Fortunately for consumers, the cost of prescription drugs still accounts for only 10 percent of healthcare spending nationwide. This is only good news because increases in the cost of hospital care and physician services have grown even faster, exceeding 5 percent annually.

Generic Counterparts

Nevertheless, several important factors have helped keep prescription costs in check. First and foremost, has been the introduction of generic alternatives when brand-name pharmaceuticals lose patent protection.

A report by the Kaiser Family Foundation points out that, “almost 80 percent of FDA-approved drugs have generic counterparts,” and explains that when there are two generic alternatives on the market, the generic price is usually about half the original price of the brand name drug. Moreover, when several competing generics are available, prices often plummet to 20 percent or less of the original brand cost.

The Value of a Formulary

In conjunction with cost-sharing techniques such as deductibles, copayments and co-insurance, another tool used by health insurers to keep prescription expenses down is the use of a formulary. Comprising a list of approved prescription drugs, formularies encourage the use of generics and lower-priced alternatives among their subscribers by creating a differentiated copayment schedule. Under such an arrangement, if you elect a brand-name drug when a generic equivalent is available, you will be responsible for a greater share of the cost.

Formulary lists are typically assembled by teams of doctors and pharmacists who evaluate drugs on the basis of safety and effectiveness in the treatment of diseases. Lists are updated regularly and will usually contain both brand name and generic drugs. When a generic is available for a brand-name product, the brand-name product is generally considered non-formulary. Typically only the generic equivalent will be on the formulary list, a practice endorsed by the FDA. In this way a formulary decreases the total prescription costs for a medical plan by steering subscribers to lower cost alternatives that fully meet their needs.

Other “utilization management strategies,” as they are known in the healthcare industry, include the requirement for prior authorization in the case of certain drugs and/or greater patient cost-sharing for new, bio-tech, and specialty pharmaceuticals. Such measures aid in controlling the cost of premiums for all plan participants.

ProtectPlus Formulary

Beginning January 1, 2011, ProtectPlus adopted use of the same formulary utilized by the Anthem Blue Cross HMO plans. The formulary is updated quarterly and can be found online at the ProtectPlus website under “Anthem Blue Cross Formulary List.”

 The copayment structure for ProtectPlus copay plans and Anthem Blue Cross HMO plans is the same for a 30-day supply bought through an in-network retail pharmacy and a 60-day supply when ordered through Anthem’s Express Scripts mail order pharmacy.

• generics = $10 copayment              

• brand-name = $150 annual deductible per member

• brand-name/formulary = $25 copayment

• brand-name/non-formulary = $45 copayment

• self-injectables (excluding insulin) = 30 percent of prescription drug maximum amount

One way to keep your prescription drug costs down is to provide a copy of the Anthem formulary list to your doctor. He or she can then use it to help select the best medication for you while still being mindful of your out-of-pocket costs. Another good strategy is to let your pharmacist know that you prefer to use generics when possible. Many pharmacies will substitute a generic when available unless the prescribing physician specifies a brand-name with the phrase “dispense as written,” but you can’t assume it. Ultimately, what matters is taking the appropriate medication for your condition. However, if an equivalent drug is available that will safely and effectively treat the condition and save you money, where is the downside?

Maintaining the longer open enrollment period adopted in 2007, the Group Insurance Trust has announced that open enrollment begins on November 2 and ends December 31.

CalCPA member firms that haven’t offered ProtectPlus plans to their employees can, of course, enroll in Group Insurance Trust plans at any time.

Firms can consider the full range of offerings for 2010 that include;

• 5 copay plans
• 3 HSA-eligible plans
• 2 Anthem Blue Cross HMO plans

This is also the time of year that the Trust announces plan changes and premium adjustments. As always, premium  increases are anticipated with concern, but the good news is:

The Trust has been able to maintain its single digit  premium increases for the seventh consecutive year.

This is a remarkable achievement when you consider that ProtectPlus also beat industry averages in each of these years.

Several benefit improvements will be implemented in 2010.

• All ProtectPlus copay plans will see a reduction in the copay amount for generic prescription drugs from $15 to $10.
• Improved coverage for mental health and substance abuse services on all copay, HSA-eligible, and Anthem Blue Cross HMO plans.
• Medical plans will now align all mental health and substance abuse member cost-sharing provisions with those offered for in-network and out-of-network medical services and remove any visit limitations (in accordance with the Mental Health Parity and Addiction Equity Act of 2008).

The Trust will also combine several copay plans for 2010.
Last year the Trust offered eight copay plans, including both regular and enhanced versions of:

• Protect 15
• Protect 25
• Protect 35

The enhanced versions of these plans—which waive the deductible for the first six in-network office visits—proved so popular that trustees were persuaded to include the enhanced benefits as standard features in the copay plans at these levels.

For 2010 the Protect 15, Protect 25 and Protect 35 plans will all feature the enhanced benefit of six office visits that are not subject to the plan’s deductible, while the Protect 10 and Protect 45 plans will retain their original structure.

Vision Service Plan and Delta Dental rates will be restructured for 2010.
Going forward, rates for both plans will be based on firm size in much the same way the medical plan rates are structured.

• Effective January 1, 2010, firms with two or more participants will see a reduction in VSP and Delta Dental rates while others will note a small increase.

Changes in Premiums
Some ProtectPlus members will see changes in their premiums next year that reflect altered geographical rate bands. Anthem Blue Cross has re-aligned several zip codes in rate areas one, two, and three, and the Trust has followed its lead in order stay consistent. For some, these changes will mean lower than average premium increases, while for others, unfortunately, it may mean an increase in excess of the average overall premium increase.

[Image Source]