We recently caught up with Nick Karls, director of compliance at Holmes Murphy and Associates, and Nathan Cassin, pharmacy benefits consulting director, to discuss fiduciary responsibilities, PBM contracts, and litigation risks.
How can brokers help employers mitigate risks related to their Pharmacy Benefit Management (PBM) contracts?
Brokers and consultants can assist employers in mitigating risks by thoroughly reviewing their PBM partners, contracts, and clinical program strategies to identify current and future issues relating to pricing transparency, rebate structures, and formulary management. Another solution is for brokers to help employers evaluate terms and ensure contract language aligns with fiduciary standards.
What fiduciary responsibilities do employers need to be aware of when managing prescription drug benefits?
The main fiduciary responsibility that an employer needs to be aware of when managing their prescription drug plan is the duty of prudence. They want to be able to show that they are carefully evaluating their PBM options, using that evaluation to select the best PBM for their plan, and finally that they’re monitoring the PBM they selected. It is not a “set-it-and-forget-it” situation; employers need to stay involved from start to finish.
What steps can fully insured and self-insured plans take to reduce litigation risks?
Steps that these types of plans can take to reduce litigation risks begin with thoroughly reviewing all contracts to identify potential savings and ensure optimal terms. Regular monitoring of pricing trends, fee structures, and plan performance helps organizations stay ahead of cost increases and negotiate better rates when necessary.
Connecting with industry experts, consultants, and benefits specialists can provide valuable insights and strategies that might otherwise be overlooked, helping to optimize the overall healthcare cost management strategy.
To cap it all off, employers should be able to document and demonstrate the steps listed above. Being able to effectively show that the employer as the plan sponsor is doing all that it can to control plan costs and get the best benefits possible for their plan spend will go a long way toward staving off expensive litigation.
What questions should employers be asking about their current prescription drug benefit structure?
- “Does my pharmacy benefit contract align financial incentives across key stakeholders (ex: member, plan sponsor, PBM, pharmacy)?”
- No one stakeholder should gain at the expense of another, especially when delivering healthcare.
- Consider an acquisition cost-plus pricing model, where every stakeholder is reimbursed at a transparent and competitive price, so they can focus on delivering quality care for members.
- Robust audit and reporting rights are key to ensuring there are protocols in place to track spending patterns and identify potential cost-saving opportunities.
- “Does our PBM have an incentive to quickly put low-list price biosimilars on formulary?”
- Many PBMs have bundled rebate contracts with drug manufacturers, which prevent them from adopting lower cost biosimilars on formulary, less they forgo rebates on other branded products manufactured by that drug company.
- Keeping expensive branded products on the formulary increases costs to members and to plan sponsors when lower cost agents are available to treat the same condition.
- Competition lowers prices, plain and simple. If your PBM is a slow adopter of biosimilars, it may be time to re-evaluate your PBM options.
- “How are my clinical and utilization management programs aligned with our employees and their families needs?”
- Utilization management should support evidence-based care, including comparative effectiveness research. It should not be an obstacle to care or serve as a profit motive for any stakeholder.
- Clinical programs must have a definable value beyond an ROI (ex: concierge for treatment, closing gaps in care, safety reviews and monitoring, fraud, waste and abuse, aligning to clinical guidelines), otherwise they may be serving a different purpose, like driving revenues for other stakeholders.
- Additionally, employers must carefully consider how their benefit decisions align with their employees’ healthcare needs, taking into account factors such as prescription drug utilization patterns, demographic health trends, and feedback from their workforce.
How can brokers support employers in ensuring compliance, managing legal exposure, and planning strategically?
It’s all about information. Brokers and consultants can best support their clients by maintaining a constant conversation regarding how their plan is designed, how it’s performing, how it compares with other plans for similar employers, and how the plan’s overall structure and performance compares to the plans that are being targeted for the novel class action lawsuits.
Source: benefitspro.com
