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How to Save $2 Million: 5 Tips for Cutting Specialty Pharmacy Costs

A guide for health insurance case managers

Specialty Prescription Costs long

The costs of specialty pharmacy medications have exploded and are rapidly approaching half of overall medicine spending.


Chances are you are spending far more on these medications than you know. The good news: you may also be spending more than you need to. Consider this recent case study:

Reviewing a high-cost case, one of our ROSE® Medical Risk Consultants (MRC) identified unusually high payments for a specialty pharmacy drug. The MRC notified the client and consulted on appropriate pricing. It was discovered that although the client had performed a medical necessity review, the cost of the drug was not reviewed because an existing discount was already in place. The client was able to negotiate with the provider and receive both retrospective and future pricing at the MRC’s suggested cost. Total savings: $2,251,272.

While this may be a rather extreme example, it is not unique. The following tips can help case managers identify and remedy specialty drug overpayments:

  1. Insist on prior authorizations.

    Consider requiring prior authorization – through your pharmacy benefit manager (PBM) or health plan – before approving any specialty drugs, and especially those that hit a high-dollar threshold of $50,000/year or $7,000/month.

    The prior-authorization process should include the following:

    • Flag “J” Codes or National Drug Codes (NDCs) to identify specialty pharmacy drugs.
      • J codes are Healthcare Common Procedure Coding System (HCPCS) Level II and mainly used in infusions, injections, and supply codes. J codes apply to drugs that are administered other than orally, typically indicating injection or intravenous delivery.
      • An NDC is a unique 10-digit, three-segment number that serves as a universal product identifier for human drugs in the U.S. The code is present on all nonprescription (OTC) and prescription medication packages and inserts.
    • Use prior approval limits.
      • Do not approve unlimited quantities. Ongoing oversight and approval requirements ensure ongoing treatment is safe and appropriate for the patient and holds the provider accountable for managing supply, preventing waste, and administering the drug appropriately.
      • Require prior approval each year.
  2. Make sure the drug is a covered benefit.

    Some specialty pharmacy medications are excluded from benefit packages. Check the approved formulary and certificate of coverage before making any decisions.

  3. Conduct a medical review.

    Request medical records to verify diagnosis. Specialty pharmacy products are approved for select diagnoses, and can be specific to genetic variations of the same diagnosis. Also, some specialty pharmacy medications are considered experimental in certain age groups because studies did not include them. Confirm that it’s the right medication for the condition.

  4. Pay close attention to cost.

    Ideally, the best time to negotiate is before any medications are dispensed. Work closely with your network management team, PBM, and providers to negotiate up front. Don’t lock in rates over years; include wording in contracts that allows for outside, objective bill and claim review.

    Make sure there is a cost check during the prior approval process and again when the claim is received. Just because a medication is medically necessary does not mean it should be exorbitantly expensive. Question pricing to verify that you aren’t paying too much, even if there is a discount in place. Check the manufacturer’s website for cost information.

  5. Be a Team.

    Consider pulling together a multidisciplinary team or task force to specifically oversee specialty pharmacy at your plan. Silos create the perfect opportunity for issues to slip through the cracks. Put checkpoints in place throughout the process to monitor what is happening to catch concerns early.

Any questions? Email us at rose@rgare.com to learn more.

The Author

  • Bonnie Schaumburg
    RN, CCM
    Medical Risk Consultant
    ROSE® Consulting Group

Summary

The costs of specialty pharmacy medications have exploded and are rapidly approaching half of overall medicine spending. RGA's ROSE® Consulting Group shares five quick tips to help case managers better manage costs and medical outcomes. Email us at rose@rgare.com to learn more.
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