calculating member cost sharing for pharmacy claims

Sponsored by the Robert Wood Johnson FoundationRxCostandCoverageChallenge.com

Calculating Member Cost Sharing for Pharmacy Claims

Presented By:

Jason Gomberg, FSA, MAAA


Chronic Disease and Pharmacy Cost

Medicare Part D Plan Finder

Health Insurance Exchange Data Availability

Pharmacy Pricing Issues

Agenda


Chronic Disease and Pharmacy Cost


Many chronic conditions have known and significant pharmacy utilization at time of

open enrollment:

─ Diabetes

─ HIV

─ Asthma

─ Heart Disease

─ Rheumatoid Arthritis

─ Multiple Sclerosis

Consumer Health Insurance Shopping


Medications may not be covered on formulary

─ Pay full cost

─ Switch to alternative

All medications may be on high cost sharing tiers

─ For example:

• Multiple Sclerosis products costing $5,000+ / month at 50% coinsurance

o Reach member out of pocket maximum in month two or three

o Member protected remainder of year

o Member might prefer to spread cost out over year

Barriers to Obtaining Medications


Medicare Part D Plan Finder


Medicare.gov website

Allows member to enter:

─ Address

─ Expected medication options

• Exact drug list plus number of prescriptions

• Not taking any drugs

• I am in above average / average / below average health

─ Preferred retail pharmacy option

Overview


Plan listing based on annual expected member cost

─ Expected pharmacy cost sharing + plan premium

─ Incorporates formulary placement of drugs plus retail pharmacy copays

─ Assumes non-formulary drugs paid 100% by member

─ Does not give month by month estimates

Summary of plan characteristics

─ Utilization management on any entered drugs?

─ Are all entered drugs on formulary?

─ Basic plan design information

Outputs


Algorithm used to calculate drug costs is available online

─ SAS based model─ https://www.cms.gov/Medicare/Prescription-Drug-

Coverage/PrescriptionDrugCovGenIn/OOPCResources.html

Pros

─ Relatively good job at helping members find low cost plan─ Non-formulary drugs count as 100% member paid, creating strong penalty for plan in rankings if drugs

are not covered

Cons

─ If members do not enter in exact drug information, may over penalize plans for narrow formularies─ Assumes member not willing to switch medications

Model Review

https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/OOPCResources.html


Health Insurance Exchange Data Availability


Plan Benefit Template (PBT) and Formulary Files

─ Describes plan designs for each of state plans

─ Publically available in: Idaho, Indiana, Iowa, Maryland, Michigan, Minnesota,

Nebraska, New Hampshire, Oregon, Tennessee, and Virginia

Not all PBTs line up with formulary files perfectly

May be difficult getting alternative data for tools

─ Formulary files on individual company websites may not be complete or have enough

information to make benefits decisions

State Data Available


Pharmacy Pricing Issues


Combined deductibles difficult to determine what percent is applicable to pharmacy cost

for an individual

Must match individual drugs to pharmacy tier

Pricing may be different by pharmacy (especially generic drugs)

Patient may be willing to switch medications for cost savings

Plan Designs


List of estimated prescriptions in given year

If list not available

─ General health of member?

─ List specific conditions where pharmacy important portion of treatment?

Preferred retail pharmacy option (or mail)

Other factors of importance?

Member Entry Dimensions


Generic drug pricing may be different by pharmacy

─ Where to find usual and customary (U&C) price points by pharmacy?

─ Maximum Allowable Cost (MAC) plan specific

─ Lesser of logic (MAC versus U&C versus Copay)

Retail versus Mail pricing differences

Model non-formulary drugs

─ Assume member pays for out of pocket?

─ Model members will switch therapy?

─ Other alternatives?

Calculation Complexities

calculating member cost sharing for pharmacy claims

Healthcare