Magazine article Drug Topics

Trend toward Paper Claims: A Big Headache for Pharmacy

Magazine article Drug Topics

Trend toward Paper Claims: A Big Headache for Pharmacy

Article excerpt

Pharmacists may benefit slightly from a hybrid system that dilutes pure managed Rx benefit plans with a dose of indemnity coverage. There's also a good chance they'll be put to more trouble and expense.

The new combo system is being given prominence by the recent Request For Proposal issued by the Blue Cross & Blue Shield Association plan for federal employees, their dependents, and retirees--an estimated 3.1 million persons, all told. This pool, comprising about 40% of the federal employee universe, generates some 30 million prescriptions yearly, worth more than $1 billion.

The RFP aims at establishing a limited network of pharmacies offering steep discounts from average wholesale price (15% is the target), low dispensing fees, and an on-line (electronic) submission system with concurrent drug utilization review. The on-line system, however, will not be used to file claims for reimbursement, but rather to provide the patient with a claims transaction number. The patient will then pay cash for the Rx to the pharmacist, and file a paper claim for reimbursement--the hallmark of the old indemnity system the Blues have long used.

THE 'SHOEBOX' ADVANTAGE: Why stick to paper claims, which add so much to administrative costs? The answer is that the government wants to retain the savings from the "shoebox" effect, said Henry Bissenbach, president, Diversified Pharmaceutical Services, Minneapolis. It works this way: When patients must fill out claim forms and mail them to the insurer, some fail to do so. They may simply be negligent, or they may assume that if they need one or two Rxs yearly, adding up to little more than the plan's deductible, filing is hardly worthwhile.

What's more, if a drug is expensive, patients may not want to shell out cash up front, and "that kind of dampens their willingness to have the prescription filled in the first place," said Ken Whittemore, director of third-party programs, NARD.

Many corporate employee health plans are also clinging to paper claims, even as more of them move from indemnity-style programs to managed care.

Perry Cohen, assistant v.p., Aetna Health Plans, Hartford, is a strong advocate of managed-care packages that include a closed network of pharmacies (with all that implies in the way of discounts from AWP), patient co-pays, generic substitution, and on-line adjudication/verification of claims. Managed care can save big money, he said--shaving $2 million from a $10 million indemnity program's bill for drugs, for example. And, the electronic systems generate reams of data that can be used to further refine the plan and reduce costs.

A HYBRID SYSTEM: Aetna wants to meet corporate customer's needs, and so it's designing the hybrid managed care--paper claims plans. But Cohen is dubious about the proposition. He points out that paper claims cost a lot more. They are "a tremendously inefficient way to administer health benefits." And, as drugs continue to rise in price, "more people will be submitting their claims."

Older people tend to file almost all of their claims, said NARD's Whittemore. "Senior citizens generally do a good job of keeping track of those expenses and getting the forms sent in."

So how big is the shoebox effect? The high estimate, 30%, probably derives from employers' observation that when companies switch from an indemnity to a plastic-card Rx program, costs tend to go up by 10% to 30%, said Whittemore. …

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