Benefits consultants face significant challenges when managing pharmacy benefit spend for clients. The lengthy process of evaluating Pharmacy Benefit Management (PBM) contracts for large employers often leaves limited time and resources for mid-market groups, resulting in suboptimal contract assessments due to resource constraints and complex PBM repricing. This use case explores how one consultant utilized Prescription Care Management’s (PCM) technology platform to drastically reduce the time required for contract evaluation for a mid-market group from several weeks to a few business hours.
Challenge
A mid-market group consisting of 1,500 members located in the Southern United States received a favorable renewal quote for their fully insured plan. However, external investment stakeholders encouraged the group to explore self-funding as a cost-saving measure. This presented a dilemma: the group’s utilization of specialty drugs was 30% higher than the industry average. To successfully transition to self-funding, the group’s consultant needed to identify a PBM contract that reduced costs and mitigated inherent risks. All of this needed to be accomplished within a few short weeks during a busy renewal season.
Methodology
Initial Evaluation
To tackle the complex analysis and challenging timeframe, the consultant partnered with PCM, enabling them to perform a comprehensive market evaluation in a fraction of the time it would take for a PBM assessment. PCM used pre-loaded contract information and plan-specific details provided by the consultant, including pricing definitions, fees, rebates, and the plan model, in its Market Check tool. Market Check compared the plan data to market contracts, ranging from coalitions to carved-in to stand-alone to pass-through, and considered crucial metrics, including pricing, rebates, exclusions, and contract flexibility. PCM completed the initial assessment to identify 15 potential PBM contracts.
Claim-by-Claim Reprice
An automated claim-by-claim reprice provided an analysis of each exclusion, pricing category, and rebate independently, identifying overstatement of potential rebates typically seen in a traditional reprice. This reduced the potential contracts to five competitive options. Pricing and fees were competitive amongst these five, but a review of contractual rebate language played a key role in narrowing the field further. PCM was able to identify certain issues that affected the overall rebate estimate, such as eliminating several brand claims below a 10-day supply, which significantly impacted total spend.
By looking at every claim line and considering rebate exclusion contract language, PCM adjusted estimated rebates for more realistic projections. This narrowed the options to two potential contracts. The initial evaluation and recalculation took only hours, as performed by PCM, instead of the typical weeks without Market Check by PCM.
Specialized Analysis
The final contracts underwent a detailed specialty drug analysis to account for the group’s significant specialty utilization. PCM compared specialty lists to see how drugs were categorized. This comparison resulted in an approximate $50,000 difference in rebates on 21 specialty claims for one PBM. After reconciling specialty rebates to align with contracted categories and rates, PCM thoroughly reviewed contract definitions, exclusions, and provisions. One self-funded PBM contract emerged as the best fit for the plan due to:
- Rebate Rate: Specialty drug definitions and contract provisions allowed rebates to be passed on even for excluded drugs if a rebate was received.
- Cost-Containment Flexibility: Catch-all contract language allowed external cost-savings programs to mitigate future specialty cost increases.
Results
PCM and the consultant completed the entire market check process in less than eight hours during a business week. Utilizing PCM’s automated data analytics enabled the consultant to provide high-level service to a mid-market group, even with a tight timeframe and limited resources. The resulting market check improved decision-making, allowed for quick data validation, and provided visibility into contract details. Ultimately, plan stakeholders determined that self-funding offered the best value with the expectation of long-term cost savings for the plan, and the consultant emerged as the real winner.
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About PCM: PCM is an innovative health tech company dedicated to solving inefficiencies in the health benefits space. Guided by each client’s unique needs, PCM’s proprietary technology provides brokers, TPAs, health plans, and others with visibility, insights, and tools to build sustainable, client-centric benefit programs. Visit PCM at www.pcmsavings.com and follow on LinkedIn.