Recently, a plan sponsor with approximately 2,000 lives asked its carrier for a potential program that centres on surveillance of narcotic drug claims. The sponsor was told nobody had ever requested that before.

Meanwhile, insurance carriers and pharmacy benefit managers (PBMs) have long observed that plan sponsors rarely request products to help contain drug plan costs (e.g., managed formularies, tiered plan designs, enhanced prior authorization programs, therapeutic substitution initiatives).

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The reason for the discrepancy between what is offered and what is demanded by plan sponsors and their advisors is simple: there remains an inadequate understanding of drug benefit plan spend, driven by an absence of information and difficulty in interpreting the information by plan sponsors and advisors. This leads to the stalemate that has given way to the default options of either maintaining the status quo of the plan or simply shifting costs to plan members.

There’s good news. The information needed to break the standoff and usher in an era of responsible value-based plan designs is readily available. But here’s the bad news: plan sponsors and advisors need to be actively seeking that information; they have to take the initiative to understand their own experience at a whole new level.

Working to understand their own situations, plans sponsors go some way towards gathering the information needed to construct a business case for change. The person in a company who is in a position to approve plan-design changes—whether that is the president of a small or medium-size business, the head of HR, the chief financial officer, the vice- president of finance or any combination thereof—requires the right information. There is a great deal of data in play within the industry, but that data needs to be transformed into meaningful information that can be used for strategic decision-making ability.

The following are considerations for using plan-specific data to build the case for change:

  • Avoid relying solely on high-level (i.e., aggregate-level) claims data. Seek transactional-level data. Even for smaller plans, more detailed information is available that will give a clearer picture of the current situation.
  • Use transactional-level claims data to address cost drivers and areas of inefficiency that add no value to members or the plan; assess contingent cost and utilization liabilities when considering the demographic and disease-state profile of the plan; measure plan-design performance in containing costs; and use the experience and key saturation metrics to complete plan-specific predictive cost models.
  • Use the same data to determine key population health profile considerations and establish baseline metrics that can be used to measure the success of implemented programs and plan design changes.
  • For every hour spent on acquiring plan information, spend three hours on the interpretation of the numbers, priorities and next steps. This area is very complicated, and even perceived basics (e.g., tiered formularies, claims pricing management) can be complex. Take time to explain the details to decision-makers.
  • Avoid the “no” trap. While the tools needed to execute better plan management exist, the level of awareness and understanding of these tools is not uniform. Don’t give up at the first no. Find somebody who understands what you are asking for and don’t be deterred.
  • Don’t worry about perfection. Plan changes that are 80% successful in achieving predetermined targets in Year 1 are already miles ahead of what the old experience would have looked like.

Copyright © 2018 Transcontinental Media G.P. Originally published on

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