Drugs are more expensive today than ever before. We now have cancer drugs that are in the hundreds of thousands of dollars and gene therapy that costs $3.5 million. Many drugs are being billed under the medical benefit and are often overlooked, resulting in overbilling and missed savings opportunities for the plan. One example is a drug that is being reimbursed at $1000/mg at a facility instead of $215/mg through a specialty pharmacy. The member receives 100mg every 28 days, resulting in a total payment of $1,300,000 versus $279,500 for the year--a difference of $1,020,500!
Most plans have a precertification process in place for high-dollar drugs that addresses the appropriateness for diagnosis as well as provider network status; however, this is where it stops. A few questions that dig a little deeper to ensure the members and the plan are getting the best care at the appropriate place at a cost-effective price might include:
Is research being done where the most cost-effective site of care might be?
Are drugs addressed separately in your provider and facility contracts?
Are you aligned with a specialty pharmacy that can source the drugs and provide home health infusions or infusions at independent infusion centers?
Do you have any plan language that addresses the management of specialty pharmacy?
Have you reviewed your PBM contract regarding management of specialty pharmacy drugs?
Managing drug spend involves a team approach that takes into account network and provider/vendor contracting, medical management, and claim review.
So where do we start?
The first step is to analyze your medical claims and identify drugs most impacting the plan: (1) top 10 for cost, and (2) top 10 for most prescribed (high cost/large volume). Again, some questions to ask include:
Where is the drug being administered?
What is the reimbursement rate for the drug?
What is the AWP of these drugs?
What is the price through the specialty pharmacy?
Is the drug able to be given at home?
How does the reimbursement at the current site of service compare versus home?
How does the reimbursement of the drug compare among providers/facilities?
Are these specialty drugs addressed separately in your provider and facility contracts?
Is there any language that has a maximum reimbursement rate for specialty drugs?
Once the top drugs have been identified and research conducted, tackling how to manage the cost comes next.
The precertification process is an ideal place to make sure the site of service is the most-cost effective location. Often there are pre-cert turn-around time limits, so how do you work around it? Work with your pharmacy team and/or specialty pharmacy to know what specialty drugs may be given at home along with the price list. Depending on your medical management team, immediate hand-off to a case manager or pharmacy team may be indicated to research and line up alternatives. For drugs that are required to be given outpatient or at a provider’s office, have a list ready of outpatient infusion centers with highest quality and lowest cost so you can steer members to those providers. Do you have providers in your network that will accept the drug from the specialty pharmacy? If so, steer the member to that provider.
A vital role in managing drug costs involves claim reviews. Do you have a process or system that will flag any drug being billed over $10,000 and pend it for review? The review should include looking at the drug, units, charge, and reimbursement. For a drug that is being overcharged, what other options are available in that area? Is the drug able to be given at home? How does this provider compare with others in the area? Has anyone reached out to the provider to discuss the charges? Was there an error on their billing? Is the provider willing to work with you either by accepting the drug from a specialty provider or reducing the price to a reasonable amount?
The final step is an assessment of the provider agreements.
Are high dollar drugs addressed separately?
Are the providers open to receiving the specialty drugs from a specialty pharmacy?
Are you removing all exclusivity language in your provider and vendor contracts?
Are you sharing the pricing arrangements on specialty drugs with the clinical team?
These are some of the questions you can ask and areas to review when looking at your plan spend. There may be some areas you can impact by changing internal processes and others may be limited by contracting. But it is important to know where the cost is and if it is appropriate. Drug spend is predicted to continue to increase in the upcoming years at a rate faster than ever before. The top 10% of drugs by price make up fewer than 1% of all prescriptions, but account for 15% of retail spending and 20%-25% of non-retail spending.[i] A proactive approach to specialty pharmacy is necessary to ensure that reimbursement of these drugs is at a reasonable rate ultimately benefiting not only the plan, but also every member.
Article by Kathy Clark, RN, BSN, CMCN, Vice President, Director of Managed Care. For more information about how this may affect your plan, please contact your Summit ReSources care specialist. The following sources were used as reference material for this article:
[i] Issue Brief. “Trends in Prescription Drug Spend 2016-2021” Accessed 11/8/2023, https://aspe.hhs.gov/sites/default/files/documents/88c547c976e915fc31fe2c6903ac0bc9/sdp-trends-prescription-drug-spending.pdf