Price Gouging Catch Leads to Drastic Decrease in Drug Prices Through TPA
Case Study
Challenge
Group with a low ($75k) ISL absorbed a stop loss claim in the first month of the plan year. The member was receiving IVIG treatment at a hospital on a monthly basis for their condition.
The allowed amount was roughly $110k per month based on the hospital’s contract with the plan network, which called for a discount of billed charges by 50%. The contract had no language as to the basis of the billed charge, which was just above $220k per monthly treatment.
Solution
The data team identified the high cost drug being billed by the provider through the medical plan and benchmarked the cost against Medicare reimbursement rates and the average wholesale price of the drug. It was painfully clear that the hospital was gouging the price of this drug through their carrier contract and that the drug could be easily and safely procured through other avenues. Unfortunately, the carrier was not willing to address the reimbursement rate directly with the provider.
AP was able to move the plan to an independent TPA who was able to lease the same network as was already in place, thus minimizing disruption or impacts to the masses. Plan language was immediately modified to exclude the CPT/HCPCs codes for the offending medication as a covered service.
The TPA was notified to deny pre-authorization and steer the medication procurement through the specialty pharmacy with the appropriate NDC number instead. Specialty pharmacy would mail the medication to the doctor so the member would be able to receive the same medication and treatment from the same provider, with no disruption to care or service.
Results
Net impact was to mitigate $110k per month in claims to $17k per month in claims. Net Savings were ~$1.1M annually, not including savings of stop loss premium and the mitigation of a significant laser.
