Worst Acting Ever

bring on the hate mail

Please forgive the wooden acting, there is obviously a good reason why these folks are in the insurance biz and not Hollywood.

Sun Life has started putting up some little videos on Group Benefits. There are two up so far, the first is mostly just an introduction to the video series, don't bother watching it. The second video actually has some substance to it.

Link to Video 2's Page - Plan sustainability – Series 2

Sun Life is surveying their plan members and seeing how they would react to changes aimed to reduce costs on their plan.

The main result were as follows.

1. Young people 18-34 just don't care.
2. Everyone else is in favor of managed plans (drug pre-authorization, generic substitution, maximum drug cost limits) but very unfavorable to reductions in co-insurance, lower dispensing fee maximums and raising premiums.

Makes sense, the only question it raises for me is the level of understanding on the behalf of plan members. Especially with drug pre-approval, as I have found any time this is used it drives employees crazy. I think they simply stated they prefer pre-approval, because they don't grasp how it works as well as something simple like a lower co-insurance. Prior pre-approval has led to some of the ugliest situations I have run into with drug plans. Green Shield has a program called a Conditional Formulary, where expensive drugs need to be pre-approved. The Dr. would write a prescription, the employee goes to the pharmacy to fill it, and the computer tells the pharmacist that the drug needs pre-approval, or the plan won't pay for it. I then get angry phone calls from the employee, HR and owners. 

Overall I have noticed similar reactions with my own clients, and have been recommending similar changes to help curb rate increases while keeping employees happy. My observations weren't scientific or by survey but it is nice to see them validated.

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

Toll Free: 1-888-592-4614
rob@hmrinsurance.ca
www.hmrinsurance.ca

E.O. E.

Drug Plans

Prescription Drugs are the most expensive part of any benefits plan. Prescription Drugs typically account for 60-70% of all health care expenses, and account for the majority of cost increases. In order to combat the explosive growth in drug costs carriers have come up with several strategies, most of which, revolve around controlling which drugs are covered and which are not.

Brand Name Drugs

Just like the name implies these are drugs made by big name pharmaceutical companies. They fall under brand names like Viagra, Cialis and Levitra. We see ads on TV, brochures in doctors’ offices and generally know what they are called but not what they do. (ask your doctor if is right for you! )
Because of the marketing blitz and patent periods (the time when no other company can produce a similar chemical agent) the big drug companies can charge whatever they want. Brand name drugs tend to be very expensive, not necessarily because they work any better but because they are SOLD better.
Most cost saving measures have targeted Brand Name Drugs. By avoiding brand names plans can avoid the cost of all that marketing and hype, reducing costs substantially.

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Generic Alternatives

Often made in the very same factory as brand name drugs, generics are typically bough in huge bulk orders by either provincial or federal agencies. Because the generics lack the little logo stamp and occasionally use less expensive fillers they can cost up to a half as much as the same brand name drug. Generics are mandated by law, to provide the exact same medicinal ingredients, in the exact same dosages and of the exact same quality as the brand name. Generics, for all intents and purposes ARE the brand name drug, for only half the cost.

While the medicinal ingredients are mandated by law the fillers and binders aren’t; occasionally people will find they are sensitive to side effects from the generic when they are not sensitive to the brand name. This can usually be traced to a difference in fillers or psychosomatic response. For these people drug plans typically allow for a “no substitutions” clause. If the doctor writes “No substitutions” on the script the drug plan will cover the cost of the brand name drug.

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Lowest Cost Alternative (LCA)

A newer and more aggressive plan of attack on drug costs, LCA goes beyond substituting brand for generic form, and actually replaces the whole ingredient with another designed to do the same job. LCA looks not at the drug being prescribed but the ailment being treated. Take depression as an example, Prozac has been around for years, it is inexpensive and effective at the treatment of depression. Wellbutrin is another drug designed to treat depression, however, it is about 5 times the cost of Prozac. Wellbutrin has the added benefits of reduced side effects, fewer drug interactions and less complications, so doctors will often prescribe Wellbutrin over Prozac. A Lowest Cost Alternative plan will look at the problem of depression, and determine that while Wellbutrin is indeed a method of solving the problem it is substantially more expensive than good old Prozac. The LCA plan will decline the claim for Wellburtin, and prompt the pharmacist to dispense one of the less expensive alternatives which are covered by the plan.

LCA plans receive a substantial rate reduction, as well as a huge amount of flack from members. I have on several occasions had employees screaming at me over an LCA drug plan. The fact that they cannot receive the drug prescribed by their physician drives them crazy. Again for these people a plan can have a No Substitutions clause which allows the generic or Brand name drug to be claimed.

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Formulary

 Most plans work on a formulary basis, a formulary is just a list of drugs to be covered. Simple examples of active formularies are drug plans that do not cover lifestyle drugs such as: anti-smoking drugs, fertility drugs, or prescription weight loss medication. More aggressive formularies resemble the Lowest Cost Alternative plans but are even more restrictive, they also tend not to allow a “no-substitutions” clause. That is, if a drug isn’t covered, no amount of fuss from your doctor will get it covered.

Formulary plans are designed to use the cheapest drug possible to treat any one given malady. Typically there is ONE single drug for each medical condition. Members are allowed to purchase a non-formulary drug, however, they tend to either be reimbursed at a lower level, or only the cost of the listed drug is covered, any additional cost is born by the plan member.

A new, kinder, gentler formulary plan is referred to as a Conditional Formulary. Pioneered by Green Shield of Canada this is a very restrictive formulary which has several hoops plan members can jump through to get their drug of choice. You have to play the insurance companies game to get the drugs. The plan starts off very restrictive, most claims occur without incident; however, once a member has a problem with a formulary drug, they can apply for an alternative. Once approved, the more expensive alternative is covered and hopefully fixes the problem with the first drug, perhaps there are lesser side effects. If this second drug still is unsatisfactory a second application can be made for a higher tier of coverage. More expensive drugs are made available at this tier and again the process is repeated until a satisfactory drug of the lowest cost is found. The core idea is to cover the cheapest drug that works. If it doesn’t work you can try a more expensive one until either a working drug is found or you reach the top tier where the most expensive drugs are covered.

By starting at the bottom price wise, and moving up only when necessary, huge costs savings can be found. Administration, paperwork and frustration are the trade off for these savings.

Summary
Which plan is best for your group depends on your budget, your drug claims history and your benefits philosophy. Obviously not everyone wants to put their members into a position of jumping through hoops with a conditional formulary, then again having conditional coverage is better than none at all.

Other than Brand Name drugs, all of these strategies require a drug card. Drug cards are where the plan design and formulary are held. While a drug card increases the cost of a benefits plan due to an increase in claims, the cost savings from drug control are starting to offset the cost.

TL;DR you might be able to lower your drug costs by using generic, lowest cost alternative, or conditional formularies.