Featured Health Business Daily Story, March 13, 2017

OPM Urges Focus on Rx Price, Utilization for 2018 FEHBP Plans

Reprinted from DRUG BENEFIT NEWS, biweekly news and proven cost management strategies for health plans, PBMs, pharma companies and employers. Subscribe today!

By Angela Maas, Managing Editor
February 3, 2017Volume 18Issue 3

Carriers participating in the Federal Employees Health Benefits Program (FEHBP) for 2018 should focus heavily on moderating rising prescription drug prices and utilization, the Office of Personnel Management (OPM) told insurers in its annual FEHBP Program Carrier Letter.

The annual letter, used by OPM to lay out its priorities for FEHBP each year, is designed to help insurers craft their benefit and rate proposals, which are due by May 31. About 8.2 million people are covered by the program, and around 250 different plans are offered by insurers.

Although OPM has noted rising prescription drug costs as a priority before, the 2018 plan year is the first in which drug costs have received top billing in the carrier letter.

“Rising drug prices and increasing drug utilization continue to drive up FEHB Program premiums,” the letter, dated Jan. 11, stated. “In 2015, 25.5% of the total FEHB healthcare budget was spent on drugs. Most FEHB carriers also report a significant increase in drug cost per member per year.”

Drug Benefit News

OPM asked its FEHBP carriers last year to improve management of prescription drugs — in fact, it listed better prescription drug management as its second-highest priority in its 2017 carrier letter. In the 2018 letter, the agency acknowledged that insurers have made efforts to curb prescription costs, but said more effort is needed.

The agency said more effort is needed, and specifically urged carriers “to reinforce or add proven utilization management techniques. We are particularly interested in proposals that optimize safe use and evidence based formulary management of drugs for mental health conditions, substance abuse disorders, immunosuppression, diabetes, HIV, seizure disorders, and cancer.”

Agency Seeks to Manage Pharmacy, Medical

OMB also said it was interested in innovative proposals from carriers to coordinate specialty drugs between medical and pharmacy benefits. “The complexity of specialty medications, billing system limitations, and provider management make cost trend management of specialty medications covered in the medical benefit challenging,” the agency said.

It added that potential strategies to address this issue include:

  • Assessing whether particular drugs should be covered under the medical benefit or pharmacy benefit, and choosing the most cost-effective approach that also takes into account “the complete cycle of care” and “the possible member and provider disruption.”

  • Implementing site-of-care programs that “redirect patients and medications to the most clinically appropriate and lowest-cost channel without compromising patient outcomes.”

  • Building utilization management and trend management programs that can be applied to drugs managed under the medical benefit.

“Your 2018 proposal should highlight how you will address the coordination of specialty drugs between the medical and pharmacy benefit through benefit structure or program initiatives,” OPM concluded.

The Blue Cross and Blue Shield Association and the Government Employees Health Association both tell DBN that they’re in the process of formulating their strategies in response to the 2018 carrier letter.

In its 2017 letter, OPM told carriers that they should implement prescription drug utilization strategies to better manage:

  • Compound pharmaceuticals,

  • Biosimilar medications,

  • Dermatological preparations,

  • Lipid-lowering drugs,

  • Hepatitis therapies,

  • Oncology drugs, and

  • Diabetes medications.

The agency also strongly encouraged carriers to create formularies that exclude drugs that don’t provide additional clinical value, or that are less safe than other drugs for the same indication.

This year, OPM noted in its letter that “nearly all” FEHBP carriers revised their formulary management or utilization management protocols “to reinforce the effective use of selected classes of prescription medications to achieve improved health outcomes while managing drug costs.”

In addition, many carriers worked to improve drug adherence and to minimize disruption caused to members affected by formulary shifts, the letter said. They also made efforts to provide drug cost calculators that display up-to-date information about the formulary tier, member cost-share and utilization management requirements for covered prescription drugs.

However, more effort is needed in that area, as well, the agency said.

“We strongly encourage carriers to improve interactive cost calculator functionality for the 2018 plan year,” the letter said. “Static formulary lists do not meet this requirement.”

View the 2018 carrier letter at http://tinyurl.com/zx6howm.

AIS’s Rx Benefit Data is an online subscription database with detailed data and insight on the medical and prescription drug benefit designs of commercial health plans. Learn more and check out a free interactive demo of the database!

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