4 Step Approach to Prescription Drug Carve-Out
Step 1: All employers should carve-out the prescription drug coverage within their health plan. For years, insurance carriers & certain PBM’s have made entirely too much money behind the scenes on prescription benefits. Smaller employers (50+) now have self-funded plan options that have finally become available to make this possible.
Step 2: Find the right Prescription Benefit Manager (PBM). It is important to find the correct PBM who is completely fiduciary and transparent, only charging for prescriptions being processed. They should work on your behalf to customize your formulary and put all rebates back in your pocket.
Step 3: Make sure you understand how Average Wholesale Pricing (AWP) discounts are handled. PBM contracting can be tricky and in most cases very important details are hidden from employers. One contract could claim a 15% AWP discount on true cost for brand and generic drugs, while another can boast a 20% discount but the actual price of the drug is being marked up, leading to higher prescription costs. i.e. – Lets say the cost for a particular brand drug is $100 at true AWP. The 15% discount would yield a total cost of $85 for that drug if you are using a true fiduciary & transparent PBM. While that same drug for the other PBM pushing the 20% discount could be marked up to $120, the price for that same drug is now $96. Now imagine the mark ups on much higher priced drugs and what that would do to the total cost of just the prescription portion of your health plan.
Step 4: Carving out the prescription plan is just half of the cost savings. It is very important to employ a PBM manager to monitor the prescription plan on a regular basis to ensure compliance, disease management, and advocacy on behalf of your employees. Savings generated by PBM management is very sizeable, in addition to preventing employees from becoming high claimants 5-10 years in the future for non-compliance of maintenance medications.
BDS has uncovered all the problems associated in working with PBM’s, under our Transparent Health model, we have done all the leg work for you. We have hand selected the only true transparent & fiduciary PBM in the country to service our clients. Please feel free to contact us if you would like to learn more about how Transparent Health can change your medical plan or for specifics on carving out your prescription plan.