1. SCT Healthcare UPdates
Partnership for Health and Welfare Benefits Management Big Spring School District
SCT Healthcare UPdates
August 2019
Robbi Ritter

2. Agenda South Central Trust Stop Loss Renewal Update Overview
Marketing Summary
Renewal and Renewal Cost Summary
Renewal Recommendation
South Central Trust Rx Executive Summary
Pharmacy Benefit Optimization
Rx Benefits Executive Summary
Update and Results
Rx Optimization – Implementation Considerations
Plan Year to Calendar Year Benefit Period Coordination

3. 2019 South Central Trust Stop Loss Renewal

4. Stop Loss Policy Details Overview
While employers take on the financial risk of a plan when they self-insure, they are able to limit their risk through the purchase of medical stop-loss insurance policies. Stop Loss is a product that provides protection by serving as a reimbursement mechanism for catastrophic claims exceeding pre-determined levels
Contract Basis: Big Spring School District currently is on a Paid contract, meaning that the district has protection for all claims incurred during the term of the stop loss policy that are paid during the twelve (12) month contract period; the most comprehensive form of stop loss renewal coverage
Specific Stop Loss: This coverage provides protection against an abnormal severity of claims paid for the treatment of a single individual rather than abnormal frequency of claims in total
The 2018/2019 Specific Deductible for Big Spring School District was $150,000; matching the rest of the South Central Trust
Aggregate Specific Stop Loss Fund: This coverage provides an additional layer of liability assumed in exchange for lower premiums. The aggregating fund operates like an umbrella over the plan as a whole and is used to cover claims once a member exceeds the Specific Deductible
The 2018/2019 Aggregating Fund for Big Spring School District was $100,000

5. Stop Loss Renewal Cost Summary
The Avalon renewal for 2019/2020 included two options:
1) Using current Specific Deductible and Aggregating Fund thresholds that increased premium by 117%; and
2) Higher deductibles intended to mitigate premium increase impacts and access existing reserves
Remaining with Avalon guarantees continuation of the $4.00 PEPM Avalon Stop Loss credit for CBC-administered LEAs and eliminates any impact from reporting fees associated with non-Avalon stop loss reporting; $3,500 per month minimum for reporting to a non-Avalon vendor
USI Marketed to our USI Stop Loss Consortium partners and to a managing general agent without successful results:
Sun Life – provided a quote at +172% over current with potential lasered claimants (those set at a higher deductible level versus the rest of the group)
Symetra – provided a quote at +144% over current for the same terms
HMIG – declined to quote – not competitive against renewal offer
Partners MGU – declined to quote – required premium significantly higher than the renewal
Berkshire Hathaway – declined to quote – unable to provide a competitive offer
Voya – declined to quote – rates were not competitive with renewal alternatives

6. Stop Loss Renewal Cost Summary

7. Stop Loss Renewal Recommendation
The USI recommendation was to increase the stop loss deductible from $150,00 to $300,000, using reserves to fund additional claims exposure

8. South Central Trust Rx Executive Summary

9. Pharmacy Benefit Manager Optimization
Pharmacy costs represent nearly 40% of total health care dollars, and the trend is expected to continue. By contracting directly with a pharmacy benefit manager (PBM), organizations are gaining better control over their pharmacy benefit programs through the ability to negotiate drug prices and rebates coupled with the power to audit the claims and operations of the PBM and conduct annual market checks to ensure that rates are competitive and transparent.
Another benefit is the ability to collaborate on improved outcomes to ensure that the PBM is using their clinical expertise to ensure that members with health challenges are getting the advantage of care optimization through drug therapy management, new therapies, ongoing clinical studies and custom clinical oversight.
Although Americans don’t use more drugs per capita than other developed nations, the US spends more per capita on prescriptions than any other industrialized nation and the high cost of prescription drugs is a significant concern for patients, employers, physicians and policymakers.
Brand name drugs make up the majority of drug spend, so generic use remains an important opportunity to reduce unnecessary cost. That said, however, we’re seeing an invasion of expensive fixed-dose combination products (two or more active pharmaceutical ingredients combined in a single dose form) that are made from medications available as lower-cost generics or over-the-counter drugs which are cheaper when bought separately.
Why? Convenience; why take two or three pills when you can take just one
An example of avoidable ballooning drug costs, absolutely!

10. Paying too much for combination drugs. . .
Duexis
Approved in 2011, Duexis is a fixed combination drug for rheumatoid pain that contains an anti-inflammatory ibuprofen (Advil) and famotidine (Pepcid), a gastric acid agent. When prescribed separately, these two drugs together cost no more than $100 per month; while Duexis in a single pill form can average $3,000 per month
Vimovo
Vimovo is a fixed combination drug for rheumatoid pain that contains an anti-inflammatory Naproxen (Aleve) and esomeprazole (Nexium), a gastric acid agent. When purchased separately, Aleve and Nexium cost between $20 and $40; contrasted with a bottle of Vimovo that can cost up to $3,000 per month
Treximet
Treximet was approved in 2008 for the treatment of migraine headache and contains two active ingredients; sumatriptan (Imitrex, available in generic form) and naproxen sodium (Aleve). The average cost of Treximet is $750 , although sumatriptan and naproxen purchased separately can cost around $20

11. Rx Benefits Executive Summary
Recognizing potential financial opportunity and potential for more transparency and control, SCT evaluated PBM carve-out options in 2018
Process generated significant market interest: improved contractual terms and financial opportunity
Incumbent PBM/carrier combos also responded with significant, but market uncompetitive financial improvements only
PBM carve-out timeline recommended staggered approach sensitive to out-of-pocket and qualified plan deductible accumulator restarts
Since then Capital BlueCross announced decision to change PBM partner on 1/1/2020 to Prime Therapeutics (Prime), effectively forcing disruption on six LEAs irrespective of accumulator restarts
USI solicited both Prime (CBC) and CVS (RxBenefits) to refresh 2018 bids for comparison sake
CBC was unable to provide a full contract and so pricing may not be apples to apples
Prime (CBC) pricing: $1,177,623 Trust savings
CVS (RxBenefits) pricing: $1,637,000 Trust savings

12. Rx Benefits Executive Summary – 2020 Update
In March 2019, Capital BlueCross announced that they had selected Prime Therapeutics as their new Pharmacy Benefit Manager, effective January 2020.
Prime is one of the largest PBMs in the national, providing services to 23 BlueCross BlueShield plans, 18 of which are joint owners of Prime
In May 2019, USI approached Capital BlueCross to assist in evaluating Prime Therapeutics and its effect on the current arrangement through CVS/Caremark; i.e., contract and pricing parameters, member disruption, service impacts
Refresh 2018 SCT PBM RFP reflecting Prime
SCT specific Prime Therapeutics contract
2020 pricing to include fees, discounts, rebates, guarantees
Network and formulary disruption analyses
Line by line repricing of claims used in 2018 RFP
Any other relevant non-contractual terms
USI Requested updated pricing from CVS (RxBenefits)

13. Rx Benefit Executive Summary - Results
CBC provided
2020 updated pricing but no SCT specific prescription benefit contract. Only limited responses to contract questions that in some cases require further clarification.
indicating that Prime retail network and formularies will generate zero disruption
Summary repricing information but no detailed reprice file
CVS provided
2020 updated pricing on original claims set and $100K at risk related to a successful implementation
Impact
Rx Optimization creates visibility and puts control in the hands of the South Central Trust with enhanced pricing negotiation, standalone contract, customized clinical programs with a significant financial incentive of over $500K annually

14. Rx Optimization - Implementation Considerations

15. Rx Optimization – Implementation Considerations
Some or all below apply to ANY PBM change:
Separate ID Card
Medical / Rx cross-accumulation of OOP on all plans and deductible on qualified plans requires data synchronization between medical carrier and PBM
Requires robust project management and data file testing which takes time
USI suggests no fewer than 120 days implementation lead time to accommodate
Member communication, timing of ID cards, member disruption analysis and notification, eligibility file loads and claim file testing is all critical to overall success

16. Implementation Timeline Overview

17. Plan Year to Calendar Year Benefit Period Coordination

18. What is the difference between a Plan Year and Calendar Year Deductible?
A deductible limit is the maximum amount in any given period that a plan participant must pay before the plan coverage is required to satisfy the full amount of claims. A Plan Year deductible resets on the renewal date of the employee health plan; ex. if the health plan renews on July 1, then the deductible runs from July 1 to June 30 of the following year. A Calendar Year deductible, which is most common among health plans and most specifically among those with a QHDHP HSA, begins on January 1 and ends on December 31, with deductibles that reset every January 1.

19. Calendar Year Benefit Period Decisions
The district has made the decision to implement a short Plan Year; July 1, 2019 to December 31, 2019, to better coordinate the benefit period with the annual minimum deductible and maximum contribution rules for the QHDHP HSA and the migration to the Rx Optimization through Rx Benefits. All Out-of-Pocket expenses; deductible, coinsurance and OOP Maximums, accumulated during the short Plan Year will be credited to participants effective with the new January 1 to December 31 benefit period. District funding into the HSA will be adjusted to facilitate the change so that all participants receive the appropriate level of financial support into their HSA accounts. The district and USI will ensure communication to participants as we approach the close of the year in order to address questions on the impact of the change.

20. Questions/Discussion?