Post on 22-Apr-2018
30th EditionYour Online Resource for Chronic Disease Information™www.managedcaredigest.com
In this VolumeGrowth Trend Analyses for HMOs, PPOs, and ExchangesEffects of Specialty Drugs on the Rx Landscape
MANAGED CAREDIGEST SERIES®
SINCE 1987
HMO-PPO Digest | 2016
5,084,9614,167,528
3,872,4303,235,2051,741,087
1,992,40 02,901,0 067,368,458 8,846,3286,713,789
13.6%4.6%
14.3%22.8%
5.6%9.5%7.8%
10.0 %3.1%6.4%
HMO-PPO DIGEST 2016 SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™
Leading the Health Care Discussion
The nationally renowned Sanofi Managed Care Digest Series®—now in its 30th year—is part of our ongoing
commitment to provide you with key data on the evolution of U.S. health care. Our goal is to help you
remain on the leading edge of health care developments in America, and we hope that this information
enables you to identify trends that may assist your organization.
Sanofi is pleased to provide you with your complimentary copy of this 30th edition of the HMO-PPO
Digest, the third report in the three-part Managed Care Digest Series® for 2016. This Digest provides
long-term trended data on and analyses of health maintenance organizations (HMOs) and preferred
provider organizations (PPOs); comprehensive overviews of the medical and pharmacy benefits offered
by managed care organizations; important metrics for prescription drugs dispensed by retail pharmacies
nationwide across 12 therapeutic classes (including specialty drugs); and key insights into the reforms
brought about through the Affordable Care Act, including health insurance exchanges and the effects
of expanding government enrollment on the managed care landscape.
Your Sanofi account executive or sales representative would be happy to provide you with additional
information on our products and services. Thank you for your commitment to the quality of health care
in the United States. We look forward to working with you in this important endeavor.
Sincerely,
Garrett Ingram U.S. Country Head of Market Access sanofi-aventis U.S. LLC A SANOFI COMPANY
Managed Care digest series® 2016
Commissioned, sponsored, and underwritten by Sanofi, Bridgewater, NJ
Developed and produced by Forte Information Resources LLC, Denver, CO
Data provided by IMS Health, Parsippany, NJ
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INTRODUCTION .................................................................................................3
EXECUTIVE SUMMARY .......................................................................................4
HMOBackgrounder ..............................................................................................................................5
Demographics
HMO Enrollment Rises; Number of HMOs Is Virtually Flat ........................................................... 6
Shares of HMOs Offering Triple-Option, POS Plans Decrease .................................................. 7
Nearly Half of the Top 20 HMO Chains Grow Enrollment by 10%+ .......................................... 8
HMOs Enroll More Than Half of Hawaii’s Population ................................................................. 9
Medicaid Membership in HMOs Expands Nationwide ........................................................... 10
Integrated Health Care System-Affiliated Share of HMOs Inches Up ................................... 11
HMO-Physician Affiliation Rates Climb by More Than 10% ..................................................... 12
Utilization
Hospital Days per 1,000 HMO Members Rise for All Payers ..................................................... 13
MD Encounter Ratio Is Below Average for Staff-Model Plans ................................................ 14
Medicare Hospital-Days Ratio for Kansas Again Tops Nation’s ............................................. 15
Financials
Individual, Family HMO Premiums Are Highest in North Dakota ............................................ 16
HMO Use of Fee-for-Service to Reimburse Physicians Decreases .......................................... 17
Share of Corporate-Owned HMOs With Physician Withholds Grows .................................... 18
PMPY Drug Expenditures Climb at HMOs ................................................................................. 19
Pharmacy
Most Staff-Model HMO Members Have Tier-One Plans .......................................................... 20
Growth Is Minimal for HMO Outpatient Pharmacy Premiums ................................................ 21
Number of Medicare Rxs Filled PMPY Edges Down in 2015 .................................................... 22
Use of DUR, Other Tools to Steer Prescribing Rises Modestly at HMOs .................................. 23
Share of HMOs With In-House Pharmacies Declines Fractionally .......................................... 24
Use of Proprietary Formularies Wanes Among Largest HMOs ................................................ 25
Portion of HMO Prescriptions Filled With Generics Rises Steadily ........................................... 26
Share of HMOs Covering Smoking-Cessation Rxs Falls Again ................................................ 27
Overall Use of Step-Therapy by HMOs Drops Off Slightly ........................................................ 28
Health Insurance Exchanges
Health Insurance Exchanges Enroll 40% of Eligible Individuals ............................................... 29
Exchange Enrollment Grows for All Ages in 2016 ..................................................................... 30
PPOBackgrounder ............................................................................................................................31
Demographics
Insurance Company-Owned PPOs Expand Share of Enrollment .......................................... 32
PPO Plan Count Decreases for Fifth Straight Year ................................................................... 33
Majority of PPO Chains See Moderate Growth in Total Enrollment ....................................... 34
PPOs Expand Most Provider Contract Counts in 2015 ............................................................ 35
Growth in PPO PCP Contracts Lags That of Specialists ........................................................... 36
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1SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016
CONTENTS, VOL. 30
Utilization
Hospital-Owned PPOs Report Highest Medical/Surgical ALOS ............................................. 37
Hospital Days per 1,000 PPO Members Increase, but Slowly.................................................. 38
Physician Encounters PMPY Drop at All but Largest PPOs ...................................................... 39
Financials
PPOs That Do Not Use Fee Caps Are a Small Minority ............................................................ 40
Use of Managed Pharmacy Programs Inches Up Among PPOs ........................................... 41
Pharmacy
Full-Service PPOs Are Less Apt to Use PBM Drug Utilization Review ....................................... 42
PMPY Prescriptions Are High for PPOs With <20,000 Members ............................................... 43
Majority of PPOs Contract Directly With a Pharmacy ............................................................. 44
RETAIL PHARMACYBackgrounder ............................................................................................................................45
Demographics
Hypertension Prescriptions Number Close to 629 Million ........................................................ 46
Patients Aged 45–64 Fill Largest Portions of Most Profiled Rxs ................................................ 47
Hypertension Drug Lisinopril Tops 2016 Prescription Count ..................................................... 48
Third-Party Rx Counts Rise for 50% of Profiled Products ........................................................... 49
Most Profiled Specialty Rxs Grow Volume From 2015 to 2016 ................................................ 50
Utilization
Generic Shares Continue to Climb for Most Rx Classes .......................................................... 51
Prescription Ratios Exceed 1,000 in Four Drug Classes ............................................................ 52
Financials
Part D CV-Related Drug Spending Nears Third-Party Levels .................................................. 53
Majority of Brand-Name Rx Spending Is by Third-Parties ........................................................ 54
CV Drugs Make Up Majority of Top 7 PPPY Spending Classes ............................................... 55
OOP Costs per Rx Decline for 10 of 12 Classes ........................................................................ 56
Hepatitis C Retail Rx Spending Tops Other Specialty Drugs ................................................... 57
LOOKING FORWARD.......................................................................................58
RESEARCH METHODOLOGY ...........................................................................60
KEY TERMS ........................................................................................................62
REFERENCES .....................................................................................................64
Comparative information at regional, state, and local levels
is available by contacting your Sanofi account executive.
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2 HMO-PPO DIGEST 2016 SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™
CONTENTS, VOL. 30 (cont.)
The HMO section reviews trended data on
demographic measures for HMOs, including
enrollment, penetration, chains and networks,
and providers affiliated with HMOs. The
unprecedented growth in government
membership in HMOs is featured, as are its
potential effects on those health plans. Snapshots
of health insurance exchange data are included,
profiling the insured population’s enrollment and
demographics, as well as how exchanges are
impacting payers. Medical utilization metrics
are tracked for HMOs nationwide and by state.
Reimbursement methods for physicians and drug
expenditures provide insight into HMO financial
structures. The pharmacy benefit is profiled in
detail, as are prescription utilization for HMO
members, pharmacy benefit designs, formulary
tiers, and step-therapy implementation.
The PPO section includes analysis of important
demographic metrics, including enrollment, chains
and networks, plan types, and provider contracts.
Key utilization benchmarks, such as average
length of stay, physician visits, and hospital days,
provide an overview of how PPOs manage
care for their member population. Finally, PPO
financial measures—focusing on reimbursement
and fees—are shown, and the pharmacy benefit
offered by these managed care organizations
is tracked by analyzing managed pharmacy
programs, services provided by pharmacy benefit
managers, and prescription costs and utilization.
The retail pharmacy section features a
comprehensive overview of the national
performance of prescription drugs dispensed
by retail pharmacies for third-party, Medicare,
Medicaid, and cash payers. This section includes
demographic measures for a dozen common
therapeutic drug classes, including the numbers
of prescriptions dispensed, payer breakouts, and
commonly dispensed medications. Measures
such as brand versus generic drug shares and
prescription ratios per 1,000 patients lend insight
into retail pharmacy utilization, and financial
metrics for this section include retail dollars,
prescription spending, and out-of-pocket costs. In
addition, 14 specialty drugs across six therapeutic
classes are separated out and profiled.
Backgrounders at the outset of each section
of the HMO-PPO Digest profile the health
care component under examination, while key
takeaways on most pages provide important
perspective on individual focus topics. Yet superior
data continue to set apart the HMO-PPO Digest
and the Managed Care Digest Series®. Long-term
trends of key industry measures are featured
throughout this Digest and give historical context
to the topic at hand. Data analyzing the significant
impact of chronic disease—patient-level claims
data and diagnosis-related hospital discharge
data—likewise appear in this Digest and highlight
how the members of managed care organizations
are being treated for chronic conditions. Key
industry trends and chronic disease metrics are
often profiled at the regional, state, or MSA level
to bring focused attention to how health care
is managed and operated in various markets.
Sanofi is pleased to present volume 30 of the HMO-PPO Digest, the third report in the Sanofi
Managed Care Digest Series® for 2016. Since 1987, the Managed Care Digest Series® has focused
on helping health care organizations develop strategies, control costs, and assess value. Now in its
30th year, the Managed Care Digest Series® continues to be an essential source for the most trusted
health care data, including detailed diagnosis-related, chronic disease-specific patient claims,
and hospital discharges. Through this wide array of data-driven
offerings, the Managed Care Digest Series® lends perspective and
understanding to the complex landscape of modern health care.
Commercial insurers manage the health care of most working people
in the U.S., and the HMO-PPO Digest presents a comprehensive
overview of their most prominent models—health maintenance
organizations (HMOs), preferred provider organizations (PPOs), and
point-of-service (POS) plans—as well as their use of pharmacy benefit
managers (PBMs). This Digest also includes extensive data on, and
analysis of, retail pharmacy metrics by therapeutic class (including
specialty drugs) for third-party, Medicare, and Medicaid payers. The
three main sections (HMOs, PPOs, and retail pharmacy) are divided into four distinct
subsections of data elements: demographics, utilization, financials, and pharmacy.
3SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016
INTR
OD
UC
TION
INTRODUCTION
PPO• Total enrollment in the nation’s PPOs
expanded again in 2015, to 161.5 million, a
3.2% growth from 156.4 million the prior year.
• Between 2008 and 2015, the number of primary
care providers contracted per PPO rose
56.3% (to 5,618 from 3,595), compared with
92.4% for specialists (to 13,397 from 6,962).
• In 2015, average length of stay per medical/
surgical admission was highest at hospital-
owned PPOs (4.1 days), and lowest at employer/
employer coalition-owned PPOs (3.2).
• Virtually all (96.7%) of the PPOs operating across
the nation reimbursed physicians using a fee
cap in 2015, although this share was lower
among plans with 100,000 or more members.
• The share of PPOs with a managed pharmacy
program inched up to 60.8% in 2015 from 60.7%
in 2014. Among insurance company- and
hospital alliance-owned PPOs, this portion fell.
• In 2015, the share of PPOs with direct pharmacy
contracts was highest once again, by
pharmacy type, for mail order plans (98.0%).
Retail Pharmacy• Total spending on medicine in the U.S. reached
$310 billion in 2015, an increase of 8.5% from
the previous year. Prescription drug expenses
at retail showed a similar rise, to $297.7 billion
in 2015, up 12.2% from $265.3 billion in 2014.
• From midyear 2015 to midyear 2016, third
parties dispensed the most prescriptions,
by payer, followed by Medicare Part D,
across all 12 profiled drug classes; cash
prescriptions outnumbered Medicaid
for all but three profiled drug classes.
• Patients aged 45 to 64 were dispensed the
highest portion of prescriptions, by age group,
across 11 profiled drug classes from midyear
2015 to midyear 2016. Females filled more than
half of prescriptions dispensed in eight of 10
profiled drug categories during this time.
• From midyear 2014 to midyear 2016, third
parties increased prescription counts for 17
of 36 of the most commonly prescribed drug
products. Among those products profiled in the
selected categories, 27 were generic.
HMO• In 2015, enrollment in HMOs reached
89.3 million, a 5.2% increase from 2014
(84.8 million). HMO market penetration
likewise rose during this period, to
27.9% in 2015 from 26.7% in 2014.
• From 2014 (36.3 million) to 2015 (43.5 million),
the number of Medicaid HMO members
nationally climbed 19.7%. Such members
accounted for the largest share (48.7%) of
HMO enrollment, by payer type, in 2015.
• The overall average number of affiliated
physicians per HMO climbed 11.5%
from 2014 (11,599) to 2015 (12,937).
• Between 2014 and 2015, the average
numbers of hospital days per 1,000 HMO
members grew 6.5% for non-Medicare
members and 2.1% for Medicare members.
• Average monthly premiums for families
increased at HMOs nationwide, to $1,379.89
in 2015 from $1,312.44 in 2014. Such
premiums for individuals were relatively
stable, edging up only $0.54 per month.
• The share of HMOs overall using fee-for-
service physician reimbursement declined
by nearly one percentage point, to 57.5%
in 2015 from 58.4% the year prior.
• The share of HMO member prescriptions
filled with generic drugs rose steadily
by 2.4 percentage points, to 77.6%
in 2015 from 75.2% in 2012.
• An estimated 40% of the eligible U.S. population
(11.1 million individuals) purchased or renewed
their health care coverage via health insurance
exchanges, as of March 2016.
4 HMO-PPO DIGEST 2016 SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™
EX
EC
UTI
VE
SU
MM
AR
Y
EXECUTIVE SUMMARY
HMOBackgrounder
SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016 5
From 1999 to 2009, total enrollment in the nation’s
operating HMOs declined almost every year.1
Membership in these organizations fell by roughly
28% during that time, to 75.3 million from 104.6 million.
Total market penetration, meanwhile, fell to just
24.5% from 37.9%. But in 2010—the same year the
Affordable Care Act was passed—HMO enrollment
began an upward climb that continued almost
uninterrupted each year through 2015. Indeed,
in the three years from 2013 (80.1 million) to 2015
(89.3 million), HMO enrollment grew by 11.5%.
Much of this increase can be attributed directly
to government beneficiaries: from 2010 to 2015,
Medicare membership in HMOs expanded by
45.7%, to 10.8 million; Medicaid membership more
than doubled during these years, to 43.5 million,
with much of the growth occurring after Medicaid
expansion took effect on January 1, 2014.2 As of
2015, Medicaid recipients accounted for the largest
share of HMO enrollment, by payer type, at 48.7%.
Yet continued growth is not guaranteed. It remains to
be seen if HMOs will be able to manage health care
utilization for Medicaid members in the long term,
and reversals in government policies—such as those
that sometimes follow a presidential election—could
negatively impact HMO membership expansion.
HMO Enrollment and Market Penetration, 2003–20153
LONG-TERM TREND
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201560,000
70,000
80,000
90,000
100,000
20%
25%
30%
35%
40%
HM
O E
nro
llme
nt (
000)
HMO Enrollment Market Penetration
HM
O Pe
netra
tion
82,500
78,58176,721 76,330
78,281 77,11875,348
77,18779,479 80,545 80,056
84,836
89,257
28.4%26.8%
25.9% 25.5% 26.0%25.4%
24.5% 25.0% 25.5% 25.7% 25.3%26.7%
27.9%
Data source: IMS Health © 2016
1 See the HMO-PPO Digest from 2001, and the HMO-PPO Digest 2010–2011.2 Medicaid.gov (2016). Eligibility. Retrieved from https://www.medicaid.gov/affordablecareact/provisions/eligibility.html3 Enrollment data include HMO members in Puerto Rico and other U.S. territories.
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015400
500
600
700
800
60,000
70,000
80,000
90,000
100,000
Nu
mb
er o
f HM
Os Enro
llme
nt (000)
Number of Operating HMOs Enrollment (000)
542
504481
465 456 448 443 440 437 441 442 430 438 431 434
91,077
86,455
82,500
78,58176,721 76,330
78,281 77,11875,348
77,18779,479 80,545 80,056
84,836
89,257
HMO GROWTH TRENDS, 2001–20151,2
LONG-TERM TREND
0
80
160
240
320
Nu
mb
er o
f HM
Os
Medicare
2013 2014 2015
Medicaid Medicare Medicaid Medicare Medicaid
For-ProfitNot-for-Profit
276
216
292
216
287
227
187
89
126
90
193
99
124
92
186
101
131
96
NUMBER OF HMOs ACCEPTING MEDICARE OR MEDICAID ENROLLEES, BY OWNERSHIP TYPE, 2013–2015
1 Operating plans only. HMOs not licensed by state agencies are excluded from all totals.2 Enrollment data include HMO members in Puerto Rico and other U.S. territories.3 Centers for Medicare and Medicaid Services. (2016). National Health Expenditure Projections 2015–2025: Forecast Summary. Retrieved from
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2015.pdf
HM
O
HMO-PPO DIGEST 2016 SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™6
DEMOGRAPHICS
HMO Enrollment Rises; Number of HMOs Is Virtually Flat
• Total HMO enrollment increased 5.2% between
2014 (84.8 million) and 2015 (89.3 million),
while the total number of operating HMOs
rose a fractional 0.7% (to 434 from 431).
• From 2001 (91.1 million) to 2009 (75.3 million),
HMO enrollment declined 17.3%, only to
expand by 18.5% through 2015. It grew most
rapidly between 2013 and 2015 (11.5%).
Key Takeaway
The spike in Medicaid HMO enrollment from 2013 to 2015 coincided, in large part, with the
expansion of Medicaid in some states under the Affordable Care Act (ACA). Although National
Health Expenditure projections call for a slowdown in ACA-related coverage expansions beginning
in 2016,3 it could also be that Medicaid recipients will continue to drive overall HMO enrollment,
especially if additional states decide to expand their Medicaid programs. New HMOs may open to
serve this burgeoning need, further increasing the Medicaid and overall HMO plan counts.
Data source: IMS Health © 2016
Number of HMOs Accepting Medicare Enrollees Falls From 2014, but Still Exceeds 2013 Count
• After expanding 5.8%, to 292 in 2014 from 276
in 2013, the number of HMOs that accepted
Medicare enrollees contracted 1.7%, to 287 in
2015. The decline was among for-profit HMOs.
• The number of HMOs accepting Medicaid
recipients was flat from 2013 to 2014 (216), and
then rose 5.1% in 2015 (227). The growth occurred
among both for-profit and not-for-profit HMOs.
HMOs OFFERING TRIPLE-OPTION OR POINT-OF-SERVICE PLANS, 2014–2015% of HMOs Offering Triple-Option Plans
% of HMOs Offering Point-of-Service Plans POS Enrollment
MODEL TYPE 2014 2015 2014 2015 2014 2015
IPA 60.0% 59.1% 49.5% 46.6% 3,318,565 2,488,235
Network 45.7 44.1 35.0 33.8 1,849,025 1,520,301
Group 60.5 61.1 65.8 63.9 697,471 687,004
Staff 10.0 10.0 40.0 50.0 101,695 65,947
TAX STATUSNot-for-Profit 48.3% 45.1% 39.5% 37.9% 1,791,909 1,699,751
For-Profit 55.4 54.8 47.3 44.8 4,174,847 3,061,736
OVERALL AVERAGE 52.9% 51.4% 44.5% 42.4% 5,966,756 4,761,487
1 Kaiser Family Foundation. (2014). Employer Health Benefits 2014 Annual Survey: Market Shares of Health Plans. Retrieved from http://files.kff.org/attachment/ehbs-2014-section-five-market-shares-of-health-plans-section-five-market-shares-of-health-plans
Point-of-service plans may be separately licensed HMOs by a state department of insurance. These plans allow HMO members to use the plan’s provider network or to go outside the network to obtain services. This type of hybrid plan generally assesses a higher fee to the HMO member for going outside the provider network.Triple-option plans include a choice of HMO, PPO, or indemnity plan.
ENROLLMENT IN AND PERCENTAGE OF HMOs OFFERING POINT-OF-SERVICE PLANS, 2005–2015
12.912.5
14.2 14.513.1
11.8
9.7
7.87.1
6.04.8
61.8%60.7%
60.1%
56.1%
51.0%52.8%
51.4%
46.7%45.4%
44.5%42.4%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
4
8
12
16
40%
46%
52%
58%
64%
POS
Enro
llme
nt (
in M
illio
ns)
Perc
en
tag
e o
f HM
Os
Point-of-Service Enrollment Percentage Offering Point-of-Service Plans
DEMOGRAPHICSH
MO
SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016 7
Key Takeaway
Membership growth in high-deductible health plans (HDHPs) corresponds with declines in enrollment
share for other types of commercial plans. In 2006, HDHPs accounted for 4% of covered workers,
whereas POS and HMO plans enrolled 13% and 20%, respectively.1 By 2014, 20% of covered workers
were in an HDHP, 8% were in POS plans, and 13% were in HMOs. This shift may have occurred because
HDHPs can be less costly than POS or HMO plans for consumers, insurers, and employers alike.
Data source: IMS Health © 2016
LONG-TERM TREND
Slight Enrollment Fluctuations Fail to Forestall 10-Year Decline in POS Market
• In the 11 years from 2005 to 2015, the
percentage of HMOs offering POS plans
declined each year except in 2010, when
it inched up to 52.8% from 51.0% in 2009.
• From 2006 (12.5 million) to 2008 (14.5 million),
the number of enrollees in HMO POS plans
rose. Since then, it contracted each year,
and by a total of 66.9% from 2008 to 2015.
Shares of HMOs Offering Triple-Option, POS Plans Decrease
• The percentage of HMOs offering triple-option
plans shrank, to 51.4% in 2015 from 52.9% in 2014,
and the share offering point-of-service (POS)
plans also decreased, to 42.4% from 44.5%.
• Meanwhile, total POS enrollment fell by 20.2%, to
4.8 million from just under 6.0 million. In both years,
POS enrollment was highest, by model type,
among independent practice associations.
TOP 20 HMO CHAINS AND NETWORKS, BY NUMBER OF PLANS, 2012 –20151
2012 2013 2014 2015 Enrollment Change (%)
COMPANY NAME HMOs Enrollment HMOs Enrollment HMOs Enrollment HMOs Enrollment 2014–2015
BlueCross BlueShield Association2 59 14,673,912 69 16,812,683 66 18,573,647 69 19,030,864 2.5%
UnitedHealthcare3 48 7,685,865 48 7,410,302 63 7,873,146 63 8,570,473 8.9
Aetna Inc. 46 4,846,351 45 4,407,236 49 4,662,163 49 4,742,294 1.7
Humana Inc.4 24 2,289,880 23 1,947,528 24 2,989,211 24 3,437,605 15.0
Cigna Health Care 23 1,407,432 31 1,601,677 22 1,080,724 22 1,203,415 11.4
Centene Corporation 13 1,879,245 14 2,034,230 17 2,961,719 21 6,737,576 127.5
WellCare Health Plans, Inc. 15 1,949,444 14 1,903,094 14 2,654,588 14 2,718,457 2.4
Molina Healthcare Inc. 9 1,702,571 10 2,031,595 12 2,478,876 12 3,385,225 36.6
AmeriHeath Caritas — — — — — — 10 1,257,190 —
Catholic Health Initiatives — — 2 93,897 7 116,478 8 108,200 –7.1
Kaiser Foundation Health Plan, Inc.2 9 8,020,900 8 7,915,669 8 8,898,228 8 9,456,373 6.3
New Universal American Corp. 2 50,337 4 101,789 4 101,889 4 114,849 12.7
Henry Ford Health System 2 430,041 2 408,717 2 367,330 3 418,545 13.9
America’s 1st Choice Holdings
3 124,538 3 133,616 3 98,117 2 107,968 10.0
Avera Health — — — — — — 2 147,772 —
AvMed Health Plan 2 136,390 2 106,467 2 101,045 2 127,901 26.6
Boston HealthNet — — — — 2 328,897 2 307,801 –6.4
CareSource Management Group — — 2 989,606 2 1,361,230 2 1,429,777 5.0
EmblemHealth (HIP Health Plans)
3 989,499 3 877,551 2 869,423 2 809,283 –6.9
Harvard Pilgrim Health Care6 — — — — 2 810,373 2 959,619 18.4
TOTAL 258 46,186,405 280 48,775,567 301 56,327,084 321 65,071,187 15.5%
1 Enrollment figures include point-of-service (POS) enrollees. Some HMOs shown without enrollment data in certain years had fewer than two plans, and therefore did not meet the definition of an HMO chain in those years.
2 Increase due to Medicaid expansion.3 UnitedHealthcare plan and enrollment numbers for 2014 and 2015 include self-funded members. Such members were not included in 2012 or 2013;
therefore, year-over-year changes in plan and enrollment numbers were more modest than appear here.4 Medicare Advantage enrollment increased.5 Increase due to Medicaid expansion and health insurance exchange membership.6 Harvard Pilgrim Health Care was added to the list in 2014.NOTE: Some data were unavailable.
TOP FIVE INDIVIDUAL HMO PLANS, BY ENROLLMENT, 2014–2015
0
1
2
3
4
Enro
llme
nt (
Mill
ion
s)
Kaiser FoundationHealth Plan ofSouthern CA
Kaiser FoundationHealth Plan ofNorthern CA
Anthem Blue CrossCalifornia
Health Netof California
CareSource
2014 2015
3.623.85
3.273.45
1.86
2.672.52
1.481.27 1.30
88
DEMOGRAPHICSH
MO
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Nearly Half of the Top 20 HMO Chains Grow Enrollment by 10%+
• From 2014 to 2015, nine of the top 20 HMO chains,
by number of plans, experienced at least a
double-digit annual rate of growth in enrollment.
• The total collective enrollment in these 20 HMO
chains expanded by 15.5% during this period,
surpassing 65 million enrollees in 2015.
Data source: IMS Health © 2016
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HMOs Enroll More Than Half of Hawaii’s Population
• In 2015, the majority (50.9%) of Hawaii’s population
was enrolled in an HMO, up from 48.7% in 2014.
• A 6.3% enrollment gain boosted Rhode Island to
fourth place, by HMO penetration, among states.
SUMMARY OF HMO PENETRATION, BY STATE, 2014–20151
Rank2 Population(000)3 Total HMOs Penetration (%)2 Enrollment (000) Enrollment
Change (%)
STATE 2015 2015 2015 2014 2015 2014 2015 2014–2015
Hawaii 1 1,383 5 48.7% 50.9% 668 703 5.3%
California 2 38,989 35 45.5 46.5 17,589 18,128 3.1
New Mexico 3 2,074 7 42.5 45.3 881 940 6.7
Rhode Island 4 1,052 3 37.4 39.7 393 418 6.3
Utah 5 2,991 6 38.8 39.5 1,140 1,181 3.6
Massachusetts 6 6,789 12 36.9 38.5 2,484 2,617 5.4
New York 7 19,770 20 36.0 38.5 7,102 7,605 7.1
Wisconsin 8 5,768 23 37.7 38.5 2,169 2,219 2.3
Michigan 9 9,918 22 34.4 36.1 3,407 3,585 5.2
Pennsylvania 10 12,797 19 32.2 34.6 4,114 4,431 7.7
Tennessee 11 6,579 9 32.4 33.9 2,117 2,232 5.4
Maryland 12 5,977 8 31.7 33.2 1,883 1,983 5.3
Oregon 13 4,026 8 31.9 33.0 1,265 1,330 5.2
Nevada 14 2,880 8 31.3 32.9 884 948 7.3
Connecticut 15 3,584 6 30.2 31.2 1,082 1,119 3.4
Florida 16 20,203 30 27.5 29.1 5,458 5,874 7.6
Colorado 17 5,422 11 28.5 29.0 1,517 1,570 3.5
Ohio 18 11,604 19 28.0 28.8 3,248 3,348 3.1
Arizona 19 6,810 11 26.9 27.3 1,805 1,862 3.2
Washington 20 7,116 10 25.8 26.8 1,806 1,904 5.4
New Jersey 21 8,949 11 25.9 26.6 2,308 2,384 3.3
Missouri 22 6,068 14 24.2 26.5 1,461 1,611 10.2
Minnesota 23 5,487 10 24.7 25.9 1,347 1,419 5.4
Georgia 24 10,151 10 23.3 24.3 2,333 2,462 5.5
D.C. 25 669 9 23.3 24.1 153 161 5.4
Illinois 26 12,832 22 19.6 20.9 2,522 2,683 6.4
Delaware 27 942 5 19.7 20.7 183 195 6.5
Maine 28 1,328 4 18.6 19.6 247 260 5.2
New Hampshire 29 1,329 6 18.3 19.3 242 256 5.6
Virginia 30 8,272 12 18.3 19.2 1,506 1,589 5.5
West Virginia 31 1,843 6 16.7 18.1 308 334 8.4
Kentucky 32 4,407 12 16.5 17.8 727 786 8.1
Indiana 33 6,617 15 16.8 17.8 1,105 1,179 6.7
Texas 34 27,351 34 16.9 17.5 4,544 4,796 5.5
Kansas 35 2,888 8 16.5 17.4 475 502 5.8
Vermont 36 625 3 15.4 16.6 96 104 7.4
Louisiana 37 4,653 11 13.4 14.3 621 666 7.2
South Carolina 38 4,854 9 13.3 13.9 639 674 5.4
North Carolina 39 9,939 7 12.2 13.0 1,199 1,293 7.9
Iowa 40 3,123 8 11.8 12.3 365 385 5.4
Oklahoma 41 3,893 9 10.8 11.3 417 439 5.3
Arkansas 42 2,973 6 9.5 9.7 283 289 2.4
South Dakota 43 855 4 8.9 9.3 75 79 5.2
Idaho 44 1,651 5 8.6 8.9 140 148 5.6
Nebraska 45 1,890 5 8.3 8.8 155 167 7.5
Montana 46 1,029 1 4.0 4.4 41 45 9.4
North Dakota 47 750 3 3.7 4.1 27 31 14.8
Mississippi 48 2,978 6 3.7 4.1 111 122 9.5
Wyoming 49 583 1 3.8 3.9 22 23 5.4
Alabama 50 4,846 3 3.5 3.7 168 178 6.1
Alaska 51 716 — 0.3 0.3 2 2 5.2
TOTAL U.S. 320,222 434 26.7% 27.9% 84,836 89,257 5.2%
1 Only operating plans are included in this table. The number of HMOs in each state includes plans that served that state but were located outside it.2 Rank is based on HMO penetration. Penetration is calculated by dividing HMO enrollment by the state population estimate. 3 The state population is a projection based on estimates of the U.S. Department of Commerce Bureau of the Census for July 2015.4 Although some HMOs served more than one state, 434 HMOs in 2015 were physically located in the states they served.NOTE: Some data were unavailable for Alaska. Enrollment values for Alaska in 2014 and 2015 were 2,222 and 2,337, respectively.
Data source: IMS Health © 2016
ENROLLMENT AND PLAN COUNT OF HMOs WITH GOVERNMENT BENEFICIARIES, 2015
Medicare Risk Medicare Cost Medicaid FEHBP Total HMO Govt.2
MODEL TYPE Members (000) Plans Members
(000) Plans Members (000) Plans Members
(000) Plans Members (000) Plans
IPA 4,391 125 205 2 15,556 82 441 30 20,593 163
Network 4,129 119 15 3 24,839 121 215 31 29,199 181
Group 1,760 23 180 8 2,350 20 471 19 4,761 32
Staff 112 5 2 2 721 4 42 4 878 10
MEMBERSHIP SIZE<15,000 96 26 3 3 41 5 3 4 143 33
15,000–24,999 187 16 — 1 66 4 13 4 268 22
25,000–49,999 637 32 10 1 523 17 15 7 1,185 44
50,000–99,999 1,717 53 12 1 2,074 34 56 11 3,859 74
100,000–249,999 2,906 69 53 2 9,550 77 188 24 12,697 107
250,000+ 4,849 76 323 7 31,212 90 895 34 37,279 106
TAX STATUSFor-Profit 6,428 183 38 3 26,629 131 471 48 33,565 250
Not-for-Profit 3,964 89 364 12 16,837 96 699 36 21,865 136
TOTAL U.S. 10,392 272 402 15 43,466 227 1,170 84 55,430 386
TOTAL HMO ENROLLMENT BREAKDOWN, BY PAYER TYPE, 2012–2015
Medicare3 Medicaid Standard40%
13%
26%
39%
52%
Perc
ent
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e o
f Enr
ollm
ent
10.7% 12.0% —12.1%—
33.4% 35.2%
42.8%
48.7%
26.4% 25.0% 25.6% 25.8%
2012 2013 2014 2015
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Data source: IMS Health © 2016
Key Takeaway
The effects of Medicaid expansion on HMO enrollment continue. Although some of these new
members may be patients with medical needs heightened by years of deferment, Michigan plans
found that enrollment gains have offset increased medical costs, which were not always as high as
expected.5 Results vary by state, of course, and may be difficult to predict so early in expansion.
Medicaid Portion of Total HMO Enrollment Continues Upward Climb
• In 2015, 48.7% of HMO members across
the nation were Medicaid members, a
5.9 percentage-point jump from 42.8% in 2014,
and a 15.3-point growth from 33.4% in 2012.
• The standard member share of HMO enrollment
crept up in 2015, to 25.8% from 25.6% in 2014;
Medicare members accounted for fewer than
one in eight HMO members in 2015.
Medicaid Membership in HMOs Expands Nationwide
• From 2014 (36.3 million) to 2015 (43.5 million), the
number of Medicaid HMO members nationally
climbed by 19.7%.1 In 2015, such members made
up 78.4% of total HMO government enrollment.
• Growth in Medicaid HMO membership
nationally, in turn, boosted total HMO
government enrollment by 16.1% from
2014 (47.8 million) to 2015 (55.4 million).
1 See page 10 of the HMO-PPORx Digest for 2015.2 Excludes 1,831,410 enrollees in the Children’s Health Insurance Program (CHIP).3 Includes Medicare Risk and Medicare Cost enrollment.4 Does not include POS or self-funded enrollees.5 Green, J. (2016). Medicaid HMOs Grow Bottom Lines After Expansion in Michigan. Retrieved from http://www.crainsdetroit.com/article/20160417/
NEWS/160419869/medicaid-hmos-grow-bottom-lines-after-expansion-in-michiganNOTE: Some data were unavailable.
PERCENTAGE OF HMOs THAT WERE PART OF AN INTEGRATED HEALTH CARE SYSTEM, 2011–2015MODEL TYPE 2011 2012 2013 2014 2015IPA 12.6% 13.2% 13.1% 12.0% 13.0%
Network 14.3 14.6 13.6 14.2 13.3
Group 51.3 46.5 45.5 50.0 52.8
Staff 50.0 50.0 45.5 30.0 30.0
AGE OF PLAN<5 Years — — — — 1.7%
5–9 Years 10.0% 8.7% 8.7% 7.1% 2.8
10–14 Years 28.6 24.2 13.8 9.5 9.4
15+ Years 21.5 22.5 23.1 22.1 22.2
TAX STATUSNot-for-Profit 33.8% 32.9% 30.7% 29.6% 29.4%
For-Profit 9.9 10.6 10.4 9.7 10.0
OVERALL AVERAGE 17.9% 18.1% 17.4% 16.7% 16.8%
PERCENTAGE OF HMOs THAT WERE PART OF AN INTEGRATED HEALTH CARE SYSTEM, BY SIZE OF PLAN, 2013–2015
0%
6%
12%
18%
24%
Perc
en
tag
e o
f HM
Os
2013 2014 2015
<15,000 15,000–24,999 25,000–49,999 50,000–99,999 100,000–249,999 250,000+
9.2%
13.8%15.7%
14.3%15.4%13.8%
16.4%
13.0%12.7%
17.1%
13.8%15.0%
20.0%18.9%16.8%
22.5%21.0%21.7%
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Integrated Health Care System-Affiliated Share of HMOs Inches Up
• Although the percentage of HMOs that were part
of an integrated health care system expanded
fractionally from 2014 (16.7%) to 2015 (16.8%), it
remained below the 2012 share of 18.1%.
• Of not-for-profit HMOs, 29.4% were part of
an integrated health care system in 2015,
a portion nearly three times that of their
for-profit counterparts (10.0%) that year.
HMOs With Highest Membership Counts Are Most Apt to Be in Integrated Systems
• In each year shown, HMOs with 250,000 or more
members were most likely, by size of plan, to be
part of an integrated health care system. In 2015,
21.7% of such plans were in integrated systems.
• Just over one in every six (16.8%) HMOs with
between 100,000 and 249,999 members were
in an integrated system in 2015, a share that
fell each year from 2013 (20.0%) to 2015.
Data source: IMS Health © 2016
Key Takeaway
Aligning an HMO with an integrated health care system can be advantageous to both parties. The
system gains access to the HMO’s members, and the HMO is granted tighter associations with the
providers, who, in many ways, control the health care utilization of its members. Yet such affiliations
are not without risk. HMOs may find smaller systems too restrictive for their members in terms of
provider choices. Furthermore, it may be that only the larger plans have sufficient enrollment
counts for the purchasing system to justify the time, effort, and expense of integration.
NOTE: Some data were unavailable.
1 The total number of affiliated physicians does not always equal the sum of the numbers of primary care physicians and specialists because of averaging.
NUMBER OF HMO-AFFILIATED PHYSICIANS AND HMO ENROLLMENT, 2006–2015
NUMBER OF PROVIDERS USED PER HMO, BY MODEL, 2014–2015
IPA Network Group Staff Overall Average
PROVIDERS 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015
Acute-Care Hospitals 88 89 67 74 45 42 20 21 74 77
Affiliated Physicians–Total1 13,357 12,877 11,175 14,413 6,044 7,719 4,599 6,450 11,599 12,937
Primary Care Physicians 3,882 3,735 3,380 4,328 1,718 2,248 1,336 1,908 3,422 3,820
Specialists 9,474 9,143 7,796 10,085 4,326 5,470 3,263 4,543 8,177 9,117
2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
2,500
5,000
7,500
10,000
60,000
68,000
76,000
84,000
92,000
Nu
mb
er o
f Affi
liate
d P
hys
icia
ns
HM
O Enro
llme
nt (000)1,962
4,561
2,114
4,670
2,397
5,287
2,487
5,606
2,732
6,026
2,946
6,631
3,277
7,370
3,412
7,867
3,422
8,177
3,820
9,117
76,33078,281
77,11875,348
77,18779,479
80,545 80,056
84,836
89,257
Primary Care Physicians Specialists Total Number of Members
HMO Enrollment Grows at a Slower Rate Than Does Physician Affiliation
• Overall HMO enrollment from 2006 to 2015
increased 16.9%, to 89.3 million from 76.3 million,
despite two periods of decline: one from 2007
to 2009 and another from 2012 to 2013.
• Over the same 10-year period, the average
number of physicians affiliated with HMOs
virtually doubled for specialists (99.9%) and
primary care physicians (94.7%) alike.
LONG-TERM TREND
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HMO-Physician Affiliation Rates Climb by More Than 10%
• From 2014 (11,599) to 2015 (12,937), the average
number of affiliated physicians per HMO grew
11.5%. Meanwhile, the number of such physicians
shrank only for IPA-model HMOs (–3.6%).
• During this same period, the overall rates
of increase in affiliated provider counts for
both primary care physicians (11.6%) and
specialists (11.5%) were virtually identical.
Data source: IMS Health © 2016
Key Takeaway
As enrollment counts have risen in recent years, so, too, have the numbers of primary care
physicians and specialists affiliated with HMOs. This network expansion may both accommodate
new members and make the HMO more attractive to existing members by expanding provider
choices. However, as broader networks often come with higher costs, this trend may be difficult to
maintain, as the pressure to manage health care spending intensifies.
1 See HMO-PPORx Digest for 2015, page 13.2 All HMO utilization data exclude well baby, neonatal ICU, and psychiatric patients.3 Morris, M., et al. (2015). Expanding Coverage: How Primary Care Physicians Are Accommodating the Newly Insured. Deloitte Center for Health
Solutions. Retrieved from http://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/expanding-coverage-accommodating-the-newly-insured.html
HMO HOSPITAL DAYS AND AVERAGE LENGTH OF STAY, 20152
Hospital Days per 1,000 HMO Members
Average Length of Stay per HMO Hospital Admission
MODEL TYPE Non-Medicare Medicaid Medicare Non-Medicare Medicaid Medicare
IPA 243.1 399.2 1,735.3 4.5 4.6 6.9
Network 261.7 402.1 1,674.4 4.5 4.7 6.6
Group 220.7 358.1 1,544.2 4.3 4.6 6.4
Staff 176.8 298.5 810.7 3.9 4.1 5.0
MEMBERSHIP SIZE<15,000 218.7 351.9 1,513.7 4.4 4.2 6.5
15,000–24,999 239.0 314.0 1,568.6 4.3 3.6 6.6
25,000–49,999 269.0 337.3 1,498.4 4.5 4.3 6.3
50,000–99,999 266.0 373.4 1,687.0 4.5 4.6 6.8
100,000–249,999 240.2 398.0 1,884.9 4.6 4.8 7.0
250,000+ 245.4 420.7 1,637.9 4.4 4.7 6.5
OVERALL AVERAGE 246.3 396.1 1,672.4 4.5 4.7 6.7
ALOS Climbs Notably for HMO Members Across All Profiled Payer Types
• Average length of stay (ALOS) per HMO hospital
admission expanded to 6.7 days from 6.6 for
Medicare, to 4.7 from 4.6 for Medicaid, and to 4.5
from 4.3 for non-Medicare HMO members in 2015.
• Since 2007, ALOS rose 11.7% for Medicare, 23.7%
for Medicaid, and 18.4% for non-Medicare
HMO members. For all payers, this benchmark
grew most quickly in the four years since 2011.
Key Takeaway
ALOS per HMO hospital admission rose in recent years for all payer types, which may partly reflect
a concerted effort by HMOs and hospitals alike to avoid readmissions—a costly and oftentimes
avoidable occurrence that is also tied to reimbursement rates. Moreover, elevated ALOS among
Medicaid HMO members could result from the poor health status of these newly insured recipients.3
AVERAGE LENGTH OF STAY PER HMO HOSPITAL ADMISSION, 2007–20152
2007 2008 2009 2010 2011 2012 2013 2014 20153
4
5
6
7
Ave
rag
e L
en
gth
of S
tay
(Da
ys)
Medicare Medicaid
6.0 6.0 6.0 6.0 6.1 6.16.3
6.6 6.7
3.9 3.9
3.9
4.1 4.24.4
4.6 4.7
3.84.1
4.3 4.34.5
Non-Medicare
Data source: IMS Health © 2016
LONG-TERM TREND
Hospital Days per 1,000 HMO Members Rise for All Payers
• The hospital-days ratios increased for non-
Medicare (to 246.3 from 231.2), Medicaid (to
396.1 from 394.7), and Medicare (to 1,672.4
from 1,638.3) HMO members from 2014 to 2015.1
• Hospital days per 1,000 HMO members, as well
as average length of stay per HMO hospital
admission, were lowest, by model type, for
staff-model HMOs, regardless of payer, in 2015.
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NUMBERS OF HMO PHYSICIAN ENCOUNTERS AND AMBULATORY VISITS, 20151,2
Physician Encounters per HMO Member Ambulatory Visits per HMO Member
MODEL TYPE Non-Medicare Medicare Medicaid Non-Medicare Medicare Medicaid
IPA 4.7 9.8 5.0 1.7 5.1 2.7
Network 4.4 10.5 4.7 2.1 5.2 3.0
Group 3.6 8.0 3.9 1.6 4.5 2.7
Staff 3.5 6.5 3.4 1.1 1.8 1.4
MEMBERSHIP SIZE<15,000 4.0 8.0 5.8 1.4 5.1 3.0
15,000–24,999 4.9 11.4 4.6 1.9 6.2 2.8
25,000–49,999 4.4 10.3 4.2 1.8 4.8 2.2
50,000–99,999 4.7 9.3 5.1 1.8 5.3 2.6
100,000–249,999 4.4 10.0 4.5 1.9 5.1 3.0
250,000+ 4.3 10.3 4.7 2.0 4.6 2.9
OVERALL AVG. 4.4 9.9 4.7 1.8 5.0 2.9
2011 2012 2013 2014 20150
3
6
9
12
Phys
icia
n En
co
unte
rs p
er M
em
be
r Non-Medicare Medicare
4.6
9.6
4.7
9.9
4.7
10.4
4.8
10.2
4.4
9.9
NUMBER OF PHYSICIAN ENCOUNTERS PER HMO MEMBER, 2011–20151,2
1 All HMO utilization data exclude well baby, neonatal ICU, and psychiatric patients.2 Ambulatory visits differ from physician encounters. Ambulatory visits are visits by an HMO member to an HMO clinic or physician’s office that do not
require the services of a physician. Such visits are usually made for tests, prescription refills, immunizations, etc. The term “physician encounter” is self-explanatory.
3 See HMO-PPORx Digest for 2014, page 14.4 Dall, T., et al. (2016). The Complexities of Physician Supply and Demand 2016 Update: Projections from 2014 to 2025. Association of American
Medical Colleges. Retrieved from https://www.aamc.org/download/458082/data/2016_complexities_of_supply_and_demand_projections.pdf
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Key Takeaway
That per-HMO member physician encounters have decreased, irrespective of payer type, suggests
the possibility that previously anticipated physician shortages are beginning to shape the ways in
which patients seek care. Indeed, as the demand for physicians is expected to outpace the supply
by an ever-widening margin over the next decade,4 alternatives such as urgent care centers and
retail clinics could become the primary site of care for a growing portion of the population.
MD Encounter Ratio Is Below Average for Staff-Model Plans
• Across the three profiled payer types, staff-
model plans had the lowest numbers of
per-HMO member physician encounters and
ambulatory visits, by model type, in 2015.
• Network-model plans, conversely, recorded the
highest numbers of ambulatory visits per HMO
member, regardless of payer, and exceeded the
corresponding overall averages that year.
Data source: IMS Health © 2016
LONG-TERM TREND
Physician Encounters per Non-Medicare HMO Member Fall to Six-Year Low
• In 2015, the number of physician visits per non-
Medicare HMO member dropped to 4.4 from 4.8
the prior year, marking the lowest such average
for non-Medicare members since 2009 (4.2 visits).3
• For Medicare HMO members, such encounters
also decreased, to 9.9 in 2015 from 10.2 in 2014,
albeit at a slower rate than that of their non-
Medicare counterparts (–2.9% versus –8.3%).
1 See HMO-PPORx Digest for 2014, page 15.2 All HMO utilization data exclude well baby, neonatal ICU, and psychiatric patients.3 There were no operating HMOs physically located in Alaska in 2015.NOTE: Some data were unavailable for the selected markets.
2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
150
300
450
600
Nu
mb
er o
f Da
ys
371.6 388.4 403.9
467.1527.8
466.7
538.6 536.3575.6 588.8
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NUMBERS OF HMO HOSPITAL DAYS AND PHYSICIAN ENCOUNTERS, 20152
Hospital Days per 1,000 Members
Average Physician Encounters
per Member
Hospital Days per 1,000 Members
Average Physician Encounters
per Member
STATE3 Non-Medicare Medicare Non-
Medicare Medicare STATE3 Non-Medicare Medicare Non-
Medicare Medicare
Alabama 277.0 1,471.7 2.9 5.3 Montana 471.7 — — —
Arizona 251.3 1,650.4 5.6 11.1 Nebraska 169.2 1,892.3 2.8 10.2
Arkansas 277.9 1,782.5 2.9 8.2 Nevada 322.7 1,405.3 3.9 10.1
California 200.3 1,098.7 3.2 6.9 New Hampshire 250.2 798.3 4.7 10.6
Colorado 222.6 874.8 4.0 7.3 New Jersey 300.5 1,991.3 5.5 10.8
Connecticut 284.3 1,854.6 3.6 11.1 New Mexico 286.5 2,389.8 5.3 10.0
D.C. 215.6 1,339.6 4.9 7.0 New York 279.2 1,891.2 5.0 12.5
Delaware 257.9 1,926.9 4.8 8.6 North Carolina 208.9 1,353.4 5.3 14.3
Florida 198.3 1,575.7 4.6 10.9 North Dakota 195.7 1,417.1 2.8 5.7
Georgia 258.4 1,482.4 4.9 10.8 Ohio 268.0 2,007.7 4.6 9.8
Hawaii 364.0 1,556.7 2.6 6.1 Oklahoma 270.2 2,181.9 4.4 7.4
Idaho 233.7 1,149.2 4.2 8.5 Oregon 283.5 1,015.0 4.2 8.8
Illinois 292.2 1,790.1 4.9 9.5 Pennsylvania 274.6 2,297.9 6.0 11.7
Indiana 240.4 2,055.7 4.8 — Rhode Island 180.5 1,914.5 2.8 10.7
Iowa 203.6 2,078.4 3.5 8.8 South Carolina 192.7 1,546.7 5.1 8.2
Kansas 273.1 2,774.2 5.4 11.4 South Dakota 212.0 1,704.1 4.1 —
Kentucky 256.9 2,068.2 5.5 14.9 Tennessee 307.4 2,353.2 4.6 10.9
Louisiana 286.3 1,816.4 6.8 11.6 Texas 202.1 1,766.8 3.5 9.8
Maine 264.9 1,287.8 5.4 11.4 Utah 185.5 1,886.0 4.1 12.3
Maryland 221.2 1,339.6 4.4 7.0 Vermont 325.9 2,115.2 3.8 —
Massachusetts 262.7 1,858.6 4.7 9.8 Virginia 239.5 1,603.3 4.8 10.2
Michigan 305.2 1,722.2 4.8 9.9 Washington 242.6 1,209.5 3.4 8.7
Minnesota 205.0 1,556.7 3.3 8.2 West Virginia 257.5 2,715.7 6.9 16.1
Mississippi 198.1 1,360.5 4.9 5.8 Wisconsin 218.6 1,645.8 4.2 10.8
Missouri 301.3 1,980.1 5.6 9.6 Wyoming 185.9 1,653.7 3.8 9.1
OVERALL AVG. 246.3 1,672.4 4.4 9.9
Data source: IMS Health © 2016
Medicare Hospital-Days Ratio for Kansas Again Tops Nation’s
• In Kansas, the number of Medicare hospital
days per 1,000 HMO members fell 16.8%
from 2013 (3,336.01) to 2015 (2,774.2), but
remained the highest in the nation in 2015.
• Meanwhile, HMOs serving West Virginia
reported the largest numbers for both
Medicare (16.1) and non-Medicare (6.9)
physician encounters per member in 2015.
Number of Hospital Days per 1,000 HMO Members, Pennsylvania, 2006–20152
LONG-TERM TREND
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AVERAGE HMO PREMIUM RATES PER MONTH, 2015
STATE1 Average FamilyPremium
Average IndividualPremium STATE1 Average Family
PremiumAverage Individual
Premium
Alabama $1,150.50 $442.50 Montana $1,327.00 $587.00
Arizona 1,512.39 615.95 Nebraska 1,333.00 615.35
Arkansas 1,146.02 445.65 Nevada 1,336.93 569.05
California 1,595.53 621.69 New Hampshire 1,688.85 523.88
Colorado 1,187.90 473.17 New Jersey 1,601.90 645.91
Connecticut 1,415.81 532.22 New Mexico 1,312.89 538.66
D.C. 1,299.65 539.19 New York 1,631.12 646.90
Delaware 1,594.43 697.70 North Carolina 1,250.19 498.54
Florida 1,295.46 528.23 North Dakota 1,971.34 747.44
Georgia 1,482.44 627.16 Ohio 1,471.07 597.72
Hawaii 1,069.26 477.30 Oklahoma 1,308.82 518.53
Idaho 1,317.76 501.61 Oregon 1,487.63 577.21
Illinois 1,372.88 561.90 Pennsylvania 1,525.43 622.46
Indiana 1,298.97 539.32 Rhode Island 1,604.92 516.33
Iowa 1,308.95 534.93 South Carolina 1,335.67 555.67
Kansas 1,407.41 593.18 South Dakota 1,568.51 650.01
Kentucky 1,290.75 543.11 Tennessee 1,676.79 668.74
Louisiana 1,301.44 540.22 Texas 1,294.83 511.98
Maine 1,523.79 553.65 Utah 1,022.78 475.10
Maryland 1,262.46 531.25 Vermont 1,748.81 615.95
Massachusetts 1,508.31 520.93 Virginia 1,380.48 552.72
Michigan 1,464.09 600.33 Washington 1,437.04 531.83
Minnesota 1,431.86 582.76 West Virginia 1,515.04 620.21
Mississippi 1,177.07 482.33 Wisconsin 1,353.01 536.87
Missouri 1,394.01 589.04 Wyoming 1,100.34 498.29
OVERALL AVG. $1,379.89 $555.39
Individual, Family HMO Premiums Are Highest in North Dakota
• Average monthly HMO premiums for both
individuals ($747.44) and families ($1,971.34)
were more expensive in North Dakota than
in any other state in 2015. Nationally, these
premiums averaged $555.39 and $1,379.89.
• Meanwhile, Vermont had the second-highest
average family HMO premium ($1,748.81), and
Delaware the second-highest such individual
premium ($697.70). Seven states reported monthly
family HMO premiums greater than $1,600.
Key Takeaway
Even as the Affordable Care Act (ACA) has increased the number of people with health insurance,
enrollment has fallen short of projections.2 Moreover, many carriers are finding that they have enrolled
a sicker population than expected, and premium rate growth beyond that of inflation seems to be
inevitable. It remains to be seen whether efforts like introducing standardized “simple choice plans”3
to the ACA marketplaces can encourage greater enrollment—especially among so-called young
invincibles—thereby expanding risk pools to offset insurers’ losses and slowing premium increases.
Data source: IMS Health © 2016
1 There were no operating HMOs physically located in Alaska in 2015.2 Roy, A. (2016). CBO Slashes 2016 Obamacare Exchange Enrollment Projections by 8 Million. Forbes. Retrieved from: http://www.forbes.com/sites/
theapothecary/2016/01/26/cbo-slashes-2016-obamacare-exchange-enrollment-projections-by-8-million/#2aef4654791e3 Andrews, M. (2016). “Simple Choice Plans” to Debut in 2017 Marketplace Enrollment. Kaiser Health News. Retrieved from: http://khn.org/news/
simple-choice-plans-to-debut-in-2017-marketplace-enrollment/
1 HMOs gave multiple answers. Totals add up to more than 100%. Other reimbursement methods used by HMOs included discounted fee-for-service, fee schedules, per diems, and return of risk pools/withholds.
PERCENTAGE OF HMOs USING VARIOUS PHYSICIAN REIMBURSEMENT METHODS, 20151
MODEL TYPE Salary Profit Sharing Fee-for-Service Bonus Program Capitation
IPA 2.7% 3.6% 61.8% 16.4% 70.0%
Network 2.1 4.2 54.2 18.8 59.4
Group 18.5 0.0 55.6 25.9 85.2
Staff 85.7 0.0 42.9 28.6 57.1
OWNERSHIPCorporate Owned 6.8% 2.9% 58.7% 17.0% 67.5%
Corporate Managed 0.0 0.0 0.0 0.0 100.0
Corporate Affiliated 9.1 0.0 54.5 27.3 72.7
Hospital Owned 0.0 0.0 33.3 66.7 33.3
Independent 5.3 10.5 52.6 26.3 63.2
OVERALL AVERAGE 6.7% 3.3% 57.5% 18.8% 67.1%
20%
30%
40%
50%
60%
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Primary Care Physician Contracts Specialist Contracts Hospital Contracts
54.6% 53.7% 53.8% 53.5% 54.0%
30.4% 31.1% 31.6% 31.6% 31.9%
39.5% 39.9% 40.5% 40.5% 41.3%
PERCENTAGE OF HMO CONTRACTS REIMBURSED THROUGH CAPITATION, 2011–2015
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Key Takeaway
As value-based payment models become increasingly popular, it is not surprising that HMOs’ use of
fee-for-service payments to physicians is declining. Many HMOs themselves are reimbursed through
pay-for-performance programs, so providing similar incentives for physicians—who are certainly at
the frontline of care delivery—aligns their goals with those of the plan.
Data source: IMS Health © 2016
HMO Use of Fee-for-Service to Reimburse Physicians Decreases
• The percentage of HMO plans overall
that made use of fee-for-service
physician reimbursement declined by
nearly one percentage point, to 57.5%
in 2015 from 58.4% the year prior.
• Capitation remained the most common
method of physician reimbursement
among HMO plans in 2015, with just
over two-thirds (67.1%) of them making
use of this payment model.
LONG-TERM TREND
HMOs Reimburse Just Under One-Third of Specialist Contracts Via Capitation
• Of the provider types shown, HMO specialist
contracts were least likely to be reimbursed
through capitation in 2015 (31.9%). Although
lowest in all the years shown, this share increased
by 1.5 percentage points from 2011 to 2015.
• Although the portion of capitated hospital
HMO contracts grew most quickly during this
time (1.8 percentage points, to 41.3%), primary
care physicians were still most apt to be paid by
HMOs via capitation in all five years shown.
FOR-PROFIT VS. NOT-FOR-PROFIT HMO USE OF PHYSICIAN WITHHOLDS1/RISK POOLS, 2009–2015
HMO USE OF PHYSICIAN WITHHOLDS1/RISK POOLS, 2014–20152014 2015
MODEL TYPE Percentage of HMOs HMO Enrollment2 Percentage of HMOs HMO Enrollment2
IPA 54.2% 18,738,437 58.7% 18,226,130
Network 49.4 16,198,085 48.9 19,414,265
Group 18.8 2,925,836 30.6 3,271,857
Staff 74.3 984,126 74.5 1,040,141
OWNERSHIP
Corporate Owned 48.0% 33,669,855 54.7% 36,371,706
Corporate Managed — — — —
Corporate Affiliated 45.2 2,506,054 50.0 2,594,415
Hospital Owned 22.8 333,502 33.3 390,036
Independent 33.9 2,337,072 32.0 2,596,236
TAX STATUS
Not-for-Profit 38.7% 14,721,071 44.0% 16,335,496
For-Profit 52.2 24,125,412 55.3 25,616,897
OVERALL AVG./TOTAL 46.1% 38,846,483 47.5% 41,952,393
2009 2010 2011 2012 2013 2014 201520%
29%
38%
47%
56%
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For-Profit Not-for–Profit
29.2%
25.7%
29.7%
33.8%
38.0%
52.2%55.3%
37.1%35.0%
38.9% 39.2% 38.3% 38.7%
44.0%
1 Physician withhold: A percentage of payments or set dollar amounts deducted from a physician’s service fee, capitation, or salary payment that may or may not be returned to the physician depending on specific predetermined factors.
2 Enrollment data for 2015 are based on 218 HMOs using physician withholds/risk pools; enrollment data for 2014 are based on 221 HMOs using physician withholds/risk pools.
NOTE: Some data were unavailable.
For-Profit HMOs See Accelerated Increase in the Use of Withholds
• As recently as 2012, the percentage of for-profit
HMOs using physician withholds in their contracts
(33.8%) was lower than that of not-for-profit HMOs
(39.2%); in 2013, these shares nearly converged.
• However, from 2013 (38.0%) to 2015 (55.3%), the
portion of for-profit HMOs using withholds jumped
17.3 percentage points, while at not-for-profit
HMOs, this share rose from 38.3% to 44.0%.
LONG-TERM TREND
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Share of Corporate-Owned HMOs With Physician Withholds Grows
• From 2014 (48.0%) to 2015 (54.7%), the portion
of corporate-owned HMOs using physician
withholds rose 6.7 percentage points, and was
highest among the profiled ownership types.
• At the same time, the share of hospital-owned
HMOs using withholds increased 10.5 points,
to 33.3% from 22.8%, and that of corporate-
affiliated HMOs grew 4.8 points, to 50.0%.
Data source: IMS Health © 2016
HMO DRUG COSTS AS A PERCENTAGE OF OPERATING EXPENSES, BY TAX STATUS, 2013–2015
HMO EXPENDITURES PER MEMBER PER YEAR FOR DRUGS, 2010–2015
OWNERSHIP 2010 2011 2012 2013 2014 2015
Corporate Owned $564.47 $579.41 $614.40 $617.26 $662.51 $667.49
Corporate Managed 252.00 516.84 499.91 475.02 656.75 586.81
Corporate Affiliated 513.78 534.65 554.57 578.92 588.80 641.49
Hospital Owned 559.86 591.08 521.53 643.40 690.49 676.83
Independent 571.28 586.56 581.80 563.52 603.80 597.27
TAX STATUS
Not-for-Profit $528.71 $538.42 $584.90 $575.67 $646.53 $659.27
For-Profit 579.37 597.69 615.24 627.47 656.70 658.09
OVERALL AVERAGE $561.96 $577.93 $604.60 $608.97 $653.07 $658.50
2013 2014 201512%
13%
14%
15%
16%
Avg
. Ph
arm
ac
y Ex
pe
nd
iture
%
Not-for-Profit For-Profit Overall Average
13.8%
15.2%
14.7% 14.6%
15.4%15.1%
15.8%15.5% 15.6%
PMPY Drug Expenditures Climb at HMOsLONG-TERM TREND
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Key Takeaway
Pharmacy costs represent a significant portion of HMO expenditures, so managing them in light of the
increasing numbers of Medicare and Medicaid members is crucial. Plan administrators will need to
consider formulary choices carefully to provide the most effective therapies, considering not only the
pharmaceutical component, but also the cost of disease progression for both plans and patients.
• Per-member per-year (PMPY) HMO drug
expenditures rose 17.2% from 2010 ($561.96) to
2015 ($658.50). The rate of growth at not-for-profit
HMOs (24.7%) surpassed that of for-profits (13.6%).
• By ownership type, corporate-managed HMOs
realized the largest increase in such spending
during this period (132.9%), followed by
corporate-affiliated HMOs (24.9%).
Data source: IMS Health © 2016
Not-for-Profit HMOs See Largest Increase in Drug Costs as a Share of Operating Expenses
• From 2013 (13.8%) to 2015 (15.8%), the share
of not-for-profit HMO operating expenses
represented by drug costs rose 2.0 percentage
points, versus 0.3 points at for-profit HMOs.
• Further, drug costs as a share of operating
expenses at not-for-profit HMOs eclipsed
those at for-profit HMOs (15.5%) in 2015 after
being 1.4 percentage points lower in 2013.
PERCENTAGE OF HMO MEMBERS AND PRESCRIPTIONS DISPENSED, BY COPAY TIER DESIGN, 2015One Tier Two Tier Three Tier Four Tier Five Tier
MODEL TYPE % of Members
% ofRxs
% of Members
% ofRxs
% of Members
% ofRxs
% of Members
% ofRxs
% of Members
% ofRxs
IPA 42.1% 42.9% 11.5% 11.3% 17.0% 16.5% 12.5% 12.2% 16.9% 17.1%
Network 48.2 49.7 14.8 13.1 14.6 15.0 15.1 14.0 7.2 8.1
Group 15.3 14.3 55.6 56.3 10.7 10.8 6.3 6.4 12.0 12.2
Staff 81.4 75.9 — — 1.2 1.5 11.3 14.6 6.1 7.9
AGE OF PLAN<5 Years 53.5% 56.9% 23.0% 24.5% 6.0% 6.3% 16.9% 11.6% 0.7% 0.7%
5–9 Years 50.6 50.6 27.8 27.8 7.4 7.4 7.2 7.2 7.0 7.0
10–14 Years 44.1 44.1 2.3 2.3 2.2 2.2 34.7 34.7 16.8 16.8
15+ Years 40.0 40.4 17.5 16.2 18.5 18.6 10.5 10.6 13.4 14.2
OVERALL AVG. 42.7% 43.3% 17.6% 16.8% 15.0% 15.1% 13.0% 12.4% 11.7% 12.4%
1 Reflects the average for those who pay a fixed percentage of the drug cost.2 Fein, A. (2015). Employers Get Tougher About Pharmacy Benefits and Specialty Drug Management. Drug Channels. Retrieved from
http://www.drugchannels.net/2015/10/employers-get-tougher-about-pharmacy.htmlNOTE: Some data were unavailable.
AVERAGE HMO COPAYMENT PERCENTAGE AND AMOUNT PER PRESCRIPTION, BY TIER, 2012–20151
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Key Takeaway
Tiered pharmacy formularies are the most common means of encouraging the use of generic
and preferred drugs to manage prescription drug spending. Indeed, as both plans and employers
look to control growth in health care expenditures, shifting costs to consumers and increasing
their responsibility in managing their own care is becoming more common through higher copay
percentages for lower-tier drugs and greater use of coinsurance for tier-four and tier-five drugs.2
Data source: IMS Health © 2016
Most Staff-Model HMO Members Have Tier-One Plans• In 2015, the share of staff-model HMO members
subject to a one-tier copay design (81.4%)
was notably higher than the corresponding
percentages of any other profiled HMO model.
• By comparison, the one-tier copay design shares
of IPA- (42.1%) and network-model (48.2%) HMO
members were far lower, but still represented the
most common copay design for these models.
Tier One Tier Two Tier Three 0%
8%
16%
24%
32%
Co
pa
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2012 2013 2014 2015
8.0%($4.79)
8.0%($4.30)
9.6%($4.43)
10.1%($4.36)
10.6%($20.93)
10.4%($19.21)
10.6%($20.55)
10.5%($17.83)
25.0%($51.74)
24.8%($52.62)
25.7%($51.76)
22.3%($54.13)
Difference Between Tier-One and Tier-Two Copayment Percentages Narrows
• As average tier-one copay percentages have
risen, the difference between those of tier-one
and tier-two drugs in 2015 (0.4 percentage points)
was less than half that of 2014 (1.0 point).
• Meanwhile, the average tier-three drug copay
percentage fell, to 22.3% in 2015 from 25.7% in
2014, yet average prescription cost in this tier rose,
even as it fell for drugs in tiers one and two.
INDIVIDUAL HMO PREMIUMS PMPM FOR OUTPATIENT PHARMACY BENEFITS, BY MEMBERSHIP SIZE, 2013–2015
HMO PREMIUMS PER MEMBER PER MONTH FOR OUTPATIENT PHARMACY BENEFITS, 2013–2015Individual Premiums Family Premiums
MODEL TYPE 2013 2014 2015 2013 2014 2015
IPA $42.56 $42.86 $43.30 $108.58 $109.95 $111.99
Network 41.92 40.48 40.58 102.97 99.11 98.59
Group 30.51 31.85 31.29 71.92 75.32 71.45
Staff 33.16 32.88 32.88 111.09 106.64 106.64
OWNERSHIPCorporate Owned $40.47 $40.50 $40.27 $105.92 $105.11 $104.31
Corporate Managed 21.50 21.50 21.50 75.00 75.00 75.00
Corporate Affiliated 40.60 41.76 46.05 59.19 67.26 79.68
Hospital Owned 36.00 — — 92.00 — —
Independent 45.16 45.16 49.36 107.37 107.37 117.46
TAX STATUSNot-for-Profit $41.44 $41.44 $41.44 $92.20 $92.20 $92.20
For-Profit 40.31 40.51 40.90 109.17 110.26 111.49
OVERALL AVG. $40.71 $40.84 $41.09 $103.04 $103.61 $104.32
<15,000 15,000–24,999 25,000–49,999 50,000–99,999 100,000–249,999 >250,000
Ave
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ium
s PM
PM
2013 2014 2015
$30
$35
$40
$45
$50
$40.26$39.28
$40.67
$42.76
$46.16
$38.03
$34.11$34.48
$36.77
$42.53$42.47
$36.26
$40.02$39.28
$43.13
$45.58$45.33$45.98
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PHARMACY
Key Takeaway
Prescription drugs are one of 10 essential benefits for health insurance exchange plans, extending
drug coverage to an unprecedented number of people. Although many exchange plans offer less
generous prescription benefits than employer-sponsored plans,1 it is likely that this is offset, at least
partially, by cost-sharing subsidies for low-income enrollees. In spite of this expanded population
receiving coverage, HMO pharmacy benefit premiums have remained relatively stable in recent years.
Growth Is Minimal for HMO Outpatient Pharmacy Premiums• From 2013 to 2015, increases in HMO outpatient
(OP) pharmacy benefit premiums for both
individual (0.9%) and family (1.2%) coverage
were modest, and in many cases decreased.
• For example, outpatient pharmacy premiums fell
for individuals in network- (–3.2%) or staff-model
(–0.8%) HMOs, and for families in network- (–4.3%),
group- (–0.7%), or staff-model (–4.0%) HMOs.
Data source: IMS Health © 2016
PMPM Individual OP Pharmacy Premiums Are Costliest for Members of Largest HMOs
• In 2015, per member per month (PMPM)
individual outpatient pharmacy benefit premiums
were most expensive for individuals enrolled in
HMOs with more than 250,000 members ($45.98).
• Meanwhile, HMOs with 50,000 to 99,999 members
reported the lowest PMPM outpatient pharmacy
premiums for individuals ($36.26), followed by
those with 25,000 to 49,999 members ($36.77).
1 Buttorff, C., et al. (2015). Comparing Employer-Sponsored And Federal Exchange Plans: Wide Variations In Cost Sharing For Prescription Drugs. Health Affairs. Retrieved from http://content.healthaffairs.org/content/34/3/467.abstract
NOTE: Some data were unavailable.
NUMBER OF PRESCRIPTIONS DISPENSED PER MEMBER PER YEAR (PMPY) BY HMOs, 2014–20152014 2015
MODEL TYPE Non-Medicare Medicare Non-Medicare Medicare
IPA 9.1 32.5 9.2 32.6
Network 9.0 27.2 8.8 26.2
Group 9.2 27.6 9.2 28.3
Staff 7.9 40.2 7.9 40.2
OWNERSHIPCorporate Owned 8.9 29.7 9.0 29.3
Corporate Managed 6.9 — 6.9 —
Corporate Affiliated 9.7 37.1 9.6 37.1
Hospital Owned 8.9 24.2 4.1 24.2
Independent 10.0 31.4 10.3 32.9
AGE OF PLAN<5 Years 7.8 18.0 8.4 —
5–9 Years 11.4 23.0 9.2 20.5
10–14 Years 7.6 45.0 6.7 45.0
15+ Years 9.1 30.0 9.0 29.8
MEMBERSHIP SIZE<15,000 Members 9.0 31.4 9.3 29.9
15,000–24,999 8.9 31.9 8.4 33.9
25,000–49,999 8.6 29.1 8.3 31.0
50,000–99,999 9.0 31.0 8.9 26.8
100,000–249,999 9.8 30.8 9.7 32.1
250,000+ 8.7 28.1 8.8 28.4
TAX STATUSNot-for-Profit 9.2 28.8 9.1 28.8
For-Profit 8.9 30.6 9.0 30.3
OVERALL AVG. 9.0 29.9 9.0 29.7
1 Does not include administrative, prescription, or dispensing fees.NOTE: Some data were unavailable.
Average Ingredient Cost per HMO Prescription Decreases Slightly
• The average ingredient cost per prescription
dispensed by HMOs declined a fractional
0.2% from 2014 ($56.75) to 2015 ($56.65).
• Despite this decrease—the second over the
course of the 10-year span shown—such
costs increased 26.8% since 2005 ($44.68).
LONG-TERM TREND
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Number of Medicare Rxs Filled PMPY Edges Down in 2015• From 2014 (29.9) to 2015 (29.7), the number of
prescriptions dispensed per member per year
(PMPY) by Medicare HMOs shrank fractionally,
but was unchanged for non-Medicare HMOs.
• Staff-model Medicare HMOs dispensed more
prescriptions PMPY than did IPA-, network-, or
group-model HMOs in 2014 and 2015. Those for
network models were the lowest in both years.
AVERAGE INGREDIENT COST1 PER HMO PRESCRIPTION AND ANNUAL PERCENTAGE GROWTH, 2005–2015
Data source: IMS Health © 2016
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015$14
$26
$38
$50
$62
–8%
–1%
6%
13%
20%
Ave
rag
e In
gre
die
nt C
ost
pe
r Rx
Dis
pe
nse
d
Average Ingredient Cost per Rx Dispensed Percentage Growth
Perc
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tag
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row
th
$44.68 $45.86$48.90 $49.72
$54.04$57.92 $58.95
$55.73 $56.70 $56.75 $56.65
7.5%
2.6%
6.6%
1.7%
8.7% 7.2%
1.8%
–5.5%
1.7% 0.1% –0.2%
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HOW HMOs INFLUENCE PHYSICIAN PRESCRIBING PRACTICES, 20152
MODEL TYPE No Controls
Financial Incentives
Drug Utilization Review
Quality Assurance
Second Opinion
Prior Authoriza-
tion
Practice Guidelines
IPA — 23.0% 97.3% 53.6% 1.6% 98.9% 74.3%
Network — 15.7 92.7 55.0 1.0 99.5 85.3
Group 2.9% 22.9 88.6 77.1 11.4 91.4 88.6
Staff — 10.0 80.0 70.0 10.0 90.0 70.0
OWNERSHIPCorporate Owned 0.3% 20.8% 95.1% 54.0% 2.6% 98.8% 80.9%
Corporate Managed — — 100.0 100.0 — 100.0 100.0
Corporate Affiliated — 18.8 87.5 62.5 6.3 93.8 87.5
Hospital Owned — — 83.3 50.0 — 83.3 50.0
Independent — 12.2 89.8 71.4 — 98.0 77.6
OVERALL AVG. 0.2% 19.3% 94.0% 56.6% 2.4% 98.3% 80.4%
Less Than a Fifth of HMOs Use Financial Incentives to Impact MD Prescribing
• The percentage of HMOs that used
financial incentives to drive physician
prescribing patterns decreased fractionally
from 2014 (19.7%) to 2015 (19.3%).
• Since 2007 (24.5%), this portion has fallen
5.2 percentage points. Meanwhile, the
share of HMOs that use DUR for influencing
prescribing rose 4.6 percentages points.
LONG-TERM TREND
1 See the HMO-PPORx Digest for 2015, page 23.2 HMOs gave multiple answers. Totals add up to more than 100% of the HMOs in the sample.3 LaMattina, J. (2016). “Pay for Performance” Drug Plans Could Impact Biopharma’s R&D Priorities. Forbes. Retrieved from http://www.forbes.com/
sites/johnlamattina/2016/05/18/pay-for-performance-drug-plans-could-impact-biopharmas-rd-priorities/#72bdf19d3c68
89.4% 89.5% 89.5% 90.1% 90.4%93.8% 93.9% 93.8% 94.0%
24.5% 24.5% 27.3%20.2%
32.2%
20.1% 19.7% 19.7% 19.3%
2007 2008 2009 2010 2011 2012 2013 2014 201512%
34%
56%
78%
100%
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Drug Utilization Review (DUR) Financial Incentives
Key Takeaway
The decreasing portion of HMOs using financial incentives to impact physician prescribing patterns
seemingly indicates that other methods have a greater impact on overall costs. Recently, payers and
drug manufacturers have experimented with alternatives—particularly for specialty drugs—such as
pay-for-performance, whereby carriers are reimbursed by manufacturers if the drugs do not generate
specific results. Indeed, it is estimated that 14% of payers now have at least one such arrangement.3
Use of DUR, Other Tools to Steer Prescribing Rises Modestly at HMOs• The shares of HMOs using drug utilization review
(DUR), quality assurance, prior authorization, or
practice guidelines to drive physician prescribing
patterns increased slightly from 2014 to 2015.1
• For example, 80.4% of HMOs used practice
guidelines to impact prescribing patterns in 2015,
versus 79.6% in 2014. The portion that applied
DUR edged up to 94.0% from 93.8% in 2014.
Data source: IMS Health © 2016
PERCENTAGE OF HMOs USING DRUG UTILIZATION REVIEW AND FINANCIAL INCENTIVES, 2007–20152
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PHARMACY
WHERE PRESCRIPTION SERVICES ARE PROVIDED TO HMO MEMBERS, 2014–20151
In-House Pharmacies
Contract Pharmacies
Non-Contract Pharmacies
MODEL TYPE 2014 2015 2014 2015 2014 2015
IPA 8.5% 7.8% 99.5% 99.5% 18.5% 19.2%
Network 10.9 10.8 100.0 100.0 18.6 17.4
Group 47.4 50.0 86.8 86.1 18.4 19.4
Staff 80.0 80.0 90.0 90.0 20.0 20.0
OWNERSHIPCorporate Owned 15.2% 14.8% 98.3% 98.3% 21.3% 20.7%Corporate Managed 0.0 0.0 100.0 100.0 0.0 0.0Corporate Affiliated 18.8 18.8 100.0 100.0 12.5 12.5
Hospital Owned 25.0 33.3 87.5 83.3 0.0 0.0
Independent 8.8 7.5 100.0 100.0 7.0 7.5
AGE OF PLAN<5 Years 5.5% 3.3% 100.0% 100.0% 9.1% 6.7%
5–9 Years 3.6 8.3 98.2 97.2 16.1 22.2
10–14 Years 9.5 3.1 100.0 100.0 0.0 6.3
15+ Years 18.7 18.3 98.0 98.0 22.1 21.6
OVERALL AVERAGE 14.6% 14.3% 98.4% 98.4% 18.6% 18.4%
1 HMOs gave multiple answers. Totals add up to more than 100% of the HMOs in the sample.NOTE: Some data were unavailable.
Share of HMOs With In-House Pharmacies Declines Fractionally
• The percentage of HMOs that had in-house
pharmacies shrank to 14.3% in 2015 from 14.6%
in 2014, as did the share that used non-contract
pharmacies (to 18.4% from 18.6%).
• HMOs that did not provide prescription services
to their members via contract pharmacies
were the rare exception in 2015; 98.4% of
HMOs used such pharmacies that year.
Data source: IMS Health © 2016
Corporate-Owned Pharmacies Are More Likely to Have DUR Services Furnished by PBMs
• In all three years shown, corporate-owned HMOs
were more apt than those of other ownership
types to have drug utilization review (DUR)
provided by pharmacy benefit managers (PBMs).
• The share of such HMOs relying on PBMs for DUR
services declined from 2013 (60.6%) to 2014
(55.2%) and again in 2015 (53.4%). Meanwhile, this
portion climbed among independent HMOs.
Corporate Owned Corporate Managed Corporate Affiliated Hospital Owned Independent0%
16%
32%
48%
64%
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60.6%55.2% 53.4%
—50.0%—
—
41.2%—43.8%—
30.0%
12.5%16.7%
21.1% 23.2% 24.5%
2013 2014 2015
PERCENTAGES OF HMOs THAT RECEIVE DRUG UTILIZATION REVIEW SERVICES FROM PHARMACY BENEFIT MANAGERS, BY OWNERSHIP TYPE, 2013–20151
Key Takeaway
DUR is employed by all but a small portion of HMOs nationally as a means of monitoring
and optimizing prescribing activity by network physicians (see page 23). That the share of
corporate-owned HMOs using PBMs to perform DUR decreased in recent years perhaps indicates
that such HMOs have the resources to bring this important and complicated service in-house.
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Use of Proprietary Formularies Wanes Among Largest HMOs
• Despite a slight decrease, to 84.9% in 2015
from 89.0% in 2014, HMOs with 250,000 or
more members remained the most apt, by
membership size, to use a proprietary formulary.
• Meanwhile, PBM formularies were most common,
by membership size, among HMOs with fewer
than 15,000 members—a portion that increased
to 30.0% in 2015 from 26.8% the year prior.
Share of HMO Members With Closed Formularies Grows for Fourth Straight Year in 2015
• The portion of HMO members whose
prescription drug benefits were subject to
closed formularies in 2015 (70.6%) increased
by 5.3 percentage points from 2014 (65.3%).
• After falling to 45.1% in 2011 from 49.8% in
2010, this share climbed each year through
2015, rising most quickly (8.4 percentage
points) from 2011 to 2012 (53.8%).
Data source: IMS Health © 2016
Key Takeaway
Closed formularies are a well-established method of controlling costs. Yet plans and PBMs
alike must balance choice and access with this cost containment. In today’s value-based,
pay-for-performance care models, it is crucial that formularies are developed in a way that considers
the total cost of care—not trading lower up-front cost for higher utilization down the line.3
CONTROLLING PHARMACEUTICAL FORMULARY FOR HMOs, 2014–2015
Proprietary (HMO) PBM Modified PBM
AGE OF PLAN 2014 2015 2014 2015 2014 2015
<5 Years 76.3% 64.4% 23.7% 31.1% — 4.4%
5–9 Years 67.4 82.8 21.7 13.8 10.9% 3.4
10–14 Years 63.2 66.7 36.8 25.9 — 7.4
15+ Years 82.4 81.6 14.8 15.6 2.8 2.7
MEMBERSHIP SIZE<15,000 69.6% 68.0% 26.8% 30.0% 3.6% 2.0%
15,000–24,999 62.5 75.0 29.2 17.9 8.3 7.1
25,000–49,999 65.4 67.9 32.7 28.3 1.9 3.8
50,000–99,999 80.3 80.0 12.7 17.1 7.0 2.9
100,000–249,999 86.0 84.2 12.9 11.9 1.1 4.0
250,000+ 89.0 84.9 8.8 12.9 2.2 2.2
OVERALL AVERAGE 79.1% 78.7% 17.6% 18.0% 3.4% 3.3%
1 In an open formulary, a drug is usually covered by the HMO, even if it is not listed on formulary.2 In a closed formulary, a drug not on formulary is generally not covered, unless it goes through a prior authorization process.3 Eldin, M. (2015). Closed Formularies Hold the Line on Costs. Managed Healthcare Executive. Retrieved from http://managedhealthcareexecutive.
modernmedicine.com/managed-healthcare-executive/news/closed-formularies-hold-line-costs?page=0,1NOTE: Some data were unavailable.
2009 2010 2011 2012 2013 2014 201522%
35%
48%
61%
74%
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ntra
cts
55.1%
44.9%
50.2% 49.8%54.9%
45.1% 46.2%
53.8%
39.0%
61.0%
34.7%
65.3%
29.4%
70.6%
Open Formulary Closed Formulary
PERCENTAGE OF HMO MEMBERS BY OPEN OR CLOSED FORMULARIES, 2009–20151,2
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Key Takeaway
The impacts of the “patent cliff” of 2012 seem partly manifest in the sudden growth and
subsequent stability in the percentages of generic prescriptions filled by HMO members
over the past several years.3 In 2015, however, an estimated $27.7 billion in patented
drug sales likewise faced a loss of exclusivity and became vulnerable to marketplace
competition.4 This next “cliff,” though anticipated to be less severe than that of 2012, could
trigger another uptick in the market share of generic prescriptions in the years to come.
Portion of HMO Prescriptions Filled With Generics Rises Steadily
• The share of HMO member prescriptions filled
with generic drugs increased by a moderate
2.4 percentage points over the four years
shown: to 77.6% in 2015 from 75.2% in 2012.
• Furthermore, this portion remained at a level
more than three times the corresponding
percentage of HMO member prescriptions filled
with branded drugs in each of these years.
PERCENTAGE OF HMO MEMBER PRESCRIPTIONS FILLED WITH BRANDED VS. GENERIC DRUGS, 2012–2015
0%
25%
50%
75%
100%
Branded Generic
24.8% 23.4% 22.5% 22.4%
75.2% 76.6% 77.4% 77.6%
2012 2013 2014 2015
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s
1 HMOs gave multiple answers. Totals add up to more than 100% of the HMOs in the sample.2 Other payment arrangements include members paying a copayment on brand-name drugs or paying the difference plus a copayment for the
branded drug.3 See the HMO-PPORx Digest for 2014.4 Optum. (2016). 2016: a “Mini-Cliff” for Drug Patents. Retrieved from https://www.optum.com/resources/library/2016-mini-cliff-for-drug-patents.html
Share of HMOs Allowing Members to Choose Branded Rxs at No Additional Cost Increases
• In 2015, 31.4% of all HMOs did not require their
members to pay an additional charge for
choosing branded drugs over generics, a slight
jump from 28.5% the previous year.
• Meanwhile, the portions of HMOs with a higher
copayment for choosing branded drugs, or
that required members to pay the difference
between branded drugs and generics, fell.
PHARMACY
PAYMENT REQUIREMENTS FOR HMO ENROLLEES CHOOSING BRANDED OVER GENERIC DRUGS, 2013–20151
All HMOs HMOs With In-House Pharmacies
PAYMENT 2013 2014 2015 2013 2014 2015
Pay No Additional Charge 29.2% 28.5% 31.4% 14.5% 14.8% 14.8%
Pay Difference Between Branded and Generic
74.5 74.8 73.9 80.0 79.6 79.6
Pay Higher Copayment 82.4 82.6 82.0 89.1 88.9 88.9
Pay Entire Cost of Branded Drug 9.7 10.2 10.1 18.2 18.5 18.5
Other Payment2 11.6 12.1 12.1 10.9 11.1 11.1
Data source: IMS Health © 2016
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Key Takeaway
The share of HMOs covering oncology drugs under the medical benefit continued to fall in
2015, possibly a result of the increase in orally administered medications available in that class—
indeed, nine of the 18 new cancer drugs approved by the Food and Drug Administration in
2015 were orals.1 With many patients preferring oral over intravenous drugs,2 this trend will likely
continue, and may extend to other prescription classes once confined to the medical benefit.
Share of HMOs Covering Smoking-Cessation Rxs Falls Again
• The percentage of HMOs covering
smoking-cessation prescriptions under
the pharmacy benefit decreased each
year from 2011 (76.8%) to 2015 (72.6%).
• In spite of this decline, such prescriptions
remained the second most likely (behind oral
contraceptives) among the six profiled to be
covered under the pharmacy benefit in 2015.
Data source: IMS Health © 2016
• HMOs were more apt to cover oncology drugs
under the pharmacy benefit in each year from
2011 to 2015. Nine out of 10 HMOs covered
such prescriptions under the pharmacy benefit
in 2015, versus just 70.6% under the medical.
• The percentage of HMOs that covered
oncology drugs under the plans’ medical
benefit fell in 2015, to 70.6% from 71.5% in 2014.
From 2011 to 2015, this share dropped an
average of 1.7 percentage points annually.
PERCENTAGE OF HMOs THAT COVERED CERTAIN PRESCRIPTION DRUGS UNDER THE PHARMACY BENEFIT, 2014–2015
Experimental Drugs
Cosmetic Use
AnorexiantsSmoking
CessationFertility Drugs
Oral Contraceptives
MODEL TYPE 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015
IPA 0.5% 0.5% 3.0% 3.2% 20.7% 21.1% 75.3% 73.7% 46.5% 46.3% 96.0% 96.8%
Network 0.5 0.5 1.1 1.0 27.5 26.3 72.5 70.6 35.7 34.5 98.9 99.0
Group 0.0 0.0 0.0 0.0 36.8 36.1 73.7 72.2 44.7 47.2 100.0 100.0
Staff 0.0 0.0 0.0 0.0 40.0 40.0 90.0 90.0 30.0 30.0 100.0 100.0
TAX STATUSNot-for-Profit 0.7% 0.7% 0.7% 0.7% 35.5% 34.9% 78.9% 78.3% 45.4% 44.7% 99.3% 99.3%
For-Profit 0.4 0.4 2.5 2.5 19.9 19.8 71.7 69.4 39.1 38.5 96.7 97.5
OVERALL AVG. 0.5% 0.5% 1.9% 1.9% 25.5% 25.1% 74.3% 72.6% 41.4% 40.7% 97.7% 98.1%
64%
72%
80%
88%
96%
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2011 2012 2013 2014 2015
Medical Benefit Pharmacy Benefit
77.5%74.9%
72.9%71.5% 70.6%
91.4% 91.4% 91.3% 91.6% 91.9%
PERCENTAGE OF HMOs COVERING ONCOLOGY DRUGS, BY SOURCE OF BENEFIT, 2011–2015
HMOs Are More Likely to Cover Oncology Rxs Under the Pharmacy BenefitLONG-TERM TREND
1 Egerton, N.J. (2016). In-Office Dispensing of Oral Oncolytics: A Continuity of Care and Cost Mitigation Model for Cancer Patients. American Journal of Managed Care. Retrieved from http://www.ajmc.com/journals/supplement/2016/improving-patient-access-to-critical-therapies-in-the-age-of-cost-sharing/in-office-dispensing-of-oral-oncolytics-a-continuity-of-care-and-cost-mitigation-model-for-cancer-patients
2 Eek, D., et al. (2016). Patient-Reported Preferences for Oral Versus Intravenous Administration for the Treatment of Cancer. Journal of Patient Preference and Adherence. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5003561/
LEVEL OF IMPLEMENTATION OF STEP-THERAPY AMONG HMOs, BY OWNERSHIP, 2015
Corporate Owned Corporate Managed Corporate Affiliated Hospital Owned Independent0%
25%
50%
75%
100%
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Os
94.2%
32.3%
100.0%
50.0%
90.9%
27.3%
100.0%
20.0%
82.9%
26.8%
Physician Pharmacist
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Data source: IMS Health © 2016
Corporate-Managed HMOs Have High Rate of Pharmacist-Implemented Step-Therapy
• In 2015, exactly half (50.0%) of corporate-
managed HMOs relied on pharmacists
to implement step-therapy, a share that
topped those of the other four HMO
ownership types by more than 17%.
• Hospital-owned HMOs were the least apt,
by ownership type, to use pharmacist-
implemented step-therapy (20.0%) in 2015.
However, all hospital-owned HMOs relied on
physician-implemented step-therapy.
• The share of HMOs using pharmaceutical step-
therapy programs dipped in 2015, to 94.2% from
94.7% in 2014. Despite this decline, this portion has
increased 3.8 percentage points since 2009.
• Matching the share from the previous
year (87.5%), corporate-affiliated
HMOs in 2015 were least likely, by HMO
ownership, to rely on step-therapy.
Key Takeaway
More than nine in 10 (93.0%; data not shown) HMOs relied on physicians to implement
step-therapy in 2015, evidence of their important position as the first line of defense in adhering
to established guidelines for safe, cost-effective therapy. By comparison, around 30% of HMOs
implemented step-therapy at the pharmacist level in 2015, a share that could increase as
the responsibilities and role of pharmacists expand, and available medications—and their
interactions—become increasingly complex to manage.
PERCENTAGE OF HMOs USING PHARMACEUTICAL STEP-THERAPY, 2009–2015MODEL TYPE 2009 2010 2011 2012 2013 2014 2015
IPA 95.0% 94.5% 97.6% 98.0% 97.5% 97.5% 96.4%
Network 87.1 90.2 92.9 94.4 93.5 94.0 93.8
Group 86.1 83.8 84.6 88.4 88.6 86.8 88.9
Staff 69.2 69.2 78.6 83.3 81.8 80.0 80.0
OWNERSHIPCorporate Owned 92.8% 92.7% 94.8% 96.5% 95.2% 95.4% 95.0%
Corporate Managed 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Corporate Affiliated 89.5 90.0 86.4 89.5 88.2 87.5 87.5
Hospital Owned 78.6 75.0 83.3 90.9 100.0 100.0 100.0
Independent 79.3 85.9 93.4 89.7 91.2 91.2 90.6
OVERALL AVERAGE 90.4% 91.2% 93.9% 95.1% 94.5% 94.7% 94.2%
Overall Use of Step-Therapy by HMOs Drops Off SlightlyLONG-TERM TREND
15.0–19.9%
20.0–24.9%
25.0–29.9%
30.0–34.9%
35.0–39.9%
40.0–44.9%
45.0%+
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HEALTH INSURANCE EXCHANGES
Enrollment in Health Insurance Exchange Plans Is Highest in Florida
• More than 1.5 million Floridians had purchased a
marketplace plan as of March 2016, the highest
number of such enrollees, by state, and a 16.5%
increase from the 2015 enrollment period.3
• Although nearly 1.1 million Texans purchased
health care coverage through the health
insurance exchange marketplace, that number
amounted to just over a third of eligible enrollees.
Health Insurance Exchanges Enroll 40% of Eligible Individuals
• As of March 2016, 11.1 million individuals had
purchased or renewed their health care
coverage via health insurance exchanges, an
estimated 40.4% of the eligible U.S. population.
• In Massachusetts, 58.7% of qualified individuals
had selected a health insurance exchange
plan; in Iowa, only 19.8% of those who could
purchase via the exchange had done so.
Data source: Centers for Medicare & Medicaid Services and Kaiser Family Foundation © 2016
TOP FIVE STATES BY HEALTH INSURANCE EXCHANGE ENROLLMENT, 20161,2
MARKET
Number of Individuals Who Have Purchased a
Marketplace Plan
Estimated Number of Potential
Marketplace Enrollees
Percentage of Potential Marketplace
Population Enrolled
Florida 1,531,714 2,654,000 57.7%
California 1,415,428 2,986,000 47.4
Texas 1,092,650 3,084,000 35.4
North Carolina 545,354 1,008,000 54.1
Georgia 478,016 1,169,000 40.9
NATION 11,081,330 27,438,000 40.4%
STATE SPOTLIGHT
PERCENTAGE OF POTENTIAL ELIGIBLE POPULATION ENROLLED IN HEALTH INSURANCE EXCHANGES, 20161,2
1 Kaiser Family Foundation. (2016). Marketplace Enrollment as a Share of the Potential Marketplace Population. Retrieved from http://kff.org/health-reform/state-indicator/marketplace-enrollment-as-a-share-of-the-potential-marketplace-population-2015/
2 Data include individuals who have enrolled in a marketplace plan, have paid their first month’s premium (“effectuated” enrollment), and who have an active policy.
3 See the HMO-PPORx Digest for 2015, page 29.
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ESTIMATED ENROLLMENT IN HEALTH INSURANCE EXCHANGES, BY AGE RANGE, 2015–20161
1 Data for 2016 represent cumulative marketplace enrollment-related activity for November 1, 2015, through February 1, 2016, and generally account for individuals who have selected, or been automatically re-enrolled into a 2016 plan through the marketplaces, with or without payment of premium. Medicare beneficiaries with only Part B coverage, or who were paying a premium for Part A coverage, are allowed to select a marketplace plan.
2 Financial assistance percentages represent individuals who have been determined eligible for advance premium tax credits and/or cost-sharing reductions.
3 Data include individuals who have enrolled in a marketplace plan, have paid their first month’s premium (“effectuated” enrollment), and who have an active policy.
4 Department of Health and Human Services (2016). Health Insurance Marketplaces 2016 Open Enrollment Period: Final Enrollment Report. Retrieved from https://aspe.hhs.gov/sites/default/files/pdf/187866/Finalenrollment2016.pdf
5 Johnson, C. (2016). Health-Care Exchange Sign-ups Fall Far Short of Forecasts. Washington Post. Retrieved from https://www.washingtonpost.com/business/economy/health-care-exchange-sign-ups-fall-far-short-of-forecasts/2016/08/27/3d93f602-6895-11e6-99bf-f0cf3a6449a6_story.html
HEALTH INSURANCE EXCHANGES
Key Takeaway
Even though the Department of Health and Human Services counted almost 4.9 million new
consumers among those selecting plans on health insurance exchanges,4 estimates show that
total exchange enrollment still fell well below expectations. This shortfall led many plans to exit the
exchange in some markets due to financial losses.5 If this trend continues, the program may need
significant changes to secure its future as a central tenet of the Affordable Care Act.
Exchange Enrollment Grows for All Ages in 2016
• Across all age ranges, the numbers of
individuals who selected a plan via health
insurance exchanges increased from 2015 to
2016; the sharpest growth was among those
aged 65 or older (up 30.5%, to 97,603).
• Individuals between the ages of 55 and 64
accounted for 3.3 million of enrollees on the
exchange, the largest number, by age range
in 2016. Those under the age of 35 made up
approximately 36% of the 12.7 million enrollees.
Mississippi Exchange Enrollees Are Most Apt to Receive Financial Assistance
• In Mississippi, of the nearly 80,000 exchange
enrollees as of March 2016, 94.2% received
an advanced premium tax credit (APTC) and
77.6% received a cost-sharing reduction (CSR).
• Likewise, 11.1 million individuals nationwide
purchased a plan through the health insurance
exchange, of whom 84.7% received an APTC
and more than half (57.3%) received a CSR.
<18 18–25 26–34 35–44 45–54 55–640
900
1,800
2,700
3,600
Nu
mb
er o
f En
rolle
es
(000
)
890.01,068.6
1,269.81,370.0
1,982.52,155.5
1,940.2 2,043.9
2,559.32,682.8
2,947.73,262.2
74.8 97.6
≥65
2015 2016
TOP FIVE STATES BY PERCENTAGE OF HEALTH INSURANCE EXCHANGE ENROLLEES WITH FINANCIAL ASSISTANCE, 20162,3
MARKET
Total Number of Marketplace
Enrollees
Percentage of Total Marketplace Enrollees
Receiving APTCs
Percentage of Total Marketplace Enrollees
Receiving CSRs
Mississippi 77,747 94.2% 77.6%
Florida 1,531,714 93.3 73.5
Louisiana 184,403 92.6 64.3
Wyoming 22,076 92.0 55.4
Alabama 165,534 91.9 75.8
NATION 11,081,330 84.7% 57.3%
Data source: Department of Health and Human Services © 2016
Data source: Centers for Medicare & Medicaid Services and Kaiser Family Foundation © 2016
31SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016
LONG-TERM TREND
From 2014 (156.4 million) to 2015 (161.5 million),
total enrollment in the nation’s PPOs expanded
3.2%. Among the factors that could be contributing
to this growth—the sharpest annual rise in PPO
enrollment during the seven years shown—is an
overall decrease in unemployment across the
nation. Since peaking at 10.0% in October 2009, the
unemployment rate among U.S. residents age 16
and over fell to 4.9% as of August 20161, thereby
increasing the number of people able to enroll in
PPOs through their employer. Furthermore, PPOs’
availability on the health insurance exchange may
also be fueling participation, though this particular
source of members may soon dry up as major plans
pull out of this marketplace due to claimed financial
losses.2 Indeed, despite this enrollment growth, the
number of operating PPOs actually contracted to
451 in 2015 from 456 in 2014. Even if the Department
of Justice proves successful in blocking the pending
Anthem/Cigna and Humana/Aetna mergers, it is
likely that PPO consolidation trends will continue,
both within the exchange and in the market overall.
PPOBackgrounder
476481
469
467 465
456451146,763
146,135
149,968
151,604152,798
156,409
161,475
2009 2010 2011 2012 2013 2014 2015425
450
475
500
525
140,000
146,000
152,000
158,000
164,000
Num
be
r of P
POs
PPO En
rollm
en
t (000)
Number of PPOs3 PPO Enrollment
Data source: IMS Health © 2016
Number of PPOs and Total PPO Enrollment, 2009–2015
1 Bureau of Labor Statistics. (2016). Labor Force Statistics From the Current Population Survey. Retrieved from http://data.bls.gov/timeseries/LNS14000000
2 Olen, H. (2015). What’s Happening to Obamacare’s PPOs? Retrieved from http://www.slate.com/articles/business/moneybox/2015/12/ppos_are_disappearing_from_obamacare_why.html
3 Includes specialty-only PPOs.NOTE: Throughout this Digest, PPO measures include enrollees of all payer types.
NUMBER OF PPOs, BY PLAN TYPE, 2014–2015General
Medical/Surgical Specialty Full Service
TYPE OF OWNER 2014 2015 2014 2015 2014 2015
Employer/Employer Coalition 2 2 0 0 0 0HMO 26 26 0 0 0 0Hospital 2 2 0 0 0 0Hospital Alliance 28 28 1 0 10 10Independent Investor 19 23 11 11 12 14Insurance Company 280 261 10 10 19 17Multi-ownership 7 19 2 2 5 4Physician/Hospital Joint Venture 9 9 0 0 2 2Physician/Medical Group 6 6 1 1 0 0Other 1 1 1 1 0 0
SIZE OF PPO: MEMBERS1–19,999 102 98 0 0 4 220,000–99,999 122 122 3 2 11 12100,000–499,999 100 100 1 1 15 17500,000–999,999 32 32 3 3 9 81,000,000+ 24 25 19 19 9 8TOTAL 380 377 26 25 48 47
ENROLLMENT IN OPERATING PPOs, BY OWNER TYPE, 2013–2015Total PPO Enrollment1
2013 2014 2015
TYPE OF OWNER Number Percentage Number Percentage Number Percentage
Employer/Employer Coalition 271,894 0.2% 357,121 0.2% 328,854 0.2%HMO 3,002,370 2.0 3,741,513 2.4 3,984,325 2.5Hospital 197,903 0.1 194,360 0.1 202,600 0.1
Hospital Alliance 5,146,321 3.4 4,474,617 2.9 4,298,158 2.7Independent Investor 33,711,177 22.1 30,949,430 19.8 27,620,633 17.1Insurance Company 101,217,152 66.2 109,198,507 69.8 115,919,006 71.8
Multi-ownership 6,715,628 4.4 5,333,916 3.4 5,753,200 3.6Physician/Hospital Joint Venture 1,968,093 1.3 1,444,205 0.9 2,621,693 1.6Physician/Medical Group 512,766 0.3 670,863 0.4 700,152 0.4
Other 55,000 0.0 44,000 0.0 46,000 0.0
TOTAL 152,798,304 100.0% 156,408,532 100.0% 161,474,621 100.0%
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Key Takeaway
Even as high-profile mergers among major chains face opposition by U.S. regulators,2 the trend toward
consolidation continues in the PPO market, in part because larger membership sizes can provide PPOs
with greater leverage to negotiate lower prices with physicians, hospitals, and other entities.
Medical/Surgical, Specialty, and Full-Service PPO Plan Counts Dip in 2015
• Across all three plan types, the numbers of PPOs
declined from 2014 to 2015; general medical/
surgical plans accounted for the vast majority
(84.0%) of all PPOs in 2015, at 377.
• Among general medical/surgical PPOs, insurance
company-owned plans were the most numerous
in 2015, at 261, though this represented a 6.8%
decline from 280 plans in 2014.
Insurance Company-Owned PPOs Expand Share of Enrollment
• From 2013 (101.2 million) to 2015 (115.9 million),
total enrollment in insurance company-owned
PPOs jumped by 14.5%; as of 2015, such plans
accounted for nearly 72% of all PPO enrollment.
• Meanwhile, membership in independent investor-
owned PPOs—the second-largest segment of
PPO enrollment, by type of owner—declined by
18.1%, to 27.6 million from 33.7 million.
Data source: IMS Health © 2016
1 Total excludes enrollment in specialty-only PPOs.2 Picker, L., and Abelson, R. (2016). U.S. Sues to Block Anthem-Cigna and Aetna-Humana Mergers. The New York Times. Retrieved from
http://www.nytimes.com/2016/07/22/business/dealbook/us-sues-to-block-anthem-cigna-and-aetna-humana-mergers.html?_r=0
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ENROLLMENT COMPARISON, HMOs VS. PPOs, 2012–2015
TOTAL NUMBERS OF OPERATING PLANS, PPOs VS. HMOs, 2003–2015
80.5 80.184.8 89.3
151.6 152.8 156.4161.5
2012 2013 2014 201560
90
120
150
180
Enro
llme
nt (
Mill
ion
s)
HMO Enrollment PPO Enrollment1
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Num
be
r of P
lans
PPOs1 HMOs680
666
596583
572
539
476 481469 467 465 454 451
481465 456 448 443 440 437 441 442 430 438 431 434
400
475
550
625
700
PPO Plan Count Decreases for Fifth Straight Year
• For the fifth consecutive year, the total number
of PPOs operating nationally declined in 2015,
to 451 from 454 the prior year. From 2003 (680)
through 2015, the PPO plan count fell by 33.7%.
• After a slight drop from 2013 (438) to 2014 (431),
the total number of HMOs inched up in 2015
(434). In the 13 years from 2003 (481) to 2015,
there was a 9.8% reduction in the U.S. HMO count.
LONG-TERM TREND
Membership Counts Rise Rapidly at HMO and PPO Plans Alike
• HMOs and PPOs both recorded significant
increases in enrollment from 2012 to 2015.
Collectively, PPOs added 9.9 million members
during this time; HMOs grew by 8.8 million.
• Although HMOs shed members from 2012 to 2013,
they still outpaced PPOs in terms of proportional
growth from 2012 to 2015: HMO membership
climbed by 10.9% versus 6.5% for PPOs.
Data source: IMS Health © 2016
1 Includes specialty-only PPOs.
Key Takeaway
As their membership count grows, PPOs will likely be subjected to increasing levels of scrutiny by
the employers and other stakeholders who are sponsoring enrollees. Much as Medicare is making
Star rating data available for beneficiaries seeking to enroll in Medicare Advantage plans, private
companies will also be seeking to compare patient satisfaction, outcomes, and other comparative
measures for their health care insurers, in addition to monthly premiums.
1 The total in this column reflects the change in the number of total enrollment between 2014 and 2015, if any, for the 12 chains for which data are available.
2 Total covered lives overstated in 2013.3 Total covered lives understated in 2013.NOTE: Some data were unavailable.
CORPORATE PPO CHAINS REPORTING, 2013–2015Number of
PPOs Total Enrollment
COMPANY NAME / HEADQUARTERS 2015 2013 2014 2015 % Change 2014–20151
MultiPlan Inc. / New York, NY 113 61,858,770 65,286,834 65,487,541 0.3%
BlueCross BlueShield Association / Chicago, IL 70 74,844,972 74,759,210 75,656,926 1.2
UnitedHealthcare / Hopkins, MN 47 49,887,771 50,649,185 50,583,665 –0.1
Aetna Inc. / Hartford, CT2 47 18,862,735 17,129,958 16,782,265 –2.0
Cigna Health Care / Bloomfield, CT3 26 2,594,809 4,020,827 4,084,124 1.6
Humana Inc. / Louisville, KY 22 8,819,627 9,867,480 10,420,055 5.6
Stratose / Atlanta, GA 4 9,469,225 9,563,250 9,016,718 –5.7
Health Net / Woodland Hills, CA2 4 5,609,813 3,611,075 3,644,409 0.9
VentureNet Healthcare / Phoenix, AZ 2 — — 676,928 —
Summa Health System / Akron, OH 2 435,315 437,160 447,000 2.3
Medica Health Plans / Minnetonka, MN 2 539,168 342,000 342,000 0.0
Catholic Health Initiatives / Englewood, CO 2 395,400 267,447 274,500 2.6
Universal Health Services / King of Prussia, PA 2 — 92,639 93,980 1.4
NUMBER OF PPOs, BY CHAIN, 2010–2015
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Aetna Records Largest Long-Term Growth in PPO Count Among Top Five Chains
• From 2010 to 2015, three of the top five PPO
chains, ranked by number of plans, increased
their PPO counts. Of these chains, Aetna Inc.
added the most plans during this period—a 38.2%
growth rate, bringing their count to 47 PPOs.
• However, among these same five chains, Aetna
Inc. recorded the largest annual decrease in their
PPO counts (–6.0%) from 2014 to 2015. During this
year, such plan counts also fell for both MultiPlan
Inc. (–5.8%) and UnitedHealthcare (–4.1%).
Majority of PPO Chains See Moderate Growth in Total Enrollment
• Eight of the 13 PPO chains shown recorded
growth in total enrollment from 2014 to 2015. Of
these eight chains, Humana Inc. recorded the
highest such increase in enrollment (5.6%).
• Conversely, three of the profiled PPO chains
experienced a decrease in total enrollment
during this period: Stratose (–5.7%), Aetna Inc.
(–2.0%), and UnitedHealthcare (–0.1%).
Data source: IMS Health © 2016
LONG-TERM TREND
34 32
47 49 50 47
Aetna Inc.
70 67 69 67
44
70
BlueCross BlueShieldAssociation
0
35
70
105
140
Num
be
r of P
POs
117 114 113 112120
113
46 48 46 47 49 47
—25— 24 —26—
2010 2011 2012 2013 2014 2015
MultiPlan Inc. UnitedHealthcare Cigna Health Care
1–19,999 20,000–99,999 100,000–499,999 500,000–999,999 1,000,000+0
12,000
24,000
36,000
48,000
Nu
mb
er o
f Co
ntra
cts
2014 2015
4,904 5,271
12,66515,672
22,43925,452
33,624 35,29539,331
43,897
AVERAGE NUMBER OF PHYSICIAN CONTRACTS, BY SIZE OF PPO, 2014–2015
1 See the HMO-PPORx Digest for 2015, page 35.2 “Primary care physicians” include family practitioners, internists, OB/GYNs, and pediatricians.3 The numbers in this column do not always equal the sums of the numbers of primary care physicians and medical/surgical specialists because
of averaging.
Key Takeaway
As the total number of physicians under contract at PPOs increased by nearly 1 million between
2014 and 2015 (data not shown), plan counts decreased (see page 32), leading to the notable
rise in per-plan physician contracts. With expansive networks being an attractive characteristic—
indeed, often the defining feature—of PPOs, these increases will likely continue.
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Across All PPO Sizes, Average Numbers of Physician Contracts Increase
• From 2014 to 2015, the average numbers of
physician contracts per PPO rose, regardless of
PPO size. Plans with 20,000 to 99,999 enrollees
saw the sharpest such increase (23.7%).
• After growing by 11.6% from 2014 (39,331),
PPOs with 1 million or more members
recorded 43,897 physician contracts, on
average, in 2015—the most, by plan size.
Data source: IMS Health © 2016
PPOs Expand Most Provider Contract Counts in 2015
• The overall average numbers of primary
care physician, specialist, total physician,
and ancillary provider contracts per
PPO increased from 2014 to 2015.1
• Meanwhile, the overall average number of
hospital contracts per PPO decreased, to 172
from 186. At full-service PPOs, this number fell
notably, to 388 from 569 the prior year.1
AVERAGE NUMBER OF PROVIDER CONTRACTS PER PPO, 2015
TYPE OF OWNER Primary Care Physicians2 Specialists Total
Physicians3Ancillary Providers Hospitals
Employer/Employer Coalition 3,105 7,245 10,350 495 63
HMO 8,310 16,672 26,616 2,417 390
Hospital 6,394 14,919 21,313 1,378 82
Hospital Alliance 4,553 11,523 16,076 2,370 103
Independent Investor 10,684 25,898 36,582 5,196 409
Insurance Company 4,882 11,926 17,072 1,665 130
Multi-ownership 7,509 16,446 29,001 3,447 214
Physician/Hospital Joint Venture 3,860 9,237 13,097 2,938 78
Physician/Medical Group 4,247 9,608 13,854 2,410 137
Other 1,500 3,600 5,100 1,000 23
TYPE OF PPOMedical/Surgical 5,247 12,457 18,300 1,957 145
Full Service 8,824 21,437 30,260 4,162 388
OVERALL AVERAGE 5,618 13,397 19,542 2,189 172
NUMBER OF PROVIDERS UNDER CONTRACT PER 1,000 PPO MEMBERS, 2015
TYPE OF OWNER Primary Care Physicians1 Specialists Total
Physicians2Ancillary Providers Hospitals
Employer/Employer Coalition 19.5 45.5 65.0 3.6 0.4
HMO 77.8 249.7 275.1 30.2 6.8
Hospital 82.9 193.5 276.4 15.1 1.0
Hospital Alliance 49.9 141.6 202.8 28.9 1.5
Independent Investor 60.5 159.7 220.2 25.5 1.1
Insurance Company 89.4 248.3 338.3 39.4 2.7
Multi-ownership 119.3 297.8 434.9 32.2 3.2
Physician/Hospital Joint Venture 30.3 77.5 107.8 19.1 2.8
Physician/Medical Group 70.7 162.4 233.1 39.2 2.3
Other 32.6 78.3 110.9 21.7 0.5
SIZE OF PPO: MEMBERS1–19,999 181.7 518.2 701.3 86.2 6.8
20,000–99,999 91.8 248.1 335.9 37.0 2.7
100,000–499,999 36.2 87.1 123.3 10.5 0.7
500,000–999,999 17.7 44.9 62.6 5.3 0.4
1,000,000+ 10.3 24.0 34.3 4.5 0.2
TYPE OF PPOMedical/Surgical 86.0 238.2 323.2 38.0 2.9
Full Service 49.5 134.9 184.4 15.5 1.1
OVERALL AVERAGE 81.8 226.5 307.4 35.5 2.7
1 “Primary care physicians” include family practitioners, internists, OB/GYNs, and pediatricians.2 The numbers in this column do not always equal the sums of the numbers of primary care physicians and medical/surgical specialists because
of averaging.
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Data source: IMS Health © 2016
Nearly Three-Quarters of PPO-Contracted Physicians per 1,000 Members Are Specialists
• In 2015, PPOs averaged 307.4 total physicians
under contract per 1,000 members. Roughly
227 (74%) of these providers were specialists,
while 82 (26%) were primary care physicians.
• PPOs with fewer than 20,000 members
averaged 181.7 PCPs and 518.2 specialists per
1,000 members. PPOs with more than 1 million
enrollees averaged 10.3 and 24.0, respectively.
NUMBER OF PROVIDER CONTRACTS PER PPO, 2008–2015
6,9628,231
9,390 9,70711,095 10,715
12,05913,397
3,595 3,805 4,155 4,527 4,970 4,753 5,0235,618
1,757 1,944 1,967 2,009 2,100 2,032 2,136 2,189
156 160 176 180 190 193 186 172
2008 2009 2010 2011 2012 2013 2014 20150
3,500
7,000
10,500
14,000
Ave
rag
e N
umb
er o
f Co
ntra
cts
Specialists PCPs Ancillary Providers Hospitals
Growth in PPO PCP Contracts Lags That of Specialists
• From 2008 to 2015, the number of primary care
providers (PCPs) contracted per PPO rose
56.3% (to 5,618 from 3,595), compared with
92.4% for specialists (to 13,397 from 6,962).
• Meanwhile, PPOs contracted with 24.6% more
ancillary providers, on average, reaching 2,189
in 2015. The number of hospitals contracted per
PPO increased 10.3% during this period, to 172.
LONG-TERM TREND
AVERAGE LENGTH OF STAY (DAYS), 2008–2015
AVERAGE LENGTH OF STAY (DAYS) PER PPO HOSPITALIZATION, 2013–2015
Medical/Surgical1 Psychiatric/Substance Abuse
TYPE OF OWNER 2013 2014 2015 2013 2014 2015
Employer/Employer Coalition 3.2 3.2 3.2 6.5 6.5 6.5
HMO 3.8 3.9 3.9 6.5 6.3 6.3
Hospital 4.1 4.1 4.1 5.3 5.3 5.3
Hospital Alliance 3.8 3.8 3.7 8.4 8.7 7.7
Independent Investor 3.8 3.7 3.8 8.8 8.4 8.3
Insurance Company 3.8 3.8 3.8 6.5 6.5 6.5
Multi-ownership 3.7 3.7 3.6 10.2 11.8 9.2
Physician/Hospital Joint Venture 3.6 3.7 3.7 9.1 9.1 9.1
Physician/Medical Group 3.7 3.7 3.7 5.8 5.8 5.8
TYPE OF PPO
Medical/Surgical 3.8 3.8 3.8 6.8 6.8 6.7
Full Service 3.8 3.9 3.9 7.7 7.7 8.0
OVERALL AVERAGE 3.8 3.8 3.8 6.9 7.0 6.9
2008 2009 2010 2011 2012 2013 2014 20153.50
3.75
4.00
4.25
4.50
Ave
rag
e L
eng
th o
f Sta
y (D
ays
)
HMO ALOS per Non-Medicare Admission PPO Med./Surg. ALOS per Admission
4.4
4.2
4.1 4.1
4.2 4.2
4.34.5
4.2
4.0
3.9
3.8 3.8 3.8 3.8 3.8
1 Excluding psychiatry.
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Hospital-Owned PPOs Report Highest Medical/Surgical ALOS
• In 2015, average length of stay (ALOS) per
medical/surgical admission was highest at
hospital-owned PPOs (4.1 days), and lowest at
employer/employer coalition-owned PPOs (3.2).
• From 2013 to 2015, average length of stay
per hospitalization decreased only at PPOs
with hospital-alliance (to 3.7 days from 3.8)
or multiple owners (to 3.6 days from 3.7).
Key Takeaway
Medical/surgical ALOS per PPO hospital admission remained flat from 2011 to 2015, in spite of
PPOs adding 11.5 million new members over this time (see page 31). With much of this enrollment
growth a result of lower unemployment nationwide, it would appear that these new PPO members
likely did not have the same deferred health care needs as the newly insured HMO population.
Data source: IMS Health © 2016
PPO Medical/Surgical ALOS Remains Well Below That of Non-Medicare HMOs
• In 2015, ALOS per PPO medical/surgical
admission (3.8 days) was 0.7 days lower than
that per non-Medicare HMO admission (4.5),
and has remained stable since 2011.
• Even though both categories of ALOS fell
from 2008 to 2010, non-Medicare HMO ALOS
began rising from 2011 (4.1 days) to 2012
(4.2), and grew nearly half a day by 2015.
LONG-TERM TREND
NUMBER OF INPATIENT HOSPITAL DAYS PER 1,000 PPO MEMBERS, 2013–2015
TYPE OF PPO 2013 2014 2015
Medical/Surgical 234.1 236.4 236.8
Full Service 237.4 238.0 244.5
SIZE OF PPO: MEMBERS
1–19,999 251.6 289.9 266.2
20,000–99,999 227.8 225.4 233.0
100,000–499,999 235.7 241.4 239.8
500,000–999,999 238.7 229.4 233.4
1,000,000+ 231.7 228.6 232.3
OVERALL AVERAGE 234.4 236.5 237.6
2008 2009 2010 2011 2012 2013 2014 2015210
225
240
255
270
Ho
spita
l Da
ys p
er 1
,000
Me
mb
ers
Hospital Days per 1,000 Non-Medicare HMO Members Hospital Days per 1,000 PPO Members
228.3
243.7
238.2
224.3
239.1 239.1
231.2
246.3
231.9
256.8253.2
232.0
230.4234.4
236.5
237.6
NUMBER OF HOSPITAL DAYS PER 1,000 MEMBERS COMPARISON, 2008–2015
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Key Takeaway
The numbers of hospital days per 1,000 members fell at both non-Medicare HMOs and PPOs in
the midst of the Great Recession, but rose again in 2012 and 2013, respectively. Even though their
offerings are often tailored to different populations, overall utilization may be affected by factors
such as the economy. Growth in the PPO hospital-days ratio has been modest, but consistent,
since 2012; this ratio for non-Medicare HMOs has fluctuated over the same time, and the increase
from 2014 to 2015 may reflect the impact of expanded Medicaid enrollment in HMOs.
Hospital Days per 1,000 PPO Members Increase, but Slowly
• From 2013 (234.4) to 2015 (237.6), the number
of hospital days per 1,000 PPO members rose
by just 1.4%. By PPO type, growth was higher
for full-service PPOs (3.0%) than for medical/
surgical PPOs (1.2%) during this period.
• Meanwhile, the hospital-days ratio actually
decreased 2.2% for PPOs with 500,000 to
999,999 members. However, PPOs with fewer
than 500,000 members or 1 million or more
members reported increases in this ratio overall.
Data source: IMS Health © 2016
LONG-TERM TREND
Non-Medicare HMO Hospital-Days Ratio Jumps Past PPO Mark
• From 2014 to 2015, the number of hospital days
per 1,000 non-Medicare HMO members grew
6.5%, to 246.3 from 231.2, and surpassed the
corresponding rate for PPOs (237.6) in 2015.
• Following a 10.3% drop in the PPO hospital-days
ratio from 2009 (256.8) to 2012 (230.4), PPOs
have since reported a gradual increase of 3.1%
from 2012 to 2015, or around 1% annually.
NUMBER OF PHYSICIAN ENCOUNTERS PER MEMBER PER YEAR, BY SIZE OF PPO, 2013–2015
1–19,999 20,000–99,999
100,000–499,999
500,000–999,999
1,000,000+ All PPOs0
2
4
6
8
Phys
icia
n E
nc
ou
nte
rs p
er M
em
be
r 2013 2014 2015
3.4 3.53.2
4.04.4
4.0
4.95.3
4.95.3
6.1
5.2 5.0 4.85.3
4.7
NUMBER OF PHYSICIAN ENCOUNTERS PER MEMBER PER YEAR COMPARISON, 2006–2015
2006 2007 2008 2009 2010 2011 2012 2013 2014 20152
3
4
5
6
Phys
icia
n E
nc
ou
nte
rs p
er M
em
be
r Physician Encounters per Non-Medicare HMO Member Physician Encounters per PPO Member
3.3
3.84.0
4.2
4.7 4.6 4.7
4.7
4.8
4.4
4.3
4.85.1
4.4
4.6 4.5
4.0
4.7
4.7
4.7
PPO PMPY Physician Encounters Exceed non-Medicare HMO Mark in 2015
• PMPY physician encounters at PPOs remained
constant at 4.7 from 2014 to 2015, while those at
non-Medicare HMOs fell to 4.4 from 4.8, creating
the largest disparity in this metric since 2012.
• From 2006 to 2015, PMPY physician encounters
grew at both PPOs (to 4.7 from 4.3) and non-
Medicare HMOs (to 4.4 from 3.3). During this
period, only in 2008 did this measure exceed 4.8.
LONG-TERM TREND
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Physician Encounters PMPY Drop at All but Largest PPOs
• From 2014 to 2015, the number of physician
encounters per member per year (PMPY) fell
at PPOs of all membership sizes, excluding
those with 1 million or more members. Across all
PPOs, this metric has remained flat since 2013.
• PPOs with 1 million or more members also
reported the highest number of physician
encounters PMPY in 2015 (5.3). The average
number of such encounters for PPOs overall
was 4.7 in each year from 2013 to 2015.
Key Takeaway
Since 2009, the numbers of physician encounters PMPY for PPO and non-Medicare HMO enrollees
have tracked closely, with a notable exception in 2012 and a smaller divergence in 2015. Having
settled into a fairly consistent rate of encounters per year before the introduction of the Affordable
Care Act, it appears that, at least initially, neither mandates to cover preventive-care services nor an
expanded Medicaid population have driven up the numbers of PMPY physician visits significantly.
Data source: IMS Health © 2016
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PPOs That Do Not Use Fee Caps Are a Small Minority
• Virtually all (96.7%) of the PPOs operating
nationally reimbursed physicians using a fee
cap in 2015, although this share was lower
among plans with 100,000 or more members.
• Just over half (50.4%) of PPOs paid physicians
via a discount from billed charges in 2015. Just
12.9% of PPOs with 1 million or more members
paid physicians in this manner that year.
Data source: IMS Health © 2016
Monthly Fees Fall for PPOs With 100,000–499,999 Members, but Climb for Others
• Contrary to the overall trend, PPOs with 100,000
to 499,999 members reduced total monthly fees
by 9.7% from 2013 ($6.00) to 2015 ($5.42).
• Meanwhile, PPOs in the other size categories
increased per member per month fees by at
least 11.8% and as much as 48.5%.
TOTAL FEES CHARGED PER MEMBER PER MONTH, BY PPO SIZE, 2013–2015
$0.00 $2.50 $5.00 $7.50 $10.00Fees Charged (Dollars)
Overall Average
1,000,000+
500,000–999,999
100,000–499,999
20,000–99,999
1–19,999
2013
2014
2015
$5.40$7.88
$8.02
$6.00$6.64
$7.04
$6.00$5.40$5.42
$6.40$8.25
$8.80
$5.82$7.13
$7.07
$6.00$6.52
$6.71
PERCENTAGE OF PPOs PAYING PHYSICIANS BY VARIOUS METHODS, 2014–20151
Fee Cap Capitation Package Price per Episode
Discount From Billed Charges Combination
SIZE OF PPO:MEMBERS
2014 2015 2014 2015 2014 2015 2014 2015 2014 2015
1–19,999 100.0% 100.0% 6.9% 9.5% — — 87.1% 83.2% 94.1% 92.6%
20,000–99,999 99.1 99.2 10.3 8.4 1.7% 1.7% 50.9 54.6 62.1 63.9
100,000–499,999 93.4 93.5 2.8 1.9 0.9 0.9 35.9 37.0 36.8 38.0
500,000–999,999 95.0 95.0 2.5 5.0 — — 22.5 25.0 25.0 27.5
1,000,000+ 90.9 90.3 3.0 3.2 6.1 6.5 15.2 12.9 21.2 19.4
OVERALL AVERAGE 96.7% 96.7% 6.1% 6.1% 1.3% 1.3% 50.3% 50.4% 56.3% 56.5%
PERCENTAGE OF PPOs PAYING HOSPITALS BY VARIOUS METHODS, 2014–20151
Discounted Charges Per Diem Usual/Customary
Charges DRG-Based Combination
SIZE OF PPO:MEMBERS
2014 2015 2014 2015 2014 2015 2014 2015 2014 2015
1–19,999 95.9% 94.4% 96.9% 95.6% — — 91.8% 88.9% 97.9% 96.7%
20,000–99,999 87.5 89.0 86.5 88.1 3.9% 2.8% 65.4 67.0 87.5 89.0
100,000–499,999 61.0 61.3 59.1 58.5 2.9 2.8 48.6 50.0 68.6 68.9
500,000–999,999 48.7 52.6 46.0 50.0 2.7 2.6 46.0 52.6 51.4 55.3
1,000,000+ 69.7 64.5 75.8 74.2 3.0 3.2 63.6 58.1 75.8 71.0
OVERALL AVERAGE 76.9% 76.7% 76.6% 76.5% 2.4% 2.1% 65.4% 65.2% 80.3% 80.2%
1 See HMO-PPO DigestRx for 2011, page 56.NOTE: Some data were unavailable.
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Use of Managed Pharmacy Programs Inches Up Among PPOs
• The share of PPOs with a managed pharmacy
program increased fractionally, to 60.8% in 2015
from 60.7% in 2014. Among insurance company-
and hospital alliance-owned PPOs, this portion fell.
• General medical/surgical PPOs were most likely,
by PPO type, to have a managed pharmacy
program, at 61.1%, though the majority (58.7%) of
full-service PPOs also had such programs.
PERCENTAGE OF PPOs WITH A MANAGED PHARMACY PROGRAM, 2013–20151
PERCENTAGE OF PPOs WITH A MANAGED PHARMACY PROGRAM, 2014–20151
TYPE OF OWNER 2014 2015
Employer/Employer Coalition 100.0% 100.0%
HMO 100.0 100.0
Hospital 100.0 100.0
Hospital Alliance 50.0 47.2
Independent Investor 41.9 56.8
Insurance Company 61.5 59.0
Multi-ownership 58.3 78.3
Physician/Hospital Joint Venture 30.0 30.0
Physician/Medical Group 33.3 33.3
Other 100.0 100.0
TYPE OF PPOGeneral Medical/Surgical 61.4% 61.1%
Full Service 55.3 58.7
SIZE OF PPO: MEMBERS1–19,999 17.9% 19.0%
20,000–99,999 62.1 58.6
100,000–499,999 85.8 84.5
500,000–999,999 80.5 90.0
1,000,000+ 81.8 78.1
OVERALL AVERAGE 60.7% 60.8%
1 Based on 431 respondents in 2013, 425 in 2014, and 421 in 2015.
0% 25% 50% 75% 100%Percentage of PPOs
Overall Average
1,000,000+
500,000–999,999
100,000–499,999
20,000–99,999
1–19,999
2013
2014
2015
17.7%17.9%19.0%
65.7%62.1%
58.6%
84.6%85.8%
84.5%
92.5%80.5%
90.0%
75.7%81.8%
78.1%
61.0%60.7%60.8%
Large Portion of PPOs with 500,000 to 999,999 Members Use Managed Pharmacy Programs
• In 2015, 90.0% of PPOs with 500,000 to
999,999 members had a managed pharmacy
program, the largest share, by size of PPO.
• Less than one in five (19.0%) PPOs with fewer than
20,000 members had these programs, though this
percentage expanded from 17.7% in 2013.
Data source: IMS Health © 2016
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Key Takeaway
Following two years of decline from 2011 to 2013, the percentage of PPOs using a PBM
for formulary management increased in both 2014 and 2015. Although likely attributable
to a number of factors, pharmacy benefit cost containment is perhaps chief among
them: PBMs are able to leverage their scale and negotiating position to achieve lower
pricing for drugs, which may in turn help offset pharmaceutical costs at the plan level.
Full-Service PPOs Are Less Apt to Use PBM Drug Utilization Review
• In 2015, the percentage of full-service PPOs
that used a pharmacy benefit manager
(PBM) for drug utilization review (59.3%) was
much lower than the corresponding share
of general medical/surgical PPOs (85.1%).
• Full-service PPOs were also less likely than their
general medical/surgical counterparts to use
a PBM for administration (77.8% versus 89.6%),
dispensing (81.5% versus 93.2%), or mail-service
processing (59.3% versus 91.9%) that year.
PHARMACY
PERCENTAGE OF PPOs USING PBMs FOR VARIOUS SERVICES, 2011–2015
PERCENTAGE OF PPOs USING PHARMACY BENEFIT MANAGERS FOR VARIOUS SERVICES, 2015
TYPE OF PPO Administration Dispensing Drug Utilization Review
Rx ClaimsProcessing
Mail-Service Processing
General Medical/Surgical 89.6% 93.2% 85.1% 99.5% 91.9%
Full Service 77.8 81.5 59.3 100.0 59.3
SIZE OF PPO: MEMBERS
1–19,999 94.7% 100.0% 78.9% 100.0% 94.7%
20,000–99,999 87.5 91.7 76.4 100.0 83.3
100,000–499,999 87.5 92.7 86.5 99.0 87.5
500,000–999,999 94.4 94.4 86.1 100.0 94.4
1,000,000+ 80.0 80.0 80.0 100.0 92.0
OVERALL AVERAGE 88.3% 91.9% 82.3% 99.6% 88.3%
Share of PPOs Using PBMs for Formulary Management Increases
• The percentage of all PPOs that used a
PBM for formulary management rose from
2014 (68.1%) to 2015 (73.8%), and surpassed
70% for the first time since 2011 (70.5%).
• After holding steady at 85.0% in 2013 and 2014,
the percentage of all PPOs using a PBM for mail-
service processing grew to 88.3% in 2015, and was
up 7.2 percentage points from 2011 (81.1%).
LONG-TERM TREND
Dispensing Formulary Management Mail Service Processing60%
70%
80%
90%
100%
Perc
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s
2011 2012 2013 2014 2015
88.6%90.4%
92.7% 92.9% 91.9%
70.5%68.6% 67.7% 68.1%
73.8%
81.1%83.9% —85.0%—
88.3%
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Key Takeaway
The rise—albeit fractional—in the generic share of PPO prescriptions suggests that health
plans continue to rely on generics as a means of managing costs. Indeed, from 2014
($44.31) to 2015 ($44.23), PPOs recorded a decrease in the average prescription cost
per member per month—the first such decline since 2009.1 Should the push toward
consolidation among PPOs continue, it remains to be seen whether larger enrollment sizes
could potentially be used as leverage by PPOs to further this downward cost trend.
Data source: IMS Health © 2016
PMPY Prescriptions Are High for PPOs With <20,000 Members
• For PPOs with fewer than 20,000 members,
the number of prescriptions per member
per year (PMPY) inched up from 2014 (16.8)
to 2015 (17.1). In the latter year, this mean
exceeded the overall average (11.8) by 44.9%.
• In addition to rising slightly from 2014 ($51.11),
per-member per-month prescription costs
for PPOs with more than 1 million members
in 2015 ($52.03) were higher than those
for PPOs of any other membership size.
AVERAGE NUMBER OF PPO PRESCRIPTIONS AND AVERAGE PRESCRIPTION COST, 2014–2015Number of Prescriptions per Member per Year
Prescription Cost per Member per Month
TYPE OF PPO 2014 2015 2014 2015
General Medical/Surgical 11.9 11.8 $44.10 $44.01
Full Service 10.9 11.4 46.32 46.21
SIZE OF PPO: MEMBERS
1–19,999 16.8 17.1 $33.50 $32.90
20,000–99,999 11.5 11.3 36.53 36.13
100,000–499,999 11.4 11.4 47.27 47.08
500,000–999,999 10.9 10.8 50.55 50.23
1,000,000+ 11.8 11.9 51.11 52.03
OVERALL AVERAGE 11.8 11.8 $44.31 $44.23
PPO Members Are Twice as Likely to Receive Generic Rxs Than Branded
• Despite remaining virtually flat from 2013 to 2015,
the share of PPO prescriptions accounted for
by generic drugs was more than double that of
branded drugs in each of those three years.
• From 2010 to 2015, the generic percentage
of PPO prescriptions increased at a pace
that was more modest than that of HMOs
(5.7 percentage points versus 15.6, respectively).
LONG-TERM TREND
PERCENTAGE OF HMO AND PPO RXs FILLED WITH BRANDED VS. GENERIC DRUGS, 2010–2015
HMO: Branded Drugs PPO: Branded Drugs HMO: Generic Drugs PPO: Generic Drugs20%
35%
50%
65%
80%
Perc
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scrip
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s
2010 2011 2012 2013 2014 2015
38.0%37.7%
24.8%23.4%
22.5%22.4%
37.8%35.1%
33.6%32.3%
32.2%32.1%
62.0%62.3%
75.2%
76.6%77.4% 77.6%
62.2%
64.9%66.4%
67.7%67.8%
67.9%
1 See HMO-PPO DigestRx for 2011, page 56.NOTE: Some data were unavailable.
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0%
25%
50%
75%
100%
Perc
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s
Retail Drug Chain Local Pharmacy
2011 2012 2013 2014 2015
86.1%80.5%
86.5%80.8%
88.3%83.3%
88.4%83.4%
89.1%85.9%
PERCENTAGE OF PPOs WITH DIRECT PHARMACY CONTRACTS, BY TYPE OF PHARMACY, 2015
Size of PPO: Members Card Program Retail Pharmacy Drug Chain Local Pharmacy Mail Order Plan
1–19,999 63.2% 94.7% 89.5% 100.0%
20,000–99,999 56.4 84.6 84.6 94.9
100,000–499,999 68.4 90.8 82.7 99.0
500,000–999,999 80.6 88.9 91.7 100.0
1,000,000+ 60.0 92.0 92.0 100.0
Overall Average 65.2% 89.1% 85.9% 98.0%
Majority of PPOs Contract Directly With a Pharmacy
• In 2015, the percentages of PPOs that had a
direct pharmacy contract with a mail order
plan (98.0%), local pharmacy (85.9%), retail
pharmacy drug chain (89.1%), or card program
(65.2%) each inched up fractionally from 2014.1
• By enrollment, PPOs with 20,000 to 99,999
members were least likely to have a
direct contract with a mail order plan
(94.9%), a card program (63.2%), or
retail pharmacy drug chain (84.6%).
Key Takeaway
The percentages of PPOs that contract directly with retail drug chains or local pharmacies rose
each year between 2011 and 2015, expanding member choice in local markets. These contracts
also increase access to pharmacist services, which can significantly impact population health
given the role these providers increasingly play in creating extended communities of care.
PERCENTAGE OF PPOs WITH DIRECT PHARMACY CONTRACTS, BY TYPE OF PHARMACY, 2011–2015
Nearly All PPOs Contract With a Retail Pharmacy Chain or Local Pharmacy
• Each year from 2011 to 2015, the percentages of
PPOs that had a direct pharmacy contract with
a retail pharmacy chain or local pharmacy each
surpassed 80%—and continued to rise each year.
• During this period, the share of PPOs that
contracted with retail pharmacy chains
exceeded that of PPOs that contracted with
local pharmacies each year.
Data source: IMS Health © 2016
1 See HMO-PPO DigestRx for 2015, page 44.
PERCENTAGE CHANGE IN TOTAL NUMBER OF RXs DISPENSED, 2015–20164
1 IMS Health (2016). IMS Health Study: U.S. Drug Spending Growth Reaches 8.5 Percent in 2015. Retrieved from http://www.imshealth.com/en/about-us/news/ims-health-study-us-drug-spending-growth-reaches-8.5-percent-in-2015
2 Centers for Medicare and Medicaid Services. (2016). National Health Expenditure Projections 2015–2025. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2015.pdf
3 Express Scripts. (2016). Express Scripts 2015 Drug Trend Report. Retrieved from http://lab.express-scripts.com/lab/drug-trend-report 4 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.NOTE: Throughout this report, ACS is acute coronary syndrome, and AMI is acute myocardial infarction.
Data source: IMS Health © 2016
45SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016
The IMS data included in this Digest now provide
more detailed product descriptions that align with
FDA Orange Book classifications, and, as such,
were restated over the last three years. In 2015, IMS
reported that total spending on medicine in the
U.S. reached $310 billion, an increase of 8.5% from
the previous year.1 National Health Expenditure
data that tracked prescription drug expenses
at retail showed a similar rise, to $297.7 billion in
2015, up 12.2% from $265.3 billion in 2014.2 Both
IMS and the Centers for Medicare and Medicaid
Services project that these costs will continue to
rise in the next few years.1,2 Although heightened
utilization is surely a factor in continued spending
growth—as evidenced by surges in the total
number of drugs dispensed at retail for several
key classes in 2016—the introduction of new drugs
that treat hepatitis C and cancer also played a
role.2 These new medications, and the thousands
more that are in development,3 will continue to
shift pharmacy spending into high-cost specialty
medications designed to treat conditions for
which few therapeutic options existed previously.
As pharmacy costs mount, payers, providers,
and patients will no doubt look for evidence
that they are maximizing every dollar spent.
Data that track outcomes for patients on a
particular therapy will likely become even more
important, as will information that monitors how
well patients adhere to their prescribed therapies.
RETAIL PHARMACYBackgrounder
Rheumatoid Arthritis
Prostate Cancer
Osteoarthritis
Multiple Sclerosis
Hypertension
Diabetes
Depression
Cholesterol
Breast Cancer
Asthma
AMI
ACS
–12% –6% 0% 6% 12%Percentage Change
–2.1%
–0.9%
0.1%
–1.9%
–2.5%
2.8%
4.5%
–0.2%
12.0%
1.0%
–6.8%
0.0%
PERCENTAGE OF TOTAL RXs DISPENSED, BY PAYER, 2015–20161
Third Party Medicare Part D Medicaid Cash
DRUG CLASS 2015 2016 2015 2016 2015 2016 2015 2016
ACS 53.0% 52.9% 37.9% 38.9% 2.6% 2.3% 6.5% 5.9%
AMI 54.2 54.3 35.9 36.6 2.7 2.4 7.2 6.7
Asthma 67.3 67.3 20.9 22.0 8.2 7.2 3.7 3.5
Breast Cancer 66.0 66.3 24.1 24.4 2.8 2.5 7.2 6.9
Cholesterol 57.0 56.3 37.0 38.2 1.8 1.6 4.2 3.9
Depression 64.6 65.2 23.2 23.7 6.4 5.9 5.8 5.2
Diabetes 57.1 57.6 33.8 33.9 3.0 2.7 6.1 5.8
Hypertension 54.9 55.0 36.2 36.8 2.5 2.2 6.5 6.1
Multiple Sclerosis 52.1 52.6 36.5 37.4 7.0 6.1 4.3 3.9
Osteoarthritis 65.8 66.3 21.9 22.4 5.0 4.4 7.2 6.9
Prostate Cancer 67.8 68.6 20.3 19.8 2.2 2.0 9.7 9.7
Rheumatoid Arthritis 66.7 67.2 20.8 21.4 4.9 4.3 7.6 7.2
1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients. 2 Barnett, J., and Vornovitsky, M. (2015). Health Insurance Coverage in the United States: 2015. U.S. Census Bureau. Retrieved from
http://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-257.pdfNOTE: On pages 46–57, “third party” refers to commercial HMOs and PPOs, and the PBMs that provide them with pharmacy services.
TOTAL NUMBER OF RXs, BY PAYER, 20161
DRUG CLASS Third Party Medicare Part D Medicaid Cash TOTAL
ACS 169,298,571 124,263,548 7,297,497 18,942,036 319,801,652
AMI 210,408,188 141,690,907 9,140,782 26,117,968 387,357,845
Asthma 96,492,168 31,504,406 10,360,032 5,080,478 143,437,084
Breast Cancer 16,999,720 6,272,173 629,397 1,757,790 25,659,081
Cholesterol 126,375,951 85,827,259 3,636,485 8,736,390 224,576,085
Depression 187,647,735 68,097,437 16,881,904 15,087,019 287,714,095
Diabetes 110,186,850 64,902,969 5,075,199 11,043,742 191,208,761
Hypertension 345,551,826 231,291,740 13,795,447 38,086,277 628,725,290
Multiple Sclerosis 4,147,027 2,948,939 482,725 310,241 7,888,931
Osteoarthritis 92,679,950 31,298,954 6,208,874 9,583,976 139,771,753
Prostate Cancer 7,439,285 2,143,420 211,988 1,055,939 10,850,632
Rheumatoid Arthritis 87,044,040 27,674,782 5,555,411 9,292,803 129,567,037
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Third Parties Cover Increasing Percentages of Many Classes of Prescription Drugs
• From 2015 to 2016, the third-party shares of
prescriptions inched up in nine of the 12 profiled
categories, most notably for prostate cancer
drugs (0.8 percentage points).
• Medicare portions climbed in 11 of the 12 drug
classes shown (prostate cancer excepted).
Medicare’s percentage of cholesterol drugs grew
by 1.2 percentage points, and asthma by 1.1.
Data source: IMS Health © 2016
Key Takeaway
Thanks, perhaps, to relatively low unemployment rates, the percentage of U.S. residents insured
through private insurers increased by 1.2 percentage points from 2014 to 2015.2 This growth may be
helping to drive up the third-party share of prescription activity in 2016.
Hypertension Prescriptions Number Close to 629 Million
• In 2016, drugs indicated for hypertension
accounted for nearly 629 million prescriptions, the
highest number, by drug class, followed by drugs
for acute myocardial infarction (387.4 million).
• For all 12 drug categories, third parties dispensed
the most prescriptions, by payer, followed by
Medicare Part D; cash prescriptions outnumbered
Medicaid for all but three profiled categories.
CHRONIC DISEASE
PERCENTAGE OF TOTAL RXs DISPENSED, BY GENDER, 20161
ACS AMI Asthma Chol-esterol
Depres-sion
Diabetes Hyper-tension
MultipleSclerosis
Osteo-arthritis
RheumatoidArthritis
0%
18%
36%
54%
72%
Sha
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isp
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sed
49.7%
50.3%50.8%
49.2%
42.1%
57.9%51.4%
48.6%
31.3%
68.7%
49.2%
50.8%
46.4%53.6%
38.3%
61.7%
36.2%
63.8%
36.9%
63.1%
Male Female
8.1%
46.0%
45.1%
Asthma BreastCancer
Chol-esterol
Depression Diabetes Hyper-tension
MultipleSclerosis
AMI Osteo-arthritis
ProstateCancer
Rheum-atoid
Arthritis
0%
25%
50%
75%
100%
Sha
re o
f To
tal R
xs D
isp
en
sed
30.2%
16.3%
31.8%
21.6%
3.0%15.2%
52.4%
29.2%
0.2%6.6%
48.0%
45.0%
10.5%
26.9%
42.6%
19.8%
2.3%11.3%
49.0%
37.1%
1.9%9.6%
44.2%
44.1%
5.2%
23.7%
48.5%
22.4%
9.9%
24.3%
43.8%
21.8%
1.4%12.9%
59.7%
25.8%
10.8%
24.3%
43.1%
21.7%
0–24 25–44 45–64 65+
ACS
0.5%6.7%
44.5%
48.0%
0.6%
PERCENTAGE OF TOTAL RXs DISPENSED, BY AGE, 20161
1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.
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Patients Aged 45–64 Fill Largest Portions of Most Profiled Rxs
• For 11 of the 12 profiled drug categories
(ACS excluded), patients between the ages
of 45 and 64 received the highest shares of
prescriptions dispensed, by age group, in 2016.
• The aged 45–64 share of prescriptions
dispensed was highest, by drug product, for
prostate cancer (59.7%) and breast cancer
(52.4%), but lowest for asthma (31.8%).
Data source: IMS Health © 2016
Key Takeaway
As patients under the age of 65 continue to fill the majority of prescriptions in key drug categories,
the payers—both private and public—who underwrite their prescriptions will be increasingly held
accountable to control these expenses. Effective management of pharmacy expenses will likely take
into account not only the price of the drug, but associated therapy adherence and outcomes as well.
Females Fill the Majority of Prescriptions Dispensed in Eight of 10 Drug Classes
• In 2016, females filled more than half of
prescriptions dispensed in eight of 10 profiled
drug categories; nearly 69% of depression drugs
were filled by females that year.
• Meanwhile, males received the majority of
AMI (50.8%) and cholesterol (51.4%) drugs, but
less than 40% of those for depression, multiple
sclerosis, osteoarthritis, and rheumatoid arthritis.
CHRONIC DISEASE
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COMMON RXs DISPENSED, BY DRUG CLASS, 2014–20161
Total Number of Prescriptions
DRUG CLASS/PRODUCT Brand/Generic 2014 2015 2016
AsthmaMontelukast Sodium Generic 30,310,968 32,041,251 34,193,690Proair HFA Brand 31,092,508 30,964,399 27,447,716Ventolin HFA Brand 19,126,702 18,769,965 20,555,779Albuterol Sulfate Generic 14,357,207 14,413,892 13,510,591Advair Diskus Brand 14,143,349 11,901,156 10,849,585
Breast CancerEstradiol Generic 7,728,053 7,596,211 7,473,064Methotrexate Generic 5,400,850 5,298,358 5,350,501Medroxyprogesterone Aceta Generic 2,599,237 2,558,478 2,502,545Premarin Brand 4,151,395 3,235,023 2,621,615Anastrozole Generic 2,396,215 2,526,398 2,694,741
CholesterolAtorvastatin Calcium Generic 66,500,341 73,858,793 83,498,762Simvastatin Generic 68,400,372 60,902,949 53,431,913Pravastatin Sodium Generic 32,393,740 29,177,477 27,102,508Crestor Brand 21,495,080 18,317,937 15,994,294Fenofibrate Generic 10,682,586 10,485,138 10,431,605
DepressionSertraline HCL Generic 38,638,848 39,283,430 40,829,666Escitalopram Oxalate Generic 23,643,403 26,379,530 29,006,184Fluoxetine HCL Generic 27,789,632 28,134,019 28,589,738Citalopram Hydrobromide Generic 35,033,870 32,399,964 30,315,966Trazodone HCL Generic 24,449,630 25,527,795 27,055,703
HypertensionLisinopril Generic 93,753,512 92,458,267 93,446,902Amlodipine Besylate Generic 67,550,767 69,537,788 73,115,300Hydrochlorothiazide Generic 46,501,216 44,693,594 43,934,501Losartan Potassium Generic 33,786,598 37,926,695 40,210,028Metoprolol Succinate ER Generic 36,240,874 35,943,587 37,343,872
Multiple SclerosisBaclofen Generic 6,047,074 6,854,650 7,705,589Copaxone Brand 76,395 64,904 58,857Tecfidera Brand 9,051 17,096 19,345Gilenya Brand 14,424 15,546 17,399Avonex Brand 36,713 23,808 18,228
OsteoarthritisIbuprofen Generic 39,851,123 40,993,111 41,551,552Meloxicam Generic 24,747,190 26,016,298 27,221,964Duloxetine HCL Generic 8,524,742 18,005,759 19,817,695Naproxen Generic 17,180,222 17,062,760 16,574,703Diclofenac Sodium DR Generic 6,886,797 7,281,466 7,576,996
Rheumatoid ArthririsIbuprofen Generic 39,851,123 40,993,111 41,551,552Meloxicam Generic 24,747,190 26,016,298 27,221,964Naproxen Generic 17,180,222 17,062,760 16,574,703Diclofenac Sodium DR Generic 6,886,797 7,281,466 7,576,996Celecoxib Generic — 3,540,405 6,584,278
Data source: IMS Health © 2016
• The hypertension medication lisinopril had
the highest number of prescriptions of the 36
individual products shown in 2016, at 93.4 million,
followed by atorvastatin calcium (83.5 million).
• From midyear 2014 to midyear 2016, the total
number of prescriptions increased for 18 of the
36 products; of those 18, only three (Ventolin
HFA, Tecfidera, and Gilenya) were branded.
Hypertension Drug Lisinopril Tops 2016 Prescription Count
CHRONIC DISEASE
1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.NOTE: Some data were unavailable. Drugs were categorized by indication, and so may appear across multiple classes.
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COMMON THIRD-PARTY RXs DISPENSED, BY DRUG CLASS, 2014–20161
Number of Third-Party Prescriptions per Year
DRUG CLASS/PRODUCT Brand/Generic 2014 2015 2016
AsthmaMontelukast Sodium Generic 21,686,455 22,964,060 24,469,962Proair HFA Brand 19,480,621 19,387,271 16,975,165Ventolin HFA Brand 15,183,494 15,166,522 15,961,102Albuterol Sulfate Generic 9,551,629 9,969,675 9,483,312Advair Diskus Brand 7,825,746 6,421,390 5,780,642
Breast CancerEstradiol Generic 5,345,291 5,288,772 5,249,946Methotrexate Generic 3,380,317 3,277,976 3,267,197Medroxyprogesterone Aceta Generic 1,914,827 1,911,914 1,897,492Premarin Brand 2,852,455 2,232,402 1,856,148Anastrozole Generic 1,349,861 1,416,724 1,528,560
CholesterolAtorvastatin Calcium Generic 38,212,245 43,371,574 48,667,407Simvastatin Generic 38,110,366 33,605,599 29,081,791Pravastatin Sodium Generic 17,265,519 16,014,760 14,628,367Crestor Brand 13,437,608 10,820,090 8,879,658Fenofibrate Generic 6,572,647 6,390,855 6,405,530
DepressionSertraline HCL Generic 26,559,608 27,033,870 28,205,990Escitalopram Oxalate Generic 17,297,872 19,283,814 21,274,858Fluoxetine HCL Generic 18,122,738 18,701,455 19,370,249Citalopram Hydrobromide Generic 21,698,936 20,247,408 19,188,968Trazodone HCL Generic 13,712,639 14,338,499 15,289,667
HypertensionLisinopril Generic 53,813,254 53,761,677 54,328,958Amlodipine Besylate Generic 35,960,070 37,154,525 38,966,381Hydrochlorothiazide Generic 27,218,672 26,498,761 26,179,596Losartan Potassium Generic 19,008,312 21,315,749 22,567,364Metoprolol Succinate ER Generic 20,882,392 20,379,142 20,781,069
Multiple SclerosisBaclofen Generic 3,095,790 3,594,075 4,080,554Copaxone Brand 31,480 25,926 20,741Tecfidera Brand 5,707 8,894 9,304Gilenya Brand 5,088 5,463 6,219Avonex Brand 15,119 8,366 5,652
OsteoarthritisIbuprofen Generic 28,060,160 29,349,003 30,057,391Meloxicam Generic 15,077,251 15,970,980 16,786,472Duloxetine HCL Generic 5,366,465 11,081,088 12,125,737Naproxen Generic 11,516,147 11,570,304 11,370,352Diclofenac Sodium DR Generic 4,478,845 4,810,116 5,050,750
Rheumatoid ArthririsIbuprofen Generic 28,060,160 29,349,003 30,057,391Meloxicam Generic 15,077,251 15,970,980 16,786,472Naproxen Generic 11,516,147 11,570,304 11,370,352Diclofenac Sodium DR Generic 4,478,845 4,810,116 5,050,750Celecoxib Generic — 2,180,799 3,928,298
• Third parties increased prescription counts from
2014 to 2016 for 17 of the 36 profiled individual
drug products; this growth was highest for the
osteoarthritis drug duloxetine HCL, at 126.0%.
• Among these 36 most commonly prescribed drug
products in the selected categories, 27 were
generic. The numbers of third-party prescriptions
grew from 2014 to 2016 for 14 generic products.
Third-Party Rx Counts Rise for 50% of Profiled Products
CHRONIC DISEASE
Data source: IMS Health © 2016
1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.NOTE: Some data were unavailable. Drugs were categorized by indication, and so may appear across multiple classes.
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PERCENTAGE OF TOTAL RXs DISPENSED FOR SELECTED SPECIALTY RXs, BY PAYER, 20161
DRUG CLASS Product Third Party Medicare Part D Medicaid Cash
Hepatitis C Harvoni 38.7% 51.8% 6.8% 2.6%
Sovaldi 41.7 47.5 8.1 2.6
Viekira Pak 51.5 24.3 18.8 5.3
HIV/AIDS Complera 69.8 17.3 10.7 2.3
Prezista 49.9 36.4 11.6 2.1
Reyataz 52.3 33.7 11.9 2.1
Stribild 70.3 15.8 11.3 2.6
Truvada 66.2 21.5 9.9 2.3
Multiple Sclerosis Gilenya 35.7 50.2 10.8 3.2
Tecfidera 48.1 37.5 11.1 3.3
Osteoporosis Forteo 26.2 68.7 1.7 3.4
Pulmonary Arterial Hypertension
Revatio 40.9 22.8 27.9 8.3
Rheumatoid Arthritis Enbrel 44.6 42.3 8.3 4.8
Humira 48.0 39.8 8.4 3.7
Third-Party Shares Are Higher Than Others for Most Featured Specialty Products
• For 10 of the 14 profiled specialty products,
third-party insurers covered the largest portions of
prescriptions dispensed, by payer, in 2016.
• Medicare Part D covered more than half of
Harvoni (51.8%), Gilenya (50.2%), and Forteo
(68.7%) prescriptions that year.
Data source: IMS Health © 2016
TOTAL NUMBER OF SPECIALTY RXs, 2014–20161
DRUG CLASS Product 2014 2015 2016 % Change 2014–2016
Hepatitis C Harvoni — 85,543 104,872 —
Sovaldi 222,262 138,854 28,110 –87.4%
Viekira Pak — 3,685 8,949 —
HIV/AIDS Complera 263,542 339,736 349,681 32.7
Prezista 598,394 629,800 527,374 –11.9
Reyataz 514,687 441,364 325,923 –36.7
Stribild 245,166 426,485 505,551 106.2
Truvada 1,246,837 1,347,720 1,507,195 20.9
Multiple Sclerosis Gilenya 14,424 15,546 17,399 20.6
Tecfidera 9,051 17,096 19,345 113.7
Osteoporosis Forteo 204,858 129,799 115,561 –43.6
Pulmonary Arterial Hypertension
Revatio 8,485 4,558 6,249 –26.4
Rheumatoid Arthritis Enbrel 195,954 148,183 129,063 –34.1
Humira 142,727 114,665 116,028 –18.7
1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.NOTE: Some data were unavailable for the selected drug classes.
• For five of the 14 profiled specialty drugs,
the total numbers of prescriptions dispensed
nationally increased from 2014 to 2016; eight
grew prescription volumes from 2015 to 2016.
• After growing 20.9% from 2014 (1.2 million) to
2016 (1.5 million), the total number of Truvada
prescriptions dispensed nationally exceeded
those of any other specialty drug shown.
Most Profiled Specialty Rxs Grow Volume From 2015 to 2016
CHRONIC DISEASE
BRANDED VS. GENERIC SHARES OF TOTAL RXs DISPENSED, BY PAYER, 20161
Third Party Medicare Part D Medicaid Cash
DRUG CLASS Brand Generic Brand Generic Brand Generic Brand Generic
ACS 8.2% 91.8% 8.5% 91.5% 8.1% 91.9% 4.8% 95.2%
AMI 1.0 99.0 0.9 99.1 3.3 96.7 1.9 98.1Asthma 62.0 38.0 70.5 29.5 64.7 35.3 57.1 42.9Breast Cancer 11.9 88.1 10.9 89.1 13.8 86.2 6.1 93.9
Cholesterol 11.7 88.3 12.7 87.3 10.7 89.3 4.9 95.1
Depression 3.3 96.7 3.1 96.9 9.9 90.1 2.1 97.9
Diabetes 39.8 60.2 40.3 59.7 48.2 51.8 17.0 83.0
Hypertension 3.7 96.3 3.2 96.8 2.6 97.4 1.7 98.3
Multiple Sclerosis 1.6 98.4 3.1 96.9 3.5 96.5 2.5 97.5Osteoarthritis 4.4 95.6 7.2 92.8 3.3 96.7 3.0 97.0
Prostate Cancer 26.3 73.7 31.1 68.9 36.2 63.8 9.6 90.4
Rheumatoid Arthritis 2.4 97.6 2.3 97.7 1.9 98.1 1.1 98.9
OVERALL PERCENTAGE OF RXs FILLED WITH GENERIC DRUGS, 2014–20161
DRUG CLASS 2014 2015 2016
ACS 90.4% 91.3% 91.9%
AMI 98.7 98.9 98.9
Asthma 34.4 35.6 36.1
Breast Cancer 83.2 86.5 88.7
Cholesterol 83.2 86.6 88.2
Depression 90.5 94.3 96.4
Diabetes 63.6 62.4 61.1
Hypertension 94.0 95.9 96.6
Multiple Sclerosis 96.6 97.3 97.7
Osteoarthritis 82.7 92.3 95.1
Prostate Cancer 65.5 70.3 74.2
Rheumatoid Arthritis 91.6 95.0 97.7
UT IL IZATION
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Key Takeaway
Regardless of payer, relatively comparable, and high, rates of generic drug prescriptions were filled
across 12 common drug classes in 2016. This seems to indicate that both private and government
payers’ formularies place similar emphasis on such drugs. However, in drug classes such as asthma
and diabetes, branded shares are higher, which may indicate that innovative therapies can alter
prescription patterns in the future.
Generic Shares Continue to Climb for Most Rx Classes
• Between 2014 and 2016, the overall percentages
of prescriptions filled with generics increased for
11 of 12 profiled drug classes; the generic share
of diabetes drugs fell by 2.5 percentage points.
• Of the 12 profiled drug classes, the generic
share of AMI prescriptions dispensed was
highest (98.9%), followed by those of multiple
sclerosis and rheumatoid arthritis (both 97.7%).
Third-Party Payers Have Highest Generic Rx Percentages in Four Profiled Drug Classes
• In 2016, third-party patients filled the largest
generic shares, by payer, of drugs in the asthma
(38.0%), diabetes (60.2%), multiple sclerosis
(98.4%), and prostate cancer (73.7%) classes.
• Meanwhile, Medicaid’s generic shares were
highest of the payers for ACS (91.9%), cholesterol
(89.3%), hypertension (97.4%), osteoarthritis
(96.7%), and rheumatoid arthritis (98.1%) drugs.
Data source: IMS Health © 2016
1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.
CHRONIC DISEASE
TOTAL NUMBER OF RXs PER 1,000 PATIENTS, BY PAYER, 20161
DRUG CLASS Third Party Medicare Part D Medicaid Cash
ACS 1,440.3 2,649.1 407.8 236.4
AMI 1,790.1 3,020.6 510.8 325.9Asthma 820.9 671.6 578.9 63.4Breast Cancer 144.6 133.7 35.2 21.9
Cholesterol 1,075.2 1,829.7 203.2 109.0
Depression 1,596.4 1,451.7 943.4 188.3
Diabetes 937.4 1,383.6 283.6 137.8
Hypertension 2,939.8 4,930.7 770.9 475.3
Multiple Sclerosis 35.3 62.9 27.0 3.9Osteoarthritis 788.5 667.2 347.0 119.6
Prostate Cancer 63.3 45.7 11.8 13.2Rheumatoid Arthritis 740.5 590.0 310.4 116.0
1 Data are as of midyear 2016, and represent the percentages of prescriptions dispensed, by drug class, to all patients.
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Key Takeaway
The numbers of prescriptions filled for cardiovascular-related drugs point to a need for ongoing
interventions in all age ranges to address risk factors such as high cholesterol and hypertension.
At the same time, the prevalence of depression is also a significant concern, especially as this
condition can impact patients’ medication therapy adherence and behavior-modification efforts,
and thus has the potential to negatively impact treatment of other chronic diseases.
Medicare Part D Records Two Top Rx Ratios Among Profiled Drug Classes
• By drug class and payer, the greatest number
of prescriptions per 1,000 patients was for
hypertension medications dispensed to
Medicare Part D enrollees (4,930.7) in 2016.
• The corresponding Medicare Part D ratio
for AMI drugs was second highest of the
12 profiled drugs (3,020.6), exceeding the
third-party ratios of all 12 drug classes shown.
Data source: IMS Health © 2016
ACS AMI Asthma BreastCancer
Choles-terol
Depres-sion
Diabetes Hyper-tension
MultipleSclerosis
Osteo-arthritis
ProstateCancer
RheumatoidArthritis
0
600
1,200
1,800
2,400
Nu
mb
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f Pre
scrip
tion
s
1,205.1
1,459.6
540.5
96.7
846.2
1,084.2
720.5
2,369.1
29.7
526.7
40.9
488.2
TOTAL NUMBER OF RXs PER 1,000 PATIENTS, 20161
• In 2016, the total number of prescriptions
per 1,000 patients surpassed 1,000 in the 12
profiled classes only for drugs used to treat
ACS (1,205.1), AMI (1,459.6), depression
(1,084.2), and hypertension (2,369.1).
• The corresponding ratios for drugs in the
breast cancer (96.7), multiple sclerosis
(29.7), and prostate cancer (40.9) classes
were all below 100 in 2016, while that of
rheumatoid arthritis (488.2) was under 500.
Prescription Ratios Exceed 1,000 in Four Drug Classes
CHRONIC DISEASE
TOTAL RX SPENDING PER YEAR, BY PAYER, 20161,2
DRUG CLASS Third Party Medicare Part D Medicaid Cash TOTALACS $10,849,917,962 $10,406,060,925 $400,359,055 $755,499,729 $22,412,288,022AMI 8,247,276,420 8,009,656,515 373,292,373 711,522,170 17,342,080,670Asthma 11,645,036,810 5,619,888,615 1,330,382,931 631,632,686 19,227,310,163Breast Cancer 1,408,129,527 1,030,003,461 109,411,254 138,671,848 2,686,246,998
Cholesterol 11,677,441,907 10,576,255,562 313,954,215 666,310,465 23,234,475,286Depression 15,070,261,144 6,827,222,238 2,545,411,098 1,039,854,127 25,483,380,997Diabetes 25,715,896,395 16,314,213,607 1,295,292,674 1,101,063,824 44,427,751,982Hypertension 11,144,533,238 9,387,565,894 405,019,962 1,036,413,691 21,973,998,922
Multiple Sclerosis 711,242,347 874,255,262 153,641,244 74,623,623 1,813,777,647Osteoarthritis 6,717,163,046 2,690,762,996 312,972,647 433,671,479 10,154,790,606Prostate Cancer 539,793,978 401,536,991 26,592,384 56,403,724 1,024,335,671Rheumatoid Arthritis 7,382,760,725 3,758,406,293 537,987,406 534,755,980 12,214,066,014
1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients. 2 The total full price the pharmacy charges the patient for the product, regardless of copayment situation.
PERCENTAGE CHANGE IN THIRD-PARTY AND MEDICARE PART D SPENDING, 2014–20161
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Part D CV-Related Drug Spending Nears Third-Party Levels
• Total Medicare Part D spending for prescription
drugs in the ACS ($10.4 billion), AMI ($8.0 billion),
and cholesterol ($10.6 billion) classes was nearly
as high as that of third-party payers in 2016.
• The only profiled drug class for which Medicare
Part D prescription spending exceeded that
of third-party payers in 2016 was multiple
sclerosis ($874 million versus $711 million).
0%
30%
60%
–60%
–30%Perc
en
tag
e C
ha
ng
e
–9.2%
7.3%
–12.0%
0.8%5.8%
17.8%
–0.2%
12.7%
–12.7%
8.3%
–5.8%–4.9%
54.3%48.7%
–10.1%–2.5%
32.7%
48.0%
–1.0%
–23.2%
–1.8%
8.4%
20.4%17.7%
Third Party Medicare Part D
ACS AMI Asthma BreastCancer
Cholesterol Depres-sion
Diabetes Hyper-tension
MultipleSclerosis
Osteo-arthritis
ProstateCancer
RheumatoidArthritis
Data source: IMS Health © 2016
Third-Party Prescription Drug Spending Declines in Eight of 12 Drug Classes
• From 2014 to 2016, third-party prescription
spending dipped for medications used to treat
ACS, AMI, breast cancer, cholesterol, depression,
hypertension, osteoarthritis, and prostate cancer.
• During this period, Medicare Part D prescription
drug spending fell in just three of the 12 profiled
drug classes (depression, hypertension, and
osteoarthritis) and rose by double digits in five.
Key Takeaway
Prescription drug spending for depression is particularly high for third-party payers, second only to
diabetes of the profiled drug classes. As providers and payers work to improve overall population
health, greater focus on this condition’s connection to chronic disease is likely merited.
CHRONIC DISEASE
TOTAL SPENDING (IN $ MILLIONS) PER YEAR FOR BRAND-NAME RXs, BY PAYER, 20161,2
DRUG CLASS Third Party Medicare Part D Medicaid Cash TOTAL
ACS $3,651 $3,039 $124 $157 $6,970AMI 259 128 57 24 467Asthma 9,161 4,805 1,050 458 15,474Breast Cancer 519 353 65 63 999
Cholesterol 4,891 4,228 111 198 9,429Depression 3,013 1,259 1,349 190 5,811Diabetes 23,285 14,694 1,205 922 40,108Hypertension 2,473 1,486 68 141 4,169
Multiple Sclerosis 394 588 103 63 1,147Osteoarthritis 2,625 405 48 116 3,194Prostate Cancer 408 313 22 34 777Rheumatoid Arthritis 4,026 1,903 349 286 6,564
TOTAL SPENDING (IN $ MILLIONS) PER YEAR FOR GENERIC RXs, BY PAYER, 20161,2
DRUG CLASS Third Party Medicare Part D Medicaid Cash TOTAL
ACS $7,199 $7,367 $276 $599 $15,442AMI 7,989 7,882 316 688 16,875Asthma 2,484 815 281 173 3,754Breast Cancer 889 677 45 75 1,687
Cholesterol 6,786 6,348 203 468 13,806Depression 12,058 5,568 1,196 849 19,672Diabetes 2,430 1,620 90 179 4,320Hypertension 8,671 7,901 337 895 17,805
Multiple Sclerosis 318 286 51 12 666Osteoarthritis 4,092 2,286 265 318 6,961Prostate Cancer 132 88 4 23 247Rheumatoid Arthritis 3,357 1,855 189 249 5,650
1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.2 The total full price the pharmacy charges the patient for the product, regardless of copayment situation.
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Majority of Brand-Name Rx Spending Is by Third Parties
• From midyear 2015 to midyear 2016, third
parties accounted for more than 50% of the
total spending per year for brand-name
medications in 11 of the 12 profiled drug classes.
• For brand-name multiple sclerosis drugs, the
sole exception, Medicare Part D covered the
majority of such spending that year (51.3%). Cash
payers accounted for less than 7% in all classes.
Key Takeaway
In seven of the 12 profiled drug classes, total spending per year for generic medications surpassed
that of brand-name drugs. Indeed, the push toward generics over their brand-name counterparts
remains a popular means of curbing health care spending. However, the steadily increasing costs
for generic drugs could potentially dilute the outcomes of such cost-saving efforts.
Total Spending for Generic Depression, Hypertension Rxs Top All Other Profiled Drug Classes
• For third parties and Medicaid alike, as
well as overall, total spending per year for
generic prescriptions from midyear 2015
to midyear 2016 was highest, by profiled
drug class, for depression medications.
• For Medicare Part D and cash payers, total
spending for generic hypertension drugs eclipsed
that of any other profiled drug class that year.
Overall, such spending for these medications
($17.8 billion) was second highest by drug class.
Data source: IMS Health © 2016
CHRONIC DISEASE
ACS AMI Asthma BreastCancer
Cholesterol Depres-sion
Diabetes Hyper-tension
MultipleSclerosis
Osteo-arthritis
ProstateCancer
RheumatoidArthritis
$0
$42
$84
$126
$168
Rx S
pe
nd
ing
$84.45
$65.35$72.45
$10.12
$87.55$96.02
$167.41
$82.80
$6.83
$38.26
$3.86
$46.02
TOTAL RX SPENDING PER PATIENT PER YEAR, 20161,2
TOTAL RX SPENDING PER PATIENT PER YEAR, BY PAYER, 20161,2
DRUG CLASS Third Party Medicare Part D Medicaid Cash TOTAL
ACS $92.31 $221.84 $22.37 $9.43 $84.45AMI 70.17 170.75 20.86 8.88 65.35Asthma 99.07 119.81 74.34 7.88 72.45Breast Cancer 11.98 21.96 6.11 1.73 10.12
Cholesterol 99.35 225.47 17.54 8.31 87.55Depression 128.21 145.54 142.24 12.98 96.02Diabetes 218.78 347.79 72.38 13.74 167.41Hypertension 94.81 200.13 22.63 12.93 82.80
Multiple Sclerosis 6.05 18.64 8.59 0.93 6.83Osteoarthritis 57.15 57.36 17.49 5.41 38.26Prostate Cancer 4.59 8.56 1.49 0.70 3.86Rheumatoid Arthritis 62.81 80.12 30.06 6.67 46.02
1 Data are as of midyear 2016, and represent the percentages of prescriptions dispensed, by drug class, to all patients. 2 The total full price the pharmacy charges the patient for the product, regardless of copayment situation.
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Medicaid PPPY Prescription Spending Is Lower Than That of Third-Party Payers
• In 10 of 12 profiled drug classes (depression
and multiple sclerosis excepted), Medicaid
PPPY prescription spending was lower
than that of third-party payers in 2016.
• Meanwhile, PPPY prescription spending for
Medicare Part D enrollees was higher in all
of the profiled drug classes than for patients
with third-party or Medicaid coverage.
Data source: IMS Health © 2016
Key Takeaway
Medicaid expansion provided millions of new patients with prescription drug coverage, yet Medicaid
PPPY prescription spending generally remains far below that of individuals with third-party coverage.
This may suggest that the prescription benefit designs of Medicaid HMOs, in which the vast majority of
Medicaid recipients are enrolled, are effective in holding down prescription drug spending.
CV Drugs Make Up Majority of Top 7 PPPY Spending Classes
• Drugs treating cardiovascular conditions (ACS,
AMI, cholesterol, and hypertension) accounted
for four of the top seven classes by per patient
per year (PPPY) prescription spending in 2016.
• Meanwhile, PPPY retail prescription spending
in the profiled drug classes was highest for
diabetes ($167.41) medications, and lowest
for prostate cancer ($3.86) prescriptions.
CHRONIC DISEASE
AVERAGE OUT-OF-POCKET COSTS PER RX, 20161
AMIHypertension
Multiple SclerosisRheumatoid Arthritis
OsteoarthritisACS
DepressionCholesterol
Breast CancerProstate Cancer
AsthmaDiabetes
$0 $7 $14 $21 $28
Out-of-Pocket Costs
$27.06
$24.71
$20.54$16.61
$15.62
$11.33$11.09
$11.05
$10.60$9.88
$8.65
$7.44
AVERAGE OUT-OF-POCKET COSTS PER RX, BY PAYER, 2015–20161
Third Party Medicare Part D Medicaid Cash
DRUG CLASS 2015 2016 2015 2016 2015 2016 2015 2016
ACS $13.48 $12.75 $8.70 $8.63 $1.86 $1.72 $18.27 $21.23
AMI 9.25 8.44 5.93 5.62 1.74 1.61 13.72 14.01Asthma 24.88 25.62 21.28 22.27 3.22 2.71 65.99 74.15Breast Cancer 17.04 16.79 15.99 16.15 2.36 2.19 23.18 22.84
Cholesterol 18.01 16.98 12.97 12.89 2.16 1.91 33.12 39.12
Depression 13.70 12.63 8.28 7.69 2.16 1.75 22.50 25.34
Diabetes 27.13 29.15 21.99 23.68 2.97 2.76 32.35 37.81
Hypertension 10.55 9.78 7.14 6.77 1.80 1.67 13.76 14.33
Multiple Sclerosis 12.18 11.43 7.90 8.41 2.18 1.83 21.01 18.38Osteoarthritis 11.97 11.86 11.23 9.03 1.97 1.75 16.08 17.73
Prostate Cancer 20.28 20.43 24.90 23.29 2.56 2.36 18.76 16.97
Rheumatoid Arthritis 11.22 11.30 9.55 8.82 2.00 1.77 15.06 15.86
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• From midyear 2014 (data not shown) to midyear
2016, average out-of-pocket (OOP) costs per
prescription fell in 10 of the 12 drug classes shown.
• OOP costs for osteoarthritis medications
decreased by the largest percentage (–22.8%)
over these two years (to $11.05 from $14.31).
Data source: IMS Health © 2016
Key Takeaway
Despite a trend toward greater cost-sharing in health plans, OOP costs per prescription declined in the
majority of profiled drug classes. This may reflect a continued emphasis on generics in plan designs,
complemented by a stronger provider focus on high-risk patients. Such interventions are intended to
minimize disease progression, which may obviate more expensive therapies complex patients require.
Third-Party OOP Costs per Prescription Decrease for Majority of Drug Classes
• From 2015 to 2016, third-party OOP costs
per prescription fell in eight of 12 profiled
drug classes, but rose for asthma, diabetes,
prostate cancer, and rheumatoid arthritis.
• Meanwhile, corresponding Medicare Part D OOP
costs declined in eight of the 12 drug classes,
while those of Medicaid dropped in all 12. Cash
payers’ OOP costs grew in nine of the 12.
1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.NOTE: “Out-of-pocket cost” is the actual amount paid by the patient for the individual prescription. This cost mainly includes copayments, but can also include tax, deductibles, and cost differentials where applicable.
OOP Costs per Rx Decline for 10 of 12 Classes
CHRONIC DISEASE
AVERAGE OUT-OF-POCKET COSTS FOR SELECTED SPECIALTY RXs, BY PAYER, 20161
DRUG CLASS Product Third Party Medicaid Medicare Part D Cash
Hepatitis C Harvoni $180 $2 $746 $436
Solvaldi 151 2 661 10
Viekira Pak 178 3 510 —
HIV/AIDS Complera 147 3 90 2,721
Prezista 87 2 50 1,294
Reyataz 87 2 49 1,368
Stribild 196 3 96 3,238
Truvada 97 3 62 1,543
Multiple Sclerosis Gilenya 210 3 194 3,085
Tecfidera 239 3 329 —
Osteoporosis Forteo 203 4 158 2,604
Pulmonary Arterial Hypertension
Revatio 162 3 60 1,649
Rheumatoid Arthritis Enbrel 169 5 130 4,081
Humira 150 3 120 3,918
AVERAGE RETAIL SPENDING AND TOTAL RETAIL DOLLARS FOR SELECTED SPECIALTY RXs, 2014–20161,2
Average Retail Spending per Prescription
Total Retail $ (in Thousands)
DRUG CLASS Product 2014 2015 2016 2014 2015 2016
Hepatitis C Harvoni — $32,632 $32,440 — $2,791,445 $3,402,036
Solvaldi $27,884 28,371 28,795 $6,197,437 3,939,478 809,414
Viekira Pak — 28,230 28,159 — 104,026 251,991
HIV/AIDS Complera 2,149 2,271 2,480 566,439 771,562 867,163
Prezista 1,233 1,319 1,420 737,759 830,853 748,750
Reyataz 1,248 1,349 1,453 642,302 595,542 473,583
Stribild 2,608 2,724 2,882 639,446 1,161,784 1,456,961
Truvada 1,392 1,453 1,585 1,735,515 1,958,183 2,388,285
Multiple Sclerosis Gilenya 5,448 5,961 6,952 — 92,666 120,964
Tecfidera 4,893 5,704 6,614 — 97,518 127,950
Osteoporosis Forteo 1,518 1,917 2,520 311,026 248,814 291,177
Pulmonary Arterial Hypertension
Revatio 2,369 3,330 5,398 — 15,175 33,733
Rheumatoid Arthritis Enbrel 2,733 3,219 3,988 535,456 477,005 514,673
Humira 2,979 3,658 4,549 — 419,398 527,860
FINANCIALS
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Data source: IMS Health © 2016
Hepatitis C Retail Rx Spending Tops Other Specialty Drugs
CHRONIC DISEASE
• In midyear 2016, the average retail spending
per prescription for hepatitis C drugs Harvoni
($32,440), Sovaldi ($28,795), and Viekira Pak
($28,159) surpassed those of the other profiled
specialty drugs shown by at least a factor of four.
• At the same time, third-party average out-of-
pocket costs for multiple sclerosis drugs Gilenya
($210) and Tecfidera ($239) were highest among
the profiled specialty drugs, including Harvoni
($180), Sovaldi ($151), and Viekira Pak ($178).
1 Data are as of midyear 2016, and represent the numbers/percentages of prescriptions dispensed, by drug class, to all patients.2 The total full price the pharmacy charges the patient for the product, regardless of copayment situation. NOTE: “Out-of-pocket cost” is the actual amount paid by the patient for the individual prescription. This cost mainly includes copayments, but can also include tax, deductibles, and cost differentials where applicable. Some data were unavailable for the selected drug classes.
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Insurers Focus on HMOs as a Path to Success on ExchangesAs health insurance exchanges approach their
fourth open enrollment period, a sense of stability in
the marketplace—which many insurers had hoped
to see around the year-three mark—has yet to come
to fruition. Citing financial losses as a determining
factor, UnitedHealthcare and Aetna, among others,
have thus opted to drastically reduce participation
in the exchanges or exit entirely in 2017, resulting in
nearly 700 counties nationwide—predominantly in
rural markets—where just one insurer is lined up to
offer plans in their market in the coming year.1
Furthermore, the types of plans available to health
insurance exchange enrollees are likewise in a
state of flux. A survey of 18 states and Washington,
D.C., found that HMOs are set to become the most
prominent model type offered to health insurance
exchange consumers, accounting for 62% of all
available plans in the profiled markets; conversely,
PPO plan offerings will continue to diminish.2
Such shifts are linked, at least in part, to the growing
evidence that HMOs, which function on narrower
networks and increased coordination of care, have
proven more effective than PPOs in containing
losses on the health insurance exchanges.3
For enrollees, meanwhile, there is a financial benefit
as well: a comparison of the lowest-priced silver
model plans revealed that premium rates for
managed care models grow at roughly half the rate
of non-managed care models.4
The question that lingers, however, is whether
rallying around HMO models will provide a pathway
to a period of stability in the health insurance
exchange market. Should it prove a more uniformly
financially successful strategy, there is hope that
next year’s open enrollment period could be one
characterized by its notable insurer entries rather
than its exits.
LOOKING FORWARD
Data: The Key Driver as Payers Shift to Value-Based Care and PHM The U.S. health care market is experiencing a shift
from traditional payer-based fee-for-service (FFS)
care management to value-based, provider-driven
population health management (PHM)—a care
model that aims to keep communities of patients
healthier through collaboration between and
among providers and payers. This new paradigm is
rapidly altering how payers do business: data, and
the ability to analyze and share them, become
essential to understanding patient characteristics
and informing care decisions.
Many payers are already in the midst of this
transformation. For example, in January 2016,
BlueCross BlueShield expanded value-based
payment contracts from its HMO plans to its
PPO offerings.5
Such transitions hinge on payers’ ability to collect
the data necessary to stratify their patient
population into subgroups according to risk, and
to design care strategies that accommodate
those needs. PPOs, in particular, will need to ensure
that sufficient metrics are still captured when
the patient receives care outside of the payer’s
established network, a challenge with which
accountable care organizations are still grappling.
Traditionally, HMOs and PPOs were mainly
responsible for patient health risk assessments,
setting and collecting premiums, analyzing claims,
and making payments to their providers. Their data
collection and analysis were geared more toward
administrative than clinical purposes; payers will
now have to use technology to develop new
ways of intelligently processing complete clinical
and cost data—including lab, pharmacy, and
outcomes information—and turn it into usable
information that will drive health care decisions—
a costly endeavor.
1 S. Kliff, et al. (2016). Big Insurers Have Quit Obamacare. That Means More Shoppers Only Get One Choice. Vox. Retrieved from http://www.vox.com/a/obamacare-competition-2017
2 Mathews, A.W. (2016). Insurers Move to Limit Options in Health-Care Exchange Plans. The Wall Street Journal. Retrieved from http://www.wsj.com/articles/insurers-move-to-limit-options-in-health-care-exchange-plans-1472664663
3 Gregory, J. (2016). Report: Insurers’ Losses on ACA Exchanges Don’t Amount to “Death Spiral.” HealthExec. Retrieved from http://healthexec.com/topics/finance/insurers’-losses-aca-exchanges-don’t-amount-‘death-spiral’-report
4 McKinsey Center for U.S. Health System Reform. (2016). 2017 Exchange Market: Emerging Plan Type Trends. Retrieved from http://healthcare.mckinsey.com/sites/default/files/2017%20OEP%20Plan%20Type%20Trends%20Infographic%20vF_19%20states.pdf
5 McCluskey, P. (2016). Three Insurance Issues to Track in 2016. The Boston Globe. Retrieved from: https://www.bostonglobe.com/business/2016/02/04/three-health-insurance-issues-track/QJ03XgGmJav4zxvgHZxdqM/story.html
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Private Payers Are Now Facing Consolidation Skepticism Consolidation of hospital systems and providers has
been a dominant trend in health care in recent
years. These mergers and acquisitions are driven by
a variety of factors, including economies of scale,
emerging integrated care-delivery models, and
access to patients. Not inconsequentially, larger
systems and networks are also presumed to attain
greater leverage in negotiating rates with payers.
In the last year, though, proposed consolidation
among four major health plans (Aetna and Humana,
in one merger, and Anthem and Cigna in another)
has received widespread attention. In particular,
concerns over the consequences of diminished
competition are being raised, as they have with
provider consolidation. The carriers likewise point
to greater efficiencies and lower costs as primary
drivers of these deals, but gaining leverage with an
increasingly consolidated provider base likely is also
an important motivation.1
Adding further complexity to the relationships
between providers and payers is the formation
of plans by systems and networks. Moreover, the
introduction of the Next Generation ACO model—
which encourages providers to assume full financial
risk for their covered populations—potentially could
put integrated care networks in another form
of competition with traditional payers that offer
lucrative Medicare Advantage plans.
Indeed, Medicare Advantage market shares among
plans in the two proposed mergers are a significant
factor in the deals. So, too, are the market positions
of Medicaid plans, which are increasingly attractive
to payers following the Affordable Care Act’s
expansion of the program.2
Going forward, it is unclear what balance will
be struck between private payers and provider
organizations regarding rates and coverage
offerings. Of significance to health insurance
consumers will be whether the Triple Aim goals of
improved outcomes, reduced costs, and improved
patient experience are advanced by consolidation
among either payers or providers.
LOOKING FORWARD
The Era of Specialty Drugs Brings New Challenges to Health CareThe era of specialty drugs has begun in earnest.
According to Express Scripts, nearly 38% of drug
spending today is on specialty medications, a
portion that is projected to increase to 50% by
2018. This share is expected to continue to grow,
driven largely by the thousands of potential drugs in
development, most of which are intended to treat
cancer, neurologic disorders, or infectious diseases.3
These drugs are, by definition, injectable, infusible,
oral, or inhaled drugs that generally require special
storage or handling, and require close monitoring
of the patient’s therapy. These factors, coupled
with the generally high financial outlay necessary to
research specialty drugs and bring them to market,
often place a large premium on such prescriptions.
Even patients with prescription drug coverage such
as Medicare Part D can still pay thousands of dollars
out of pocket for specialty drug treatments, even
after they have reached the catastrophic spending
limit.4 Yet such medications often treat chronic
diseases that may not respond to other forms of
therapy, making them a necessity for patients who
have exhausted all options.
Payers and providers are taking steps to get the
most out of their specialty drug spend, including
adherence programs to guarantee that patients
are filling their prescriptions. Others are developing
clinical guidelines to help answer questions about
when to switch to a specialty medication. Still others
are leaning more heavily on pharmacy benefit
managers (PBMs), such as Express Scripts, or even
forming their own PBMs or specialty pharmacies.5
The long-term effects of these efforts, like those of the
drugs themselves, remain to be seen.
1 Von Ebers, P. (2016). Mega Health Insurance Mergers: Is Bigger Really Better? Health Affairs Blog. Retrieved from http://healthaffairs.org/blog/2016/01/22/mega-health-insurance-mergers-is-bigger-really-better/
2 Hensely, S. (2015). Anthem Deal For Cigna Would Hasten Health Insurance Consolidation. National Public Radio. Retrieved from http://www.npr.org/sections/health-shots/2015/07/24/425885225/anthem-deal-for-cigna-would-hasten-health-insurance-consolidation
3 Express Scripts. (2016). Express Scripts 2015 Drug Trend Report. Retrieved from http://lab.express-scripts.com/lab/~/media/e2c9d19240e94fcf893b706e13068750.ashx
4 Kodjak, A. (2015). Specialty Drugs Can Prove Expensive Even With Medicare Coverage. NPR. Retrieved from http://www.npr.org/sections/health-shots/2015/12/03/458216778/specialty-drugs-can-prove-expensive-even-with-medicare-coverage
5 Van Dyke, M. (2015). Right-Sizing Drug Spending. HFMA. Retrieved from http://www.hfma.org/Leadership/Archives/2015/Summer/Right-Sizing_Drug_Spending/
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General HMO and PPO Data
The data derive from information gathered by
telephone and email surveys between January
and May of 2016. Each state’s Department of
Insurance was contacted for a list of licensed HMOs
(where applicable). Each plan was subsequently
provided a survey containing questions relevant to
all data in the HMO-PPO Digest. Questionnaires
are refined every year to reflect changes in industry
operations and include, for example, questions
specific to the Medicare and Medicaid managed
care populations.
HMOs supplied data for their plan as they operate
it. For some organizations, one license may be
held, but several local plans operate from that
one license. For others, an entire state or two or
more overlapping states may be served by only
one organization. The data are not representative
of individual product lines. This is important to
understand when using data at the metropolitan
statistical area (MSA) level (available through your
Sanofi account executive), because data are
often supplied by the plan at a broader level. For
example, enrollment or premiums are at the state or
full-plan level.
Nearly all of the data that appear in this Digest are
from a census of the HMO and PPO industries. When
data were not available from all plans, a smaller
sample was used.
Medicare and Medicaid managed care information
was gathered from operating HMOs and other types
of managed care organizations (MCOs) recognized
by the Centers for Medicare & Medicaid Services
(CMS). IMS Health used CMS’s 2014 Medicaid
Managed Care Enrollment Report to capture the total
number of Medicaid recipients in HMO programs.
The Medicaid HMO demographic data shown in this
Digest are as of midyear 2015.
IMS Health often validates the reported information
by contacting HMOs and PPOs by telephone or
email. IMS Health also compares its data with
those published in other sources, including trade
associations in the managed care industry,
periodicals and journals, and state regulatory
agencies. IMS Health does this to ensure that its
database includes an accurate count of all operating
HMOs and PPOs in the nation.
A final review process takes place, before and during
the production of this report, between IMS Health
and Forte Information Resources, a leading provider
of publishing products and services for the health
care industry.
Sanofi, as sponsor of this report, maintains an
arm’s-length relationship with the organizations that
prepare the Digest and carry out the research. The
desire of Sanofi is for the digests to be completely
independent and objective.
Most data for the HMO-PPO Digest were gathered by IMS Health, Parsippany, NJ, a leading provider
of innovative health care data products and analytic services. The information was gathered from
the following sources:
• Each state’s Department of Insurance
• Surveys of every licensed HMO
• Where applicable, in HMOs that offer more than one operating plan under one license, multiple plans’
data may exist
Primary and secondary research is conducted, compared, and verified against historical data.
HMO REGIONS STATESPacific Alaska, California, Hawaii, Oregon, Washington
Mountain Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming
West North Central Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota
East North Central Illinois, Indiana, Michigan, Ohio, Wisconsin
South Central Alabama, Kentucky, Mississippi, Tennessee
Southwest Arkansas, Louisiana, Oklahoma, Texas
New England Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont
Mid-Atlantic New Jersey, New York, Pennsylvania
South Atlantic Delaware, D.C., Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia
61SANOFI / MANAGED CARE DIGEST SERIES® / WHERE INFORMATION BECOMES INTELLIGENCE.™ HMO-PPO DIGEST 2016
HMO-PPO Market Definitions
As part of the survey process, HMOs supplied
a definition of their service area by county.
This information was rolled up to the MSA, the
consolidated MSA (CMSA) and the state in order
to provide the health plans that are displayed when
a market is identified. The HMOs that appear in
each of the markets include those plans that serve
the counties in that market. However, the data are
adjusted to include only those plans that cover at
least 50% of the counties in their respective MSA. For
those MSAs that have fewer than five plans, the report
automatically defaults to the state level. This is to
ensure the integrity of the data.
Some of the managed care content used for analysis
is obtained from quarterly and annual financial
statements submitted by insurance companies,
as required, to a state’s department of insurance.
These statements have been collected and made
available by the National Association of Insurance
Commissioners (NAIC). Although the NAIC has
permitted use, they do not endorse any analysis or
conclusions based upon the use of its data.
For questions about the terms used in this Digest,
please consult the Key Terms section (pages 62–63).
Long-Term Trends
Recognizing the value of long-term
trending in the formulation
of business intelligence, the
Managed Care Digest Series® for 2016 often
features up to three decades of data, identified by
the Long-Term Trend icon.
National Pharmacy Data
The Retail Pharmacy section, which begins on page 45,
presents a comprehensive overview of the national
performance of prescription drugs dispensed by retail
pharmacies. National-level retail pharmacy data
across a dozen therapeutic drug classes are organized
according to major chronic disease category. Drug
categories are determined by clinical indication, so
specific products may appear in multiple categories.
This section also features utilization metrics across
these 12 drug classes for four payer types. Retail
spending metrics represent the full price that the retail
pharmacy charges the consumer for the product,
regardless of copayment.
Average out-of-pocket (OOP) cost measures, by
therapeutic drug class, are likewise examined.
These costs represent the amount patients are
required to pay the retail pharmacy for their
individual prescription drug. The cost mainly includes
copayments, but can also include tax, deductibles,
and cost differentials, where applicable (everything
the patient paid at the point of sale).
The retail pharmacy drug analysis extends to data on
14 common specialty products within 6 drug classes
(pages 50 and 57).
The prescription metrics derive from IMS Health’s
Vector One®: Payer (VOPA) platform. Through
agreements with a variety of data providers, the
IMS Health data warehouse receives billions of
prescription claims per year.
VOPA is IMS Health’s projected prescription and
patient-centric database. The only database of its kind,
it provides projected retail pharmacy prescription and
longitudinal metrics at various levels of aggregation,
including state, region, and national levels. IMS
Health uses a unique and patented algorithm for
de-identification of patients, ensuring compliance with
HIPAA regulations.
IMS Health uses projection territories aligned to balance
coverage proportional to prescribing activity. These
territories are stratified by payment type and the sample
is expanded to the universe by strata, census division,
and class of trade. IMS Health reconciles the results
to produce a single projection factor for each claim.
This factor is used to project prescriptions and patients
filling a prescription. Patient counts will be unique at the
focus diagnosis level by gender, age, and payer type
(including Medicare Part D). These factors are used
to project prescriptions and patients in each territory.
Regional and national projections are created by
rolling up from the prescriber to the geographic area of
interest. These data are current as of midyear 2016 and
are trended over three years. Data for 2014 and 2015
have been restated.
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Download the complete methodology at www.managedcaredigest.com.
LONG-TERM TREND
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KEY TERMS
Accountable Care Organization (ACO): An ACO is
an associated network of primary care physicians,
specialists, and hospitals that actively coordinates the
delivery of care to effect higher-quality outcomes.
ACOs report on quality measures, and the providers,
who likewise are accountable for maintaining a high
standard of individual performance, are rewarded
for their participation.
Affordable Care Act (ACA): The ACA was signed into
law by President Obama in March 2010 as part of the
administration’s comprehensive health care reform
legislation. The ACA is aimed primarily at decreasing
the number of uninsured Americans, reducing
the overall costs of health care and improving
quality. In June 2012, the Supreme Court upheld
the constitutionality of most of the ACA, and many
reforms have already taken effect.
Ancillary Services: Supplemental services, including
laboratory, radiology, physical therapy, and
inhalation therapy that are provided in conjunction
with medical or hospital care.
Capitation: A fixed per capita payment made
periodically to a medical service provider (such
as a physician) by a managed care group (such
as an HMO) in return for medical care provided to
enrolled individuals.
Children’s Health Insurance Program (CHIP): CHIP is
Title XXI of the Social Security Act and is a state and
federal partnership that targets uninsured children
and pregnant women in families with incomes too
high to qualify for most state Medicaid programs,
but often too low to afford private coverage. Within
federal guidelines, each state determines the design
of its individual CHIP program, including eligibility
parameters, benefit packages, payment levels for
coverage, and administrative procedures.
Cost Plans: Cost plans are paid a predetermined
monthly amount per beneficiary based on a total
estimated budget. Adjustments to that payment are
made at the end of the year for any variations from
the budget. Cost plans must provide all Medicare-
covered services but do not provide the additional
services that some risk plans offer.
Coverage Gap (“Donut Hole”): The Medicare Part D
coverage gap, often referred to as a “donut hole,”
refers to a period of time during the coverage year
when the beneficiary is responsible for a larger portion
of drug costs. The ACA aims to close the coverage
gap by 2020, gradually introducing manufacturer
discounts and subsidies from the Centers for
Medicare and Medicaid Services to lower costs for
Part D enrollees.
Generic Substitution: The pharmacist-initiated act
of substituting one pharmaceutical equivalent for
another in order to decrease the drug product cost.
Group-Model HMO: There are two types of group-
model HMOs: (1) the closed panel plan, in which
medical services are delivered in the HMO-owned
health center or satellite clinic by physicians who
belong to a specially formed but legally separate
medical group that serves only the HMO; and
(2) the plan in which the HMO contracts with an
existing, independent group of physicians to deliver
medical care.
Health Insurance Exchange: A key provision of the
ACA is the creation of health insurance exchanges,
or marketplaces, in each state in which individuals
and small businesses can choose from a variety of
qualified health insurance plans. If a state chooses
not to establish its own exchange, the federal
government will establish one for it. States may
also elect to set up a partnership marketplace, in
which the state and federal governments jointly run
the exchange.
Independent Practice Association (IPA)-Model HMO:
In IPA-model HMOs, physicians practicing in their own
offices participate in a prepaid health care plan. The
physicians charge agreed-upon rates to enrolled
patients and bill the IPA on a discounted fee-for-
service or capitated basis.
Integrated Health Care System: An organization
made up of two or more facilities that have a formal
agreement (or an intent to develop one) to integrate
or share the delivery of health-related services.
Mail-Service Pharmacy: Mail-service pharmacies
are used by many plans as a cost-saving and
convenient alternative to retail pharmacies.
Members typically order their drugs via fax, email,
or the Internet. Prescriptions can be paid for with a
personal check or credit card. Once a prescription
order is transmitted to the mail-service pharmacy,
members usually receive their prescription within two
to four days.
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Managed Pharmacy Program: A distinct service or
group of services designed to optimize therapeutic
outcomes for individual patients. These services
include, but are not limited to, the following:
performing or obtaining necessary assessments of
patient health status; formulating a medication
treatment plan; performing a comprehensive
medication review to identify, resolve, and prevent
medication-related problems, including adverse
drug events; and coordinating and integrating
medication therapy management services within the
broader health care management services being
provided to the patient.
MedPAC: The Medicare Payment Advisory
Commission (MedPAC) is an independent
Congressional agency established by the Balanced
Budget Act of 1997 to advise the U.S. Congress on
issues affecting the Medicare program.
Network-Model HMO: A network-model HMO is an
organizational form in which the HMO contracts for
medical services with a network of medical groups.
Patient-Centered Medical Home (PCMH): A PCMH
is a care delivery model whereby patient treatment
is coordinated through their primary care physician
to ensure the patient receives the appropriate care
when and where they need it, in a manner they
can understand.
Retail Pharmacy: A pharmacy in which drugs are
sold directly to patients, as opposed to a hospital
pharmacy. Also known as a community pharmacy.
Risk Plans: Risk plans are paid a per capita premium
set at approximately 95% of the projected average
expenses for fee-for-service beneficiaries in a given
county. Risk plans assume full financial risk for all care
provided to Medicare beneficiaries. Risk plans must
provide all Medicare-covered services, and most
plans offer additional services such as prescripti on
drugs and optometry.
Self-Funded Plan: A plan offered by employers who
directly assume the major cost of health insurance
for their employees. Some self-insured plans bear the
entire risk; other self-insured employers insure against
large claims by purchasing stop-loss coverage.
Specialty Drugs: Specialty drugs are high-cost
injectable, infused, oral, or inhaled drugs that
generally require special storage or handling and
close monitoring of the patient’s drug therapy. Most
specialty drugs are used to treat chronic diseases.
Staff-Model HMO: A staff-model HMO consists
of a group of physicians who are either salaried
employees of a specially formed group practice
that is an integral part of the HMO plan, or salaried
employees of the HMO. Medical services in staff plans
are delivered at HMO-owned health centers.
Step-Therapy: The practice of beginning drug therapy
with the most cost-effective and safest treatment and
progressing to other more costly or risky therapies,
only if necessary, with the aim of controlling costs and
minimizing risks.
Definition sources:
ACA: http://thomas.loc.gov/cgi-bin/
bdquery/z?d111:HR03590:@@@D&summ2=m&
ACO: http://content.healthaffairs.org/cgi/content/full/26/1/w44
Ancillary Services: https://www.plexishealth.com/
glossary/?glossary_letter=A#.VhQA3XthraY
Capitation: http://www.merriam-webster.com/medical/capitation
CHIP: http://www.medicaid.gov/chip/chip-program-information.
html
Cost Plans: CMS Financial Report, Fiscal Year 2011
Coverage Gap/Doughnut Hole: http://healthinsurance.about.
com/od/medicare/f/donuthole.htm
Generic Substitution: http://www.drugs.com/dict/generic-
substitution.html
Group-Model HMO: Glossary of Terms Used in Managed Care,
1994, Medical Group Management Association
Health Insurance Exchange: http://www.cbpp.org/files/CBPP-
Analysis-on-the-Status-of-State-Exchange-Implementation.pdf
IPA-model HMO: Glossary of Terms Used in Managed Care, 1994,
Medical Group Management Association
Integrated Health Care System: http://www.imshealth.com
Mail-Service Pharmacy: https://www.urac.org/accreditation-
and-measurement/accreditation-programs/all-programs/
mail-service-pharmacy/
Managed Pharmacy Program: http://www.pstac.org/aboutus/
profsvc.html
MedPAC: http://www.medpac.gov/-about-medpac-
Network-Model HMO: Glossary of Terms Used in Managed Care,
1994, Medical Group Management Association
PCMH: https://www.acponline.org/running_practice/delivery_
and_payment_models/pcmh/understanding/what.htm
Retail Pharmacy: http://www.ncbi.nlm.nih.gov/pmc/articles/
PMC2720370/
Risk Plans: Einstein, A. B., et al., Cancer Economics: Contracting
With a Medicare HMO, 1997.
Self-Funded Plan: http://www.bls.gov/ncs/ebs/sp/healthterms.pdf
Specialty Drugs: http://content.healthaffairs.org/cgi/content/
full/25/5/1319
Staff-Model HMO: Glossary of Terms Used in Managed Care, 1994,
Medical Group Management Association
Step-Therapy: http://www.medterms.com/script/main/art.
asp?articlekey=40302
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HMO and PPO
Assistant Secretary of Health. (2016). About the
Multiple Chronic Conditions Initiative. HHS.gov.
Retrieved from http://www.hhs.gov/ash/about-ash/
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