A pharmacy carve-out with a Pharmacy Benefit Manager (PBM) is an opportunity for your clients to save money.
Pharmacy carve-out models enable flexibility. Control over the individual PBM contract allows for customization of a pharmacy benefits plan specific to the plan sponsor’s needs that includes programs and services that impact overall costs and improve clinical outcomes.
An estimated 108 million Americans belong to a self-insured health plan, with many of these plans including medical and pharmacy benefits from the same company because the industry tends to adopt a "bundled" approach to employee health plans.
However, the carve-out alternative is gaining in popularity because it presents an opportunity to align with a PBM whose strengths may include flexible formulary modeling, stronger negotiating power and customizable benefits to meet the specific and tailored needs of the plan.
What it Means to Carve Out Your Pharmacy Benefit Management
In the conventional bundled model, medical and pharmacy benefits roll into one insurance plan. The employer contracts directly with the medical health plan vendor for medical and pharmacy benefits. The medical health plan vendor will either administer the program in-house or contract with a PBM to process pharmacy claims and administer the pharmacy plan. Because the employer contracts directly with the medical health plan vendor, there is no direct relationship with the PBM.
While this may seem like a convenience communicating with only the health plan, the bundled medical and pharmacy benefits contract may not be the best option for small and mid-sized employers, especially those who are newer to or considering self-funding their plan. Larger health plans tend to use their own PBM and include not only fees for service but are far more likely to induce penalties and/or charges for noncompliance or customization.
By carving out the pharmacy benefits, employer groups can align with a PBM who offers clinical oversight, customized formulary design and a transparent look into your data. As no two health plans are equal, the same is true for PBMs. Matching a PBM that fits the needs of each group can help with employee retention through better clinical alignment, customized service and pharmaceutical knowledge, in addition to tailored solutions for an organizations' employees and their pharmaceutical spend.
Carving out with a PBM also offers other distinct advantages such as more plan flexibility, dedicated customer servicing teams, value-based formulary options and an overall lower net cost.
Advantages to Carving Out
There are many opportunities to reduce costs by carving out your pharmacy benefits with a PBM like Pharmacy Benefit Dimensions (PBD). Working with PBD allows plan sponsors to take advantage of enhanced pharmacy discounts because we manage our own robust network of pharmacies across the U.S. We also own the majority of our contracts with drug manufacturers, putting us in a unique position to leverage our population, experience and clinical acumen to secure the best possible rates for our groups.
Lower costs can also be achieved through our value-driven formulary options. Our clinical team utilizes a value-based approach when making formulary decisions, focusing on low-cost therapeutic alternatives (e.g., generic medications), to help balance medication efficacy, safety and cost-effectiveness.
Greater Transparency and Overall Pharmacy Plan Control
Carving out allows for greater visibility into the true cost of the prescription drugs, and with greater transparency comes greater control. To achieve maximum cost savings while improving patient outcomes, it becomes critical to understand the many contributing factors that drive prescription drug costs. With a carve-out PBM, clients have access to their members' utilization and pricing data, as well as the details behind their contract with PBD.
Improved Insights into Drug Utilization Review and Spend
By carving out the pharmacy benefit, employer groups can see claims data and detailed reporting for their members. Having transparent access to data allows employer groups to make informed decisions to make targeted and meaningful changes that align with their specific plan goals and their members’ utilization. This could mean customizing clinical programs, utilization management or claims adjudication. PBD works with employers to find the right approach to meet their benefit and financial objectives.
Containing Specialty Cost
Specialty medications are the fastest growing and most expensive segment of pharmacy spend. By carving out your pharmacy benefit, you have greater control over specialty drug costs. Plan sponsors and brokers can make decisions on the inclusion or exclusion of specialty drugs, specialty pharmacies and programs that go along with it.
At PBD, we offer a prescription drug program for specialty medications through a unique relationship with Reliance Rx, our specialty pharmacy sister company. Reliance Rx fills prescriptions, manages distribution and specializes in providing high-quality service for complex chronic conditions such as hepatitis, multiple sclerosis, cancer and rheumatoid arthritis. Measures put in place by Reliance Rx, including close collaboration with physicians and personal counseling with patients, results in greater efficiency and higher patient adherence.
By carving out your pharmacy benefit with PBD, employer groups also have the option of implementing a Specialty Copay Assistance Program (SCAP). This unique cost containment strategy provides an opportunity to realize savings available to both plan sponsors and members from pharmaceutical manufacturers.
Considering a Carve-Out with PBD
When deciding whether to carve out prescription drug benefits, consider what your needs are and how PBD can help you achieve your goals.
Staying with the bundled approach may appear to offer the convenience of dealing with one vendor but carving out doesn’t need to create a barrier between medical and pharmacy. At PBD, we interface and interact with the medical TPA to ensure that the plan runs smoothly and efficiently.
By choosing a carve-out option and partnering with a transparent and flexible PBM like PBD, you also have the potential to deliver significant savings and better serve the unique needs of your clients and their members.
Talk with our team to learn more about if a carve-out is a better option for your group or company.