Wednesday, June 29, 2016

Express Scripts, Anthem Face ERISA Lawsuit Over Drug Pricing

Express Scripts Inc. and Anthem Inc. are accused in a proposed class action of breaching their ERISA fiduciary duties by entering into a 10-year, multibillion-dollar prescription-drug agreement that caused plan participants to overpay for benefits (Burnett v. Express Scripts, Inc., S.D.N.Y., No. 1:16-cv-04948, complaint filed 6/24/16).

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The lawsuit is the latest development in the $15 billion battle between Anthem and Express Scripts. In March, Anthem sued Express Scripts for allegedly overcharging for prescription drugs in violation of the parties' agreement.

Two months later, two health plan participants sued both companies under the Employee Retirement Income Security Act challenging Express Scripts' alleged overbilling.

The latest lawsuit, filed June 24 in the U.S. District Court for the Southern District of New York, is brought by participants in three medical plans sponsored by Verizon Communications Inc., AmTrust Financial Services Inc., and LG&E and KU Energy LLC. The plans have more than 26,000 participants combined.

Billion-Dollar Agreement

In December 2009, Express Scripts paid approximately $4.67 billion to Anthem for the exclusive right to provide pharmacy benefit management services, the complaint says. Under this agreement, Express Scripts supports Anthem's business in over 24 states and services more than 15 million of its members.

According to the complaint, Anthem breached its ERISA duties by entering into an agreement with Express Scripts that was imprudent and not in the best interests of its members. In addition, Anthem allegedly failed to properly monitor and prevent Express Scripts from overcharging.

The complaint alleges that Anthem used Express Script's nearly $5 billion payment to fund stock buybacks in 2009 and 2010, which ultimately enriched Anthem's stockholders and management, rather than passing this money through to participants.

Read more >>

Tuesday, June 28, 2016

Workplaces Fight Skyrocketing Prescription Drug Costs

A report from the International Foundation of Employee Benefit Plans asked employers how they are managing prescription drug costs and responses revealed that, among other expense-saving methods, 18% of organizations are setting limits for specialty and biotech drugs.

The estimated price tag for treating a patient with a specialty drug is high. For some chronic conditions, a year of treatment with a specialty drug can exceed $100,000. In many cases, specialty drugs represent only about 1% of all prescriptions but account for one-quarter to one-third of total drug spend.

The most popular cost-controlling methods for organizations are tiered pricing and a mail-order drug service, with 89% and 82% of employers currently implementing these initiatives. As for drug formulary lists, 71% of organizations have this tool in place, and 63% are using a pharmacy benefit manager (PBM).

Tyrone's comment:  CMS conducted an analysis to determine whether or not preferred networks and mail-order drug service deliver on the purported savings. The conclusion is that in some cases they do not. The difference maker is likely two things: negotiation skills and level of PBM industry knowledge.

Monday, June 27, 2016

Review vs Audit: A Comparison of Services Performed by Pharmacy Benefit Management Consultants

There are two levels of service a consulting firm can perform on a group pharmacy benefit plan: review and audit. In truth, many plan sponsors believe they're buying an audit when in fact they're receiving only a review. Because the identification of risk is vastly different between the two consulting services, plan sponsors and their agents should know the differences.

[Figure 1]

Review

The problem is that a review provides only limited assurance and is substantially narrower in scope when compared with an audit.
  • A review does not include an investigation of the plan sponsor’s internal control system or its risk of excessive overpayments, which could be an area of interest for CEOs, CFOs and plan administrators. 
  • A review does not use true acquisition cost reference-based pricing. For the most part, a review checks for contract compliance. Errors found during a review are likely just billing mistakes and don't account for all risks. Risk is measured by exposure to overpayments.
  • A review costs less than an audit and, as a result, is often viewed as the preferred option (see figure 1). 
  • Reviews disclose overpayments related specifically to contract terms. It does not help to disclose payments over AAC (average acquisition costs) or withheld manufacturer revenue which the PBM retains as a service fee or hidden cash flow.

Friday, June 24, 2016

Reference Pricing: "Net" Invoice Cost for Top Selling Generic and Brand Prescription Drugs (Volume 124)

This document is updated weekly, but why is it important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to healthcare reform. 

The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.


Friday, June 17, 2016

The 7 Habits Of Highly Effective Benefits Professionals

Collectively, the approaches outlined below have enabled employers to save 20-55% less per capita on health benefits versus a standard employer approach. Cost savings compound over the years. While too many employers accept annual premium increases of 10% or more, wise employers are converting overspending on healthcare into delivering better value to their stakeholders, whether they are employees, union members, citizens or shareholders.

Habit #1: First things first: Value-based primary is the bedrock of the highest-functioning health systems

Value-based primary care stands in stark contrast to the milk-in-the-back-of-the-store primary care model that has been a pervasive driver of the scourge of over-treatment. Grassroots change at the city level is recognizing the importance of primary care and how it can attract major employers. IBM IBM +0.85% is a leading example of how wise organizations recognize that health benefits are the second biggest cost input into their business. Like any other item in their supply chain, they will shift to high-value suppliers. It turns out that locating jobs in high-value healthcare communities boils down to those communities with the strongest foundation of valued-based primary care.

Habit #2: Be proactive managing pharmacy benefits

Successful Rx management has been described as playing whack-a-mole. The pharmacy benefits management (PBM) industry has many firms that are well known for hidden fees, shell game pricing and taking drug manufacturers’ money to promote specific drugs.

There are three pillars to manage drug cost and quality:
  • Review PBM arrangements to determine the “spread” (PBM profit) and whether more favorable terms are available.
  • Formulary changes that create a large financial impact with next to no disruption.
  • Carefully manage specialty drug acquisition and use.
Tyrone's comment:  For the record, a spread is NOT the difference between the amount billed [to the plan sponsor] and what the contract calls for. Any difference here is simply a billing error. A spread is the difference between the $ amount billed by the PBM to the plan sponsor and the $ amount reimbursed to the pharmacy from the PBM for the same prescription. It's not uncommon to see spreads over $100. Any third-party pricing analytics software which doesn't address true spreads falls short of delivering real value. In fact, some PBMs who strive to be transparent offer their clients the capability to compare claims to contract agreement in near real-time which may eliminate the need for a software package which does exactly the same job.

Habit #3: Have specific plans for uncommon, but predictable, gargantuan claims

Thursday, June 16, 2016

Reference Pricing: "Net" Invoice Cost for Top Selling Generic and Brand Prescription Drugs (Volume 123)

This document is updated weekly, but why is it important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to healthcare reform. 

The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.


Tuesday, June 14, 2016

Drug companies fight generics with coupons

Look closely at ads for most medications that appear in magazines, on TV or on the internet. Along with an extensive list of side effects and possible uses, you'll find an offer to explore options that will make it easier for patients on commercial insurance to afford the expensive meds.

They're called copayment coupons and cards, discounts and patient-assistance plans. These financial breaks for consumers are part of a $7 billion effort by pharmaceutical firms in 2015—up from $1 billion in 2010—designed to help patients access drugs they otherwise can't afford, according to IMS Health.

While the coupons have improved patient compliance, drug manufacturers are covering all or part of the copays to bypass efforts by insurers and pharmacy benefit managers to rein in the rising price of drugs. One key strategy is to put lower copays on lower-cost preferred drugs and raise copays on higher-priced medicines that may not offer additional value for their higher cost.

The patient-assistance portion of such drug company programs, designed to help patients access the most expensive meds, represents only 5% to 10% of the $7 billion, according to IMS. The rest goes for coupons.

Monday, June 13, 2016

Pharmacy Benefit Managers offer a commodity. Do not treat them as differentiated services.

[Figure 1]
A commodity is a good or service which has no distinguishable characteristics among the good or service. Here are some examples of a commodity:

Corn
Soybeans
Rice
Coffee
Wheat
Gold
Live Cattle
Natural Gas
Oil


In other words, one barrel of oil, a bushel of wheat or ounce of gold is essentially the same or indistinguishable from another of its variety. The opposite of a commodity is a specialty good or service. Most PBMs attempt to differentiate their services out of the commodity class because the only way to compete in a commodity market is on price.

Thursday, June 9, 2016

Reference Pricing: "Net" Invoice Cost for Top Selling Generic and Brand Prescription Drugs (Volume 122)

This document is updated weekly, but why is it important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to healthcare reform. 

The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.


Monday, June 6, 2016

UHC administered self-insured health plan, AT&T, sued in federal court for embezzlement, self-dealing in medical claims overpayment offset dispute

On June 1, 2016, in the southern district of Texas Federal Court, United HealthCare administered self-insured ERISA plan, AT&T Inc. and its Plan Administrator Larry Ruzicka were sued in federal court. According to the complaint: “This dispute arises out of Defendants’ ongoing and systematic ERISA violations consisting of an elaborate scheme to abstract, withhold, embezzle and convert self-insured Plan Assets.

An almost identical separate suit was filed against another United HealthCare administered health plan, GAP Inc. less than 30 days before this case was filed.  According to industry experts, more and more CEO’s, CFO’s and Plan Administrators are exposed to tremendous liabilities due to poorly managed or “Head in the Sand” monitoring practices. As we have written about and predicted, this is evidence of the growing trend of self-insured health plans being exposed to tremendous liability by TPAs.

Tyrone's comment:  It's simple, if a plan sponsor doesn't have full auditing rights they're likely overpaying; not just for medical, but pharmacy claims as well. These overpayments can lead to lawsuits against the CEO, CFO and others. "We didn't know..." is no longer an excuse. For starters, do you know how much your company (or client) pays the PBM for providing pharmacy benefit management services? This is different from plan costs. Somewhere hidden in the plan costs are the PBM's service revenues. To not know this dollar amount is negligent. Click here to learn more.

One of the serious problems these cases present to the self-insured health plans is inaccuracies on the Form 5500/Tax filings. ERISA requires IRS Form 5500 reporting to be accurate. AT&T, GAP Inc. and others may be reporting incorrect amounts on direct and indirect compensation, for example, based on the alleged facts of these cases.

Thursday, June 2, 2016

Reference Pricing: "Net" Invoice Cost for Top Selling Generic and Brand Prescription Drugs (Volume 121)

This document is updated weekly, but why is it important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to healthcare reform. 

The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.




How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.


Wednesday, June 1, 2016

Concerns Persist about the 340B Discount Program

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Did you know there is a federal program that provides medicines at a steep discount to some hospitals and clinics? Created in 1992 as part of the Veterans Health Care Act, the 340B drug pricing program requires drug companies to provide discounts—sometimes as much as 50%—to covered entities, hospitals, and clinics that treat low-income and uninsured patients.

Covered entities also include federally qualified health centers and look-alikes, consolidated health centers, freestanding cancer centers, and more. In addition to paying less for the drugs, the covered entities are also permitted to generate profits from the sale of prescription medications to insured patients in order to subsidize required medications for underinsured patients.

Under the 340B program, participating drug manufacturers sign an agreement with the Department of Health and Human Services (HHS) stipulating that they will charge covered entities at or below a maximum price, known as the ceiling price.