This blog is for anyone wanting to reduce overutilization, waste, abuse, and fraud in a self-funded pharmacy benefit program. Define what it means to have a quality pharmacy benefits program then execute. Care structure should place a premium on making sure the drug works, making sure the drug is going to the right patient, and finally making sure the patient is taking the drug, for instance.Document and orchestrate processes. Specialty pharmacies must have disease state specific patient intake workflows. Take the emotion out of prior authorizations (and other utilization management programs i.e. step therapy) to deliver better results for patients and plan sponsors. The largest ePA or electronic prior authorization provider in the country is owned by a drug wholesaler. Systematize processes and don’t deviate.Reduce barriers to access. This doesn’t mean making every drug in the market available to anyone who has a prescription. It does mean that a patient prescribed the right drug should not be hindered by the plan design in taking said drug. A copay accumulator program is a strategy used by insurance companies and pharmacy benefit managers to stop manufacturer copay assistance programs from counting towards the deductible and out-of-pocket spending. These programs should be eliminated as they restrict access to drug therapies.Be relentless in pursuit of efficiency. Plan objectives should be accomplished with the least expensive combination of resources. Easier said than done and it all starts with PBM literacy.Quantify participant satisfaction. Net Promoter Score, or NPS®, measures customer experience, for example. A word to the wise, don’t sacrifice efficiency just to make a patient or doctor happy. Strive for above average participant satisfaction but stick to the documented plan. You can’t make everyone happy. Case Management Workflow – Hep C Conclusion Reducing waste and abuse in pharmacy benefits starts with the five methods listed above. If the primary goal of drug therapy isn’t to achieve better health care outcomes, with the least expensive combination of resources, then what are we doing? Pharmacy benefits management isn’t a beauty contest.

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform. How to Determine if Your Company [or Client] is Overpaying Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.-- Tip --Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

All of the different PBM business models will profess how much money they can help plan sponsors save or ways to improve your pharmacy benefit plan. But what one thing none of them are doing is sharing with these same employers how much money they are making off your group. Only two business models will do that - fiduciary or radically transparent PBM models. I mean who are we kidding? Traditional, pass-through and transparent PBM business models are for the most part the same. Do any of them reveal how much money the PBM is being paid for servicing your group?Think about this for a second. The contracts pharmacy benefit managers enter into with pharmaceutical manufacturers and pharmacies are pretty much set in stone. Unless a PBM significantly outperforms its contract, the terms between us and manufacturers won't change until the contract has come to an end. For a PBM to outperform a contract with a pharmaceutical manufacturer or rebate aggregator would require doubling the number of lives covered, for example. If you believe this and you should, then what plan sponsors are really negotiating for come renewal is what part of the discounts a PBM has secured you will allow that same PBM to keep. Click to Learn MoreThe amount of dollars a PBM keeps for itself is referred to as the PBM's service fee. In other words, it is the fee a PBM is charging you for the services it was hired to perform. PBM service fees are a primary driver of PMPM or PEPY costs. While rebates, clinical management, and discount guarantees are important, they are also being used to distract purchasers from a key driver of their final plan costs - PBM service fees.Don't confuse the service fee with the admin fee. The service fee is the amount of money a PBM keeps in its bank acount after the bills are paid. An admin fee is usually a per claim, PEPM or PMPM fee which is easily quantifiable. I don't want to confuse you but the admin fee I'm referring to is different than a manufacturer admin fee. That is a topic for another day. In many cases, the non-fiduciary PBM will offer an artificially low admin fee knowing full well acceptance means you've essentially given it a blank check for service fees. Pass-through and transparent PBM business models don't let you in on what their service fee amounts to. That is a big big problem. Unlike admin fees, service fees are not easily quantifiable primarily because non-fiduciary PBM don't want you to know just how much their fees are contributing to your costs! The full-disclosure and fiduciary-model PBM will let employers in on their service fee or the part of negotiated discounts it will keep. The lower this fee the less employers pay plain and simple. A fair PBM service fee will bend the cost trend. Non-fiduciary PBM companies have learned how to leverage the purchasing power of the unsophisticated plan sponsor purchaser to their financial advantage. The perception of many plan…

 It is a myth that the Big 6 (ESI, CVS, Optum, Humana, MedImpact and Prime) offers better price savings just because of their size. The myth is often perpetuated by the old guard who for a long time have personally benefited from overpayments received from opaque PBM business practices. We can't expect the old guard to bite the hand that feeds them, can we?Sure, the Big 6 have more purchasing power, but their clients often don't realize the full benefit. For example, if our rebate aggregator pays us, TransparentRx, a $3000 rebate for drug "A" every penny goes back to the client with an audit trail. The audit trail includes claim level detail (e.g. claim number, NDC, date and rebate amount) for every drug which earned a rebate payment. The Big 6 might earn $4000 on that same drug, but retains $1200 in-house, for instance. The plan sponsor pockets an additional $200 working with a radically transparent, albeit smaller, PBM. Without an audit trail a PBM could earn a rebate on a drug and not share any of those dollars with the plan sponsor who actually earned it. A similar scenario plays out in mail, specialty and retail pharmacy networks.Price quotes (RFPs etc...) are simply an estimate of what the plan sponsor would have spent had the historical utilization matched that of the proposing PBM (a lot in this sentence). Furthermore, the future actual cost is unknown. As a result, the plan sponsor’s PBM contract is the most important tool to address the actual level of spend - not cost projections. Non-fiduciary PBMs know full well what you like to see in proposals. When contract language is opaque, the non-fiduciary PBM starts to eat away at the proposed savings, i.e. discount and rebate guarantees, as soon as you go live.If you've never considered the PBM management fee in how you procure pharmacy benefit management services, watch this free webinar. The PBM management fee isn't what you think it is. It is largely the undisclosed fee a PBM charges for providing their services to plan sponsors. For non-fiduciary PBMs, the bulk of this fee is buried in the final plan pharmacy cost. It goes without saying, the contract is king.

Employer-sponsored plans that prioritize price risk poor clinical outcomes and higher overall costs in their pharmacy programs. Equal focus on all four pharmacy cost drivers will always produce the best results. Price is just one indicator of pharmacy benefits management program success, but it is one that can also hide problems.    On the positive side, lower spend can be the result of better product mix and efficient drug utilization driven by improved formulary management. Here are three myths that have developed in the market and reasons why placing equal emphasis on each of the four pharmacy cost drivers will generate greater value at a lower cost over the long term.   1. Rebates are one of the Top 2 factors in lowering employer-sponsored pharmacy benefit plan costs.” The employer faces a double whammy on rebates: (1) rebates may be kept by the PBM (2) rebates are offered only on expensive drugs. Almost without exception the most heavily advertised and rebated drugs have therapeutic alternatives which cost up to 90% less than the rebated products. An employer may think it need not worry about this structure since it receives 90%+ of the rebates. Are there other fees paid to the PBM by the manufacturer that are relabeled and therefore are no longer considered a “rebate”? Does the employer even have access to the right information to make these decisions?   2. Pass-through and Transparent PBM business models provide similar levels of transparency and price. Non-fiduciary PBM companies have learned how to leverage the purchasing power of the unsophisticated plan sponsor purchaser to their financial advantage. Consequently, pass-through and so called transparent PBM business models don't let you in on what their management fee amounts to. That is a big big problem. Unlike admin fees, management fees are not easily quantifiable primarily because non-fiduciary PBMs don't want employer-sponsors to know just how much their fees are contributing to your costs. The full-disclosure and fiduciary-model PBM will disclose to self-insured employers their management fee or the part of negotiated discounts it will keep. The lower this fee the less employers pay plain and simple. A reasonable PBM management fee bends the cost trend whilst delivering similar levels of service and outcomes.      3. Benefit design is less important than pricing guarantees such as AWP discounts and rebates. Never once during hundreds of RFPs has any consultant or broker ever asked us for a signature ready benefit design as part of our response. I've not taken a poll so I don't know the reason. Maybe it is because some believe benefit design doesn't have a big role in determining cost. If that is the case, nothing could be further from the truth. I would be asking for a benefit design to be submitted as if we were going live with it. In pharmacy cost drivers, price is 1A and benefit design is 1B. Benefit design includes but is not limited to elements such as formulary, network configuration and member cost-sharing arrangements. Aside from copayments and deductibles (cost-sharing) most plan sponsors…

Factor in the actual benefit design, not questions about benefit design, into your PBM scorecard. At a minimum, it should be the same form the PBM uses to set your group up in the back-office. Sometimes even the PBM's benefit design form excludes important details, such as DAW codes, so be careful. If important information is missing get it included especially when that information contributes to your cost.    Click to Learn More   Never once during hundreds of RFPs has any consultant or broker ever asked us for a signature ready benefit design as part of our response. I've not taken a poll so I don't know the reason. Maybe it is because some believe benefit design doesn't have a big role in determining cost. If that is the case, nothing could be further from the truth. I would be asking for a benefit design to be submitted as if we were going live with it.   Don't put 50 questions in a RFP around benefit design where important details get lost in translation. Instead, get a copy of a signature ready benefit design and score it as part of the PBMs proposal. Here are some weights I recommend applying to each scorecard:   Contract - 40%   Benefit Design - 25%   References - 10%   Questionnaire - 5%   Reverse Auction - 15%    Finalist Presentation - 5%   In pharmacy cost drivers, price is 1A and benefit design is 1B. Aside from copayments and deductibles (cost sharing) most plan sponsors know little else about their benefit design and have left it up to the PBM to decide. When the PBM is non-fiduciary that could lead to significant overpayments.

This document is updated weekly, but why is it important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to health care reform.  The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders. How to Determine if Your Company [or Client] is Overpaying Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month. Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list. Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement.  It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions. Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem. Multiple price differential discoveries means that your organization or client is likely overpaying. REPEAT these steps once per month. -- Tip -- Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving. When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.