Cigna provider contracting and steerage helps manage specialty spend

For those who need specialty medications to treat a complex, chronic condition, the right care facility can help keep costs down and health outcomes positive. The relationships we nurture with our health care provider partners are key. We work to control costs through provider contracting, value-based relationships with physician and facility partners, and by limiting exposure to excessive drug-cost markups – all while helping minimize customer disruption and optimizing their experience.

Overall, our efforts to steer to lower cost sites of care have helped to save clients millions – approximately $81,000 per successful intervention, per year1 and approximately $250 million for a sample of just 3,025 customers.2

Integrated benefits help us place emphasis on cost control.
“It's really important when we take care of our sickest, most expensive customers - those customers that have specialty conditions – to manage them in an integrated environment,” explained Mark Johnson, clinical strategy product director for Cigna Pharmacy. “These customers not only have specialty conditions, but often have other chronic conditions as well – like diabetes, hypertension and depression. Being able to connect that engagement together across benefits is very important to our success.” 

The higher customer engagement achieved as a result of integrated medical and pharmacy benefits helps lead to lower costs, in particular for those with costly conditions. We’ve achieved savings of $7,372 per member per year (PMPY) for those who have a condition requiring specialty medication. For oncology patients, in particular, we’ve achieved savings of $11,679 PMPY and 24% lower inpatient costs.3

When pharmacy and medical benefits work in a silo, this may pose a challenge to employers. It is more difficult to ensure their employees receive coordinated care and understand the true cost of care. Cigna's integrated specialty approach means that we help manage costs and care across benefits.

Negotiated fair pricing within our provider networks helps to manage costs.
As we contract and maintain relationships with a robust network of health care providers, we routinely review our physician fee schedules (i.e. how they are reimbursed). Cigna’s National Injectable and Immunization Fee Schedule (NIIFS) applies a fixed unit price. This is based on industry-standard methodology using average sales price (ASP)* for a majority of medications. We use ASP to calculate a set reimbursement for each drug administered in a physician’s office. This helps to:

  • Remove excessive price markups.
  • Avoid the network disruption that results from either mandating specialty drug coverage through pharmacy benefits and/or the use of a specialty pharmacy.
  • Achieve consistent discounts of average wholesale price (AWP) minus 30% or more.4

We also manage out-of-network claims to avoid excessive reimbursement rates. We identify opportunities to re-direct customers to in-network providers. For example, if a customer requires a gene therapy treatment, we work to steer them to appropriate participating providers.

When appropriate, we steer customers to the lowest cost site of care.
Medical specialty drugs are usually injected or infused, and require a health care professional to administer and monitor treatment in a medical setting. The site of care where this takes place could be a physician’s office, infusion suite, home or outpatient hospital facility. However, costs can vary widely among different care settings, with outpatient facilities typically being the most costly and physician’s offices the least. 

With our Specialty Care Options (SCO) program, we redirect the site of administration of costly specialty drugs to less expensive settings, when clinically appropriate. All the while, we help ensure customers continue to receive quality care and service. As of March 2021, we have over 100 drugs included in the program that are eligible for redirection.

A recent addition to the list is Neulasta – a drug given after chemotherapy to help stimulate the growth of "healthy" white blood cells in the bone marrow. We added this drug to our site of care steerage efforts in September 2020. Results to date show $39,000 in savings per redirected case for this drug alone.2 Administration costs at a hospital setting are often more than double the cost of equal service offered in a physician’s office setting, for example.2

Billing restrictions help manage the potential mark-up on high-cost medical injectables.
When a customer must use an outpatient hospital facility for treatment, our restrictions around buy and bill can help keep costs reasonable.

With buy and bill, a provider purchases a drug from a pharmaceutical wholesaler/specialty distributor in advance of treatment and then submits a reimbursement claim to Cigna for both drug and medical administration. This practice can result in excessive markups of high-cost medical injectables for customers and clients.

To combat these practices, we may restrict where the facility can obtain the medication or the allowable amount to bill to us. For example, we can require them to receive the drug from an outside vendor and only bill us for the administration. We can also limit the procurement to Cigna-contracted specialty pharmacies.

*The ASP is a market-based price that reflects the weighted average of all manufacturer sales prices and includes all rebates and discounts that are privately negotiated between manufacturers and purchasers (with the exception of Medicaid and certain federal discounts and rebates).

  1. Cigna’s nationwide Book of Business projected savings analysis 2020. Individual customer results/costs will vary.
  2. Cigna claims analysis 2020. Includes both retrospective and prospective programs results. Individual customer results/costs will vary.
  3. Cigna 2020 Book of Business study of medical customers with integrated medical, pharmacy and total behavioral health vs. those with Cigna medical and carved out pharmacy. Individual results will vary; not guaranteed. Average annual per member per year (PMPY) and per patient per year (PPPY).
  4. Average of all drugs on national medical specialty pharmacy fee schedules. Based on Cigna 2018 contracting data. Results may vary.

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