Rx Cost Management Best Practices: Meeting Market Trend

By Team PCM | June 25, 2024 | Blog post, Plan Management, Contract Management

Overview: 

Aligning a group’s PBM contract with market rates is time-consuming for benefit experts, requiring at least a market check and, at most, a full-blown RFP. Allocating valuable time and resources to the complexity of contract evaluation strains most brokerages. This use case explores how one consultant utilized Prescription Care Management’s (PCM) Market Check tool to compare market rates and negotiate a better contract with the PBM their client loves quickly and efficiently.

Challenge: 

A mid-market group with 1,600+ members loved the service provided by their current PBM; however, at the three-year renewal mark, their rates were 15% behind the market, even after implementing specific specialty management programs. With no annual review provision in the contract, the broker hesitated to renew, as there was no way to validate outside the three-year renewal period. Additionally, after missing out on 11.7% rebate increases over the contract period, the group was 30% behind market trend in rebates. For the consultant, balancing the positive relationship between the group and PBM with sub-par rates was untenable. The consultant partnered with PCM to bring rates and rebates up to market standard without going out to bid. 

Methodology: 

Establish a Baseline 

PCM started the market comparison process by evaluating the contract, looking specifically at effective rates and rebates compared to current contractual discounts and rebates. A contract review allowed PCM to establish understanding of where the client rates stand on pricing components, establishing a baseline for market comparison. 

Market Comparison 

With a clear understanding of rates and rebates, PCM utilized its Market Check tool to compare the incumbent contract to multiple market contracts quickly. Within the tool, PCM and the consultant dynamically adjusted different pricing components to see what changes would be needed for the incumbent to reach market standards.  

Contract Improvements 

After completing the market analysis, PCM prepared data-driven contract suggestions for the incumbent PBM. Based on these suggestions, the consultant requested the incumbent bring their rates and rebates up to market and add contract language that includes an annual review provision. 

Results: 

The incumbent agreed to improve their rates and rebates and added the suggested contract language, allowing the group to renew their existing contract and continue receiving the expected level of service. 

In a matter of days, PCM received group data, established a pricing baseline, evaluated the market, and facilitated data-driven contract negotiations, cutting down weeks of work by the consultant. Now, both the plan and consultant are moving forward with a more flexible contract that includes an annual contract performance review and annual market check, to be streamlined by PCM. 

By leveraging PCM’s Market Check tool, this consultant provided significant value to their client with minimal work.  

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.  

Rx Cost Management Best Practices: Meeting Market Trend

By Team PCM | June 25, 2024 | Blog post, Plan Management, Contract Management

Overview: 

Aligning a group’s PBM contract with market rates is time-consuming for benefit experts, requiring at least a market check and, at most, a full-blown RFP. Allocating valuable time and resources to the complexity of contract evaluation strains most brokerages. This use case explores how one consultant utilized Prescription Care Management’s (PCM) Market Check tool to compare market rates and negotiate a better contract with the PBM their client loves quickly and efficiently. 

Challenge: 

A mid-market group with 1,600+ members loved the service provided by their current PBM; however, at the three-year renewal mark, their rates were 15% behind the market, even after implementing specific specialty management programs. With no annual review provision in the contract, the broker hesitated to renew, as there was no way to validate outside the three-year renewal period. Additionally, after missing out on 11.7% rebate increases over the contract period, the group was 30% behind market trend in rebates. For the consultant, balancing the positive relationship between the group and PBM with sub-par rates was untenable. The consultant partnered with PCM to bring rates and rebates up to market standard without going out to bid. 

Methodology: 

Establish a Baseline 

PCM started the market comparison process by evaluating the contract, looking specifically at effective rates and rebates compared to current contractual discounts and rebates. A contract review allowed PCM to establish understanding of where the client rates stand on pricing components, establishing a baseline for market comparison.  

Market Comparison 

With a clear understanding of rates and rebates, PCM utilized its Market Check tool to compare the incumbent contract to multiple market contracts quickly. Within the tool, PCM and the consultant dynamically adjusted different pricing components to see what changes would be needed for the incumbent to reach market standards.  

Contract Improvements 

After completing the market analysis, PCM prepared data-driven contract suggestions for the incumbent PBM. Based on these suggestions, the consultant requested the incumbent bring their rates and rebates up to market and add contract language that includes an annual review provision. 

Results: 

The incumbent agreed to improve their rates and rebates and added the suggested contract language, allowing the group to renew their existing contract and continue receiving the expected level of service. 

In a matter of days, PCM received group data, established a pricing baseline, evaluated the market, and facilitated data-driven contract negotiations, cutting down weeks of work by the consultant. Now, both the plan and consultant are moving forward with a more flexible contract that includes an annual contract performance review and annual market check, to be streamlined by PCM. 

By leveraging PCM’s Market Check tool, this consultant provided significant value to their client with minimal work.  

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.