How Carve-In Plans Can Control Pharmacy Benefits for Optimal Savings

Within employee benefits, the choice between pharmacy “carve-in” and “carve-out” is an important decision for employers, particularly when evaluating cost control, flexibility, and transparency. While these approaches differ in structure and administration, self-funded employers can exercise meaningful influence over their pharmacy spend under either model when contracts and oversight are designed intentionally.

Pharmacy Carve-In vs. Carve-Out

The difference between carve-in and carve-out pharmacy arrangements centers on who manages the PBM relationship and how tightly pharmacy is integrated with the medical carrier.

Carve-In Pharmacy Plans: These bundle medical and pharmacy benefits under a single carrier, with the PBM typically affiliated with or owned by the medical provider. In this model, PBM contracting and pharmacy operations are administered through the medical carrier, limiting direct employer control although it simplifies administration.

Common examples of carved-in plans include:

• UnitedHealthcare (medical) with OptumRx (pharmacy)
• Aetna (medical) coverage with CVS/Caremark (pharmacy)
• Cigna (medical) with Express Scripts (pharmacy)

Plan sponsors often select a carve-in structure for its operational simplicity, integrated member experience, and potential for clinical coordination across medical and pharmacy. It is more common for smaller and mid-sized employers, though some larger employers also choose carve-in models for administrative efficiency or bundled pricing, recognizing that customization and transparency may be more limited.

Carve-Out Pharmacy Plans: In contrast, carve-out plans allow employers to contract with separate medical and pharmacy benefit entities, giving the plan sponsor direct control over PBM selection, pricing models, and program design. Under this approach, an employer might use a national carrier, such as Aetna, for medical coverage while independently selecting a PBM. The employer could also layer in alternative solutions, such as specialty pharmacy carve-outs, alternative funding models, or clinically focused utilization programs. Carve-out arrangements are often favored by larger employers due to their flexibility, increased transparency, and ability to more directly manage pharmacy cost drivers.

Choosing between a carve-in and carve-out strategy is not purely an administrative decision, it directly influences cost structure, transparency, flexibility and the overall pharmacy benefit management. While carve-out plans typically offer greater control by design, both models can be optimized for increased transparency and reduced costs with the right strategy.

Carve-In Groups Can Still Control Pharmacy Spend

Historically, many plan sponsors and brokers have assumed that carve-in arrangements limit control over pharmacy pricing and contract terms. While carve-in structures do centralize PBM contracting with the medical carrier, employers are not without leverage and can still influence pharmacy outcomes while retaining the operational simplicity of a fully integrated plan.

By leveraging an independent pharmacy marketplace analysis, brokers and employers can benchmark the employer’s incumbent carve-in PBM renewal offer against comparable PBM offers available in the market. This type of exercise can provide objective visibility into how competitive the incumbent carve-in offer truly stacks up in the market and whether there is leverage to negotiate a better pharmacy deal.

Introducing credible, data-driven market comparisons strengthens the employer’s negotiating position and motivates the incumbent carrier and affiliated PBM to improve pricing and contract terms. Because carve-in carriers are typically accountable for both medical and pharmacy benefits, they may be more inclined to protect the combined relationship. The risk of losing the full account can create meaningful negotiating leverage, even within a bundled structure.

In practice, this approach encourages the incumbent carve-in PBM to sharpen their pencil, and often results in a more aggressive and employer-aligned pharmacy offer without requiring a full carve-out transition.

Carve-In Pharmacy Savings In Action

A carve-in Truveris client with more than 600 lives was approaching renewal with their incumbent PBM. Using the Truveris Marketplace, the client’s carved-in renewal offer was benchmarked against five comparable PBM market options, revealing that several alternatives were more competitive. Truveris then modeled the projected financial impact of each scenario using the client’s historical claims data to estimate expected pharmacy spend under each offer. Armed with these insights, Truveris supported the client in engaging the incumbent PBM with data‑backed benchmarks. To retain both the medical and pharmacy relationship, the incumbent PBM improved its renewal terms. The final outcome included a 25% reduction from the initial proposal, resulting in more than $120,000 in projected pharmacy savings in a single plan year, without requiring a carve-out transition.

In summary, carve‑in plan sponsors are not locked into suboptimal pharmacy economics. With the right market intelligence and claims‑based analysis, employers can negotiate stronger pricing, improved guarantees, and greater transparency within a carve‑in structure. To learn more about how to actively manage pharmacy spend for self-funded carve-in plans, connect with a Truveris pharmacy contract expert today.