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Pharmacy Benefit Management | Healthcare WHITE PAPER PHARMACY BENEFIT MANAGEMENT HEALTHCARE REFORM AND EMERGING TRENDS – Rajnarayan Basak Abstract Pharmacy Business Management (PBM) plays a significant role in the Healthcare industry. PBM business is changing rapidly in HealthCare market place. These changes are driven by multiple aspects –regulatory guidelines, focus on reduction of drug cost, and provide advanced prescription products to better manage member’s health conditions. Key regulatory requirements that are driving PBMs are Healthcare Reform, changes due to Medicare Part-D guidelines, NCPDP regulations. The demand for innovative programs like advanced drug utilization programs, Pharmacy-Medical integrated products and Disease management programs has been the driver for a number of emerging trends. Additionally, influence of social networking is increasing very rapidly in PBM arena as well. All PBMs are responding to these items in similar yet distinct approaches. Pharmacy products and services will enhance significantly by collaboration and combination of various product and services offering. Introduction Pharmacy Business Management (PBM) between various entities. In recent years, of the key trends are governed by laws plays a significant role in the Healthcare PBMs are not only focusing on basic and regulations, by increased awareness of industry. It is unique in the manner in elements of PBM business but also on consumer about the need of overall health which it administers the pharmacy product expanding the service offering to meet the management, and by abundant use of and focuses on real time interaction needs of changing market dynamics. Some technology like social networking. Regulatory Drivers Healthcare Reform Healthcare reform will have multifold will need to support changes to benefit/ that in 2008, there were about 47 million impact on PBMs and other healthcare member enrollment process and also individuals [1] who did not have any kind players. Healthcare reform will increase support the need for drug manufacturer of healthcare. This large user base will Medicare Part-D Plan benefit coverage for to provide discount to members and have provide significant growth opportunity Medicare Part-D members and open up a rebate contracts with CMS (Center of for health insurance companies including large customer base of individual plans. Medicare and Medicaid services). PBMs. PBM will drive towards increasing There needs to be changes at PBM side as Healthcare reform will bring focus on customizable products to meet the needs well as drug manufacturer side to support individual plans and individual insurance of individual customers. these and other new guidelines. PBM market. The Census Bureau estimated Similar to minimum plan requirement in Medicare Part-D, Health Healthcare reforms-Changes to PBM Insurance Exchange will require PBMs to offer minimum benefit Creation of Risk pool Members in the gap will receive a 50 A 2.9 percentexcise tax in Formation of Health Elimination of Medicare percentdiscounton brand name drugs. imposed on the sale of Insurance exchange prescription drug "donut plan along with regulatory requirement such as :- Medicare drug beneficiaries medical devices. Anything hole" An annual fee is imposed on who fall into the "doughnut generally purchasedat the pharmaceutical companies accordingto hole" coverage gapwill get a retail level by the public is market share. The fee does not apply to $250 rebate. excluded from thetax. • Elimination of life time maximum companies with sales of $5 million or less. • Restriction on annual maximum limit • Cost sharing obligation for preventive care benefits • Prohibit exclusion due to pre-existing condition • Dependent coverage up to age 26. 2010 2011 2012 2013 2014 2015 20162017 2018 2019 2020 Additionally, there will be options to offer PhasedPhased inin elimeliminationination ofof covecoveraragegegagapp customizable plan benefits to meet the DrDrugug manumanufafacturercturer toto prprovidovidererebateebate foforfrfullull benebenefifitt dualdualeligibleeligible consumer needs. PBMs will not only need to reduce time to market but will also need to support variations of basic features to • Underwriting process PBM to refine existing market segments target a wide consumer base. Some of the • Member enrollment process and also to identify new market segments. key areas that need changes will be:- The PBMs will be able to reach current and • Claim and payment processing • Development of new products and potential members directly with targeted • Rebate processing increase in customizability of plan messages at reduced costs compared to Apart from conventional processes, social benefits that of big-budget advertisements. commerce will be an important tool for Regulatory requirements for PBM Industry Government policies, CMS and NCPDP have very high influence on healthcare industry. CMS As of March’ 2010, 29 million members members is expected to go to 77 million by This is an excellent opportunity for PBMs are eligible to be enrolled under Medicare 2030 [2]; PBM has significant opportunity to re-enter and expand market sharing Part-D Plans. CMS selects PBM to support to target this large customer base. in Medicare Part-D market, by enabling MA-PD (Medicare Advantage Prescription As per healthcare reform proposal, there themselves to align to new guidelines and drug) and PDP (Prescription Drug Plan) will be significant change in the CMS also to offer comparable advance plans to plans. The number of Medicare eligible plan structure for Medicare Part-D plans. meet the consumer needs. NCPDP NCPDP (National Council for transactions due to the changes like electronic transmission format, NCPDP D.0 Prescription Drug Programs) maintains Medicare Part-D plans. A new version of specifically focuses on the following items:- telecommunication standard for NCPDP telecommunication standard D.0 • Coordination of benefit transactions in healthcare industry. NCPDP will be effective from 1/1/2012. NCPDP • Claims for compound drugs telecommunication standard 5.1 was D.0 has refined the structure and provided made effective from 2000 onwards. There provision to share detail information across • Sharing detail about member’s were few intermediate changes that were PBM, Pharmacy and Provider. Apart from utilization and cost sharing as part of made to support the need for additional the enhancement to the structure of the real-time transactions. External Document © 2018 Infosys Limited External Document © 2018 Infosys Limited An important component of such changes transition. Pharmacies should strategize phase but at the same time it would be in NCPDP standard is to support both solution effectively so that there is no easy to retire old standard once the new the old and new standards during the significant redundancy during transition standard reaches steady-state phase. E-prescribing Interaction among various stakeholders effectiveness of the scripts. will enable the availability of important of the PBM business uses real-time Additionally, CMS is also focusing on information real-time as well as in standard transactions (claim, financial detail etc). e-prescribing and is providing incentives format. This opens up an opportunity for However, sending a prescription to a to providers to use e-prescribing. It will PBMs (and/or all healthcare entities) to pharmacy (Retail, Mail Order or specialty) be mandatory for all eligible providers to perform better drug utilization program. still involves a lot of manual intervention. support e-prescribing by 2012. It will also help in making EHR more E-prescribing will have a significant role Another significant benefit for transaction oriented and will help in in implementing real-time interaction e-prescribing is to have prescription increasing its adoption. and will help to standardize quality and information available electronically. This Industry Drivers Differentiation based on Value added products and Controlling costs In the current healthcare environment, and control overall cost. Express-Script retail presence not only provides an easy/ PBMs play a much bigger role than has a team of experienced pharmacy that convenient access to prescription drugs providing coverage for member’s enable them to high quality provide case but also provides an excellent opportunity prescription drug plan. PBMs are now management program to the members. for members to get a quick consultation focusing on enabling members to manage Initiatives like GlowCap of Express-Script from the pharmacist or nurse. their health condition more effectively and aim at providing effective utilization of Another aspect of these programs is efficiently. There are multiple programs medication with timely reminders about to provide a summarized view of their available in the market place to achieve the medication schedule. Aetna is waiving effectiveness to various stakeholders like this objective. Key programs include case co-pay for chronic drug prescription(s) in plan sponsors, government and internal management, disease management and order to encourage the members to adhere management of PBMs. drug utilization review. to their medications Individual PBMs are supporting various PBMs now support case management and PBMs use various drug utilization review programs and some of the programs are disease management programs to help programs to manage member’s overall also optional for members. PBM has the members manage their health conditions health condition and to drive member to potential to combine the best
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