Do you know how much your company spends on pharmacy benefits? If you don’t, you’re not alone. Many employers and benefits managers feel stuck in a plan that they can’t oversee or control. With the cost of pharmacy benefits rising each year, businesses are turning to carve-out plans that allow them to work directly with a pharmacy benefit manager (PBM) for more oversight and less cost.
What is a Carve-Out plan vs. a Carve-In plan?
Carve-out and carve-in plans are two options employers have for managing different medical benefits provided to their employees.
Carve-outs enable employers to contract with a separate company to “carve out” benefits that focus on a specific disease: like diabetes; or cancer and other specialty treatments; or a particular service, like pharmacy benefits.
Alternatively, a carve-in plan leaves all healthcare arrangements under one roof, controlled by a single medical provider. In the case of a pharmacy benefits plan that’s carved in, a company’s medical provider holds the PBM contract, handling the benefits and costs while the company remains one step removed.
What Is a Pharmacy Carve-Out Plan?
A pharmacy carve-out is when an employer separates, or carves out, their prescription drug benefits from their major medical plan to contract directly with a PBM. Today, many companies, from large Fortune 500s to small and medium-sized businesses, are carving out pharmacy benefits, and for good reason. In contrast to a carve-in strategy, carve-out plans give employers better control over pharmacy benefit costs, a crucial consideration as the costs of prescription drugs continue to rise.
Carve-out plans give employers transparency into their pharmacy benefits, allowing them to have greater understanding and control of spending, negotiate better deals, and ensure the program is performing as promised. Contracting directly with a PBM gives employers direct access to the cost of their pharmacy benefits, and the data to evaluate program performance.
Why Companies Are Turning to Carve-Out Plans for Pharmacy Benefits?
Prescription drug coverage is the single most utilized health care benefit — trending annually at 15 to 25 percent. With the cost of prescription drugs rising, the resulting increase in healthcare spending is impacting the bottom line. Carved-in employers often feel out of the loop as they can’t access accurate data about their pharmacy benefits spend.
Carve-out plans, however, can offer greater transparency and control, both critical components for helping employers and employees manage prescription drug costs. They also give employers direct access to PBMs who are knowledgeable about pharmacy benefits. With many high-priced prescription drugs, a carve-out plan allows companies to focus attention on managing pharmacy benefits costs separately from the rest of their medical plan. In addition, maintaining an effective pharmacy benefits plan keeps patients from shouldering too much of the cost of prescription drugs.
A carve-out plan can offer employers another strong solution for offering a complete pharmacy benefits program while also keeping spending in line. The first step is to work with your PBM to achieve the transparency and cost savings every employer needs.
For companies considering a carve-out plan, Truveris can help. Our technology, combined with our team of experts from across the pharmacy benefits chain, help companies get the best PBM contract prices without sacrificing the quality and flexibility necessary for plan members.