Thursday, December 16, 2010

Creative Saving

I have lots of tricks up my sleeve for saving bits of money here and there on benefit plans. Here is a list of some of the creative things I can do for your company to help either reduce, or control your benefit plan costs.

One of the more creative ways of controlling benefit costs is to make your employees more savvy consumers. If they were going out on their own to purchase prescription drugs or professional services with their own money you can be sure they would try and find the best price and value they could for their hard earned dollars. But because most plans are as easy as “Swipe, and go” employees often don’t think of way to save money. It all seems free to them.

First prescription fills are often the most wasted. When an employee is prescribed a new drug there are many unknowns, will it fix the problem? Will it have side effects? Will the problem go away before the prescription is used up? Most plans have a 3 months supply limit, where the maximum amount of drugs that can be dispensed at any one time is equal to 3 months. We can set up your plan to limit the maximum supply of the first and only the first time a new drug is dispensed. This is a slight inconvenience if the member needs to go for a refill, but each subsequent refill will be for 3 months. The benefits here are that if the drug in question is has some side effects or is ineffective, only a month is wasted, rather than 3 months.

Dispensing Fees can eat up a lot of plan dollars, for small prescriptions or for prescription of some low cost drugs like antibiotics the $12 dispensing fee you might pay is more than the cost of the medication. Going hand in hand with high dispensing fees are high drug prices. Costco or Wal-Mart have low dispensing fees and often similarly low drug costs, where small or private pharmacies might charge two or three times as much to dispense the same drug, they often also charge a premium for the ingredient as well. Making the employee pay the dispensing fee firstly reduces the costs directly paid by the plan, as well as it makes members shop around for a cheaper dispensing fee (and as a result cheaper drug costs). I have a list of dispensing fees by pharmacy located at this page on my blog.

Say no to 100% reimbursement. Plans will often have 80% coverage for Drugs or dental, but will occasionally leave the professional services (massage, chiropractor, naturopath etc.) at 100% coverage. Because employees see these services as “free” they will tend to take advantage and max out their benefits regardless of if they need the treatment for medical reasons or not. Massage therapy is especially notorious for this. When the member has some skin in the game, a 20% co-pay or even a $5 user fee, they think twice before spending recklessly.

Physicians recommendations can also be added to paramedical plans, so before a claims will be reimbursed the member must provide written medical evidence, usually in the form of a prescription from their doctor. The recommendations ensure that the treatment received is medically necessary. These referrals are easy for members actually suffering a problem to

Ensuring proper Co-ordination of benefits can help improve the coverage employees receive as well as improve the bottom line of your plan. if employees have duplicate coverage under their spouses plan, ensure that they are properly setup to take advantage of Co-Ordination of Benefits. If there is duplicate coverage, some of the bills invoiced on your plan perhaps could have been paid under the spouses plan, reducing the total impact on your claims history.

Deferred Drug Cards (DDC) are a new type of drug cards which have been popular in Quebec for some time but are now just branching out to the rest of the country. Great West Life is a big supporter of Deferred Drug Cards out west. DDC work similar to a Pay Direct Drug Card (PDDC) they allow electronic claims tracking, formulary control, and other benefits brought about by a normal drug card, however, the way the member get reimbursed is different. With a Direct Drug Card the member only pays their portion of the claim as defined by their co-pay. In a plan with an 80% co-pay and a $100 claim, the member only remits $20 to the pharmacy as their share. However, with a Deferred Drug Card the member pays the whole claim cost of $100 out of pocket. The claim starts a timer, the employee will be electronically reimbursed directly to their bank account as soon as one of two conditions is met.

1) A predefined time period elapses, say 30 days from the claim.

2) A predefined out of pocket maximum is reached, say $150.

The employee is out of pocket $100 from their drug claim. Because the member had to pay upfront they take on a more consumer savvy attitude, they think before they buy. The member might decide to go to a cheaper pharmacy, purchase a less expensive drug, take a smaller supply or simply decide they don’t need the prescription filled after all. These choices all reduce the cost of the plan. Once the time period is reached, again lets assume 30 days, an electronic fund transfer takes place and deposits $80 to the members bank account. Similarly, if they incurred another claim inside that 30 day period, which exceeded the out of pocket maximum of $150, the covered portion is deposited to the members account.

All of these ideas revolve around making your employees better consumers. Take advantage of cheaper vendors, utilize other available coverage, think before you spend. None of these changes create huge savings up front, they do however help control claims and rates over time. The cost of benefit plans is rapidly increasing all the time, these are all perfect ways to slow that increase down.


Robert Reynolds, GBA
Certified Group Benefits Advisor
Hendry McKenzie Reynolds Employee Benefits Ltd.

Toll Free: 1-888-592-4614

E.O. E.

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