avoiding aca's cadillac tax: five most costly benefit plan misconceptions · 2015. 8. 27. ·...

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Avoiding ACA's Cadillac Tax: Five Most Costly Benefit Plan Misconceptions

Misconception #2: My PMB Doesn’t Matter

BeneCo of Wisconsin, Inc. Phone: 262.207.1999 ext. 112

Email: [email protected] Vice President, BeneCo of Wisconsin

For Additional Webinars: http://www.benefitsinc.com/beneco_webinars.html

mailto:[email protected]

http://www.benefitsinc.com/beneco_webinars.html

-2- Avoiding ACA’s Cadillac Tax: Five Most Costly Benefit Plan Misconceptions that Employers Have

BeneCo of Wisconsin, Inc.:

A member of The Benefit Companies, a privately held company.

Have been providing insurance and employee benefits consulting since 1971.

A full service benefits firm serving over 1,200 companies and organizations ranging from 10 to 50,000 employees.

Headquartered in Brookfield, WI with additional Wisconsin offices in Green Bay, and Plymouth.


Jeff Schultz

Vice President

BeneCo of Wisconsin

Justin Andaloro

Manager of Marketing & Communications

BeneCo of Wisconsin


What is the Cadillac Tax High-cost group plans will be subject to a 40% excise tax

beginning in 2018.

Not just rich benefit plans

High risk groups will be affected

The tax applies to annual premiums in excess of $10,200 for individual coverage and $27,500 for family coverage.

Paid by the insurer if FI and by the Employer if Self-Funded

These amounts will be indexed for inflation.

Employer HSA contributions will likely be included.

Jury still out on HRA


Cadillac Tax Know your Numbers Projected 8% Trend

2013 PPO Plan HSA Current Single $696.80 $452.92

Family $2,003.77 $1,302.45

2014 Single $9,031 $5,870 Family $25,969 $16,880

2015 Single $9,753 $6,339 Family $28,046 $18,230

2016 Single $10,533 $6,847 Family $30,290 $19,689

2017 Single $11,376 $7,394 Family $32,713 $21,264

2018 Single $12,286 $7,986 Family $35,330 $22,965

2019 Single $13,269 $8,625 Family $38,157 $24,802

2020 Single $14,330 $9,315 Family $41,209 $26,786

2021 Single $15,477 $10,060 Family $44,506 $28,929

The Problem


Cadillac Tax Know your Numbers

PPO Plan HSA Family Coverage $2,086 $0

Employee $0 $0 Employee + Spouse $0 $0

Employee + Child(ren) $7,830 $0

40% Excise Tax Per Employee Plan Participant PPO Plan HSA

Employee $834 0 Employee + Spouse 0 0

Employee + Child(ren) 0 0 Family Coverage $3,132 0

Current Enrollment in Each Category

PPO Plan HSA Employee 422 105

Employee + Spouse 51 12 Employee + Child(ren) 23 5

Family Coverage 304 22

Projected Cadillac Tax Based on Current Enrollment PPO Plan HSA

Employee $352,106 $0 Employee + Spouse $0 $0

Employee + Child(ren) $0 $0 Family Coverage $952,170 $0

Total Projected Excise Tax in 2018: $1,304,276


Misconceptions Misconception #1: Plan Design is the Only Way I Can Reduce Plan Expenses 4/1/2014 10:00-11:00 Misconception #2: My PBM Doesn't Matter 4/24/2014 10:00-11:00 Misconception #3: Wellness Doesn't Produce an ROI 6/3/2014 10:00-11:00 Misconception #4: All Care Management/Utilization Review Firms Are the Same 7/15/2014 10:00-11:00 Misconception #5: My Employees Will Never Understand Their Benefits and Engage 8/5/2014 10:00-11:00


How much of our benefit planning…. • Is data driven?

• Identifies, removes, or eliminates plan and vendor inefficiencies?

• Is integrated with all aspects of employer cost and employee wellness?

• Is held accountable by measuring and managing each financial and wellness metric?

• Benchmarks plan performance, member health and utilization?

• Improves member health and well-being?

• Supports corporate culture?

• Achieves sustainable long-term financial objectives?

Asks the summary question: Have we deployed every possible tactic to affect healthcare spend within the current plan infrastructure?


Best Performers Poor Performers 15% over two-year overall cost trend

Moderate Performers 10% average two-year overall cost trend

There is a pattern in how companies successfully manage their healthcare costs.

5 percent average two-year overall cost trend • Quantitative analysis of healthcare data Integrated health benefits approach Pre-set targets and regular assessment Employee education

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Source: Survey of 555 large US companies, Managing Health Care Costs in a New Era, 10th Annual National Business Group on Health/Watson Wyatt Survey Report, 2005.

Business Case For Qualitative Employer Benefits Planning


• Identify areas of unnecessary spending and increased cost within the framework of your health plan. Identify Inefficiencies

• Review plan performance history and identify areas of excess spending. Is it price, utilization, both? Identify Cost Drivers

• Review plan performance history against industry benchmarks. Benchmark Your Data

• Create a clear, concise, and ongoing message to create a partnership mentality… Engage Your Members

• Leverage health promotion and worksite wellness to generate significant healthcare cost savings…

Supercharge Your Wellness Program

• Continually measure to manage claims data for possible intervention…

Measure and Manage Your Results

•Though out the year, we will continue to strategize and keep you informed of

the issues that affect you and your employees as it relates to ACA . ACA Compliance and Guidance

Qualitative Employer Benefits Planning


1. From 1999 to 2009, the number of prescriptions nationwide increased 39%.

2. Retail prescription prices rose from an average price of $38.43 in 1998 to $71.69 in 2008 and the average brand name drug was 4 times the average generic alternative.

3. Specialty medications accounts for about 1% of claims and 34% of costs

The business case for managing prescription drugs:


PBM Case Study: Group 1: 1300 Employees

73% of all prescriptions filled this plan year-to-date have been generics.

Generic Prescriptions

2005 2006 2007 2008 2009 2010 2011

% Utilization 59% 63% 67% 72% 73% 76% 77%

% Total Dollars 27% 26% 21% 23% 22% 15% 16%

Overall Rx Net $PMPM

$34 $38 $35 $34 $33 $39 $42


PBM Case Study: Group 3: 500 Employees

Generic Prescriptions 2006 2007 2008 2009 2010 2011

% Utilization 66% 68% 67% 72% 75% 81%

% Total Dollars 27% 27% 28% 34% 28% 34%

Overall Rx Net $PMPM

$30 $36 $39 $39 $32 $27


PBM Savings: Traditional Savings Programs

Offered by PBMs


Mandatory Mail (-5% to 10% client savings)

After you have had three (3) fills of a particular maintenance medication at a retail pharmacy, all future prescription refills for that medication must be obtained through a mail-service pharmacy.

Clinical Programs (2% to 6% client savings) Prior Authorization programs helps to contain costs and ensure appropriate

prescribing. Step Therapy programs helps to contain costs by requiring within selected therapeutic classes that members try a lower-cost alternative medication before using a more expensive drug.

Limited Retail Networks (1% to 3% client savings) This program limits members to a list of certain retail pharmacies. Often

times, excluding one or more market leaders to offer a more aggressive price.

PBM Savings:

Standard Programs Offered by PBM to Save Money

Additional Revenue

Additional Revenue


Savings Opportunities Offered by

Independent Third Party Companies


Other Savings Options

Pricing Audit (4% to 8% client savings)

Ensure that third-party compensation is being paid out correctly, according to contract terms.

Gain a better understanding of the multitude of third-party contracts currently in place, and use best practice recommendations to negotiate in the future.

100% claim review

Plan Design Audit (2% to 4% client savings)

The Plan Design Audit is verifies PBM contract and benefit plan design claims processing compliance. This is a first step in the process of eliminating waste in your pharmacy benefit program. The fiduciary requirements are satisfied for pharmacy benefit program management oversight.


Other Savings Options

RFP (Request For Proposal) (6% – 12% client savings)

An RFP is separated into two sections: Current negotiations & Full RFP. Each has its’ advantages. Current negotiations with current PBM

Discuss a new contract is needed with the current PBM Build in best practice language and guarantees No member impact

Full RFP Three to five PBMs are selected Asked multiple questions in RFP template Claims re-priced Responses reviewed and scored Finalist meeting held PBM selected


Innovative Savings Programs

Offered by Independent Third

Party Companies


Fraud Waste & Abuse FWA

This process deletes most false positives and dead ends while at the same time, creates views that consider appropriate, actionable criteria.

Reporting provides actionable data on a regular basis

Claim cost outliers

Multi users, narcotics & network pricing

Surveillance Process:

Outlier utilization

Drug-use abnormalities

High-cost claim monitoring

Inappropriate pharmacy network pricing

Multiple members utilizing one card

Abuse monitoring

Manual claim submission integrity

PBMs only look at static windows and only at drug data


Specialty Medications

Specialty medications accounts for about 1% of claims & 34% of costs

Specialty medications comprise 11 of the top 16 drugs

By 2014, will represent 50% of total drug spend

37% require prior authorization under medical benefit

83% require prior authorization under pharmacy benefit

35% of employers restrict coverage under the medical benefit

36% are using separate tier for specialty medications

29% of employers do not have a copay for specialty medication under the medical benefit

> 50% of specialty medications are dispensed through the medical benefit

40% higher costs for specialty medication dispensed through the medical benefit


Integration of Data

Integration of medical & pharmacy data ($1.50 PMPM savings)

Identify specialty medications being filled on medical side

Identify duplication of specialty fills

Identify gaps in care

Oversee adherence programs

Provide clinical oversight & outreach programs


Gaps in Knowledge

Do you know where specialty spend falls?

85% of employers respondents were not sure

88% of health plans were not sure of their drug trend for specialty drugs covered under the medical benefit.


Every PBM purports to have the best deals.

Do I have a choice in PBMs?

Do clinical resources matter?

How do you measure their deal strength?

What are the details they don’t share?

What is the impact on my company’s utilization?

How do I complete a re-pricing exercise under a different network?

Can all PBMs administer innovative plans?

How do I validate and measure results on an on-going basis?

PBM


Ask your PBM Vendor (or any prospective PBM) these questions:

1. Does your revenue increase if my plan utilization increases?

2. Are you willing to operate in a fully transparent relationship?

a) Sharing all revenues and expenses with our plan?

b) Fully disclosing all rebates on a drug by drug basis?

3. Will you commit a Pharm MD to my account in order to improve member health, compliance and improved Rx trend?

4. How much profit do you make on my account?

5. Can you administer value based plans designs?

6. Will you provide specific contract pricing information for every claim in an on-going claims file?

7. Show me the money. Will you re-price my plan claims at your contracted rates?

PBM


PBM – Pricing Comparison: Which PBM has better pricing?

PBM #1 PBM #2

Generic Effective Rate = 67% Generic Effective Rate = 64%

Effective rate only includes MAC generics Effective rate includes all generics

Contains MAC at mail Does not contain MAC at mail

Rebates are $3.00 (retail) & $9.00 (mail) Rebates are $12.00 (retail)

& $36.00 (mail)

Rebates paid within 120 days Rebates paid within 180 days

AWP – 15% AWP – 16% Post AWP pricing Pre AWP pricing

Not Guaranteed Guaranteed

All claims Brand only claims

Contains zero balance logic Does not contain zero balance logic

If plan paid =

$0, rebates

are not paid

Rebates paid

on all claims

regardless


Employee behavior is hard to change

What Rx’s are being dispensed at Retail that could be dispensed at Mail?

How do I measure the cost impact?

Simple examples are best

How do I indentify opportunities around this rapidly growing area?

Employee Education


Brand : Nexium Generic : Omeprazole

• Nexium – cost $192/month

• Zegerid – cost $185/month

• Prevacid – cost $189/month

• Protonix – cost $247/month

• Omeprazole – cost $17/month

Prescription Tier Examples

Varied cost of Heartburn and Acid Reflux drugs

Share real Rx alternatives


Brand : Zocor

Generic : Simvastatin

Similarities

• Active Ingredients

• Strength

• Purity

• Quality

• Effects on the Body

Differences

• Color (sometimes)

• Shape (sometimes)

• COST:

• Zocor - $143/month

• Simvastatin - $15/month

Similarities of High Cholesterol drugs Share real Rx alternatives


0%

10%

20%

30%

40%

50%

60%

70%

80%

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Blain Supply, Inc Blain's Farm and Fleet Cholesterol Meds

Generic

Formulary

Non-Formulary

Prescription Drugs -Prescription Class By Source



$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

1/0

6

4/0

6

7/0

6

10/0

6

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7

4/0

7

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7

10/0

7

1/0

8

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8

7/0

8

10/0

8

1/0

9

4/0

9

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10/0

9

1/1

0

4/1

0

Cholesterol Rx Cost per Script


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Pe

rce

nta

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f All

Gas

tro

Rxs

Blain Supply, Inc Blain's Farm and Fleet Gastro Meds

Generic

Formulary

Non-Formulary




$0

$50

$100

$150

$200

$250

1/0

6

4/0

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GI Rx Cost per Script


How to save 8-10% on your Rx spend?

Pricing Audit (4% to 8% savings)

Plan Design Audit (2% to 4% savings)

RFP (Request For Proposal) (6% – 12% savings)

Protocol Specialty spend (up to 50% savings on specialty spend)

Engage members (1% savings)

Align motives Priceless

-35-

Measure and Manage Your Results

Avoiding ACA’s Cadillac Tax: Five Most Costly Benefit Plan Misconceptions that Employers Have

Measure Quarterly • All Vendors

• Network • PBM • Coordinated Care

• All Changes • Plan Design • Employee Contributions • Employee Cost Share

Thoughout the year and then at year end. And then don’t stop.


• Are we holding our vendors accountable? Identify Inefficiencies

• Do we fully understand the costs driving our plan? Identify Cost Drivers

• Are we reviewing plan performance history against independent and objective industry benchmarks? Benchmark Your Data

• Are we reaching for Zero Trend? Supercharge Your Wellness

Program

• Are we educating our employees beyond plan design? Engage Your Members

• Are we continually looking for areas of intervention? Measure and Manage Your

Results

Employer Driven Health Care

Are we driving or is the system?


Pay or Play Webinar Series Series: Course Level Date Time

Top 10 Frequently Asked Questions about ACA (Rebroadcast) 101 5/14/2014 9:00-10:30

To Register: http://www.benefitsinc.com/beneco_webinars.html


ACA Learning Series: Course Level Date Time

What do the Updated Regs Mean to our Company and Our ACA Strategy (Rebroadcast of March 19, 2014)

200 5/20/2014 2:00-3:00

Understanding HPID and the Reinsurance Fee in 2014 101 5/21/2014 10:00-11:00

Top 5 Most Inaccurate Assumptions about the ACA and How to Avoid Them

301 5/28/2014 10:00-11:00

How to Prepare for and Survive a DOL Audit (Rebroadcast) 201 5/29/2014 10:30-11:30

How to Prepare for and Survive a DOL Audit (Rebroadcast)

201 6/18/2014 10:30-11:30



Avoiding ACA’s Cadillac Tax: Five Most Costly Benefit Plan Misconceptions that Employers Have:

Course Level Date Time

Misconception #3: Wellness Doesn't Produce an ROI 300 6/3/2014 10:00-11:00

Misconception #4: All Care Management/Utilization Review Firms Are the Same

300 7/15/2014 10:00-11:00

Misconception #5: My Employees Will Never Understand Their Benefits and Engage

300 8/5/2014 10:00-11:00



We are grateful AM 620 WTMJ has asked BeneCo to host a radio series to educate listeners on how best to tackle the ins and outs of the Affordable Care Act (ACA). Focused primarily on educating: Business Owners, CEO's, CFO's and HR professionals; we will help them determine if ACA is a "Top 3" or "Top 30" business priority. Tune in to hear us discuss critical ACA challenges to businesses on April 27th from 8:00-9:00pm. Be sure to listen for the advertisements! If you would like the podcast from the February 16th or March 16th show, please drop us a line.


You asked for it…

ACA Impact Study How will ACA impact my organization? What do I need to plan for?

Free initial consultation Fee for service basis based on plan complexity

ACA Sustainability Analysis How do I create a long term sustainable ACA cost strategy and still comply? Fee for service basis based on plan complexity


Ask us about Haiti…

The work: Orphan care and sponsorship, tent city refugee relocation and community development, microenterprise other ministry opportunities

To get more info or engaged in some way drop us a email, or for a glimpse of the work go to www.newlife4kids.org or www.missiondiscovery.org

2014 Upcoming trips: June and October

http://www.newlife4kids.org/

http://www.missiondiscovery.org/


Post-workshop questions or to get the links for upcoming webinars:

Jeff Schultz Vice President BeneCo of Wisconsin, Inc.

262-207-1999 x112 [email protected] www.beneco.co


Thank you

avoiding aca's cadillac tax: five most costly benefit plan misconceptions · 2015. 8. 27. ·...

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