Health Maintenance Organization (HMO) Capitated Managed Care Plans: Kaiser Permanente
HMO capitated managed care plans identify a specific budget and allow provider physicians to allocate the funds as they see fit. Tobacco-dependence treatment has proven highly cost effective (see Table 2 in coding section) in reducing unexpected doctor’s office visits; preventing, averting or resolving problems with other types of care; and reducing medication expenditures related to hypertension, asthma, and other pulmonary conditions.
Managed care organizations tend to encourage more healthful lifestyle changes and are generally willing to cover preventative services such as tobacco-dependence treatments. Kaiser Permanente (KP) of Northern and Southern California are examples of changes in HMO managed-care-plan formularies for tobacco-dependence treatment.
Kaiser Permanente’s Tobacco-Dependence Pharmacotherapy Benefit
Before 2003, the lifetime pharmacy benefit for a patient suffering from tobacco dependence was a mere 42 “Step 1” nicotine patches (1 patch/day for 6 weeks). And that once-in-a-lifetime benefit could only be obtained if the Kaiser patient attended a one-day/week, 6-week group-counseling program. This changed in 2003 because the scientific literature compellingly showed that tobacco-dependence treatment was effective, tobacco dependence was a chronic medical disease, not one that was acute and self-limited, and that scientifically based tobacco-dependence treatment was highly cost-effective, enabling an HMO, such as Kaiser Permanente, to realize system-wide, real dollar savings within one year.
As of 2008, the Northern California Kaiser Permanente formulary for tobacco-dependence treatment includes nicotine patch, nicotine gum, nicotine lozenge, and bupropion. Nicotine inhaler, nicotine nasal spray, and varenicline, while not on-formulary, are available to the patient at standard co-pay rates if the prescribing physician enters an exception code on the prescription.41 The medication dosages and combinations used and the duration of treatment are not proscribed by the Kaiser pharmacy. Rather the Permanente Medical Group physician determines individualized tobacco-dependence pharmacotherapy, just as that physician would if treating any chronic medical disease, such as hypertension or asthma. Treatment duration is not limited, because Kaiser Permanente recognizes tobacco dependence as a chronic disease.
Tobacco-dependence medications are available at drug benefit co-pay when received by prescription and in conjunction with participation in an approved tobacco-dependence treatment program.42 The patient may select from an array of such programs, based on the patient preference. This can be as simple as using Kaiser Permanente’s telephone counseling line, 1-800 NO BUTTS, or a Kaiser Permanente web-based behavioral intervention, Breathe Online Healthy Lifestyles program (available on kp.org), or using more intensive behavioral management programs provided by Kaiser Permanente, including individual counseling, single-session workshop, or multi-session, group-counseling classes.
Formulary management of medications can provide an increase in value relative to cost and clinical experts are using such programs as a way to optimize cost. It also helps primary care physicians who may not have the expertise in treating tobacco dependence rely on the experts to provide standardized formulary combinations.
In Northern California, Kaiser Permanente’s Clinical Recommendations for Tobacco Cessation 200843 includes the following policies:
- Medications are available as often as medically necessary, at drug benefit co-pay, in conjunction with participation in a Kaiser Permanente-approved behavioral management program (see above).
- KP patients with Medicare Part D coverage do not need to attend smoking cessation program in order to receive medications member co-pay.
- Counseling (group or individual) is available at no added cost to KP members.
Kaiser Permanente also provides:
- Smoking as a Vital Sign44 (assessing smoking status implemented in primary and specialty care visits, built into electronic medical record system)
- 100% Smoke Free Campuses (no smoking allowed on Kaiser Permanente-owned property)
- Quit Tobacco programs available at no extra cost for Kaiser Permanente members (Available in person, online, and by phone. Northern California partners with the CA Quit Line for phone counseling support, Southern California provides their own telephone support.)
Background and Motivation for Kaiser Permanente’s Tobacco-Dependence Benefit Changes
In the year 2000, Kaiser Permanente Northern California reviewed the cost and disease burdens associated with tobacco use and the cost effectiveness of known treatments. Data showing Kaiser Permanente Northern California’s performance on tobacco-dependence interventions from the standardized HEDIS (Health Plan Employer Data Information Set) tool, from the National Committee for Quality Assurance (NCQA), showed several opportunities for improvement. (More than 90% of America’s health plans use HEDIS to measure performance on important dimensions of care and service.) Kaiser Permanente Northern California also conducted analyses and concluded that an expanded formulary benefit for tobacco-dependence treatment would pay for itself in less than one year.41 Such compelling internal data led to a major change in the pharmacy benefits for tobacco-dependence treatment.
At the time, the demand for smoking cessation programs was widespread among consumers, purchasers, and regulators, as well as important to Kaiser Permanente’s emphasis on wellness and healthful lifestyle changes. Kaiser Permanente realized that tobacco dependence is a chronic and relapsing condition, and that charging for tobacco-dependence programs, which frequently require multiple quit attempts to achieve long-term or lifetime continuous nonsmoking, constituted a barrier to access for many patients. Considering the burden of the disease, the costs of providing programs to members was relatively small.
In 2003, to improve patient access to effective (and cost-effective) pharmacotherapy, Kaiser Permanente Northern California removed the limitations on the use of tobacco-dependence medications. The behavioral change program became available at no additional cost to members and the formulary medications were made available at co-pay (with participation in a treatment program), with an unlimited treatment schedule, for as long as clinically indicated – not restricted to once a year. Kaiser Permanente of Southern California also enacted similar changes.41