by Sarah Gunter
In 2018, 72% of shock stop loss claims were drug related. In 2022, specialty prescription drugs have only gotten more expensive, more frequent, and more widespread. It’s no secret that prescription related stop loss claims pose a threat to self-funding. Trevor Daer, of Granite Peak Analytics, compares the situation to the hardening of the stop loss market back in the 2000s. “If you can't get stop loss insurance, then self-funding is very tough to do. And that I think is very important for employers, brokers, TPAs, because without stop loss, you don't really have at least innovative brokers and you really don't need a TPA,” says Daer.
But there is a solution—if you can fully align and optimize your strategy where it comes to your prescription program, better prices and care are possible. That’s what Granite Peak does. First, by negotiating contracts with PBM partners, they’re able to eliminate waste and prescription overspend. Daer explains, “We’re kind of like a watchdog on the back end of a prescription program. And what we’re trying to do as that watchdog is ensure that when the patient shows up at the pharmacy and needs medication, they’re getting the best possible price and also the best possible care. That’s really where our focus is, to ensure that patient is well taken care of, and to eliminate or reduce the cost and convenience issues for them to be on therapy.”
The first thing Daer recommends for prescription strategy is being proactive. As this area of healthcare is constantly evolving, strategy is not something where you can “set it and forget it.” Second, Daer suggests thinking about measurement: “per-member per-month is kind of the gold standard for measuring health plans, specifically pharmacy,” he says. It’s also important to be critical. Considering how words like “pass through” and “transparency” have been watered down and leveraged for sales and marketing purposes, knowing how to really evaluate a prescription program is crucial. “Be very skeptical of any program that's presented to you,” says Daer. “And if you don't have the expertise, or you don't have the time, like I said, be willing to ask for help.”
Evaluating a prescription program well means being able to see the bigger picture and knowing the right questions to ask. There’s no one solution that will work for every company perfectly. “If you've seen one TPA, or one consultant, or one employer, you've seen they're all very different, so not one PBM partner will fit for all of them, not one management program,” Daer explains.
For TPA’s, Daer takes into consideration a couple of principal questions in order to figure out if there’s room to do better. These include: “What is your market? Are you driving? Are you essentially acting as the PBM broker for most of your clients? Is it all independent consultant or broker driven?” For brokers, he asks, “Who are you trusting for the pharmacy program for your clients? How's it working? How much time are you spending on it?” And for employers, it’s key to know workforce demographics, which means asking questions like: “Are there a lot of production employees, so low wage earners, high hours? Are you a law firm with more high wage earners?” As some creative specialty programs are based on income, being able to identify what will work for different kinds of clients is helpful.
However, there are some questions any TPA, broker, or employer should ask a PBM. The first is simple—ask, how do you get paid? “It’s a perfect question that'll tell you where they're aligned,” says Daer. Next, ask, do you allow monitoring of the contract? The best PBM’s embrace accountability and want to do the best they possibly can. Those who avoid it or do not want to be monitored pose red flags. Another question is, do you outsource anything? And, if so, who do you outsource it to? While bottom middle market prescription partners might have a different name slapped on them, many are using BUCA options for everything they do, for rebates, networks, claim systems, etc. If the PBM is essentially another middleman to the middleman, what value is being provided?
The best PBM’s will answer these questions, but not all will. It ultimately comes down to looking at per-member per-month costs. When negotiating a contract, it can be helpful to ask, do you offer a net cost guarantee? “All PBMs are going to reprice claims and say we can save you 30%,” explains Daer. “Great—guarantee it, guarantee at least 20% of it, put in fees at risk. Then you get into granular details of will they put more than their admin fees at risk? Do they put 50% at risk, you know, how much are they willing to bet on it? And that depends; it's not available for every single client or opportunity, but it's a good way to understand. You can really put people in a place of transparency and accountability.”
If you can align your strategy with these considerations in mind, you can greatly reduce the threat of prescription related stop loss claims. Remember: be proactive, know the measurements, and look critically. Look at the big picture; learn the specifics about your TPA, broker, and company, and how the different parties work together. And finally, know the right questions to ask your PBM in order to find and create real value.