Discount Card Prescription Programs: The Gap and Opportunities

In 2014, the Congressional Budget Office reported, “Post ACA, 42 million Americans do not have health insurance and millions of others have limited coverage.” A 2015 Omnibus survey reported, “35 million adults worry about needing a medication that prescription coverage won’t cover.” New estimates from the Commonwealth Fund Biennial Health Insurance Survey, 2014, indicate that 23 percent of 19-to-64-year-old adults who were insured all year—or 31 million people—had such high out-of-pocket costs or deductibles relative to their incomes that they were underinsured.²

This gap in the affordability and coverage of prescription drugs has become a leading concern for patients. A Kaiser Family Foundation poll released in April 2015 asked what the next healthcare priority should be for the White House and Congress as the ACA settles into its fifth year. 76 percent of Americans said, "making sure that high-cost drugs for chronic conditions ... are affordable to those who need them." And 60 percent said they support government action to lower prescription-drug prices.³

Although the ACA requires prescription drug coverage, it does not address drug pricing and might actually make certain drugs less affordable for some patients. According to a May 2014 Milliman, Inc. report, “Patients are responsible for paying up to $2,000 toward prescriptions on high-deductible exchange plans.”¹

While all exchange plans must cover prescription drugs, insurers are permitted to use a tiered system of coverage. Typically, costly brand-name drugs or “specialty medicines” may be listed with large copayments and/or deductibles. This means patients can be required to pay 100 percent of a drug's cost until the deductible is met.

Further, outside the exchanges, health plans have responded to rising prescription drug costs by increasing enrollee cost-sharing amounts using formularies to exclude certain drugs from coverage, applying quantity dispensing limits, requiring prior authorization, and using step therapy (starting with the most cost-effective drug and progressing to more costly therapy only if necessary).

It makes sense that the increasing uninsured and underinsured populations are causing a re‐emergence of private companies, retailers and PBMs to offer direct-to-consumer (DTC) and business‐to‐business (B2B) prescription discount cards. DTC programs are marketed to individual patients whereas B2B programs are available to all members of an eligible group, such as AARP for example.

Companies offering prescription discount cards leverage the power of group purchasing to negotiate prescription discounts with pharmacies on behalf of patients. Most, if not all, offer a drug pricing tool that helps patients compare prescription prices at local participating pharmacies. The pharmacies agree to let patients receive discount pricing because they want increased foot traffic and additional business at the pharmacy. In most contracts, pharmacies pay the prescription card discount company a transaction fee each time it processes a prescription through the company’s network.

In general, there are no additional costs to patients or to the employer group, health plan, or health exchange that contracts with a prescription discount card company to offer cards to its members. In fact, depending on the contract, prescription discount cards can generate additional revenue based on utilization for these third-party organizations through shared administrative fees.

Uninsured and underinsured covered patients have found using a prescription discount card can reduce drug expenditures and out-of-pocket costs, which in turn can increase medication adherence and improve overall health outcomes. The Centers for Medicare & Medicaid Services (CMS) estimates that 11 percent of hospital readmissions occur due to medication non-adherence, creating an economic impact that is estimated to cost nearly $100 billion annually.⁴

For health plans, exchanges, employer groups, retailers, and other organizations, offering prescription discount cards can serve an integral role in managing chronic conditions by ensuring members have access to affordable medications. For excluded drugs, extending a discount to members encourages engagement, compliance and adherence, which can help reduce readmission rates and improve patient satisfaction. Today’s healthcare and reimbursement environments dictate that health plans capture all cost data to manage patient-care quality and outcomes in a uniform, replicable, and scalable manner. Another advantage to offering a prescription discount card that integrates with health plan data is the ability to access a simple and efficient platform allowing integration of non-covered Rx for total care management, including aggregated patient savings information and trends in medications.

However, as the use of prescription drug discount cards has proliferated, the variety of questionable practices from card distributors also has increased. While those wishing to launch a prescription drug savings program are becoming increasingly aware of these practices, many lack the analytical experience and program visibility to unravel the true impact of complicated billing and accounting practices.

Your organization may want to evaluate your current prescription discount card providers with an eye toward converting patients to better programs, either created by your company or by working with a company that will create one for you.

About Medical Security Card Company LLC

Medical Security Card Company LLC dba/ScriptSave (MSC), a wholly owned subsidiary of MedImpact, is recognized as the nation’s premier consumer Pharmacy Benefit Management (PBM) company and works collaboratively with the retail pharmacy community to create sustainable solutions that attract, retain, and reward existing pharmacy customers. MSC specializes in designing prescription benefit programs that provide the most value to the 100 percent cash-paying consumer, delivered through retail pharmacies, health insurance companies, employers and PBMs.

Sources:

1. Milliman Client Report, Milliman, Inc. May 2014. http://www.phrma.org/sites/default/files/pdf/milliman-impact-of-hix-on-pharmacy-benefits-report.pdf
2. The Commonwealth Fund. May 20, 2015. http://www.commonwealthfund.org/publications/issue-briefs/2015/may/problem-of-underinsurance
3. Kaiser Health Tracking. http://www.nationaljournal.com/health-care/2016-candidates-drug-prices-soaring-20150421
4. "National Medicare Readmission Findings: Recent Data and Trends." Centers for Medicare & Medicaid Services, n.d. Web. 10 Oct 2012. http://www.academyhealth.org/files/2012/sunday/brennan