Promoting high quality, cost effective drug therapy throughout the Military Health System TRICARE Mail Order Pharmacy LTC Don De Groff

Promoting high quality, cost effective drug therapy throughout the Military Health System TRICARE Retail Pharmacy Contract CDR Jill Pettit

DoD Pharmacoeconomic Center TRICARE Retail Pharmacy (TRRx) Contract Objectives Consolidate retail pharmacy services under a single contract –Streamline claims processing, network management –Provide a portable benefit –Consistent benefit interpretation across all regions Contract structure allows Government to: –Apply Federal Pricing as the basis for refunds 100% of refunds received by Government

DoD Pharmacoeconomic Center Key Contract Provisions Fixed price, performance based contract –Claims processing fees –Prior authorization and Medical Necessity review ESI pays pharmacies from a government account in accordance with its network agreements Contractor guarantees a reimbursement rate for generic and brand drugs –Financial incentive if reimbursement rate achieved –Financial dis-incentive if reimbursement rate not achieved Performance incentive for network management Full visibility of drug costs, administrative costs, refunds

DoD Pharmacoeconomic Center TRRx STATS (Nov ’04) 5.7 million POS (pharmacy) claims 329,614 paper claims 54,505 pharmacies in network 67,040 calls to pharmacy help desk 56,353 calls to beneficiary help desk 1889 prior authorization reviews 868 medical necessity reviews

DoD Pharmacoeconomic Center TRRx Features Portability in 50 states, Guam, Puerto Rico, US Virgin Islands Beneficiary Services 24 x 7 x 365 Pharmacy Help Desk Services 24 x 7 x 365 TRRx Dedicated Staff ESI processes all claims

DoD Pharmacoeconomic Center TRRx Network 54,505 as of Nov 04 (43,000+ under MCSCs) Guaranteed access standards –Urban - 2 miles -- 90% of benes (91.0%) –Suburban - 5 miles -- 95% of benes (98.2%) –Rural - 15 miles – 95% of benes (97.3%) Specialty pharmacy services –Compounded items –Special distribution items/injectables Stable network – no more than 10% decrease over life of the contract

DoD Pharmacoeconomic Center TRRx Claims Processing ESI processes all claims – network, non- network (DD2642 claims), split billing (OHI) ALL paper claims processed to same standards as electronic (POS) claims –Includes specialty drugs, compounded items

DoD Pharmacoeconomic Center TRRx “Formulary” Today Open TRRx benefit exclusions –smoking cessation products, cosmetic drugs, weight control drugs, OTCs –branded products when generic available –some injectables (eg Xolair, Synergis, Synvisc, etc) Covers some supplies/injectables – diabetic supplies, spacers, diaphragms

DoD Pharmacoeconomic Center TRRx under Uniform Formulary Same benefit exclusions –Branded products when generic equivalent available Non-formulary drugs –Established by DoD P&T committee –Available at third tier cost share $22.00 per 30 day supply –Available at second tier cost share with approved medical necessity $9.00 per 30 day supply –Not available at MTF

DoD Pharmacoeconomic Center Prior Authorization DoD P&T designates drugs requiring PA –Establishes PA criteria for TMOP/TRRx PA’s approved for one year PDE5 InhibitorsEnbrel Fertility injectablesGrowth Hormone HumiraKineret LamisilPenlac RaptivaSporanox

DoD Pharmacoeconomic Center Types of Medical Necessity 1 - Required for prescriptions exceeding quantity limits established by DoD P&T 2 - Required for certain benefit exclusions (prenatal vitamins) 3 - Required for brand name drug when generic is available 4 - Under Uniform Formulary - required to receive non-formulary drug at second tier ($9.00) cost share –Criteria developed by DoD P&T Approval good until end of TRRx contract

DoD Pharmacoeconomic Center Prior Auth/Medical Necessity Portability Prior Authorizations (good for one year) MTF  TRRx  TMOP –Cannot “seed” CHCS with PA drugs Medical Necessity (good for life of contract) MTF  TRRx  TMOP Only “Type 4” MN approvals transfer from MTF to TRRx and TMOP

DoD Pharmacoeconomic Center Who Pays the TRRx Bill? (How the money flows!) Treasury Department Issues Appropriation Warrant Cost Center or Department Receives OPTAR (MTF Pharmacy) Congress Appropriations BillPresident Signs into Law Office of Management & Budget Apportions Funds DoD Comptroller Receives Apportionment Component Comptroller Receives Allocation (USN, USA, USAF, HA/TMA) Responsible Office/Claimant Receives Allocation (BUMED, MEDCOM, AFSG) Fund Administering Activity Receives Operating Budget or Allotment (MTFs) HA/TMA sends MP $ to Service Component HA/TMA maintains purchased care $$ (T- NEX, TRRx, TMOP)

DoD Pharmacoeconomic Center TRRx Accounting TRRx  Accrual fund (Medicare eligible)  Non-accrual fund (TRICARE eligible) MTFs are NOT billed for Rxs filled in TRRx for MTF enrolled beneficiaries

DoD Pharmacoeconomic Center Beneficiary Preference or Cost Shifting?

DoD Pharmacoeconomic Center The Top 20 Hit Parade (by cost)

DoD Pharmacoeconomic Center The Top 20 Hit Parade (by # of Rxs)

DoD Pharmacoeconomic Center TMOP UPDATE 4 “W”s and an “H” –Express-Scripts Inc (ESI) –Mail Service –Tempe Arizona –1 March 2003 –PDTS as “adjudication” engine

DoD Pharmacoeconomic Center Statistics Current Workload Prescription Returns and Reasons –Possible Future Increase Number of Calls and Top Call Drivers –OHI, OHI, OHI

DoD Pharmacoeconomic Center Unique Features Robotics Replenishment Only Re-baseline Feature GPI Switching

DoD Pharmacoeconomic Center New Territory OIF Navy Deployment Smoking Cessation P2/P4 Multi-Ingredient Compound Feature Data Mining through Business Objects Drug Diversion

DoD Pharmacoeconomic Center TMOP Contracting Officer Representative LTC Don De Groff TRRx Contracting Officer Representative CDR Jill Pettit