Bridging the Gap Between Medical and Pharmacy Benefits

October 13, 2020

SAP Partners

As health care costs rise, especially for patients with complex conditions, a major barrier to access is the disconnect between medical benefits and pharmacy benefits.

Those of us who work in health care are well aware of the unsustainable trajectory of national health care spending. Health care expenditures in the United States grew 4.6% to $3.6 trillion in 2018, representing $11,172 per person. Spending for 2019-2028 is projected to grow at an average annual rate of 5.4%, reaching an estimated $6.2 trillion by 2028.1

Just 5% of the population accounted for over half of total health care expenditures in 2017, and today 1% of patients are responsible for 22% of total health care spending.2 These statistics are no surprise, as we have known for quite some time that high-need, high-cost patients comprise a small fraction of all health care users, yet account for a disproportionate amount of expenses in the system.

While these figures provide a broad picture of what is happening in health care spending, it is important to drill down to the individual patient to understand what these rising costs mean to patient care. The underlying concern is that as the cost of care continues to escalate, barriers to quality care will increase accordingly, especially for patients with complex conditions. A major barrier obstructing access to care for many of these patients is the disconnect between medical benefits and pharmacy benefits. These 2 entities, which are critical to the health and welfare of the patient, operate independently with virtually no collaboration on behalf of the patient. Unless we start to think about medical and pharmacy benefits in a new way that puts patients’ needs first, population groups that are already underserved could have even more difficulty accessing care as costs increase.

Silos Inhibit Quality Care

There are inherent conflicts and challenges in healthcare today, especially when it comes to high-need patients who require care across both the medical and pharmacy benefit spectrum. Care is typically delivered through a medical plan and a pharmacy plan, a set of mutually exclusive siloed systems. Some employers may even have other third-party contracts to support case management, as well as population or disease management programs. Pharmacy benefits are most often facilitated by a third-party pharmacy benefit manager (PBM), whose sole job is to establish utilization management criteria, such as formularies and payment approval practices for pharmacy benefits.

Unfortunately, coordination of care among all these varied and disjointed entities falls squarely on the shoulders of patients and their providers―stakeholders who are least able to advocate for themselves effectively to overcome cost barriers. This is particularly concerning for patients with a serious condition, and especially for those with a rare or orphan disease for which there are new first-in-class therapeutic alternatives coming to market.

Typically, when these first-in-class therapies are released, payers take a wait-and-see approach until they decide what utilization management requirements must be met before they recognize and approve the product. This can be a very long process that leaves patients and their providers in limbo for months while promising treatments (that are too expensive to access without insurance) sit on the shelf.

Reforms Leave Silos Intact

Over the past several decades, there have been many efforts to change health care, most with the goal of reducing care costs while improving outcomes. Unfortunately, none of these endeavors has addressed the need to bridge the gap between medical and pharmacy benefits that could drive the delivery of more coordinated, high-quality care. The reforms that have been made have fundamentally changed the way people receive care, especially for those with complex diseases, by impacting:

The kind of care patients receive

Some of the reform efforts have driven innovation in the biopharma industry by supporting the expansion of new drug alternatives. Federal laws now incentivize companies to invest in small patient population therapeutic alternatives based on various rare and orphan designations. These drugs may be approved more quickly, getting them to patients faster. There are also tax benefits for bringing these novel therapies to market for patients who might continue to be underserved without these new treatments.

The expansion of therapeutic alternatives has also brought specialty pharmacies and specialty care more into the mainstream. Providers who understand how to optimize patient access and clinical response to these complex therapies now have a much more important spot in the healthcare continuum.

How many treatment options patients have

The reforms that have incentivized innovation so biopharma companies can focus on rare and orphan conditions have made more care options available to patients. That is a benefit, but it continues to drive access challenges. As more therapeutic alternatives become available and costs increase, stakeholders are under more pressure to pause and ensure patients are receiving the right treatment at the right time. This can delay or prevent treatment altogether, as not all stakeholders have patient care as a primary concern due to competing priorities within the organization.

The settings where patients receive care

As therapeutic alternatives convert more to self-administered therapies, many patients are receiving care in their homes or in outpatient infusion centers rather than a hospital. Moving away from the hospital setting highlights the importance of care coordination necessary to ensure proper patient oversight and monitoring of side effects and adverse events. The growth of these self-administered therapies has created a critical need to build a multidisciplinary care team around patients who are not receiving the care they might automatically get in a hospital.

A Holistic Approach Can Break Down Silos

While many of the recent reforms have various aspects that ultimately benefit patients and support quality care, there is still a long road ahead. Many complexities and barriers continue to obstruct timely access to the appropriate treatment for many patients, especially when both medical and pharmacy benefits are needed. Frankly, for those of us working every day to bring life-changing therapies to market, it is frustrating and extremely disappointing when patients are denied access to a promising therapy because of payer roadblocks.

Health care must change. What we are doing now is simply not working for those who need the most care, and the situation will only worsen as costs continue to rise. It is time to break down the walls between medical and pharmacy benefits that inhibit quality care and to think of the patient journey more holistically. The key to success may be found in collaborating with providers who can support patients with whatever treatment modalities are needed from diagnosis to clinical endpoint. This would empower collaboration across modalities. It will also be necessary to educate all stakeholders about the importance of each new therapeutic alternative and its intended mechanism of action.

Achieving this transition requires healthcare to move away from the old fee-for-service mentality where a provider sees a patient, sends a bill and gets paid. It may be time to move the reimbursement paradigm, so reimbursement only comes after all providers have collaborated to create the desired clinical impact for the patient. We need to start thinking differently about patient care. For instance, perhaps get the patient on therapy first, demonstrate that the patient is benefiting and having the desired clinical response, and then worry about payment.

Of course, there are many moving parts to achieving this kind of transition in healthcare. Providers may need to contract differently with PBMs and medical plans, so they are only reimbursed after they establish a clinical benefit for the patient. Providers, payers and the industries that support payers must think more longitudinally about the patient’s journey, influencing and coordinating the patient’s care much earlier in the care continuum and staying involved through the entire course of treatment.

Hopefully, conversations on this topic will gain some momentum, especially in this latest realm of integration and acquisitions where PBMs are buying medical plans and vice versa. The healthcare industry appears to be signaling a new approach for what has typically been a pharmacy carve-out to more of a pharmacy carve-in―a change that cannot come soon enough for high-need patients caught between medical and pharmacy silos.

Author Information

Paula Bickley is the vice president of Market Access, Biologics by McKesson.

References

1. National Health Expenditure data, 2018. CMS website. Updated March 24, 2020. Accessed October 12, 2020. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet

2. LaPointe J. 1% of people account for 22% of total healthcare spending. RevCycle Intelligence. Published February 26, 2020. Accessed October 12, 2020. https://revcycleintelligence.com/news/1-of-people-account-for-22-of-total-healthcare-spending