A discussion on the preferred site of care regarding infusion centers and home infusion as well as generating rebates and implementing appropriate utilization management on medical benefit vs pharmacy benefit drugs.
Neil B. Minkoff, MD: For all of you, have you seen the site of care? Somebody talked about this a second ago: 10 years ago, we would have looked at this differently. The sites of care have proliferated, so we look at it a little differently. Where are we now? How has that changed over the last couple of years in terms of preferred sites of care for us, for hospital vs. home vs. clinic?
Michael Fine, MD: It’s changed a lot. I can’t remember who said it, but more and more hospitals have acquired practices; more and more the hospitals have grown into large systems. When they acquire practices, they basically become large systems, and they exert a lot of monopoly power. In the past, they weren’t that interested in outpatient care. They mostly focused on inpatient care, but now they’ve driven up the cost of care, including infusions and medications that are done at the hospital because that’s where the physician is located, and their practice is owned by the hospital. The need to move infusions away from outpatient clinics in the hospital or outpatient centers in a hospital has become greater.
The options have now become infusion centers and home infusion. These were slow because physicians were reluctant. Even if there wasn’t a financial incentive, they were concerned about having their patients infused at home and about potential infusion reactions. It took a lot of effort to convince them that this was a safe modality. We presented data to many of them to show that the amount of infusion reactions and infections were lower when the nurse did the infusion at home than when they did it in a hospital setting. It’s become important: The single best way for us to save money on expensive infused drugs like they use in multiple sclerosis [MS] is to be able to do it at home.
Cheryl Larson: I was going to add to that about plan design: Progressive employers are using plan design to remove or reduce cost share to the patient if they’re being driven to a certain site of care to try to control that a bit, and it’s effective. Not a lot of employers are doing it, but they are doing it.
Kevin U. Stephens Sr, MD: I just want to add that 1 thing that has happened over the last 6 months with COVID-19 [coronavirus disease 2019] has been the expansion of telehealth. Even as we’re doing now, the videoconference allows providers to video into the patient’s home and talk to them while they’re administered the infusion and those kinds of things. The risk of the patient going out, going to the office, going to the clinic, and encountering COVID-19 is something that can be significant, as well as the time and distance and those kinds of things. We have to start thinking differently now that COVID-19 has changed our life—I hope for the short future, but who knows how long this is going to last us? We’re certainly not near the end; we haven’t felt the first wave yet. We have to be innovative.
Michael Fine, MD: I’d like to add 1 other thing that I forgot to mention, Neil. We’ve incentivized the members to use home infusion too by charging them nothing for the administration. They share in none of that cost. All they would pay is their share of cost for the drug.
Neil B. Minkoff, MD: That gets at exactly what I was trying to narrow down as we get from conceptual into the actual implementation. Rebates have come up a few times, more than once here, and I hear tell that some people have made some decisions based on rebates once or twice in the past. Can someone outline for me, please, how the industry—how you guys are looking at medical benefit vs. pharmacy benefit. Can you generate rebates on medical benefit drugs in a way that you might not have been able to in the past? Is it still a pharmacy benefit–driven issue only? We’ll then get down to some of the other nitty-gritties about how the implementation in medical vs. pharmacy benefit might be different.
Eric Cannon, PharmD, FAMCP: I’m happy to take that, Neil. At the end of the day, the answer is yes. You can generate significant dollars in rebates on medical drugs, and you can generate significant money on rebates on pharmacy drugs. Ultimately, what we sell our clients and what our goal has always been is that we’re going to deliver a product that produces a low net cost in terms of health care. With that low net cost being a factor, however—I’ve contracted with the pharmacy or the provider or the infusion center or whomever—rebates stacked on top of that factor into that.
Cheryl hit on this idea when we started talking about transparency in health care. Ultimately, if any one of us is hiding back pieces, or we’ve misaligned the incentives, and I’m motivated based on some revenue that I’m getting behind the scenes, then what we’re doing may not always be in the best interest of the patient. One of the things we’ve tried to do is this: When we take a drug, a set of drugs, or a category—let’s say we take MS as a category to our P&T [pharmacy and therapeutics] committee—we put out all those costs in terms of what the net cost of X-Y-Z particular treatment would be. And you try to factor into that any adverse effects or other things that you know may play into the total cost of care for that patient. Rebates are just 1 piece of this, and you see people who make a decision based on a particular rebate on a particular product.
One of the things I’ve always reminded our clients and our employer groups is to not get lost focusing on the rebate and forget about the utilization management or the appropriate utilization of a drug. You may make a ton of money in rebates, but you’ll never overcome the cost of the product if it was used inappropriately. Making sure that you’ve selected the right patient, that you’ve got appropriate utilization, and that you balance the role of rebates in all this is key in delivering the best benefit at the lowest cost for your patient. As soon as you focus too much on discounts at the provider’s office or focus too much on rebates, then you’ve lost focus on that low-net cost and how we optimize care for the patient.
Neil B. Minkoff, MD: I love that you segued to utilization management because I want to come back to that. I want to put a little placeholder right here on that, but I want to make sure everybody is weighing in on the concept of medical vs. pharmacy benefit drugs and what that means in terms of rebate and revenue, as well as potentially decision-making on the plan side to make sure we’re not missing anything.
Michael Fine, MD: Neil, rebates are like beauty; they’re in the eye of the beholder. If you make your revenue through rebates, then they look nice, but we’re mostly a full-risk plan. We would much rather get discounts or lower cost because we get that money up front rather than having to wait 6 months or a year to recover money to return to us. We don’t benefit any more from a rebate than a discount. As they say, money in hand is always better than future money. The other point is that, on the medical side, I know Cheryl mentioned how the government oftentimes doesn’t do things right, but Medicare did it right with buy-and-bill by establishing the average sales price [ASP]. Most of us use that today even in commercial, and that has, for us [Health Net of California], reduced the need for rebates on the medical side because, when the companies discount drugs to the provider, we share in that discount too as the average sales price falls. For us, rebates on the medical side, while they’re still there in some drug categories, they’ve become less important because we’re able to pay it ASP, and we don’t have to pay whatever the physician is choosing to charge.
Cheryl Larson: Employers don’t see rebates on the medical side at all, and even when we’re told on the pharmacy side that we’re getting the rebate, we’re not getting all of the rebate because there’s no transparency on either side. For employers, the medical benefit is a big black hole. That’s why total cost of treatment has become so important, and we recognize that we know that needs to change as well.
Kevin U. Stephens Sr, MD: I’ll recognize the same thing as our colleagues have said. The biggest thing we look at is the total cost of care. When you look at the bigger picture, you can start to drill down what Eric and Michael have said, and it can get siloed. With a focus on 1 particular thing, suboptimal effects can happen. At the end of the day, it’s about what the total cost is and what the outcome is with the patient, because the patient is not getting better. Or if the patient has transportation or other needs that are preventing adherence, as you said earlier, then it’s not much value for the patients. It’s a very complicated picture.