Written by Typically Pharmacy Benefit Managers, or PBMs administer prescription benefit plans. PBM’s job is to get discounted contracts with pharmacies and pharmaceutical companies, adjudicate claims from pharmacies, pay them for covered prescriptions and provide additional clinical & administrative support.
Today, more than ever, prescription medicine represents a large portion of employer sponsored plan expenses, representing 15%-25% of the total health care spend. The cost of prescription drugs is a combination of daily, relatively low-cost maintenance medications and unforeseen catastrophic drug expenses. It’s now not uncommon to see members on specialty medications exceed $100,000 in annual spend individually. Several market pressures – including new drugs, price inflation, higher utilization and clinical-guideline changes – are all factoring into this. This makes the importance of prescription benefit design significantly important.
When the employer is fully insured, the pharmacy benefits are bundled in it. In other words, the employer has no say in the terms and conditions that were negotiated between PBM and insurance companies. The agreement is not shared with the employer and all rebated offered by PBM are typically kept by the insurance carrier. This is called ‘carve-in’.
Carve Outs
Carving out the prescription benefits can help self funded plans reduce costs and improve the health of their employee population. In this case, you are able to establish a direct business relationship with PBM, have access to quality data necessary to maximize control and selection of programs to drive better outcomes. If you don’t have the manpower to receive, review or audit prescription claims, you can work with your TPA to provide another layer of administration on pharmacy benefits and demand access to claims, contract summary and reports. Realistically, it could be harder to get it from ASO.
How to start?
Start by reviewing your historical claims and prepare the RFP. Send the RFP to PBMs. Get full details on discounts, rebates or other saving programs. The selected PBM must be able to send the prescription claims in NCPDP format to be processed along with other medical claims by your TPA. Pay special attention to speciality drugs, which can be delivered through your PBM or your medical provider. When you request drug claims and reports, you may see your spending through your PBM without seeing what was spent through your medical coverage. You have to request both and look at your spending across all channels, then come up with a plan to address your organization’s overall needs.
Get a formulary
Get a formulary in place based on multi-tier copayment design. Have a stronger reimbursement policy for drugs obtained through medical benefits including prior authorization for speciality drugs. When processing claims, apply edits for prior authorization, step therapy and quantity limits.
Manage Utilization Beyond the plan design, go for strong utilization management. By redirecting patients and medications to most clinically appropriate setting, you can save costs. For example medications administered at home will be significantly cheaper than administration in a hospital outpatient setting. Read your current stop-loss agreement or contract and determine if prescription drugs are covered under the stop loss. Your stop-loss vendor should permit this change any time of the year. Talk to us about how our health insurance solution can reduce costs, improve health outcomes and provide you better visibility & control over your health benefits.
Request a free demo
We’ll get back to you promptly.