July 17, 2019

How Allina Health is revealing drug prices to patients (and why so many other providers struggle to do so)

Daily Briefing

    While many health systems struggle to implement price transparency tools, Allina Health in Minnesota has successfully implemented a tool that gives physicians real-time information about how much patients' prescriptions will cost, Phil Galewitz reports for NPR's "Shots."

    Learn 3 pricing strategies hospitals are using to respond to changing market characteristics

    The problem with opaque drug prices

    Each year, patients refuse hundreds of thousands of prescriptions at the pharmacy due to high prices, according to Galewitz. "Studies show that [doing so] can jeopardize their health and often lead to higher costs down the road," Galewitz writes.

    To help alleviate some of that "sticker shock," some health systems and physicians are adopting drug pricing tools that can give patients a better idea of the drug's out-of-pocket costs before they leave the physician's office, Galewitz reports.

    How Allina is trying to make prices more transparent

    For example, Allina Health has embedded a drug pricing tool in the system's EHR and prescribing systems. The tool uses patients' insurance and pharmacy information to estimate how much they would pay out of pocket for their prescription, according to Galewitz.

    The system also enables physicians to find lower-cost alternatives to the drug that was originally suggested.

    In one instance, Allina physician David Ingham said, "I pulled up one medication I normally use, and it said it would be $240 out of pocket, but it suggested an alternative for $20 that was pharmacologically equivalent."

    He added, "I sheepishly asked the patient which we should choose."

    However, Allina's drug pricing tool—like many others—has "serious limitations," Galewitz writes. "Because price negotiations among insurers, drugmakers and middlemen are often highly competitive and secretive, the tools often don't have useful data for every patient," he adds. For instance, Allina representatives told Galewitz many pharmacy benefit managers share only partial data or no data at all on health plan enrollee costs. 

    As a result, Allina's pricing tool works for only about 50% of patients, according to Galewitz.

    Why the industry has been slow to embrace drug price transparency

    According to Norman Rosen, a physician employed by Providence St. Joseph Health System, a similar pricing tool used at Blue Shield of California is expected to save patients more than $100,000 in out-of-pocket costs in 2019.

    But despite the benefits to patients, many providers have been slow to adopt drug pricing tools, Galewitz reports.

    Humana, for instance, introduced a drug pricing tool in 2015, but fewer than 10% of its physicians use it, according to company officials.

    "It's a chicken-and-egg thing where doctors don't use it because they don't have the data for all their patients, and health plans don't promote it to physicians because doctors don't have the technology in place," according to Anthony Schueth, a health information technology consultant. "[A]t the moment the drivers are not there across the board for widespread adoption."

    How CMS is boosting price transparency

    According to Galewitz, CMS is making moves to expand implementation of drug price transparency tools.

    The agency last month mandated that all Medicare drug plans employ a pricing tool in physicians' electronic prescribing systems by 2021, according to Galewitz.

    Demetrios Kouzoukas, head of CMS' Medicare program, said he hopes the mandate will increase use of the pricing tools across the industry.

    "What we are hoping and expecting is that there will be a standard that's developed by the industry ... so that the tool is available in all the electronic health records, for all the doctors and all patients, and spreads even beyond Medicare," he said at a hearing last month  (Galewitz, "Shots," NPR, 7/5).

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