Prescription Drug Plans

Question 1

Describe the term Prescription Drug Plan

Answer 1

Sold as a “rider” to the major medical package. Plan members submitted receipts to a claims admin. and were reimbursed for prescription drugs.

Often subject to deductible and 20% coinsurance payment

Most employers have discontinued these plans

Question 2

Describe “carved out” plan

Answer 2

Typically administered by a PBM or TPA

The plan offers payers discounts off normal pharmacy charges, electronic claims admin according to benefit requirements and utilization reports.

Question 3

What are the common elements to modern day prescription drug plans

Answer 3

1. Member eligibility cards
2. Online claims adjudication
3. Tiered co-pays or deductibles and coinsurance
4. Pharmacy networks providing discounts for branded meds
5. Maximum allowable cost (MAC) pricing for generics
6. Mail service
7. Formularies and/or preferred drug lists
8. Prior authorization for certain high-cost medications
9. Therapeutic interchange or switching

Question 4

The price assigned by the drug manufacturer and used as a reference price for all discounts paid to pharmacies and PBMs. Used as a reference for pricing guarantees in public and private contracts.

Answer 4

Average Wholesale Price (AWP)

Question 5

The price at which wholesalers buy pharmaceuticals from manufacturers.

Answer 5

Wholesale Acquisition Cost (WAC)

Question 6

Places a ceiling on the reimbursement for generic. Most plans offer payers a MAC list that will deliver a 50% or larger discount off the AWP.

Answer 6

Maximum Allowable Cost

Question 7

What are the options available to employers for a pharmacy benefit plan?

Answer 7

1. Manage the benefit and adjudicate claims internally
2. Outsource the benefit management to a health plan, PBM, or TPA.
3. Contract directly with pharmacies and adjudicate claims internally.

Question 8

What happens when an employee presents his or her prescription drug card to a pharmacy that is in the network?

Answer 8

A prescription drug card program provides its participants with prescription medications from a participating pharmacy at a pre-negotiated discount rate. The pharmacist then uses computer network to get answers to a number of questions, such as whether the drug is covered by the plan, whether the individual is eligible for the medication and whether and limitations are associated with the medication before filling the prescription.

Question 9

What are some examples of medications excluded under prescription drug plan?

Answer 9

Smoking cessation
Hair Loss
Obesity
Cosmetic Conditions
Drugs for investigational use and immunizing agents

Question 10

Prescription products that do not necessarily cure illness but can be used to improve daily life by boosting psychological attitudes, energy levels, sexual performance and body image are typically excluded from prescription drug plans

Answer 10

Life-Style Drugs

Question 11

Biotechnology Medications

Answer 11

Drugs made from living cells that treat diseases from cancer to anemia to psoriasis.

Covered under health care plan if they must be administered by a health care professional

Question 12

Prescription Drug Plans typically include

Answer 12

1. Federal legend drugs
2. State-restricted drugs
3. Compound items (federal legend drug or state-restricted drug)
4. Injectable insulin

Question 13

What factors have been cited as contributing to the dramatic increases in prescription drug costs?

Answer 13

Increased volume, mix and availability or products, as well as cost increases passed on by the pharm industry.

Direct-to-consumer advertising

Demographics drive cost as population ages

Targeting “young-old” population aimed towards prevention

Question 14

What are the three teir’s in a prescription drug plan

Answer 14

1. Generics
2. Preferred brands
3. Nonpreferred/nonformulary brands

Question 15

Program that restricts coverage under the plan for certain drugs based on the patient’s conditions and maximizes the outcome of the medication.

Answer 15

Prior Authorization

Question 16

Under a _______ ____________ drug plan, the physicians must call in to the entity that is administering the program. The physician answers questions about the patient’s condition and, based on the information, the drug will either be covered under the plan or not.

Answer 16

Prior Authorization

Question 17

Predefined maximal quantities for specific medications. Restrict the number of dosage units that can be dispensed for a 30-day, 60- or 90-day supply of a prescription. Originally established so that certain medications can not be abused. May help with compliance or medication therapy.

Answer 17

Quantity Limits

Question 18

What are the reasons for the popularity or standalone prescription drug plans

Answer 18

1. Typically no discounts for prescription drug coverage.
2. Medical claims processors often did not require detailed receipts for prescription drugs and therefore could not review the prescriptions for coverage as effectively as is done with the PBMs online claims processing systems.
3. Limited data was available in report format for reviewing drug trends because of a lack of detailed information from the claims processing systems,’
4. Rebates and other cost savings programs are not available through medical claims processors, but are available in prescription benefit plans.

Question 19

What factors influence the cost of prescription drug benefits?

Answer 19

1. Demographics
2. Benefits, copays, and formulary design
3. Drug cost and the mix of branded products covered by the benefit drivethe cost of drugs
4. f prescriptions
5. Costs charged by the PBM
6. Fraud
7. Ability of the plan to manage costs

Question 20

Advantages of a mail service program

Answer 20

Save patients time and money

Offer a lower4 cost of dispensing and allow quality control through automation

Question 21

Disadvantages of Mail service programs

Answer 21

Possibility of waste and possibility of an employee stocking up on prescriptions prior to employment term

Question 22

Common techniques plan sponsors use to control pharmacy costs

Answer 22

1. Review the design of the pharmacy benefit and how it fits into the overall medical program.
2. Analyze experience to identify area needing better management

Question 23

Pharmacy management tools and techniques

Answer 23

1. Reduce the pharmacy network to the smallest size without compromising access
2. Offer mail service
3. Adopt a plan that encourages generics
4. Use a formulary that is designed to promote cost-effective and clinical therapeutic drugs coupled with a rebate program
5. Practice utilization management
6. Offer physician profiling that highlights high cost physicians with low acuity patients
7. Educate patients about alternatives to high cost therapies
8. Communicate cost trends to plan members to help them become better consumers

Question 24

What are the three types of drug utilization review

Answer 24

1. Concurrent
2. Retrospective
3. Prospective

Question 25

Occurs at the point of service and flags potential overuse based on clinical monitoring criteria or “edits” that have been programmed into the PBM’s systems. These edits (hard edits) are for too-soon refills, duplicate claims, drugs requiring prior auth, or quantity limits.

Answer 25

Concurrent

Question 26

Pharmacists or nurses review patient profiles to determine if patients are complying with their drug therapy or to suggest alternative therapies to their physicians that may be better or more cost effective.

Answer 26

Retrospective

Question 27

Educating physicians and patients about drugs or drug therapies

Answer 27

Prospective