MinuteClinic expands scope of services
On pace to reach about 1,000 clinic locations by 2016 and a robust team of 1,800 nurse practitioners and physician assistants working tirelessly to provide patients convenient access to quality care, MinuteClinic has demonstrated the integral role that it plays not only within CVS Caremark’s healthcare offering but within the entire U.S. healthcare system.
Since its inception in 2000, the retail-based clinic operator has come along way. For example, it has seen 11 million patients, with more than 10 million being in the last five years; has formed clinical affiliations with well over a dozen health systems; and is serving as a critical point of entry to the healthcare system for the 50% of clinic patients who report having no medical home. These successes have helped pave the way for MinuteClinic’s growth, and now the clinic operator is taking an even greater role in reinventing pharmacy.
MinuteClinic, which experienced a 17% boost in revenues during the second quarter, is now expanding its focus beyond acute ailments and, through its expanded collaboration with Caremark, is proving to be an important “integration sweet spot” for the entire CVS Caremark enterprise.
Non-acute care is MinuteClinic’s fastest-growing segment, due in large part to the rise in chronic diseases and the primary care physician shortage that is plaguing the nation. The company has stated that it expects non-acute visits and non-flu vaccinations to reach 25% of its services over the next five years.
“We continue to focus on new programs at MinuteClinic aimed at identifying and monitoring chronic conditions. As an example, we’re focused on identifying patients with elevated blood pressure and encouraging them to follow-up with MinuteClinic or their primary care physician. As a result, we’ve seen a 50% increase in blood pressure evaluations compared to the same quarter last year,” Larry Merlo, CVS Caremark president and CEO, told analysts during its recent second-quarter conference call. “And we believe our plans to enhance our services and to double our clinic count over the next several years should position us well to play an important role in helping solve the primary care physician shortage, especially with millions of newly insured individuals expected to enter the healthcare marketplace.”
The collaboration between MinuteClinic and the PBM business also is enabling CVS Caremark to create programs for PBM members that are difficult for rivals to match. For example, clients have the opportunity to change their benefit structure to substantially reduce or eliminate co-pays at MinuteClinic. MinuteClinic also offers PBM clients flu vaccination and biometric screening programs, injection training and on-site, employer-based clinics.
Meanwhile, the overall convenient care industry is enjoying significant industry developments this year — moves that further solidify MinuteClinic’s critical role in today’s consumer-driven healthcare system.
For example, Massachusetts lawmakers recently passed a massive healthcare bill that seeks to control healthcare costs and expands the services of limited-service clinics to allow for anything within the scope of practice for a nurse practitioner.
In response to the recently passed legislation, Andrew Sussman, president of MinuteClinic and SVP/associate chief medical officer of CVS Caremark, said in a statement sent to Drug Store News, “we’re very pleased to be able to bring an expanded scope of services to MinuteClinic patients in Massachusetts in areas such as monitoring of chronic diseases, and prevention and wellness offerings. These services are well within the scope of practice of our nurse practitioners and have been welcomed by our patients in the additional 24 states where we have MinuteClinic operations.”
As of August, South Carolina is allowing retail-based health clinics to enroll as providers in Medicaid, a move that will enable Medicaid patients to use clinics for wellness visits, preventive services and to treat acute ailments.
The state currently has about two-dozen retail-based health clinics, all of them MinuteClinics.
According to The Post and Courier, South Carolina Medicaid director Tony Keck said the move is designed to expand access to care and keep those patients with basic health issues from using high-cost emergency departments.
When comparing MinuteClinic users to non-MinuteClinic users, CVS Caremark found that MinuteClinic users had 8% lower overall healthcare costs, and their emergency room expenses were 12% lower, the company stated in its most recent annual report.
Flagship programs promote drug adherence
With its sights firmly fixed on delivering innovative solutions that address emerging customer needs that no stand-alone PBM or stand-alone retail pharmacy could provide, CVS Caremark is seeing growing interest in its proprietary programs — or integration sweet spots — known as Maintenance Choice and Pharmacy Advisor.
Having the ability to offer patients a choice between picking up maintenance medications at a pharmacy location or having them shipped to the home, with no increase in co-pay or payer pricing, is clearly proving to be a winner for CVS Caremark, which broadly introduced the Maintenance Choice program in 2009.
There are currently about 10.7 million lives covered under 880 plans that have implemented or committed to implement Maintenance Choice and, according to CVS Caremark, it is seeing more new clients adopt Maintenance Choice right out of the gate. To put it into perspective, 63% of the lives adopting Maintenance Choice in 2012 were from new clients, compared with 14% back in 2009.
“We also have compelling data demonstrating that Maintenance Choice has been successful in broadening access while reducing costs and improving prescription adherence,” Larry Merlo, president and CEO of CVS Caremark, told analysts during the company’s second-quarter conference call in early August. “As we’ve discussed previously, we’re making enhancements to the program to provide a more transformative member experience that will further differentiate CVS Caremark in the marketplace.”
What Merlo is referring to is Maintenance Choice 2.0, the next generation of the program that will significantly increase its potential. This newest version includes a less restrictive or voluntary plan design option — tripling the number of potential customers who might want to use the program. It is currently in pilot and expected to be broadly available in January 2013.
“Management says Caremark could end up with 30 million patients covered by Maintenance Choice once 2.0 is rolled out and fully adopted, though again, management expects adoption to be initially slow and then accelerate as the value of the program becomes well-understood in the marketplace,” stated Barclays Capital analyst Meredith Adler in a recent research note. “For the customer and the patient, [Maintenance Choice] provides a lower cost and has been demonstrated to improve adherence.”
Another flagship program in CVS Caremark’s arsenal is Pharmacy Advisor, a significant program driven by the fact that face-to-face counseling between pharmacists and patients can be two to three times as effective as other forms of communication in driving adherence to prescription drug regimens.
Powered by the company’s proprietary Consumer Engagement Engine, the Pharmacy Advisor program places critical information into the pharmacists’ workflow, whether they are at a PBM call center, mail-order pharmacy or in a CVS retail pharmacy. The program started last year with just one disease state — diabetes — but expansion plans are well-underway.
“We now have 16.2 million lives covered by more than 900 clients committed to implement Pharmacy Advisor for diabetes. And additionally, I’m pleased to report that we have 10.7 million lives covered by 550 clients already enrolled in Pharmacy Advisor for cardiovascular conditions, which we launched this past April,” Merlo told analysts during its second-quarter conference call. “And given our success to date, we expect to go live next year with five more Pharmacy Advisor programs addressing additional chronic diseases.”
While the Pharmacy Advisor is currently free, Adler indicated that the company eventually may charge for it. Most likely, a base level of services will be offered for no cost, but additional capabilities will require payment, she stated in a research note.
“As Maintenance Choice prompts more patients to visit the pharmacy, its combination with Pharmacy Advisor represents another opportunity to improve patient health,” the company stated in its most recent annual report. “Together, the two programs can drive a significantly higher percentage change in optimally adherent members than either program on its own.”
Future is healthy for PBM business
Remember back in 2009, when some on Wall Street swore the sky was falling as Caremark came off a tricky selling season? Oh, how times have changed.
“Everything we’ve seen this year demonstrates that CVS is a stable company that is well-positioned to take advantage of growth opportunities in the industry,” stated Barclays Capital analyst Meredith Adler in a recent research note.
The pharmacy healthcare provider has no doubt hit its stride with its portfolio of unique, integrated offerings that sweep across the entire spectrum of pharmacy care. As it relates to its PBM business, the company credits its deep clinical expertise in enabling it to deliver a wide spectrum of best-in-class services and innovative plan designs for clients and members. And the proof of its success is in the numbers.
Total revenue in the pharmacy services segment rose nearly 25% in 2011, generating net revenues of $58.9 billion versus $47.1 billion in the year-ago period, but that’s just the beginning.
Its client retention rate for 2012 was approximately 98%, while its book of business grew significantly. The 2012 selling season yielded more than $7 billion in net new sales, along with another $5.5 billion related to PBM contracts that came with its 2011 purchase of Universal American’s Medicare Part D business. In fact, when combining the 2011 and 2012 selling seasons with the Universal American acquisition, CVS Caremark increased its book of business by 50% compared with 2010.
Today, much of the focus is on the opportunities in mid-2013 and 2014 and, so far, all signs are pointing to continued growth.
“As previously reported in the marketplace, we experienced some contract losses earlier in the selling season. However, I’m happy to report that we have continued to win new business along the way, with gross wins totaling $3.5 billion, resulting in net new business of $640 million to date, and that is on a 2013 impact basis,” Larry Merlo, CVS Caremark president and CEO, told analysts during its second quarter conference call on Aug. 7. “Our new client wins include major Fortune 100 companies as well as regional health plans in both the commercial and Medicare or Medicaid segments.”
Meanwhile, the company has indicated that its PBM is seeing an increased interest in limited networks as clients eye the potential savings of 1% to 3%.
“Clearly, the ESI-Walgreens event created a lot of momentum around narrower networks and, as an example, 20% of the new business we will be bringing on board in 2013 are going to opt for a narrow network,” Jonathan Roberts, EVP and president of CVS Caremark Pharmacy Services, told attendees of the Morgan Stanley Healthcare Conference in New York City in September. “We see many flavors of narrow network, from simply taking retailers out, which is one flavor, to creating incentives to go to specific retailers in the form of lower co-pays. So, I think it is another way for clients to save money. I think it was demonstrated that it is very minimal customer disruption to move to a narrow network.”
Merlo also noted the increased interest during the company’s second quarter conference call and told analysts that “the clients adopting limited networks are a mix of both employers and health plans. So while we are not seeing a watershed change in the adoption of limited networks, it’s clearly a factor in the selling season, and it will continue to be on the table as a cost-savings opportunity for clients.”
The company’s flagship programs — such as Maintenance Choice and Pharmacy Advisor — are no doubt gaining significant traction and fueling growth, but the growing Medicare Part D and managed Medicaid segments continue to be of great importance.
For CVS Caremark, the Medicare Part D business undoubtedly represents a growth opportunity as the aging of the U.S. population, coupled with healthcare reform, is expected to be a significant driver of prescription utilization in the coming years.
The reality is that the number of people in the United States ages 65 years or older is projected to rise to 55 million by 2020, up 36% from 2010. On average, this population fills three times more prescriptions than people ages 64 years or younger. As a result, it is expected that Medicare drug spending will increase 8.5% annually over the next decade.
CVS Caremark began 2012 as the insurer for approximately 3.6 million covered lives across its PDPs (that number now stands at more than 4 million lives), and it also supports the Medicare business of approximately 40 PBM clients who sponsor their own PDPs and Medicare Advantage Prescription Drug programs.
And because mail-order utilization is relatively low with Medicare, the company’s more than 7,300 pharmacy locations and its leading retail market positions in key sun-belt states well-position it to serve the Medicare Part D population.
“Caremark has put a big emphasis on Medicare Part D and managed Medicaid, and this makes it different from most of its competitors. Both businesses are expected to show substantial growth in future years now that healthcare reform — or most of it — is moving forward,” Adler stated in a research note. “Many states will be expanding their Medicaid rolls to cover those currently uninsured, in part because they will be getting lots of financial support from the federal government initially. Meanwhile, pharmacy coverage for retirees is likely to shift to Part D over time.”