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  09:26:50 am, by MedBen1   , 182 words,  
Categories: Wellness, Discounts, Health Plan Management, Incentives

Lower health plan costs tied to health focus, plan management over discounts

Employers with the lowest comparable health costs focus on strong clinical programs and solid plan management over proclaimed discounts, according to the 2007 SHPS Health Practices Study (you can download the study here). According to SHPS’s CEO Rishabh Mehtrotra:

“We discovered a troubling pattern whereby employers use financial models and network procurement strategies to manage health costs instead of addressing the underlying clinical risks driving the demand for health care.”

Five key findings in the report, according to Employee Benefit News are:

1) Employers that focus on targeted conditions in their programs experience costs averaging 18.2% lower that norms.

2) Incentives for participation in desirable health behaviors led to costs averaging 15.1% lower than norms.

3) Companies using strong benefit managers with centralized recordkeeping and solid eligibility procedures experienced costs on average 12.7% below norms.

4) Wellness promotion and education helped costs by 16.9%.

5) Practices that increased costs included over-reliance on proclaimed network discounts, multiple plan design options used to control costs, use of deductibles and copays in isolation to control costs, and using the health care benefits as a tool to become an “employer of choice” or to lower turnover.


  01:25:29 pm, by MedBen1   , 137 words,  
Categories: Announcements, Prescription

Generic profit margins (or lack thereof) begin to take effect

Walgreen’s third quarter earnings were a good reflection of the general trend of tighter prescription drug margins. According to a posting on The Wall Street Journal’s Health Blog, “Despite higher revenues, Walgreen’s net income for the quarter was down 3.8% from last year.”

The blog also notes that the major pharmacy benefit managers, from Express Scripts to Medco, saw similar results.

As more drugs become available generically, it is tougher for these companies to make money on the spread between brand and generic drugs. Bad news for the middlemen, who have traditionally keep part of the margin as profit. Good news for smart benefit plan buyers who demand fully transparent plans and complete pass-through of discounts instead of savings and rebate guarantees that give the impression of savings while allowing valuable margin to be left on the table.

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