by Ryan Rice of Prism Health Group
We hope you’ve had the chance to read our article from last week that explored how the right PBM model can become an incredibly powerful asset in the quest for developing a cost effective and quality-based health and benefits program. Now, we are providing the steps to take to know how to measure and validate the performance of your PBM at any point in time.
Choose Your Words Wisely. Like any good relationship, the words you choose matter. When you're negotiating PBM contracts, it's vitally important that you are deliberate with the words you use when finalizing a pharmacy contract. PBM's are notorious for creatively alerting contract language to serve their interests instead of the interests of their client partners.
In order to ensure one has successfully elected the right language, review the precise definitions for commonly used terms such as Brand Drugs, Generic Drugs, Average Wholesale Price (AWP), Specialty Drugs, Specialty Drug Lists, Zero-Balance Due Claims, etc. Your contract with the PBM should always call out these and other defined terms in such a way that the application of the word has specific meaning when used in the broader context of the agreement.
It’s common for many PBM contracts to extend guaranteed pricing for specific drugs, channels of delivery, etc., yet the caveat sections outline specific instances where the guaranteed pricing does not apply. It’s important that you and/or your advisor and pharmacy consultant be vigilant in eliminating as many caveats as possible, so to avoid any instance for the PBM to skirt their contract obligations.
Calibrate & Evaluate - Securing Claims Data
Your PBM may try to lull you into thinking that you don’t need access to your pharmacy claims data. Plan Sponsors
have a right to request a full claims utilization file from their PBM and/or Carrier / TPA on a regular basis. The claims data is your best way to validate performance, hold the PBM accountable, and to gain insight in planning for future initiatives.
When requesting your data from the PBM, it’s important to ensure the produced data is comprehensive and doesn’t exclude critical data fields. Coordinating a readable format that allows the Plan Sponsor and/or their advisor or pharmacy consultant to measure, validate, and report specific findings is paramount.
What's Worse.... Unfortunately, if the PBM secured contract terms that allows for inclusion of contract exclusions or caveats, the Plan Sponsor may not achieve their intended outcome. Therefore, it’s important for Plan Sponsors to use the data to corroborate the commitments in the contract between the Plan Sponsor and PBM. A well-crafted contract is easily substantiated by comprehensive data.
Don't Be Afraid - Take Control & Achieve Autonomy
Autonomy is critical in today’s healthcare marketplace. With many PBM entities vertically integrating with large and regional carriers, consortiums, cooperatives, and coalitions, it’s hard to tell who’s on your side. Therefore, ensuring your contract and relationship with your PBM is based on your best interests, and not subject to binding and exclusive relationship standards, will ensure complete freedom to do what’s good for you.
Although your PBM may lead you to believe that there’s only one or few ways to manage costs and improve care, the industry offers several different models and mechanisms to help in achieving your goals. Keeping an eye on what other PBM entities or third parties offer in the form of pricing, clinical programs, and operational efficiency is a solid way to keep your incumbent PBM on their toes and the Plan Sponsor in the driver seat.
Aligning with PBM and TPA entities that will reasonably partner and align with alternative third-party solutions is critical in taking complete control over your pharmacy spend.
Never Turn Your Back on a PBM - Trust, Yet Verify.
Your PBM made a series of hard and fast commitments to you, and it’s your right to hold the PBM accountable to those commitments. Facilitating an annual financial reconciliation audit is a mainstay means to recuperate any shortfall in performance, as well as validate over-performance.
Plan Sponsors should always be asking what the PBM is doing to lower costs and improving care. By effectuating different market solicitation tactics, i.e., Request for Proposal (RFP), Market Check, Competitive Intelligence Mining, the Plan Sponsor can keep the PBM engaged and dedicated to performing at a high level, while also getting a clear sense as to whether or not the current value proposition is market competitive.
Finally, if you’ve got to this point in the narrative and think to yourself that this is far too complex to wrap your hands around, don’t be dismayed – Prism can help. The PBM industry is ever-changing, with new complexities emerging on a regular basis. Now more than ever, Plan Sponsors require targeted and timely insights to guide decisions and shape pharmacy program initiatives. Aligning with an Independent Pharmacy Consultant like Prism will ensure market competitiveness and an ongoing heavy-weight in your corner, keeping an active finger on the pulse of your plan’s performance.
You Can Do This.
There’s no question that the PBM industry can often take on a scary persona.That said, with discipline, dedication, and patience, one can begin to apply the above concepts to re-write the narrative and begin to take back control over their pharmacy benefit.
Behind the teeth, claws, and scaled skin lies a powerful resource that has the potential to help lower costs and improve care. Ensuring you meaningfully seek to understand and invest the
time and attention necessary to getting the most out of your pharmacy benefit, will surely yield favorable outcomes.
Prism Health Group is proud to be featured on The Granite List. To learn more about the work we do, find us here.
