Plan Design Tip

 

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The addition of a deductible equivalent to dispensing fee on prescription drug coverage is proving to be an effective way to empower plan members to make wise consumption decisions.

Professional dispensing fees can range from $4.11 at Costco to $12.00 at Shoppers Drug Mart. By obtaining medications at lower cost providers, plan members will save the plan money. When members are responsible for the professional dispensing fee, they will likely shop around for a cost effective provider. If they decide not to shop around, they will pay the equivalent of a ‘convenience fee’ for shopping at higher cost pharmacies such as Shoppers Drug Mart, which has many locations but charges a premium for dispensing medications.

Recent savings quoted from the insurance marketplace peg the savings from this program change at 14% to 20% of the healthcare or drug premium. This is a substantial saving because healthcare and dental care often account for 60% to 80% of the cost of most group insurance plans.

The savings from this program design are further magnified by behavioral changes brought about when plan members are forced to think about their consumption habits. This might mean that a plan member might forgo a prescription for an expensive cold remedy, choosing instead an over the counter remedy that is more appropriate and often much more cost effective.

2018-04-17T15:56:32+00:00