On Finance: MCOs improve bottom lines with drug discount programs

Health plans that offer a drug discount card as part of their marketing strategy can gain a competitive advantage. It’s not a panacea, but MCOs that offer their customers a value-added, no-cost drug discount card have a real opportunity to improve customer loyalty and retention, thereby boosting their bottom lines.

As prescription drug prices have soared by double digits over the past few years, health plans have paid out an ever-growing amount for prescription drugs-$66.5 billion in 2001 with the federal government projecting a rise to $100 billion in 2004. Health plans have been forced to raise their premiums to address this skyrocketing cost. Many employers have responded by reducing or even eliminating their prescription drug coverage and by shifting to consumer-directed healthcare, which usually requires higher out-of-pocket costs for medications.

Naturally, employees are unhappy about having to pay more for their prescription drugs and their dissatisfaction frequently translates into decreased productivity, higher absenteeism and increased employee turnover, which can hurt a company’s corporate culture and balance sheet. Replacing an employee is very expensive, typically running from 30% to 150% of a person’s salary.

Many health plans have not recognized the marketing benefits of a value-added prescription drug discount program. They make the mistake of viewing the program as a pharmacy benefit, not a tool for acquiring and retaining health plan members. Health plans that include a drug discount card as part of their customer loyalty strategy have discovered that it helps them enhance customer retention at little or no cost.

How can offering a discount drug card help MCOs retain customers? Today’s employers are fickle. As they seek ways to control their rising health insurance costs, the Kaiser Family Foundation/HRET survey found that more than half of the firms that offer coverage shopped for a better option last year, with one in six changing insurance carriers. Basically, this means that employers increasingly view health benefits as a cost-driven commodity.

Offering a discount drug program is a win/win situation. With some discount drug cards offering average savings of more than 20 percent, employers that provide the card demonstrate that they appreciate their employees and are trying to provide some tangible relief from the high cost of prescription drugs. MCOs benefit by offering a creative solution that positions them as a partner, rather than a commodity. After all, employers don’t relish inconveniencing their employees and dealing with the additional work that switching health plans requires.  

Of course, individuals without prescription drug coverage benefit greatly from the savings provided by a drug discount card, but so do many people with insurance. Using the discount card to purchase a three-month supply of a drug with a high co-pay is sometimes cheaper and more convenient than paying three separate co-pays. A discount card with an open formulary can be used to purchase medications not covered under a benefits program with a restrictive formulary. A “household” discount card can be used by all family members.

When choosing a drug discount program partner, MCOs should consider whether the company:

• Has a proven track record working with health plans;
• Offers significant discounts and provides detailed reports on utilization and cost savings;
• Uses an open formulary that ensures cardholders will receive discounts on all FDA-approved brand-name and generic drugs;
• Has established a large, accessible, nationwide pharmacy network that includes chain and independent pharmacies;
• Offers an easy-to-use program that doesn’t require any claim forms or paperwork and provides immediate point-of-sale savings;
• Provides free enrollment;
• Consistently delivers exceptional customer care with toll-free telephone access to highly trained, responsive customer service representatives; and
• Has the staff, flexibility and innovative systems and technology to develop creative, customized marketing solutions that meet an MCO’s needs.

A discount drug program is not designed to replace an MCO’s insured prescription drug coverage. However, it is a useful, popular product offering that can supplement existing coverage or fill-in coverage gaps. At a time when many working Americans and their families are struggling to afford prescription drugs, an MCO that offers its customers the right discount drug program not only significantly reduces out-of-pocket costs for plan members, but also positions the MCO as a valued partner that cares about its customers.

Lori Bryant, President and CEO of ScriptSave, a leading provider of prescription drug discount programs, which are offered through plan sponsors that include managed care organizations and other health plans, third party administrators, employers and counties/municipalities. Lori can be reached at 800.347.5985