1. Managed Care Models: The Benefit vs. Cost Balance
Presentation Developed for the Academy of Managed Care Pharmacy
Updated February 2015

3. Objectives To identify the types of managed care models
To differentiate the level of control and cost per model
To identify the role of pharmacy within these models

4. Managed Care Model Types
Health maintenance organization (HMO)
Preferred provider organization (PPO)
Point-of-service plan (POS)
Integrated delivery system (IDS)

5. Note increase in HDHPs

6. Characteristics of HMOs
“Gatekeeper” principle
Primary care provider (PCP) serves as a gatekeeper and must authorize all medical services
Services not authorized by the PCP will generally not be paid for
Rationale for gatekeeper is to avoid unnecessary expenses
Preferred networks
Plans will only pay for services provided by healthcare providers that they have contracted with, aka “In Network”
Plans will not pay for “Out of Network” providers
Patient premiums are generally lower

7. Characteristics of PPOs
No gatekeeper
Patients can choose their own providers without having to use a designated PCP
Preferred networks with some out of network coverage
Patient can see any healthcare practitioner they want, but they are financially incentivized to see in-network providers
E.g., Patient pays 10% to see in-network vs. 50% to see out-of-network
Patient premiums are generally higher

8. Characteristics of Other Models
Point of Service:
Hybrid of PPO and HMO
Members of a POS plan do not make a choice about which provider to use until the point at which the service is being used, but physicians may be at risk or contracted exclusively with the plan
High-Deductible Health Plans (HDHPs):
Lower premiums and higher deductibles than a traditional health plan; a form of catastrophic coverage

9. Shift Towards Integrated Models
Integrated Delivery Systems
A network of health care organizations all under the same parent company
Provide all healthcare services to a group of patients, such as within a geographic location
Includes PCPs, physicians, hospitals, pharmacies, and insurers
Note: Not all models include all groups
All working towards the same financial and clinical goals

10. Employer Decision: Benefit Controls vs. Cost
Few Benefit Controls
Higher Cost
Lower Cost
Highly Controlled Benefits
Considering all the models of healthcare available, employers must decide on a benefit design for their employees. This involves choosing between offering their employees more choice or lower costs. There is a balance to be achieved. The more patient option, the higher the cost of the plan benefit design.

11. Benefit Control vs. Cost
PPO
POS
HMO
Less Control
Higher Cost
Higher Control
Lower Cost

12. The Role of Pharmacy
The pharmacy benefit is often outsourced to Pharmacy Benefit Managers (PBMs)
PBMs contract with multiple organizations to manage prescription drug benefits
PBMs provide clinical and operational program support
Formulary management, generic substitution, manufacturer contracting, drug utilization evalution
PBMs usually have their own mail order pharmacy

13. The Role of the Pharmacist in a PBM
Develop and oversee utilization management strategies
Prior Authorizations
Step Therapy
Quantity Limitations
Participate in Pharmacy and Therapeutics Committee
Negotiate rebates with manufacturers
Conduct drug utilizations evaluations
Monitor pipeline and patent expiration
The role of the pharmacist in a PBM is detailed in this slide. The downside for a pharmacist in this setting is that due to the fact PBM’s do not have access to other medical information that an HMO does, such as ICD-9 codes to identify patients at risk. There is not the coordination of pharmacy and medical care at a PBM since only the drug benefit is managed.

14. Summary There are many different types of managed care models.
Each model offers a choice to employers who buy these services.
Employers must balance employee choice with cost when choosing.
Pharmacists have varying roles within these managed care model types.

15. Thank you to AMCP members Wen Liu & Debbie Meyer for updating this presentation for 2015