BENEFITS ADVISORY COMMITTEE

MINUTES OF MEETING

MAY 3, 2007

[In these minutes: Employee Benefits’ Announcements, RxAmerica and the UPlan’s Pharmacy Benefit Plan, Prior Authorization Motion]

[These minutes reflect discussion and debate at a meeting of a committee of the University Senate; none of the comments, conclusions, or actions reported in these minutes represent the view of, nor are they binding on the Senate, the Administration, or the Board of Regents.]

PRESENT: Gavin Watt (chair), Linda Aaker, Tina Falkner, William Roberts, Karen Wolterstorff, Jody Ebert, Jennifer Imsande, Rhonda Jennen, Jerremy Mlenar, Sandi Sherman, Michael Marotteck, Carla Volkman-Lien, Carl Anderson, George Green, Amos Deinard, Richard McGehee, Peh Ng, Theodor Litman, Rodney Loper, Dann Chapman

REGRETS: Joseph Jameson, Fred Morrison

ABSENT: Don Cavalier, Carol Carrier, Frank Cerra, Keith Dunder

GUESTS: Professor Stephen Schondelmeyer from the College of Pharmacy and Professor Brian Isetts from the College of Pharmacy

OTHERS ATTENDING: Bob Altman, Linda Blake, Ted Butler, Joyce Carlson, Karen Chapin, Nancy Fulton, Betty Gilchrist, Murray Harber, Jim Jorstad, Joe Kelly, Shirley Kuehn, Gladys McKenzie, Kathy Pouliot, Kelly Schrotberger, Curt Swenson, Phyllis Walker

I). Gavin Watt called the meeting to order.

II). Employee Benefits’ Announcements:

• There was a very positive response to the diabetes initiative in which the UPlan participates. Several UPlan members with diabetes have agreed to participate in the diabetes care focus groups that will be held in May. The results of this study, which is being conducted by an independent research group, will provide valuable information about diabetes to Minnesota Community Measurement and other organizations. Information shared at the focus groups will remain strictly confidential.
• The generic plus co-pay reduction has taken effect. Co-pays for drugs in the generic plus category have been reduced from $10 to $8 as of Monday, April 30, 2007.
• The deadline to take the Wellness Assessment has been extended until May 31, 2007. A handout charting the weekly and year to date Wellness Assessment participation was distributed to members.
• Supervisors will be receiving a communication piece on ‘Supporting a Healthy Workplace – Suggestions for Supervisors.’ A copy of this document was distributed to members.
• Although the Long Term Care (LTC) numbers are not quite final, it was reported that approximately 3,500 people are enrolled in either John Hancock or CNA LTC. Six hundred seventy nine people transferred from CNA to John Hancock. Before the most recent LTC open enrollment, there were approximately 2,400 people enrolled in CNA. The increase in the number of people purchasing LTC reflects a successful open enrollment.
• A copy of the most recent U & Your Benefits newsletter was distributed to members. The new UPlan Facts section was pointed out. Also, it was mentioned that the section of the newsletter, Guidance of Rx drugs, references a website, which contains very useful information - http://www.crbestbuydrugs.org/ Dr. Schondelmeyer contributes to this public education project of Consumers Union, the publisher of Consumer Reports.

III). Gavin Watt introduced Professor Stephen Schondelmeyer from the College of Pharmacy. He also noted that Professor Brian Isetts will be joining the meeting shortly. Professor Schondelmeyer, noted Mr. Watt, is an expert on pharmacy economics and was instrumental in the design of the UPlan Generic Plus formulary.

Mr. Watt noted that the committee’s main agenda item is to further discuss the RxAmerica plan. He added that two important factors should be taken into consideration:

1. With the advent of UPlan 2006, a new formulary with tighter restrictions was introduced.
2. A new service organization, RxAmerica, was also ushered in.

In Mr. Watt’s opinion, RxAmerica did not do a good job of communicating the UPlan’s pharmacy benefit changes. With this said, however, it was noted that employees, on the average, and the UPlan in general are paying less for pharmacy benefits due to the new pharmacy benefit manager (PBM) and plan design.

At length the committee discussed RxAmerica and the UPlan’s pharmacy plan design issues. Major themes of today’s discussion included:

• Should the RxAmerica contract be terminated and the University go out to bid for a new PBM? Or, should the University continue to work with RxAmerica and monitor their performance in order to resolve its service issues?
• Both RxAmerica and the University need to communicate better to UPlan members about the changes that were made to the UPlan’s pharmacy plan design.
• There would be a risk in changing providers, as there is no guarantee that the next provider would be any better than RxAmerica.
• Employee Benefits reported that there has been a remarkable decrease in the number of calls they receive regarding RxAmerica. Most of the concerns that are reported are related to RxAmerica’s mail order service. Employee Benefits receives more dissatisfaction calls about the two UPlan vendors combined than it does about RxAmerica.
• Members’ concerns regarding the UPlan formulary are a separate issue from RxAmerica’s performance.
• The prior authorization process has been an on-going issue with RxAmerica, which needs to be resolved.
• There are drugs that are not covered by the UPlan. A vast majority of employers across the country have drugs that are not covered by their plans noted Professor Isetts; this is not uncommon. As a result, patients would pay the full cost for these medications. The UPlan has 4 drug categories:

1. Generic Plus – includes most generic drugs and when an effective generic drug has not been identified, one or more brand drugs have been included in this category. The co-pay for generic plus drugs is $8 (previously $10).

2. Brands – these are preferred brand drugs that are considered safe, effective and appropriate and have a $20 co-pay.

3. Non-formulary – non-preferred brand drugs that are covered, but do not fall into the generic plus or preferred brand categories. These drugs have a $35 co-pay.

4. Non-covered medications – drugs that are not covered by the plan. UPlan members bear the full cost when purchasing these drugs. These drugs can include cosmetic items, over the counter medication not specifically covered by the plan, drugs without FDA approval and a very limited number of other drugs.

· The University should cover the first month’s cost for a higher priced drug if a prior authorization cannot be resolved in real time at the pharmacy. Patients should not be held hostage. Professor Schondelmeyer agreed with the overall philosophy behind this comment; however, consideration needs to be given to:

o RxAmerica’s computer system may not be set up to handle this type of transaction; their system may need to be reprogrammed. Dann Chapman added that prior authorizations in a PBM system are set up to occur before an authorization to dispense a drug is given. The concept of a retroactive prior authorization is illogical.

o There is no instance where the purpose of a prior authorization is simply to reduce a co-pay, reported Professor Schondelmeyer. There is a perception that all it takes is a call to one’s doctor’s office to get a prior authorization and pay a lower price for a prescription.

Dann Chapman stated that the Administrative Working Group (AWG), in conjunction with Employee Benefits, would work to see what changes, if any, can be made to improve the prior authorization process.

· Professor Schondelmeyer noted that HealthPartners increased its generic script percentage since the University contracted with RxAmerica. While overall HealthPartners did a good job in promoting the use of generic drugs, they did not do as good a job as RxAmerica. In some instances, HealthPartners preferred more expensive drugs because they received a rebate on these drugs, but the University did not benefit from these rebates. In these cases, HealthPartners was making money off UPlan patients by prescribing higher priced drugs in order to get a rebate.

· Step therapy is drug therapy for a medical condition using the most cost-effective and safest drug therapy and progressing to other more costly or risky therapy, if necessary. The ultimate goal is to control costs and minimize risks. Prior authorization is a safety and cost containment measure that provides for payment of benefits only when treatment has been approved in advance. While the step therapy and prior authorization processes may seem the same from the consumer’s perspective, there is a difference.

During the course of today’s discussion a member introduced a motion to change the current UPlan prior authorization process. This motion recognizes that there are situations when UPlan members pay too much for a prescription at the point of delivery. The motion requests that the AWG and Employee Benefits work to resolve this problem. The committee voted to unanimously approve the motion, which has been inserted at the end of these minutes.

It was further requested that RxAmerica report back to the committee on:

• When a UPlan member calls RxAmerica, how many representatives does he/she need to speak with to get their issue resolved?

• The length of each call.
• Number of dropped calls, or, in other words, the number of calls when a member cannot hold any longer and hangs up.
• How much money is the prior authorization process saving the UPlan?

Furthermore, a request was made to look into changing the refill policy, and allow members to refill their prescriptions further in advance, and not have to wait until a prescription is close to running out.

Following today’s discussion, Gavin Watt asked for the committee’s recommendation on how to proceed with RxAmerica. Brian Isetts from the College of Pharmacy reported that the first year is always the most difficult for plans that change PBMs. The problems generally moderate as the relationship continues. Members agreed not to call for the issuance of a new RFP to look for a new PBM at this point, but to press for resolution of issues that are still of concern.

The suggestion was made earlier in the meeting that a working group made up of BAC members be established to advise and consent on a communication plan to employees about how the UPlan’s pharmacy benefit program works, to work on performance monitoring issues, and to address plan and process issues. Interested members were asked to contact Mr. Watt.

Motion

Benefits Advisory Committee

May 3, 2007

Proposed by R. McGehee

Background:

I support the principle that the University should make efforts to reduce costs for the prescription drug benefit program. In particular, I believe that the policies of “prior authorization” and “step therapy,” if used appropriately, can be very effective at reducing costs without compromising medical effectiveness by guiding patients toward generic and less expensive medications.

However, I am concerned about the current implementations of these policies. I believe that the same cost reductions can be achieved through educating employees, working with doctors and pharmacists, and implementing less draconian procedures. I believe that the current approach of placing the burden on the patient at the time that the patient appears at the pharmacist with a prescription is causing undue hardship and is counterproductive.

According the document UPlan Formulary, Version 1.7 (February 2007):

Certain drugs require prior authorization to ensure that they are medically necessary and part of a specific treatment plan (drugs indicated with PA in the formulary). Your physician completes the PA form with information about whether you have tried other medications for the diagnosed condition and the rationale for using the selected drug and faxes it to RxAmerica. If the prior authorization is approved by RxAmerica, you can continue to take your medication at the $10 Generic Plus co-pay. If the prior authorization is not approved by RxAmerica, you can continue to take your medication at the $20 Brand co-pay if the drug is on the formulary or the $35 non-formulary co-pay. If either you or your physician decides not to apply for the prior authorization, you can continue to take your medication, but you will be charged the full price of the prescription.

While this policy sounds reasonable in principle, our recent survey of employees indicates that, in many cases, the system assumes that a patient appearing at a pharmacy without a prior authorization has already decided not to apply for a prior authorization, even if the patient has no knowledge that a prior authorization is required.

I believe that the current implementation needs revision.

I have seen no evidence that the documented cost saving to the UPlan can be attributed to these harsh measures. Instead, I have seen evidence that many patients have been substantially inconvenienced and that some have been exposed to serious medical risk. At a minimum, a great deal of employee anger toward the University has been generated.

I believe that the $35 co-pay is itself a sufficient incentive for patients to seek prior authorization, if they receive appropriate information. I believe that the interaction between the patient and the pharmacist should be an educational experience, not a traumatic experience. I believe that, in the long run, engaging employees in cooperative efforts to reduce prescription drug costs will be more beneficial, both to the patients and the UPlan, than the current measures, which are often interpreted as punitive and adversarial.

Here is how I envision the system working: A patient arrives at the pharmacy with a prescription for a non-formulary drug. The pharmacist informs the patient that the drug is non-formulary, explains that there may be drugs just as effective (or more) at a lower co-pay and asks the patient if he or she would like the pharmacist to contact the physician to see if the substitute can be arranged. If the contact is successful and the doctor agrees, the patient leaves with the formulary drug, and everybody is happy. If the contact occurs and the doctor explains that the alternatives are medically unacceptable, the patient should be given the drug at the Generic Plus co-pay. RXAmerica, the pharmacist, and the physician should complete the necessary paperwork. If the pharmacist is unable to contact the doctor, the patient should be given the choice: (1) take the prescription at the non-formulary co-pay, or (2) wait until the doctor can be contacted. If the patient chooses option (1), then RXAmerica should contact the patient, either by phone or in writing, to make sure that the patient understands the options.

Therefore, I propose to the Benefits Advisory Committee consider the following motion.

Motion:

The Benefits Advisory Committee (BAC) recommends to the Administrative Working Group (AWG) that the current implementation of the prior authorization process for the pharmacy benefit be revised (1) to encourage a more cooperative and less adversarial relationship between patients, physicians, pharmacists and RxAmerica, (2) to insure that a patient presenting to a network pharmacist a valid prescription for a covered drug should not be charged more than the $35 non-formulary co-pay to fill the prescription. And, a subsequent reduction in member responsibility would be effected by the PBM within two months of the initiating event, and (3) if a $35 co-pay is charged, and a prior authorization is subsequently approved at a lower co-pay, the patient would automatically be refunded the difference within two calendar months.

IV). Hearing no further business, Gavin Watt adjourned the meeting.

Renee Dempsey

University Senate