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Cost Containment Strategies and Vendor Contracting Employers’ Top Health Plan Concerns

As health care plan utilization places second in rising medical costs, the runner-up still isn’t going unnoticed among plan sponsors.

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When asked to rank cost-management strategies implemented by group health plans in 2017, survey respondents to a recent survey by the Segal Group listed prescription drug cost management strategies and improved vendor contracting as plan sponsors’ main concerns. “Using specialty pharmacy management; intensifying pharmacy management programs; contracting with value-based providers; increasing financial incentives in wellness design; and adopting a high deductible health plan (HDHP),” were the top five recorded by plan sponsors.

The findings, according to the study, demonstrate how sponsors are pushing utilization by encouraging high quality, low cost providers, as well as following strategies to lower costs, including the “use of custom and limited provider networks, expansion of dedicated primary care clinics that are on or near work-sites and, for some industries, continued migration to tax advantaged health savings accounts (HSAs) and HDHPS.”

Tyrone’s comment:  Brokers, consultants and plan sponsors are better served when they roll up their sleeves and become more knowledgeable about the inner-workings of PBM services. Unfortunately, most purchasers are essentially winging it picking up secondhand information as they go hoping something sticks. A 250 question RFP doesn’t guarantee much if you can’t get important disclosure details to hold up in the contract language, for example. Education is the key to eliminating overpayments for pharmacy servicesRemember the fight is not about you or me, it’s about the patients who rely on us to make affordable and quality healthcare available to them – this very important point often gets lost during the procurement process. Success dictates you acquire knowledge far beyond the functional role of a PBM. 
In response to these results, Edward Kaplan, national health practice leader for Segal, suggests sponsors adopt a “three-pronged approach to the challenge of health care cost management that encompasses vendor management, plan design management and population health management.”


Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

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