If you’ve been considering a self-funded health insurance plan, you may have come across the term Pharmacy Benefit Manager (PBM), and thought what’s that?
A Roundstone self-funded plan breaks out the total cost you would normally pay for a fully insured plan into the components needed for care, and then finds ways for you to save money on each segment. It’s like purchasing separate streaming subscriptions to replace cable television.
Think about it this way: streaming services provide you the same content you enjoyed before, plus additional programming tailored to your interests in an easier-to-navigate format. In the same way, your self-funded plan connects you to the quality care you need at a better price and introduces you to cost-saving initiatives that help you realize even greater savings. Plus, you’ll only pay for the services you need- it’s like getting rid of commercials and unwatched channels!
What is a PBM?
In short, a PBM administers prescription drug benefits. They work with prescription drug manufacturers, pharmacies, and drug wholesalers to help you and your employees access the medication you’re prescribed per their contract price. Their objective is to help members achieve the best possible outcomes, and the right PBM partner will also reduce pharmacy spend.
It may surprise you to know that if you’re covered by a fully insured plan, you’re already using PBM services- you just didn’t get to choose the PBM that would benefit you most.
Some PBMs are on your side, while others are taking advantage of the opacity in the market. Traditional PBMs, similar to traditional fully insured insurance companies, keep the savings you generate as additional profit. Using an independent PBM to carve out, or separate your medical coverage from your pharmacy coverage makes it easier to see where your money is going- and easier to navigate cost-saving measures.
Roundstone prefers to work with transparent PBMs. A transparent PBM is open about their fee structure, which makes it easy to track just where their revenue comes from. A transparent PBM will have a very clear contract, so you can be sure there won’t be any nickel and diming that increases your costs.
Pass-through PBMs are named because they pass the savings from manufacturer’s coupons and rebates on to you. Typically, a pass-through PBM will collect their revenue through admin fees. So your costs are easy to anticipate, and you are secure in the knowledge that you keep the money you save.
How Does a PBM Reduce Prescription Drug Costs?
PBMs have access to rebate programs and pharmacy networks that would otherwise be difficult to track down, and deliver savings through a number of avenues. Case management, prescription delivery services, and negotiated prices are just a few of the tricks up their sleeves when it comes to ensuring you and your employees have access to the medications prescribed at an affordable price. Manufacturer’s co-pay assistance programs and mail order pharmacy programs also help increase savings and therefore access to prescribed medications.
Another instance in which the right PBM partner makes a world of difference is when it comes to high-cost specialty medications. PBMs have much more purchasing power than one individual, and uses that power to leverage negotiations in pricing, discounts, or rebates for the same drug. They may also have access to their own specialty pharmacies or pharmacy network to provide the same medication at a lower cost.
In some instances, generics and more affordable brand medications can be substituted for a more expensive prescription and deliver the same medical outcome. A PBM can help navigate which brand name drugs are worth the cost, and which have exact duplicates available at a lower price.
The Benefits of Using a PBM
PBMs help reduce prescription spend, period. Through the negotiations and programs explained above, but also by providing access to clinical programs like quantity limits, step therapy, and prior authorizations- alongside advice and recommendations on the options covered by your plan. They also monitor for fraudulent prescription claims and manage claims reporting.
Another benefit of using a PBM is better access to medications: a PBM partner you trust can be instrumental in mitigating rising costs and reducing out-of-pocket costs, which means that individuals are able to access the medications they need as often as they are prescribed. Greater compliance naturally leads to better member outcomes, so affordable and available medication means healthier employees.
PBMs are also a great resource when it comes to knowing what’s covered. They can point individuals to medications that are covered by your specific insurance plan, which reduces out-of-pocket costs. Customer service teams are available to help make sure your spend is where it should be- through reporting, outreach on solutions for high cost medications, verifying contracts, and annual audits, which all ensure that members get the prescriptions they need at the contracted cost.
What Are the Potential Savings?
Roundstone employers have realized significant savings and flexibility through partnering with transparent, pass-through PBMs. During the quoting process, and each year at renewal, Roundstone’s Cost Savings Investigators (CSI Team) take a hard look at an employer’s claims data to recommend cost-saving initiatives- and the results can really add up.
A prime example: during the underwriting process for a fully insured company looking toward moving to a self-funded plan, our Cost Savings Investigators (CSI) Team was alerted to high prescription drug costs. Roundstone reached out to an independent PBM who provided better pricing and delivered a manufacturer’s coupon program to the employee and employer.
This group is projected to save over $60,000 annually, because when you’re self-funded with Roundstone, we find ways to manage the whole cost and get lower pricing on your behalf.
Absent the control and flexibility within Roundstone’s benefit funding solution, the employer’s renewal with a fully insured plan would have been an increase over the previous year because of the high-cost prescription drugs. The insurer would have seen the increase in spend on prescription drugs, and raised the whole group’s premium to insure against risk.
By using the right PBM, your self-funded plan can cover the best pharmaceuticals available at a low, reasonable cost. Roundstone works with PBMs that maintain a high level of commitment to clients, and always think of the employees’ wellbeing first.
Do you have questions about how to find a PBM partnership that saves you money, or how this partnership works differently than a fully insured plan’s prescription drug model? Roundstone works with a number of flexible, cost-controlling PBMs, and we’re happy to answer any questions you have on finding the right partner for you. Contact us today to find out more!