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Benefit Design

When Payers Can’t Absorb Shock Claims

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When Payers Can't Absorb Shock Claims

Neil Minkoff, Marc Hixson, Kim Gwiazdzinski, and Jim Clement authored an intriguing article in AJMC last month about stop-loss.

Apparently when payers can’t absorb the risk (from high-cost patients), they can push the cost onto stop-loss carriers. When the shock claims become too high even for the stop-loss carriers, they can pass on a certain amount to reinsurers. This is the nutshell version of something that is much more complex.

Ultimately, payers make patients pay the price (either literally or figuratively).

I couldn’t help but notice that the organizations that are meant to absorb the cost aren’t able to absorb the cost themselves.

The authors raise an interesting point: what is the point of coverage? Is it to absorb shock claims IF they occur or WHEN they occur?

One would think that payers are ready for the shock claims WHEN they occur, although this sadly doesn’t seem to be the case.

What principles of microeconomics can show up to address this problem? Would spending less in other areas allow payers to invest more on the latest high-quality drugs?

Collaborations Among Stakeholders

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Collaborations Among Stakeholders

How can us market access professionals (strategists, writers, editors, and everyone else) possibly do our work if we’re not curious enough to seek out our customers’ voice?

In market access, we often treat our asset as our own child and customers’ needs as a stepchild. This backfires on the business as the stepchild always turns out to be the Cinderella of the story.

Isn’t the goal of manufacturers, payers, and providers ultimately the same? To keep patients healthy enough so they stay out of the health care system? It’s just that the market demands each stakeholder to address this call in a different way.

AMCP’s Partnership Forum is a platform where these stakeholders collaborate on tactics and strategies to drive efficiencies and outcomes.

Tapestry Networks is another platform that brings together such stakeholders.

I wonder if there are other such collaborative platforms out there.

Today is the First Day of Your Product’s Life Cycle

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Today is the First Day of Your Product's Life Cycle

What a phenomenal shape the circle is.

Where does it begin? Now, where does it end.

Is it possible that the circle could’ve started at any another point?

Yesterday ended last night. Today is the first day of the rest of your product’s life.

70% of launches fail. There’s evidence to suggest that the first year sets the trajectory for the rest of the product’s life cycle.

Cycle = circle.

Even if your drug has already launched, do you get another chance to begin?

How you got here is not how you will get there. 

The asset inventory is what it is. It takes months-years to generate new evidence. What will you do in the meantime? Your product already has what it needs to penetrate the market in a way that no other product can–if you allow it.

Take a page from Zig Ziglar’s playbook: If you give them enough of what they want, they will give you everything you want.

What Does It Look Like?

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What Does It Look Like?

If I want my radical idea to be picked up, it has to look familiar to them.

Build a bridge.

Otherwise, they’re left with two choices: jump across the gorge or go home. What would anyone choose?

In the words of Seth Godin, “It’s far easier to sell someone on a new kind of fruit than it is to get them to eat crickets.”

What precedents have been set? If they did it before, it’s easier for them to do it again.

CMS Final Rule Threatens Existence of Manufacturer Coupons

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CMS Final Rule Threatens Existence of Manufacturer Coupons

Peter Pitts and Jason Zemcik wrote a brilliantly simple article later last week dissecting the CMS Best Price Rule.

Manufacturers offer copay assistance coupons for many drugs in order to offset cost share. Evidence from a Massachusetts Health Policy Commission study suggests that these coupons indeed promote adherence and better outcomes.

Unfortunately, a critical drug pricing rule finalized by CMS towards the end of 2020 could unintentionally jeopardize coupons. The rule requires that manufacturers ensure the benefit of their coupons go solely to the patients. If the coupon’s full value is not realized by the patient, the manufacturer will be required to count it as a discount to the drug’s Medicaid price (manufacturers are required to give Medicaid programs their ‘best price,’ which is the lowest price they offer to any other purchaser of a drug).

How could a coupon possibly benefit anyone else other than a patient? Payers have figured out how to flip coupons on their head in order to remain profitable. Copay accumulators. Under the copay accumulator tactic, the coupon value is not counted against the deductible. Therefore, once the coupon funding is exhausted, beneficiaries are forced to pay their full deductible. When faced with this situation, many patients are forced to decide between paying their rent/mortgage or seeking medical care.

In this accumulator scenario, coupons can be viewed as a price concession to an entity other than a patient since it lowers payers’ cost for the drug. As a result, CMS would require the full coupon value to be factored into Medicaid discounts.

If the best price is brought down further with coupon values, how likely is it for manufacturers continue offering coupons?

If they are forced to thus stop offering coupons, how will this impact patient access to necessary treatment?

Lexus Came From Toyota Embracing Conflicting Goals

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Lexus Came From Toyota Embracing Conflicting Goals

If the market demands conflicting outcomes, embrace it (before someone else does).

The market is demanding health care delivery that is affordable + effective—highly conflicting priorities!

Harvard Business Review narrated a successful case of embracing conflicting goals:

‘When designing what became the Lexus line, Ichiro Suzuki, Toyota’s chief engineer, stipulated that the new car needed to be faster, lighter, and more fuel efficient than existing luxury sedans. The order was full of contradictions. Making a car faster usually meant having a bigger, heavier engine; making it lighter without compromising power meant stripping out luxury that was essential for this segment. So, the Lexus team returned to fundamentals and re-evaluated their most basic assumptions about how to build a car. Alongside tens of smaller new ideas, they designed and built a first-of-its-kind aluminum engine that made the car 120 pounds lighter, improving weight and fuel efficiency, thereby delivering on a seemingly impossible demand.’

Right now, all eyes are on payers and PBMs. What are they doing to make health care affordable + effective? Drugs are only effective is they’re used for the right patients at the right time.

Your Customers Should Feel Heard

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Your Customers Should Feel Heard

Everyone has a problem.

Believing that your customers have no problems is just as true as believing that everyone posting smiling photos on Instagram has no problems.

What’s the problem of your customers? What keeps them up at night? What makes it dreadful for them to come back to work the next day? Why are they right to think this way?

The sequel to this would be: How can you show up to delight them? But let’s not get ahead of ourselves. 

Customers feeling like they’re heard is in itself a TREMENDOUS stride forward.

Nurture trust. Nurture relationship.

If your neighbor knocked at your door with freshly baked cherry pie, would you accept it? What if a stranger did the same thing: would you accept it?

The Market Is Beginning To Side-Step Payers

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The Market Is Beginning to Side-Step Payers

Adam Fein published an interesting article today about how GoodRx’s discount card business is allowing PBMs to side-step managed care organizations, avoiding having to pay pass through payments.

In short, consumers can use discount cards, such as GoodRx, to save money on prescription drugs at the pharmacy. When they use GoodRx, they’re benefitting from a PBM’s network rate that they’re not even paying premium for. PBMs whose network rates are utilized through GoodRx are not obligated to pass through the manufacturer rebates to plan sponsors and can keep that money for themselves. It is important to note that 70% of GoodRx’s consumers already have commercial or Medicare Part D insurance, which they’re deciding not to use because GoodRx will save them more money.

Is the value of managed care organizations being questioned?

Reading this reminded me of something that I had read earlier this month by Fast Company. Providers (just like patients in the GoodRx example above) are finding ways to side-step insurers. Concierge practices promise more provider-patient time and more comprehensive health care for an annual membership fee in ADDITION to health insurance. Direct primary care goes a step beyond that by requiring monthly fees and with NO regard to insurance coverage.

Is the value of managed care organizations being questioned?

This is just the beginning. Managed care organizations cannot be completely done away with just yet. Just like colleges and universities can’t be done away with—yet. But changes are happening.

A rip has been made and the seam is ready to be opened.

I’m not rooting for or slamming any single party. I am, however, rooting for whoever is actually in the business of benefiting patients. And there ARE gems among manufacturers, payers, and providers who are honestly showing up for patients.

What’s important is: How will I benefit patients with [[heart failure]] today? What did I do this week to give patients with [[Medicaid coverage]] hope? Why did God give me this position? By the way, those who don’t ask why they have this will have no right to ask why it was taken away.

I need to ask myself these questions, as do you. Irrespective of your level in the food chain.

Remember to Get That Marketing Myopia Checked Out​

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Remember to Get That Marketing Myopia Checked Out​

Market access brainstorm sessions typically gyrate around strategic objectives such as:

  • “Our goal is to achieve parity”
  • “The strategic objective for this year is to defend access”

This is the fatal trap of marketing myopia. Market access teams often treat their asset as their own child and customers’ needs as a stepchild. This backfires on the business as the stepchild always turns out to be the Cinderella of the story.

To put it a different way, Harvard Business School Professor Theodore Levitt said “people don’t want to buy a quarter-inch drill. They want a quarter-inch hole!”

If you’re looking to influence payers’ and PBMs’ utilization management strategies, understand why it’s important for THEM. Hint: the cop-out answer would be “they need to save money.”

Today, Harvard Business Review published an interesting article on Profit Segmentation. A sophisticated payer or PBM would categorize its beneficiaries into 3 buckets: Profit Peaks, Profit Drains, and Profit Deserts. Profit Peaks are the high-profit customers (typically about 20% of the customers that generate 150% of their profits). Profit Drains are high-revenue, low-profit/loss customers (typically about 30% of the customers that erode about 50% of these profits). Finally, Profit Deserts are the low-revenue, low-profit customers that produce minimal profit but consume about 50% of the company’s resources.

Benefit designs can be effective tools for payers to solve the problem for Profit Drains. Most of the Profit Drains’ problems are fixable, but they require teams that are expert at changing the cost to serve by managing the relationship with these beneficiaries. Fortunately, in most cases, the beneficiaries receive a parallel reduction in their own cost.

For example, if a patient on a statin visits a clinic for muscle pain, it’s just as costly for him as it is for the payer. Therefore, implementing the right order pattern (i.e. benefit design) is a win-win that often converts Profit Drain customers to Profit Peaks.

What would a reasonable change-in-order pattern look like for this patient? If you were responsible for the payer strategy for a statin competitor, how would you encourage payers and PBMs to convert the target population from Profit Drains to Profit Peaks?

Deloitte pointed out that 70% of launches fail by missing expectations at launch. Could marketing myopia be the culprit?

In the famous words of Seth Godin, “when you shine a light, both of you can see better.”

Krishna Patel, PharmD
Market Access Strategy and Execution Consultant
info@sojusllc.com
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