Oxford Changes Tier 3 Prescription Drug Rules for NY Small Groups

As drug costs continue to rise, carriers are creating innovative ways for members to maintain affordable access to a variety of medications. Oxfords Select Designated Pharmacy Program, for example, focuses on providing members with access to lower cost alternatives to a select number of Tier 3 (high-cost) medications. This program will be implemented for Oxford fully insured New York small groups (2-50 lives) on January 1, 2011. The program does not apply to Healthy NY plans, and is optional for self-funded groups. 

About the program  Members of the program are required to choose one of three cost-saving options to continue to receive medications at the in-network benefit level:              

  • Option 1: Switch to a lower-cost medication and save
  • Option 2: Fill the prescription through the Mail-Order Pharmacy and save
  • Option 3: Do both to save 

Members are allowed two “grace” fills of their current medication at the retail pharmacy before they must select a new option. If a member chooses to continue filling a Tier 3 medication at the local retail pharmacy after the second grace fill, the member will pay the full cost of the medication, as benefits are not payable under the plan.

 Medications included in the program The targeted medications and products listed below, all in Tier 3, represent 2% of all retail prescriptions. The majority of these have multiple, lower-cost alternatives.


Lyrica, Symbicort, Avodart, Uroxatral, Lexapro, Atacand, Atacand HCT, Avapro, Avalide, Asacol, Asacol HD, Axert, Frova, Maxalt, Maxalt MLT, Zomig, Zomig ZMT, Toviaz and Detrol.

All employers will receive a letter from Oxford about the Select Designated Pharmacy Program as well as all members that are currently taking these medications. Members will also receive an outgoing call from Oxford, and point -of-sale messaging at the retail pharamacy to help them understand their options for savings.

IBM Plans to Cover Its Employees’ Deductibles, Copays for Primary Care Services

As reported by the American Academy of Family Physicians, IBM plans to eliminate copays and deductibles for primary care physician services for most of its employees in January, a move that could prompt other large companies and employers to eliminate financial barriers for primary care services as well, according to analysts interviewed by AAFP News Now.

“IBM is doing this because we think it is the right thing to do,” said Paul Grundy, M.D., M.P.H., IBM’s global director of health care transformation. “We have really listened to our patients. They want a meaningful relationship with their doctor. They want to have a healing relationship, and they want us to support them in having better access and more convenience around their care.”

IBM is one of the nation’s largest employers, employing about 115,000 people who reside in nearly every part of the country. The new ‘first dollar’ for primary care program essentially will make primary care services free for 80 percent of the 328,888 employees and dependents who are enrolled in IBM’s self-insured plans. It does not apply to the 20 percent of employees and their dependents who are enrolled in the company’s HMO.

Grundy expects that the elimination of copays and deductibles for primary care services will “create much better value for our employees and for IBM.” The company spent $79 million on a series of wellness programs between 2005 and 2007, which helped the company save $191 million, said Grundy.

“We feel if we can get much more robust prevention, if we can focus on an early diagnosis, it will save on expenses like hospitalizations, (sub) specialist care and emergency room care,” said Grundy. In turn, this should lead to increased productivity among the company’s employees — perhaps the greatest benefit for IBM, according to Grundy.

BREAKING NEWS: AP Story on Increased Costs Caused by Senate Finance Proposal

The Associated Press is out with another story on the new PricewaterhouseCoopers’ report highlighting the increased costs for individuals and families as a result of proposals from the Senate Finance Committee.  Here are some key excerpts:

  • “…a new accounting firm study that projects the legislation would add $1,700 a year to the cost of family coverage in 2013, when most of the major provisions in the bill would be in effect.  Premiums for a single person would go up by $600 more than would be the case without the legislation, the PriceWaterhouseCoopers analysis concluded.”
  • The study projected that in 2019, family premiums could be $4,000 higher and individual premiums could be $1,500 higher.”
  • It concluded that a combination of factors in the bill — and decisions by lawmakers as they amended it — would raise costs.”
  • “Other factors leading to higher costs include a new tax on high-cost health insurance plans, cuts in Medicare payments to hospitals and doctors, and a series of new taxes on insurers and other health care industries, the report said.”
  • ‘Health reform could have a significant impact on the cost of private health insurance coverage,’ it concluded.”
  • the industry stopped short of signaling all-out opposition.  ‘We will continue to work with policymakers in support of workable bipartisan reform,’ Ignagni said in her memo.”

Full AP Article

NYS Health Coverage Expansion Through Age 29

Effective September 1, 2009  the “Age 29” law, permits eligible young adults through the age of 29 to continue or obtain coverage through a parent’s group policy. Insurers will notify employees of this benefit. Employees or their eligible dependents may then elect the benefit and pay the premium, which cannot be more than 100% of the single premium rate. This benefit, referred to here as the “young adult option,” is separate and distinct from the “make-available” requirement. It is called the young adult option benefit because it permits eligible young adults to continue their coverage through a parent’s health insurance coverage once they reach the maximum age of dependency under the policy. Young adults may also elect this coverage when they newly meet the eligibility criteria, such as if they lose eligibility for group health insurance coverage.

“Age 29”  Frequently asked questions

Three New Federal Healthcare Mandates Will Impact Healthcare Costs

American’s with Disabilities Act (ADA) Amendments

    • Effective October 3, 2009 for all large and small groups.
    • Hearing Aids:
      • Coverage of hearing aids will be standard.
      • Dollar limits mirror Durable Medical Equipment (DME) and Prosthetics and vary by state and plan
      • Limited to one device as follows:
        • Connecticut every 12 months
        • New Jersey every 24 months
        • New York every 3 years 

 Mental Health/Substance Use Parity

    • Effective October 3, 2009 for large (51+ lives) groups.
    • The new law does not allow more restrictive financial requirements for mental health and substance use disorder coverage than for any other medical expense.
    • It specifically states that deductibles, copayments, coinsurance, and out-of-pocket expenses must be in parity.
    • A plan may still have an aggregate lifetime limit and an aggregate annual limit that is applied to both medical and mental health/substance use disorder benefits.
    • The law also prohibits treatment limits on mental health and substance use disorder benefits that are more restrictive than those of medical/surgical benefits. The law specifically requires the following limitations to be in parity:
      • Limits on frequency of treatment
      • Limits on number of visits
      • Limits on number of days of coverage
      • Other similar limits on the scope or duration of coverage.

 Michelle’s Law

    • Effective October 9, 2009 for individual plans, large, and small groups.
    • Prevents dependent children covered under a group health plan from losing coverage if they are forced to take a medically necessary leave of absence from school

The Heroes Earnings Assistance and Relief Tax Act of 2008


The Heroes Earning Assistance and Relief Tax Act of 2008 (“Heart Act”) created a new provision under code section 125 that allows, but does not require, employers who offer a health FSA, to permit “qualified reservist distributions” (QRDs) from health FSAs.  This is an optional benefit, and employers are not required to permit such distributions. The HEART Act was signed into law on June 17, 2008 and the IRS has issued notice 2008-82 to assist employers in their compliance efforts.

Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008

On October 3, 2008, as part if the economic bail out bill, President Bush signed into law the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 – Amends the Employee Retirement Income Security Act of 1974 (ERISA), the Public Health Service Act, and the Internal Revenue Code to require a group health plan that provides both medical and surgical benefits and mental health or substance use disorder benefits to ensure that: (1) the financial requirements, such as deductibles and copayments, applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits covered by the plan; (2) there are no separate cost sharing requirements that are applicable only with respect to mental health or substance use disorder benefits; (3) the treatment limitations applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan; and (4) there are no separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits.

Requires the criteria for medical necessity determinations and the reason for any denial of reimbursement or payment for services made under the plan with respect to mental health or substance use disorder benefits to be made available by the plan administrator.

Requires the plan to provide out-of network coverage for mental health or substance use disorder benefits if the plan provides coverage for medical or surgical benefits provided by out-of network providers.

Exempts from the requirements of this Act a group health plan if the application of this Act results in an increase for the plan year of the actual total costs of coverage with respect to medical and surgical benefits and mental health and substance use disorder benefits by an amount that exceeds 2% for the first plan year and 1% for each subsequent plan year. Requires determinations as to increases in actual costs under a plan to be made and certified by a qualified and licensed actuary.

Summary of Mental Health Parity and Addiction Equity Act of 2008


Wellness Programs in Health Coverage in the Group Market

The attached document below contains final rules governing the provisions prohibiting discrimination based on a health factor for group health plans and issuers of health insurance coverage offered in connection with a group health plan.


These final regulations apply for plan years beginning on or after July 1, 2007.

 Final Regs 



New Law Provides Parity for Mental Health, Addiction Services

Business with 51 or more employees that offers coverage for mental health services is required to provide the same level of deductibles, copayments, out-of-pocket expenses, co-insurance, covered hospital stays and covered outpatient visits for mental health services and addiction services as it does for physical ailments, said Hannah Vanderbush, deputy press secretary for Sen. Pete Domenici, R-N.M., a chief sponsor of the legislation.


The bottom line spells increased costs to all employers with 51 or more employees.


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Hewitt Data Reveals Little Change in U.S. Health Care Cost Increases for 2009

This Hewitt report indicates that the average health plan increases across the U.S will average between 6%-7% for 2009 with several exceptions for metropolitan areas that experienced increases as high 11%.  


Jim Winkler, North American practice leader of Hewitt’s Health Management Consulting business states “The “Employers continue to diligently manage health care costs through a combination of approaches, including continued cost shifting, tougher negotiations with health plans, and expanded health and wellness programs with incentives to encourage behavior change.


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