{"id":8625,"date":"2021-12-02T03:00:00","date_gmt":"2021-12-02T11:00:00","guid":{"rendered":"https:\/\/www.pinnaclehrs.com\/?p=8625"},"modified":"2021-12-02T03:45:39","modified_gmt":"2021-12-02T11:45:39","slug":"is-a-pharmacy-carve-out-right-for-your-group-health-plan","status":"publish","type":"post","link":"https:\/\/www.pinnaclehrs.com\/is-a-pharmacy-carve-out-right-for-your-group-health-plan\/","title":{"rendered":"Is a Pharmacy Carve-out Right for Your Group Health Plan?"},"content":{"rendered":"<p style=\"font-size: 18px\"><span style=\"color: #393d40;background-color: white\"><span style=\"color: #000000\">Pharmacy spend in the US is significant. Six in ten adults<\/span> <a href=\"https:\/\/www.kff.org\/health-costs\/poll-finding\/public-opinion-on-prescription-drugs-and-their-prices\/\">tell KFF.org<\/a>&nbsp;<span style=\"color: #000000\">they are currently taking at least one prescription drug and a quarter say they currently take four or more prescription medications.<\/span><\/span><\/p>\n<p style=\"font-size: 18px\"><span style=\"color: #393d40;background-color: white\"><a href=\"https:\/\/www.pwc.com\/us\/en\/industries\/health-industries\/library\/behind-the-numbers.html\">PwC\u2019s Behind the Numbers<\/a><span style=\"color: #000000\">&nbsp;predicts a 6.5% medical cost trend in 2022, while drug cost trend reports show ongoing increases year over year and make up 20% of overall medical costs for employers. <\/span><\/span><\/p>\n<p style=\"font-size: 18px\"><span style=\"color: #000000\">Besides the cost burden on employers, employees can find that certain medications are not covered by their health plan. This increases pressure on employers to develop a sustainable strategy that provides cost-effective pharmacy benefits. <\/span><\/p>\n<p style=\"font-size: 18px\"><span style=\"color: #000000\">As a solution, many employers consider pharmacy carve-out plans as an option; however, carve-out plans are debated vigorously by health plan experts. By understanding what a pharmacy carve-out is and considering important factors, employers and brokers can work together to make the right decision.<\/span><\/p>\n<h3><span style=\"background-color: white\">What is a pharmacy carve-out?<\/span><\/h3>\n<p style=\"font-size: 18px\"><span style=\"color: #000000\">A <\/span><a href=\"https:\/\/www.milliman.com\/-\/media\/milliman\/pdfs\/articles\/best-practices-pharmacy-benefits-carve-in-carve-out.ashx\">pharmacy carve-out<\/a> <span style=\"color: #000000\">is when an employer separates (carves out) their prescription drug benefits from their medical plan and contracts directly with a pharmacy benefit manager (PBM). A pharmacy carve-out is commonly used under the self-insured model. In comparison, fully insured medical plans typically have the pharmacy benefit as a built-in feature (bundle).<\/span><span style=\"color: #0e101a\"><\/span><\/p>\n<h3><span style=\"background-color: white\">Advantages<\/span><\/h3>\n<p style=\"font-size: 18px\"><span style=\"color: #000000\">Pharmacy carve-outs can provide transparency, flexibility, control, and accessibility to employers in the form of:<\/span><\/p>\n<ul style=\"font-size: 18px\">\n<li style=\"vertical-align: baseline\"><span style=\"color: #000000\"> Better control over pharmacy benefit costs. <\/span><\/li>\n<li style=\"vertical-align: baseline\"><span style=\"color: #000000\"> Access to the costs and data to evaluate program performance.<\/span><\/li>\n<li style=\"vertical-align: baseline\"><span style=\"color: #000000\"> Greater flexibility to customize solutions in plan design and clinical programs to help reduce costs.<\/span><\/li>\n<li style=\"vertical-align: baseline\"><span style=\"color: #000000\"> Standardized language in the PBM contract to allow increased transparency into pharmacy benefits, allowing employers to better understand and control spending, negotiate better deals, and ensure the program performs as promised. The contract itself can allow:<\/span>\n<ul>\n<li style=\"vertical-align: baseline\"><span style=\"color: #000000\"> Access to pharmacy claims data.<\/span><\/li>\n<li style=\"vertical-align: baseline\"><span style=\"color: #000000\"> Audit rights, such as a claims audit, operational assessment, and rebate audit.<\/span><\/li>\n<li style=\"vertical-align: baseline\"><span style=\"color: #000000\"> Annual review to ensure rates are competitive.<\/span><\/li>\n<li style=\"vertical-align: baseline\"><span style=\"color: #000000\"> Service performance guarantees.<\/span><\/li>\n<li style=\"vertical-align: baseline\"><span style=\"color: #000000\"> Credits to help cover administration expenses or costs incurred when switching to a new vendor.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3>Disadvantages<\/h3>\n<p style=\"font-size: 18px\"><span style=\"color: #000000\">There are a lot of variables that affect whether a pharmacy carve-out is the right solution for your company. It\u2019s critical to understand the disadvantages of carve-outs before making your next move: <\/span><\/p>\n<ul style=\"font-size: 18px\">\n<li><span style=\"color: #000000\"> Carved-out plans offer short-term savings, though the savings might not be beneficial to an employer over the long term. <\/span>\n<ul style=\"font-size: 18px\">\n<li><span style=\"color: #0e101a\"> <\/span><a href=\"https:\/\/www.benefitspro.com\/2021\/07\/27\/researchers-find-reduced-medical-spending-associated-with-integrated-pharmacy-benefits\/\">A July 2021 study compared the costs of bundled and carve-out plans<\/a><span style=\"color: #000000\"> and found that bundled pharmacy benefits are associated with reduced medical expenditures over the long term, resulting in annual per-member, per-month savings compared with a carve-out.<\/span><\/li>\n<li><span style=\"color: #0e101a\"> <\/span><a href=\"https:\/\/www.healthcarenewssite.com\/newsletters\/wa-premera-0412.pdf\">Another study<\/a><span style=\"color: #000000\">&nbsp;found that savings from a carve-out plan may seem beneficial on the surface, but medical costs are 7.5 times higher in the long run. Therefore, any savings promised by a carve-out should be weighed against potential increases in medical spending by employers.<\/span><\/li>\n<li><span> <\/span><a href=\"https:\/\/www.managedhealthcareexecutive.com\/view\/thinking-of-carving-out-specialty-benefits-your-questions-answered\">Managed Healthcare Executive<\/a><span style=\"color: #000000\"> also reported carve-outs could deliver short-term savings, but not long-term savings, due to PBM vendors\u2019 approach to utilization management. For example, many employees are denied access to their prescribed medications and are unlikely to have their denial overturned on appeal. This results in employees paying for medicine out-of-pocket, added costs for employers if they pay multiple vendors, and a poor member experience overall.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"font-size: 18px\"><span style=\"color: #000000\">Besides long-term costs, carve-out contracts for medical and pharmacy require multiple vendors, increasing the administrative burden on the employer.<\/span><span style=\"color: #0e101a\"><\/span><\/p>\n<h3 style=\"font-size: 36px\">Thoughtful considerations<\/h3>\n<p style=\"font-size: 18px\"><span style=\"color: #000000\">After reflecting on the advantages and disadvantages of carve-outs, making the decision may still be no small feat. Fortunately, you can ask yourself<\/span> <a href=\"https:\/\/www.milliman.com\/-\/media\/milliman\/pdfs\/articles\/best-practices-pharmacy-benefits-carve-in-carve-out.ashx\">important questions<\/a> <span style=\"color: #000000\">to help you with your decision.<\/span><\/p>\n<ol style=\"font-size: 18px\">\n<li><span style=\"color: #000000\">How much are pharmacy benefits currently costing your plan?<\/span><\/li>\n<li><span style=\"color: #000000\">How are you currently overseeing the pharmacy benefits program? <\/span><\/li>\n<li><span style=\"color: #000000\">What changes would be necessary for the new arrangement?<\/span><\/li>\n<li><span style=\"color: #000000\">How will the fees from your medical health plan vendor be impacted? <\/span><\/li>\n<li><span style=\"color: #000000\">Is now the right time to search for a PBM vendor (and possibly a medical health plan request for approval)?<\/span><\/li>\n<\/ol>\n<p style=\"font-size: 18px\"><span style=\"color: #000000\">When deciding to carve-out pharmacy benefit programs, employers and brokers should work together to consider critical factors such as internal staff expertise, current and future costs, and appropriate timing. However, your top consideration should be, \u201cDoes this make the most sense for our organization and our employees?\u201d<\/span><span style=\"color: #0e101a\"><\/span><\/p>\n<p style=\"font-size: 18px\">&nbsp;<\/p>\n<p style=\"font-size: 18px\"><span style=\"font-style: italic\">Content provided by&nbsp;<\/span><a href=\"https:\/\/www.q4intel.com\/employers\/\" style=\"font-style: italic\">Q4iNetwork<\/a><span style=\"font-style: italic\">&nbsp;and partners<\/span><\/p>\n<p style=\"font-size: 18px\">Photo by<span>&nbsp;<\/span><span><a href=\"https:\/\/www.123rf.com\/profile_volody10\">volody10<\/a><\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/track.hubspot.com\/__ptq.gif?a=1652561&amp;k=14&amp;r=https%3A%2F%2Finsights.q4intel.com%2Femployers%2Fis-a-pharmacy-carve-out-right-for-your-group-health-plan&amp;bu=https%253A%252F%252Finsights.q4intel.com%252Femployers&amp;bvt=rss\" alt=\"\" width=\"1\" height=\"1\" style=\"min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important\" \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Pharmacy spend in the US is significant. Six in ten adults tell KFF.org&nbsp;they are currently taking at least one prescription drug and a quarter say they currently take four or more prescription medications. PwC\u2019s Behind the Numbers&nbsp;predicts a 6.5% medical cost trend in 2022, while drug cost trend reports show ongoing increases year over year &hellip; <a href=\"https:\/\/www.pinnaclehrs.com\/is-a-pharmacy-carve-out-right-for-your-group-health-plan\/\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">Is a Pharmacy Carve-out Right for Your Group Health Plan?<\/span><\/a><\/p>\n","protected":false},"author":310,"featured_media":8628,"comment_status":"close","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,11,38],"tags":[20,12,39],"_links":{"self":[{"href":"https:\/\/www.pinnaclehrs.com\/wp-json\/wp\/v2\/posts\/8625"}],"collection":[{"href":"https:\/\/www.pinnaclehrs.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinnaclehrs.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinnaclehrs.com\/wp-json\/wp\/v2\/users\/310"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinnaclehrs.com\/wp-json\/wp\/v2\/comments?post=8625"}],"version-history":[{"count":0,"href":"https:\/\/www.pinnaclehrs.com\/wp-json\/wp\/v2\/posts\/8625\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pinnaclehrs.com\/wp-json\/wp\/v2\/media\/8628"}],"wp:attachment":[{"href":"https:\/\/www.pinnaclehrs.com\/wp-json\/wp\/v2\/media?parent=8625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinnaclehrs.com\/wp-json\/wp\/v2\/categories?post=8625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinnaclehrs.com\/wp-json\/wp\/v2\/tags?post=8625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}