Episode 23 – Looking Back on Pharmacy Benefits in 2020 and What’s to Come for Employers

Mike Stull (0:09)

Hi everyone, this is Mike Stull. Welcome to this month’s episode of the Employers Health HR Benecast, your source for expert commentary and insights on current health benefits related news and strategies. We hope that this new year finds you healthy.

We’re looking forward to a number of great virtual events in 2021, and we hope you can join us. If you haven’t made it to our PBM Sightlines Series, episodes covering PBM fundamentals, contracting, and specialty management strategies can be found on the webinar recordings page of our website.

Be sure to keep an eye out for the 2021 Pharmacy Benefit Conference. It’ll be a virtual series this year, which will feature industry experts covering the PBM pipeline, audits, stop loss, and other hot topics in the PBM industry starting in March.

A special thank you to our sponsors who have continued to support the work of Employers Health, including our annual supporters for 2021, CVS Health, and Elixir.

With that, let’s get started with today’s guest.

On today’s episode, I’m talking with Zach Hostetler, Vice President of Client Solutions here at Employers Health. Zach leads the client solutions team that works directly as an extension of our clients’ benefits teams to help in providing high quality health benefits at a sustainable cost. He’s here to share what we’re hearing from client organizations, including what they’re focused on and challenges that they are anticipating in 2021 and beyond.

We’ll also provide an update on our growing client solutions team and the resources they provide to our client organizations. So, let’s jump into the interview. All right, Zach, welcome.

Can you start by giving our listeners a little background on your role and the role of the Client Solutions team here at Employers Health?

Zach Hostetler (2:02)

Thanks for having me today, Mike. The client solutions team, they serve as the main point of contact for our clients and their consultants. Each of our groups are assigned a client executive who will serve as an extension of their benefits team and help them navigate what we all know to be an extremely complex industry.

It’s no secret that the PBMs that we work with are exceptionally large and complicated organizations. The client solutions team assists those clients in navigating the different channels within those organizations to allow the clients and their consultants to focus more on strategy, as well as dozens of other responsibilities that they have. Often, the team will participate in those strategic discussions with our partners, and we’ll develop client-specific recommendations for plan management that focus on each client’s unique goals.

It’s our goal each year to help our clients achieve a flat or negative trend. Certainly, a number of factors can work against us in helping our clients achieve that goal, but we’re always searching for new management opportunities to help our clients reduce their trend.

Mike Stull (3:05)

Thanks for that. As we look back on the past year, obviously, COVID-19 was an unexpected twist and one of the most important topics that benefits teams had to tackle. How did it impact the employers overall from our team’s perspective?

Zach Hostetler (3:21)

As you mentioned, it just created an additional challenge in an already dynamic industry. There were a lot of unknowns early. Unfortunately, as much as we learn every day, it just creates more unknowns for our clients, specifically around testing availability and the ability to get them on-site, how those tests are going to be covered, and the costs associated with them.

Then, most recently, the unknown around the vaccine and when it’s going to be available, if they’ll be able to get it on-site and the costs and coverage with that, how do they incentivize their plan members to get the vaccine so that they can have a safe and healthy workforce. Then, there is a lot of uncertainty and questions, especially with our large organizations that cross different state borders, is whether their employees in each state are considered essential. Whether they’ll be able to get the vaccine and if their plan members will be able to get them all at the same time is really up in the air at this point.

I’ll say that the responses that we saw from our clients related to the pandemic, they varied pretty widely. Early on, we had a lot of clients that we had a little bit of radio silence from because they were pulled from their normal day-to-day activities into doing other things to just keep business operations continuing as they needed to in light of the drastic changes. Then, once they were able to get back to some degree of normalcy, there were a lot of groups looking for all of the savings’ opportunities that were possibly available to them.

I know a lot of members of my team spent a lot of time pulling data and providing nice summaries of all the opportunities available. Some of our more aggressive groups or more actively managed groups didn’t have a lot left on the table, but then there were certainly plenty of groups that had those opportunities. As the pandemic went on, we found that a lot of the groups then reverted back to focusing more on the disruption and not wanting to disrupt their members more than what they needed to in light of all of the other things that were working against their team at that time.

A lot of plans didn’t move forward with some of the cost savings opportunities, which really surprised us later in the year.

Mike Stull (5:51)

Yeah, I’d say we saw the same thing on the sales side. We saw this pause right around middle of March, beginning of April. Then, it was like there was a lot of pent-up demand for potential savings.

The RFPs came hot and heavy after that. Obviously, I think a lot of employers were balancing, like you said, how much disruption do we want versus how much cost savings do we want to achieve. Our results were fantastic last year from a sales perspective.

I would attribute that to a lot of companies looking for those cost savings. As we move forward with COVID-19, what do you see or what are you hearing in terms of the big issue for employers?

Zach Hostetler (6:44)

I think that specifically related to COVID-19, it’s going to be the testing and vaccine availability and how they are able to get their members vaccinated as quickly as possible. I know we have a number of clients that are asking about that almost constantly and wanting to make sure that they are always kept up to date on what’s the newest and what’s the latest related to the vaccine and the ability to perhaps have on-site clinics for that in the future. Then, as well as testing, I don’t think that even as more and more are getting vaccinated, I don’t think that the testing component is necessarily going to go away in the short term.

Those that have implemented testing strategies and have on-site testing abilities, I think that probably going to continue. Unrelated to the pandemic and COVID-19, I think that the rising cost of specialty is going to continue to be a big factor going into the rest of this year. I think that that’s probably one that I share every year and probably will for a number of years to come.

Our groups are just getting pounded by specialty year over year. It’s continued to rise up to what we had predicted for a long time to ultimately be about 50 percent of overall spend. For those groups that have been lucky enough to keep it down significantly below the 50 percent threshold, they’re starting to see that tick up as they’re getting more and more specialty utilizers on the plan.

I think the challenge is that there is both the increases to the cost, so the inflation of the drugs themselves, as well as the unpredictability of new members coming onto the plan that can add significant costs to the plan, specifically for some of our smaller clients. I think that the clients are going to continue to be focused on what gives them the biggest bang for their buck. They’re not looking to disrupt a significant number of members if the savings aren’t there.

Looking for those opportunities with high savings and low disruption, which is obviously great, and that’s what everyone’s always looking for. I think that that’s going to be very important this year. I think then the last thing I would say, and this ties back to the pandemic, is a focus on mental health.

As we all know, there’s been a lot of talk around the effects of the quarantines and the isolations that individuals are having to work through. There is going to be a continued effort to promote mental health initiatives within our employers. One thing that we’ve done for a number of years now is the Right Direction Initiative, the free program that is offered through Employers Health and the APA.

I know that that program had a revamp last year. If you looked at it a couple of years ago, I would suggest that you take another look because Dr. Godar on our team has done a lot to advance that program. I think that you might find something new there that wasn’t there before.

Mike Stull (9:56)

Yeah, so a lot to unpack there in terms of what our employers are looking for. Certainly with a pandemic, I would agree that the vaccinations piece is top of mind for a lot of employers. It is going to be challenging because of all the state-by-state rollout of the vaccines.

I think the other piece has to do with specialty. I remember five years ago and when specialty was 20% of spend thinking, how in the world are we going to get to 50% and here we are. Certainly, employers are trying to figure out how to tackle specialty drug.

And then with mental health, yeah, Right Direction, eight years. This is our eighth year with Right Direction. Again, I always say it that it is one of the initiatives that is really a feel-good initiative for us because we’re so far out ahead of it in terms of addressing mental health in the workplace.

And a number of our employers that implemented Right Direction early on should feel really good about the progress that they’ve helped push as it relates to addressing the stigma of mental health in the workplace. And rightdirectionforme.com is the website that you can go to to access those Right Direction resources. So as it relates to some of these non-COVID related challenges, how’s your team working with those clients to tackle some of those issues?

Zach Hostetler (11:40)

Yeah, I think probably everyone starts out what I’m about to say with the following statement that there’s no silver bullet when it comes to managing some of these high costs. We have to manage the things that can be managed. And even though the individual impact of those programs might not be as high of a cost savings as what you might look for, when you look at them in the aggregate, it can really add up.

So groups are always so focused on specialty just because that’s the number that continues to rise year over year. But as I mentioned earlier, 50% of the spend is still in the non-specialty area. And there’s a much greater number of scripts that are flowing through as non-specialty than are specialty.

So there are more opportunities to manage things on the non-specialty side. So for our existing clients, if you think every year, the client solutions member brings out the continuum profile when they meet with you for an annual or mid-year review. And everyone’s eyes are always brought down to what I know is the purple bar because everyone’s, it’s the third one and everyone goes right there to look at what new options are available with respect to specialty.

But then there are all of these other categories that we’re always pushing our groups to look at, as well as looking at the clinical checkup opportunities that really can bring some cost savings and manage the things that can be managed. So each one individually might look like a small opportunity, but when you put them in the aggregate, they become a much greater number and far more impactful. That said, we are still always pushing and trying to advance our management of specialty drugs.

As most of you are aware, the PBMs have put out a lot of true accumulations programs over the last few years to take advantage of co-pay dollars, while at the same time, not giving plan members the benefit of dollars that they didn’t actually spend out of pocket. Most recently, CVS last year came out with its prudent RX program in the late summer. We were actually lucky enough to have the first client in the CVS Health book of business move forward with that program, effective, I think, August 1st, and a number of other groups that have implemented that program late last year and certainly a lot more for 1-1.

And most of our groups are seeing savings around 15 to 20 percent on their overall specialty costs. In addition to that, we’re also looking at other vendors that can come in and do something a little bit unique while still playing by the rules set by the PBMs. So, a new vendor for 2021 is one that will do concurrent specialty PA review. So, for those of you that want to ensure that the PBM is appropriately managing its PA criteria, this will come in and just take the PBM’s own criteria.

And then after the PBM has approved a drug for over a certain dollar threshold, it will ensure that all of the steps were considered and done by the PBM. I think the second thing outside of specialty management and non-specialty management is, you know, in order to bring a lot of these recommendations to our clients, we always have to look at that disruption, as I mentioned earlier. So, we’re always doing our best to run the analytics before we have our meetings with our clients to look at potential savings as well as the disruption that’s going to be associated with it, so that it’s not something that we have to bring back to them later.

We’re always focused on getting the programs to our clients as early as possible. With some of the custom clinical edits that our clinical team at Employers Health have developed, they’re seeing a trend in one part of the country and then they’re able to develop a program that we’re able to roll out to the entire book of business. It’s great because in a lot of instances, that trend hasn’t made it to a large portion of our book of business yet.

So, they’re able to implement these programs before they have anyone utilizing those drugs, so that they don’t receive that unfortunate call on the back end from a plan member who was able to fill a script for some multivitamin and now is unable to do that because a plan change was made. I think the other thing that our clients are focused on is, you know, chronic condition management and what are the opportunities available to them. So, we’re always looking at new vendors to bring to them that might focus on a specific condition or disease state.

I know this past year, the clinical team started working with a third-party vendor to evaluate the treatment of hemophilia patients for one of our clients who was experiencing a tremendous amount of spend on the drugs related to that condition. So, just continuing to look at what’s new and out there and ensuring that these programs or these vendors truly can do what they claim to do before we’re rolling them out to the broader book of business.

Mike Stull (17:13)

You mentioned the clinical team as kind of a final point. Could you give us a little bit of, maybe it’s a little behind the scenes, in terms of how our client solutions team, our analytics team, and clinical teams work together to propose and implement some of these solutions?

Zach Hostetler (17:32)

Yeah, I guess I’ll start with the clinical team. Just as a little bit of history, two and a half years ago, we had one pharmacist on the team, and he was responsible for the entire book of business and now we have four on the team and we’re adding another one this summer. So, the benefit to our clients is that as that team continues to grow, we’re able to start devoting more of those resources and that independent clinical knowledge to individual clients and it’s our goal over the next few years to start assigning clinical advisors to every account the same way that you have a client solutions executive assigned to your account.

They obviously bring that independent perspective on drug utilization. I’ll speak to a specific example just from this year that the team developed custom criteria related to duexis and vomovo and we had the opportunity late in the year to compare the results of our custom criteria versus the PBM standard criteria and what we found was only seven percent of the duexis and vomovo claims were approved under the EH custom criteria while 77 percent of those claims were approved under the PBM’s own criteria.

So, 70 percent delta in or 70 percent reduction in the number of claims that were approved and I’m certain that this it’s no nothing new related to duexis and vomovo that those are typically drugs that you don’t want hitting your plan for the high cost and low value of those drugs. The clinical team has started attending more annual reviews to be there and provide that independent perspective during client meetings and have started working more closely with my team and have helped develop customized opioid reporting for you know one client’s leadership team as well as tackling other one-off projects.

Mike Stull (19:37)

One of the advantages I wanted to talk about just real quick with the clinical team from a consultant perspective for those consultant partners that may be listening is that they really get a chance to dive deep into the clinical programs that each of our PBM suppliers have and I know a lot of consultants who are also pharmacists will oftentimes you know they’re they’re tasked with understanding a little bit about all of the programs that the PBMs offer whereas our pharmacists can really drill down into those specific programs offered by our three suppliers. So, just one of the things that again outside of an independent clinical analysis also providing a level of detail that hopefully is helpful to our consultant partners.

Zach Hostetler (20:29)

Thanks, Mike. Moving on to how we work with the analytics team. They’re essential to our ability to provide relevant recommendations to our clients.

I mean everywhere you go you hear the the term big data and you hear the importance of accurate analytics for consideration in order to make prudent business decisions you know with without the data that they provide our team it’s it’s impossible for us to function effectively and effectively evaluate the programs that we offer to individual clients. Though most of the programs are you know good opportunities for all of our clients they’re they’re not all good opportunities and that’s where my team really takes a look at each individual client and what their goals and priorities are for plan management to help them achieve those goals and look at each program and determine on a case-by-case basis whether or not that program is going to help them further those objectives.

So, they’re they’re able to help us confidently show potential savings opportunities the disruption that we’ve talked about a few times. They’re out there evaluating new reporting tools for us. So, I know that that’s something that’s a big priority for them is to get us better reporting and better tools that will put the information at our fingertips and help us make more real-time decisions based on the data that we have.

Mike Stull (21:58)

Well, I think we’ve we’ve covered a lot of ground in a short period of time. Appreciate you taking the time to talk a little bit about some of the issues that are out there that our teams are are working on today.

Zach Hostetler (22:11)

Thank you, Mike.

Mike Stull (22:13)

Thanks again to Zach for his time. It’s nice to take a step back and see the achievements the Employers Health team and its clients have accomplished together.

Before we close, I want to share the keyword for this month’s episode and congratulate last episode’s winner, Darlene from George Fisher. She’ll receive a $50 gift card for correctly submitting the keyword specialty. Congratulations, Darlene. The keyword for this month’s episode is value. So, if you’d like to be considered for the $50 gift card, please submit the keyword value along with your name and email address and any questions using the link on the landing page.

There’s always something new at Employers Health, so be sure to follow us on social media, our LinkedIn and Twitter accounts to stay up to date. You can also check out our blog on our website for relevant resources on trending topics.

Zach talked a lot about the COVID pandemic and the vaccine rollout, and we just put up a new blog post that deals with resources for employers. So, check that out again at our website, www.employershealthco.com.

Again, don’t forget to submit your questions by completing the field on the landing page or clicking the link titled submit your questions here, and then be sure to tune in to an upcoming episode to hear the answers to those questions.

That will conclude this month’s episode. Be sure to tune in next month to hear from Executive Director of Benefits Programs and Corporate Human Resources at Command Corporation and 2020 Excellence in Benefits Award recipient Teresa O’Callaghan.

Thank you again to Zach for sharing his insight and expertise, and thank you for taking the time to listen, but more importantly, thank you for your continued membership, participation, and interest in Employers Health.

Be well, and we’ll see you soon.