Mediscor PBM

Health Market Inquiry Public Hearings

5 May 2016

Christo Rademan

CEO: Mediscor PBM

Contents

1. Healthcare landscape

2. Company overview

3. Role and benefits of a PBM

4. Mediscor services

5. Our results

6. Our income model

7. Mediscor statement of issues

Contents

1. Healthcare landscape

2. Company overview

3. Role and benefits of a PBM

4. Mediscor services

5. Our results

6. Our income model

7. Mediscor statement of issues

Healthcare landscape & integration

Contents

1. Healthcare landscape

2. Company overview

3. Role and benefits of a PBM

4. Mediscor services

5. Our results

6. Our income model

7. Mediscor statement of issues

Offices

Baobab building located in

Centurion, Pretoria

• Experienced – Established in 1989,

servicing the industry for 27 years

• Independent – largest PBM, with more than

40 clients

• Regulatory Approval –Unconditionally

accredited Managed Care Organisation

• Skills – 120 Staff

• Provider coverage – all pharmacies in SA

• Claim volumes – in excess of 100,000

medicine transactions per day

Mediscor Company Overview

• Medical schemes

• Medical scheme administrators

• Managed care organisations

• Health insurance companies

• Labour union sick funds

• Capitation management

• Namibia

• Botswana

Mediscor Client Profile

Contents

1. Healthcare landscape

2. Company overview

3. Role and benefits of a PBM

4. Mediscor services

5. Our results

6. Our income model

7. Mediscor statement of issues

Role and Benefits of a PBM

•Business Intelligence

•Reporting and monitoring disease burden

•Contact centers

•Provider contracting and network management

•Advisory services

•Maintenance of medicine product database and price files

Supplementary Services

•Establish electronic interfaces

•Claims processing and adjudication

•Management of medicine benefits

•Pre-authorisation

•Generic and therapeutic substitution programmes

•Design and manage formularies and protocols

•Exception management

•Reduce inappropriate medicine use, fraud and abuse

Core Functions

Benefits of a specialist PBM

• Significant IP required:

On every product & condition

Too much for providers to know / remember

• Requires high capability systems with trusted real-time clinical

intelligence

• Discipline with largest claim volumes

• Pharmacy is the service where the member has the most

contact with the scheme

• An independent PBM provides “Checks & Balances”

Contents

1. Healthcare landscape

2. Company overview

3. Role and benefits of a PBM

4. Mediscor services

5. Our results

6. Our income model

7. Mediscor statement of issues

Pharmaceutical Benefit Management

Electronic claims processing

Business intelligence

Client support

Consulting

Medicine Authorisation - ChroniLine®

Mediscor services

Electronic claims processing

• Licenced from OptumRx since 1998

• OptumRx:

Third largest PBM in the USA

Managing 3,000 funders, 34 million lives

Employs 14,000 staff

Owned by United Healthcare, the largest HC organisation

in the world, managing 70mil lives

• Mediscor benefits from all international

development

• NB: We own the local development and have

no dependency

See: www.optumrx.com

• Licenced from Medi-Span since 1998

• Medi-Span:

One of the top 3 clinical publishing organisations in the

world (including Lexicomp and Facts & Comparisons)

Utilised by top PBM’s internationally

Has clinical intelligence in the GPI coding system

Serving clients in 150 countries

Owned by Wolters Kluwer in the Netherlands

Employs 19,000 staff

• Mediscor benefits from all international clinical

knowledge and research

• We own and maintain the local database

Electronic claims processing

See: www.medispan.com

Centralised patient record

Claims processing

* Impact measured and reported on monthly

Business intelligence

• Comprehensive interactive reporting and

data analysis

• Clients view results on-line

• Facilitates “drill down” capabilities to

view e.g. medicine expenditure results,

industry comparisons and profiling

• Enables clients to generate & export own

reports and results

• Measures patient’s financial experience at

pharmacy

• Measures pharmacy compliance with

regard to generic substitution and

negotiated dispensing fees

Two reporting systems running on QlikView:

Client support

• Dedicated Claims contact centre - 7 days a week

• Dedicated Authorisation contact centre - 5 days a week

• Dedicated client support and provider relations team

• Clinical supervision - Pharmaceutical and Therapeutics committee

• Client training

• Provider communication by real-time messages, web, e-mail, fax,

provider-and switch organisations

• SMS patient communication facility

@ SMS

Extensive suite of options e.g.

• Real-time:

Inform patients at time of dispensing on generic

substitution

• Scheduled messages:

Inform patients on progress and outcome of chronic

registration

• Client receives weekly results analysis

SMS patient communication facility

SMS

Benefit related clinical

advice

Benefit design

assistance

What-if studies and

impact analysis

Ad hoc reports

Attending risk-

committee meetings

Pharmaco-economic

& Clinical

expertise

Assistance

with CMS

complaints

Consulting

Formulary

selection

Authorisations

High cost and exceptions

Contact doctor

29 Clients 250,000 patients

Declined

Letters 180 Templates

Non- formulary

Approved

Mem

ber

Pharm

acy

Docto

r

ChroniLine

Contents

1. Healthcare landscape

2. Company overview

3. Role and benefits of a PBM

4. Mediscor services

5. Our results

6. Our income model

7. Mediscor statement of issues

Savings & Cost containment

Our results

Contents

1. Healthcare landscape

2. Company overview

3. Role and benefits of a PBM

4. Mediscor services

5. Our results

6. Our income model

7. Mediscor statement of issues

Our income model

1. Fee per principal member per month

2. Fee per beneficiary per month

3. Fee per transaction

Contents

1. Healthcare landscape

2. Company overview

3. Role and benefits of a PBM

4. Mediscor services

5. Our results

6. Our income model

7. Mediscor statement of issues

1. Bundling of managed care services

• Administrators also offer managed care services

• Group structures facilitate bundling and cross-subsidisation of managed care fees

• Managed care services may be added as layers to administrative costs making it difficult to identify, define and demonstrate the value of managed care

• This obscures the objective evaluation of the contribution made by various managed care services

• Larger administrators could potentially take advantage of this “gap” and influence schemes to contract services on the basis of cost and not necessarily results

• Environment difficult to compete in even when value propositions are better

1. Bundling of managed care services

Scheme A

1. Bundling of managed care services

Recommendations:

• CMS to enforce detailed breakdown of administrative and managed care cost components in negotiations and contracting

• Scheme trustee training to include:

– Make up and role of each managed care component

– Expected outcomes

– Potential conflicts of interest

2. Regulation of Pharmaceutical supply chain

• Pharmaceutical supply is the most regulated supply chain in SA private healthcare industry

• Both prices (SEP and dispensing fees) are determined and regulated by the DoH

• No opportunity for private sector to negotiate SEP based on volume while public sector purchase at tender prices significantly lower than SEP

• Results in industry building various models of vertical integration and using other methods to benefit from volumes

3. CMS oversight

Current position:

• CMS retrospectively review the contracting of Administrators and Managed care organisations.

• Should disagreement arises, this leads to significant time delays and legal costs.

Recommendation:

• CMS regulatory framework should include the advance right to review tender allocations for administration and managed care services

• Including a process which governs the early notification, and inspection of significant appointments

4. Low cost benefit options - LCBOs

• There are 8-10mil people with employment, but without medical cover. This is primarily due to affordability.

• Current PMB regulation is preventing the introduction of LCBOs within the medical schemes environment

• Employers, Insurance and labour funds are offering medical cover at affordable cost

The End