Formulary

• A formulary is a list of medications and supplies chosen for plan coverage based on efficacy, safety, and cost-effectiveness. These products may be placed in different coverage tiers with utilization management (UM) criteria applied to control costs and ensure appropriate utilization.

• Each Health Plan has its own standard formularies available for use by commercial employer clients.

Cost Share

Member cost share is defined by the plan and varies by formulary coverage tier. Traditional cost sharing arrangements include the following provisions:

• Deductible: Set amount each member pays out-of-pocket for covered services before insurance coverage begins.

• Copay: Fixed amount a member pays out-of-pocket for medication coverage after the deductible is met.

• Coinsurance: Percentage of a covered health cost that a member is responsible for paying after meeting their deductible.

• Out-of-Pocket Maximums: This is the most a member must pay for covered services in a plan year. After a member spends this amount on deductibles, copayments, and coinsurance, the plan pays for 100% of the costs of covered benefits.

• Plan defined benefit is the maximum amount a plan sponsor pays for the covered benefit per member per month or per year. This option is less prevalent; however, it is a viable model for future considerations.

Rebate

• A form of price concession paid by a pharmaceutical manufacturer to the health plan sponsor or the PBM working on the plan's behalf. Rebated discounts given after the purchase of specific medications reduce the net cost of the medication for the payer. Manufacturers offer these rebates in return for coverage preferred position on the PBM formulary.

Participating Pharmacy

• List of retail and home delivery pharmacies that are in-network to dispense covered medications.

• Because of supply chain dynamics which often result in brand drug reimbursement below product cost, retail pharmacies have experienced financial challenges when dispensing GLP-1s. This has resulted in many retail pharmacies deciding to discontinue dispensing these drugs. PBM mail order pharmacies have also restricted distribution of these products due their negative impact on the PBM’s ability to meet payer financial guarantees.

• Pharmacy Fill Location - benefit provisions may vary depending on whether members fill prescriptions at a participating mail order pharmacy or participating retail pharmacy. Payers may restrict certain medications, such as GLP-1s to specific preferred pharmacies or pharmacy types to limit the amount dispensed (e.g. maximum one-month supplies) and minimize potential waste, particularly during initial dose escalation.

• GLP-1 medications dispensed as compounded formulations should be excluded from the benefit. Compounded GLP-1 products are not approved by the FDA, and the FDA as well as leading obesity organizations have issued warnings based on safety concerns.

Types of Coverage Available

Traditional: A medication is covered on the formulary, meaning employees have access to the medication pending any utilization management requirements.

Rider:Your carrier may provide the option to add a coverage rider buy-up for AOMs not currently on formulary. Terms of the rider may include additional limitations on access to AOMs, such as quantity limits or dispensing restricted to specific pharmacies. Riders may be subject to both state policies and filing deadlines.

• It is important to have a defined process in place to validate all per member per month (PMPM) premium quotes received from the health plan to include AOMs. This can be accomplished through internal or external marketplace intelligence.

Third Party Carve Out: Plans may opt to carve out AOM benefits from their current PBM and outsource access to AOM medications to a third-party or point-solution vendor for an additional fee. Many third-party vendors offer specialized clinical expertise and comprehensive management in addition to providing access to medications. Components of carve-out services can include:

• Population health management member stratification

• Clinical, nutritional, behavioral, and lifestyle coaching in conjunction with prescribing medication

• Detailed analytics and outcomes reporting for the payer

• Specialized expertise in disease states such as obesity, diabetes etc.

• Defined benefits paid by the plan sponsor

Considerations for Carving Out AOM Benefits:

Pros

• Specialized AOM services provided to members

• May facilitate appropriate medication prescribing, comprehensive care, and control of medication spend

• May be viewed by employees as a valuable enhancement to the benefits package

• Ability to aggregate and analyze data on cost and health outcomes

Cons

• Additional vendor administrative burden

• Additional outreach may be necessary to coordinate care

• Health Plan may charge additional fees and/or adjust premiums

Benefit Design

Traditional value-based benefit

• Create optional comprehensive weight management program for members. Offer generic copay on medication if members enroll and participate in program. Charge brand copay if not enrolled or participating.

• Add AOMs to preventive medication list or cover medications as part of standard plan design.

Questions to Ask Your Organization or PBM:

Does the benefit design currently provide AOM coverage?

If AOMs are not covered:

• When was the last time AOM benefits were reviewed and discussed for coverage?

• Is there a business reason why the plan has chosen to exclude this benefit?

• Are there other anti-obesity therapies or treatments available to members?

• What type of utilization management programs are in place to address off-label use of GLP-1s for obesity? For example, new to therapy prescriptions may require Prior Authorization with a documented diagnosis of Type 2 diabetes and the use of metformin, with at least 14 days between prescription fills.

• Are members aware of the potential to utilize health savings account such as FSA, HSA and HRA to help cover the cost of these medications? Informing members on direct-to-consumer or manufacturer discount programs can also help reduce costs for members when the medication is not covered within the benefit.

If AOMs are covered:

• What criteria does your health plan incorporate to ensure that AOMs are appropriate and affordable for members who need them? Determine appropriateness of criteria for both new therapy initiation and renewals.

• Is there a comprehensive care management plan for members taking AOMs? How does the plan ensure that members have equitable access to treatment?

• Are lifestyle benefits, such as diet, physical activity and behavioral counseling also covered with these medications?

• What methodology or evidence does your health plan use to manage access?

• How often is the utilization management criteria reassessed by the health plan?

Other considerations

• Does the health plan cover obesity treatment and does it reimburse for nutritional, exercise, and psychosocial benefits to address environmental influences impacting weight?

• Does the health plan provide clinical engagement for obesity services reimbursed as a complex chronic disease along with the nutritional, exercise, and psychosocial benefit access?

• How does coverage for this class integrate or align with other obesity management benefits offered by the health plan, such as bariatric surgery?

• Can a coverage rider buy-up be added (adjustment or add-on to basic policy) for this class? Is there more than one rider option available?

• What are the cost implications if the organization decides to cover these medications?

• Does the health plan require members to enroll in a behavioral/lifestyle program as part of coverage?

• Does the health plan offer a value-based benefit design where member copay is reduced (e.g. generic copay apply) for members who are enrolled vs. standard cost share for those who are not enrolled?

Clinical Guidance

There are publicly available clinical guidelines that provide guidance on defining and diagnosing obesity, how to approach obesity as a disease, and what parameters may be useful in classifying severity.

• The Lancet Diabetes & Endocrinology, Definition and diagnostic criteria of clinical obesity

• ACE / AACE Treatment Guidelines

• AMA Guidance on Use of BMI in Treatment

• AHA / ACC / TOS Treatment Guidelines

• Guidelines for definition of ASCVD

The definition of obesity and diagnostic criteria for obesity were updated by The Lancet (link above) in January of 2025. They recommend using BMI only as a population-level screening tool, with excess adiposity confirmed through direct body fat measurement or additional measurement criteria. It also distinguishes between "clinical obesity," where organ function is impaired, and "preclinical obesity," where function is preserved but risk remains.

Guidelines often suggest differing levels of treatment that intensify with the severity of the obesity classification or additional disease conditions.

Patient Identification Algorithms and Predictive Modeling

Clinical guidelines illustrate there is no one-size-fits-all approach for identifying the most suitable candidates for AOM access. Factors such as body mass index (BMI) and comorbidities may inform whether an individual would benefit from treatment.

Predictive modeling and data analytics are tools your health plan may utilize to target the most appropriate members for intervention.

Questions to ask your Organization and Health Plan

What percentage of my members will end up utilizing AOMs? Typically, a plan may experience utilization of GLP-1s for weight loss ranging from 2% to 10% of the eligible population, depending on coverage criteria.

• It is important when stratifying eligible populations that members are not counted multiple times based on multiple covered disease states (obesity, diabetes, ASCVD with obesity etc).

What are the benefits and risks of covering AOMs more broadly (e.g. follow the manufacturer label requirements)? Alternatively, what are the pros and cons of covering more narrowly (e.g. limit access to patients with specific health complications)?

• Broad coverage that aligns with the full product label allows more members access to medications but may lead to a larger eligible population and increased medication costs.

• Narrower or more restrictive coverage allows the most at-risk members (e.g. those with type 2 diabetes or cardiovascular disease) to receive the medication and may result in a smaller eligible population. Narrower coverage may also result in the loss of manufacturer rebates if not coordinated with your PBM, which could impact the cost of coverage.

• Requiring lifestyle management programs prior to or with therapy may also limit the treatment population.

• Restricting medication prescribing to a limited network of prescribers or a center of excellence may allow more control over patient eligibility, potentially without having to implement additional prior authorization criteria.

• When discussing coverage with your health plan, financial benefits and risks of a broad vs. narrow coverage strategy should be understood.

We cannot perform our own predictive modeling; what should we do?

• Your PBM may already perform some of these functions for you, and many third-party carve out vendors will include predictive modeling as part of their standard benefit offering.

• Some consulting firms can perform these analytics.

Medication therapy is one component of the solution, and an effective coverage strategy must include a comprehensive lifestyle and engagement program. Published studies demonstrate up to 26% waste in drug spend due to lack of engagement.

Coordinate with the health plan/PBM to determine what programs or support they offer to provide the services listed below. If there are gaps in these services, you may want to evaluate current or new vendors, such as point solution providers, to help fill these gaps to provide more comprehensive care. At a minimum, clinicians should educate members on risks, benefits and alternatives to AOM therapies, and members should regularly follow up to monitor weight, blood glucose, and kidney function among other health outcomes. Any prerequisite program participation requirements that are associated with AOM therapy approval should be discussed with the health plan/PBM to ensure that they align with any rebate requirement.

Lifestyle Support Programs with Holistic Member Support:

• Determine what your health plan offers regarding community/provider-based programs that promote a healthy lifestyle.

• Ask whether your health plan includes mental and emotional support, in addition to physical health and lifestyle changes, for holistic management of obesity.

• Understand whether current vendors have an existing weight management program and the specific capabilities.

Personalized Nutrition Therapy/Counseling:

Provide personalized nutrition therapy and counseling to help members understand and manage their dietary habits.

Integration across Stakeholders:

• Understand how your health plan facilitates cooperation among members, providers, employers, plan specialists, and primary care providers.

• Optimize vendor effectiveness and impact by ensuring that they can access and utilize electronic health record data and medical claims data.

Telehealth Support:

• Understand how your health plan leverages telehealth to facilitate regular provider contact for medication adjustments based on weight goals, safety, tolerability, and health outcomes.

• Several organizations offer comprehensive obesity care models with obesity medicine specialists as part of their care teams.

Stability Prior to Prescription Therapy:

• Health plans should ensure that lifestyle modifications have been implemented when prescription therapies are being considered.

• Ensure your health plan correlates these modifications with key performance indicators (KPIs) to track progress. More detail on possible KPIs is described later in this framework in Section 5.

Member Engagement Medication Therapy Support:

• Set realistic health goals and timeframes with members before starting medication therapy.

• Communicate potential side effects of medications to members and strategies for managing these side effects.

• Discuss dose escalation and the need for a gradual increase in dosage based on effectiveness and tolerability of the medication.

Monitoring and Evaluation:

• Understand from health plan how they are monitoring and evaluating the effectiveness and safety of the holistic management approach.

• Ask health plan how they are using data-driven approaches to identify areas for improvement to implement necessary changes.

Covered utilization: If your health plan currently covers AOMs or you are considering a rider for coverage, there are multiple levers the health plan may use to manage utilization and cost. You should determine how they are leveraging the options below to appropriately manage this medication category if it is covered as part of your benefit.

Utilization management

Health plans and PBMs have standard utilization management (UM) programs to limit fraud, waste and abuse, and to ensure AOMs are prescribed to the appropriate patient population.

PBMs also offer programs that are more comprehensive in nature, such as EncircleRx from Evernorth (Express Scripts), Optum Rx Weight Engage, and CVS Weight Management Program. The range of services offered by PBMs should be evaluated and carefully compared with other third-party providers or point solution vendor program services to ensure they offer the best cost/benefit option for the payer and their members.   Plan sponsors should also ensure that third party providers and point solution vendors can successfully integrate with the plan’s benefits and UM.

• EncircleRx from Evernorth (Express Scripts) offers financial guarantees for a flat per member per month (PMPM) fee. Participation in this program may impact rebates received for these medications.

• Optum Rx Weight Engage allows payers to configure different elements of the program. It helps members with behavior modification support such as diet and exercise planning through a live coach or digital platform.

• CVS Weight Management Program provides one-on-one support from a dedicated registered dietitian in a virtual setting, including personalized nutrition planning based on health needs, social determinants of health, and cultural and individual preferences, empowering members to develop sustainable habits for achieving long-term weight loss. The program may include return-on-investment (ROI) guarantees and other guarantees, depending on eligibility.

New start limitations

• Limit access to medications for initial prescriptions to a one-month supply to avoid waste if dosage is adjusted before the medication supply is used.

Limiting coverage to expanded indications only, such as reducing the risk of major adverse cardiovascular events in adults with established cardiovascular disease and either obesity or overweight, and for moderate-to-severe obstructive sleep apnea in adults with obesity.

Member cost sharing

• Consider what your members will pay out-of-pocket for access to AOMs.

• Balancing the economics of access for your overall population while ensuring equitable access for your membership is an important consideration in determining cost sharing.

Provider networks

• Health plans should work closely with provider networks to educate and enforce coverage requirements and UM practices for AOMs.

• Health plans may implement additional requirements for continued access to medication (i.e. monthly visit with member’s care team to monitor progress, adjust dose, discuss potential side effects)

• The health plan may evaluate the value of providing an open provider network vs. limiting prescribing of GLP-1 AOMs to a center of excellence network.

Rebates and discounts

• Manufacturers typically provide rebates for preferred formulary placement of their products, particularly for a competitive medication class like AOMs.

• Health plans may optimize rebate opportunity for AOMs by aligning contracting with formulary and utilization management strategy.

• Health plans may consider driving utilization to specific channels (retail vs mail order pharmacies) or pharmacies where they have preferred contracts in place.

Non-covered utilization: For employers that decide not to provide AOM coverage, establish a process to guide members to alternative access options.

• Manufacturers may offer copay cards or direct-to-consumer programs which can be used to lower out-of-pocket costs.

• It is important to note that incurred costs for non-covered medications will not accrue toward the member’s deductible or OOP maximums under their insurance program.

• Your health plan may also establish cash discount programs with retail pharmacies to enable member access.

• Copay cards and cash discount programs do not apply to non-approved pharmacies.

• Payers should discourage the use of compounded GLP-1 medications as these are not FDA approved and there are significant safety concerns. The FDA indicates that previous shortages of the GLP-1 drugs are now resolved, requiring compounding pharmacies to discontinue making and distributing compounded GLP-1s.

Plan sponsors who implement behavioral modification and patient engagement programs have realized increase compliance and return on investment. Several point solution case studies are pending publication.

All health plans should aim to establish key performance indicators (KPIs) to monitor success and/or identify potential shortcomings. However, this can be challenging due to the multiple data sources and vendors involved with different benefits.

Payers should consider the following as they work with their health plan to understand their KPI-monitoring program:

Catalog weight management benefits

• What do you currently offer to manage obesity and identify the vendor who can/should be able to track outcomes.

Identify data requirements and availability

• Discuss with each vendor to determine what information/data can be provided and measured.

• Identify if there are extra fees or development needed to obtain data.

Determine who will compile and measure

• Evaluate who can compile and provide comprehensive measurements from the different vendors and data sources (PBM, health plan, point solutions vendor, or consultant).

KPIs may be segmented into the following measurement groupings (with examples of what to track). Depending on the outcome being evaluated, it may not be possible to provide measurements in all areas listed below, but these are suggestions to make outcome measurements more robust and facilitate a more comprehensive view of program impact and success.

Members:

Percentage of total body weight loss (both from highest weight and weight at the start of the program)

Medication adherence

• Adherence to treatment is a relatively easy measure to track and has a high correlation with improved outcomes and reduced medication waste.

Attrition and rationale

• Tracking and understanding how many members discontinue AOMs and the rationale may provide opportunities to improve the care model.

Holistic health outcome measures

• Evaluating health outcomes (e.g., blood pressure, blood sugar, cholesterol, etc.) is critical to understand the health benefits associated with weight management.

• Measuring other indicators of physical and mental health (e.g., standardized survey tools such as PROMIS-10) is an important way to track the impact of the program beyond weight and health metrics.

Population:

What percentage of the population is utilizing the medication? Does this align with original expectations?

What percentage of utilizers have weight-related comorbidities?

• Assess population that qualifies for additional indications (e.g., diabetics with obesity, sleep apnea, cardiovascular risk).

Analytics by cohort (e.g. diabetes diagnosis, race, gender, etc.)

• Identifying differences among AOM user cohorts may identify disparities in care and provide areas to focus efforts.

• Long-term benefits include reduction in blood sugar and cardiovascular risk among other health outcomes. What changes are observed in the population?

Cost:

Net cost per member (prescription cost and total health care cost)

• Tracking the net cost will assess plan liability to cover AOMs. It is important to include the impact of rebates and other factors offsetting cost.

• PBM and/or vendor contract performance

Return on Investment (ROI):

Longitudinal medical outcomes and associated plan costs

• Implement processes to track medical claims for members utilizing AOMs to study long-term savings as a result of treatment. Obesity treatment is long-term, and it may take years to achieve medical savings.

• Payers can estimate medical cost offsets using the studies below:

Low Cost Offset Scenario

High Cost Offset Scenario High Cost Offset Scenario

Additional Cost Offset Data:
Effects of Semaglutide 2.4 mg on Healthcare Costs in Patients with Obesity and Atherosclerotic Cardiovascular Disease (SHINE-ASCVD)

Non-medical offsets

• Consider other metrics to quantify benefits for members utilizing AOMs as well as the organization (e.g. lower absenteeism, lower presenteeism, etc.)

As KPIs are developed, it might be helpful to stratify measurements into the following:

Baseline metrics – prior to implementation or beginning therapy

Short term metrics – outcomes during the initial year of therapy or program implementation

Long term metrics – outcome beyond the first year of therapy or program implementation

Finally, the health plan may adjust the premium to cover AOM medications such as GLP-1s, and employers should assess the costs and benefits before implementing coverage.