The passage of the Patient Protection and Affordable Care Act in 2010 (ACA) promised fundamental changes in the American health care environment. In turn, many in the chain pharmacy community were intrigued, if not excited, about the potential growth in prescription utilization and expansion of medication therapy management that the ACA promised to bring. Yet, in the four years since enactment of the law and after the first nine months of the exchange plans providing coverage, it is worth asking where pharmacy really stands and whether the expectations created by the enactment of the law have been met.

Stated differently, now that enrollment is over and the program is under way, how will chain store pharmacy be impacted?

This article will analyze the program rollout, how access to prescription drugs may be impacted, and what we can expect in the coming months and years.

ACA’s promise for chain drug pharmacy can be viewed through four lenses: (i) the expansion of the insured population and their corresponding utilization of a pharmacy benefit, (ii) coverage of prescription medications as an exchange plan “essential benefit,” (iii) the expansion of MTM programs and (iv) pharmacist participation in the new accountable care organizations (ACOs).

Viewing the ACA through each of these lenses, it appears that the law’s promise for chain pharmacy has not yet been fully realized.

Impact of Coverage Expansion

Over the past year the country has been spellbound watching the administration’s rollout of the ACA exchange plans. The April 2014 announcement that over 8 million Americans had enrolled in the new insurance plans (and another seven million enrolled in state Medicaid programs even though less than half the states expanded their Medicaid eligibility criteria) underscores the opportunity for a true benefit for chain pharmacy.
In fact, given that pharmacy is likely the most utilized benefit of any health insurance plan, some of the promise is being realized.

Although the data is just coming in, there are some surprising statistics as to how exchange participants are using their pharmacy benefit. An April 2014 report by Express Scripts noted that exchange participants were purchasing 47% more specialty medications (particularly heart disease/hypertension, cholesterol and diabetes products) than participants in commercial plans and that exchange participants had a higher utilization of pain, anti­seizure and antidepression medications. Express Scripts also found that 60% of exchange participants had not had coverage in the prior year for the medications.

Although the data are preliminary, it appears these newly covered lives are using their pharmacy benefit. As exchange coverage stabilizes in the coming years, we can expect greater pharmacy utilization and the additional value to chain store pharmacies that this will bring.

Prescription drugs as an essential benefit: Another anticipated benefit to both pharmaceutical manufacturers and pharmacy was the inclusion of prescription drugs as one of the 10 essential benefits that every exchange plan must provide. While at first this clear congressional mandate appeared to promise robust prescription coverage, the Department of Health and Human Services (HHS) required insurers to provide only “one drug per therapeutic class.”

As a result, health insurers limited the number of brand medications that were covered in the exchanges, placed branded drugs on higher tiers with significantly higher co-pays for beneficiaries and employed other utilization controls such as physician prior-authorization requirements. In fact, even for drugs that have Part D “protected class” status (immunosuppressant for organ transplant rejection, anti­depressants, antipsychotics, anticonvulsants, antiretrovirals for HIV/AIDS and antineoplastics for cancers), HHS still only required that one drug per class be provided, because drugs in the therapeutic class were not interchangeable.

The result is bad for pharmacy and for patients. Avalere, a health care consultancy, has studied exchange plan prescription drug coverage and found that many medications are simply not covered on plan formularies. Thus, when enrollees actually try to use their coverage, they may be disappointed to learn that their medications are not covered or are only covered at a high tier with an expensive co-pay. In turn, the enrollee experience at the pharmacy counter may have a long-term negative impact on re-enrollment. While it is too early to tell how this will play out, chain pharmacies should monitor this issue as short-term gains in pharmacy utilization may decline in the coming years.

Expansion of MTM

Perhaps the greatest promise for chain drug stores in the ACA came in sections 3503 and 10328 of the law, in which MTM programs were to be expanded. The origins of the MTM initiative reach back to the 2003 creation of the Part D program in the Medicare Modernization Act, in which the prescription drug programs were required to create MTM programs for certain high risk beneficiaries. By 2010, however, it was widely recognized that MTM programs were not being used in Part D.

Responding to the need, Congress created two MTM mandates in the ACA: under section 3503 of the act a grant program to be run by the Agency for Healthcare Research and Quality to establish the value of MTM programs, and a substantive Part D requirement under ACA section 10328 that, starting in 2012, each Part D beneficiary with two or more chronic conditions receive an annual medication review by a licensed pharmacist, followed by quarterly follow-ups.

Unfortunately, to date, the MTM promise remains largely unfulfilled. Congress never funded the section 3503 grant program; thus, no federal grants have been issued to develop model MTM programs. Similarly, the data indicates that only 11% of Part D enrollees actually receive any form of MTM service, which is less than half of the roughly 25% of beneficiaries currently eligible in the Part D program for such services. (In contrast, when an insurer is responsible for all health care coverage, rather than just drug coverage, the MTM participation rate was three times higher.)

ACO Opportunity

Perhaps the most intriguing, if least defined, opportunities for chain drug stores is participation in the newly created ACOs. ACOs are, generally described, a network of health care providers that work together to provide beneficiary care and share in the responsibility for, quality of and costs of that care.

For example, a primary care physician network can affiliate with a group of local hospitals, intermediate and long-term-care facilities, and other specialty practices in a defined geographic area to provide coordinated and integrated care for ACO participants. Intuitively, pharmacy, perhaps the most often used source of health care, should be a natural part of any ACO model. While, to date, that has not proven to be the case, there is an effort to integrate pharmacy into the ACO model and expand the benefits of ACOs into the pharmacy ­community.

There are two types of ACOs today: the so-called pioneer ACOs (through the CMS Innovation Center), which was a group of programs initially launched and approved by CMS, and the CMS Shared Savings Program. Generally, the ACOs share in health care savings generated by an integrated care model, but they can be penalized for exceeding benchmark cost expectations for their populations. Although the government has recently touted over $300 million of savings generated by these programs, the ACO model has not yet proven to be an overwhelming success — with 13 of the 32 pioneer ACOs dropping out of the program since its inception in the past three years.

More important for chain pharmacy is the ability of ACOs to integrate pharmacy into their care models. There are several barriers to such coordination, including the lack of ACO experience in pharmacy, the contrast in reimbursement models between ACO and pharmacy payment models, and the absence of clarity in the law and regulation as to the role pharmacy can play in an ACO setting.

That being said, on September 30, Patrick Conway, chair of the CMS Innovation Center, announced that CMS will soon be requesting public input on how Part D plans and Medicaid pharmacy could merge with ACOs. In sum, this is an important and emerging area for chain drug stores — watch this column for more to come on this issue.

Conclusion

The ACA remains, in part, a promise yet to be fulfilled. Coverage expansion, both through the new exchange plans and in those states that have expanded their Medicaid eligibility, holds promise of greater utilization, with the risk of a more competitive reimbursement environment. Yet, HHS has not required access to the full range of prescription drugs available today and restrictive plan formularies may disappoint many new enrollees.

On the care expansion side, MTM benefits have yet to fulfill their potential and reach the needed beneficiaries. ACO expansion, however, creates an intriguing opportunity for chain drug stores to expand care and potentially share in overall health cost savings.
As the nation grows more comfortable with the ACA, we may see more of this law’s promise realized for Americans generally, and for pharmacy specifically. In summary, stay tuned.

DAVID FARBER is a partner in the Food and Drug Administration, life sciences and health care practice and MICHAEL PAULHUS is a partner in the health care practice at international law firm King & Spalding.