Innovations Driven By Employers - PowerPoint Presentation

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Innovations Driven By Employers

Patrick Pine, Chief Administrative Officer, Robert F. Kennedy Medical Plan

What is the Robert F. Kennedy Medical Plan?

A Taft Hartley (Union) Plan for Employers Contracted with United Farm Workers (UFW)Serves average of 3500 to 4000 employees and 10,000 to 15,000 total livesWorks with average of 40 employers

Most (85%) in California but some groups in Oregon, Washington, Arizona, New Mexico and Texas

How is the Robert F. Kennedy Medical Plan Structured?

Self insured, self administeredMedical benefits via a network with Anthem Blue CrossDental benefits via insured arrangement with United Healthcare

Vision benefits via insured arrangement with Vision Service Plan (VSP)Prescription drug benefits via insured arrangement with Express Scripts

Challenges Facing Employers Other Than Cost

Compliance with multiple regulatory requirementsDeveloping and maintaining and transmitting and receiving data securelyCommunicating required information and disclosures in multiple languages using multiple media

Recruiting , retaining , training and developing employees

What Has Not Worked for Us?

“Wellness” programs - Why not?Over last two years, the persons who incurred our most expensive claims: 77

year old spouse of an employee with chronic conditions; 65 year old spouse with chronic condition; 10 year old child;

two 55

year

old spouses

with chronic

conditions;

infant child; employee injured

in

a fall; teenage son hurt in a fight

None of our largest claims would have been mitigated by any “wellness” program

What Else Has Not Worked For Us?

Printed material – especially if in English and formal Spanish – Why not? Too much “legalese”; general aversion to print

material; medical terminology not understood

in

any language

Our “Success Stories”

Our Program with our consultants at Gallagher Benefits to RFQ/RFP/Bid Prescription Benefit Managers (PBMs)Our Program Relying on a Network of Providers based in Mexico – mostly Mexicali and Tijuana

RFP RX BID Process- Project Background

Robert F. Kennedy Medical Plan (RFK Plan)

currently contracts with Express Scripts

for its pharmacy benefit management (PBM) services through 12/31/2015.

RFK Plan engaged Healthcare Analytics (HCA), a division of Gallagher Benefit Services (GBS), to

assess the PBM marketplace

to ensure that they attain the best financial arrangement for the 2016-2018 plan years

The key to the analysis, and what clearly differentiates GBS from other consulting firms, is its in-depth evaluation of the bidding PBM’s

contract language

There is a direct link between variations in contract language and the overall financial impact for each PBM’s bid

In order to select the best candidate for PBM services, HCA conducted an extensive Request for Proposal (RFP) process which included an analysis of all submitted proposals

9 PBMs were solicited for proposals

Costco and

Navitus declined to bid.

HCA’s analysis included, but was not limited to, the following parameters:

Review of bidding PBM’s

contract language

Review of the proposed

financial terms

to calculate the potential costs and/or savings projected over the contract term (using HCA’s proprietary PBM pricing model)

Evaluation of

questionnaire

responses

Comparison of the

unit cost and cost per day

amounts of highly utilized drugs in all networks; and

Review of the

Maximum Allowable Cost

(MAC) lists provided by each bidding PBM

RFP RX BID Process

Summary of PBMs Invited/Responding

RFP RX BID Ranking Process

Best and final offers (BAFO) were requested from the finalists identified in the original analysis

The results of these improved bids but did not change the results or recommendationsAs a result of the BAFO financial and scoring analysis, HCA concludes the following PBMs should be considered and participate in finalist presentations. Suggested ranking:

Benecard

(Pass-Through)

Switched administrative fee to PMPM (mistake)

Increase in cost (54K).

Express Scripts (Narrow)(Traditional)

Biggest increase in rebates ($143K)

Increase in discounts ($51K)

Optum

(Traditional)

Second best improvement in rebates ($96K).

Best increase in discounts (63K).

Best

and Final offers did result in better financial savings for each of the three

finalistsExpress Scripts had the biggest improvement in their offer

RFP Rx Bid Results

RFP RX BID Results

Best and Final Offers – adjustments made to original bid

Finalist

Discounts

Rebates

3 Year Enhanced Savings Projections

Benecard

Switch

to PMPM

($54K

increase

)

No Rebate

increase

$54,000

Cost increase

Express

Scripts (Narrow)

Better Discounts($51K over 3 years)Biggest increase in rebates($143K over 3 years)$194,000Optum Best Discount($63K over 3 years)Increase in Rebates

($96K

over 3 years)

$160,000

RFP RX BID Financial Results

Projected Total Cost Avoidance over the Contract Term (3 years):The 3-year savings figures below reflect the Best and Final bids from the

PBMs.Express Scripts the incumbent, had the greatest improvement over 3 years.

All but two of the vendors offered a financial improvement over the then current offer

Express Scripts Provided a greater than $1 million savings over the then current contract

Significant savings to the client for the next three years of their pharmacy contract

Our Mexico Provider Program

Several plans with employees and families near the border have long had programs using doctors, dentists, optometrists and pharmacies in Mexico. There are some hospital facilities that some plans also include.

Our Mexico Provider Program

Typically the providers are first “vetted” to assure quality. The providers are often included in medical tourism programs with American insurers.There are firms that specialize in creating networks for American employers such as SIMNSA.

Why Do Many of Our Members Prefer Mexico Providers?

Cost Savings Typically Mexico providers charge substantially less for same services than US providers

Overcoming Language Barrier Our Spanish speaking members prefer providers that

are primarily Spanish speaking

Why Do Many of Our Members Prefer Mexico Providers?

Familiarity Those Who May Have Grown Up in Mexico or Who Have

Family in Mexico Prefer Providers That They Are Familiar WithExcellent “Customer Service”

Many

of the providers provide transportation to

and

from

the US with expedited border crossings, some

provide

hotel lodging and food for patients and family

members

and many reportedly are better

than US

providers at communicating

with the patient

Example of Savings from Mexico Providers

Female spouse of member told by US doctor she needs a full knee replacement at total cost of $35,000 with Plan paying about $28,000 and her cost about $7,000 Mexico doctor recommends partial knee surgery without full replacementCost in Mexico about $3,500 with Plan paying about $2,800 and her cost about $700 plus

her travel costs ($500)Plan reimburses her about $500 in travel costs under its medical tourism policy

Plan Net Savings: $24,700 Her Net Savings: $6,800

What Else Are We Considering?

Various applications of “reference based pricing”Further use of “medical tourism” – both domestic and internationalIncreased use of data analytics