For Employers
Choosing the right plan

Your choices today can impact the future.

Choosing the right health and drug benefit plan for your organization promotes a healthy workforce, increases employee satisfaction and contributes to your bottom line.

There are many factors to consider when selecting a plan, including your goals for the plan, the number of employees, the needs of your workforce, and your budget. Most employers purchase benefits with the goal of providing plan members access to the most appropriate and timely treatments.

To manage budgets, employers may consider adopting measures to reduce costs, however, most of these measures will restrict employee access to needed medicines. Examples include influencing the choice of therapy, delaying or denying therapy, or influencing the method of access (case management, PPNs, etc.). Other measures impose greater cost-sharing for employees by way of higher deductibles, premiums, or co-payment amounts. Limiting the amount of benefits payable to employees, such as annual or lifetime caps for drugs, can save money in the short term but is not a long term solution.

It is important to know the implications of all these measures for your employees and how they impact access to the right treatment at the right time. Which could have a negative impact on your employees’ health, which in turn carries a hidden cost: lower employee productivity and an impact to your bottom line.

Employers need to weigh the costs vs. benefits when providing comprehensive benefit plans that will attract and retain the best employees. As the complexity of plans increase, it is important to work with a trusted resource to help you understand the short-term and long-term impacts to employees and your business.

In today’s environment of providing high quality health benefits while managing your plan costs, “plan hygiene” is becoming a priority for many employers. Plan hygiene refers to the overall health and design of your plan. There may be simple options to improve your overall plan costs while having minimal impact on member access to medications. Working with your provider to limit drug mark ups, dispensing fees, and the frequency of refills for chronic medications are just a few examples.

Plan design types and their impact on employee access to therapy

(each check represents negative impact on access to the plan member)

Legend

Delay therapy
Increases financial burden
Additional Administrative Burden/Steps
Sub-Optimal Therapy
Deny Access

Drug Plan Feature Delay therapy Increases Financial Burden Additional Administrative Burden/Steps Sub-Optimal Therapy Deny Access
Preferred Pharmacy Network (PPN)
FEATURE
Preferred Pharmacy Network (PPN)

A network of pharmacies that agree to provide guaranteed levels of service, competitive dispensing fees and drug prices for the plans that participate in the network.

POTENTIAL IMPACT
  • May make it difficult for some employees to fill their prescription.
  • PPN pharmacy may not be convenient for the employee and their family.
  • Pharmacist may not be aware of all the medications that employees are receiving – an important role for ensuring proper medication.
Case

Margaret and her family live in a rural area, which requires a 45 minute round trip to the nearest PPN pharmacy, instead of using her local pharmacy which is in the same town that she visits to bank, grocery shop etc.

Deductibles/Co-payments
FEATURE
Deductibles/Co-payments

The portion of the claim cost that must be paid by the plan member.

POTENTIAL IMPACT
  • The employee’s level of coinsurance (the amount the employee has to be paid out of pocket) for their drug may be unaffordable.
  • For a $30,000 per year drug, a 20% copayment is $6,000
  • This may result in the employee skipping or foregoing their treatment due to cost.
  • Poor adherence can result in poor health outcomes, which can impact an employee’s productivity, absenteeism or disability.
Case

Wilma’s drug plan has a 20% co-insurance and she is on chronic medications for treating diabetes and hypertension. Recently, she has had a number of extra expenses. In order to save some money, she has decided to skip taking her medication the odd day. Her physician is still concerned that her therapy is not working as well as it should, and thus prescribes a more intensive and expensive therapy.

Prior Authorization/ Special Authorization
FEATURE
Prior Authorization/ Special Authorization

Drug claim will only be approved if the patient meets pre-defined medical criteria set out by the payer.

 

POTENTIAL IMPACT
  • Increases administrative burden and may result in employees receiving sub-optimal therapies, or long delays before starting therapy.
Case

Carol’s rheumatoid arthritis (RA) is not responding to first line therapies and her rheumatologist recommends she tries a biologic treatment. When she gets to the pharmacy with her prescription she finds out that prior authorization is required.

She contacts her insurance carrier and gets the necessary form. This requires her to return to the rheumatologist to get the form completed. It may take up to 6 weeks to get another appointment.

Once she has the form completed by the doctor she submits to the insurance carrier and must wait 4 weeks for a response.

During this waiting period, her RA continues to remain poorly managed and she has to take additional days off work.

Generic or Mandatory Generic Pricing
FEATURE
Generic or Mandatory Generic Pricing

If a brand name drug has a lower-cost generic alternative; the plan will reimburse up to the price of the generic product.

 Often the pharmacist will automatically substitute and dispense the generic, however, the patient can request the brand name drug and the pay the difference in price.

 In a “traditional” generic plan, if the doctor indicates “no substitution” on the prescription, the plan will reimburse the price of the brand name drug.

 In a “mandatory” generic plan, the plan will only reimburse the brand if the doctor provides medical evidence that the patient cannot tolerate the generic drug.

POTENTIAL IMPACT
  • Some generic drugs are not comparable to the brand medication and there may be variation even between different generic versions.
Case

Geoff’s 8-year-old son Tyler is taking medication to control his ADHD. While taking the brand medication Tyler was a good student at school and was socially competent. Since he switched to the generic medication which had a different way of releasing the medication, Tyler has not been able to function as well as he had been previously. Geoff has had to take considerable time off from work to deal with Tyler’s behavioural and learning issues, as well as to take Tyler to additional appointments with the specialist.

Step Therapy
FEATURE
Step Therapy

Drug plan requires the claimant to try and fail on drug A (typically lower cost) before being eligible for drug B.

POTENTIAL IMPACT
  • Step therapy can ensure that patients try older, lower cost therapies first before using, newer higher cost therapies.
  • This can save the plan money, however sometimes step therapy can delay access to the most appropriate and effective medications.
Case

Harpreet has been recently diagnosed with atrial fibrillation and the physician wishes to prescribe a blood thinner. Harpreet’s drug plan requires him to initiate therapy with an old, inexpensive therapy for several months, however, this therapy is not as effective as newer medications. During this period of time, Harpreet needs to take time off work to go for testing and has a significantly increased risk of stroke compared with the newer medications.

Maximum allowable costs (MAC), Lowest Cost Alternative (LCA) or Reference Based Pricing
FEATURE
Maximum allowable costs (MAC), Lowest Cost Alternative (LCA) or Reference Based Pricing

Drug plan sets reimbursement limits for medications that fall within specific therapy classes and caps the maximum amount reimbursed under the drug plan for certain drugs at the price of the corresponding “reference drug” in each class.

POTENTIAL IMPACT
  • Some of the newer, innovative therapies may offer improvements or innovations that will increase treatment effectiveness or patient adherence.
  • Drugs have different side-effect profiles or drug interactions
  • If patients are not getting the drug they need or experience side effects, they may choose not to take their medication.
  • The employee may only be reimbursed for a lower cost drug than the one they are on.
  • If they cannot afford to pay the difference, this may require them to stop their current treatment and try an alternate medication that may not work for them.
Case

John’s medication is only reimbursed up to the lowest cost drug in his therapy class. He cannot afford to pay the cost differential and takes the lower cost drug. Unfortunately, it has different side effects and sometimes results in him leaving work early or taking a day off.

Therapeutic Substitution or switching
FEATURE
Therapeutic Substitution or switching

When a patient switches a drug from what is prescribed. Could be because of medical need, affordability or plan design.

POTENTIAL IMPACT
  • Could impact an employee’s ability to receive the most appropriate medication.

Mahmood has been diagnosed with depression and it is affecting his ability to do his work. There are a number of medications that could be effective in treating his condition, however, his physician is limited in the choices that can be prescribed due to the restrictive nature of Mahmood’s benefit plan. The medication he is prescribed has an increased likelihood of causing side effects that will be detrimental to his performance at work.

Tiered Plans
FEATURE
Tiered Plans

When drugs are grouped into different categories, each with a different reimbursement level.

POTENTIAL IMPACT
  • Could impact an employee’s ability to receive the most appropriate medication.
Case

Mahmood has been diagnosed with depression and it is affecting his ability to do his work. There are a number of medications that could be effective in treating his condition, however, his physician is limited in the choices that can be prescribed due to the restrictive nature of Mahmood’s benefit plan. The medication he is prescribed has an increased likelihood of causing side effects that will be detrimental to his performance at work.

Managed Formularies
FEATURE
Managed Formularies

When a third party is “managing” the formulary and making clinical and cost-effectiveness decisions about which drugs will be covered.

POTENTIAL IMPACT
  • Could impact an employee’s ability to receive the most appropriate medication.

Mahmood has been diagnosed with depression and it is affecting his ability to do his work. There are a number of medications that could be effective in treating his condition, however, his physician is limited in the choices that can be prescribed due to the restrictive nature of Mahmood’s benefit plan. The medication he is prescribed has an increased likelihood of causing side effects that will be detrimental to his performance at work.

Maximum Limits/caps Annual/Lifetime
FEATURE
Maximum Limits/caps Annual/Lifetime

When the plan sponsor limits the amount they will pay for benefits. This could be a separate cap for all health benefits, or for drugs only.

POTENTIAL IMPACT
  • Low limits on drug expenditures can have catastrophic results for employees who take a large number of different drugs, or who require breakthrough treatments that have a high price tag.
Case

Cindy has just been diagnosed with a rare, deadly form of cancer for which new cancer therapies have been shown to be particularly effective in treating – so effective, in fact, that some people with this type of cancer appear to have been cured. These new therapies also have fewer side effects and many employees are able to work while undergoing their treatment. The drug manufacturer’s patient support program is willing to cover the co-pay for this new medication, however, Cindy’s lifetime cap is too low for her to start therapy. Due to the cost, Cindy is forced to receive a medication that has significant side effects, and her likelihood of returning back to work is greatly reduced.

Provincial Formulary Mimic
FEATURE
Provincial Formulary Mimic

When a private plan mimics the provincial drug plan for the list of drugs they will reimburse.

POTENTIAL IMPACT
  • Could impact an employee’s ability to receive the most appropriate medication.
Case

Mahmood has been diagnosed with depression and it is affecting his ability to do his work. There are a number of medications that could be effective in treating his condition, however, his physician is limited in the choices that can be prescribed due to the restrictive nature of Mahmood’s benefit plan. The medication he is prescribed has an increased likelihood of causing side effects that will be detrimental to his performance at work.

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