The 2015-2016 Marketplace: ACA & Public Exchanges Shaping the New Pharmaceutical Benefit and Management Evolution Joel Owerbach, Pharm.D. November, 2015 Pharmaceuticals Strategy-Solutions Former VP, Chief Pharmacy Officer, Excellus Health Plans VP, Health Policy-Strategy, Alliance Life Sciences
Market Reforms-Transformation The new “disruptive” health care markets being shaped by multiple simultaneous and inter-related reforms: • ACA Reforms • Insurance Reform • Benefits Reform • Treatment/Therapy Reform • Health Care Delivery Reform • Financing/Payment Reform • Medical Practice Reform-Transformation (Technology, People ) Pharmaceuticals Strategy-Solutions
Topics Framing Our Discussion The New Marketplace: • Where ACA and the employer health benefit evolution intersect ACA and Medicaid • • Public Exchanges (2015-2016) Updates: The Numbers, The States, the Insurers • Insights and Market Observations: • Benefit designs and comparisons • Pharmaceutical benefit details • Specialty Drugs Formulary opportunities and challenges • The Marketplace as a Window to insurance/ drug coverage transformations ahead: • The 2015-2016+ Marketplace Commercial insurance/drug coverage transformation potential • • Implications for Pharmaceutical Companies and Insurers - Moving up the learning Curve Pharmaceuticals Strategy-Solutions
The Reality Drivers of Health Benefits Transformation Pharmaceuticals Strategy-Solutions
Health Benefit Evolution: The new retail Health Insurance Marketplace Employers: Shifting choice and cost to employees 401K Defined Benefit Starting late 80s Contribution Retirement Pensions Plans Defined Benefit Defined Health Care Starting late 2000s Contribution, Benefit HDHPs Key Points: 67% of employers offer HDHPs (2014) 60% of employees choose lowest cost Plans when options available Pharmaceuticals Strategy-Solutions
ACA – 5.5 years in from March 23, 2010 Goal: Increase Access Insurance/Coverage enhancements: • Improve Affordability – Age 26 coverage on parent’s policy Improve Quality – No Exclusion for children with pre-existing (2010) – Preventative Services (2011-2012) – Medical Loss Ratio Rules – and Consumer Rebates (2012) New Insurance Marketplace (2014) – New Individual, Small, Large Group Insurance requirements (2014-2016) • Access Impact: – Medicaid expansion (many states) – Increase primary care provider support (loan repayment) – Increase access to home and community based service (alt to long term care). • Medicare: – Filling in the donut hole (starting 2011) • Testing Delivery and Payment Reform – ACO pilots – Programs (2011) – Center for Medicaid and Medicare Innovation: Grants Pharmaceuticals Strategy-Solutions
ACA and Medicaid ACA Implementation Impact on Medicaid Expand Eligibility Simplify/modernize enrollment process Create coordinated enrollment with MA, CHP and Exchange Plans Promoting/Fund system delivery, and payment reform opportunities Improve quality of care Expand services offered (Essential Health Benefits – to expanded group) Create options to reduce LTC Increase fees to primary care Medicaid Reforms to Expand Coverage, Control Costs and Improve Care: Results from a 50- State Medicaid Budget Survey for State Fiscal Years 2015-2016. Kaiser Family Foundation, October, 15, 2015 Medicaid Moving Forward. KFF, Fact Sheet, January 2015 Pharmaceuticals Strategy-Solutions
The Marketplace – 4thQ 2013 Pharmaceuticals Strategy-Solutions
The Marketplace - 2ndQ 2014 Pharmaceuticals Strategy-Solutions
The 2014-2015 Public Marketplace- By the Numbers 8,019,763 (revised down to 6 - 7 M) (9.2M in 2015) • 4/19/14 Marketplace “Plan selection” enrollment per HHS 5/1/14 85 • 85% selected a Bronze (20%) or Silver Plan (65%). 86% of those enrolling: financial assistance 282 (>330 in 2015) • Number of insurers offering Qualified Health Plans on the marketplace exchanges in 2014 250 (>280 in 2015) • Approx. Number of new formularies being applied through the Qualified Health Plans in 2014 >3,200 • Number of different benefit designs being offered in the 2014 marketplace exchanges $4,410 (2015: Advanced premium credit avg. -$268/month) • Average exchange subsidy per subsidized enrollee (CBO, April 2014) $26 Billon • Additional retail drug spend in 2021 anticipated due to Health Care Reform Pharmaceuticals Strategy-Solutions
Public Marketplace: New Benefit Requirements - EHBs Pharmaceuticals Strategy-Solutions
Exchanges Prescription Drug Benefits Rules Finalized – 2/20/13 Health exchange plans must provide the greater of: • One drug in every United States Pharmacopeia (USP) category and class OR…. The same number of prescription drugs in each category and class • as the EHB benchmark plan; AND • Submit its drug list to the exchange, the state, or the Office of Personnel Management (OPM) Additional drug benefit guidance: • There are no protected drug classes in the exchanges • A health plan must have procedures in place that allow an enrollee to request clinically appropriate drugs not covered by the health plan • Plans may implement tiering and other utilization management tools Pharmaceuticals Strategy-Solutions
The New Marketplace – Additional State Requirements Impacting the Rx Benefit Examples (from 2014) Must allow 90 days at retail with a max of 1 copay per 30 days supply AR, DE, MD, ME, NE, NH, SD, TN, VT, NJ, MS Must cover oral contraceptives and devices CA, CT, DE, GA, IA, ME, MD, NV, NH, NC, RI, TX, VT, WA, AZ, MA, NY, HI, VA, NM, IL, NJ, WI. MO – must cover at 1 st or 2 nd tier. Formulary must remain unchanged during member’s plan year LA, TX Must cover Oral Fertility Drugs MD, NY, NJ, IL, MA, TX, CT, RI Specialty Pharmacy – cannot have home delivery exclusive AL, AZ, CT, DE, GA, ID, IN, MS, NC, NE, KS, KY, MO, ME, MD, MS, ND, NJ, NY, OK, RI, SD, TN, TX, VA, VT, WV, WI, MA, WA, LA Smoking cessation product coverage mandate • MD, RI Pharmaceuticals Strategy-Solutions
State Benchmark Formulary Variability Drug Class Benchmark low Benchmark High • HMG CoA Reductase Inhibitor (High Cholesterol ) 3 7 USP, 7 HIOS • Angiotensin II Receptor antagonists 1 7 USP, 8 HIOS Antidementia- Anticholinesterase Inhib. 1 4 USP, 3 HIOS • • Immune Suppressants 3 24 • Multiple Sclerosis Agents (1) 7 • Platelet Modifying Agent 4 8 • Antidiabetic Agents 5 21 Insulins (1) 10 • • Sleep Disorders – other 1 5 • Ophthalmic anti-inflammatory 6 11 • Bronchodilators, sympathomimetic 5 10 Health exchange plans must provide the greater of: • One drug in every United States Pharmacopeia (USP) category and class OR…. • The same number of prescription drugs in each category and class as the EHB benchmark plan. Pharmaceuticals Strategy-Solutions
EHB Requirements: Formulary Challenge or Opportunity? Formulary Challenge (green): QHPs in these States need to add the drug to meet the required number in the category if they didn’t have it included already. Formulary Opportunity (red): QHPs only required to have a number less than the max number available on the market. Pharmaceuticals Strategy-Solutions
Public Marketplace-Exchanges: New Benefits and Rules Pharmaceuticals Strategy-Solutions
Marketplace Subsidized Coverage and Assistance Premium Credit: Income-based tax credits for purchasing coverage from a health care exchange (sliding scale: 100% to 400% of FPL) Cost-Sharing Assistance: Cost sharing subsidies available on silver plans only. Lowers out of pocket max (sliding scale: 100% to 250% FPL) 400% FPL FPL Out of Pocket Max Act. Value 100-150% $2,116 94% Cost Sharing Assistance 151-200% $2,116 87% 201-250% $3,175 73% Pharmaceuticals Strategy-Solutions
The GAP Reality: No Medicaid - No Insurance Pharmaceuticals Strategy-Solutions
ACA Timetable: 2014+ Adapted from PWC, Sept 2014 Pharmaceuticals Strategy-Solutions
ACA – Membership Distribution Impacts Insurance Type 2014 2015 2016 2017 2018 2020 2025 Medicaid/CHIP +7M +10M +12M +12M +12M +14M +14M Employment Based -<1M -1M -6M -7M -8M -7M -7M coverage Individual Exchange - +5M +8M +15M +18M +18M +17M +16M Subsidy Individual Exchange- +1M +3M +6M +6M +6M +6M +6M No subsidy Exchange Total +6M +11M +21M +24M +24M +23M +22M Employer SHOP <1M +1M +2M +3M +3M +3M +3M Uninsured -12M -17M -23M -24M -24M -25M -25M Yellow: Key Impact Year CBO Baseline update: March, 2015 Pharmaceuticals Strategy-Solutions
2014 - 2015 Marketplace Enrollment- Top 10 Enrollment Reported 2/15/15 1,217,111* 1,600,006 1,189,316 512,968* 559,473 471,930 536,929 340,905 347,300 384,612 * As of 1/26/15 (CA) 2/4/15 (NY) National Enrollment Capture (2014): Top 3 States: 39% Top 10 States: 65% Top 20 States: 84% Pharmaceuticals Strategy-Solutions
Marketplace Enrollment – The Top Insurers in 2014 Top Insurers – Projected Enrollment in Public Exchanges National Enrollment Capture (projected) Top 3 Insurers: 17% Top 10 Insurers: 38% Top 20 Insurers: 53% Pharmaceuticals Strategy-Solutions
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