Life Sciences

Medicare & Reimbursement Advisor Weekly, August 26th, 2009

Medicare & Reimbursement Advisor Weekly, August 26, 2009


Employer adds universal step restrictions in September, more drug classes to be hit

Part D admin costs 11% of total drug spend

Managed markets program asks payer MDs to talk business during clinical meeting

Evercare clinical team has eye on coverage gap

Employer adds universal step restrictions in September, more drug classes to be hit

To continue providing what it says is affordable access to prescription drugs, Principal Life Insurance Company will implement a national formulary and step therapy policy change in all states except Texas, starting September 15. Most branded drugs move from tier 2 to tier 3 and add a step and/or prior authorization (PA).

Generic “alternatives,” according to the company, will be available on tier 1.

For prescriptions filled on or after September 15, an additional 10 drug classes will be added to the step therapy program. At that time, both current and first-time users of third-tier drugs will need to try an alternative generic drug if they do not have a history of a generic drug within the past 24 months.

When a member wants to fill a prescription for a third-tier drug, the pharmacy system will check whether the member has received an alternative generic drug within the last 24 months.

CVS Caremark sent communications to members and physicians August 15, which included a list of impacted scripts.

Below are the primary changes (see chart). Tier changes apply to all drugs listed.

Part D admin costs 11% of total drug spend

Private Medicare Part D plans average 11.3% in administrative costs as a share of total drug spending, according to a recent Commonwealth Fund study. Private health plans’ administrative costs averaged 9% of premiums across all policies sold and are well below “vastly overstated” estimates offered by proponents of a government-run public plan, the Blue Cross Blue Shield (BCBS)-funded study found. Here’s the link:

North Carolina may mandate new preadmission screen

North Carolina may mandate a uniform screening program for Medicaid patients before they are admitted to skilled nursing facilities. Information on the PreAdmission Screening and Annual Resident Review tool can be found at

Against medical advice

A report that 39% more patients left their hospital beds against medical advice in 2007 compared with 10 years earlier caught one of the nation’s leading hospital quality experts off guard.

To read the full story, click on: http:// topic/WS_HLM2_QUA/Many-Hospitalized-Patients-Leave-Facilities-Against-Medical-Advice.html

Oregon embraces more holistic reimbursement system

The state’s Health Policy & Research meeting will be September 23. At its most recent meeting in July, the committee discussed the Four Quadrant Clinical Integration Model as a framework for assessing and treating patients with different levels of healthcare needs. The group also recommended a reimbursement framework that rewarded holistic care. The rationale: The current fee-for-service payment structure can be a hindrance for providers to use effective interventions. In the literature, this system is often cited as placing financial incentives behind medical overutilization and resource inefficiency by putting the full risk of care on the payer. Policies which further exacerbate this trend include the undervaluation of preventive services, as well as the overvaluation of non-preventive services; non-payment to physicians for services required to provide patient-focused, care coordination; and the provision of incentives for volume of services without regard to quality of care or resource utilization. Read details at:

Managed markets program asks payer MDs to talk business during clinical meeting

Editor’s note: A view from a health plan medical director on a difficult category was presented on a panel of health payer thought leaders last year. Highlights from this speech are featured below. Of note here is that this interview was part of a managed markets program to hold a business/reimbursement- oriented panel during a clinical society meeting (in this case, ASH). Was it like putting oranges on the McDonald’s menu? Maybe not, since attendance was more than 100 physicians, many who attended multiple sessions in the series. I was the writer. The program discussion was recorded and disseminated to private practice clinicians and administrators as part of the managed markets series. (See the full link below to access.)

Consider the cost of oncology in the payer’s terms: Anthem collects approximately $200–$300 from each commercial member per month, and a single diagnosis of cancer diagnosis takes $50–$100 of that income. “If you roll that out, we’re paying about $200 million a month for cancer,” said Jeff Kamil, MD, vice president and senior medical director at Anthem Blue Cross. “In New York, cancer care—which includes physician, hospital, radiology, and pharmacy services—may be consuming as much as 20% of medical costs. That’s a startling number for me,” Kamil said.

Historically, health plans’ approach to oncology has been to contract for the best deal, he said.

Further, Kamil added that health plans have not had the required professional or technical expertise to engage oncology care. Oncology is a complex field with many disease stages and treatment options, and like all other parts of the healthcare system, the disease has its share of overuse, underuse, and misuse of drugs.

However, health plans can no longer continue to ignore cancer, since oncology is a “trend driver” with new targeted biologics and an increased growth in spending. As a result of clear medical evidence and labeling for the newer agents, especially in regard to safety and off-label use, “cancer care spend is growing at 20% per year; so [it’s] a trend that will get attention,” Kamil said.

Addressing the future and where the cost, quality, and physician dilemma is headed, he said health plans should help oncologists provide higher-quality cancer care but use resources in a more efficient way.

To accomplish this, health plans will insist that oncology care be evidence-based and develop administrative tools to enable this (e.g., the NCCN guidelines—developed as algorithms—encompass 97% of the tumors encountered in oncology practices).

On the horizon, Anthem is working with oncologists to develop new tools and relationships that will improve health plan and oncology interfaces and relationships.

To read the full story that I wrote about this topic, go to the following link at and contact me with any questions.

Account focus

Evercare clinical team has eye on coverage gap

by Bryan Cote

executive editor, custom research & publishing

I recently sat down to speak with Evercare’s clinical leadership team to hear about its greatest challenges and how account teams can help.

The organization serves more than 170,000 Medicare and Medicaid beneficiaries across the country through nursing homes, communities, end-stage renal disease programs, and hospice and chronic care improvement services. Here’s a sneak peek at our conversation. Note: The entire interview will run in a few weeks.


  • Mike Anderson, RPH, vice president of clinical services at United Healthcare (UHC) Health Alliance
  • Sally Brooks, MD, national medical director at Ovations and Evercare

How are your Medicare business lines structured?

There are about four million members in Evercare’s stand-alone PDP, which has only a pharmacy division. Its MA-PD, under the Secure Horizon’s division, has a more integrated model. As national medical director for Ovations, Brooks says each of Evercare’s market medical directors are very mission-oriented and focused on the most responsible way to educate providers and beneficiaries about safe and cost-effective use of the Medicare Part D benefit. The company uses a mix of open and closed formularies, with enhanced plans being more open. The Medicare Advantage plans have a separate formulary, based on their PacifiCare acquisition.


When asked whether Evercare has an across-business-lines subcommittee like Coventry does (see the February 27 MRAW), Anderson did not name one exactly like it. However, the organization has a committee feeding recommendations on formulary development—an Ovations pharmacy management committee that makes tiering decisions. The P&T committee meets quarterly and also in monthly intervals.

Medicare Part D

Formulary submissions are due to CMS in the spring and Evercare’s approach this time was program and benefit-design consistency and formulary stability. “Clinical trumps everything, but we have our eye on affordability and not making wholesale changes,” Anderson says.

Which classes are your focus this year?

Recent generic launches in the statin and osteoporosis classes have spurred Evercare and UHC to try to bolster beneficiary education about generics. Anderson notes that UHC has expanded its generics program this year to increase awareness about reasonable generic alternatives. A form is mailed to beneficiaries to bring to their doctors.

Beyond the contract

So what can account teams do to be successful with Evercare and UHC? “We’re a little unique in that we have Prescription Solutions in-house as our PBM, so the account folks must know the PBM contracting and clinical folks—the industry team here—since we stay on the same page on strategy all the time with them. We must collectively look at priorities. It’s most helpful when we work with account managers who understand the competitive pressures we face under Part D, how Part D plans compete in the market, and how that’s different from a commercial environment,” Anderson says.

What gets your attention?

“Account managers that look at things as a beneficiary would and understand how their drug interplays with the plan design have a leg up,” Anderson says. “If you make your case and fail to account for the fact your drug may put the beneficiary into the [Part D] coverage gap faster, then you’ve missed something critical to us.”

Special needs plans

Evercare is a leader in the special needs plans (SNP) area, with plans in almost every state (see enrollment analysis in April 9 MRAW).

“Our SNPs are not just pharmacy-based.We take a multidisciplinary-based approach. Pharmaceutical companies can help us with research or educational materials, caregiver tools,” says Brooks.

Brooks assists Evercare’s market medical directors in ensuring that members receive and use its multidisciplinary approach resources.


Evercare has been a pioneer in the long-term care (LTC) arena. It has a nursing home SNP with approximately 30,000 members, across more than 35 states, Brooks says. The formulary used for this population is the same as Evercare’s community program designed for dual eligibles.

Educational disconnect

There is often an educational disconnect among providers, family members, caregivers, and the plans, says Brooks.

“We need to figure out how to communicate with each other more effectively to enhance care, particularly for patients moving through the continuum; that’s a big challenge now, given how complex things have become,” she says.


“One challenge we have with the dual eligibles is that, in some cases, there is not the strong copay incentive for them, so it can be more difficult through our benefit designs alone to really get them to use generic options,” says Anderson.

Coverage gap

“Over time, there will be more opportunities, I think, for pharmaceutical companies to partner with us to help people who don’t qualify, for example, for the government subsidy, but are still experiencing financial hardship, still falling into the coverage gap,” Anderson says.