Value-Based Benefit Design Increases Adherence and Lowers Costs

Las Vegas—In 2009, pharmacy spending accounted for 16% of Whirlpool Corporation’s healthcare spending. Of the 22,000 employees, an increasing number had chronic conditions, including diabetes, coronary artery disease, and asthma.

Stacy White, Whirlpool’s benefits manager, knew the company needed to increase medication compliance and implement condition management. However, the human resources department’s budget remained the same as the year before.

Ms. White recounted at the PBM conference the way Whirlpool was able to effectively deal with the situation. Rather than a traditional flat coinsurance program, Whirlpool instituted a 5-tier benefit design and moved a formulary managed by a pharmacy benefit manager (PBM) to one the managed by company itself.

Members of the plan were encouraged to choose the most cost-effective medications. The tiers were arranged based on clinical evidence and cost effectiveness of brand, generic, and specialty drugs. In 2012, 19.8% of members were in tier 0, the least expensive option in which patients primarily used generic drugs to treat chronic conditions and had no copay. An additional 65.2% of members selected the second level option, in which patients had 10% coninsurance and used generics  primarily.

When Whirlpool implemented its 5-tier benefit design and customary formulary in the first quarter of 2010, the generic dispensing rate was 73.73%. By the fourth quarter of 2012, generics accounted for 82.70% of Whirlpool’s prescriptions.

Whirlpool also implemented a value-based benefit design for its major chronic conditions, starting with diabetes in January 2010 and continuing with coronary artery disease and asthma/chronic obstructive pulmonary disease in January 2013. In addition, the company opened bids for a new PBM vendor partnership, selecting the vendor that agreed to tight contractual definitions and flexibility in dealing with potential challenges.

Amy Ball, vice president of clinical programs and client management at HealthStrategy, LLC, cited data from PBMI’s prescription drug cost and plan design report that found employers are increasingly offering incentives and value based design. In 2010, 32% of companies that responded to PBMI said they had reduced copays for specific drug classes compared with 36% in 2011. In addition, 8% of companies in 2010 had a reduced copay for members with specific health conditions compared with 15% of companies in 2011.

In 2010, the first year Whirlpool began its value-based benefit design for diabetes, the testing rates for hemoglobin A1c, lipids, and microalbumin increased, according to Ms. Ball. Office visits declined 4%, although visits for diabetes education increased 114% compared with 2009.

Further, between 2009 and 2010, medication utilization increased 48% for insulin, 40% for sulfonylureas, and 41% for biguanides. Similar results were found in 2011 and 2012, according to Ms. Ball, who said HealthStrategy, LLC receives a fee from PBMs to consult and analyze data for Whirlpool and other clients.

Among Whirlpool’s diabetic members, medication compliance increased for oral diabetics, insulins, hyperlipidemic medications, and angiotensin-converting-enzyme inhibitors from 2009 to 2010. In addition, there was an increased generic dispensing rate for antidiabetic medications, from approximately 50% in the first quarter of 2010 to >65% in the fourth quarter of 2012.