1199SEIU Benefit Funds
Cost Containment Program
The 1199SEIU Benefit Funds are not-for-profit,
multi-employer Taft-Hartley funds that are self-insured and self-administered.
The Fundsí approach to health care coverage for the nationís largest health
care workers union is different from that of many other payers. As health care
costs continue to rise, many plans have shifted costs to participants. 1199SEIU
provides 420,000 working and retired members and their dependents with
access to quality, comprehensive care with no out-of-pocket costs. The Fundsí
experience shows that first-dollar coverage helps keep members healthy and
health care costs low.
Over the years, the Funds instituted a mandatory
generics program requiring members to use generic equivalents or pay the full
difference between the cost of the generic and brand-name drug, and a Preferred
Drug List (PDL) allowing members to choose from preferred medications in 15
drug classes with no out-of-pocket cost. Members choosing to use non-preferred
drugs pay a differential capped at $16. In 2004, the Funds were mandated
through collective bargaining agreements to aggressively pursue new strategies
to contain rising health care costs. The pharmacy program offered the best
opportunity to achieve these savings.
The Benefit Funds sought to implement innovative
pharmacy cost containment programs to continue to:
The 1199SEIU Benefit Fundsí 420,000 active and
retired members and their dependents are the target audience.
Mandatory Mail-order for Long-term Medications
Members can receive 90-day prescriptions for maintenance
medications at no cost through the
mail or at the Rite Aid pharmacy chain. If they still choose to fill 30-day
maintenance prescriptions at other retail pharmacies, they must pay out of
Expanded Preferred Drug List (PDL)
The original PDL of 15 drug classes was expanded
to include any drug class where there was a cost-saving opportunity from greater
discounts, higher rebates or member cost differentials. By selecting just one
or a few brand-name medications in each class, the Funds were able to leverage
deep discounts with drug manufacturers, limiting costs while still providing members
with the most clinically effective medications on the market. The PDL more than
doubled in size to 40 drug classes or about 55% of total prescriptions. When
members choose preferred drugs in these classes, they have no out-of-pocket
Eliminating Differential Cap
The $16 differential cap on non-preferred
medications was eliminated, bringing the preferred program in line with the
mandatory generics program. Now, members must use either the range of deeply
discounted generic or preferred drugs and pay nothing, or they must pay the full cost of the difference between the brand-name
or non-preferred medication out of their own pockets. The average
differential is now $68.The vast majority of members choose the "freeĒ option.
Sensitivity to Member Issues
Buy-in from members
is key to the success of the Fundsí prescription initiatives. Sensitivity to
member issues in both plan design and member communication is a priority. For instance, when instituting mandatory mail
order for maintenance medications, the Funds anticipated members would be
concerned about the security of their prescription drugs, the convenience of
using the pharmacy, and the impact of mail order on the jobs of 1199SEIU
pharmacists. So the Benefit Funds negotiated a retail pharmacy alternative,
giving members the option to order and pick up their three-month supply at Rite
Aid, an 1199SEIU participating pharmacy chain, instead of ordering from the
mail-service pharmacy. As a result, members were more willing to make the
change and understood that the program was developed with their needs in mind.
The strategy increased compliance by making the most cost-effective choice the
most convenient choice as well.
Engaging Members in Protecting Their Benefits
Through campaign communications, targeted
newsletters, trainings with union delegates, and polls and surveys, The Funds
have educated members about the richness of their benefits within the national
context and the importance of making changes in order to preserve them.
When members follow the Fundsí plan design, they
spend nothing for medications they need. When they do not, they incur costs. The
pharmacy cost containment programs have lowered the Fundís prescription drug
cost by almost 10% per year. The initiatives have saved the Funds more than $200M
since 2005 and have kept its prescription trend to a -1% in 2008.