms in health plans can be confusing. Employers must understand their pharmacy plans, especially in this era of rising drug costs.

As a pharmacist, I help MedCost clients navigate their Pharmacy Benefit Manager and identify opportunities for cost-saving in their company health plans. Here are some terms employers need to know when determining prescription drug benefits for their health plan.

1. Pharmacy Benefit Manager (PBM)

An organization that develops and maintains preferred drug lists, contracts with pharmacies, and negotiates discounts and rebates with drug manufacturers. PBMs also process and pay prescription drug claims in addition to implementing strategies that save pharmacy plan dollars, while improving member health.

2. Formulary 

A prescription drug list that is preferred by a health insurance plan. Identifies medications available to treat certain medical conditions and organizes into tiers.

3. Tiers

Different cost levels a member pays for a medication. A tier 1 medication is generally generic and lower-cost, while higher-cost brand name medications fall in Tier 2 or 3.

pharmacy terms4. Brand-name drug

Developed, patented and sold exclusively by a pharmaceutical manufacturer.

5. Generic drug

Manufactured and sold after the brand-name patent has expired. For example, Tylenol® is a brand-name medication and acetaminophen is its generic equivalent. Generics promote competition and drive down drug costs. Almost 80% of prescription drugs sold in the US are generics.

6. Specialty drug

A high-cost, prescription drug that treats complex conditions such as rheumatoid arthritis, cancer or multiple sclerosis. These drugs typically have special storage requirements, administration techniques and require specific monitoring. Specialty drugs may account for up to 45% of a plan’s total drug costs.

7. Exclusion

A drug or service not paid for by a health plan.

8. Rebates

Money paid by manufacturers after drug purchases, as part of negotiations with payers (insurance companies, PBMs, benefits administrators, Medicare). Rebates cut about $40 billion from drug sales annually (see examples).

pharmacy terms9. Prior authorization

Requires a doctor to provide additional clinical information to determine coverage of the prescription drug under the plan.

10. Step therapy

Trying a lower-cost, clinically-similar drug before a higher-cost drug for the same medical condition is allowed under the plan.

Summary

Step therapies and prior authorizations feel disruptive to employees. For that reason, employers are faced with the challenge of balancing employee satisfaction with cost containment.

Our clients are seeing significant results using preferred formularies and these cost-saving strategies. One group avoided expenses of over $250,000 in the first months after adopting a managed approach with one of our PBM vendors.

The goal is to ensure the right people get the right drug for the right medical condition at the right time.  With our PBM partners, we work to ensure that our members are utilizing safe, clinically-appropriate, cost-effective treatments. Employers can partner with their employees to become better healthcare consumers so everyone benefits in the use of prescription drugs.

7 Ways to Manage Medical Cost for Employers (Infographic)

medical cost

*Discover more resources about MedCost Care Management programs hereOr browse through seven ways to manage medical cost:

  1. Complex Case Management 
  2. Inpatient Management
  3. Outpatient Management
  4. Telehealth Services
  5. Nurse Health Coaching
  6. Maternity Management
  7. Behavioral Health

To print this infographic, click on the title and scroll to “PRINT THIS PAGE” at the bottom.MedCost

House Republicans Introduce Health Care Reform Legislation

health reformBy Brad Roehrenbeck, General Counsel & VP, Legal Services, Compliance

On Monday, House Republicans unveiled the long-awaited legislation intended to overhaul former President Barack Obama’s signature health care legislation, the Patient Protection and Affordable Care Act (ACA). The bill, titled the American Health Care Act (AHCA), would make major changes to the ACA that impact individuals, employers, insurers, and providers in significant ways, as summarized below.

Provisions Impacting Employer-Sponsored Coverage

The most significant development impacting employers under the proposed law is removal of the employer mandate.

  • Large employers would no longer face penalties for failing to offer coverage that meets the minimum value and minimum essential coverage requirements of the ACA. 
  • Additionally, the proposed bill would repeal the widely unpopular excise tax on high-cost coverage (the so-called Cadillac Tax) and offer tax credits to small businesses for providing coverage to employees. 
  • The law would also require employers to indicate on Form W2 the months of coverage each employee was eligible for coverage. (Note: It appears the legislation is intended also to eliminate the ACA’s annual employer 1094/1095 reporting under Section 6056 of the Code. That would be a natural by-product of the employer mandate repeal, but the bill does not appear to eliminate this obligation expressly. This may be addressed in a future amendment to the bill.) 

Changes to Account-Based Plans

health reformThe AHCA would make some significant changes to the rules governing HSA accounts for the first time since 2004.

  • The bill would increase the annual HSA contribution limit to equal the out-of-pocket maximum amount established for that year under the HSA rules (currently $6,550 for self-only coverage and $13,100 for family coverage).
  • The rules would also be modified to allow both spouses (if over 55) to make “catch-up” contributions to the same HSA account.
  • Also, a new special rule would allow HSA account holders to use HSA funds to pay for health care services performed up to 60 days prior to the account being established.
  • The bill would also reduce the excise tax on distributions not used for medical expenses from 20% to 10%.
  • Finally, the AHCA would remove the ACA’s cap on contributions to health FSA plans.

Changes to the Individual Market

While leaving in place popular provisions of the ACA such as the requirements that insurers cover dependents up to the age of 26 and pre-existing conditions, the AHCA would otherwise significantly redesign the ACA’s changes to the individual market.

  • First, the bill does away with the individual mandate and repeals the cost-sharing subsidies and premium tax credits made available under the ACA to individuals who enroll in coverage on the exchanges.
  • In turn, the AHCA puts in place refundable tax credits that individuals could use to defray the cost of coverage, including coverage outside the exchanges.
  • Like under the ACA, these tax credits are eligible for advance payment. The amount of the credits will vary based on age and income, and excess payments can be deposited directly into an HSA account.
  • Tax credits are not available for any coverage that includes abortion services.

health reformIn place of the individual mandate, to incentivize individuals to maintain coverage, the bill provides for increased premiums (30% for 12 months) for individuals who have had a gap in coverage of at least 63 days.

  • The bill also creates the “Patient and State Stability Fund,” which provides significant payments to states ($10 to $15 billion per year through 2026) to help stabilize the individual and small group insurance markets and to assist high-risk patients.
  • Also, beginning in 2020, the ACA’s requirements around essential health benefits will sunset.
  • Finally, the bill allows carriers greater flexibility to vary premiums based on age by up to a 5:1 ratio, up from 3:1 under the ACA.

Changes in the Medicaid Program

Unsurprisingly, the AHCA would repeal the ACA’s expansion of the Medicaid program.

  • It would also put into place a per-capital allotment of federal Medicaid dollars to the states, which is expected to rein in the future federal financial commitment to the program.
  • Similar to other provisions, the bill would bar Medicaid dollars from being used on abortion providers.
  • It would also require states to disenroll high-dollar lottery winners and incentivize states to assess participant eligibility on a more frequent basis. (Note: The bill will also reverse major cuts to the Medicare Disproportionate Share Hospital program, which provides safety net funding to more than 3,000 hospitals that disproportionately treat indigent patients).

Repeal of ACA Taxes

Finally, the AHCA would repeal numerous taxes—in addition to the Cadillac Tax discussed above—that either have gone into effect or are expected to become effective under the ACA.

  • Among those are:
    • The insurer tax (effectively a federal insurance premium tax),
    • The prescription medication tax,
    • The tax on over-the-counter medications,
    • The medical device tax.
    • It would also eliminate taxes on high-income earners that were levied under the ACA to help pay for the law.

health reformRepublicans have signaled an aggressive timeline for deliberations on the law. Committee hearings are expected to take place immediately, and the bill could reach the floor of the House in as little as one week.

President Trump has forecasted that he would like to sign the bill by Easter. We will continue to monitor developments, including any changes in the bill as it moves through the legislative process.MedCost

This blog post should not be considered as legal advice.

Four Corporate Ideas for Employee Wellness Programs

Stories of Success

If you’re one of the 80% of employers who have offered employee wellness programs and information,[i] you may be searching to see what is working at other companies. Developing a culture of wellness can decrease sick leave absenteeism by an average 28%, and workers’ compensation and disability costs by an average 30%.[ii]

employee wellness programs

How can you increase your employees’ job satisfaction and overall health, while saving hard-earned health care dollars? Here are four power ideas for more successful employee wellness programs

1. Offer Choices.

One size does not fit all in employee wellness programs,” said Crystal Spicer, MedCost Human Resources Manager. As a company offering financial and health solutions for employer benefit programs, clients were asking what wellness outreach MedCost was doing for their own employees.

The MedCost HR team realized that what worked for one employee didn’t necessarily fit another. So the company’s wellness committee designed a point-based program with multiple ways to boost health and earn financial incentives.

The annual program, kicked off in 2016, measured points earned for employee wellness activities on a quarterly and a yearly basis. This chart shows multiple ways that MedCost employees could earn points for the financial incentives at year’s end:

employee wellness programs

“We got people’s attention, which is what we were striving for,” said Crystal. One group of women came to work an hour early to walk together – even climbing stairs.

A Weight Watchers group cosponsored by the company attracted 20 people. Sherry lost 56 pounds. Glenn lost 36. Trish, motivated on her own, lost 40. And their new habits of exercising and eating helped them keep it off.

MedCost offered $100 drawings quarterly for those who met point goals. At the end of 2016, those who accrued the 2,400 points will receive a $500 contribution into their personal Health Savings Account.[iii] Employees enrolled in a Preferred Provider Organization plan could earn a gift card for $250.

Fitness classes offered after work onsite were another way to add points. The company shared costs with employees who signed up for the six-week classes. From the beginning, classes were well-attended.

Financial incentives are effective for successful employee wellness programs. Four out of five employers use financial incentives to promote wellness.[iv]

“Getting buy-in is key,” said Crystal. “Earning these financial incentives are obtainable because there are a whole variety of ways to get there.

2. Incorporate Employee Suggestions

employee wellness programs

Figure 1. Several MedCost employees at the 2016 Heart Walk

Our annual support of the Triad American Heart Association’s walk hit new levels this year – and not just financially. Jenny implemented a leadership contest to raise the most employee contributions, with the winner earning the right to wear this Southern Lady hat, red beads and tutu (See Figure 1).

Brad (in the lovely hat and tutu) definitely stood out in the crowd of 7,500 walkers through downtown Winston-Salem.

But even better were the 125 employees, family members and friends who walked between one to four miles on October 29th. Dogs, babies in strollers, music and laughter made this emphasis on healthy hearts a lot of fun.

Another employee suggestion resulted in a weekly “Walk with Me Wednesday” event, beginning in 2015. MedCost is located in a business park with sidewalks, gazebos and ponds. An average six to eight employees walk 15 minutes together at noon, enjoying fresh air, camaraderie and exercise in a beautifully landscaped setting.

employee wellness programs

Figure 2. MedCost on Kimel Park Drive, Winston-Salem, NC

One key benefit of this weekly walk is better connectivity among the employees who walk together. In many businesses, department knowledge is often siloed from other departments because of different functions. And employees don’t get to know each other.

“The walks really do benefit the mind as well as the body,” said Karen, a 16-year employee at MedCost. “Walking with others just motivates me to get out and walk.”

 

3. Take a Long-Term Approach to Your Return on Investment (ROI)

“Looking purely at hard costs, healthcare spending can be one of the largest single expenses for a business, next to payroll,” said Dan Birach, president of HEALTHWORKS division at Carolinas HealthCare System. [v]

“Statistics show that for every dollar an employer invested in areas such as wellness programming and disease management, they enjoyed an ROI of anywhere from $1.50 to $3.80. Healthy employees are more productive and miss fewer days.”

The Society for Human Resource Management reported that 80% of employers offered preventive wellness services and info in 2015.[vi]

Employee wellness programs are having an impact on reduced dollars spent on health benefits. When corporate wellness programs were implemented:

  • Claims costs reduced 28%
  • Doctor visits reduced 17%
  • Hospital admissions reduced 63%
  • Disability costs were down 34%
  • Incidence of injury reduced 25%[vii]

“A wellness program can make just a small difference at first,” said Crystal. “It has to build gradually.”

Employers offering wellness programs are looking for the same key ingredient for their employees – motivation.

4. Motivate Your Employees for Better Quality of Life

employee wellness programs

Figure 3. Claudia Johnson before losing weight

Claudia works with providers (hospital systems, medical offices and other professionals) at MedCost. When doctors diagnosed medical issues exacerbated by her obesity, she took a hard look at her lifestyle. And wanted to change.

“I am involved in Christian ministries in my personal life,” Claudia said. “I wanted to be in better health. My family and friends supported me to make some new choices.”

MedCost wellness choices inspired Claudia to do things differently. In January of 2016, she braved the cold temperatures to begin walking every morning at 7:30 a.m. with several other employees. She climbed stairs at lunch. She focused on her health.

“I’ve lost 30 pounds,” Claudia said. “I love the fact that I have gone from a size 22 to a size 18. My grandchildren are ten and six. I have to get rid of some more of this weight to keep up with them.”

employee wellness programs

Figure 4. Claudia Johnson after losing 30 pounds

Summary

Inspire your employees. Fit your wellness program to your unique business style and culture. One size won’t fit all, so try different ideas to see what resonates with your employees.

Above all, pour on the encouragement. Your employees are spending a large chunk of their time working for you. Your support may not only boost your bottom line, but improve your employees’ health in a life-changing way.

Your company will produce not only satisfied customers, but loyal, healthier employees.MedCost

 

 

[i] “Eight Things You Need to Know about Employee Wellness Programs,” Alan Kohll, Forbes, April 21, 2016, http://www.forbes.com/sites/alankohll/2016/04/21/8-things-you-need-to-know-about-employee-wellness-programs/2/#4097a3e13e2d

[ii] “Be Stronger, Live Better,” National Association of Health Underwriters Education Foundation, http://www.nahueducationfoundation.org/materials/WellnessBrochure.pdf

[iii] For those enrolled in a High Deductible Health Plan with the company.

[iv] Incentives for Workplace Wellness Programs,” RAND Corporation, http://www.rand.org/pubs/research_briefs/RB9842.html

[v]  “Five Things to Consider When Planning Your Wellness Program,” Dan Birach, HEALTHWORKS Division, Carolinas HealthCare System,  http://www.carolinashealthcare.org/medical-services/prevention-wellness/employer-solutions/healthworks/info-hub

[vi] Kohll, ibid.

[vii] National Association of Health Underwriters Education Foundation, ibid.

Fully-Insured vs. Self-Funded Health Plans (Infographic)

Has your company examined the differences between fully-insured versus self-funded health plans? Check out this infographic to see why more employers are choosing self-funded plans.

fully-insured versus self-funded health plans

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US Senate Passes 21st Century Cures Act

21st Century Cures ActA sprawling health bill that passed the Senate Wednesday and is expected to become law before the end of the year is a grab bag for industries that spent plenty of money lobbying to make sure it happened that way.

Here are some of the winners and losers in the 21st Century Cures Act:

Winners

Pharmaceutical and Medical Device Companies. The bill will likely save drug and device companies billions of dollars bringing products to market by giving the Food and Drug Administration new authority and tools to demand fewer studies from those companies and speed up approvals.

The changes represent a massive lobbying effort by 58 pharmaceutical companies, 24 device companies and 26 “biotech products and research” companies, according to a Kaiser Health News analysis of lobbying data compiled by the Center for Responsive Politics. The groups reported more than $192 million in lobbying expenses on the Cures Act and other legislative priorities, the analysis shows.

Medical schools, hospitals and physicians. The bill provides $4.8 billion over 10 years in additional funding to National Institutes of Health, the federal government’s main biomedical research organization. (The funds are not guaranteed, however, and will be subject to annual appropriations.)

The money could help researchers at universities and medical centers get hundreds of millions more dollars in research grants, most of it toward research on cancer, neurobiology and genetic medicine.

21st Century Cures ActThe bill attracted lobbying activity from more than 60 schools, 36 hospitals and several dozen groups representing physician organizations. They reported spending more than $120 million in disclosures that included Cures Act lobbying.

Mental health and substance abuse advocates. The bill provides $1 billion in state grants over two years to address opioid abuse and addiction. While most of that money goes to treatment facilities, some will fund research.

The bill also boosts funding for mental health research and treatment, with hundreds of millions of dollars authorized for dozens of existing and new programs.

Mental health, psychology and psychiatry groups spent $1.8 million on lobbying disclosures that included the Cures bill as an issue.

Patient groups. Specialty disease and patient advocacy groups supported the legislation and lobbied vigorously. Many of these groups get a portion of their funding from drug and device companies. The bill includes more patient input in the drug development and approval process, and the bill is a boost to the clout of such groups.

More than two dozen patient groups lobbied the bill, and reported spending $6.4 million in disclosures that named the bill as one of their issues.

21st Century Cures ActHealth information technology and software companies. The bill pushes federal agencies and health providers nationwide to use electronic health records systems and to collect data to enhance research and treatment. Although it doesn’t specifically fund the effort, IT and data management companies could gain millions of dollars in new business.

More than a dozen computer, software and telecom companies reported Cures Act lobbying. The groups’ total lobbying spending was $35 million on Cures as well as other legislation.

Losers

Preventive medicine. The bill cuts $3.5 billion — about 30 percent — from the Prevention and Public Health Fund established under Obamacare to promote prevention of Alzheimer’s disease, hospital acquired infections, chronic illnesses and other ailments.

Consumer and patient safety groups. Groups like Public Citizen and the National Center for Health Research either fought the law outright or sought substantial changes. Although they won on some points, these groups still say Cures opens the door for unsafe drug and device approvals and doesn’t address rising drug costs.

Hair growth patients. The bill says federal Medicaid will no longer help pay for drugs that help patients restore hair. The National Alopecia Areata Foundation spent $40,000 on lobbying disclosures this cycle that included Cures.

The FDA. The bill gives the FDA an additional $500 million through 2026 and more hiring power, but critics say it isn’t enough to cover the additional workload under the bill. The agency also got something it opposed: renewal of a controversial voucher program that awards companies that approve drugs for rare pediatric diseases.

(Kaiser Health News, Sydney Lupkin and Steven Findlay, December 7, 2016)

5 Key Definitions in Health Plans

How many of the terms in this example below do your employees understand? If you’re getting blank stares over words like “co-insurance” and “out-of-pocket limit,” it’s time to educate your staff before open enrollment starts for the next plan year.

definitions health plans

Source: Centers for Medicaid & Medicare Services

 

Five Key Terms

Only 12% of American adults have a basic understanding of the terms used in their health plans.[i] As more health plans are transitioning to some type of Consumer-Driven Health Plan (CDHP), it is more vital than ever for employees to understand basic terms that identify their responsibilities for payment.

Here are five easy definitions for HR professionals to use when explaining your company health plan:

  1. Deductible

The amount an employee owes for health care services before the health indefinitions health planssurance or plan begins to pay. For example, if a deductible is $1,500 as in Jane’s example above, the plan won’t pay anything until a $1,500 deductible for covered health care services is met. The deductible may not apply to all services.[ii]

2. Co-payment

A fixed amount (e.g., $25) that an employee pays for a covered health care service, usually when service is received. The amount can vary by the type of covered health care service. Co-payments are more familiar in traditional plans such as Preferred Provider Organizations (PPOs).

3. Network

The facilities, providers and suppliers your health plan has contracted with to provide health care services. So in-network services or providers have already negotiated a billing rate that would be applied.

Out-of-network charges are usually more expensive, because no rate has been contracted with that doctor’s office or provider.

4. Out-of-Pocket Limitemployee deductibles

The most an employee pays during a policy period (usually a year). This limit usually includes deductibles, copays and/or co-insurance. Premiums, balance-billed charges or health care not specified in the plan would not be included.

5. Co-insurance

An employee’s share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service.

In the example above, after Jane met her deductible ($1,500), her plan began to pay 80% of qualified health expenses. Jane’s part of the payment (co-insurance) was 20%, paid until Jane’s total expenses for the year hit her $5,000 out-of-pocket limit.

After Jane had paid a total of $5,000, her plan paid all other expenses for the rest of the plan year.

 

Equip Your Employeesdefinitions health plans

As HR departments approach a new year, health plan terms may still sound like a language most employees don’t know. Equip your employees to make decisions they will feel good about so they can better manage those vital health care dollars.MedCost

 

 

[i] Quick Guide to Health Literacy Fact Sheet,http://health.gov/communication/literacy/quickguide/factsbasic.htm (accessed September 13, 2016)

[ii] Centers for Medicare & Medicaid Services https://www.cms.gov/CCIIO/resources/files/downloads/uniform-glossary-final.pdf (accessed September 13, 2016)

 

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Employee Deductibles Rise Faster Than Wages

ks110111-medEmployer health insurance expenses continued to rise by relatively low amounts this year, aided by moderate increases in total medical spending but also by workers taking a greater share of the costs, new research shows.

Average premiums for employer-sponsored family coverage rose 3.4% for 2016, down from annual increases of nearly twice that much before 2011 and double digits in the early 2000s, according to a survey by the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

But 3.4% is still faster than recent economic growth, which determines the country’s long-run ability to afford health care.

And the tame premium increases obscure out-of-pocket costs that are being loaded on employees in the form of higher deductibles and copayments. Another new study suggests those shifts have prompted workers and their families to use substantially fewer medical services.

For the first time in Kaiser’s annual survey, more than half the workers in plans covering a single person face a deductible of at least $1,000. Deductibles for family plans are typically even higher.

Deductibles are what consumers pay out of pocket before the insurance kicks in. Employers sometimes contribute to pre-tax accounts to help workers pay such costs.

Employers have been flocking to high-deductible plans in recent years, arguing that exposure to medical costs makes consumers better shoppers.wingeddollar-sm

It also saves employers money. Having workers pay more out of pocket shaved half a percentage point off premium increases of employer-sponsored plans in each of the past two years, Kaiser researchers calculated.

Since 2011, the average deductible for single coverage has soared 63%, according to the survey, while workers’ earnings have gone up by only 11%.

Microsoft PowerPoint - 20160825 Cumulative Slides [Read-Only]

 

 

(Kaiser Health News, Jay Hancock and Shefali Luthra, September 14, 2016)

 

Federal Study Helps Seniors Stay at Home

seniors stay homeA federally-funded project that researchers say has potential to promote aging in place began by asking low-income seniors with disabilities how their lives at home could be better, according to a study released Wednesday.

At the end of the program, 75% of participants were able to perform more daily activities than they could before and symptoms of depression also improved, researchers said in the journal Health Affairs. 

Called Community Aging in Place, Advancing Better Living for Elders, or CAPABLE for short, the program was funded by the Center for Medicare & Medicaid Innovation.

The seniors who took part were each paired with a team for five months that included an occupational therapist, who made six visits; a registered nurse, who made four; and a handyman, who worked a full-day at the participant’s home installing assistive devices and doing repairs, according to the study.

The nurses and therapists helped participants identify three achievable goals for each member of the team and identify what barriers had to be overcome. For example, the therapist might survey a house for safety issues such as unsafe flooring, poorly lit entrances and railings in disrepair.

seniors stay homeThe therapist then worked with the elderly person to identify assistive devices, repairs or modifications that could help achieve the participant’s goals. Next, the therapist created a work order for the handyman that prioritized those goals within a $1,300 budget for each dwelling.

Spending on assistive devices and home repairs ranged from $72 to $1,398 for each participant, the researchers said.

They studied 234 adults older than 65 who participated in CAPABLE, all eligible for both Medicare, the government health insurance plan for seniors, and Medicaid, the government health insurance plan for low-income people.

All participants had trouble with routine tasks in a group of eight known as activities of daily living. They include bathing, dressing, using the toilet and walking across a small room. On average, participants had trouble with 3.9 tasks at the start, but improved to just two by the end of the program.

Researchers said they could not conclude that the participants’ improvements were due to the CAPABLE program because the project was funded without a control group to make scientific comparisons.

(Kaiser Health News, Rachel Bluth, September 7, 2016)
KHN