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Health Insurance Strategies

Prescription Health Benefits

Prescription drugs are the top driver of health benefit cost increases.

Group Health Insurance Prescription Plans

Because of prescription drugs, health benefit costs are increasing by over 10% a year, driven by a 20% growth in Specialty pharmaceuticals. On average, prescriptions comprise at least 25% of your overall healthcare benefits expense. So, it is critical to know what's driving the cost growth in this segment of your benefits plan.

I recently spoke to a fully-insured employer, with over 200 employers on their health insurance plan, who received an 80% renewal increase. Why? Because a member of the plan was taking a $1 million a year medication.

What would you do if this happened to you?

It's not a far-fetched possibility, as pharmaceutical manufacturers move away from developing general application medications to ones that are directed to specific, and more often than not, very rare medical conditions. In a very real sense, they are "designer" drugs.

As Preferred Provider Organizations (PPOs) negotiate discounts for medical services, Pharmacy Benefit Managers (PBMs) do the same for your prescriptions. PBMs are an integral part of your Health Insurance plan, and you must manage them just like you do your Medical spend.

PBMs are intermediaries, acting as go-betweens for drug manufacturers, pharmacies and your health insurance plan. They perform prescription claims administration, facilitate mail-order drug delivery, market drugs to pharmacies and manage the list of drugs covered by your health insurance plan.

Unfortunately, PBMs complicate the buying process by operating behind a veil of confidential contracts, confusing terminology and pricing structures. You are completely in the dark about your pharmacy plan, because there is no transparency, which means there is no way to keep them accountable.

Just like every aspect of your business, you must proactively manage your PBM. Never lose sight of the fact you hired them, and they work for you.

Because they are "big" and have a recognizable name means nothing. Not all PBMs are created equal. So, just like you do with other important financial decisions for your company, you need to thoroughly examine a number of PBMs to determine which one will deliver the best results. You must evaluate all parts of their operation. And although there are the veils and confidential contracts, you must pull back these curtains and demand as much transparency as possible.

And don't be fooled by terms such as "fiduciary" PBMs or statements such as "We pass on all the rebates." Although more transparent than a "big name" PBM, there are still aspects of these types of PBMs, such as high processing or administrative fees, that can cause them to be unprofitable partners.

We will help you find the right PBM partner, and together, we will implement other strategies that will maximize savings and protect your bottom line.

BTW – What did the company to which I referred in the beginning of this article do about the 80% increase? They decided to self-fund their health insurance plan and exclude all Specialty drugs. The member was able to obtain their medication through a manufacturer's financial assistance program.

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