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Michigan Purchasers Health Alliance Annual Fall Kickoff U-M Drug Carve-out – Greater Plan Sponsor Involvement in Drug Be

Michigan Purchasers Health Alliance Annual Fall Kickoff U-M Drug Carve-out – Greater Plan Sponsor Involvement in Drug Benefit Management September 20, 2007. Keith Bruhnsen, MSW Assistant Director, Benefits Office Manager, Prescription Drug Plan. Presentation Topics.

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Michigan Purchasers Health Alliance Annual Fall Kickoff U-M Drug Carve-out – Greater Plan Sponsor Involvement in Drug Be

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  1. Michigan Purchasers Health Alliance Annual Fall KickoffU-MDrug Carve-out – Greater Plan Sponsor Involvement in Drug Benefit ManagementSeptember 20, 2007 Keith Bruhnsen, MSW Assistant Director, Benefits Office Manager, Prescription Drug Plan

  2. Presentation Topics • University of Michigan Facts • U-M Prescription Drug Carve-Out • Plan Design • PBM Selection • Effective Controls and Innovative Practices • Focus on Diabetes • Focus on Medicines • U-M Results

  3. U-M Facts As a Employer: • 34,800 employees & 6400 retiree contracts • 80,00 covered lives • 7 Unions (25% of actives) • 2006 health care cost $233M (25% Rx) As a Provider: • 4 pharmacy’s (1/2 of drug plan scripts) • Coordinated effort with prescribers & hospital committees

  4. U-M Prescription Drug History • Pre-2000 15-30% Rx trend rates • Inadequate rx data from health vendors • Minimal rx programming • Inconsistent coverage • Study the problem & propose solutions

  5. 2002 Prescription Drug Work Group Recommended: • Self-funded & self-administered carve-out operational structure • Create an equitable co-pay structure • Harmonize drug plan coverage • Utilize campus expertise • Improve physician and patient education • 1/1/03 Consolidated Plan Implemented

  6. U-M Plan Design • Rich plan design, low member out-of-pocket cost ($7 - $14 - $24) • Maintain open formulary of available drugs with standard exclusions (cosmetic, experimental) • Added coverage for psychiatric drugs; oral contraceptives/devices; smoking cessation; $0 co-pay insulin/needles/test strips/lancets, prenatal vitamins; $5,000 fertility lifetime benefit • Mail-order pharmacy (90-day retail max, 90-day option for mail order supplies at 2x co-pay) • Annual Out-of-Pocket max “safety net”: $2,500 individual and $5,000 family • 75% refill limit

  7. 2005 RFP PBM Selection 2006 Selecting Transparent Vendor • Plan design flexibility • Claims data access • Unbundled services • Improved Pricing • Per transaction basis • 100% pass-through • 100% rebates • Good MAC • Medicare Part-D Employer Subsidy • Research opportunities • Innovative partner • Ease of doing business (coding )

  8. Operations Benefits Office • Administrative, financial and clinical oversight Pharmacy Benefit Oversight Committee • Broad representation, advisory • Endorse review of new drugs • Review financials, customer issues, new programs • Address member communication and privacy Pharmacy Benefit Advisory Committee (P&T) • Small monthly work group of MD’s and pharmacist • Review new drugs, formulary, PDL, programs • Monitor utilization, design PA criteria

  9. Key Strategies • Manage toward lowest net cost based on evidence based medicine • Adjust plan design to goals, sensitivity to member disruption, and more consumer involvement • Manage rebate game - rebates diminish with generic releases and increased specialty Rx spending • Future savings are in managing “appropriate use” - utilization, overuse, waste, abuse, and off-label prescribing • Demand accountability: audit claims, system set up, and rebates • Continually educate plan members on plan rationale and individual opportunities

  10. Plan Design Initiatives • Benefit Limitations on Supplies and Quantities • Limits on Fertility, ED, Smoking Cessation and Weight Loss • Plan Exclusions • Standard (cosmetic, anorexiants, etc) • Non-coverage of Rx drugs with OTC alt/equivalents • FDA Approved Dosing Limits (maximum daily doses) • Manage Out-of-Network & Compound Claims

  11. Pharmacy Program Intervention Matrix

  12. U-M Rx Plan Cost History

  13. U-M Health Plan Rates and Prescription Drug Plan Premiums

  14. UM RX Trend in Comparison to National Averages

  15. U-M 2006 Financials, 2007 Metrics FINANCIALS • Transparent vendor = $4.5M • 4.35% increased GDR = $2M cost avoidance • Pill Splitting = $195k Plan, $25k Members • 340B Pricing = $512k • DAW1 = $130K (93 members) • Smart PA’s = 17% reduction in PA request • Medicare Part-D Subsidy = $3.5M • Focus on Diabetes cost $200K (6 mths) 2Q 2007 Metrics • Tier 1 generics = 62% • Tier 2 preferred brands = 25% • Tier 3 non-pref brands = 13% • Mail Order Utilization = 8.4% • 90 Days @ retail = 8.9% • Generic sub. rate = 97% • Percent generic adjudicated at MAC = 87% • 2006 UM Plan $ inc. = 5.77% (2007 projected = 5.1%) • 2006 PMPY $ Inc. = 3.64%

  16. Research and Other Initiatives • Tablet Splitting – half price financial incentives to patient • College of Pharmacy: Retail Pharmacy Safety & Customer Satisfaction Survey , Whitepapers • Injectable Pilot Program using hospital public health service pricing (340B) • Statin & PPI Switch Program with UMHHC • MHealthy: Focus on Diabetes • MHealthy: Focus on Medicines

  17. MHealthy: Focus on Diabetes • Substantial medication underutilization and adherence (40-60%) • 2,227 UM employees with diabetes mellitus • 2,631 members benefiting • Diet controlled may opt-in • Copays: generics $0, brands -50%, non-pref. -25% • Provide copay reduction for: • Glycemic agents • Antihyperlipemics (statins, fibrates, etc) • All antihypertensives (ACE, ARB, diuretics, etc) • Calcium Channel Blockers • Beta-Blockers • Antidepressants

  18. Focus on Diabetes – cont. • Outcome Measures • Adherence – based on pharmacy claims • Medication and total health care spending • Plan Cost: $400,000/yr • Member Copay Relief: Avg $152.89/yr • Decrease in pill splitting side effect

  19. MHealthy: Focus on Medicines • 3000 employee & retirees with 9+ medications in past 120 days (review OTC, supplemental) • Goals to improve health, identify safety concerns, contain cost, and optimize members therapy • EOB with history, plan/member cost and savings opportunities: preferred brand, generic, or pill splitting Three study groups: • EOB suggestion to consult with physicians • EOB + offer of pharmacist phone consultation • EOB + letter offer for face-to-face consultation with pharmacist and review of medical record • Identify areas for future expansion

  20. Summary • Competing interest in PBM’s profitability & employer cost • Carve-out can control drug spending • Employer must invest resources for returns • Innovative designs can manage use and shape behavior • There are vendors eager to work in a culture of innovation UM Benefits Office: www.umich.edu/~benefits/ Questions: keithb@umich.edu

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