I received multiple comments and questions to my recent article on the value of the Rx carve-out to your Medical plan. Here's an "around the globe" take highlighting the most frequent questions/feedback I received via my email and comments to the post:
--Question - "Don't you lose the stop-loss coverage for Rx claims when you use a carve-out PBM and
separate Rx claims from other medical claims covered by stop loss protection?" First up, a quick definition of stop-loss coverage for those not familiar with the term. Stop-loss coverage is the reinsurance companies secure to protect themselves against the negative financial impact of catastrophic claims. Pay the premium, and the coverage can protect you against the impact of a 150K bill for a single employee, or 1M more in total costs than you were expecting from a down year. Answer from The Capitalist - My experience is that Stop Loss coverage is based on your past experience, and most stop loss providers will allow you to make changes (especially aggressive moves that will save $$$ against the plan), even during the coverage year. You'll need to gain their approval/check-off, but this won't be a barrier to making the move.
--Question - "How does a HR person know what kinds of drugs need to be on the formulary? The PBMs do not look out for the best interests of the employer, they look for their own profits." Answer from The Capitalist - Good news in this area. If you have a quality broker, they'll land you with a quality PBM that will help you deal with the big Rx providers. For example, I have a PBM (I'm defining that as the firm that serves as the consultant to help you structure your plan with Caremark or AdvancePCS) that helps us deal with plan design and what categories are covered by our plan. As for the actual formularies, you don't have a lot of control over those - the big providers like Caremark and Advance define what is preferred and non-preferred by category, but you get to choose whether you want to cover a certain category of drugs (meaning you can opt in or opt out of covering conditions like adult ADD, adult complexion problems, conditions treated by drugs like Viagra, etc.). While the skeptic in me agrees with you that the big Rx providers aren't incented to help you drop your cost structure, the proof is in the results - and the Rx carve out helps you control costs. The big providers like Caremark and Advance have to pass along a large degree of the savings to the employer, or the PBM consultant (the firm that guides you to one of the big providers) will guide employers elsewhere. Typically one of the big providers in in "market share" mode, which means the biggest savings. As a result, that is who you'll probably go with when you shop the carve-out.
--Comment - "All Blue Cross Blue Shield organizations aren't alike. By labeling BCBS organizations as generally inflexible when it comes to Rx, you are using a generality that doesn't give proper credit to the best BCBS organizations." Answer from The Capitalist - No question there are different BCBS approaches when it comes to Rx. Additionally, a BCBS org can be world class when it comes to their provider network and discount levels, but Rx can still be a weakness. Shop around and be a smart consumer when dealing with BCBS orgs. Better yet, explore doing business with multiple BCBS orgs if you can handle the ITS fees associated with doing business outside their local state network.
Keep the questions coming. I'll answer them or get someone who can. Be a capitalist when shopping your plan.
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