Prescription Drug Plans Flashcards
Module 6
Describe the term Prescription Drug Plan
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
Describe “carved out” plan
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.
What are the common elements to modern day prescription drug plans
- Member eligibility cards
- Online claims adjudication
- Tiered co-pays or deductibles and coinsurance
- Pharmacy networks providing discounts for branded meds
- Maximum allowable cost (MAC) pricing for generics
- Mail service
- Formularies and/or preferred drug lists
- Prior authorization for certain high-cost medications
- Therapeutic interchange or switching
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.
Average Wholesale Price (AWP)
The price at which wholesalers buy pharmaceuticals from manufacturers.
Wholesale Acquisition Cost (WAC)
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.
Maximum Allowable Cost
What are the options available to employers for a pharmacy benefit plan?
- Manage the benefit and adjudicate claims internally
- Outsource the benefit management to a health plan, PBM, or TPA.
- Contract directly with pharmacies and adjudicate claims internally.
What happens when an employee presents his or her prescription drug card to a pharmacy that is in the network?
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.
What are some examples of medications excluded under prescription drug plan?
Smoking cessation Hair Loss Obesity Cosmetic Conditions Drugs for investigational use and immunizing agents
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
Life-Style Drugs
Biotechnology Medications
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
Prescription Drug Plans typically include
- Federal legend drugs
- State-restricted drugs
- Compound items (federal legend drug or state-restricted drug)
- Injectable insulin
What factors have been cited as contributing to the dramatic increases in prescription drug costs?
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
What are the three teir’s in a prescription drug plan
- Generics
- Preferred brands
- Nonpreferred/nonformulary brands
Program that restricts coverage under the plan for certain drugs based on the patient’s conditions and maximizes the outcome of the medication.
Prior Authorization
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.
Prior Authorization
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.
Quantity Limits
What are the reasons for the popularity or standalone prescription drug plans
- Typically no discounts for prescription drug coverage.
- 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.
- Limited data was available in report format for reviewing drug trends because of a lack of detailed information from the claims processing systems,’
- Rebates and other cost savings programs are not available through medical claims processors, but are available in prescription benefit plans.
What factors influence the cost of prescription drug benefits?
- Demographics
- Benefits, copays, and formulary design
- Drug cost and the mix of branded products covered by the benefit drivethe cost of drugs
- f prescriptions
- Costs charged by the PBM
- Fraud
- Ability of the plan to manage costs
Advantages of a mail service program
Save patients time and money
Offer a lower4 cost of dispensing and allow quality control through automation
Disadvantages of Mail service programs
Possibility of waste and possibility of an employee stocking up on prescriptions prior to employment term
Common techniques plan sponsors use to control pharmacy costs
- Review the design of the pharmacy benefit and how it fits into the overall medical program.
- Analyze experience to identify area needing better management
Pharmacy management tools and techniques
- Reduce the pharmacy network to the smallest size without compromising access
- Offer mail service
- Adopt a plan that encourages generics
- Use a formulary that is designed to promote cost-effective and clinical therapeutic drugs coupled with a rebate program
- Practice utilization management
- Offer physician profiling that highlights high cost physicians with low acuity patients
- Educate patients about alternatives to high cost therapies
- Communicate cost trends to plan members to help them become better consumers
What are the three types of drug utilization review
- Concurrent
- Retrospective
- Prospective
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.
Concurrent
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.
Retrospective
Educating physicians and patients about drugs or drug therapies
Prospective
