Survey shows pharmacy benefits now standard

Pharmacy benefits have become a standard part of U.S. companies' health care plans, according to a new survey conducted by William M. Mercer Inc. All 204 respondents to the survey offer pharmacy benefits to all (96 percent) or some (4 percent) of their active employees.

The survey found that the size of a company can directly affect how it provides these benefits.

Among large employers with more than 10,000 employees, an average of 56 percent of employees are covered through a carve-out pharmacy benefit manager. Mid-sized employers, with fewer than 10,000 employees, on average, do not carve out pharmacy benefits to a third-party benefit manager, but rather, provide these benefits through their point of service or preferred provider organization plan (31 percent) or health maintenance organization (27 percent).

In addition, large employers provide pharmacy benefits to more retirees than do mid-sized employers (81 percent vs. 54 percent). An average of 50 percent of retirees from large companies receive pharmacy benefits through a third-party pharmacy benefits manager, compared to only 14 percent among mid-sized companies.

"Prescription drugs typically account for 9 percent to 12 percent of an employer's health care costs, and the cost of pharmacy benefits is rising more rapidly than overall medical costs," said Mark Whiting, a principal in the health care and group benefits consulting practice in Mercer's Kansas City office. "That's why we're seeing so much interest in pharmacy carve-out programs. A carve-out applies the principles of managed care to an employer's pharmacy benefits in an effort to better control costs while maintaining or even enhancing quality and service levels."

According to the survey, pharmacy costs to employers also vary by company size. Pharmacy increases were more likely to exceed medical cost increases at large companies than at mid-sized companies. Sixty-two percent of large companies and about half of mid-sized companies reported higher increases in pharmacy costs than in overall medical costs.

As for employees' costs, both employees and retirees are more likely to incur a coinsurance cost rather than a copayment among traditional medical plans. However, all other plans (point-of-service, preferred provider and health maintenance) are more likely to have a copayment structure. HMOs in particular rarely have participants pay coinsurance; about 97 percent of such plans have copayment arrangements.

Pharmacy benefits require many unique services and can be provided through numerous companies, according to Mercer. Claims processing is the most universal service provided through traditional medical plans (98 percent) and POS/PPO plans (84 percent). Offering a network of retail pharmacies is the most common service provided by HMOs (76 percent) and pharmacy benefits managers (99 percent). In addition, pharmacy benefits managers provide the most extensive services to employers, including mail-order services, drug utilization review and formulary management.

During the next two years, according to the Mercer survey, large employers will be more inclined than mid-sized employers to introduce or expand disease management programs (42 percent vs. 10 percent). In addition, more large employers (66 percent) than mid-sized employers (41 percent) are very or somewhat likely to integrate data across drug and medical plans. Overall, more than half of all the respondents are likely to introduce or expand managed drug programs (54 percent) and disease management programs (51 percent).

William M. Mercer Inc. is a human resource management consulting firm.[[In-content Ad]]