Tag Archives: End of Life Care

Guest Blog Post: Linda Davis – Reaction to the Campaign for Sustainable Rx Pricing (CSRxP) Policy White Paper

Tired of Hearing about Specialty Drug Prices Yet?

Almost every day there is an article in the media criticizing pharmaceutical manufacturers for their high prices. And, just about every stakeholder complains about these rising prices including pharmacy benefits managers (PBMs), health plans, physicians, hospitals, legislators, regulators, presidential candidates, and consumer advocates. It seems there are always new groups forming to address drug prices.

CSRxP Reacts to Manufacturers’ Drug Prices

The Campaign for Sustainable Rx Pricing (CSRxP), a multi-stakeholder group, founded by the National Coalition on Health Care, is the latest organization trying to address drug prices. They published their “Proposals for Change,” a three- pronged approach, with a single focus on drug prices in May of 2016. While focusing on price addresses a key driver of unsustainable and unaffordable health care costs, it misses the bigger picture; every player in the drug supply chain benefits from high drug prices. These groups also contribute to high prices, confusing financial arrangements, and frequently changing and opaque prices at every point along the chain. The singular focus by CSRxP on price may be, in part, because its members include supply chain players such as health plans, hospitals, physician organizations, and PBMs.

All Players Along the Supply Chain Contribute to the Problem of High Prices

Drugs are distributed along a complex and convoluted supply chain of wholesalers, retail pharmacies, mail order pharmacies, specialty pharmacies, hospitals, infusion centers, physicians, hubs, and specialty pharmacies.



Along the way, there are myriad organizations managing financial transactions and influencing patient and physician behavior. The higher the price of the drugs, the more organizations can charge for their services in the form of “spread,” rebates, and administrative fees, often in the form of percentages. As a percentage of drugs costs, almost any amount can look small.

Health Plan Role

Health plans have not traditionally managed pharmacy costs aggressively. With the increase in prices over the last several years, they have begun to invest in developing new capabilities. The Action Group’s Specialty Pharmacy Learning and Action Network participants have found half of their specialty pharmacy costs are drugs administered by clinicians and paid for by health plans.

They also found that health plans’ ability and management of specialty drug costs is highly variable including:

  • Knowledge and experience in developing formularies, preferred drug lists, and in negotiating with manufacturers on drug price, value and rebates.
  • Willingness to require physicians to adhere to prior authorization processes for certain drugs.
  • Ability to manage patient adherence and utilization.
  • Whether providers are required to administer drugs in the lowest cost site of care.
  • Whether manufacturer rebates are shared with their customers.
  • Whether providers are required to submit NDC codes on drugs they administer to better identify the specific brand, dosage, and number of units administered.
  • Claims systems’ ability to collect, aggregate and store data related to drugs and drug administration.
  • Staff knowledge and ability to analyze, manipulate and utilize data to identify variation, trends, costs, and prices.
  • Knowledge of the complexities of the pharmaceutical supply chain.
  • Leverage with provider systems that have market power negotiating how and what they are paid for the drugs they administer to patients.
  • Ability to anticipate the next new development by the ever-expanding number and type of players in the supply chain.

Further, health plans may decide it’s not worth the cost to hire the talent, implement the systems, and administer the programs necessary to manage these drugs if they aren’t directly benefiting from managing these costs, especially if customers aren’t demanding them. They also may benefit from higher rebates on higher priced drugs through manufacturer negotiations. In today’s environment, higher claim costs or medical loss ratio (MLR) results in higher administrative costs.

PBMs Benefit from High Prices

PBMs have become highly consolidated, with the three largest holding tremendous market power in negotiating with clients. They almost always refuse to be the “fiduciary” for their clients, meaning they won’t be legally responsible to protect the financial interests of their clients. The PBM role is to manage and reduce prices and utilization for clients; however, they negotiate drug prices with manufacturers who pay rebates, typically higher rebates on higher-priced drugs.

Pharmacies, including Specialty Pharmacies, Benefit from High Prices

Almost all PBMs own at least two distribution channels including mail order pharmacies, specialty pharmacies, and retail pharmacies. Revenue from these channels is based primarily on “spread,” which is the difference between acquisition cost and what they get paid for these drugs by their customers, including employers. The higher the price of drugs, the bigger the spread can be. They also realize increased revenue from increased utilization. This incentive is in direct conflict with their role as a manager of overall pharmacy costs. Non-PBM-owned specialty pharmacies also realize increased revenue through increased prices and utilization.

Hospitals Benefit from High Prices

Hospitals that own physician practices also benefit from higher drug prices. They mark-up drug acquisition costs and bundle it into pricing to medical carriers without identifying the specific drug, dosage, or number of units, making it impossible for health plans and employers to know what is being administered. Hospitals with 340B status can purchase discounted drugs and charge greatly higher prices to commercial payers and employers.

Many hospitals have shifted care that formerly was provided in physician offices to outpatient hospital departments, billing health plans on using hospital claims and billing standards that aren’t as easily managed because of the lack of specificity related to drugs. Physicians who administer drugs in their offices also benefit from marking up prices.

A Single Focus on Drug Price Misses the Bigger Picture

The CSRxP’s White Paper includes three prongs to address prices include increasing transparency, promoting competition and innovation. Within each of these prongs, several specific actions are recommended that target manufacturers, the FDA, and federal agencies. While their proposal is well thought out and includes an extensive list of goals and actions, it misses some key points related to other stakeholders along the supply chain including:

  • The lack of transparency of pricing and profits of PBMs, specialty pharmacies, hospitals, physicians, health plans, and a growing list of players participating in delivering and managing these drugs.
  • Cost variation of clinician-administered drugs, depending on the providers’ market power and site of care, e.g., hospital outpatient vs. physician office.The role and amount of rebates paid to health plans and PBMs.
  • The impact of manufacturers’ patient financial support programs that cover patient costs but are applied to patient deductibles and bypass incentives built into employers’ benefit plan designs.
  • The impact of 340B discount programs on the profits of qualified hospitals.

What Does this Mean for Employers?

While the high prices charged for drugs are the root cause of many of the problems in the specialty pharmacy world, employers have little influence on them in the short term. In the meantime, they should support the goals and actions of the CSRxP, and learn about relationships within the drug distribution and payment supply chains by asking vendors questions about revenue sources, how they make their margins, and inherent incentives in their financial relationships with other stakeholders.

CSRxP Policy Platform
CSRxP Policy Platform Summary

Guest Blog Post: Denise Winston – How Improving Health Literacy and Financial Wellness Improves Lives

Denise Winston

Denise Winston

Most employees are not financial planners, financial experts, or health care specialists. Yet we expect them to make decisions about tens of thousands of dollars each year in the form of health insurance, health savings accounts, 401(k) plans, and other employee benefits – on top of the other six to 10 financial decisions they make each day. Unfortunately, employees often make decisions on sophisticated and complex health and financial situations with very little or no education.

April is National Financial Literacy Month

National financial literacy month (dubbed Financial Capability Month in Minnesota) is recognized in the U.S. in April to highlight the importance of establishing and maintaining healthy financial habits. To learn more about related events, visit debtadvice.org. This website also includes a variety of free consumer education tools.

Understanding the Facts

  • At 62 percent, medical bills are the leading cause of personal bankruptcy in the U.S. (72 percent of those had medical insurance.)1
  • About 64 percent of Americans report that money is their number one stressor.2
  • Financial stress lowers IQ by 13 points.3
  • On average, financial stress costs businesses $5,000 in lost productivity per employee per year.4
  • About two-in-four people (52 percent) have less than $1,000 to pay for out-of-pocket expenses associated with an unexpected illness or accident.5
  • Up to two-thirds of working Americans are living paycheck-to-paycheck.

The Numbers: How Income is Typically Allocated (Although Most Employees Likely Don’t Know It!)

100% Gross Income

– 43% Debt: Lenders allow a back-end debt-to-income ratio (DTI) of 43 percent. This means 43 percent of gross income can be used to service housing costs and debt (car payments, student loans, credit card minimum payments, child support, and other loan payments).

– 30% Taxes: Those in a 30 percent tax bracket will have 30 percent of gross income coming out of their paychecks to cover taxes.

– 9.5% Health Insurance Premiums: The ACA mandate states that every American obtain health insurance, with very few exceptions. It is deemed affordable as long as premiums do not exceed 9.5 percent of income (not including deductibles, co-pays, etc.).

10% Savings: At least 10 percent of income should be placed in savings for emergencies and retirement.

7.5% Left to Live On: That leaves just 7.5 percent left to live on (food, clothing, utilities, transportation costs, entertainment, and everything else we need and want).

Employer Action Steps

There are things employers can do to raise health literacy and financial wellness levels among employees, enabling them to make informed decisions and improve their quality of life.

Recognize the impact of health and financial stress: Understand how stressors are affecting your employees’ lives and productivity at work.  It is important to remember that financial stress can suppresses the immune system and put pressure on relationships, which affects overall health and wellness.

Establish an education strategy: Build a strategy designed to improve health literacy and financial wellness. Make outreach initiatives personal, find a champion, tell stories, and get expert help.

Use creative and engaging communications:

  • Use the magic number of three (chunk information like a phone number)
  • Use positive words (brand-new, advanced, additional options, personalized)
  • Keep communications simple (small words, short sentences, real examples)
  • Provide educational information that is readily available, and easy to use and understand (video, audio, bullet points)
  • Consider the unique cultural needs of your workforce.

Tap proven health and financial literacy programs: Check with your brokers/agents, carriers, other vendors, and independent resources to learn about proven health literacy and financial wellness programs.

Let technology help you: Learn to use benefit and HR admin systems, HR support and resource tools, mobile apps, and online courses, to your best advantage.

A Look at Health Literacy

Medical experts agree: A patient’s health literacy – the ability to understand medical language, actively listen, analyze treatment plans, make daily decisions and ask health providers relevant questions – affects health outcomes and medical adherence. In fact, patients with the lowest personal health care management skill levels and confidence incurred costs averaging up to 21 percent higher than patients with the highest skill levels.

Here are some resources to help you boost health literacy among your employees:

  • NBCH Action Briefs. As a member of the National Business Coalition on Health, The Action Group makes well over a dozen Action Briefs available to members and non-members.
  • Choosing Wisely®. These materials help engage employers, physicians and patients in conversations aimed at reducing unnecessary medical tests and procedures. Click here to learn more about how you can use Choosing Wisely to improve health literacy.

A Look at Financial Wellness

It’s estimated that financially stressed employees spend 20 hours per month on the job worrying and dealing with personal financial issues. Their minds are not on their work, and that not only has a negative impact on profitability, but also on business relationships and the overall business environment.

Organizations can save $3 for each dollar they spend on financial wellness.6
An effective health literacy and financial wellness program can be to your health insurance premiums what a safety program is to your workers’ compensation premiums — a way to control costs and be a benefit that helps everyone.

Additional ways financially stressed employees eat into profitability:

  • Absenteeism
  • Tardiness
  • Long breaks
  • Theft
  • Overtime abuse
  • Frequent phone calls
  • Increased request for 401(k) loans and hardship withdrawals
  • Wage garnishments
  • Employee retention

The good news is, working together, employers and employees can rein in health care costs and improve health and productivity through a well-designed health literacy and financial wellness program. A quality program will be unbiased, scalable and customizable, and will allow employees to assess, learn and act.

Recent articles of interest:

Denise Winston is the founder of Money Starts Here, a financial education company.


1 Harvard University study, 2007
2 American Psychological Association, 2015
3 Princeton University research by William Stewart Tod, professor of psychology, 2013
4 Federal Reserve Study, 2010
5 Aflac, 2015
6 Consumer Financial Protection Bureau report, 2014

Blog Post: Opening Conversations About End-of-life Care by Carolyn Pare

Who knew La Crosse, WI, is considered to be the “Best Place to Die in America,” where 96 percent of adults have health care directives in place? Or that 63 percent of Americans die in hospitals and another 17 percent die in institutions such as long-term care facilities, when nearly two-thirds say they would prefer to die at home? Or that fewer than 30 percent of Americans have an advance directive such as a living will?

These and many other surprising facts came to light during our latest Action Group member meeting, featuring presentations from Steve Calvin, M.D., Jennifer Lundblad, and Karen Peterson (see below).

The primary goal of the meeting was to increase awareness and understanding among employers about advance care planning and end-of-life care to enable them to support employees in dealing with these issues. We also explored the limitations of health care delivery and what really matters in end-of-life care.

Perhaps the most important message was that talking about end-of-life care needn’t be difficult, especially when conversations are started when all is well. In this recent article, “End-of-life: The Real Health Care Crisis,” the author calls for Americans to come to grips with “rampant and seemingly uncontrollable costs of sustaining life in a system which lacks any semblance of common sense.”

The Action Group has developed a simple communications toolkit for employer members, which is available on our website. Here are some highlights from the member meeting:

If you have not read the book Being Mortal by Dr. Atul Gawande, I highly recommend it. He discusses how important it is to deploy modern medicine to best meet the goals and desires of patients.

Jennifer Lundblad, President and CEO, Stratis Health

  • The short definition for palliative care is “interdisciplinary care for patients and their families that improves the quality of life during a serious and/or life-limiting illness.” It is wrapped around total care and provided in places like hospitals, clinics, homes, nursing homes, assisted living centers, or care settings.
  • The pillars of palliative care include:
    • Pain and symptom management
    • Psychosocial and spiritual support
    • Information and support to make decisions that reflect goals and values
    • Continuity of care
  • Hospice care is for people who are in the last six months or so of life. Palliative care is not the same as hospice care because it focuses on people with a six-month life expectancy (or less) who are no longer receiving curative treatment. Hospice care is often delivered at home, but it can also be provided in facilities.
  • The hospice philosophy embraces six significant concepts:
    • Death is a natural part of life. When death is inevitable, hospice will neither seek to hasten or postpone it.
    • Hospice care establishes pain and symptom control as an appropriate clinical goal.
    • Hospice recognizes death as a spiritual and emotional, as well as a physical, experience.
    • Patients and their families are a unit of care.
    • Bereavement care is critical to supporting family members and friends.
    • Hospice care is normally available, regardless of the ability to pay.
  • Doctors and patients both think that having “The Talk” about end-of-life care is important, but there is a huge gap. Patients and their families think that if they have a serious illness, their doctor will start the talk, while doctors say they believe patients should be the first to bring up the topic. Consequently, these talks may not take place at all, or they occur during a health crisis when it’s very stressful for all.

Karen Peterson, Director of Program Operations, Honoring Choices Minnesota

  • Honoring Choices began because we knew we could do a much better job with advance care planning:
    • 90% of people say talking with their loved ones about end-of-life care is important, but only 27% have done so.
    • 82% of people say it’s important to put their wishes about end-of-life care in writing, but in Minnesota, only 35% have done so.
    • 80% of people say that if they were seriously ill, they would want to talk with their doctors about end-of-life care, but only 7% have had that conversation.
  • Doctors aren’t trained to have advance care planning discussions with patients; they are trained to think of death as failure.
  • Advance care planning:
    • What it is: A process focusing around conversations about health care choices for the future.
    • Why it matters: Any one of us could be in a situation where we are unable to speak for ourselves or make health care choices. Your doctors and loved ones can’t follow your wishes if they don’t know what they are.
    • How to begin: Resources are available online, through many health care providers, and on the website Honoring Choices Minnesota.
  • A Health care directive is a written document everyone should complete after contemplation and discussion.
  • Physician Orders for Non-sustaining Treatment or POLST is an approach to end-of-life planning based on conversations between patients, loved ones, and health care professionals designed to ensure that seriously ill or frail patients can choose the treatments they want or do not want and that their wishes are documented and honored.
  • Advance care planning is a huge gift for families. Otherwise, loved ones already crushed by a sudden crisis may find added to their shoulders the agony of a fateful guess.
  • There are three primary questions to ask during advance care planning:
    • Who would you want to make decisions for you if you couldn’t make them yourself?
    • What would your goals of treatment be if you permanently lost the ability to meaningfully know who you were, who you were with, or where you are?
    • Do you have any spiritual, personal or cultural views that would affect treatment choices.
  • Five things to consider when choosing an agent:
    • Do you trust this person to be able to make tough decisions?
    • Will this person honor your wishes even I they don’t personally agree with them?
    • Is this person emotionally strong enough to make choices at a difficult time?
    • Can this person stand up for you if family members disagree?
    • Is this person likely to be nearby and available in case of emergency?
  • Living well questions:
    • What gives meaning or brings quality to your life right now?
    • What fears or worries do you have about aging or about your health?
    • What helps you get through tough times or stressful situations?
  • It’s important to explore your feelings and preferences, to talk with your loved ones, to write or revisit your healthcare directive, to bring your directive to your health care provider, and to revisit your directive regularly.
  • The “5Ds” of reviewing your directive:
    • You start a new decade
    • There is death that affects you
    • You experience divorce or other change in relationship status
    • You receive a diagnosis
    • Your is a decline in your health status
  • Honoring Choices Minnesota offers templates of healthcare directives in multiple languages, a number of videos, a robust website, and free speakers for employer lunch and learn meetings.
  • People are reluctant to start the conversation, but once they start it is a relief. Identifying issues and questions to work through aid decision-making long before it is needed.

Steve Calvin, M.D., co-chair of the Program in Human Rights and Health, University of Minnesota School of Public Health

  • Six years after legislation to encourage end-of-life planning touched off a furor over “death panels,” the Obama administration issued a final rule authorizing Medicare to pay doctors for consultations with patients on how they would like to be cared for as they are dying. (Read more here.)
  • There has been considerable societal “freaking out” about end-of-life care, because some people have preyed on fears about death panels.
  • There is huge tension among employers about what to do and how to approach the topic with employees.
  • It’s important to understand and communicate that the motivation isn’t around reducing costs; it’s around allowing people to have their choices honored. We need better mechanisms to facilitate discussions.
  • Atual Gawande talks about barriers physicians experience in bringing up the topic, not the least of which is that doctors have a sense that death is a failure. Some physicians simply can’t enable end-of-life conversations because they can’t admit things are not going to get better.