SUMMER 2007
IN THIS ISSUE

    MESSAGE FROM THE CEO
    UP CLOSE
    MANAGED CARE LIABILITY
    NEWS YOU CAN USE

 
UpClose
Ken Dowell,
Evergreen Rx Practice Leader




PBM Contracts: Traditional vs Transparent

Negotiating the best PBM contract in today’s environment can be difficult if there is not a clear understanding of the various pricing scenarios being offered in today’s marketplace.

Which one is best for your plan depends on many factors. In fact, for some plan sponsors, the traditional model may be the better solution to manage pharmacy spend, rather than the new models promising transparency and full disclosure.

Traditionally, PBMs have been constantly under pressure to provide plans low administrative fees, deep guaranteed rebates and low pharmacy network rates, but these may not always be the measuring stick in determining what program works best for an individual plan sponsor. Today, most PBMs offer a range of pricing options, from the traditional to the transparent and the transparent with a pass through offering full disclosure.

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A Message from the CEO
by Charles Crispin, President & CEO, Evergreen Re

Unprecedented Growth in Catastrophic Claims
May Leave Health Plans Exposed


By 2010, the severity and frequency of catastrophic healthcare claims are expected to grow to unprecedented levels, according to a study recently commissioned by Evergreen Re.

The frequency of catastrophic claims, defined as a member incurring medical claims of $1 million or more in a year, increased ten-fold from the year 2000 to 2005, from less than 1/10th of one member per 100,000 health plan members in 2000 to 1.1 per 100,000 members in 2005. While this increased incidence is staggering, there is no reason to believe the increased frequency will not continue. Using an assumption of 7% annual trend, 2.4 per 100,000 members would have a claim exceeding $1,000,000 by 2010 (twice as many as in 2005). Assuming 11% level trend, the frequency would jump to 3.6 per 100,000 members.

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