Episode 12 – Special Guest Bruce MacRae of CVS Health

Marcas Miles (0:09)

Hello, and welcome to the Employers Health HR Benecast, your source for clarity on health benefit trends and strategies. I’m your host, Marcas Miles. As open enrollment season is up on us, we know how busy you are.

You can download and listen to this and all of our podcasts when time allows or to help get you through your day. One of our more seasoned account managers recently wrote a blog post for us that included five tips to make open enrollment season more tolerable. You can find that at employershealthco.com under the tab connect. There’s a connect with us tab and then you’ll find it under benefits insights.

In this month’s episode, I’ll toss the hosting over to Mike Stull, who previously recorded this podcast, and he had a chance to catch up with a longtime leader and vendor partner from CVS Health. It’s an interesting conversation covering a lot of ground related to the longstanding relationship between our organizations, but also the PBM industry.

But first, I’d like to remind you to listen for a keyword in each episode. Each month, a lucky listener is eligible to win a $50 Visa gift card simply by submitting the keyword or phrase from the podcast. I’ll tell you what that is later in the episode for this month’s drawing, so be sure to listen closely to that.

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So here is the previously recorded interview between Mike Stull and Bruce MacRae from CVS Health. We’re super happy that Bruce MacRae accepted our invitations to spend some time and field a few questions. An extra special treat is that our former podcast host and chief marketing officer, Mike Stull, will lead the interview with Bruce.

So I appreciate both of them for their time and energy. Bruce is a division head for coalition business at CVS Health. He has been with the company for 26 years, many of those years having affiliation or connection with Employers Health.

You’ll hear much more about that, I’m sure, during the interview. Mike has been with Employers Health for 13 and a half years and been responsible for a variety of aspects of the business. Together, these two gentlemen have likely seen it all as it relates to the PBM industry.

And because that’s the case, I’m going to step aside for this one and let Mike take it from here. So enjoy.

Mike Stull (2:48)

Thank you, Marcas.

And thank you, Bruce, for joining us today. Bruce, Marcas shared a little bit of introduction on your background, but I thought maybe I would start by just letting you tell the audience a little bit about your background, your time at CVS, and when you became involved with Employers Health.

Bruce MacRae (3:13)

Sure.

Thank you, Marcas and Mike. My pleasure. And quite frankly, I’m very honored to be part of your podcast.

I’ve been with CVS in its multiple iterations for 26 years, as Marcas mentioned. I started in the PBM industry, at least with Caremark, when we were primarily a mail service pharmacy. I’ve had the pleasure of working with Employers Health Group since we brought on our first six clients, moved them over from a competitive PBM.

The team that worked on that was part of my team. And I’ve been involved with Employers Health and their clients since the inaugural year 1998.

Mike Stull (4:02)

Yeah.

And if I’m not mistaken, your background is primarily in finance, is that correct?

Bruce MacRae (4:09)

True. I started with Caremark in the finance area. I actually worked with another healthcare organization in the finance area.

My first three or four years with Caremark were more finance focused, although all of my career, even pre-Caremark, was interacting with our clients. And so as we, Caremark, moved into kind of a new business focus for us, with a new portion of the business, more into health plans, and their very operational focus for the health plans, which was going to make them important, I was asked to join a newly created group that was going to bring service to that new kind of business sector for us. I look now, fast forward 26 years, and what we called health plans then, compared to what we call health plans today, is dramatically different.

And in fact, the health plan business that I started working on with Caremark looked a whole lot more like the coalition business that Caremark asked me to run about eight years ago.

Mike Stull (5:22)

Yeah. Kind of a nice transition.

Can you tell us a little bit about your current role within CVS?

Bruce MacRae (5:30)

Yeah. I’ve had multiple responsibilities within CVS Caremark over my years. Director within the employer business unit.

I shared responsibility for our national accounts for a while. And then, I think it was about eight years ago now, we pulled up and we took a look at the market and the way we were servicing the market. And we organized around our clients in a different way.

Most groups were organized around their clients geographically, as we had been, although we had this national account segment as well. But even that was geographically aligned. We took a different look at the market and we aligned around client types.

So we maintained a national account group, but we made that much more focused, employer national accounts. We created a government group. We had a, what we called key account group, which was employer groups that weren’t in national accounts or in government.

And then, unique to the marketplace, we created a whole business unit, which I was asked to help create, built around our coalition clients. Employers Health was, quite frankly, a model to what we were using to create this business unit. And we saw the very unique needs of employers who purchased their PBM services through a coalition.

And we created what I like to call a kind of a company within a company. So as we’ve grown to be a Fortune 7 organization, I have been able to, and now with significant support, because this has been the fastest growing part of our employer segment, but I’ve basically been able to create a company within a company. All the people, all the departments, all the organizations within CVS Health that touch our clients and their members who purchase through a coalition, now have either dedicated or designated representatives within CVS Health to deliver that service.

It’s pretty unique when I understand in the marketplace, nobody has tried to emulate it.

Mike Stull (7:52)

Yeah. And certainly our members, I think, see the value in that and we continue, I know our team continues to say it’s a PBM within a PBM.

So we’ve certainly, and we’ll talk a little later about some of the loyalty scores that we’ve been able to accomplish, not just within employer self, but within the coalition business unit as well. But I want to take us back a little bit and I guess; a lot is changing obviously in the marketplace today and probably changing faster maybe than it ever has. But as you’ve seen over 26 years and certainly even in the time I’ve been with Employers Health, the marketplace has changed dramatically, both from the types of drugs that are being covered or available for patients, the different players from a PBM perspective, how the retail pharmacy plays into it, how the mail order pharmacy, specialty pharmacy, just maybe talk a little bit about some of the bigger changes have been either for the good or the bad since you began your career.

One of the things I mentioned recently was, I was looking back through some old files I saw in the early 2000s where the generic dispense rate for our book of business was 40% and to think that now that’s at 90% is quite astonishing when you really think about it. I remember times when the biggest clinical challenge we had was whether or not to cover branded Nexium and now we’re making these clinical decisions on these high-tech specialty drugs that have a lot of, in some cases, curative power but cost a lot of money. Obviously, a lot of changes.

I’m curious from your perspective what you’ve seen.

Bruce MacRae (10:09)

Mike, you’re so right and I guess I go back a little farther than you do. As I mentioned, when I joined CVS Health, CVS Caremark, Caremark at the time, we were primarily a mail service organization.

My first initiative was working with clients to carve in the benefit. When we meant carve in benefit, we meant carve in the retail portion of the benefit into a comprehensive benefit. We’re fighting against, at the time, the significant concern that employers had, payers had, regarding the shoebox effect.

We worked very effectively at the time with clients to manage through that. As I think about that, once we got through this integration standpoint, our main recommendations came down to how to structure co-pays, plan design. At the time, formularies were open.

Member cost share was really seen as the way to drive down the lowest cost. You’re right. When GDR was 40%, we weren’t even talking about it.

As we would go through the reports, we would typically say something to the effect that clients like, you really can’t do much about your drug mix. What you can do is about how the members pay for it. Let’s make sure we’re putting in DAW1s and DAW2s, shifting the financial penalty to members when they take a generic, a branded product when a generic is available.

Let’s push up that generic substitution rate. I can’t remember the last time I spent any part of my conversation with a client reviewing generic substitution rates. That’s not at 99% or right there with our clients.

I haven’t seen a report that way. It really has been about how can we help members make really smart choices. If I think about it, there’s been three major initiatives that we’ve worked with with our clients to help them lower the overall cost of the benefit.

One has definitely been focused on generics, as we’ve driven generic dispensing rates through step therapy programs and helping members and their physicians make wise choices when a generic is available. I’ve also seen a lot of activity over the years on utilization management programs. Again, I go back far enough that we were bringing out a pretty innovative utilization management program, specifically in our mail service pharmacy, that we were going out to our clients and telling them, look, we’ve got this great opportunity to interact with your member’s physicians before the drug gets dispensed.

It’s been written. We’ve got a little time. Your member doesn’t expect to get it right then.

We were engaging with physicians to help the physician make a better choice for the member. I remember going out and talking to clients about it. We had that up and running before we even had great reporting in place to show the value of it.

That’s obviously changed dramatically over time, but by using prior authorizations and other effective ways to communicate with physicians, we’ve been able to save our clients and our members a significant amount of money. Prior authorizations alone last year saved our clients almost $3 billion. And then formularies, we’ve seen a huge change in how formularies have made an impact for both members and the payers, and CVS Health, CVS Caremark, has been a true innovator in this area.

Again, I’ve seen it going from completely open formularies to three-tier formularies to 2012 when we were the first prescription benefit management organization to introduce into the employer marketplace the idea of exclusions. And since 2012, we’ve saved our clients $19 billion just in our exclusionary formulary alone. As a matter of fact, in recent research we’ve done, it’s demonstrated that we’re saving on average $20 per member per month for clients who have adopted our formula with exclusions over those that are more open.

Mike Stull (14:54)

Yeah, certainly I think we’ve seen the… I remember back when I started it was, well, how many… The big question was, well, how many times or what factors should we use in setting mail co-pays over retail co-pays? And that was like the big decision, is it two, is it two and a half? And now with the introduction of high deductible plans, obviously those types of conversations aren’t necessarily on the table as much, and you mentioned generic substitution rate. I think most of the groups I see 98%, 99%, most of them 99%. And so you’re right, it’s just not a conversation that we really have anymore.

From a formulary perspective, I think it’s good for the audience. And there are a lot of drugs that hit plans that don’t necessarily have a lot of clinical value but have a high price tag. And so when we think about formulary, it’s not just picking one drug over another in a class like insulins or classes like that, but it’s also looking at how do we keep some of the bad utilization from hitting the plan.

And I know another way that CVS is trying to get out in front of that is through what we’re calling real-time benefits. And so it’s getting some of this information about formulary, about prior auth, and about patient cost into the hands of the physician while the patient is there, and so that they can make a better-informed decision.

Bruce MacRae (16:52)

Yeah, I’m probably more excited about our initiative around real-time benefits that we’ve kicked off at the beginning of this year than I’ve been about any initiative we’ve brought to the marketplace in my career.

I mean, real-time benefits are going to achieve for our clients and their members, something that I’ve been challenged by our clients for as long as I’ve been doing this. And so we would bring our innovative idea to the marketplace on how we can help members stay healthier, be more adherent to their drugs, save money for both the plan and the member. And universally, our clients would say that’s a great idea.

But, and whatever it was, that’s a great idea, but why can’t you do this, as opposed to doing it to my member, having my member have to deal with this at some point, why can’t you get the doctor to write it that way the first time? And we’ve done a lot over our time, and I think we’re probably the best in the industry at communicating with physicians and with members, all the stakeholders, prior to the drug being written, with a real initiative to get, to make the member experience as great as possible. Because something that hasn’t changed over my whole career has been the client’s balancing act, the need to balance cost-saving health generation with member disruption. So beginning this year, we rolled out real-time benefits.

This does exactly what our clients have been challenging me all along. It gets the doctor; information allows them to make the best choice before they write the prescription. So I’ll give you a quick example.

It’s all through the electronic medical records. We get over 70% of our prescriptions sent to CVS Health for our members through electronic prescribing, through the electronic medical records. So physicians are using this, and what this technology allows us to do is leverage that same electronic medical record to send to the physician information, transparency information about the total cost of the drug and the cost to the member, real-time.

So, CVS Health has a high-ductal health plan. If I go into my physician and they go to write me a prescription, they’re going to find out the full cost of the drug under my plan and what it’s going to cost me. And most importantly, we’re going to send up to five therapeutic alternatives, if they’re available, and the cost of those to help this physician make a better choice for treating my condition.

It’s still all up to the physician, right? They’ve got, ultimately, the choice to make, but this is information that physicians have never had before, and we’re seeing great results. We’re rolling this out across, really, across the country. Electronic medical record needs to be turned on, if you will, this portion of it, this functionality needs to be turned on, and we’re working on driving that.

But for the initial group of prescriptions that we’ve gotten, 40% of the time, we send out a therapeutic alternative, a non-formulary prescription. The doctor is taking the recommendation and it’s saving the member, on average, $130. I mean, this really is game-changing, and it allows the doctor to make the change before he writes the drug.

Now, I think what makes us unique, we’re a unique healthcare organization. We have, you know, we’re delivering service through our 10,000 retail pharmacies, obviously for customer care. We’ve got one of the highest-rated apps in the healthcare space, and really outside of the healthcare space, and all of that has got this technology involved.

So if the doctor doesn’t take advantage of it, and the member does show up at the pharmacy, the pharmacist, our pharmacist, will have the same level of information. If in conversation between the pharmacist and the patient, they choose to make a change, it’s a push of a button. It’s integrated in the pharmacist’s workflow.

If you’ve been into a pharmacy lately, you know that’s a busy place. Having integrated into their workflow, we’re confident it’s going to happen. Calling the customer care at CVS Health, our customer care representatives have that same technology built into their workflow.

You go onto our app, our check drug price, it’s already there for our members to help them make better choices. It’s truly a game-changer.

Mike Stull (21:51)

Yeah.

Well, Bruce, you mentioned the fact that CVS has a high-deductible plan for its own employees, and certainly a lot of our member organizations have also adopted, and employers in general have adopted high-deductible health plans. And obviously, the participants are feeling more of the cost, particularly as it relates to, I mentioned insulins earlier, so we’ll just stick with insulin or specialty medications, at least through the deductible phase. I’m curious, this is a great start, the real-time benefits, in terms of getting out ahead of the prescription.

Are there other solutions that CVS has that you’re working with clients on who have those high-deductible health plans?

Bruce MacRae (22:47)

Yeah, Mike, great question. And again, I’ve been in the industry a long time. I remember when the consumer-driven health plans came to the market, and some of the taglines for some of the startup companies were something along the lines of, no rules.

And effectively, what they were recommending is, we’re going to shift all this financial burden onto members, and then they’ll just magically make a great decision. Well, that didn’t work when they first rolled out, and healthcare certainly hasn’t gotten any easier or simpler in the intervening years. So, if I look at what we’re doing, so we have a full-replacement high-deductible health plan for our employees, and we have married it with our best thinking in how to assist the members in getting the care they need.

Because ultimately, what all pharmacy prescription managers are looking to do is help the members that we get to serve get the medication they need and improve their overall health. So, the high-deductible health plan can put a lot of barriers in the way for that. So, first and foremost, we have multiple iterations of a preventative drug list that we strongly recommend our clients implement with any high-deductible health plan.

And in fact, we’re advocating with federal government to relax some of the regulations as it relates to preventative drug lists and HSAs when you can apply those. So, in our vision, members who have chronic conditions would be able to afford the opportunity to go around, if you will, to miss the deductible phase of the high-deductible health plan and be given even a $0 copay. We also strongly advocate, and we have it within our plan, the implementation of point-of-service rebates in high-deductible health plans.

So, what does that mean? So, a lot of discussion around rebates in the marketplace today. In many ways, they’ve been vilified. What this does is put the value of that rebate in lowering the cost of drugs at the point of sale, so the member realizes the value of that benefit when they’re in their deductible phase.

The client still gets the vast majority value of the benefit because it really only pays down for the member. But this is a huge kind of two-prong step to help avoid one of the major issues with high-deductible health plans, which is we don’t want people making bad choices to avoid care on their prescription drugs, which are going to lead to higher medical costs down the road. Matter of fact, a recent published white paper from CVS Caremark demonstrates significant savings when you mirror these two initiatives together in terms of overall medical savings for our plan.

Mike Stull (26:22)

Yeah. I think it’s great that the systems are set up to be able to do this for employers that want to do it. Now, we just have to figure out how to get the manufacturers to pay us more quickly so that we’re not sitting on a bunch of float money there at the point of sale.

But that’s a whole public policy challenge, and we won’t necessarily get into that today. The final piece I just wanted to touch on is really around, you know, we’ve had a lot of new business within Employers Health and our partnership with CVS, and we’ve had a lot of change over that same time period, yet we’ve been able to maintain very high loyalty and very high satisfaction scores. And maybe just spend the last couple minutes, maybe share some of the successes that you see in those areas, and, you know, if there’s one or two things that you can point to that are key drivers of those types of results, that’d be great as well.

Bruce MacRae (27:31)

Sure, Mike. I’d love to. Thank you.

And I’m going to brag for just a second. The coalition business unit since its inception has been, we’ve driven some of the highest level of customer loyalty within all of our employer business at CVS Health. So I’m very proud of that, and it’s not by accident, right? We’ve created this unique group within a larger PBM.

The Employers Health group has led that level of loyalty and satisfaction, outpacing even the other coalition clients. And I’d say, you know, why? We have a very unique partnership with employers’ health. You guys have a, almost a mirror organization to us that you wrap around your clients.

You have clinical support, you have legal support, you have account management support, and our teams work very collaboratively on the delivery of service to your members. You guys are also a great advocate for clients. So, you know, one of the changes I’ve seen in the marketplace over time is the proliferation obviously of data, but the ability to do something with that data.

And in CVS Health, I think with our data analytics, with the AI and the machine learning team that we have in place, we’re able to capture or identify trends in the industry quicker than we ever have in the past and really get in front of them before it becomes a huge cost driver for our clients. Employers Health is doing the same thing, except you’re doing it on a very targeted way. You’re looking at high-cost claimants for your book of business, and oftentimes bringing to us observations, opportunities for initiatives that we put into place uniquely within your group of clients.

It’s really a very exciting and continues to be evolving partnership that the two organizations have.

Mike Stull (29:50)

Yeah, I certainly am.

Our account management teams got together back in the spring to do some training. And one of the things that I’m most proud of is, you know, even with all of the growth and with all of the change in personnel that we’ve seen over the years, we’ve still been able to hit those loyalty benchmarks and really lead from a percentage of clients, from a loyalty score and a satisfaction score and participant satisfaction. So we certainly play up the part that, you know, the participant experience and the experience of those managing the plans is really important to our model.

And it’s not just a price play, but how do you focus on price? How do you focus on utilization and outcomes? And then how do you deliver the best experience possible? So certainly thankful and appreciative of the efforts that your team has made in helping us work with our member organizations to achieve that. So that will wrap us up for this interview, Bruce. Certainly appreciative.

I know that the industry will continue to change. We’re in the midst of a lot of, I think, what will become some reform. But I know over the past, for you, 26 years, for me, the past 13, we’ve seen these changes occur in the marketplace and we figure out how to work through them and how to adjust to make sure that we continue to deliver on the promises to our clients.

So thank you very much for joining us.

Bruce MacRae (31:46)

Thank you.

Marcas Miles (31:48)

I hope you enjoyed that and found that beneficial. I know that I did. But I was able to listen in when they recorded it and found it very interesting.

A few upcoming events in which you may be interested include a PBM Trends meeting in St. Louis on September 25th from 11 until 1. So lunch is included in that.

And then a PBM Trends Mental Health Trends meeting in Orlando, Florida on October 3rd from 8:30 until 11. We found these meetings to be very popular across the country in different regions and have recently added to the agenda the Mental Health Trends topic, which is also one that we know that you find very important. But it makes sense because of the work that we do here at Employers Health around that topic.

Also save the date for the Employers Health Annual Membership Meeting that will be in Canton, Ohio on November 28th. We’re featuring a speaker by the name of Bradford Coles, who will provide an objective analysis of the next era of healthcare reform. That’s something that is sitting in the background all the time, but we haven’t really heard a lot of thought leadership around what the next era of healthcare reform might look like.

So we’ll hope that you join us to hear Ford, who is the Executive Director of the Healthcare Advisory Board Company.

You can register for these events and any other events and find more information on our website at employershealthco.com. And please don’t forget to follow us on LinkedIn and Twitter to stay up to date on all upcoming Employers Health events. I know my team works hard on our social channels and we would love for you to engage with us anytime that you can over there.

I would be remiss if I did not mention that World Mental Health Day is coming up on October 10th. This provides an opportunity for you to share information and resources with employees and provide a platform to let them know that it’s okay to get help or encourage a coworker that might need help. You can check out WFMH, which is WorldFederationOnMentalHealth.com. Simply Google World Mental Health Day or, of course, head over to RightDirectionForMe.com where you’ll likely find what you need over there.

So we encourage you to submit your questions regarding HR benefits and also the value of membership in Employers Health. You can do so by completing the field on the landing page or clicking the link titled Submit Your Questions Here. Also, if you’d like to be considered for the $50 Visa gift card, which again, if you heard me earlier, the pool is small on that, folks.

The code phrase for this episode is Open Enrollment. So Open Enrollment. Please submit that along with your name and email address using the link on the landing page.

And that will conclude this month’s episode. Thank you again for taking the time to listen, but more importantly, thank you for your continued membership and interest in Employers Health. And don’t forget, submit those questions so that I can answer them on an upcoming edition of our podcast.