By Peter Moffat
All benefit lines have various maximums, limits, caps, or guidelines in place to ensure that claims are managed. With one exception – drugs. As a result, open ended drug programs can have a huge impact on a company’s Extended Health Care program.
Extended Heath Care costs have increased over 15% annually for the past decade. Although inflation has eased somewhat, the typical insurer assumes 12% to 14% annual inflation in setting your rates. This is unsustainable.
Addressing inflation is critical to managing your benefits expense long term. Companies that can fight off inflation and utilize those future dollars to re-invest and enhance their program, rather than maintain status quo, will be far better positioned to attract and retain high quality employees in the future.
The long term goal is to engage plan members and elevate their understanding of the link between drug purchases and the impact on their company’s benefits program. One direct method to accomplish this is the implementation of a dispensing fee deductible. This means that the plan member pays the fee the pharmacist charges to dispense the drug. In doing so, you introduce an element of consumerism and engage the plan member to link everyday purchases to benefit cost inflation.
Recognizing that not all pharmacies are equal in terms of services provided surrounding proper education and compliance that can support efficacy and healthier outcomes, for most routine purchases of medication the process of filling a prescription is a simple transaction that does not require those value added services.
In terms of the transaction itself…pharmacy dispensing fees range from $ 4.50 to over $ 12. Engaging the plan member in choosing what they pay is part of an effective short and long term drug management strategy to support plan sponsor efforts in elevating plan member engagement, good consumer behaviour, and ultimately, a sustainable and effective benefits program.
A well crafted benefits plan addresses this philosophical question: What should our plan cover – medical therapies or convenience?