The Evolution of Pharmacy Benefit Management

Cincinnati—At a Managed Care Essentials session at the AMCP meeting, Robert Navarro, PharmD, clinical professor of pharmaceutical outcomes and policy at the University of Florida College of Pharmacy, outlined the components of benefit design and discussed the evolution of pharmacy benefit management. The session was titled Managed Care Benefit Design DNA.

Dr. Navarro began by citing the HMO Act of 1973 that was the genesis of managed care. The act was, he said, the result of a market that was dissatisfied with the delivery system of healthcare. Managed care was intended to define covered products and services, manage supply (source/price) and demand, and establish financial risk sharing to avoid what Dr. Navarro called moral hazard.

The concepts that drive the group heath insurance model outlined by Dr. Navarro are: (1) pre-paid (monthly premium/predictable costs/large risk pool); (2) subscription health insurance (annual contract); (3) defined benefit (inclusions and exclusions); (4) defined provider network, access rules, and access fee; (5) healthy lifestyle incentives and preventive care; (6) coordinated care; and (7) promotion of best practices.

The entities involved in managed care include the plan sponsors who purchase medical and/or pharmacy benefits (employers, Medicare, managed Medicaid); managed care organizations that provide medical and pharmacy benefits through a variety of benefit structures (health maintenance organization, preferred provider organization, point of service, and various hybrids); and pharmacy benefit managers that specialize in managing pharmacy benefits.

The components of pharmacy management mentioned by Dr. Navarro include certificate of coverage, which defines covered products and services and access rules. He also cited drug utilization review programs, disease management and medication therapy management (Medicare) programs, and patient accessible drug information centers.

Dr. Navarro then discussed trends in employee cost sharing over the past decade. In 2001, the average annual health insurance premium for family coverage was $7061; the employer contribution was $5269 and the employee contribution was $1792. In 2011, the total premium was $15,073, of which the employer contributed $10,944 and the employee $4129. The premium increased 113% over the 10-year period; the employee contribution increased 131%.

Currently, most plans include cost-sharing incentives that encourage members to use the least costly drug option available. For example, for beneficiaries of commercial plans, the copay/coinsurance amount for Tier I drugs (generics) is $0 to $15. For Tier II (preferred brand), the copay is $20 to $30 and step edits, prior authorization, and/or quantity limits may apply. Copay/coinsurance amounts increase for Tier III (nonpreferred brand) and Tier IV (specialty) drugs. For Medicare beneficiaries, copay amounts range from $5 for Tier I to $100 or 50% for Tier IV medications; Medicaid beneficiaries have a copay of $1 to $3 for Tier I drugs; all other tiers require prior authorization.

Dr. Navarro ended his presentation with an overview of the evolution of healthcare in the United States. He said that most plans now offer additional benefits, expanded drug use, as well as increased risk sharing, and increased payments for quality outcomes. He noted that many plans are offering provider reimbursement for value, rather than volume.