Escaping the Specialty Drug Tunnel with Cross-Benefit Strategies

September 25, 2023 - As the healthcare landscape evolves, health plans manage an increasingly intricate web of claims and costs across the healthcare continuum. Managing specialty drugs — projected to exceed $665 billion in spending by the end of 2024 — constitutes a substantial portion of the challenge, explained Emily Markoe, Senior Director of the Product and Strategy Team at Optum.

Markoe began by highlighting common hurdles health plans face when managing specialty drugs and introduced an innovative approach that could reshape how specialty drug management is executed.

The Tunnel View of Specialty Drug Management

Markoe emphasized that, as health plans grapple with the complexities of managing specialty drugs and the broader spectrum of healthcare services, the expertise and resources required to effectively manage specialty drugs often present barriers.

There have been longstanding challenges in balancing provider preferences with plan design and cost-management strategies, revealed Markoe. This challenge is further exacerbated by the fact that savings levers are not universally available across medical and pharmacy benefits, and the opportunity to optimize their effectiveness varies across each benefit.

Markoe then introduced the concept of "tunnel view" specialty drug management, where health plans separately focus on cost savings strategies on the pharmacy or medical benefits. While efficient to some extent, Markoe mentioned that this approach fails to fully capture savings opportunities arising from integrating both benefits.

“Today, around 60% of specialty drug spending falls under the pharmacy benefit, while the remaining 40% falls under the medical benefit,” said Markoe.

This division exists primarily because of how drugs are administered: self-administered drugs typically fall under the pharmacy benefit, whereas those requiring clinical administration fall under the medical benefit.

Markoe argued that this division is somewhat artificial and has led to leakage in spending for health plans. Managing specialty drugs across two benefits, each with its own rules and strategies, can lead to missed savings opportunities.

Cross-Benefit Integration for Specialty Management: Optum Specialty Fusion

To bridge the gap between pharmacy and medical benefits, Optum created Specialty Fusion, a pioneering prior authorization and utilization management solution. Specialty Fusion streamlines the prior authorization process through a centralized point of entry and analyzes every possible combination of therapy, site of care, and benefit in real-time at the point of care. Markoe noted that this integration allows providers to quickly make informed treatment decisions that maximize clinical effectiveness and cost savings.

"Specialty Fusion operates in real-time, conducting behind-the-scenes scans of cost levers within each benefit,” Markoe clarified. “It is powered by a decision engine that analyzes both benefits comprehensively — considering all available savings levers and applying them in every conceivable permutation to determine the best treatment choice for each patient before the provider submits their authorization request."

By examining various permutations across both benefits, Specialty Fusion recommends the top treatment options that yield the most affordable yet effective care for each member, provider, and plan design.

Specialty Fusion's innovative approach of analyzing treatment permutations to identify cost-effective and clinically effective options offers significant time-saving benefits for patients and providers. Swiftly pinpointing optimal treatment choices streamlines decision-making, reducing the uncertainty and delays often associated with the prior authorization process. This efficiency extends to providers' administrative tasks, as the system can navigate complex benefit divisions, saving valuable time otherwise spent on paperwork and insurance interactions.

Specialty Fusion's data-driven recommendations also ensure patients and providers can focus on treatment options that deliver the best results, both clinically and financially. This accelerates treatment initiation and improves overall patient experiences by alleviating the stress associated with coverage and affordability of healthcare decisions. Ultimately, the long-term benefits include improved cost management and the potential for continual refinement of recommendations based on outcomes and cost data, contributing to more efficient and sustainable healthcare systems, highlighted Markoe.

Cost Savings of a Cross-Benefit Approach

Although specialty drugs treat various conditions, those used for cancer, autoimmune conditions, and multiple sclerosis constitute more than half of all specialty drug spending. They often involve unique administration methods, like injections or infusions, and require close monitoring for side effects and effectiveness.

The coverage for these medications differs depending on their administration method. When individuals self-administer these drugs at home, they are covered by prescription drug insurance, whereas medications administered in a clinic setting are typically categorized under medical benefits. Specialty drug costs can be substantial, often surpassing $1,000 monthly, and annual expenses tend to increase by 15–20%. Additionally, the clinic type and location can drastically impact medication costs.

With Specialty Fusion, costs can be accurately estimated by analyzing historical claim data and applying intricate methodologies.

“By examining historical patterns and ensuring all variables align, this tool can estimate the cost based on past occurrences of exact scenarios over the last five years,” Markoe said. This example highlights the tool's ability to identify substantial cost savings without compromising patient care.

The Future of Specialty Drug Management

Looking ahead, Markoe envisions a healthcare landscape where specialty drug management is more integrated and sophisticated. Specialty Fusion positions itself as a solution ahead of its time, which will continue to gain value as the industry embraces cross-benefit strategies. While the market is already witnessing some integration attempts, the goal is a consolidated, singular, specialty drug benefit approach that optimizes formulary management, rebate value, and provider reimbursement for improved cost control. 

Optum Specialty Fusion presents a paradigm shift in specialty drug management. By embracing cross-benefit strategies and breaking down unnecessary divisions, health plans can drive substantial cost savings while providing patients with effective and affordable treatments. As the healthcare industry adapts to new challenges, innovative solutions like Specialty Fusion are poised to redefine how specialty drugs are managed and bring about a more streamlined and cost-effective future.

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