The Employer's Guide Blog for Overseeing PBMs

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The 7 Habits Of Highly Effective Benefits Professionals

Collectively, the approaches outlined below have enabled employers to save 20-55% less per capita on health benefits versus a standard employer approach. Cost savings compound over the years. While too many employers accept annual premium increases of 10% or more, wise employers are converting overspending on healthcare into delivering better value to their stakeholders, whether they are employees, union members, citizens or shareholders.

Habit #1: First things first: Value-based primary is the bedrock of the highest-functioning health systems

Value-based primary care stands in stark contrast to the milk-in-the-back-of-the-store primary care model that has been a pervasive driver of the scourge of over-treatment. Grassroots change at the city level is recognizing the importance of primary care and how it can attract major employers. IBM IBM +0.85% is a leading example of how wise organizations recognize that health benefits are the second biggest cost input into their business. Like any other item in their supply chain, they will shift to high-value suppliers. It turns out that locating jobs in high-value healthcare communities boils down to those communities with the strongest foundation of valued-based primary care.

Habit #2: Be proactive managing pharmacy benefits

Successful Rx management has been described as playing whack-a-mole. The pharmacy benefits management (PBM) industry has many firms that are well known for hidden fees, shell game pricing and taking drug manufacturers’ money to promote specific drugs.

There are three pillars to manage drug cost and quality:

  • Review PBM arrangements to determine the “spread” (PBM profit) and whether more favorable terms are available.
  • Formulary changes that create a large financial impact with next to no disruption.
  • Carefully manage specialty drug acquisition and use.
Tyrone’s comment:  For the record, a spread is NOT the difference between the amount billed [to the plan sponsor] and what the contract calls for. Any difference here is simply a billing error. A spread is the difference between the $ amount billed by the PBM to the plan sponsor and the $ amount reimbursed to the pharmacy from the PBM for the same prescription. It’s not uncommon to see spreads over $100. Any third-party pricing analytics software which doesn’t address true spreads falls short of delivering real value. In fact, some PBMs who strive to be transparent offer their clients the capability to compare claims to contract agreement in near real-time which may eliminate the need for a software package which does exactly the same job.
Habit #3: Have specific plans for uncommon, but predictable, gargantuan claims

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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