Deficiencies of 100% Copay Prescription Drug Programs

Deficiencies of 100% Copay Prescription Drug Programs

(Cash Discount Cards, HDHPs & CDHPs)

The objective of this presentation is to:

1) Provide a summary of the current PBM industry claims

adjudication system deficiencies and the problems they

generate when patients are financially responsible for the full

cost of their prescriptions under:

Cash Discount Cards, and

High Deductible Health Plans (HDHPs) – particularly

Consumer Driven Health Plans (CDHPs).

2) Share the news that a solution is now available that provides a

real-time quality control process that prevents those problems:

Patient Driven RxSM.

Introduction

Confidential & Proprietary Copyright © 2015, Medical Banking Rx, LLC, All Rights Reserved 2

Currently, there is no way to prevent pharmacists from circumventing

the prescription claim adjudication process on prescriptions for ALL

patients that bear the total financial responsibility for the cost of their

prescriptions. This is an industry-wide deficiency that generates

significant problems for both patients and PBMs.

Consequently, there is a need in the market for:

1. An ability to pre-empt a pharmacy’s opportunity to “game” the system

when a patient bears the full financial responsibility for the cost of a

prescription, and

2. Product and/or service differentiators that significantly add value and

provide a competitive advantage.

Market Needs


MBRx is a recipient of the Healthcare Information and Management

Systems Society (HIMSS) Medical Banking Project “Disruptive

Innovator” Award (best potential to transform healthcare using

disruptive innovation) for creating a truly unique process, Patient Driven

RxSM, that provides a real-time solution to the prescription related

deficiencies inherent in all 100% copay situations (HDHPs, CDHPs and,

Pharmacy Cash Discount Cards.

HIMSS Award Winning Solution

Cash paying patients typically subsidize a pharmacy’s group

health/managed care reimbursement rates.

Pharmacists can easily circumvent the adjudication process when

patients bear full financial responsibility for their prescriptions and

charge “what the market will bear”, with very little chance of exposure.

Pharmacists can be expected to consider the relative “risk” of being detected

against the “reward” of being able to set a desired, higher price. It’s really a

“Risk”/“Reward” proposition - particularly when there is no real penalty if caught.

When it is easy to exploit a system for financial gain, with very little chance of

being caught, it is logical to conclude that many will take advantage of the

opportunity!

There are no published statistics on the frequency of pharmacy claim

adjudication circumvention because there is no way to track or

measure its occurrence, and without the MBRx Patient Driven RxSM

medical banking solution, there is no way to prevent it.


Adjudication Circumvention

Circumventing the claims adjudication system on 100% copay

programs (i.e. cash discount cards and prior to a deductible) is not

illegal.

This behavior is not consistent with the terms of their contract with

PBMs, but the repercussions, if any, in the unlikely event a pharmacy

is caught, have not eliminated the problem.

PBMs have recognized the potential for this problem for a long time,

but in the absence of a solution, they are not going to publically

recognize it.

However, the PBM that utilizes the Patient Driven RxSM medical banking

solution will possess a significant competitive advantage that

differentiates its service offering from competitors who do not.

Adjudication Circumvention


Cash discount card (CDC) pharmacy programs are 100% copayment

plans that typically do not provide concurrent Drug Utilization Review

(DUR).

CDHP/HDHP pharmacy programs, prior to deductibles being met, are

100% copayment plans that provide concurrent DUR.

Approximately 90% of CDH members never meet their deductible;

For 90% of CDH members, the card functions as a cash discount card, and

For 10% of CDH members, the card functions as a cash discount card (100%

copay) that converts automatically to a cost-sharing copay card when their

deductible is met.

The difference between CDHPs/HDHPs and CDCs is that

CDHPs/HDHPs have a deductible which, once met, automatically

converts to a cost-sharing arrangement. The Patient Driven RxSM

solution can be utilized with any line of business in which, at some

time, the patient bears full financial responsibility (i.e. 100% copay).

100% Copay

Programs and Plans


Currently, when a pharmacist submits a claim, it is adjudicated and an edit

is returned indicating the network discount price the pharmacist should

collect from the patient at the point-of-sale; and the amount being paid

subsequently by a third party, such as a health plan, is reported as $0.00.

Therefore, the pharmacist knows the patient will be paying the entire cost

of the prescription at the point-of-sale; and because the decision to reverse

the claim to secure a higher price resides solely with the pharmacist

(without the PBM’s or patient’s consent or knowledge), pharmacy discount

cards typically experience up to 50% reversals.

Since the percentage of reversals under pharmacy discount cards are

approximately 10 times greater than under fully funded plans, it is

logical to conclude that pharmacists’ ability to unilaterally make reversal

decisions (without either the PBM’s or patients’ consent or knowledge)

plays an important role in the frequency of reversals.

Current 100% Copay

Process


When adjudication circumvention occurs, neither the patient nor the

PBM have any way of knowing it has occurred at the point-of-sale.

This deficiency leaves the patient vulnerable to:

1. Paying more than their PBM’s network contract rate, and

2. An inability to receive concurrent Drug Utilization Review on all

prescriptions - thereby making them susceptible to drug therapy related

problems which otherwise could have been detected and avoided.

This deficiency leaves the PBM vulnerable to:

1. A high attrition rate. Pharmacies can easily switch patients to their loyalty

discount cards by representing to the patient that their card provides them

a better (less expensive) price.

2. A significant loss of revenue. PBMs do not receive revenue when

pharmacies circumvent the adjudication process.

Under Cash Discount

Card Programs


The PBM is inoculated against efforts to switch the patient to a

different card, once patients understand:

1. There is a current industry-wide deficiency where the pharmacist can

disregard the price they are supposed to charge the patient and instead

establish a higher price without the patient’s knowledge, and

2. Patient Driven RxSM is the only safeguard available to protect them from

being overcharged.

Thereafter, any attempt by a pharmacy to switch a patient to their

loyalty card will be met with resistance and suspicion as to the

pharmacy’s ulterior motives.

No one feels comfortable knowing they are vulnerable to being taken

advantage of without their knowledge. This issue strongly appeals to

patients!

Diminishing The Cash

Discount Card Attrition Rate


Patient Driven RxSM changes the PBM’s cash discount card to a

“pre-funded” discount card.

From the pharmacist’s perspective, the Patient Driven RxSM process

functions just like a traditional, fully funded plan without a deductible,

with all the advantages thereof.

Pharmacists will no longer be able to “opt-out” of the claim

submission [adjudication] process when participating in the PBM’s

cash discount card program; thereby, producing a significant

increase in a PBM’s revenue.


Increasing PBM Revenue Under

Cash Discount Card Programs

When adjudication circumvention occurs, neither the patient, health

plan, nor PBM have any way of knowing of its occurrence at the point-

of-sale, leaving the patient and PBM vulnerable to:

1. The deductible not being tracked at the point of service,

2. The patient paying more than the contract rate,

3. The claim not being counted toward the patient’s deductible, and

4. The patient not receiving concurrent DUR on all prescriptions;

thereby, being susceptible to drug therapy related problems

which otherwise could have been detected and avoided.

5. The data required for accurate actuarial and clinical analysis, risk

prediction, projected outcomes and optimal compensation under

pay-for-performance models is incomplete.


Under HDHPs and CDHPs

Without Patient Driven RxSM, pharmacist can circumvent the adjudication

process and unilaterally reverse claims without the PBM’s or patient’s

consent or knowledge at the point-of-service, leaving them vulnerable

to:

1. Paying more than the negotiated discount rate for their

prescriptions,

2. Therapy related problems such as drug interactions, duplicate

therapies, etc. not being detected and avoided,

3. Deductibles not being tracked at the point of service to identify

when they have been met,

4. Claims not being counted toward the patient’s deductible, and

5. Data quality required for accurate actuarial and clinical analysis,

risk prediction, projected outcomes and optimal provider

compensation under pay-for-performance models being

incomplete and inaccurate.Confidential & Proprietary Copyright © 2015, Medical Banking Rx, LLC, All Rights Reserved 12


Under pay-for-performance models, the accuracy of data is critical.

Actuarial analysis, risk prediction, and quality of projected outcomes

are only as good as the information available.

Patient Driven RxSM will continue to serve as the best means for

assuring the accuracy of data.

Patient Driven RxSM serves as a significant competitive advantage when

providers’ reimbursement is under pay-for-performance models.

Should reversal codes eventually be required, they could not serve as

a control mechanism because you can’t control what you can’t audit,

and it is not feasible to perform on-site pharmacy audits.

Data Quality


Providing a real-time, quality control feature that forces claim

submission via the Patient Driven RxSM medical banking solution:

1. Ensures the consumer never pays more than the correct, aggressive,

deep discounted price,

2. Eliminates the frustrating experience of being overcharged and waiting

for the HDHP/CDHP to provide corrective reimbursement,

3. Eliminates the uncertainty of knowing that the claim went toward their

deductible, and

4. Provides prospective DUR on all prescriptions, thereby reducing the

potential for dangerous, and even life threatening, drug-related medical

problems.

As a result, the Patient Driven RxSM medical banking solution

generates a significant value proposition that increase

HDHPs’/CDHPs’ and patients’ perception of value and satisfaction.



Providing a real-time, quality control feature that forces claim adjudication

and prevents reversals without the PBM’s or patient’s consent or

knowledge via the Patient Driven RxSM medical banking solution assures:

1. The patient never pays more than the correct, aggressive, deep discounted

price,

2. Concurrent DUR is provided on all prescriptions, thereby reducing the

potential for dangerous, and even life threatening, drug-related medical

problems,

3. The frustration of being overcharged and if detected, waiting for the HDHP or

CDHP to provide corrective reimbursement will not be experienced,

4. Provides prospective DUR on all prescriptions, thereby reducing the potential

for dangerous, and even life threatening, drug-related medical problems, and

5. The data required for accurate actuarial and clinical analysis, rick prediction,

projected outcomes and optimal provider compensation under pay-for-

performance models is complete and has not been compromised.



Upon implementation of the Patient Driven RxSM solution, a significant

change occurs in the traditional adjudication process that shifts control

from the pharmacist to the PBM/patient.

The pharmacist is forced to submit [adjudicate] the claim.

Because claim submission [adjudication] is required:

The patient is able to receive the benefit of [complete] Drug Utilization

Review edits, [and DUR] edits that can prevent therapeutic problems that

could require hospitalization or even result in death.

The pharmacist will no longer be able to establish their preferred price,

rather than their network discount price, and charge the patient accordingly.

Instead, the patient will always receive the benefit of the [PBM’s] network

discount price.

Reversals will be limited to patient decisions (such as the network discount

price exceeds the patient’s ability or desire to pay, the patient does not pick

up the prescription [patient abandonment], etc.) just as they are under fully

funded health plans.

Experience Following

Patient Driven RxSM Implementation


Cash Discount Cards: Once patients understand that Patient Driven RxSM

eliminates a pharmacist’s ability to circumvent the adjudication process,

thereby eliminating the pharmacist’s ability to charge a price for a prescription

that is greater than the negotiated discounted price, any attempt by a

pharmacy to switch a patient to their “loyalty” card can be expected to be met

with a suspicion that there is an ulterior motive for trying to get the patient to

switch cards.

CDHPs/HDHPs: The Patient Driven RxSM solution is the only option that

eliminates the top five (5) deficiencies inherent under all current

CDHPs/HDHPs. As a result, the Patient Driven RxSM medical banking solution

generates a significant value proposition that increase HDHPs’/CDHPs’ and

patients’ perception of value and satisfaction.

Other Lines of Business: Most insurance firms and TPAs prefer to limit the

number of PBMs used concurrently. Since the MBRx PBM client can provide

features (Patient Driven RxSM) other PBMs do not, as well as those that other

PBMs do provide, it stands to reason that it will be in the best position to

secure and retain ALL of their plans.

Value Propositions


With the utilization of the Patient Driven RxSM solution, PBMs will be

able to educate consultants, plans, and the public regarding the

deficiencies of traditionally administered plans causing the following

question to become a minimum standard criterion in every Request for

Proposal when selecting a PBM:

“Please explain the real-time, quality control measure that you

[PBM] can provide to prevent pharmacies from circumventing the

adjudication process when the patient bears the full financial responsibility

for the cost of the prescription”.

Those PBMs without an ability to prevent adjudication circumvention in

real-time will find themselves severely disadvantaged.

Patient Driven RxSM changes the terms on which PBMs’ can win and

retain business by altering clients’ and customers’ acceptable

expectations.

RFP’s Minimum Standard

Criterion


With the utilization of the Patient Driven RxSM solution, PBMs will be

able to educate consultants, plans, and the public regarding the

deficiencies of traditionally administered plans causing the following

question to become a minimum standard criterion in every Request for

Proposal when selecting a PBM:

“Please explain the real-time, quality control measure that you [PBM] can

provide to prevent pharmacies from circumventing the adjudication process

by reversing claims without the PBM’s or patient’s consent or knowledge

when the patient bears the full financial responsibility for the cost of the

prescription”.

Those PBMs without an ability to prevent adjudication circumvention in

real-time will find themselves severely disadvantaged.

Patient Driven RxSM changes the terms on which PBMs’ can win and

retain business by altering clients’ and customers’ acceptable

expectations.

RFP’s Minimum Standard

Criterion


MBRx provides a truly unique and comprehensive medical banking

solution, Patient Driven RxSM, that was specifically designed for the

PBM industry and uses an unconventional approach to achieve

exceptional results and significant competitive advantages for PBMs

and their clients.

Patient Driven RxSM serves as a real-time quality control solution that

prevents prescription claim adjudication circumvention by the

pharmacist, placing the PBM and patient, rather than the pharmacist,

in control.

Patient Driven RxSM is an outsourced service provided by MBRx that

enables PBMs to continue with their core competencies.

Medical Banking Rx (MBRx)

Overview


For additional information,

please go to www.medicalbankingrx.com
