TRICARE: A Study of the DoDs Managed Health Care Benefits Program - - PowerPoint PPT Presentation

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TRICARE: A Study of the DoDs Managed Health Care Benefits Program - - PowerPoint PPT Presentation

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ACIs 11 th Annual Big Four Pharmaceutical Pricing Boot Camp May 24, 2017 TRICARE: A Study of the DoDs Managed Health Care Benefits Program James W. Kim McDermott Will & Emery JaKim@mwe.com The information contained in this

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#ACIBigFour

ACI’s11th Annual “Big Four” Pharmaceutical Pricing Boot Camp

James W. Kim McDermott Will & Emery JaKim@mwe.com

TRICARE: A Study of the DoD’s Managed Health Care Benefits Program

May 24, 2017

Tweeting about this conference?

The information contained in this presentation is for educational purposes only and does not constitute legal advice.

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Military Health System: An Overview

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USD(P&R) ASD(HA)

Defense Health Agency Director Deputy Director

  • Sr. Enlisted Advisor

POLICY DEVELOPMENT & OVERSIGHT POLICY EXECUTION Combat Support Agency Responsibilities Admin & Mgt EEOO TRICARE Health Plan Facility Planning Medical Logistics Budget & Resource Management Walter Reed National Military Med Center

  • Ft. Belvoir

Community Hospital Joint Pathology Center Comptroller DHA OGC

Special Staff

Manpower EHR Functional Champion METC HQ DMRTI Program Integrity Portfolio Mgmt and Customer Relations Innovation and Advanced Technology Dev (CTO) Infrastructure & Operations Solution Delivery JMESI

Defense Health Agency Director

Deputy Director

  • Sr. Enlisted

Advisor IPO PEO DHMS Defense Health Service System (DHSS) Defense Health Clinical Systems (DHCS) Information Delivery

Secretary of Defense

Chief of Staff Component Acquisition Executive Analytics Communications Prog Integration Small Business Def Health Board Strategic Mgt HA / DHA Liaison Procurement Innovation DoD/ VA PCO Cyber Security CJCS

NCR Medical Directorate Business Support Directorate Health IT Directorate (CIO) Research Development & Acquisition Directorate Healthcare Operations Directorate (CMO) Education & Training Directorate *

Defense Health Agency

Academic Review & Oversight Prof Development , Sustainment, & Prog Mgmt Pharmacy Clinical Support Public Health * Readiness Warrior Care Program Advanced Development Science & Technology Clinical Infrastructure Program Veterans Affairs R&D Liaison

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Defense Health Agency: Organizational Chart

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Functional Alignment – DHA Pharmacy Operations Division

Pharmacy Operations Div. Chief of Staff/ Operations Branch Purchased Operations Branch Integrated Utilization Branch Informatics Integration Branch Formulary Management Branch

Administrative Ops Budget / Travel Task Management HR Staff Development / Trng Industry Liaison BAP Support Congressional (703) Retail Refund Drug Contract Execution DLA Liaison/VA Liaison Joint National Contracts DAPA / BPA Prime Vendor Liaison Replenishment Liaison Centralized Refill Initiative TPharm Contract Execution Contract Requirement Integration Compliance Measures TPharm4 Transition Lead Replenishment Management MTF Support Liaison 1-1-1 Program Lead Com Development/Tracking P&T Operations Outcome Assessment Section Evidence Based / Practice Guidelines Drug Contracting Integration Support MCSC Interoperability Support Provider Education P&T formulary decision and 703 communication P&T purchased care liaison Performance Support Liaison New Drug Initiative Automation Project Lead Clinical Capability Support MTF to MOP Capability/Role out ePrescribing Capability / Role out PDTS Transition Point of Service Integration Support Telemedicine planning Contract support Data Engine Utilization Analysis Data Integrity Clinical Initiative Lead Medication Adherence MTM / PCMH / Multiple Medications ‘MART’ Support Audit Initiatives Dashboards BPR Metric Support Division Mission Alignment / CCONOPS (Shared Services) Lead for Provider Education / Reports Lead for eMSM initiatives / Market Collaboration / eMSMs MTF Support – Ops / Execution Lead for MCSC Collaboration P&T Support

Aurora, Falls Church, San Antonio Locations

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What Is TRICARE?

  • TRICARE is the DoD health care program serving 9.5

million Active Duty Service members (ADSMs), National Guard and Reserve members, retirees, their families, survivors, and certain former spouses worldwide.

  • As a major component of the Military Health System

(MHS), TRICARE brings together the worldwide health care resources of the Uniformed Services supplemented by civilian health care professionals, institutions, pharmacies, and suppliers

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TRICARE Beneficiaries

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TRICARE Regions Reduced from Three to Two

  • Contract regions changing from the current

configuration of North, South, and West to just East (combining the prior North and South regions) and West, with the two regions managed under different companies.

  • The new regional contracts were awarded on July 21,

2016.

  • East = Humana Government Business
  • West = Health Net Federal Services
  • After reviewing the filed protests, the GAO upheld the

contract awards on November 11, 2016.

  • Contract initiation 1/1/2018
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DHA Pharmacy Division

  • Advise DoD Health Affairs (HA) on policy development and

priorities setting related to Pharmacy operations

  • Create and implement a unified set of business rules to

guide and execute DoD policies for Pharmacy, with consideration for:

  • Beneficiary Satisfaction
  • Cost-effectiveness
  • Evidence-based best practices
  • Retail recapture
  • Data-driven performance measures
  • Align incentives across the enterprise to drive behaviors
  • Provide clinical pharmacists credentialed to participate in

direct medical care (i.e., Patient Centered Medical Home (PCMH))

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TRICARE Pharmacy

  • Prescription benefit authorized under 10 USC 1074g
  • Prescriptions available through:
  • MTFs
  • Mail order
  • Retail Pharmacies
  • Copayments:
  • Home Delivery (Up to a 90 day supply)
  • Generic: $0
  • Formulary: $20
  • Non-Formulary: $49
  • Retail Pharmacy (30 day supply)
  • Generic: $10
  • Formulary (Brand) $24
  • Non-Formulary: $50
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Reimbursement for Drugs

  • All Rx subject to Federal Ceiling Price

limitations (32 CFR 199.21(q)) & refunds required when FCP exceeded

  • DoD Retail Pricing Agreement required

for inclusion on Uniform Formulary and availability without preauthorization

  • Preauthorization requirement at retail

network pharmacies (does not apply to

  • ther points of service).
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DMEPOS Reimbursement

  • TRICARE uses the reimbursement rates established by

the Centers for Medicare and Medicaid Services (CMS) for certain items of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies.

  • CMS DMEPOS Fee Schedule - reimbursement rates for

those items that begin with a HCPCS code of A (transportation supplies, medical & surgical supplies, administrative/misc/experimental), E (DME), K (DMERCS), L (Orthotic/Prosthetic), or V (Vision/Hearing Services).

  • For all other items of DMEPOS, TRICARE pays a

maximum allowable charge.

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DHA Pharmacy Costs

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MHS Rx Costs

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Rx Cost Comparison Across Distribution Channels

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Managing Utilization/Cost

  • Retail Refund Program
  • $7.0 B in total refunds (FY09-OCT13)
  • $1.4 B average annually since 2009
  • Formulary management plays a key role in negotiating

with manufacturers

  • $1.3 B cost avoidance in FY12
  • Formulary Management Tools
  • Medical necessity, prior authorizations, quantity limits,

step therapy

  • Maximize use of Home Delivery
  • Cost Share/Co-Pay considerations
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Updates – NDAA 2017

  • Section 701 – establishes TRICARE Select (PPO plan) –

replaces TRICARE Extra and Standard

  • Prior authorization requirement for specialists prohibited
  • Section 705 – Value-based incentive program to be

incorporated into TRICARE health services contracts (including “per capita cost”) – to be implemented 1/1/2018

  • Section 706 – Privatization – use of private-sector

healthcare systems

  • Section 717 – Veterans to receive care at MTFs
  • Section 743 – Rebate program pilot - manufacturers to pay

rebates based on “lowest rate available,” including rates charged to the mail order pharmacy. The pilot program would begin no later than October 1, 2017 and end by September 30, 2018.

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Requiring Mail Order/MTF Use

  • Under an interim rule published by DoD in August 2015, following

the change mandated in the FY 2015 NDAA, TRICARE began requiring beneficiaries to use the mail order system or a military pharmacy to refill select non-generic prescription maintenance medications.

  • In September 2015, Express Scripts notified beneficiaries taking an

affected drug that beginning October 1, they would no longer be able to fill maintenance drug prescriptions at retail pharmacies unless they wished to pay the full cost, and explaining their options.

  • After October 1, beneficiaries still filling an affected drug at a retail

pharmacy received additional notification of the change and one final “courtesy” fill before having to pay 100 percent of the cost of their medication.

  • DoD estimates this program could save the government at least $88

million a year, but will help beneficiaries as well, with an estimated beneficiary savings of $176 per year.

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Compounding Update

  • On May 1, 2015, TRICARE’s pharmacy benefits manager, Express

Scripts, began a new screening process of all ingredients in compound drugs.

  • Coverage criteria - all ingredients in compounded medications to be

approved by the U.S. Food and Drug Administration (FDA) – maintained and administered by Express Scripts

  • DHA saw reimbursements for approved compounds drop from over

$1 billion in the first four months of 2015 to a monthly average of around $9 million for the last four months of the fiscal year.

  • If a compound does not pass an initial screening, the pharmacist can

switch a nonapproved ingredient with an approved one, or request the doctor write a new prescription. Beneficiaries whose compounded medications are rejected by the system are able to request prior authorization or, if they are denied, appeal the

  • decision. Beneficiaries using a compound drug likely to be impacted

by the change received notification explaining the new process and steps to be followed.

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Questions?

James W. Kim McDermott Will & Emery JaKim@mwe.com