THE CHALLENGE: As plan sponsors have increasingly come to realize, getting their hands on their own company’s medical claims data can be a huge, drawn-out hassle with the insurance company. Sometimes the carrier will cooperate, but more often than not, they’ll make the excuse that they need to keep the details from the plan sponsor to stay competitive. In other words, no, they won’t share that data. That, unfortunately, leaves employers in the dark, unable to discern where their money is going and how much they’re paying for care or medications. Spurred on by legislative changes that have placed them squarely in the sights of regulators and class-action lawyers, employers have lately turned to the courts for relief, filing lawsuits alleging that insurers are squandering their money. This was, in essence, the quandary facing our client, a self-funded charter school with more than 500 employees, an increasingly larger annual healthcare bill, and growing frustration over its inability to control, in particular, its pharmaceutical expenses.
OUR SOLUTION: The insurer in this case decided to dig in its heels on our client’s detailed medical plan data. It would not comply, cooperate, or collaborate – not without charging the client thousands of dollars more a year. We were, however, able to get our hands on the plan’s pharmaceutical claims history. That data – about 100,000 fields of information – revealed close to $750,000 in drug claims for the most recent 12 months. The team made three more key discoveries:
- The plan wasn’t doing much to encourage participants to make their medication purchases anywhere but at expensive retail pharmacies.
- In many instances, only single-source, high-cost brands were made available to participants.
- Our client wasn’t getting many of the manufacturer rebates or price breaks that a switch to an independent Pharmacy Benefits Manager (PBM) would yield.
With that knowledge, our data analytics team then leveraged benchmarking figures to compare and contrast our client’s spend against other available options.
THE OUTCOME: Based on our recommendation, the client made a small but important pivot. It stayed with the carrier but carved out and shifted management of its pharmacy benefits to a PBM. Its administrative cost for drug benefits is higher today, but the savings it’s expected to realize – about $500,000 overall – will more than offset that expense, thanks to a PBM that can use its volume purchasing power to win price concessions and discounts from drug makers. Finally, we also saved the client and its participants money by streamlining its tiered offerings to make them more affordable to families in the plan. In short, our client and its enrollees are now getting better healthcare for less.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. An employee-owned organization, we’ve been providing our clients with the confidence to face whatever lies ahead for more than 100 years. For more information, contact us online or call 877-440-3304.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.