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Economic and event outcomes of members with
carve-in versus carve-out pharmacy benefits:
A two-year cohort study
P.P. Gleason1, 2, Y. Qiu1, K. Bowen1, C.I. Starner1, 2, S. V. Johnson1, D. Yoder3 1 Prime Therapeutics LLC, Eagan, MN, USA; 2 University of Minnesota, College of Pharmacy, Minneapolis, MN, USA; 3Blue Cross Blue Shield Association, Washington, DC, USA
No external funding provided for this research
Background
•• When purchasing health insurance, decision
•• Three separate regional Blue Cross and
Blue Shield Plan studies comparing carve‑in
makers are faced with the question of whether
to carve‑out pharmacy benefits have been
to include the pharmacy benefit as part of the
total health package — a carve-in model — or to
reported; Highmark, Independence Blue and
treat it as a separate benefit administered by an
Premera.1-3
external pharmacy benefit manager —
•• The medical benefit savings in the carve‑in
a carve-out model.
populations ranged from per member per
•• There is ongoing debate about which model is
year (PMPY) savings of $115.92 to $217.12 or
more beneficial to the plan because both are
6.2 percent to seven percent.
intended to promote savings through pharmacy •• These studies were hindered by limited
network channel discounts, mail order pharmacy
geographic regions, relatively small carve-out
services, specialty pharmacy services, formulary population sizes of 40,000 to 180,000 members
management, pharmaceutical manufacturer
and in only one study (the largest) was the PMPY
rebates and clinical offerings such as utilization
difference stated as statistically significant.
management, drug utilization review and
•• Analyses using a large national sample of data
disease/care management.
would be more representative of the potential
•• An advantage of the carve-in model is
medical savings associated with carve-in
integrated medical and pharmacy benefits can
pharmacy benefits across a spectrum of
be more efficiently coordinated. The integrated
Blue Cross and Blue Shield Plans.
data is used to enhance chronic disease and
specialty pharmacy care management services
with the goal of reducing associated medical
events and costs.
Figure 1. Study population distribution within state by percent of 2010 census population
< 65 years of age for carve-in and carve-out groups
Carve-in
n = 818,054
Carve-out
Objective & Purpose
n = 1,042,029
•• The primary objective was to compare, at a national level, the PMPY allowed medical costs between
commercially insured members receiving carve-in to those with carve-out pharmacy benefits in 2010
and 2011.
•• Secondary objectives were to compare the two-year hospitalization rates and the two-year
emergency department visit rates.
Methods
•• Using the Blue Health Intelligence (BHI)
•• The DxCG software also creates Diagnostic
110 million member database, BHI sent certified
Clinical Categories (DCC) to indicate the
de‑identified Health Insurance Portability and
presence of diseases. Indicators for asthma,
Accountability Act (HIPAA) compliant data from
chronic obstructive pulmonary disease,
25 Blue Cross and Blue Shield Plans to Prime
depression, diabetes, hypertension and
Therapeutics (Prime) for a random sample
hyperlipidemia were provided.4
of three million members; 1.5 million with
•• Other member characteristics were age in years,
pharmacy benefit carved in and 1.5 million
gender, insurance product type (exclusive
carved out.
provider organization, health maintenance
•• Inclusion criteria were:
organization, point of service, preferred provider
organization), rural/urban, region (Northeast,
→→ Age less than 65 years as of December 31,
South, Midwest, West), group size defined
2011
as < / = 100 contracts or > 100 contracts and
→→ Continuous enrollment allowing for a 30-day
administrative services only (ASO), also known
gap during 2010 and 2011
as self-insured.
→→ Complete medical claims records
•• Prime then applied further exclusions to
identify a final analyzable data set. Members
•• Exclusion criteria were:
were excluded if they had any gap in insurance
→→ A major change in benefit design, such as
coverage, a missing BHI assigned DCC, or were
a change in medical benefits from or to a
not identified as ASO.
consumer directed health plan, a change
•• The primary objective was statistically assessed
in insured product type (e.g., preferred
using a general linear model (GLM) with gamma
provider organization to a health maintenance
distribution to measure the relative PMPY
organization)
total medical cost differences between the
→→ Change in pharmacy coverage (e.g., carve-in
carved‑in and carved-out groups adjusting for
to carve-out)
the following covariates: age, gender, DCG score,
presence of each of the six chronic diseases,
→→ Enrollment at any time in a government
insurance product type, rural/urban, region and
program (e.g., Medicare, Medicaid), during
group size.
2010 through 2011
•• The carve-in members meeting inclusion and
exclusion criteria were randomly identified by
BHI and then matched to carve-out members
within their database using 15-year age bands,
gender and region of the country.
•• Member characteristics sent from BHI included
Percent of 2010 census population < 65 years of age who are in study
0.021 – 0.1%
0.101 – 0.25%
0.251 – 0.5%
0.501 – 0.599%
0.6 – 1%
1.001 – 3.79%
Table 1. Adjusted models* for annual relative cost, hospitalizations and
emergency department visits
Multivariate general linear model*
with gamma distribution
Relative PMPY medical cost
(95% Confidence Interval)
Annual relative cost
Carve-out group
Carve-in group
Reference group
0.89 (0.89 – 0.90)
Multivariate logistic
regression model*
Odds Ratio
(95% Confidence Interval)
p value
< 0.0001
→→ A sensitivity analysis was performed
excluding members with > / = $100,000 annual
medical cost in 2010 or 2011.
p value
•• The secondary objectives were statistically
assessed using multivariate logistic regression
models comparing the carve-in to the
carve‑out odds of hospitalization or emergency
department visit adjusting for the same
covariates as the primary objective.
the diagnostic cost group (DCG) score which
uses age, gender and diagnoses generated
from patient encounters within the entire
medical delivery system to infer the medical
•• Thirteen GLM models were performed to
problems and to predict patients’ health care
examine the independent effect of each baseline
expenditures. DCG scores are generated from
characteristic on medical cost between carve-in
4
the DxCG software available from Verisk Health.
and carve-out and the results show most of the
covariates had little impact. The DCG score had
the largest independent impact.
2-year hospitalization
Carve-out group
Carve-in group
Reference group
0.91 (0.89 – 0.92)
< 0.0001
2- year emergency department visit
Carve-out group
Carve-in group
Reference group
0.96 (0.95 – 0.97)
< 0.0001
*Adjusting for age, gender, DCG score, chronic diseases (asthma, COPD, depression, diabetes, hypertension, and hyperlipidemia), insurance product type (exclusive provider
organization, health maintenance organization, point of service, preferred provider organization), rural/urban, region (Northeast, South, Midwest, West) and group size > 100 contracts
or < / = 100 contracts
PMPY = per member per year
Results
•• The final analyzable dataset included 818,054
carve-in and 1,042,029 carve-out members.
•• Members were found in all 48 contiguous states
in both the carve-in and carve-out groups, as
shown in Figure 1.
•• There were significant differences (p < 0.001) on
almost all baseline characteristics between the
carve-in and carve-out groups.
→→ The carve-in group had a 4.8 percentage
point higher rate of members greater than
49 years of age.
→→ The carve-out group had three in 10 members
with very low DCG scores of < 0.05 while only
two in 10 carve-in group members were in the
very low DCG score category.
→→ The highest DCG category of scores > 1.5 had
5.1 percentage points more carve-in than
carve-out members.
→→ The carve-in group also had higher rates of
all six chronic diseases.
•• The unadjusted relative cost (RC) [medical PMPY
•• As shown in Table 1, multivariate analysis found
the carve-in group had a relative cost of 0.89,
equating to an 11 percent lower PMPY total
medical cost in the carve-in group compared
to the carve-out group after adjusting for the
baseline differences.
•• Our findings are similar to those of smaller in
region plan studies conducted by Premera,
Independence Blue and Highmark. In their
studies, the carve-in groups were found to
have six to seven percent lower allowed PMPY
medical costs.
$3,176
$330
PMPY medical costs were $3,506 for carve-out
and $3,176 for carve-in for a $330 lower PMPY
within the carve-in group.
•• Secondary analysis, after excluding high cost
(> / = $100,000 per year) members, found the
carve-in group had a relative cost of 0.90 that
equates to a ten percent lower PMPY total
medical cost compared to the carve-out group
after adjusting for baseline differences. The
PMPY difference in dollars was $274 lower
among carve-in members.
Carve-in
n = 818,054
Carve-out
n = 1,042,029
•• During 2010 and 2011, the carve-in group had
slightly higher unadjusted hospitalization rates
(8.2% versus 7.6% for carve-out group) and
emergency department visit rates (24.9% versus
23.5% for carve-out group).
PMPM = per member per month
*PMPY during 2010 through 2011 adjusting for age, gender, DCG score, chronic diseases (asthma, COPD, depression, diabetes, hypertension and hyperlipidemia), insurance product type
(exclusive provider organization, health maintenance organization, point of service, preferred provider organization), rural/urban, region (Northeast, South, Midwest, West) and group
size > 100 contracts or < / = 100 contracts
Limitations
Conclusions
carve-in pharmacy benefits were associated
with 11 percent lower PMPY medical costs, nine
percent lower hospitalization events and four
percent lower emergency department visits.
$3,506
•• Figure 2 shows, the adjusted (transformed back)
costs] between carve-in and carve-out was 1.13.
The 1.13 RC indicates that the carve-in group had •• Table 1 shows the carve-in group had an adjusted
highly statistically significant nine percent
a 13 percent higher medical cost PMPY with no
(p < 0.0001) lower hospitalization rate and four
adjustment for baseline differences.
percent (p < 0.0001) lower emergency department
visit rate, during the two years studied.
•• This large national sample study found that
Figure 2. Adjusted total paid medical PMPY* by carve-in versus carve-out
•• Pharmacy and medical data integration occurs
within a carve-in services model resulting
in pharmacy formulary coverage and benefit
design decisions being made with a holistic
examination of the medical cost impact.
•• Carved in pharmacy benefits allow for
improved health plan care coordination
through integrated data resulting in more
timely and targeted health interventions
including enhancing care management and
disease management programs.
•• Due to data constraints, we were not able to
adjust for other possible confounding factors
like specific benefit designs including out of
pocket maximums.
•• We did not investigate the specific reasons
why the carve-in group had lower costs along
with lower hospitalizations and emergency
department visits. Care and/or case
management programs may have been different
between groups.
•• Administrative databases have the potential for
miscoding and include assumptions of individual
actual health care utilization and diagnoses.
•• Pharmacy benefit claims data were no included
in this study.
•• Data are limited to self-insured commercial
populations in the United States; therefore
findings may not be generalized to Medicare or
Medicaid populations or other types of insurance
(e.g., Health Maintenance Organizations).
•• Further research is required to identify the
specific factors influencing lower costs and to
further validate these findings.
References
1. Culley EJ, et al. Pharmacy Benefit Carve-In: The Right Prescription for Cost Savings. Benefits & Compensation Digest 2010;47(11):22-26.
2. Smith-McLallen A. Effects of Pharmacy Benefit Carve-In on Utilization and Medical Costs: A Three-Year Study. Benefits Magazine 2012;49(2):1-6.
4085-B © Prime Therapeutics LLC 09/14
1305 Corporate Center Drive, Eagan, MN 55121
AMCP, October 8, 2014, Boston, MA, USA
Patrick Gleason, 800.858.0723, ext. 5190
pgleason@primetherapeutics.com
3. Wells P, Ness D. Pharmacy Carve-In: The Value of Integrated Benefits. Premera Blue Cross, 2011. Washington Healthcare News. www.wahcnews.com/newsletters/
wa-premera-0412.pdf . Assessed August 8, 2014.
4. Verisk Health DxCG Medical Classification System Version 7: Structural Summary. www.veriskhealth.com/answers/population-answers/dxcg-risk-analytics?gclid=CJiLso
C1hMACFQgLaQod5aoAng. Accessed August 8, 2014.