Impact on self-insured employers
In a 2017 survey by the National Pharmaceutical Council, 63 percent of corporate executives believed that PBMs lacked transparency about how they made money. Without full transparency, prescription pricing is so complex that it’s virtually impossible for even the best-informed plan sponsor to understand the relationship between PBM fees and actual drug costs. In addition, 58 percent of respondents believed that contracts were too complex, ambiguously worded and often benefitted PBMs at the expense of employers. Perhaps most telling, only a third of employers said their PBMs were “strongly aligned with their own goals for managing employee health, productivity and costs.” In the same NPC survey, only 30 percent of corporate executives said they had a complete understanding of their PBM contracts. Faced with the complexity of prescription benefits, self-insured employers often turn to consultants, health plans and the “Big Three” PBMs themselves for recommendations on plan design.
The unique risk to self-insured health systems
Self-insured health systems face the same doubts and concerns about spread-based pricing and other PBM tactics as companies in other industries, with the added complexity: They’re in the business of providing and seeking reimbursement for the very services they’re insuring. This unique bind colors interactions with both health plans and PBMs.
As sophisticated providers of patient care, many health systems are integrating pharmacy services into their operations—investing in facilities, systems and staff, strategically positioned to enhance specialty and primary care. To support this critical role, managed care staff negotiate with health plans and PBMs for inclusion in preferred provider and pharmacy networks. These negotiations are complicated by PBMs’ desire to steer patients—and revenues—to their own specialty and mail-order pharmacies.
As self-insured employers, health systems rely on health plans and PBMs for third-party administration and access to provider networks that meet the needs of employees and their families. Ironically, the networks they’re offered often exclude their own providers and facilities. Unfortunately, smaller health systems simply don’t have the clout to force their way into the networks that will care for their own employees, while larger systems sometimes lack the knowledge and confidence to prevail.
The lines between these negotiations are becoming blurred—with health plans offering higher reimbursement rates for hospital care only if the health system agrees to use the plan’s PBM for its employee coverage. Health systems with sophisticated pharmacy operations can find themselves in the surreal situation of steering employees away from their own facilities.
In critical areas, the interests of PBMs and health systems are seldom aligned:
- Total lack of transparency in pricing
- Undue emphasis on profits that increases costs
- Inadequate clinical programs
- Lack of coordination throughout the care continuum
- Delays in therapy initiation and poor compliance
- Withholding of robust data for analytics
- Insufficient focus on population health
- Cookie-cutter solutions and poor account service