Unlocking the Value of Pharmacy Benefits: The Essential Qualities of a Top-Tier Consultant

A good pharmacy benefits consultant plays a vital role in guiding organizations through the complexities of pharmacy benefits management, aiming to optimize healthcare outcomes while controlling costs. Here are some key attributes and certifications that define a good pharmacy benefits consultant which are key to unlocking the value of pharmacy benefits:

  1. Expertise in Pharmacy Benefits Management (PBM): A deep understanding of how PBMs operate, including drug pricing, rebate management, benefit design, formulary, and utilization management, is crucial. This knowledge helps in negotiating contracts and ensuring that clients receive the best possible terms.
  2. Analytical Skills: The ability to analyze data effectively is essential. This includes interpreting drug utilization reports, identifying trends in prescription drug spending, and evaluating the financial impact of different pharmacy benefit strategies.
  3. Certifications: Relevant professional certifications can enhance a consultant’s credibility and expertise. Certifications such as the Certified Pharmacy Benefits Specialist (CPBS) or Certified Employee Benefit Specialist (CEBS) with a specialization in healthcare and benefits can demonstrate a consultant’s commitment to their profession and expertise in the field.
  4. Regulatory Knowledge: A thorough understanding of healthcare regulations, including the Affordable Care Act (ACA), Medicare, and Medicaid, as well as compliance issues related to pharmacy benefits, is important. This ensures that advice and strategies are compliant with current laws and regulations.
  5. Communication Skills: Effective communication and negotiation skills are vital. A good consultant must be able to explain complex pharmacy benefits concepts in understandable terms to clients and negotiate effectively with PBMs and drug manufacturers.
  6. Ethical Standards: High ethical standards and transparency are essential, particularly in areas such as rebate management and contract negotiations, to build trust with clients.
  7. Continuous Learning: The healthcare landscape, especially pharmacy benefits, is constantly changing. A good consultant stays updated with industry trends, new drugs, technologies, and regulatory changes to provide informed advice.
  8. Strategic Thinking: The ability to develop innovative and strategic solutions that align with the client’s healthcare goals and financial constraints is critical. This might involve designing custom formularies, implementing cost-saving measures, or leveraging technology to improve pharmacy benefits management.

In summary, a good pharmacy benefits consultant combines industry-specific knowledge and certifications with analytical, strategic, and communication skills, all underpinned by a commitment to ethical practice and continuous learning. These attributes enable them to play a critical role in unlocking the value of pharmacy benefits and delivering value to their clients, helping them to manage their pharmacy benefits effectively and efficiently.

Best Pharmacy Benefit Consultants for Cost-Effective Drug Plans [Weekly Roundup]

Best Pharmacy Benefit Consultants for Cost-Effective Drug Plans and other notes from around the interweb:

  • Best Pharmacy Benefit Consultants for Cost-Effective Drug Plans. In the complex world of healthcare and pharmaceuticals, managing costs while ensuring the best possible care can be a daunting challenge for businesses of all sizes. Pharmacy Benefit Consultants (PBCs) play a crucial role in navigating this landscape, offering expertise that can lead to significant savings and more effective drug plan management. This article delves into the importance of PBCs, what to look for when selecting a consultant, and how they can transform the cost-effectiveness of drug plans.
  • 5 ways to improve your PBM procurement process in 2024. Many self-funded plan sponsors struggle to manage the cost of pharmacy benefits and rely on non-transparent contract guarantees to hold PBMs accountable. Meanwhile, drug spending continues to compound at an astonishing rate in defiance of the savings promised during the procurement process. As a former pharmacy program director for a plan covering more than 16,000 lives, I can tell you that it is possible to stop the “games” PBMs play, control costs, and ensure that all contractual guarantees are met, especially in scenarios where a PBM won’t guarantee an all-in per member per month (PMPM) cost for the year. Understanding the problem is a part of the solution, but making meaningful changes to the way plan sponsors and brokers evaluate PBMs is where the real opportunity lies.
  • 3 thing to know about specialty pharmacy in 2024. Specialty drugs may be covered by a medical benefit (what patient-members likely think of as “their insurance”) or pharmacy benefits. There’s often a gray area for where specialty falls, but it can relate to whether the drug is being administered in a clinical setting, like a doctor’s office, outpatient clinic, or infusion center. Reimbursement for these drugs can also vary between average wholesale price (AWP) for pharmacy reimbursement and average sales price (ASP) for the medical benefit. It’s complex to compare, and both ASP and AWP are used in the health care industry, but they’re different. ASP is a government-regulated tool that uses manufacturer sales information including discounts, such as rebates. AWP is the average price that wholesalers sell drugs to pharmacies, prescribers, and others. A government report found the median percentage difference between ASP and AWP to be 49%.
  • Lawsuit alleges J&J health plan fiduciaries mismanaged prescription drug benefits. A lawsuit filed on February 5, 2024, against Johnson and Johnson and its health plan fiduciaries is a good reminder that the fiduciary duties that exist under the Employee Retirement Income Security Act of 1974 (ERISA) do not just apply to qualified retirement plans. They apply to ERISA health and welfare plans, too. There is likely a very strong “rest of the story” to the allegations in this lawsuit and the defendants will no doubt vigorously dispute and defend this case, but the allegations in this new class action complaint give employers and their plan fiduciaries much to think about. Among the allegations in the proposed class action complaint, the plaintiff alleges that someone with a 90-pill prescription for one generic drug could fill that prescription without insurance for between $28.40 – $77.41, and yet, it alleges, the defendant fiduciaries contractually agreed to have the plan pay $10,239.69 for the same 90-pill prescription.

Breaking: Employees Hit Johnson & Johnson with a Major Lawsuit Over Sky-High Drug Costs

In this legal dispute, employees hit Johnson & Johnson with a major lawsuit. Ann Lewandowski and other plaintiffs are suing Johnson & Johnson for allegedly mismanaging their prescription-drug benefits, resulting in significant financial losses for participants in the company’s ERISA plans. The complaint asserts that Johnson & Johnson and its benefits committee failed in their fiduciary duties by allowing the plans to overpay for prescription drugs, notably generic medications, through arrangements with their Pharmacy Benefits Manager (PBM).

This purported mismanagement led to inflated costs for the plan participants, including higher premiums, deductibles, and out-of-pocket expenses, while potentially costing the plans and their beneficiaries millions of dollars. The case underscores the complex interplay of corporate practices, legal responsibilities, and the financial well-being of employees in the healthcare benefits landscape.

Pharmacy Benefit Managers (PBMs) play a critical role in the healthcare system by acting as intermediaries between employers or health plans and the pharmaceutical world. Their primary functions include negotiating discounts with drug manufacturers, determining the list of covered medications (formulary management), and setting the amount pharmacies are reimbursed for drugs. PBMs aim to reduce prescription drug costs and improve convenience and safety for patients, but their practices and the transparency of their operations have been subjects of debate and scrutiny in the context of overall healthcare affordability and access.

Employers can mitigate the risk of litigation like the Johnson & Johnson case by investing in education around Pharmacy Benefit Managers (PBMs), specifically through Certified Pharmacy Benefit Specialist (CPBS) training. CPBS training equips employers with comprehensive knowledge on how PBMs operate, strategies to ensure that their PBM contracts are cost-effective, and insights into maintaining transparency and accountability in their pharmacy benefits management. By understanding the intricacies of PBM operations and learning to navigate the complex healthcare landscape effectively, employers can safeguard against excessive prescription drug costs and ensure that their benefits plans are managed in the best interest of their employees.

Tyson Foods, Employing 140,000, Parts Ways with Major PBM [Weekly Roundup]

Tyson Foods, Employing 140,000, Parts Ways with Major PBM and other notes from around the interweb:

  • Tyson Foods, Employing 140,000, Parts Ways with Major PBM. Tyson Foods will become one of the first Fortune 100 companies to stop using the nation’s traditional large pharmacy benefits managers, as it looks to cut spending on high-cost drugs. Tyson’s decision adds to an upheaval in the industry, as startups promising lower costs and transparency challenge the largest benefit managers and pushed them to change their own business models. Tyson made the decision as it saw pharmacy costs soar. “We were going anywhere between 12% to 14% increases for pharmacy — and on a $200 million spend that’s quite a bit. We found that the specialty (drug) component of our trends … were picking up a lot of the increase year over year,” said Renu Chhabra, Tyson vice president and head of global benefits. When she tried to get answers on what was driving those trends from the company’s old pharmacy benefit manger, or PBM, Chhabra says she couldn’t get the kind of data she wanted.
  • 5 ways to improve your PBM procurement process in 2024. Many self-funded plan sponsors struggle to manage the cost of pharmacy benefits and rely on non-transparent contract guarantees to hold PBMs accountable. Meanwhile, drug spending continues to compound at an astonishing rate in defiance of the savings promised during the procurement process. As a former pharmacy program director for a plan covering more than 16,000 lives, I can tell you that it is possible to stop the “games” PBMs play, control costs, and ensure that all contractual guarantees are met, especially in scenarios where a PBM won’t guarantee an all-in per member per month (PMPM) cost for the year. Understanding the problem is a part of the solution, but making meaningful changes to the way plan sponsors and brokers evaluate PBMs is where the real opportunity lies.
  • 3 thing to know about specialty pharmacy in 2024. Specialty drugs may be covered by a medical benefit (what patient-members likely think of as “their insurance”) or pharmacy benefits. There’s often a gray area for where specialty falls, but it can relate to whether the drug is being administered in a clinical setting, like a doctor’s office, outpatient clinic, or infusion center. Reimbursement for these drugs can also vary between average wholesale price (AWP) for pharmacy reimbursement and average sales price (ASP) for the medical benefit. It’s complex to compare, and both ASP and AWP are used in the health care industry, but they’re different. ASP is a government-regulated tool that uses manufacturer sales information including discounts, such as rebates. AWP is the average price that wholesalers sell drugs to pharmacies, prescribers, and others. A government report found the median percentage difference between ASP and AWP to be 49%.
  • Cigna Group to Sell Medicare Businesses to Health Care Service Corporation (HCSC). The Cigna Group today announced that it has entered into a definitive agreement whereby Health Care Service Corporation (HCSC) will acquire The Cigna Group’s Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D and CareAllies businesses, for a total transaction value of approximately $3.7 billion. As part of the transaction, The Cigna Group and HCSC have agreed to enter into a four-year services agreement under which Evernorth Health Services, a subsidiary of The Cigna Group, will continue to provide pharmacy benefit services to the Medicare businesses, effective on closing of the transaction.

Navigating the Shift of J-Code Drugs to Pharmacy Benefits: A Comprehensive Analysis

The healthcare landscape is constantly evolving, and one notable change that’s garnering attention is the shift of J-code drugs to pharmacy benefits. This shift has wide-ranging implications for patients, healthcare providers, and insurers alike. In this post, we delve into the benefits and challenges of this move, offering a balanced perspective that is essential for stakeholders in the healthcare industry.

Understanding J-Code Drugs

Before we dive into the specifics, let’s clarify what J-code drugs are. These are typically injectable drugs administered in a physician’s office. They are categorized under ‘J-codes’ in the Healthcare Common Procedure Coding System (HCPCS). These drugs have traditionally been covered under medical benefits but are increasingly being moved to pharmacy benefits.

The Shift to Pharmacy Benefits: Benefits and Challenges

Benefits of the Shift

  1. Cost Transparency: Pharmacy benefits often come with clearer cost information, making it easier for patients to understand and manage their expenses.
  2. Streamlined Administration: This transition can simplify administrative processes, potentially reducing the paperwork and time involved in drug dispensing.
  3. Potential for Lower Costs: Through pharmacy benefits, there might be better negotiation leverage for prices, potentially leading to lower costs for patients.
  4. Enhanced Medication Management: Pharmacy benefits could offer better support in medication management, ensuring adherence and improving patient outcomes.
  5. Broader Access to Discounts and Rebates: Patients might benefit from discounts and rebates that are more readily available through pharmacy benefits.

Challenges of the Shift

  1. Access Issues: Patients might face more restrictions, such as limited networks of preferred pharmacies, impacting their access to necessary medications.
  2. Complex Approval Processes: The transition might involve more complex prior authorization processes, potentially delaying treatment.
  3. Disruption of Care: Switching systems could disrupt existing care plans, causing inconvenience and potential health risks for patients.
  4. Insurance Plan Limitations: Some insurance plans might offer less favorable terms for pharmacy benefits, impacting coverage and costs.
  5. Challenges in Coordination of Care: Coordinating care between healthcare providers and pharmacies can be complex and time-consuming.

J-code drugs are typically injectable drugs that are administered primarily in a physician’s office. Moving these to the pharmacy benefit could have several implications. Here’s a table that outlines some potential benefits and challenges:

Shift of J-Code Drugs to Pharmacy Benefits
This table highlights key points but is not exhaustive. The actual benefits and challenges can vary based on specific healthcare policies, insurance plans, and patient circumstances.

Implications for Stakeholders

For Patients

Patients need to be aware of how this shift could affect their access to medication and overall costs. Understanding the nuances of their insurance plans is more crucial than ever.

For Healthcare Providers

Providers must navigate the new administrative landscapes, ensuring that they can still deliver the best care while dealing with different billing and authorization processes.

For Insurers

Insurers play a critical role in this transition, balancing the need to manage costs while ensuring patient access to necessary treatments.

For Pharmacists

Pharmacists will likely see an increased role in patient care, requiring a deeper understanding of J-code drugs and associated management protocols.

Conclusion

The transition of J-code drugs to pharmacy benefits is a complex process with both benefits and challenges. It’s essential for all stakeholders to stay informed and adapt to these changes to ensure that patient care remains effective and efficient. As the healthcare industry continues to evolve, staying ahead of trends like this will be key to navigating the future of healthcare successfully.

5 ways to improve your PBM procurement process in 2024 [Weekly Roundup]

5 ways to improve your PBM procurement process in 2024 and other notes from around the interweb:

  • Federal mandates bring big lawsuit worries for health plan administrators. The Consolidated Appropriations Act of 2021, enacted on December 27, 2020, introduces significant new disclosure mandates for health plan providers, heightening the risk of substantial legal challenges. This Act amends the Employee Retirement Income Security Act of 1974, aiming to enhance transparency in employee health benefit plans. The implementation of various components of this law has been gradual, with compliance deadlines for certain sections only recently becoming due. Jennifer S. Berman, a seasoned employee benefits attorney and compliance consultant, emphasizes the surge in fiduciary responsibilities for sponsors of health and welfare plans. Three years into the enactment of the CAA, plan sponsors are diligently working to fulfill these newly imposed duties. This legislation represents more than a mere federal requirement for health plan administrators. It carries the potential for significant class-action lawsuits against plans that fail to comply with the updated legal requirements.
  • 5 ways to improve your PBM procurement process in 2024. Many self-funded plan sponsors struggle to manage the cost of pharmacy benefits and rely on non-transparent contract guarantees to hold PBMs accountable. Meanwhile, drug spending continues to compound at an astonishing rate in defiance of the savings promised during the procurement process. As a former pharmacy program director for a plan covering more than 16,000 lives, I can tell you that it is possible to stop the “games” PBMs play, control costs, and ensure that all contractual guarantees are met, especially in scenarios where a PBM won’t guarantee an all-in per member per month (PMPM) cost for the year. Understanding the problem is a part of the solution, but making meaningful changes to the way plan sponsors and brokers evaluate PBMs is where the real opportunity lies.
  • 3 thing to know about specialty pharmacy in 2024. Specialty drugs may be covered by a medical benefit (what patient-members likely think of as “their insurance”) or pharmacy benefits. There’s often a gray area for where specialty falls, but it can relate to whether the drug is being administered in a clinical setting, like a doctor’s office, outpatient clinic, or infusion center. Reimbursement for these drugs can also vary between average wholesale price (AWP) for pharmacy reimbursement and average sales price (ASP) for the medical benefit. It’s complex to compare, and both ASP and AWP are used in the health care industry, but they’re different. ASP is a government-regulated tool that uses manufacturer sales information including discounts, such as rebates. AWP is the average price that wholesalers sell drugs to pharmacies, prescribers, and others. A government report found the median percentage difference between ASP and AWP to be 49%.
  • New limits on prior authorization hailed as good first step. New federal rules requiring health insurers to streamline requests to cover treatments are being hailed as a good first step toward addressing a problem that’s increasingly aggravated patients and doctors. Health insurers will have to provide coverage decisions on urgent treatment requests within 72 hours for patients in Medicare Advantage, Medicaid or Affordable Care Act plans under federal rules finalized Wednesday. The deadline is seven days for non-urgent requests. Insurers’ requirements for their sign-off on some physician-ordered care is a major tension point with providers and has faced recent scrutiny from Congress. The new protocols, which largely take effect in 2026, may cut the review process in half for some insurers.

Medication Therapy Management (MTM) Expansion: CMS Takes Major Steps as Self-Funded Employers Remain Inactive

The upcoming modifications in the Medication Therapy Management (MTM) program by CMS are expected to significantly expand eligibility, with an estimated increase in eligible Medicare beneficiaries from 4.5 million to 11 million. CMS doubles down on medication therapy management (MTM), with program expansion, as self-funded employers remain indifferent to MTM’s vast benefits.

The new eligibility criteria, taking effect in 2025, will include (1) require Part D sponsors to include all core chronic diseases in their targeting criteria, codify the current 9 core chronic diseases in regulation, and add HIV/AIDS for a total of 10 core chronic diseases, (2) lower the maximum number of covered Part D drugs a sponsor may require from 8 to 5 drugs and require sponsors to include all Part D maintenance drugs and (3) revise the cost threshold methodology based on the average annual cost of 5 generic Part D drugs ($1,004 in 2020). These changes are projected to add approximately $336 million annually to plan costs.

medication therapy management (MTM) expansion and workflow
TransparentMTM™ pharmacy workflow

MTM is a key strategy to leverage pharmacy-led initiatives to reduce medical costs. By focusing on identifying and resolving Drug Therapy Problems (DTPs), pharmacists can play a crucial role in conducting comprehensive medication reviews (CMRs), enhancing both health outcomes and cost efficiency. The savings generated can then be reinvested into the MTM program, potentially making it self-sustaining.

The revised MTM guidelines will require Part D plans to include members with up to three chronic conditions, taking at least five Part D drugs, and meeting a lowered annual spending threshold. This will necessitate a more comprehensive approach in CMRs, including real-time consultations through telehealth or in-person visits. To optimize their pharmacy benefit management program, self-funded employers should focus on four main strategies:

  1. Technological Integration in Pharmacy Workflows: Utilizing platforms that combine medical and pharmacy claims data can help identify a wider range of DTPs, enabling more effective CMRs and facilitating cost reduction.
  2. Infrastructure Scalability: Evaluating current technology and infrastructure for their ability to handle increased demand and provide scalable solutions is crucial.
  3. Proactive Member Eligibility Identification: Tools that can predict future eligibility and manage enrollment processes will be essential for efficient MTM service delivery.
  4. Continuous Program Monitoring: Implementing tools for real-time monitoring and analysis will help in identifying cost-saving opportunities and ensuring the effectiveness of the MTM program.

Self-funded employers would serve themselves extremely well by taking a page from the CMS playbook. By embracing a data-driven approach and focusing on efficiency and scalability, self-funded employers can adopt a CMS-like medication therapy management (MTM) expansion, achieving total cost of care savings and maintaining high-quality service for members with multiple medications and conditions.

Employer Health Plans Fear State PBM Crackdown Preemption Threat [Weekly Roundup]

Employer Health Plans Fear State PBM Crackdown Preemption Threat and other notes from around the interweb:

  • Employer Health Plans Fear State PBM Crackdown Preemption Threat. Employers looking ahead to a continued push by state and local governments to regulate pharmacy benefit managers more tightly in 2024 are set to back stricter federal law preemption of these measures. PBMs, which manage prescription drug plans of behalf of health insurers, have been criticized over lack of transparency and inflated costs to health plans, but the federal government has not yet enacted legislation to rein in these middlemen. Groups representing companies with self-insured health plans say the states’ attempts to fill the void on PBM legislation threaten preemption protections under the federal Employee Retirement Income Security Act. What’s more, maintaining a nationally uniform regulatory system under ERISA, which turns 50 in 2024, is necessary to avoid a problematic patchwork of state laws, the employer groups say.
  • 3 thing to know about specialty pharmacy in 2024. Specialty drugs may be covered by a medical benefit (what patient-members likely think of as “their insurance”) or pharmacy benefits. There’s often a gray area for where specialty falls, but it can relate to whether the drug is being administered in a clinical setting, like a doctor’s office, outpatient clinic, or infusion center. Reimbursement for these drugs can also vary between average wholesale price (AWP) for pharmacy reimbursement and average sales price (ASP) for the medical benefit. It’s complex to compare, and both ASP and AWP are used in the health care industry, but they’re different. ASP is a government-regulated tool that uses manufacturer sales information including discounts, such as rebates. AWP is the average price that wholesalers sell drugs to pharmacies, prescribers, and others. A government report found the median percentage difference between ASP and AWP to be 49%.
  • Plan Sponsors Have a Fiduciary Duty to Employees that Includes Scrutiny of PBM-Owned Rebate Aggregators. Drug manufacturer rebates can be a valuable tool for controlling the rising costs of prescription drugs. Most manufacturers offer a rebate program through which they agree to return a part of the drug’s list price to plans in exchange for access to the plans’ drug “formulary”. Rebates are intended to flow through to the plan sponsors and benefit patients, reducing their overall drug spend. The rebate process has been hijacked by PBMs and their sister-aggregators. PBMs utilize rebate aggregators to negotiate drug manufacturer rebates on behalf of the plans they administer. In 2022, just three PBMs along with their rebate aggregators, controlled 79 percent of the market. Some of the largest rebate aggregators include Zinc (owned by CVS Caremark), Ascent (owned by Express Scripts), and Emisar (owned by United Healthcare).
  • Why such ‘high markups’? Senators seek drug price probe of insurers who own PBMs. The senators urged Inspector General Christi Grimm to determine if large insurance companies are using their vertically integrated pharmacies to evade federal requirements that limit the percentage of premium dollars spent on profits and administration, known as the Medical Loss Ratio, or MLR. The letter follows an investigation by the Wall Street Journal revealing significant markups of generic drugs at specialty pharmacies owned by CVS Aetna (which operates the Caremark PBM), Cigna (which owns Express Scripts) and UnitedHealthcare, which owns a PBM and specialty pharmacy. The Journal’s analysis found that the three companies charged up to twenty-seven times more than a generic reference pharmacy for a selection of nineteen drugs. For example, a monthly supply of the generic version of Tarcera, a lung cancer drug, costs $73 at the generic reference pharmacy, compared to $4,409 through Cigna.

Navigating the Waters of Stop-Loss Insurance

In an era where healthcare expenditures are skyrocketing, particularly due to the soaring prices of specialty medications, stakeholders across the spectrum are grappling with financial strategies to manage these burgeoning costs. This blog delves into the complexities surrounding the economics of healthcare, emphasizing the pivotal role of innovative insurance solutions in this ever-evolving landscape. Navigating the waters of stop-loss insurance requires a keen cost-management process and knowledgeable staff.

The healthcare industry is witnessing an unprecedented rise in the cost of specialty medications. These drugs, essential in combating various chronic and life-threatening conditions, demand extensive research and development, often targeting smaller patient populations. This necessity for intensive investment has led to these medications now representing a sizable portion of healthcare spending.

The Dilemma for Employers: Cost Containment Strategies

Employers, particularly those managing self-funded healthcare plans, face the daunting task of balancing quality healthcare provision with financial sustainability. Initiatives like patient assistance programs offer some respite, but the reliance on traditional stop-loss insurance reveals inherent shortcomings. This insurance, designed to mitigate large claim impacts, often falls short in offering long-term, comprehensive protection, particularly in managing the costs of specialty medications.

A critical aspect often overlooked in stop-loss insurance is ‘lasering’ – a practice where insurers exclude high-cost claims or claimants from coverage. This practice, while not directly affecting members due to continued benefits, leaves employers financially exposed. The implications are profound, especially when considering catastrophic drug claims that can escalate employer liabilities exponentially.

Navigating the Waters of Stop-Loss Insurance
Process Flow: Stop-Loss and Supplemental Stop-Loss for Employers

Imagine a company, XYZ Corp, operates a self-funded health plan for its employees. In a given year, an employee’s child is diagnosed with a rare illness requiring an expensive treatment costing $500,000. XYZ’s stop-loss insurance has a specific deductible of $200,000 per claimant, meaning the insurer will cover costs above this threshold.

However, mid-year, the insurer applies lasering to this claimant, increasing the specific deductible to $400,000 for the next policy year due to the high cost. Now, if the child’s treatment continues to be expensive, XYZ will be responsible for costs up to $400,000.

This is where supplemental stop-loss insurance comes in. It can provide coverage for the gap between the original specific deductible and the increased amount due to lasering. For example, it might cover costs between $200,000 and $400,000, protecting XYZ from bearing the full financial burden of this unexpected increase in healthcare costs.

Conclusion: Charting a Course through Complex Healthcare Financial Waters

As the healthcare industry continues to evolve, understanding and navigating the intricacies of healthcare economics becomes crucial. The rise in specialty medication costs and the challenges of traditional stop-loss insurance underscore the need for comprehensive, forward-thinking solutions. Supplemental stop-loss insurance stands out as a key strategy in this context, offering a safety net for employers and ensuring the sustainability of healthcare provisions.

CMS Letter to Pharmacy Benefit Management Companies [Weekly Roundup]

CMS letter to pharmacy benefit management companies and other notes from around the interweb:

  • CMS letter to pharmacy benefit management companies. The Centers for Medicare & Medicaid Services (CMS) values your partnership in providing health care coverage and access to essential treatments, including prescription medications, to millions of people. However, we are hearing an increasing number of concerns about certain practices by some plans and pharmacy benefit managers (PBMs) that threaten the sustainability of many pharmacies, impede access to care, and put increased burden on health care providers. We are writing to share these concerns and to encourage you to work with providers and pharmacies to alleviate these issues and safeguard access to care.
  • NC wanted to share information on drug pricing. Here’s how it got shot down. For a brief few weeks, N.C. State Health Plan members had a rare window into the secretive world of drug pricing. Days before the health plan trustees met to discuss whether the plan could afford to continue covering obesity medications manufactured by pharmaceutical giant Novo Nordisk, staff posted online pages of pricing information they had prepared based on an analysis of expenditures. Notably, the documents estimated the discount, or “rebate,” Novo Nordisk had agreed to give NCSHP for these drugs — a piece of information that is considered a trade secret in the pharmaceutical industry.
  • Plan Sponsors Have a Fiduciary Duty to Employees that Includes Scrutiny of PBM-Owned Rebate Aggregators. Drug manufacturer rebates can be a valuable tool for controlling the rising costs of prescription drugs. Most manufacturers offer a rebate program through which they agree to return a part of the drug’s list price to plans in exchange for access to the plans’ drug “formulary”. Rebates are intended to flow through to the plan sponsors and benefit patients, reducing their overall drug spend. The rebate process has been hijacked by PBMs and their sister-aggregators. PBMs utilize rebate aggregators to negotiate drug manufacturer rebates on behalf of the plans they administer. In 2022, just three PBMs along with their rebate aggregators, controlled 79 percent of the market. Some of the largest rebate aggregators include Zinc (owned by CVS Caremark), Ascent (owned by Express Scripts), and Emisar (owned by United Healthcare).
  • Why such ‘high markups’? Senators seek drug price probe of insurers who own PBMs. The senators urged Inspector General Christi Grimm to determine if large insurance companies are using their vertically integrated pharmacies to evade federal requirements that limit the percentage of premium dollars spent on profits and administration, known as the Medical Loss Ratio, or MLR. The letter follows an investigation by the Wall Street Journal revealing significant markups of generic drugs at specialty pharmacies owned by CVS Aetna (which operates the Caremark PBM), Cigna (which owns Express Scripts) and UnitedHealthcare, which owns a PBM and specialty pharmacy. The Journal’s analysis found that the three companies charged up to twenty-seven times more than a generic reference pharmacy for a selection of nineteen drugs. For example, a monthly supply of the generic version of Tarcera, a lung cancer drug, costs $73 at the generic reference pharmacy, compared to $4,409 through Cigna.