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70% of Employers Do Not Know What They are Spending on Specialty Pharmacy

October 03, 2011 By: Nadia Category: HealthCare, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: PRNewswire, 9/29/2011, Midwest Business Group on Health (MBGH)

Few employers have a thorough understanding of specialty pharmacy benefits, and only a fraction are of them are aggressively managing what is becoming one of the fastest-growing areas of health care spending, a new survey shows.

A national survey released Sept. 29 by the nonprofit Midwest Business Group on Health in Chicago, one of the nation’s largest business coalitions, found:

Survey Findings

  • 70% do not know how much their company was spending on specialty drugs
  • 25% of employers have little or no understanding of specialty pharmacy and
  • 53% have only a moderate understanding.
  • 30% indicated that they did not know how much their total specialty pharmacy claim costs had increased during the past three to five years.

“In addition to the uncertainty and challenges that health reform and the economy are placing on employers, health plans and pharmacy benefit managers, the real driver of drug cost trend growth for employers lies in biologics and specialty pharmacy,” said Cheryl Larson, MBGH Vice President, in a statement. “Our research confirms there is a broad lack of awareness and specific knowledge about benefit design related to specialty pharmacy that illustrates key gaps that need to be addressed.”

The objectives of the survey were to identify and assess the level of knowledge and benefit design gaps of employer plan sponsors in the area of specialty medications and biologic products used to treat conditions such as multiple sclerosis and arthritis. These drugs often require special approvals for their use, instructions on dosing and side effects, and appropriate storage and distribution.

The proportion of employers’ pharmacy benefit expenditures attributable to 

  • Specialty drugs grew by 17.4% in 2010, the fastest pace since 2004, according to Medco Health Solutions Inc.’s 2011 Drug Trend Report, which found that
  • Specialty drugs represented 16.3% of total health benefit costs.

How survey was conducted

The survey was conducted by MBGH in July 2011 with guidance from Randy Vogenberg, principal at the Institute for Integrated Health Inc., a Baltimore-based consultant that provides integrated pharmaceutical benefits consulting and education to self-insured employers and business coalitions.

Of the 120 employers responding to the survey,

  • 69% were self-insured,
  • 19% were fully insured, and
  • 13% offered a combination of self-insured and fully insured benefit plans.
  • Employers responding ranged in size from 500 to 25,000 employees.

About Midwest Business Group on Health (MBGH)

The Chicago based Midwest Business Group on Health (MBGH) was founded in January 1980 by a small group of large Midwest employers to help employers and their population obtain more value from their health care benefit dollars.

Most large employers changing health benefit for 2011

August 23, 2010 By: Nadia Category: HealthCare, Medtipster, Prescription News

www.Medtipster.com Source: Employee Benefit News – By Kathleen Koster – 8.18.2010

According to a new survey by National Business Group on Health, more than half (53%) of large U.S. employers plan to revise their 2011 health care benefit programs in the wake of health care reform legislation and anticipated large benefit cost increases next year.

Also considering the provisions of the Patient Protection and Affordable Care Act, 19% of respondents are scaling back changes they planned to make while an equal number are making no changes.

The remaining respondents were still undecided pending further review of the final regulations.

Among employers who will be making specific changes to their health benefit plans to comply with the new law, 70% said they will remove lifetime dollar limits on overall benefits while 37% said they will make changes to annual or lifetime limits on specific benefits.

Approximately one-fourth will remove annual dollar limits on overall benefits while 13% reported they will remove pre-existing condition exclusions for children.

The survey, based on responses from 72 of the nation’s largest corporations representing more than 3.7 million employees, was conducted in May and June 2010.

“While the health reform law has forced employers to evaluate their health care benefit strategies and decide whether to comply with the law or lose grandfathered status, they haven’t lost sight of the fact that controlling rising costs remains one of, if not, their highest priority. They have to foot the bill, not the government,” says Helen Darling, president of the National Business Group on Health. 

“In fact, with cost increases expected to accelerate next year, many of the plan design changes employers are making are being done to help curb those increases, as they have to do every year,” she adds.

Employers estimate their health care benefit costs will jump to an average of 8.9% next year, compared with an average increase of 7% this year. To help curb those increases employers plan to use a wider variety of cost-sharing strategies.

According to the survey, 63% of employers plan to increase the percentage employees contribute to the premium, up from 57% who did so this year, while 46% plan to raise out-of-pocket maximums next year compared with 36% this year.

In order to further mitigate costs, employers are shifting to consumer-directed health plans. In fact, 61% of plan sponsors will offer a CDHP in 2011.

While the most common type of plan employers will offer is a high-deductible plan combined with a health savings account (64%), the survey found a large spike in employers moving to a full replacement plan.

Among employers offering a CDHP, the number moving to a full replacement plan doubled from 10% this year to 20% in 2011.

“Consumer directed health plans are living up to their expectations as a way to help save employers money and put employees in greater control of their health care.  In fact, offering these plans was the most often-cited tactic by employers to control costs.  We fully expect that employer interest in CDHPs, and especially full-replacement plans, will continue to increase in the future,” says Darling.

As the health reform law makes Medicare Part D benefits richer as the “doughnut hole” closes between now and 2020, 5% of employers plan to drop retiree health coverage in 2011 while 60% are considering doing so in the future.

In attempt to cut costs with wellness initiatives, 41% of employers offered premium discounts for completing health assessments while 22% offered premium discounts for participating in tobacco cessation programs.

In addition, one in four (25%) of plan sponsors plan to raise the co-pay or co-insurance for retail pharmacy prescription drug benefits while 21% plan to do the same for mail-order pharmacy benefits.

Copies of the survey report can be found at www.businessgrouphealth.org.

Mini Clinics Increase share 15% over last 24 Months

November 16, 2009 By: Nadia Category: Medtipster, Prescription News

Nádia - your personal pharmacy cost adviser

Nádia - your personal pharmacy cost adviser

WASHINGTON, Nov. 16 /PRNewswire/ — Despite the recession, overall growth of the heath care retail clinic market has increased approximately 15 percent in the past two years, according to a new report released today by the Deloitte Center for Health Solutions. Retail clinic market growth, however, will likely slow to 10-15 percent from 2010 through 2012 and will accelerate above 30 percent from 2013-2014, according to the report.

The report, “Retail Clinics: Update and Implications,” suggests that consumer adoption of retail medicine is strong and growing. Additionally, the report suggests that the industry’s potential to expand its revenue opportunities will support its long-term sustainability. The four factors that will likely contribute to the sector’s growth include:

•Increased use and satisfaction by consumers
•Increased use and acceptance by commercial health plans and large employers
•Increased services provided through the retail medicine model
•Increased demand for preventive and primary health care services as a result of health reform and consumer demand

“The growth and evolution of retail clinics reflect opportunities for disruptive innovation and an improved value proposition of price, quality and service for the U.S. health care system,” said Paul Keckley, Ph.D. and executive director, Deloitte Center for Health Solutions. “While the current economic downturn has incited a period of contraction, the retail clinic industry will emerge with a more refined business model to drive a second, albeit slower, wave of growth in the next three years.”

Key findings highlighted in the report include:

•Patient Volume Remains Strong: According to the report and Deloitte’s 2009 Survey of Health Care Consumers, 33 percent of consumers indicate they are willing to use a retail clinic, especially younger and middle-aged working adults. Moreover, 30 percent of respondents are likely to use a retail clinic if it would cost them 50 percent less than seeing their physician.

“Retail clinics represent a new channel that can deliver primary care services more conveniently and at lower cost to consumers,” added Keckley. “Clinic services are typically safe and effective, due in large measure to medical management programs that are evidence-based and supported by electronic medical records. Additionally, health insurance plans are increasingly offering coverage of retail clinic visits in their benefits packages for individuals and employers — ‘covered lives’ is a key to growth.”

•Existing Locations: Most retail clinics operate in retail pharmacy settings (82 percent), or as a department or wholly-owned subsidiary of the host organization, such as a grocery store (12 percent) or big-box discount store (6 percent). Notably, 2009 has seen increased activity by acute care organizations entering retail medicine via contractual arrangements with drug store and grocery chains.

•Potential Locations: The market potential for retail clinics remains strongest in retail pharmacies, as within 10,000 retail pharmacies, there are currently 801 clinic locations. However, big-box discount stores and grocery stores have expansion opportunities if these channels selectively leverage services, given:
•Within over 5,000 big-box discount stores, there are currently only 58 clinic locations
•Within over 5,000 grocery stores, there are currently only 115 clinic locations

•The Evolving Business Model: Core services at retail clinics typically include preventative health screenings, prescriptions and over the counter (OTC) therapeutics and uncomplicated primary care. The retail clinic business model is capable of supporting additional revenue streams (zones) unrelated to its core operations:
◦Zone Two: Core extenders including medication management, health coaching for chronic issues and employee wellness
◦Zone Three: New revenue programs including care management services for chronic issues; referral management services for acute, specialty or OTC issues; and health insurance for individuals or groups

•Challenges to Growth: The retail clinic industry faces a few challenges, including labor shortages, compensation inflation, price pressures from new entrants and regulatory pressures from state governments — all of which may slow growth or impede retail clinics from opening. In fact, in some states and localities, regulators are fearful that retail clinics represent a compromise to safe and effective care. Additionally, some local physicians have actively campaigned against retail clinic openings and advised patients to seek care elsewhere.

“As a new entrant to the health care industry, retail clinics represent a threat to many traditional health care stakeholders,” added Keckley. “However, to consumers, health plans and employers, retail clinics offer an important health care alternative with a strong value proposition. Therefore, we expect this new sector to mature while growing its scope of services, locations and impact on population-based health status.”

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