Transcript Document

Tailoring payer marketing
to the evolving US landscape
Breakout session –
2014 Simon-Kucher New York Strategy Forum
Nicholas Keppeler
Alex Gasik
Boston office
One Canal Park
Cambridge, MA 02141, USA
Tel. +1 617 23145 00
[email protected]
[email protected]
www.simon-kucher.com
Goals for this breakout session
1
Discuss how the fragmented US payer landscape results in
the need for tailored marketing by payer type (and plan type)
2
Consider what potential shifts in future payer behavior might mean from a portfolio evaluation
perspective
3
Group discussion of your own perspectives on the evolving US market and need for customized
marketing solutions
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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Agenda
 The increasingly fragmented US payer landscape
 Tailoring product marketing to different payer stakeholders
 Some thoughts on the future of US payers
 Questions & group discussion
2014 LS Strategy Forum_Tailoring US marketing by payer
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The US is one of the most fragmented healthcare systems in the world, with many “payer” types
Conceptual
Public
Medicare
(covers over 70 million
people*)
Center for Medicare
and Medicaid Services
(CMS)
Private
Medicare Advantage and Part D
plans
Managed care
organizations (MCOs)
Medicaid
(state-run; covers over 55
million people*)
Managed Medicaid
Pharmacy benefit
managers (PBMs)
Veteran’s Affairs (VA)
Public plans
administered by private
companies
 4-5 large, national MCOs
 >100 smaller, regional MCOs
Over 9 million people are dual eligible and
covered by both Medicare and Medicaid
 3 large PBMs
 >40 smaller PBMs
 Several PBMs
are owned by an MCO
The VA covers over 8 million
people**
Source: Simon-Kucher & Partners *2013, CMS data **2013, VA data
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Mergers & acquisitions have consolidated payers
to some degree…
Horizontal merger examples
MCOs
Aetna + Coventry Health Care
 Aetna acquired Coventry in 2013
 With 22 million lives, now 3rd largest MCO in the US
Vertical merger example
UnitedHealth Group
+
Optum
After breaking off PBM contract with
Medco, UHC moved PBM business
in-house under the Optum brand in
2011
(Previously Prescription Solutions &
Igenix)
PBMs
Express Scripts + Medco
 ESI acquired Medco in 2012, after having purchased WellPoint’s
NextRx in 2009
 After these acquisitions, Express Scripts is now the largest PBM in the
US
+
Apple Care Medical
Memorial Healthcare
Monarch Healthcare
Optum has expanded its reach by
acquiring the management services of
several independent practice
associations in 2011
Source: Simon-Kucher & Partners; Aetna press release 2013; Express Scripts press release 2012; WellPoint press release 2009; WSJ 7/21/2011; Optum.com; HealthCare Partners press release 2012
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…but even just looking at MCOs and PBMs, there are still many smaller players to account for in
marketing strategy
Distribution of MCO lives
Distribution of PBM lives
MedImpact
Humana Pharmacy Solutions
>100 Others
United
12%
Prime
Therapeutics
17%
~1% each
3%
(owned by BCBS companies)
15%
~2% each
WellPoint
Inc.
OptumRx
(PBM of United)
3%
7%
Cigna
7%
HCSC
(BCBS IL,
NM, OK, TX)
3%
Express
Scripts
34%
10%
12%
Aetna
8%
8%
10%
Kaiser
>40 Others
(PBM of Humana)
22%
Catamaran
CVS Caremark
Source: Simon-Kucher analysis; AIS Directory of Health Plans 2013; www.healthstrategiesgroup.com
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Furthermore, some US healthcare changes are increasing the complexity and fragmentation
Accountable Care Organizations
Health Insurance Exchange plans
 The ACA sped up the trend toward ACOs operating under financial and quality
risk-sharing contracts
 8 million people signed up in 2014 (only ~28% of
the estimated eligible population), with up to 25mm projected for peak enrollment
by 2018
 An estimated 14% of the US population is now served directly by an ACO
 ~500 ACOs nationally and at least one in each state
 Although ACOs currently focus on increasing efficiency of care to cut costs, options
for doing so are likely to decrease, leading to other strategies such as restricting drug
expenses
ACOs bearing financial risk are more of a “payer” than the MCO (or CMS)
 Some regional payers have substantial local share (e.g. Maine Community Health
Options - ME, Health Republic and Fidelis Care - NY)
 In 2015, 25% more companies will offer plans on exchanges (258 total), further
increasing competition
‒ All states will have more than one company offering plans on the marketplace
Exchanges have resulted in greater diversity of plan offerings and increased
importance of smaller plans
Source: Simon-Kucher & Partners; Kaiser Family Foundation; Avalere Health report 2014
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Each US payer has its own set of decision drivers, which requires tailoring of product marketing
Commercial MCOs/PBMs
$
Medicaid / Managed Medicaid
$
Different plans may approach the same cost challenge in very different ways
Medicaid payers (as well as others like Part D LIS) face a different set of
management options due to limited patient OOP
IDNs/Accountable Care Organizations
Health Insurance Exchange plans
ACOs may not all be as sophisticated as IDNs at this point, but
they are moving in that direction and require a total-budget
focus for marketing
$
$
Marketing for an Exchange plan depends on their approach toward the mix
of patient cost sharing / limited networks / restrictions
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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Agenda
 The increasingly fragmented US payer landscape
 Tailoring product marketing to different payer stakeholders
 Some thoughts on the future of US payers
 Questions & group discussion
2014 LS Strategy Forum_Tailoring US marketing by payer
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Even within the “commercial” book of business,
there is often high variability in payer needs
Simon-Kucher usually identifies 4-6 distinct segments of commercial plans for a
therapeutic area (segments may also vary by products within a therapeutic area).
Project example
Commercial Plan Segmentation Example for a Specialty Therapeutic Area
Potential
managers
Fence
sitters
 Believe preferred products
could drive savings
 Undecided on
path forward
 Not eager to
prefer products
Disease state
managers
Contracting
drivers
 Proactively
seeking rebate
opportunities
Sideliners
 Developed specific programs to
manage costs
 Support broad choices of
patients / physicians
 Not actively
managing class
(now or in near future)
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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Commercial segments are not always stable
In this example, a number of factors could shift how segments develop over time.
Project example
Commercial Plan Segmentation Example:
Distribution of Prime Affiliated Members into Plan Segments
Potential
managers
Prime will try to shift these plans
to contracting & preferred
products
Fence
sitters
3 Prime affiliated plans
2 Prime affiliated plans
Disease state
managers
Contracting
drivers
Prime Therapeutics
Sideliners
2 Prime affiliated plans
Manufacturers would accelerate
this shift with contracting
1 Prime affiliated plan
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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Example:
Payer marketing can focus on shifting the market landscape
In this example, manufacturer wanted to delay shift to contracting.
Project example
Commercial Plan Segmentation Example:
Targeted Marketing Efforts to Each Plan Segment
Fence sitters
Contracting
drivers
Potential
managers
Disease state
managers
 Define triggers for if and when to start
contracting
 Highlight cost savings from “disease state
manager” strategies
 Continue education on disease specific
savings strategies
 Actively monitor for competitor reactions
 Emphasize manufacturer’s support programs
to help make those programs successful
 Emphasize manufacturer’s support programs
to help make those programs successful
 Raise awareness of challenges to preferred
product style of management
 Monitor plan behavior for shift to other
segments
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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Across ACOs there are varying degrees of organizational capability to act like how we normally think of a
“payer”
IDC Health Insights, an IT consultancy
explains “Five stages to ACO maturity”
“Ad Hoc”
Piloting small ACO-like programs
“Opportunistic”
Open to more ACO contracts,
no major shift in approach yet
“Repeatable”
Clinical and IT infrastructure altered to
accommodate ACO approach
“Managed”
ACO model becomes key strategic growth area and care is fully
integrated
“Optimized”
“Evaluations of recent ACO programs show quality improvements among all participating
organizations and financial savings for many. This is not a surprise. The Institute of Medicine has
been reporting for more than a decade that a third or more of medical spending could be
eliminated while increasing patient health. The only surprise is how fast the system has moved in
this direction.”
Culture of proactive care coordination,
risk-based contracts majority of business
– David Cutler, PhD, economics professor at Harvard
Source: Simon-Kucher & Partners www.govhealthit.com/news/idcs-5-stages-aco-maturity. www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2014-Fact-sheets-items/2014-09-16.html
2014 LS Strategy Forum_Tailoring US marketing by payer
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As ACOs further advance, they may end up behaving more like Integrated Delivery Networks such as Kaiser &
Geisinger
Conceptual
Implementation of ACO/IDN policies for…
…site of service (hospital
vs. clinic)
…overall generic Rx
utilization
…areas of focus for quality
metrics (diabetes, CV)
…majority of
individual products
$
Most ACOs
Most ACOs have targeted larger cost-containment efforts, not yet focusing on specific
products:
 For example, Catholic Medical Partners received $14mm from MSSP, with cost
savings primarily via reduction in unnecessary hospitalization, ER visits, and
better coordination of care
 However, some ACOs like New West Physicians (Denver, CO) are further
along and their Medical Director helps create guidelines for certain diseases
(e.g., diabetes), which physicians are incentivized to follow via peer rankings
and/or cash bonuses
Most IDNs
Kaiser Permanente (8.7mm lives) directly manages utilization to achieve cost savings
through:
 Pharmacy control —purchasing power and operating their own pharmacies and
warehouses
 Standardized formulary — formulary based on clinical evidence and
recommendations from pharmacists who regularly add/remove drugs. Generally,
has some preferred drugs and other similar drugs in class are not covered
 High generic utilization — generic Rx rate across all scripts is 85% and can be
as high as 98% in cases when a generic is available and appropriate
Source: Simon-Kucher & Partners; www.bizjournals.com/buffalo/news/2014/09/18/catholic-medical-partners-to-receive-14m-in.html?page=all businesshealth.kaiserpermanente.org/manage-costs/pharmacy/
2014 LS Strategy Forum_Tailoring US marketing by payer
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As ACOs shift to act more like IDNs, marketing messages must take into account their global budget
consideration
and unique payer contract clauses
Value story shifts:
Rationale:
Objective should be to drive product
adoption system-wide
Treatments are likely to become more standardized and it will be
critical to be part of any ACO guidelines/recommendations
Competition should encompass all
treatments for the disease
With global budgets, drugs compete not just with drugs but also with
procedures, etc.
Trial endpoints that match ACO quality
metrics will be seen as especially valuable
Clinical value directly linked to quality metrics will help ACOs see that
product value will be realized under their payment system
Health economic story should take a broad
view…
Even ACOs without hospital affiliations are responsible for all patient
costs associated with hospitalizations, diagnostics, and more
…but should be careful
of relying on “outlier” patients
ACOs are expected (in some cases required) to get supplemental
insurance for high-cost patients (e.g. $100k/yr) ; HE arguments that
rely heavily on a small number of catastrophic cost patients will not be
very compelling
$
IDNs/ACOs
Marketing considerations:
 Health economic arguments are highly
valuable to ACOs/IDNs that look at
global budgets
 Reinforce medical cost as key driver of
spend vs. pharmacy or device cost
 Tailor services and marketing to each
individual ACO, as their capabilities
and focus can vary widely
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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Several payer types include patients with minimal
out-of-pocket exposure
Examples
Fee-for-service Medicaid
 State-administered Medicaid plans
Low-income subsidy (LIS)
benchmark plans
 Part D plans with low premiums
(e.g. $30/mo) set for each state
 Patient only responsible for
small copay, and premium is fully
covered
 State sets formulary primarily
based on mandatory and
supplemental rebates
 Patients have minimal or no
copay burden
Managed Medicaid
 Medicaid plans administered by
an MCO under can provide
services not covered by fee-forservice Medicaid
 Patients have minimal or no
copay burden
Medicare and Medicaid dualeligibles
 Cover patients who are eligible
for Medicare and full or special
need Medicaid plans
 Medicare pays first, and then
Medicaid covers the rest
Source: Simon-Kucher & Partners. www.kff.org, CMS
2014 LS Strategy Forum_Tailoring US marketing by payer
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Project example: Price-response curves can look quite different for payer segments without patient OOP
exposure
Project example
Patient share: Medicaid vs. Part D
(price/month)
40%
Medicaid
Payer price thresholds for restrictions can
cause steep drops in Medicaid share curves
30%
20%
Medicare Part D
Part D has a gradual decline due to
patient coinsurance exposure
10%
$500
$600
$700
State & Managed Medicaid
Marketing considerations:
Patient share
0%
$
$800
$900
$1,000
$1,100
$1,200
 Key for Medicaid plans is to get on
the formulary, and avoid harsh
restrictions
 Understand how each Managed
Medicaid account looks at net price
(not all states are transparent with
rebates they receive!)
 Look closely at Part D lives to see if
there are LIS/duals that might act like
“Medicaid”
$1,300
Price / month
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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Patients in Health Insurance Exchange plans will be more cost sensitive due to their plan choice
and income level
Exchange Enrollment by metal levels
Enrollees who qualify for tax credit
(HHS reported 3/11/2014)
(income 100-400% of federal poverty limit, and
not eligible for other insurance)
Platinum
5%
9%
Bronze
20%
Silver
65%
Percent of Enrolled Patients
Gold
100%
75%
50%
15%
Don’t qualify
25%
0%
The most popular metal level plans, by far, have
been
middle-level options: “Silver”
85%
Qualify for advance premium
tax credit (APTC), w/ or w/o
cost-sharing reduction (CSR)
These types of enrollees are less likely to have
been insured previously due to income and/or
ineligibility
Source: Simon-Kucher & Partners; HHS Health Insurance Marketplace March 11 2014 report
2014 LS Strategy Forum_Tailoring US marketing by payer
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In addition to greater patient cost sharing, marketing for these plans must consider other cost
containment tools from MCOs
1
Greater patient
cost-sharing
2
Rx price sensitivity
= Patients
Limited provider networks
Rx price sensitivity
= ACOs
 Patient out of pocket (including copays and
deductibles) tend to be higher for HIX than for
employer-sponsored plans
 Copay offset for patients is allowed…at least for
now
 48% of networks in exchange plans nationwide
utilize limited networks
 For Silver plans, premiums were 17% less for
plans with limited network choice
$
Health Insurance Exchange
Plans
Marketing considerations:
 More than any other segment, this
group has a wide range of pricesensitive stakeholders to target
 Patient marketing is critical
 Specialty drugs may face hurdles here
that aren’t present in employersponsored plans
3
More restrictive formularies
Rx price sensitivity
= MCO payers
 Still an evolving picture to monitor
$
 Independent analysis has shown 70% of HIX plans
have higher use of PAs and step therapies
 Greater restrictions seen in Oncology, HIV, even
orphan drugs
Source: Simon-Kucher & Partners; avalere.com; online.wsj.com; benefitspro.com
2014 LS Strategy Forum_Tailoring US marketing by payer
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Agenda
 The increasingly fragmented US payer landscape
 Tailoring product marketing to different payer stakeholders
 Some thoughts on the future of US payers
 Questions & group discussion
2014 LS Strategy Forum_Tailoring US marketing by payer
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One possible way to look at the fragmented payer market:
Budget focus + Access controls
Conceptual
Current payer mindset by segment
(budget focus & direct access controls):
High
(total cost focus)
Patient/Physician marketing critical
 Low control plans use patient OOP to drive cost-effective
adoption
$
IDNs
Level of budget integration
ACOs
$
$
Low
(pharmacy vs. medical
spend)
Value-added services & total budget
 Emphasize savings (or minimal impact) on global budget
 Less sophisticated ACOs value tools to help them improve
decisions
Commercial
Exchange
plans
$
$
PBMs
Low
control
Improvement vs. direct competitors
 Justify why product deserves premium vs. competitors
Improvement vs. indirect and direct competitors
 Focus on both global budget as well as direct competitive set
(these plans will implement product-specific protocols)
Medicaid
High
control
Level of access restrictions
Source: Simon-Kucher & Partners
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In the future:
ACOs and Medicaid could eventually converge in an area occupied primarily by IDNs today
Conceptual
Future payer mindset by segment
(budget focus & direct access controls):
High
(total cost focus)
As ACOs increase their capabilities and exhaust other cost savings, it’s
likely that they will implement product-specific policies like IDNs do today
Level of budget integration
ACOs
$
Medicaid is moving increasingly toward Managed Medicaid (MCOs) and
even testing Medicaid ACOs, both of which are likely to increase overall
budget awareness (in addition to tight Medicaid budgets overall)
Medicaid
$
Low
(pharmacy vs. medical
spend)
Low
control
High
control
Level of access restrictions
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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In the future:
Commercial plans already operate in a number of segments
Conceptual
Future payer mindset by segment
(budget focus & direct access controls):
High
(total cost focus)
Level of budget integration
There are a wide variety of
commercial plans…
$
Commercial
Low
(pharmacy vs. medical
spend)
Low
control
High
control
Level of access restrictions
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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In the future:
Commercial plans already operate in a number of segments
Conceptual
Future payer mindset by segment
(budget focus & direct access controls):
High
(total cost focus)
Level of budget integration
$
… driven by different segments of
payers who may be moving in
various directions
$
$
$
Commercial
$
Low
(pharmacy vs. medical
spend)
Low
control
High
control
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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Project example: Payer mix and setting your pricing strategy
Project example
Modeled patient share: Total market
(price/month)
40%
Patient share
New payer mix assumption increased
share at higher prices by as much as
+33%
35%

Research showed that share was heavily influenced by increasing patient OOP
(due to coinsurance)

Initial payer mix:
30%
Large % of lives in traditional Part D and Commercial plans
25%

20%
Large % of lives in Medicaid and
Medicare LIS, who are not exposed to coinsurance
15%
10%
New payer mix assumption
Old payer mix assumption
5%
0%
New payer mix:
(client bought patient-level indication data)
$500
$600
$700
$800
$900
$1,000
$1,100
Price/month
Key lesson:
Assumptions about payer mix / behavior can have significant implications for your forecast assumptions!
Source: Simon-Kucher & Partners
2014 LS Strategy Forum_Tailoring US marketing by payer
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Agenda
 The increasingly fragmented US payer landscape
 Tailoring product marketing to different payer stakeholders
 Some thoughts on the future of US payers
 Questions & group discussion
2014 LS Strategy Forum_Tailoring US marketing by payer
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