Pharmacy benefits are complex, seemingly on purpose. If you are with a large national broker and are utilizing their coalition PBM deal, it can be even more complex. It doesn’t have to be this way.
Large brokers often have coalition deals, but these deals aren’t just for your benefit—they’re a revenue stream for the Broker that in most cases is never revealed to the employer. If this is the case, how can you trust that their incentives are aligned with what is best for you and your employees?
The power of knowing what to ask
You are not powerless. Armed with these six questions, you can shine a light on the implications of your large broker’s deals, and demand practices that give you the insight to potential conflicts of interest and enable you to truly know you are doing everything you can to control costs.
If you don’t know all of the answers to the questions listed below, or you aren’t doing the tasks outlined, then your Broker may not be putting your best interests first, and you might be leaving money on the table.
Question One: Are you getting an annual audit of your claims?
Contract underperformance is very common but without an annual audit, you may not receive the contractually required savings.
Question Two: Are you going out to bid for your pharmacy benefit manager regularly?
If you are not going out to bid every few years, you are leaving dollars on the table. Every RFP process equates to better contract terms if done correctly and thoroughly. If you have a Broker that has their own coalition, they aren’t motivated to do a market check or RFP process for you since they are making income on you being exactly where you are – with them. This is the fox guarding the henhouse at its best!
Question Three: Does your PBM contract contain market check provisions to ensure your pricing is competitive?
Pharmacy trends need to be managed as close to real-time as possible and this includes continuously confirming that you have a competitive deal in place managing costs. If you are in the coalition of your broker, they risk their income by looking too hard at your current deal.
Question Four: Is your broker bringing you programs that can save you money?
There are many add-on savings programs available – copay assistance programs, specialty drug carve-out management, physician detailing, discount card wrap programs. Are you familiar with them, or others? Have you reviewed the savings opportunity for each? Many of these programs are risk-free: a percentage of savings fee or guaranteed savings above the fee and equate to huge savings
Question Five: Can you get your utilization data in a timely manner from your PBM?
This one is our favorite. IT’S YOUR DATA. As a self-funded group – you are financially responsible for the payment of the claims. You partner with a PBM to process the claims but it’s your data. We see over and over again the roadblocks put up by the PBM and the broker for reasons why you can’t get the data, how it takes weeks or months to get—and ultimately might not even be the full set of data that you requested. Why is this? Neither wants you to be able to analyze to see that there are better options.
Question Six: Are your broker’s revenue streams transparent?
Too often the large brokers disclose only the fee they charge the client but NOT the fee they earn from the PBM in their coalition. They have contracts with the PBM(s) in their coalitions that create a revenue stream to the Broker that can equate to double or more what they are collecting from the employer group directly. By not disclosing these fees, incentives can never be measured by the employer group and it means the broker is biased.
Here’s a true story of what asking these questions can reveal:
A 25,000 person employer group retained a large Broker. The process called for an RFP from new prospective PBMs, and the PBM in the broker’s coalition came in with the best offer—to double the rebates from what that employer group was getting from their current PBM. On the strength of that promise, and that PBM’s relationship to their broker, the employer decided to move their business to the broker’s coalition PBM.
A year and a half into the deal RemedyOne connected with the employer. We asked if what they expected had come true—had their rebates doubled? The benefit leader paused, thought, and then confided, “I know it’s higher but I’m not sure if it’s as high as we were expecting.”
We see this all the time – a deal looks great on paper and then is not checked after implementation to see if it was true. There are reasons it may not be as high, but more importantly: Why didn’t the broker monitor the expected benefits for their client?
We asked when the PBM contract would be up for bid. The employer discovered that the deal would automatically renew in 30 days and yet there had not been a market check process performed. This employer, like so many others, focuses on their employees and relies on their broker to have their best interests at heart and to take effective action on their behalf. In this case, they started to wonder if their broker was looking out for them like they assumed it was.
Beyond asking questions—how can you take action?
But when you are clear about who you are serving, things can become clear. When we ask these six questions, it sets us up to take action. Action that effectively audits the past, and proactively manages the now. We accomplish this through our rebate management services.
Large brokers with their own PBM coalition deals may be like foxes guarding the henhouse, but you still have the power to get what you deserve.
