Providing Security in a Time of Rising Costs

Aug 29, 2017
Aligning retiree prescription needs with employer budgets.
  • Medicare


Employer sponsored plans are faced with a unique situation as they must manage both the costs of providing healthcare coverage and offer high-level service to their retirees. They must walk the line between their financial obligations and the commitments they have made to these retirees and their families. Finding the balance between maintaining their funds while sponsoring group retiree coverage is critical.

Part D plans spent close to $3,700 per member per year (PMPY) on prescription drugs for Medicare beneficiaries in 2016 – more than three times the PMPY spend seen in commercial, Medicaid and Exchange populations. This illustrates just how costly retiree drug coverage has become to maintain.

As employers struggle with increasing costs and other market pressures, their retirees are faced with challenges of their own. A recent retiree market study revealed that most retirees are concerned that any level of reduction in their prescription benefit will have a dramatic impact on their health and financial wellbeing. According to a recent Retiree Market Survey, nearly 60% believe their health will be significantly impacted if their current prescription benefits are reduced and 64% believe their current financial state will be at risk if their plan costs increase.

At Express Scripts, we examined the various cost-reducing options available to employers, along with what their retirees would be willing to change, in an effort to preserve their prescription benefit. We found that while the security of their benefit remains a priority, changes to their benefit are acceptable when incentivized financially.

Retirees are open to pharmacy network changes.

Over 80% of retirees are open to going to a selected group of pharmacies to fill retail prescriptions at a lower cost and nearly 80% are open to going to one specific pharmacy chain for the same outcome.

Employers can benefit from their members’ willingness to use a smaller subset of pharmacies by installing a narrow or preferred pharmacy network offering. While this is very common practice for Part D plans that are open to all Medicare beneficiaries in the individual market, adoption has been slow among employer groups.

Express Scripts has a number of Medicare pharmacy network options for employers to evaluate. Our independent model allows employers to choose from anchor pharmacies within these networks. Additionally, employers have the flexibility to explore options for driving additional savings and improving member adherence from these networks.

Saving money is the driving factor behind generic utilization among retirees.

Nearly all retirees (92%) are open to taking an equivalent generic drug instead of a brand name drug to save money. At Express Scripts, we have seen employers successfully manage costs and drive member behavior by incentivizing retirees to take a generic prescription instead of a brand in exchange for a lower co-pay.

Additionally, about eight in 10 retirees are open to taking an alternative brand drug instead of a current brand drug to save money. Express Scripts offers a variety of options, including formulary choices that can drive the plan cost down, and ultimately, pass the savings on to the member.

Choice plays a significant role in retiree tolerance to change.

Retirees are largely satisfied with their current group-sponsored benefits, and rely heavily on the continuation of this offering. Within the employer sponsored offering, 70% would be open to their employer providing a group-sponsored plan design that allows them flexibility of choice. This statistic shows that retirees are tolerant to change if it is based on their decision rather than a decision made for them.

Employers might consider EGWP Plus Choice, which enables retirees to choose from plans with varying cost and coverage levels that align with employers’ pharmacy benefit strategy. It combines the individual-market advantage of plan and premium options with the assurance that no member is left without coverage as these plans remain employer sponsored.

Retirees believe their former employer has an obligation.

Although only 24% of large organizations still offer retiree drug coverage, our research showed that eight in 10 retirees expect their plan sponsor to fulfill their agreement to provide a prescription drug plan. It also revealed that there is some concern among retirees that their coverage will eventually be discontinued. The data shows that 40% are worried that their plan sponsor will stop providing coverage.

Express Scripts understands the unique challenges that both employers and their retirees continue to face every day. That is why we provide employers with consultative guidance on which cost-reducing options make the most sense for them, while enabling them to honor the commitment they made to their retirees and providing retirees the security of prescription drug coverage in a time of rising costs. For more information on your cost-reducing options, please contact your Express Scripts representative.

Author Bio

Laura Crawn
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