powerpoint presentation · 4/23/2018 6 reference-based pricing (rbp) •caps the price for a...
TRANSCRIPT
4/23/2018
1
Presents
Evaluating Health Insurance Cost Containment Strategies for Your OrganizationApril 27, 2018
Agenda
• Funding Arrangements• Network Strategies• Pharmacy Management• Population Health Management• Conclusion
x
• Communications
• Employee morale/response
• Employee engagement
• Employee retention
• Culture
• Workload for HR team
Major Considerations
4/23/2018
2
Funding Arrangements
Funding Options
• Fully-Insured
Low Risk Moderate Risk High Risk
• Level-Funding
• Minimum Premium
• Risk Corridors
• Health Reimbursement Arrangement (HRA)
• Traditional Self-Funding
• Captive Insurance Company
Risk Tolerance Continuum
• Fully Insured
Healthcare Dollars Defined
Fixed Costs (admin, stop loss)
15%
Pharmacy Claims
17%Medical Claims
68%
4/23/2018
3
Financial Components of a Health Plan
VARIABLE COSTS
Employer only pays actual
claims costs, protected by overall liability cap
FIXED COSTS
FIXED COSTS
Employer always
pays full premium, regardless of actual
claims paid
Claim
Expected
claims
Admin
expenses &
stop-loss
Claim corridor
Expected
claims
Admin
expenses &
stop-loss
FULLY
INSURED
SELF-FUNDING
WITH STOP-LOSS
Claim corridor
Reserves/
run-out claims
Taxes Taxes
Reserves/
run-out claims
Cash Flow
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb
Monthly Expense – Fully Insured
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb
Monthly Expense – Self-Funded
Claims Expenses
Self-Funding Considerations
• Cash flow/reserves
• Access to claims data
• Tax considerations
• Full reliance on claims experience
• Additional compliance and administrative burden
• Greater flexibility in plan design and cost containment programs (including captives, Rx carve-out and reference-based pricing)
4/23/2018
4
Captive Insurance
• Employer-created insurance company
• Highly regulated
• Administratively complex
• Potential stop-loss savings
• Risk sharing
• Captive structures
• Multi-employer captive
• Single-parent captive
Captive Layers
$250,000
$75,000
Captive Considerations
• Mandatory or voluntary cost containment strategies
• Heterogeneous or homogenous
• Barriers of entry and exit
4/23/2018
5
Network Strategies
• Narrow Networks
• Reference-Based Pricing
• Telemedicine
• On-Site Clinics
Network Strategies
Fixed Costs15%
Pharmacy Claims
17%
Medical Claims
68%
Broad vs. Narrow Network
• Availability
• Providers included
• Negotiating ability
• Price
• Premium and claim reduction
Out of Network
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Reference-Based Pricing (RBP)
• Caps the price for a particular medical service basedon a reference, like Medicare
• Self-funded only using a TPA
• Price comparison to networks
0%
50%
100%
150%
200%
250%
Broad Narrow RBP
% of Medicare
Reference-Based Pricing (RBP)
Where to apply RBP?• All medical services
• Specific services
• Facility-only services
Broad Network
Out of Network
Facilities
Facilities,
Physician &
Ancillary of
Network
Fixed Costs15%
Pharmacy Claims
17%
Medical Claims
68%
Facility
Non-Facility
Facility-Only Reference-Based Pricing
Non-Facility
RBP Does Not Apply to:
• PCP
• Specialists
• Non-hospital labs and
imaging
PHCS or similar network
Broad Network
Out of NetworkOut of Network
Out of Network
Broad Network: Physician &
Ancillary Services Only
Facilities
Facility
RBP Applies to:
• Hospital including labs
and imaging
• Surgery centers
• Dialysis centers
• Outpatient facilities
No network
4/23/2018
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RBP Prospective With Flexibility
SERVICES PROVIDED
NO BALANCE
BILLING
SERVICES PROVIDED
NO BALANCE
BILLING
SERVICES PROVIDED
NO BALANCE
BILLING
MEMBER GOES TO
ANOTHER
PROVIDER WHO
ACCEPTS RBP
MEMBER GOES TO
PROVIDER; BUT IS
BALANCED BILLED BY
PROVIDER
Reference-Based Pricing Considerations
• Funding arrangement
• Where to apply RBP
• Payment method
• TPA/RBP and stop-loss carrier
• Network’s efficiency for non-RBP services
• Market provider dynamics
• Employee education
• Compliance
Reference-Based Pricing Pros and Cons
Pros
• Lower claim costs
• Lower stop-loss premium/attachment factors
• Lower increases with Medicare
Cons
• Higher costs for non-RBP claims
• Push-back from providers
• Disruption and balance billing for employees
• Employee communication complexity
• Short-term phenomenon
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Telemedicine
• Access options
• Providers
• Commonly treated conditions
• Availability
• Vendors
• Plan design and cost considerations
Telemedicine Statistics
10-minute average wait time
13-minute average visit time
92% issues resolved after first call
Utilization is correlated to engagement
Telemedicine Pros and Cons
Pros
• Affordable/low barrier to care
• Convenient, accessible and time-saving
• Effective for remote locations and travel
• Reduction in urgent care and ER utilization
• Reduces absenteeism; improve productivity
Cons
• Reduce care continuity
• No in-person physician interactions including readings
• HSA compliance concerns
4/23/2018
9
On-Site Clinics
• Providers
• Commonly treated conditions and services
• Access and availability
• Build out vs. pop up
• Plan design and cost considerations
On-Site Clinics Statistics
20-minute average visit time
Average utilization: Year 1 60%-65% | Year 2 85%-90%
Cost range per visit $60-$90 (excluding labs and Rx)
On-Site Clinics Pros and Cons
Pros
• Convenient
• Reduces absenteeism; increases productivity
• Monitors chronic conditions
• Supports a wellbeing program
• Lower lab and Rx costs than insurers
Cons
• Continuity of care with PCP
• May not reduce healthcare costs
• HSA compliance concerns
• May not be available to all employer locations
4/23/2018
10
Pharmacy Management
Pharmacy Cost Containment Opportunities
Fixed Costs (admin, stop-loss)
15%
Pharmacy Claims
17%
Medical Claims68%
Pharmacy Terms/Considerations
• Pharmacy Benefit Manager (PBM)
• Rebates – who keeps them and what percentage?
• What is dispensing cost?
• Who determines the ingredient costs?
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Pharmacy Management Programs
• Mandatory mail order
• Step therapy
• Quantity limits
• Restricted formulary
• OTC exclusions
Pharmacy Management Programs
• Pharmacy rebate and discount evaluation
• Medical channel management
• Specialty carve-out
• Couponing/web-based discounts
PBMs’ Hidden Profit
4/23/2018
12
Value of 100% of Rebates
Specialty Spend
2014 Actual 2020 Projected
Traditional Pharmacy Benefit Specialty Pharmacy Benefit
68%
32%
50% 50%
Medical Channel Management and Specialty Carve-Out
Channel Management
• How do members access specialty pharmacy?
• Do specialty drugs go through the medical plan?
Specialty Carve-Out
• Does the PBM own the specialty pharmacy?
• Who retains specialty rebates?
• What volume of approvals are you experiencing?
4/23/2018
13
Hepatitis C per Rx
Couponing/Web-Based Discounts
• Coupons from prescribing physician• Good for covered and non-covered prescriptions
• Web tools such as GoodRx, Milligram and BlinkHealth
Example: Zetia (cholesterol-lowering medication)• Carrier discounted price - $300
• Employee copay - $60
• Online discounted price - $24
• $36 x 12 = $432 annual savings for employee
• $240 x 12 = $2,880 annual savings for employer
Pharmacy Management Pros and Cons
Pros
• Potential savings to employees and employer
• Enhanced compliance with treatments
Cons
• Increased employee communication and education
• Disconnect from underlying medical plan
• Disease management coordination
4/23/2018
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Population Health Management “Big Data”
Deeper Dive with Data
Predictive Modeling
Analysis by• Provider• Location• Program
Engagement• On meds vs. not
Chronic Condition Control
Impact of programs
Medical and Rx claimsUtilization Reports
Biometrics
Site of Care
Traditional data reporting
Data analytics and Consulting
Uses of Big Data
• Development of top tier networks
• Structure plan design to promote compliance
• Adjust formulary to restrict access
• Determine population health programs to implement
4/23/2018
15
Conclusion
x
• Communications
• Employee morale/response
• Employee engagement
• Employee retention
• Culture
• Workload for HR team
Major Considerations
x
Ken Liberatore
Vice President, Paradigm Group
Edward Rittenberg
Principal, Paradigm Group
Questions?