Bob Meyer

It is impossible to escape headlines about the rising costs of prescription drugs these days. With new specialty drugs hitting the market every day, increasing demand, and rising drug inflation, keeping a lid on pharmacy costs can be a challenge. However, the Prices For Prescription Drugs is something that we keep a focused eye on since it affects so many people. These newly released drugs haven’t seen all positive headlines though with many drugs causing certain people extremely detrimental health issues. Take a look on https://drugguardians.com/ to find out more about drug side effects and what you can do to get compensation. Gone are the days where prescription spend was five to 10 percent of a healthcare plan cost. Today drug spend averages around 25 percent and is expected to be over 30 percent in the next five years. With such a large percentage of healthcare dollars going toward pharmacy spend, brokers have to take a more proactive approach and use cost containment strategies as well as Pharmacy Benefit Manager (PBM) review and audits to help keep costs in line.

For many brokers that have operated primarily in the fully insured space, PBMs are not evaluated because they are bundled with the healthcare plan. However, for brokers dealing in the self-funded space, educating yourself on components of a pharmacy contract can be very beneficial.

In the self-funded market, brokers tend to look to their TPA’s for help with selecting the PBM. In many cases, the TPA assigns the PBM of their choice to the broker and plan sponsor. However, these days there is a lot of difference in price and service between PBMs . As a broker it could be a good idea to look around at a few different PBMs to make sure your client will get the best option. With more and more employers moving to self-funding, and prescription costs on the rise, brokers need to educate themselves on some of the specifics they should be asking about their client’s pharmacy benefits. Here are some specific points to ask about: Pricing, transparency, specialty pharmacy management, customer service, rebates, reporting, case installation, formulary management, manufacturer coupon/co-pay assistance, prior authorization procedures, and cost management strategies.

In addition, a broker should be aware of various cost containment tools that PBMs are putting in place to reduce medication costs and to promote the most clinically appropriate drug choice. With all the different medication choices out there these days, the PBM should guide the formulary to make sure the best drug is chosen. The PBM should encourage the use of generics over brand name drugs whenever possible, and evaluate the various options based on scientific evidence, treatment guidelines, safety and cost. Beyond encouraging the use of generics, some of the other cost containment tools are step therapy, prior authorization and quantity limits.

One of the most effective cost containment tools a PBM will put in place is step-therapy. When step therapy is put in place an individual covered under the prescription plan will first be prescribed a less costly drug before stepping up a to drug that is more costly. For example, a person suffering from allergies should first try an over the counter medication. If that does not provide relief, a Tier 1 medication will be prescribed. If the Tier 1 medication does not work, the PBM will review the patient’s situation and make sure they met the step therapy requirements before the plan will pay for a Tier 2 or Tier 3 medication. Step therapy helps to control costs but also steers patients to drugs that have fewer and better understood side effects.

Another tool put in place to control costs is prior authorization. Prior authorization requires the patient to meet clinic’s criteria and the health plan to approve therapy prior to the drug initiation. Prior authorization is used to maximize patient safety and the chances of the drug’s effectiveness. This cost containment solution also reduces the costs for unnecessary or less effective treatments. Prior authorization is usually required for high cost medications with a history of misuse or inappropriate use.

The last common cost containment strategy a broker should be aware of are utilization management tools such as quantity limits, refill-too-soon supply limits and pill-splitting. All of these tools help to make sure that the patient is getting the right amount of drugs rather than an abundance, which can be costly and wasteful. With quantity limits the PBM will systematically restrict how much of a drug should be dispensed at a time. These limits are determined by guidelines set by the FDA, drug manufacturers and medical professionals. Narcotics are a common example of when supply limits are used. With these types of drugs, quantity and day limits may apply. Refill-too-soon supply limits help to make sure individuals are utilizing their drugs appropriately and to reduce stockpiling of mediations. Pill-splitting is the least popular utilization management tool and is not usually a mandatory option offered.

Cost containment tools are important for brokers to be aware of in order to make sure their clients are safely and financially managing their prescription plans. Brokers should be mindful of these tools and make sure to ask TPAs and PBMs about these solutions when reviewing a new or existing prescription benefit plan.

Brokers may be familiar with the basics of a prescription drug plan but they may not be aware that many of their clients could be missing out on hundreds of thousands of dollars, sometimes millions of dollars, due to a PBM using creative pricing strategies and them not always meeting the terms of the contract. The PBM world is complex and ever changing. For this reason, we advise all our clients to regularly review and audit their PBM contract every 18 months to make sure they are not missing out on big savings and to make sure they are getting the appropriate pricing and rebates. The audit process confirms the contract pricing, guarantees the performance of the plan, and holds the PBM accountable for their results. After the audit is performed, the client will need to decide, based on the results, if the best choice is to work with the current PBM to true up the terms of the contact or to begin shopping for a new PBM.

When reviewing your PBM contracts, the first course of action should be to check the language used in the contract. Make sure your contract already includes, or is amended to include, a clause that gives the plan sponsor the right to hire an outside, independent auditor to periodically conduct PBM audits. This way the PBM does not get the right to select an auditor of their choosing that would probably have the best interest of the PBM as a priority rather than that of the plan sponsor.

Another item to look for or add to a PBM contract during the review process is performance guarantees. Performance guarantees hold the PBM accountable for their performance during the term of the contract. Guarantees should be written in for all channels of the pharmacy plan such as retail, mail order and specialty. Guarantees are written in to make sure that the PBM is holding up their end on things like pricing, quality and timeliness. A plan sponsor should make sure that performance guarantees are written in for their specific needs and for the areas where they see risk within the PBM contract. Plan sponsors should be continually monitoring their pharmacy contract to make sure their guarantees are being met.

If the plan sponsor wants to move forward with an audit, keep in mind that there are many types of audits that can be performed on your PBM contract. Some of these audits can be costly and time consuming. The best solution is to work with a consultant that is familiar with PBM contract terminology and the various types of audits. A consultant can review your contract to help identify the type of audit that will yield the most savings for the plan.

Diversified Brokerage Specialists, Blue Ash, OH
The Meyer Group, St. Louis, MO

Question: What tips and experience can you share about the process of grooming agency successors into leadership roles?

Mohr
For us, it is about working in the agency and learning about our culture, our attitude towards service and our commitment to serving our brokers. Understanding the importance of personal service, response times, accountability, documentation, accuracy and other factors are all part of providing great service. The other part is that any successor must take the time to be involved in education, business networking and industry groups. Staying active and aware of the latest trends, products and sales concepts is vital to maintain a competitive edge. Any successor must contribute to the success of the agency. One of our company mottos has always been “do the best thing for the client and the money will follow.” We tend to attract brokers that desire the same thing.    

Meyer
The key to getting Natalie prepared to take hold of the reins of the agency was exposure. Taking Natalie to all sorts of different meetings and events, even the ones that may not have seemed important at the time. I wanted to make sure she was equipped with the knowledge to handle any type of opportunity or complication that might arise for her in the future. There were meetings that I took her to that I did not think were going to be super beneficial to her but sometimes those were the ones that she would walk away and say, “Wow, I am really glad you brought me along on this one, it was a big learning opportunity for me.” Industry exposure is key!

Another tip I would share for grooming agency successors from my experience is patience on both parts regarding execution, but starting as soon as you can. There will be delays on both parts—life events, unexpected work travel, learning curves, etc. Remember that you both share the same goal so be patient and use great communication skills.

Keeping employees happy and providing them with a solid benefits package is an ongoing task for employers. Employees are averaging about four to five years at a job versus the 20 to 30 years people used to spend at one place. To help hold onto valuable employees, employers are offering even more voluntary benefits these days. Some of the more common voluntary benefits that have been offered for years are dental, accident, vision and disability. It’s plain to see that benefits have to keep up with the times and technologies being offered. Now a new set of voluntary benefits are being offered such as critical illness, student loan reimbursement, pet insurance and paternity leave. 

The most popular new benefit being offered these days is identity theft protection. According to a recent study by Willis Tower Watson, it is predicted that identity theft protection, which was offered by 35 percent of employers in 2015, could double to nearly 70 percent by 2018, making it the fastest growing type of employee voluntary benefit over the next couple of years. For this reason it is important for brokers and employers to be educated in this benefit and see the value it can deliver to employees

Identity theft is a growing concern for many Americans and based on the numbers it should be a concern for everyone. It is said that about one of four Americans will experience identity theft. These days everything from checking your bank balance, to reading your Facebook feed to buying a new pair of shoes is all done from the convenience of our phones and computers. With more and more things being done digitally, your information is more accessible for hackers and thieves to access and use fraudulently. 

Many people think of identity theft as fraudulent charges on their credit card, but identity theft goes much further than that and can be more complicated to resolve than just letting your credit card company know that you were not the one responsible for certain charges. For those who are not familiar with identity theft and various ways it can occur, here is a list of the major types of identity theft. 

• Tax ID theft—An individual’s social security number is used to falsely file tax returns with the IRS or state government.

• Child ID theft—Children’s identities are very vulnerable because the theft of their identities often goes undetected for many years. Once the child reaches an age where they are looking to use their identity, the damage has already been done. According to the Identity Theft Resource Center, “The chance for a child’s information right now in this day and age, before they reach adulthood, to be compromised in a breach is 100 percent.” For this reason when employers are looking into offering employees identity theft protection they should make sure that the coverage includes spouses and children. 

• Medical ID theft—This happens when someone’s personal information has been stolen to get medical services or to issue fraudulent billing to the victim’s health insurance provider. This is currently the fastest growing form of identity theft!

• Criminal Identity Theft—When someone fraudulently gives another person’s name and personal information (ex: driver’s license, date of birth, or Social Security number) to a law enforcement officer upon arrest or during an investigation. This type of identity theft can be very timely and costly to resolve. 

• Senior ID theft—Seniors are usually in constant contact with individuals that access their personal information such as medical professionals, caregivers and staff at long term care facilities. For this reason seniors are vulnerable and often the target of many scams. 

• Social ID theft—A thief uses an individual’s name, photo and other personal information to create a phony account on a social media platform such as Facebook, Twitter, etc. 

With all these different forms of identity theft happening, there is more and more stress surrounding the idea of becoming a victim of ID theft. For this reason employers are offering identity theft coverage as a way to help provide employees with a sense of security and help to improve financial wellness.  Employers are seeing that by helping their employees with financial wellness, they are more likely to create a more engaged and productive workforce. When employees are stressed with the burdens of their financial well being they are more likely to be distracted and need more time off. 

The stress is not just the fear of becoming a victim but the stress associated with resolving the identity theft once it has occurred. According to the Federal Trade Commission that tracks identity theft statistics, they estimate that “recovering from identity theft takes an average of six months and 200 hours of work.” In more complicated cases it may take even longer for the issue to be resolved. For employers this is a real problem because the agencies and authorities that must be contacted to resolve identity theft are not open in the evening or on the weekends. Therefore employers are left either paying for employees to resolve their issues while on the clock or paying for lack of productivity when an employee has to take time off to rectify the situation. Either way the employer ends up paying into the cost. By providing identity theft coverage the employer can help to save time and money and reduce stress for the employees. 

Identity theft coverage is a rather new type of employee benefit being offered, so employers and HR professionals need to be familiar with the types of features often provided by identity theft providers and how those features can help to reduce employee stress and time away. When selecting an identity theft provider, here are some of the types of services you want to make sure are offered.

• Customer service line—Make sure that the provider selected has a line for employees to call for info once the employee’s identity has been compromised. These call services should help walk the victim of identity theft through the process of what they need to do. Also with these services many providers can even arrange three way calls with credit bureaus and other agencies to help make sure things are going in an efficient and timely matter. Some providers even assign a customer service rep to the individual’s case from the time they call in initially. This is a great perk to have because it will save the customer time having to explain their situation to each new person they speak with.  

• Reimbursement—Make sure that coverage purchased offers some type of reimbursement for time and money lost. Not only should the provider help to reimburse for any financial loss, they should also reimburse for the costs associated with time it takes to resolve the issue. For example if an employee needs to take two days off work to fly to another state to prove that they are who they say they are, these costs for time away from work can be reimbursed by the identity theft protection provider rather than the company having to pay the employee for the time taken off. Many identity theft protection providers will also cover cost of child care if someone needs to take time to rectify their situation.

• Resolution services—Many identity theft protection providers offer a $1 million guarantee.  This means that the identity theft protection providers will spend up to $1 million dollars to resolve your issues. Knowing when the company has spent $1million dollars on a specific case is impossible, so looking for a provider with an unlimited guarantee is a good way to make sure that at some point the identity theft provider does not stop working to resolve the issue until it is fixed. 

• Family Coverage—Knowing who is covered under that identity theft coverage is very important. Some providers price their products on a per person basis, others automatically cover the entire family under the policy. Being aware of this is very important because if the pricing is done on an individual basis the coverage may become very costly once the whole family is covered under the policy. 

• Monitoring Services—At this point in time identity theft cannot really be fully prevented, but being aware of when your personal information is being used to do things such as make major purchases, changing your address, or set up new utilities is key to resolving the issue in a timely manner. If an individual is alerted about their personal information being used and it was not authorized by them, they can notify the identity protection provider to help keep a better eye on their information and make sure it does not lead to bigger issues down the road. 

Employers looking to offer identity theft coverage can offer this benefit on a voluntary or employer paid basis.  On December 30, 2015, the IRS announced that identity theft coverage being offered to all employees can now be offered as a tax free benefit if the benefit is paid for with payroll deductions or is offered as an employer paid benefit. Prior to the December 2015 IRS announcement, this benefit was only able to be provided on a tax free basis if the employer had a history of breach.  With this announcement the IRS is working to make it easier for employers to offer this benefit.

With identity theft it is not a matter of if it will happen but rather when it will happen. At some point all individuals will need to have this type of coverage, so the sooner it is offered the better. With rates for this type of coverage starting as low as four dollars per month with some carriers, can employers afford not to offer this coverage? 

With all the current changes in the health care market, ancillary benefits have been catapulted to being the new core benefit. Ancillary benefits cannot be subsidized or regulated by the government the same way health insurance recently has, which means that these benefits are here to stay and they will not change from year to year. For many years health insurance was the cornerstone of a benefits package and products such as life insurance, long term disability, short term disability, vision and dental were merely the accessories to a benefit package. But these days, with some companies moving to the exchange or choosing to go self-funded, ancillary benefits play a larger and more important role for employee retention. As more and more baby boomers are helping to take care of their elderly parents, benefits such as long term care are becoming more desirable for companies to offer to their employees. Or for a younger female employee looking to have a baby in the next 10 years, the idea of purchasing a short term disability plan is becoming more common.

With ancillary benefits taking a larger role in the benefit offerings of companies, it is important for brokers to understand the differences among plan designs and how  they could affect rates. Take for example a short term disability plan with a one day wait on accidents versus an eight day wait. The shorter wait can increase the rates by more than 25 percent. Having orthodontia included in the dental coverage; a vision plan as a true insurance plan or just a reimbursement schedule; these are important factors for each broker to consider when he is sourcing the market for these benefits.

For many brokers, when they are approached by a client to get ancillary benefits quotes for their employees, they will submit the case to one or two carriers with whom they have a good working relationship. However, with a market that is always shifting, the broker may be missing out on great rates offered by a carrier that they have not worked with much in the past, if ever at all. That’s why it is important to look at quote engines that offer quotes from multiple companies and explain the minute details so you, as the broker, are not spending hours comparing quotes.

From a client’s perspective this ensures that they will be offered the best products and the best rates. The client will be happier than ever with his broker, knowing that he took the time to get quotes from so many different carriers. When presenting to a client, the broker has the opportunity to shine and present information with the confidence that they are selling the client the best benefits for his specific needs.

These quoting tools can also be a great tool for a broker that has a unique case or is being asked by a client to get bids on a product about which they do not have a great deal of knowledge. Let’s say a broker usually sells life insurance policies and that is their specialty. Then one day a major client requests vision quotes. Now the broker is scrambling to find the best carriers and trying to get quotes from a company with whom he does not have a point of contact or experience. Rather than having to go back to their client with sub-par products, the broker can use the same tool that he uses to quote life insurance.

If a broker has a client that is only interested in seeing dental quotes, it is just as easy to go ahead and have quotes run on other benefits such as short term or long term disability and have the quotes ready to show a client when they present the dental quotes. With health benefits being less lucrative and more time-consuming, it is imperative that a broker start offering ancillary products.

These benefits can also put extra earnings in a broker’s pocket. Since most rates are guaranteed for two and sometimes three years, it gives brokers a fixed income. Here’s one scenario: a 25 life case—group life, short term disability, long term disability, dental, vision—the average yearly premium is $31,112.88, which gives the broker an average commission of $4,667.00 and over two years equals roughly $9,334 in commissions on one small 25-man case. You can see the potential to earn nice commissions and get locked-in rates—it’s a win-win. Here again, by having the option to quote with multiple different carriers, a broker can see what options to give the client—the best product on top of getting a top commission rate.

So how do you go about finding these multiple carrier quoting tools? There are not many out there. Ask your general agent if they have something to offer, but be sure that by using their tools you are not losing out on commission or potential bonuses. Also keep in mind who is doing the service. Is the general agent going to help with the day-to-day issues that might arise with a group? We all know how important it is to provide good service to our clients when issues arise. It is important to find a quoting tool that allows a broker to quote multiple sources with one submission. This provides a simple solution for the broker and a comprehensive analysis for the client.