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Chains work to educate prospective ACA patients

BY Alaric DeArment

One of the biggest problems with the healthcare reform law is that a lot of people out there don’t fully understand it.

To educate the general public about the law, a few organizations have come up with simple, online tools aimed at dispelling the confusion.

The Kaiser Family Foundation released last month an animated video designed to help people understand the changes to the healthcare system that the law will bring. The video, titled "The YouToons Get Ready for Obamacare" and written and produced by former ABC News anchor Charlie Gibson, explains the changes in how Americans will get coverage and the costs starting next year.

A Kaiser poll back in April found that 42% of Americans were unaware that the Patient Protection and Affordable Care Act is still on track to be implemented, though the Obama administration last month said it would allow a key provision of the law, the requirement for employers to help employees obtain coverage, wait until 2015.

A survey last month by CVS Caremark also found knowledge gaps about the law. The survey found that general awareness of the Affordable Care Act had increased to 74%, up from 57% in a 2011 survey. But 36% of respondents who were likely to enroll in health exchanges needed more information and help in evaluating the insurance exchange process.

More than two-thirds of respondents (68%) said they expected retail pharmacies to offer health insurance in stores or online. In an effort to fill the information gap, CVS Caremark will roll out a company-wide information and outreach program to help customers gain access to critical health insurance marketplace information, including retail events, brochure displays and online at CVS.com/insurance.

"We have a tremendous opportunity to help Americans understand the new healthcare law and how it affects them so consumers receive the coverage that best fits their families," CVS Caremark EVP and chief healthcare strategy and marketing officer Helena Foulkes said.

Another educational effort comes from Walgreens and the Blue Cross Blue Shield Association. The national campaign centers on a website, LearnAboutReform.com, which offers consumers information about the ways they can purchase health insurance and the benefits available to them.

"Many Americans have had little experience purchasing health coverage and are confused about what the law means to them," Blue Cross Blue Shield SVP strategic services and chief strategy officer Maureen Sullivan said. "Blue companies have been working hard to help consumers navigate this new environment and the coverage options that are available to them. Our partnership with Walgreens is another example of our commitment to ensuring that all Americans have the tools they need to understand these changes and access affordable health insurance coverage that meets their needs."

The website includes easy-to-understand explanations of what the law means for consumers; answers to questions about eligibility for federal financial assistance, the individual mandate and penalties for not purchasing insurance; an explanation of the enrollment process and how health insurance exchanges will work; and an interactive glossary of terms related to the law.

"Walgreens is a trusted community resource for health-and-wellness information, and through this collaboration, we hope the millions of Americans who will be entering the marketplace in October are more informed and better prepared," Walgreens SVP and chief strategy officer Brad Fluegel said.

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ACA delays concern patients, opponents

BY Alaric DeArment

Of all the policies to come out of the Obama administration, few have caused more controversy and greater uncertainty than healthcare reform.

Passed and signed into law in 2010, the Patient Protection and Affordable Care Act is designed to address the tens of millions of Americans who lack healthcare coverage, and it is expected to add more than 30 million new patients when it takes full effect. Following a legal challenge to the law, the U.S. Supreme Court ruled last year that one of its key elements, the individual mandate, did not violate the Constitution.

Now, however, the law has hit another speed bump as the administration allowed a one-year delay in another key part of the law, the requirement that employers provide health insurance for employees or pay a penalty. Originally set to take effect next year, it has been put off until 2015. Experts have said that the delay could significantly reduce the number of people lacking insurance who will gain it next year. At the same time, a Kaiser Health Tracking Poll from June found up to 77% of respondents ages 18 years to 25 years old considered health insurance "very important," with almost two-thirds concerned about paying medical bills for serious illnesses and accidents, and 44% concerned about paying for routine care.

Some groups, notably the National Retail Federation, already had called for the full implementation of the law to be delayed. In testimony before the House Energy and Commerce Subcommittee on Oversight and Investigations, NRF VP and employee benefits counsel Neil Trautwein, said that his group had "consistently" opposed the law and retailers had "serious concerns" about it. "Our nation, particularly employers, cannot afford for the ACA to stumble out of the starting gate," Trautwein said. "We fear that as time diminishes between June 2013 and January 2014, a cascade of additional last-minute regulations will create added confusion and could encourage more employers to back out of coverage."

But while some employers may cheer the delay, it will likely come as a disappointment for patients who had been counting on receiving coverage. In announcing that 17 health insurers had joined the state health insurance exchange, New York Gov. Andrew Cuomo said the approved 2014 rates even for the highest-tiered plans — plans on the state exchange will be tiered as Bronze, Silver, Gold and Platinum — would be 53% lower compared to last year’s direct-pay individual rates, not including the effects of federal financial assistance for people meeting certain income thresholds. And while healthcare costs per capita in New York are 18% higher than the national average, the new rates would be in line with the nationwide average previously forecast in a report by the Congressional Budget Office.

"New York’s health benefits exchange will offer the type of real competition that helps drive down health insurance costs for consumers and businesses," Cuomo said. "The opportunity to choose among affordable, quality health insurance options will mean improved health outcomes, stronger economic security and better peace of mind for New York families."

According to a Truven Health Analytics study, the healthcare reform law will add 6 million Americans to Medicaid and 21 million to affordable insurance exchanges. New York and Los Angeles are likely to see the largest absolute increases in Medicaid rolls, while large increase are also likely to occur in the Texas cities of Houston, San Antonio and Austin as the number of uninsured Americans is expected to drop from 49 million in 2012 to 27 million in 2016.

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CMS cost analysis fuels controversy over rise of limited pharmacy networks

BY Jim Frederick

Results of a recent federal survey of Medicare Part D claims is again roiling the sometimes strained relationship between independent and smaller-chain community pharmacies and managed care, and could herald a growing threat to those pharmacies as health plan payers and pharmacy benefit managers abandon open pharmacy provider networks and shift more business to exclusive preferred pharmacy groups.

The new survey comes from the Centers for Medicare and Medicaid Services. Based on a study of Medicare prescription claims received in March 2012 by 13 Part D prescription drug plans, CMS reported that a majority of those prescriptions cost an average of about 6% less for PDPs when generated by a pharmacy in a preferred pharmacy network, compared with the costs of a prescription filled in a non-preferred pharmacy in an open-provider network.

"At the contract level, excluding mail order, we find that aggregate unit costs weighted by utilization [meaning costs per dose] were lower in preferred networks for the majority of sponsors with this type of network," CMS reported.

Nevertheless, the government’s findings aren’t a slam-dunk for the PBM industry. In reporting its survey conclusions, CMS takes a more nuanced view.

"Based on a one-month sample, negotiated pricing for the top 25 brands and 25 generics in the Part D program at preferred retail pharmacies is lower than at non-preferred network pharmacies," the agency noted. "However, there are different results between sponsors once we include mail-order pharmacy costs. When both mail and retail pharmacy costs are included, some sponsors’ preferred network pharmacies are offering somewhat higher negotiated prices than are offered by their non-preferred network pharmacies. Thus, our hypothesis that preferred network pharmacy negotiated prices are lower than non-preferred network … was not confirmed."

Indeed, CMS concluded, "negotiated prices are sometimes higher in certain preferred networks — contrary to our expectations."

Responding to the report, the National Community Pharmacists Association took note of CMS’ finding that some preferred networks generate higher costs, and warned that "preferred pharmacy plans … are not in the best interests of many patients" and "amount to government-sanctioned bias against small business." But the pharmacy benefit management industry, which supports limited pharmacy provider networks for employer-sponsored health plans and Part D PDPs, was quick to seize on the survey findings.

"The CMS analysis confirms that negotiated prices at preferred pharmacies are lower on average than at non-preferred pharmacies," said Mark Merritt, president and CEO of the Pharmaceutical Care Management Association. "Indeed, government and beneficiary savings from preferred pharmacy network plans are likely even greater, as the government’s analysis takes into account only part of the savings from these plans."

Merritt said additional savings come from "other factors, including premiums, reinsurance and post point-of-sale price concessions, that ultimately determine CMS payments to preferred network plans."

PCMA has long advocated preferred pharmacy networks as a cost-saving tool for public and private pharmacy benefit plan sponsors. "The tools utilized by Medicare Part D plans — including preferred pharmacy networks and generic alternatives — are delivering savings," the PBM advocacy group asserted. "While preferred physician and hospital networks have long been used to reduce costs, there is a growing understanding of the cost-savings potential of pharmacy networks."

To argue its case that limited pharmacy networks that exclude thousands of independent and small-chain operators would still provide plenty of access for seniors everywhere, PCMA also makes a stunning declaration, essentially equating community pharmacies with fast-food joints. "Today, there are more drug stores in the United States than McDonald’s, Burger Kings, Pizza Huts, Wendy’s, Taco Bells, Kentucky Fried Chickens, Domino’s Pizzas and Dunkin’ Donuts combined, creating a highly competitive environment," the group noted.

Citing a study from health consulting firm Visante, PCMA also predicts that "greater use of preferred and limited pharmacy networks could save Medicare an additional $35 billion over the next ten years while meeting the program’s pharmacy access standards."

For both chain and independent pharmacy retailers, the growth of preferred pharmacy networks and exclusive-provider contracts between pharmacies and PDPs carries explosive disruptive potential. Medicare Part D accounts for roughly 1-of-5 U.S. prescriptions dispensed at retail, according to CMS. And both public and employer-funded health plan sponsors and the plans themselves — not to mention the patients enrolled in those plans — are shifting in greater numbers to those limited pharmacy networks to capture perceived savings.

Many patients seem willing to accept the inconvenience that comes with having a substantially reduced network of pharmacies from which to choose to obtain their prescriptions via whatever Part D PDP they’re covered by. Savings, in many cases, are trumping choice and convenience.

"Given the 2013 growth in these networks," Pembroke Consulting president Adam Fein reported recently, "I expect CMS to update its guidelines regarding preferred networks. However, the cost savings shown in this [CMS] report support my view that preferred networks will continue to grow."

As Fein noted earlier this year, only "16 of 2013’s 190 PDPs have a preferred pharmacy network design." However, that list of 16 preferred network plans includes most of the nation’s biggest and most influential PDPs. Those plans determine the size and scope of the pharmacy provider network for the largest number of Medicare Part D beneficiaries and wield the power to determine the market, essentially, for a substantial portion of the U.S. prescription dollar for the more than 22.6 million seniors enrolled in a PDP in 2013.

According to an analysis of CMS data from Pembroke, "more than 4-out-of-10 seniors [are] enrolled in one of these 16 plans" this year, and "seniors are increasingly choosing preferred networks."

"In 2013, narrower pharmacy network models will become a mainstream staple of both commercial and Medicare Part D plans," Fein predicted. "Expect these networks’ success to prompt howls of protest from the non-participating pharmacies."

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