When Are Prescription Copay Waivers a Good Idea?

I recently received a question as to which drug class or population/disease state, if ever, would I recommend a zero dollar member cost share.   This is a great question, and there actually are some situations in which I would recommend use of a zero dollar copay.

First, let me briefly review why I do not recommend $0 copays as a standard part of the benefit design, even for classes such as diabetes and cardiovascular disease.

• The primary reason is that most patients do not stop taking medication because of cost, particularly in a commercially insured population (see figure for common reasons for non-adherence).  Accordingly, copays are being waived without any possibility of benefit for the vast majority of patients.  This known fact is evidenced in the small improvements that are seen in compliance after implementing a copay waiver program—averaging 2-4 percentage points and representing 1-2 weeks of additional therapy.  Targeting copay waivers to patients at high risk for adverse events and who truly have cost as a financial barrier would be an ideal approach, but it raises HR and equity issues that are not easily resolved.

• The second consideration to keep in mind is the potential for fraud.  I have heard from frustrated employers who implemented zero dollar copays for chronic conditions only to find that employees began sharing medications with family and friends with the same condition.  Quantity limits can help control this potential problem partially but not entirely.  I have not studied this phenomenon personally so I cannot speak to the magnitude of the problem.

I would however, recommend use of a zero dollar copay program under certain conditions.  First, zero dollar generic copays are a great tool for promoting use of lower cost, therapeutic alternatives for patients currently using brand medications. I would consider them for therapy classes for which you have step therapy in place as the two programs are complementary.  Step therapy will promote generic use for new users, and the $0 generic copay program is a carrot strategy for promoting generics with current brand users.  The $0 generic copay helps to grab the member’s attention and provides an extra little incentive for making the switch.  I would not make the copay waiver indefinite, however.  Six months of free generics is sufficient.  Based on my experience and rigorous evaluations, these programs have a solid ROI; and the patient saves money too of course.

Second, a population for which I MIGHT consider a $0 generic copay is hypertension and cholesterol, and other cardiovascular medications in seniors. The rate of adverse cardiovascular events (absent treatment) is much higher in the senior than in the commercial population; so IF price elasticity is at least as high as we see with commercial members, there is the potential to materially reduce the rate of adverse cardiovascular events and to achieve a net savings from reduced hospitalizations.  The key to this decision is determining the actual price elasticity of demand within your senior population.  As little contemporary public data is available on price elasticity within the senior population, individual vendors will have to assess the elasticity within their own data.  Once identified, a simple analytic tool, like the VBID calculator, can be used to determine the potential reduction in hospitalizations and medical spend that can be achieved.  Of course, implementing copay waivers in the Medicare Part D program is a greater administrative challenge than a commercial plan or retiree plan, which would be a relevant consideration.

A third population for which I would PILOT a $0 generic program is patients at HIGH risk for adverse cardiovascular events but who have NOT initiated pharmacotherapy. The classic example is the patient with a recent myocardial infarction who has not initiated a statin and/or beta-blocker.  While cost is not likely to be the reason for non-initiation for most patients, it might be a useful short-term incentive, when combined with the right intervention, for encouraging use.  I would say pilot first because it simply may not be effective and there is the risk that a zero price could actually deter use if it serves as a quality indicator for non-initiating patients.  Another growing challenge is that many patients will appear as non-users because of the $4 generic programs which do not always result in a claim being submitted.

For those of you looking for more information on copay waivers, see the recent Fairman editorial in JMCP and a paper Steve Melnick and I published last year on the potential financial savings from copay waivers.

Two Things You Must Know About Employee Wellness Incentive Programs

A new survey, by Fidelity Investments and the National Business Group on Health, reported that the use of employee incentives to promote health and wellness continues to rise.  The Fidelity survey covered 147 companies with between 1,000 and 100,000 employees. The average employee incentive rose 65% to $430 last year from $260 in 2009.

While incentives can be used in all sorts of way, one of the most common uses is for promoting completion of a health-risk assessment (HRA), the idea being that employers can then identify patients who are at highest risk for poor clinical outcomes and target these patients for enrollment in targeted wellness and disease management programs. 

When I first joined the care management industry and began to study evaluate wellness programs, I had two fundamental questions: 1) what is the validity of the self-report HRAs that are so common in the industry and 2) how well do incentives improve participation and  longer-term behavior change?  Here is what we found:

1. Using self-reported health-risk assessments to identify high-risk patients will miss 90% of your high-risk population.

We examined more than a dozen employers who had simultaneously incentivized completion of a self-report HRA and biometric screening..  Participation was between 70 and 80% across employers, providing an ideal scenario for assessing the validity of the self-reported HRA.  Examining more than 5,000 patients, we found that the percent of members failing to report or under-reporting their risks at baseline ranged from about 20% to more than 60%, depending on the particular measure, as shown below.  An example of under-reporting would be when a member reports that their total cholesterol is 180 md/dl (low risk), but the biometric test finds that the actual score is 250 (high risk).

Percent of Members Failing to Report or Under-Reporting Their Risk

 

For individual patients, the underreporting was not limited to just one risk factor.  Nearly 50% of respondents failed to report or underreported 3 or more risk factors.  The reasons for underreporting are multiple, likely reflecting a lack of prior testing, lack of memory, or confusion about different biometric scores.  Of course, some of the gap also reflects an unwillingness to share health-related data with their employer due to confidentiality concerns, embarrassment, questions about the program’s value, etc.  Regardless of the reason, the impact of the poor quality data on an employer’s ability to identify high-risk patients was profound– Across these employers, the biometric scores identified 18 percent of the responders as being high risk where the self-report HRA identified only 1 percent of responders as high-risk.  In other words, the self-report missed more than 90% of the high-risk patients.

Improving the quality/validity of responses to self-reported HRAs is no small task given the complex nature of the problem.  However, the alternative of incentivizing biometric scores, while increasingly popular, raises fundamental questions about the employer’s role in promoting wellness. 

A second note of caution relates to the effectiveness of incentives.

                2. Incentives can increase enrollment in a wellness program, but their ability to impact longer-term behavior change and ultimately, outcomes has yet to be seen.

Incentives can be quite effective in promoting completion of an HRA, enrollment in an online wellness program, or other programs that represent a low “cost” to the patient if they enroll.  However, incentives for participation have yet to be shown to lead to longer-term behavior change in employer-based wellness programs.  Perhaps more concerning, there is a notable lack of research which demonstrates that incentives paid for health improvement are effective.  This is not particularly surprising as we know the non-adherence to healthy behaviors (e.g., medication compliance) is a multi-factorial problem in which financials play only a small, if any role, for the majority of employees.

As evidenced by this recent survey, employers are spending a growing amount of money on employee incentives, perhaps with an over-confidence in the effectiveness of these programs given the research to date.  Furthermore, as many companies will inevitably pass on the cost of these incentives to workers in the form of higher premiums, the importance of prudent purchasing becomes even more critical.