What questions should I ask about my PBM?

Whether you're new to the self-funded healthcare market or just want to make some changes to your current plan, selecting a pharmacy benefits manager is a crucial step. Unfortunately, it's not a piece that often gets a lot of attention.

Self-funded employers often focus on the cost of surgery, injury, or some other aspect of your current health care claims. Pharmacy benefits are often added at the end of the conversation, or companies simply choose the PBM recommended by their broker.

However, an essential part of the self-funded approach is choice, and you deserve it with your health insurance plan. And you deserve a partner who sits down with you and walks you through the project, making sure you consider every detail.

Here are some essential questions to ask when reviewing PBMs.

Which of the following are your top recommendations for reducing pharmacy costs?

There are many possible answers to this question, but one of the first steps should be to analyze your healthcare data and tailor a plan to your specific needs. There are many tiers to a pharmacy plan, and a self-funded business should understand all of them and determine which ones offer huge savings potential.

How do you add value to our strategy?

There is a strong emphasis on unit cost when it comes to pharmaceutical benefits. However, if you're still looking for the lowest unit cost, chances are you're also getting a low value. Be sure to ask how potential PBMs add value to the plan for you and your employees.

What programs do you have in place to ensure our employees receive the care they need?

While the total cost of your pharmacy benefits plan is critical, so is employee care. When discussing clinical programs with potential PBMs, mention employees who require sophisticated or specialized drug treatments.

What level of customer service is available to our employees and to us?

The pharmaceutical industry is constantly changing as new drugs and pricing structures are introduced. You need a PBM that will keep you informed of any changes that may affect your plan and help you make any necessary adjustments along the way. Plus, if your employees have issues with their benefits, they need a team that can help. Our clients are assigned specialist account managers who provide exceptional service.

Can we review your current pharmacy and reimbursement contracts?

If a PBM is unwilling to share its contracts, it is not truly transparent. Reviewing these contracts can help you determine where and why your costs are incurred.

When selecting a PBM, avoid letting it drag something onto the table without giving you a choice. Research your alternatives and ask lots of questions to determine the best PBM for you.

Once health insurance programs are complete and operational, it can be difficult to ensure that they operate in the most efficient and cost-effective way possible.

Ask these five questions of your current or potential Pharmacy Benefits Manager (PBM):

Does my Pharmacy Benefits Manager actively improve the health of my employees?

The fundamental objective of health insurance programs is to provide employees with quality health care. Why aren't pharmacy benefit managers often seen as an important factor in health promotion? Every HR manager and CFO wants their company's employees to be happy and healthy.

Innovative PBMs provide services with direct effects on employee health. PBMs can benefit the health of your employees by providing Medication Therapy Management (MTM) treatments and face-to-face consultations to help employees manage chronic conditions such as asthma, COPD, diabetes, and cardiovascular disease. Innovative PBMs add value by directly influencing the amount of money spent on medical claims by improving overall health.

Make sure your PBM has an action plan to actively promote employee health. Not only will your employees benefit, but you may also see a reduction in total medical and pharmaceutical claims.

Does my Pharmacy Benefit Manager implement differential pricing?

Many pharmacy benefit managers use a pricing strategy known as "differential pricing".

Differential pricing, simply put, is the practice of "charging a health plan more than the PBM pays the pharmacy to fill a prescription." The PBM takes advantage of the differential.

Although this is common practice in the traditional PBM paradigm, many CFOs and HR managers are unaware of the substantial amount this price is costing the plan. Since the pricing strategy is not expressly stated in the contract, decision makers are usually unaware that it is being implemented.

Fortunately, there are alternative pricing structures that gatekeepers can instruct their PBM to use. Direct underwriting occurs when PMB bills the plan sponsor for the exact amount paid to the pharmacy for each prescription.

If prescription price calculations are not clearly specified in your PBM contract, your plan is likely paying differential prices. Make sure your PBM has a transparent pricing structure that actively benefits your employees and your organization.

My Pharmacy Benefits Manager guarantees reimbursement, right?

In addition to differential pricing, a typical PBM does not pass on rebates from prescription manufacturers to plan sponsors. The sad reality is that many PBMs make substantial profits by hiding the discounts they rack up.

Ideally, your contract with your PBM should state the amount of guaranteed rebates payable to your organization.

Be sure to work with a PBM that clearly explains how it generates revenue. If your PBM can't give you a straight answer, there's probably something to hide.

Does my Pharmacy Benefit Manager provide specialty drug coverage?

For good reason, specialty drugs are a hot topic in healthcare. In 2015, only 1-2% of the US population used specialty drugs, but they accounted for about 38% of overall drug spending.

A "prior authorization (PA)" temporarily bars a claim so that a health care expert can review your medical necessity. PAs are the primary mechanism used by a benefit plan to regulate the price of specialty drugs. If your PBM has ties to expensive drug manufacturers that offer discounts, there may be a conflict of interest. Make sure your pharmacy benefits manager has a transparent and effective prior authorization approach that protects both the employee and the plan sponsor.

Despite their exorbitant cost, specialty drugs are sometimes the best effective treatment for specific diseases. Almost all specialty drug manufacturers offer co-payment assistance programs to help consumers pay for their medications. By applying for this financial assistance, patients can now afford a drug that was previously unaffordable. Make sure your PBM has a strategy for using co-pay assistance to benefit your employees.

These are just two of many approaches to combat the rising cost of specialty drugs.

The average monthly cost of prescription drugs is around $5,000 and the specialty drug category will continue to expand. The stakes are high, so make sure your PBM offers solutions for the entire specialty medicine industry.

Does my organization hold my Pharmacy Benefit Manager accountable?

When businesses choose to be self-funded, it can be difficult to find a reliable Third Party Administrator (TPA). Many employers use the PBM recommended by the TPA to administer the plan.

This plug-and-play option may be simple, but it can have a significant influence on package prices. Innovative pharmacy benefit managers can be a valuable piece of the healthcare puzzle for the four reasons outlined above. PBMs can not only improve the health of your employees but also lead to substantial savings for your business.

Separate your PBM from your TPA so that it is directly responsible to your organization. By entering into direct agreements with your PBM, you can track performance and cost savings on an annual basis. This direct contract allows you to extend or terminate your PBM contract solely based on your performance, not on the suggestion of the TPA.