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Low or no copays can result in cost savings
Identify your high-cost claimants
When a diabetic employee at Pitney Bowes fills a prescription for a cholesterol-lowering statin, it will cost about $300 less annually than it did previously. This is because copayments were eliminated in 2007 for statins for all employees or beneficiaries with diabetes or vascular disease.
Back in 2001, Pitney Bowes, a Stamford, CT-based company which helps its customers integrate physical and digital communications channels, did some predictive modeling to understand the key predictors for its high-cost claimants.
The results weren't surprising, according to Mary Bradley, director of health care planning, but "it gave us the road map for some specific chronic conditions."
The high-cost claimants were mainly those with three chronic conditions asthma, diabetes, and hypertension who were noncompliant with their medications.
"The reason that may have been pronounced in our population is we have a coinsurance prescription drug program," she says.
All generic and name brand medications for these conditions were moved out of the higher coinsurance tier of 30% to 50% out-of-pocket responsibility, into a lower tier of 10% coinsurance.
"Most prescription drug plan designs have a tier 1 cost sharing which is reserved for generic medications," explains Bradley. "We broke that paradigm and put these medications into tier 1."
A reduction in the coinsurance payment from 50% to 10%, "for our hourly population, is a pretty significant reduction," she notes.
Total cost lowered
After the change was made, medication adherence for asthma increased from 33% to 47%, for diabetes, 75% to 79%, and for hypertension, 76% to 80%.1
"As you would expect, with that increase in medication compliance, we also saw a lower total cost of care," says Bradley.
The company found that although the cost of medications increased due to better compliance, the cost of medical and short-term disability claims decreased. The total cost of care was reduced by 17% for asthmatics, 14% for diabetes, and about 20% for members with hypertension.
Next, the company took a closer look at the compliance rates for statins, which was around 85%. "Compliance seemed fairly high, so statins weren't included initially in the cost-sharing reduction," she says. "But we took a slightly different approach. "
The company took a closer look at the 15% of beneficiaries that were not compliant, and found out these were the very people who were at highest risk namely, diabetics and members with history of a cardiac event.
"This led us to a 2007 update in our plan design. We removed the cost sharing for statins for diabetics and those who had a cardiac event," she says.
In addition, copayments were lowered for all employees and beneficiaries who were prescribed the clot-inhibiting drug clopidogrel. As a result of these changes, compliance increased 2.8% for statins and 4% for clopidogrel.
The additional cost of the prescription drug, she says, "really was a very small investment when you are looking at the total cost of care. We would much rather make the investment to prevent a secondary complication of a condition, than having someone hospitalized or presenting to the ER, or if it's an employee, missing time from work."
1. Choudhry NK, Fischer MA, Avorn J, et al. At Pitney Bowes, value-based insurance design cut copayments and increased drug adherence. Health Affairs 2010;29(11):1995–2001.