For one large provider of rehabilitation and acute care services with over 40,000 plan members, there were several concerns about the new PBM contract. First, the new contract was supposed to deliver millions in savings, which was encouraging but difficult to validate. Secondly, previous benefit audits had shown delays in discounts, resulting in overpayments during the year and large settlements after year-end.
With invoices for over 35,000 monthly claims, representing many new and different drugs often with changing prices, how was the client going to be able to determine if the new contract was performing? Were savings delivered? And experience already showed that discount levels in the beginning of the plan year were often too low followed by higher discounts later in the contract year to compensate for a shortfall. These fluctuations resulted in overcharges early in the year, hurting some members, in particular those with HDCD plans. And for the plan itself, fluctuations in discounts disrupt cash flow not to mention lengthy discussion after close of the plan year to request adjustments to offset PBM underperformances.
Annual audits did identify the shortfalls very accurately but came with delays and unresponsive PBM’s had resulted in overcharges that had to be written off. So, to get ahead of the game, we combined the fact-based accuracy of audits with the speed of CM: As claims come in during the year, they now get reviewed and performance monitored on a monthly or quarterly basis, not when the year is over. As a result, the client works with the PBM to address issues during the plan year. Working with the PBM, the refunds were already calculated by the end of the first year, resulting in over $875,000.00 in refunds that otherwise might have been missed. And in the second year, after the first quarter, the PBM showed perfect discounts for non-specialty products and adjusted its pricing schedule already starting Q2 when the data showed that specialty pricing was off by more than $250,000.00.