Blue Cross and Blue Shield

Of the 400 health plans available to federal workers, the Blue Cross and Blue Shield plan is the largest, covering nearly 42 percent of the four million federal enrollees. To control drug costs, Blue Cross and Blue Shield recently began requiring federal enrollees to pay 20 percent of the price of prescriptions purchased at participating retail pharmacies. Previously, federal enrollees did not have to pay anything for prescription drugs. Enrollees may continue to receive drugs free of charge, however, if they buy them through the plan's mail order program. Members of Congress and retail pharmacies have raised concerns about the quality of mail order services and the effect of the change on the business of retail pharmacies that serve plan enrollees. To provide pharmacy services to its federal employee health plan, Blue Cross and Blue Shield contracts with two pharmacy benefit managers: PCS health Systems, Inc., which provides retail prescription drug services, and Merck-Medco Managed Care, Inc., which provides mail order drug services. This testimony discusses (1) Blue Cross and Blue Shield's reasons for the benefit change, (2) how it was implemented, (3) the change's effect on retail pharmacies, and (4) the extent to which PCS and Medco have met their contract requirements for services provided to the federal health plan.