Author: Tyrone Squires, MBA, CPBS

This author has written 1334 articles

Tip of the Week: Smaller PBMs Grade Higher on Customer Satisfaction

A newly released survey finds that plan sponsors’ overall satisfaction with their PBMs is relatively high. But Pharmaceutical Strategies Group’s 2020 Pharmacy Benefit Manager Customer Satisfaction Report also reveals that customer satisfaction of PBMs varies depending on the firms’ size and the type of client being served.

Key takeaways from the 2020 PBM Customer Satisfaction Report include:

  • 90 percent of respondents feel their PBM financial relationship is somewhat/completely transparent
  • Likelihood to renew their PBM contract averaged 8.0 on a 10-point scale
  • Highest-rated core PBM function is retail network options
  • Highest-rated noncore PBM function is the account team acts as a strategic advisor
  • Highest-rated specialty management function is customer service for patients using specialty medications
  • Highest-rated PBM service dimension tied between meets financial guarantees and PBM staffing adequate to meet customer needs

“The size of the PBM does make a difference, often in the services that are provided because of scale. It also makes a difference in the types of customers who choose a PBM — so many customers are looking to middle-market, midsized PBMs for more flexibility, where others look to the larger PBMs for perhaps deeper discounts,” Sharon Phares, Ph.D., senior vice president of research and data innovation at Pharmaceutical Strategies Group, said during a May 25 webinar to discuss the survey’s findings.

Tyrone’s Commentary:

I asked one of our broker partners last week a simple question. Mind you this broker does business with all types of PBMs large, mid-size and small. The question was simply, “do any of the other PBMs you work with beat TransparentRx on price.” His answer, “no.” His response was matter of fact there was no fluff. What matters more than a PBM’s size is whether or not it is aligned philosophically to its clients desire for radical transparency. It is a myth to say that large PBMs offer deeper discounts. What they often times offer is the illusion of deeper discounts. You can’t have ‘deeper’ discounts and little to no transparency, for instance. It doesn’t work that way in this business not by a long shot.

In general, “PBMs with 20 million or fewer members tend to have higher satisfaction ratings than larger PBMs,” Phares said, attributing the difference to both “customers with different needs and expectations from their PBM” and “the services provided by the PBM itself.”

The Untold Truth: How Pharmacy Benefit Managers Make Money [Free Webinar]

How many businesses do you know want to cut their revenues in half? That’s why traditional pharmacy benefit managers don’t offer a fiduciary standard and instead opt for hidden cash flow opportunities such as rebate masking. Want to learn more?

Here is what some participants have said about the webinar.

“Thank you Tyrone. Nice job, good information.” David Stoots, AVP

“Thank you! Awesome presentation.” Mallory Nelson, PharmD

“Thank you Tyrone for this informative meeting.” David Wachtel, VP

“…Great presentation! I had our two partners on the presentation as well. Very informative.” Nolan Waterfall, Agent/Benefits Specialist


A snapshot of what you will learn during this 30 minute webinar:

  • Hidden cash flows in the PBM Industry
  • Basic to intermediate level PBM terminologies
  • Specialty pharmacy cost-containment strategies
  • Examples of drugs that you might be covering that are costing you
  • The #1 metric to measure when evaluating PBM proposals

Sincerely,
TransparentRx
Tyrone D. Squires, MBA  
10845 Griffith Peak Drive, Suite 200  
Las Vegas, NV 89135 
Office: (866) 499-1940
Mobile: (702) 803-4154


P.S.  Yes, it’s recorded. I know you’re busy … so register now and we’ll send you the link to the session recording as soon as it’s ready. 

Tip of the Week: Claims Repricings Should Not Be Your Most Important Tool in Evaluating PBM Proposals

An article was just published by Jonathan Swichar a trial attorney who specializes in pharmacy litigation. The title of the article is “PBMs Keep ERISA Preemption Fight Alive.” The screenshot is from a questionnaire TransparentRx submits in response to RFPs. 

Click to Enlarge

Ninety percent (90%) of the responses we receive rank claims repricing the #1 factor in evaluating PBM proposals. Can we for goodness sakes put an end to this practice? Claims repricings should not be your most important tool in evaluating PBM proposals.

There is parity in network pricing across the PBM industry. No one PBM has a decided advantage over another no matter their size or the price benchmark being used whether it is AWP minus, MAC, NADAC etc. 

The key then is what happens after the plan goes live? When your ingredient costs exceed that of the PBMs (pharmacy reimbursement) does the PBM return the overages to you or keep it for themselves, for example? You rely on claims repricings because 1 +1 = 2 and downplay the importance of contract nomenclature. Big mistake.

Non-fiduciary PBMs print money by leveraging this sort of unsophistication to their financial advantage. It’s no surprise PBMs who don’t volunteer radical transparency are attempting to circumvent SCOTUS’s ruling.


Tip of the Week: Money is good, Information is better [rerun]

Three economists were critical in creating and expounding on the hypothesis of information asymmetry or information failure: George Akerlof, Michael Spence, and Joseph Stiglitz. The three shared the Nobel Prize in economics in 2001 for their commitments. 

Information Asymmetry hypothesis suggests that sellers may have more data than purchasers, slanting the cost of merchandise sold or services rendered. The theory argues that low-quality and high-quality services can command the same price, given a lack of information on the buyer’s side. 

Akerlof initially contended about information asymmetry in a 1970 paper named “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism.” In this paper, Akerlof gave a new explanation for a well-known phenomenon: the fact that cars barely a few months old sell for well below their new-car price. Akerlof’s model was simple but powerful. 
Assume that some cars are “lemons” and some are high quality. If buyers could tell which cars are lemons and which are not, there would be two separate markets: a market for lemons and a market for high-quality cars. But there is often asymmetric information: buyers cannot tell which cars are lemons, but, of course, sellers know. Therefore, a buyer knows that there is some probability that the car he buys will be a lemon and is willing to pay less than he would pay if he were certain that he was buying a high-quality car. This lower price for all used cars discourages sellers of high-quality cars. 
Although some would be willing to sell their own cars at the price that buyers of high-quality used cars would be willing to pay, they are not willing to sell at the lower price that reflects the risk that the buyer may end up with a lemon. Thus, exchanges that could benefit both buyer and seller fail to take place and efficiency is lost.
KEY TAKEAWAYS
PBMs know exactly how much they are charging (management fee) for their services, but self-funded employers do not. Non-fiduciary PBMs don’t want buyers (employers) to know how much revenue they generate because it would allow better decisions on the part of their customers. Those customers, self-funded employers among others, don’t realize that in many cases the PBM’s management fee contributes more to their final plan costs than does the ingredient cost! 
A large number of the difficulties self-funded employers face come about because of something they are doing or not doing, something that changing broker, benefits consultant or even PBM won’t fix. My experience reveals that their grievances about prescription drug prices and pharmacy benefits management in general stem from the self-funded employer’s choices and constraints, not a lack of options.
Self-funded employers are smart but they are unaware of or lacking information that might benefit them in improving their pharmacy benefit management decisions. Better decisions are the first step to improving their employer-sponsored pharmacy benefits results. The key then to getting to lowest net cost and maximizing efficiency in their pharmacy benefit program is eliminating information asymmetry which requires extensive pharmacy benefits management education and training.

Large PBM Under Fire for Not Accurately Disclosing the True Cost of its PBM Services

The largest Medicaid contractor in the United States on Tuesday acknowledged to investors that Ohio has sued it, accusing it of improperly inflating its bills to the health system for the poor. The company, Centene, also said more such suits could be filed by other states. Because it relies heavily on government revenue, the prospect of state litigation could pose a big risk to the company.

Ohio Attorney General Dave Yost in March filed suit against Centene, which does business with 31 state Medicaid departments. The case accuses the company of using its managed-care organization and drug-middleman subsidiaries to improperly bill Ohio taxpayers for tens of millions of dollars. 

Tyrone’s Commentary:

Figure 1. Hierarchy of Decision-Making

For the record, I try to not to speak disparagingly about my competitors. I’m sure they are well run companies that treat their employees well and return decent profits to shareholders. It is their business models for which I have a problem. I just simply disagree with them and let it be known every opportunity I get. Any PBM who promoted one thing during the RFP, but behaved differently after the plan went live will be called to answer for it. This begs the question, “how do commercial plan sponsors and states like Ohio get into these opaque PBM contracts in the first place?” Figure 1 might provide an explanation. Leadership should be making decisions in the best interest of the organization. Those decisions should drive profit (top of pyramid) either higher long-term revenue and/or lower costs. However, decisions on pharmacy benefits management or healthcare in general are often made at the bottom of the pyramid. A CHRO might decide to maintain the status quo because he/she wants to avoid the pain of any disruption to their members, for example. With a mile long to-do-list it’s just easier to stand pat. It’s also safer. No one has ever been fired for hiring a Big Three PBM, right? The state of Ohio is making PBM decisions at the top of the pyramid. My gut tells me this is going to get real ugly and that this is only the beginning.


The suit comes after an analysis of 2017 Medicaid data showed that Centene and CVS Caremark charged far more to administer prescription drugs than the state’s other four Medicaid managed-care providers. Also, Centene’s drug middleman was paid $20 million for services that CVS said it had provided. In its quarterly earnings filing with the U.S. Securities and Exchange Commission, the company acknowledged Ohio’s complaint and said other states could follow suit. 

The SEC filing said that the Ohio lawsuit claims breach of contract and illegal conduct, “including among other things, by (i) seeking payment for services already reimbursed, (ii) not accurately disclosing to the Ohio Department of Medicaid the true cost of the PBM services and (iii) inflating dispensing fees for prescription drugs.”

What’s Worse Than Overpaying for Pharmacy Benefits? Believing You Aren’t.

Alabama Gov. Kay Ivey for signed into law legislation (Act 2021-341) on May 6 which further regulates pharmacy benefits managers (PBMs) and helps ensure that reimbursement rates cover pharmacies’ costs of purchasing drugs.

The measure – sponsored by Republican State Sen. Tom Butler – becomes effective on July 1 and will apply to PBM contracts on and after October 1.

Specifically, the legislation states that PBMs may not “vary the amount a pharmacy benefits manager reimburses an entity for a drug, including each and every prescription medication that is eligible for specialty tier placement by the Centers for Medicare and Medicaid Services.”

Additionally, PBMs are prohibited from reimbursing an in-network pharmacy or pharmacist in the state an amount less than the amount that the pharmacy benefits manager reimburses a similarly situated PBM affiliate for pharmacist services for patients in the same health benefit plan.

Among other provisions, the measure also states that a PBM may not:

• Charge a pharmacist or pharmacy a point-of-sale or retroactive fee or otherwise recoup funds from a pharmacy in connection with claims for which the pharmacy has already been paid.

• Exclusively require the purchase of pharmacist services through a mail-order pharmacy or PBM affiliate.

• Impose a monetary advantage or penalty under a health benefit plan that would affect a patient’s choice of pharmacy.

• Deny a pharmacy or pharmacist the right to participate as a contract provider if they meet and agree to the terms and conditions of the PBM’s contract.

• Prohibit a pharmacist or pharmacy from informing a patient about a more affordable alternative prescription drug if one is available.

Tyrone’s Commentary:

Non-fiduciary PBMs have been planning for at least five years the day when they could be forced to provide more transparency. They knew most of their clients didn’t have the desire to do it themselves. Forgoing rebates in exchange for a medical administration credit, is just one example. It isn’t a better deal for you. It is a way for the non-fiduciary PBM to hide cash flow and to protect their profits. Vertically integrating their businesses is another example. It doesn’t lead to lower net costs for their clients. However, it does make for a very appealing marketing presentation. Keep a watchful eye out on your medical benefit drug claim costs. The non-fiduciary PBM will have to shift the cost somewhere, charge a PEPM fee north of $30 or a combination of the two.

Tuesday Tip of the Week: Dig Deeper into Your Non-Fiduciary PBM’s Financial Shenanigans

The Mississippi Division of Medicaid confirmed the probe to the Daily Journal on Monday. Medicaid officials said the attorney general’s office hired outside attorneys to “investigate and potentially pursue claims” that include Centene’s management of pharmacy benefits.

Mississippi officials are investigating whether Fortune 500 company Centene and possibly other firms may have significantly overcharged taxpayers as they managed billions of dollars worth of state Medicaid health insurance benefits.

Tyrone’s Commentary:

States have pivoted from evaluating PBM performance on discount guarantees and rebates to the PBM’s management fee. EACD or the PBM management fee is the amount of money a PBM is being paid to provide its services. It is only after you know how much money a PBM is taking home that you begin to realize the magnitude of overpayments. Running an efficient pharmacy benefits program requires sophistication, bravery and steadfastness.

Click to Learn More

In my business, I’ve always recommended a continuous monitoring process. Continuous Monitoring or CM would have identified Ohio’s and Mississippi’s problems before they got out of hand. This of course assumes you have the right advisor working on your behalf. Most don’t know the difference between a ZBD claim and a clawback. But I digress. Audits occur 12 – 24 months after the fact which is too late to recoup the majority of overpayments. Continuous Monitoring on the other hand, catches and resolves overpayments or other issues much faster. Even with the full power of the AGs office, I’d be surprised if the plaintiffs win.

The investigation is in the early stages but is similar to a recently-announced Ohio lawsuit against Centene, said Colby Jordan, a spokeswoman for Attorney General Lynn Fitch. In that case, authorities allege Centene overcharged Ohio taxpayers by millions of dollars.

The Ohio suit, according to Yost, alleges three areas of wrongdoing: requesting reimbursements for amounts already paid by the state, failing to disclose the true cost of pharmacy services, and artificially inflating drug dispensing fees. Yost’s office suggested that Centene’s practice of subcontracting with more than one firm to provide pharmacy benefits had raised red flags.

In Mississippi, Magnolia Health uses at least two companies – Envolve Pharmacy Solutions and RxAdvance – to get drugs to Medicaid recipients, according to a 2019 Centene news release.

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[Free Webinar] The Untold Truth: How Pharmacy Benefit Managers Make Money

How many businesses do you know want to cut their revenues in half? That’s why traditional pharmacy benefit managers don’t offer a fiduciary standard and instead opt for hidden cash flow opportunities such as rebate masking. Want to learn more?

Here is what some participants have said about the webinar.

“Thank you Tyrone. Nice job, good information.” David Stoots, AVP

“Thank you! Awesome presentation.” Mallory Nelson, PharmD

“Thank you Tyrone for this informative meeting.” David Wachtel, VP

“…Great presentation! I had our two partners on the presentation as well. Very informative.” Nolan Waterfall, Agent/Benefits Specialist


A snapshot of what you will learn during this 30 minute webinar:

  • Hidden cash flows in the PBM Industry
  • Basic to intermediate level PBM terminologies
  • Specialty pharmacy cost-containment strategies
  • Examples of drugs that you might be covering that are costing you
  • The #1 metric to measure when evaluating PBM proposals

Sincerely,
TransparentRx
Tyrone D. Squires, MBA  
10845 Griffith Peak Drive, Suite 200  
Las Vegas, NV 89135 
Office: (866) 499-1940
Mobile: (702) 803-4154


P.S.  Yes, it’s recorded. I know you’re busy … so register now and we’ll send you the link to the session recording as soon as it’s ready. 

AIDS Healthcare Foundation Taking Tough Stance on PBMs – Pharmacy Benefit Manipulators, Really?

In response to growing consolidation and increasingly monopolistic behavior in the pharmacy and health care industries, AIDS Healthcare Foundation (AHF) is launching a new advocacy campaign to take on pharmacy benefit managers (PBMs) that are undercutting community pharmacies and driving up drug prices.

The national campaign aims to raise awareness about PBMs’ undue influence on patients’ access to the prescription drugs they may need and to educate the public and press elected officials to call out and prevent PBM abuses. The campaign also hopes to rein in the abusive industry, which broadly functions as middlemen between insurance companies and pharmacies.

AHF’s ‘Stop PBMs’ campaign will include direct and online community mobilization, legislative outreach, online and print advertising, a website, social media posts and more, all urging greater regulation of these corporate health care middlemen that are driving up drug prices. According to AHF, Ryan White contract pharmacies & independently owned pharmacies are being hurt by PBMs in several ways:

(1) PBMs often enforce mandatory mail order of prescription drugs by their patients/clients, and

(2) Force expensive drugs onto patients

(3) Send six months’ worth of medications that may, or will expire

(4) Send refrigerated medications that will go bad sitting on doorsteps

(5) Force pharmacies into accepting reimbursement that doesn’t cover their costs through take it or leave it contracts and abusive practices like clawing back reimbursements months or years after payment.

Tyrone’s Commentary:

If you’ve read any of my previous blog posts you know that I give non-fiduciary PBMs no slack. I just personally believe it is better to do a lot of good and make less money then to make a lot of money and do harm. That being said, most of what AHF is purporting is spot on but one thing bothers me. The finger always gets pointed at the PBM. Plan sponsors rarely take responsibility for their role in how the pharmacy benefit is managed or what it ultimately costs. No one ever says, “You know we really suck at managing our pharmacy benefit no wonder our PBM takes us to the cleaners. Maybe we should get smarter about how to manage the darn thing.” PBMs generally rely on the demands of their clients for how much information they disclose and how close you get to lowest net cost. If you are overpaying, it is likely your own fault. The non-fiduciary PBM is simply leveraging the purchasing power of its unsophisticated clientele. 

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