Evaluating your Pharmacy Benefit Manager

Evaluating your Pharmacy Benefit Manager

Pharmacy Benefit Managers… Are they really adding value to your health plan?

Limited price transparency. Lack of competition. Changing formularies. Spread pricing.

These are just some of the issues that employers face with the pharmacy benefit managers (PBM) used to administer prescriptions for their health plans.

In fact, a recent survey published by Formulary Watch said U.S. employers were not confident in PBM practices — and more than half (51 percent) have questions about their integrity and administration.

  • Sixty-nine percent of Americans think PBMs overcharge
  • Sixty-three percent of Americans think they operate with little-to-no price transparency.

So how can employers reevaluate their PBMs to make sure they provide value for their health plans as well as enhanced well-being for their employees?

  • Get Educated
    While your advisor can often fill you in on PBM trends and details, it’s also important for you and your benefits staff to stay in the know about the current landscape for PBMs. Learn what models are available, beyond the one you may be using, as well as what benefits and services each one may offer your organization, and if new or different contacts are coming to market. Also, be aware of laws that regulate how PBMs work and understand how changes or new legislation may impact drug benefits in your health plan.
  • Audit your PBM contract
    If you haven’t had one recently, arrange to do one on your PBM in-house or hire a third party to help you. Careful, line-by-line audits can help you understand:

    • What guarantees are offered?
    • What your current contract terms and conditions are and if they align with what your PBM delivers?
    • What metrics or KPIs will be used to measure and monitor the success of your plan?

    As a result, an audit can help you determine whether you want to stay with your PBM once the contract ends or seek more favorable terms by moving to a different one.What your current contract terms and conditions are and if they align with what your PBM delivers?

  • Conduct an RFP
    If you decide to look for another PBM, solicit competitive bids through a methodical RFP process. By defining your goals, expectations, and requirements, you can gain an insightful opportunity to:

    • Evaluate proposals to see how each one may (or may not) align with your specific needs.
    • Conduct due diligence on other PBMs to understand their business practices and how they may impact outcomes and cost containment for your organization’s health plan.
    • Compare the cost of drugs, discounts, rebates, and management fees, as well as price transparency, clinical programs, and services provided under each PBM.
    • Gain wider optics into the flow of money among different players in the PBM system to reveal potential cost-savings and (hopefully) negotiate better terms.
  • Assess wellness program(s) provided by your PBM
    The overall health of your employees can also drive down drug utilization. So, find out what solutions, if any, your PBM offers that can help ensure employees take their medications as prescribed and minimize waste. Is step therapy used? Are the protocols for prior authorization adhered to? Are disease management programs offered? Also, look at how they engage participants or employees in the health plan. All these factors can help maintain clinical continuity and contribute to keeping regular drug costs down.

  • Review quarterly reports
    Beyond annual reviews, it’s important to run quarterly reports with your advisor. Not only review the medications that were dispensed, but also check for the rebates due from your PBM and see when and how often they flow to your bank account. Are you receiving them when you should be or is there a lag? The goal is to get them as soon as possible according to the terms of your contract.

    In addition, include your in-house medical director and pharmacist in quarterly reviews to discuss and analyze claims data — and get their informed insights about what may be going on in your health plan.

  • Consider alternatives
    Promising more accountability and greater transparency over current models, alternatives are coming to market to challenge “the big three” with new ways to manage the use and costs of prescriptions. Navitus and EmsanaRx are two examples that pass 100 percent of discounts negotiated with drug makers to employers, who pay a set fee for the administration of their pharmacy benefits not a percentage of the discounts. Others eliminate the role of the PBM or “middleman” and offer direct-to-consumer pharmacy initiatives. Mark Cuban’s Cost Plus Drug Company, for instance, offers more than 100 generic medications directly to patients at wholesale prices.

 

Ultimately, a strategic evaluation of your PBM can help yield significant cost savings and enhance the overall value to your health plan. Let’s work together to get your employees the medications they need at a price you can afford.

 

 

This material has been prepared for informational purposes only. BRP Group, Inc. and its affiliates, do not provide tax, legal or accounting advice. Please consult with your own tax, legal or accounting professionals before engaging in any transaction.

Comments are closed.

Table of Contents

Recents Post
March Pulse webpage
March 2024 Pulse Newsletter
Slip Trip Fall
Slip, Trip, and Fall Prevention
2023 State of the Market Mid-Year Report
State of the Market 2024 Outlook

This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. Baldwin Risk Partners, LLC (“BRP”), its affiliates, and subsidiaries do not guarantee that this information is, or can be relied on for, compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability. This publication is not intended to be legal, underwriting, or any other type of professional advice. BRP does not guarantee any particular outcome and makes no commitment to update any information herein or remove any items that are no longer accurate or complete. Furthermore, BRP does not assume any liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Persons requiring advice should always consult an independent adviser.

Baldwin Risk Partners, LLC offers insurance services through one or more of its insurance licensed entities. Each of the entities may be known by one or more of the logos displayed; all insurance commerce is only conducted through BRP insurance licensed entities. This material is not an offer to sell insurance.

Get in contact with an advisor today to see how BKS can support you.