Pharmacy Benefit Management for Employers to Manage Drug Costs, Claims, and Rebates

Employers need to know how drug claims work, how pharmacies get paid, and what fees they must pay. This is where pharmacy benefit management, or PBM, steps in. A PBM assists employers by managing drug benefits for their workers. It may review drug claims, coordinate with pharmacies, list the drugs covered by a plan, and track rebates from drug makers.

Kanurra assists employers in checking drug claims, costs, rebates and fees. Kanurra also helps employers learn about their options if they wish to change their PBM.

What Is Pharmacy Benefit Management?

Pharmacy benefit management is the way health plans handle prescription drug benefits. A PBM works with employers, health plans, pharmacies and drug companies to keep drug costs under control, process claims and manage parts of the drug benefit program.

Depending on the agreement, a PBM may take on these responsibilities:

• Prescription claims processing: The PBM handles the paperwork and payment when a member fills a prescription.
• Pharmacy network management: The PBM sets up agreements with pharmacies that are part of the health plan’s network.
• Formulary management: The PBM helps create a list of medications that members can use under the plan.
• Authorization: The PBM manages the process for reviewing certain drugs before the health plan will cover them.
• Rebate administration: The PBM works with drug makers to handle rebates and reports how much money is saved.
• Reporting and data access: The PBM provides information about prescription use, claims data and overall drug costs.

These services support the work of a prescription benefit program. Employers should also know how the PBM gets paid and how the total cost of the drug benefit is figured out. Learn more about Kanurra’s pharmacy benefit management services.

What Should Employers Look for in Pharmacy Benefit Management?

When checking employer pharmacy benefits, employers should look at more than just discounts or rebates. They should also check drug costs, extra fees, and how rebates are handled.

Important areas to review include:

• Pricing structure: Understand how the PBM calculates the amount charged to the plan for prescriptions.
• Administrative fees: Review the fees included in the contract.
• Rebate arrangements: Find out how manufacturer rebates are reported and credited to the plan.
• Claims data: Check whether detailed claims information is available for review.
• Specialty medications: Understand how high-cost and specialty prescriptions are managed.
• Coverage rules: Review formulary requirements and prior authorization processes.

Looking at these details together helps employers understand their drug costs and ask better questions. Kanurra explains more about PBM pricing and PBM rebates.

Understanding PBM Pricing and Rebates

PBM pricing can be hard to understand because one drug claim can have several costs. The pharmacy gets paid for giving out the medicine. The health plan pays based on its contract. The PBM may also earn money from service fees or other charges.

One area employers may need to understand is spread pricing. This happens when a PBM charges the health plan more than it pays the pharmacy and keeps the difference. Spread pricing may not apply, depending on the contract.

Employers should also look at manufacturer rebates. These rebates may be linked to medications and manufacturer agreements. A rebate number alone does not show the cost of a prescription benefit, so it must be considered together with drug pricing and fees.

When reviewing a PBM, employers can ask:

• What did the pharmacy pay for the prescription?
• What amount was charged to the health plan?
• What fees apply to the claim or to the arrangement?
• How much in rebates was received, and how much was credited to the plan?
• Can the figures be checked against underlying records?

Kanurra’s PBM pricing page explains the components of pharmacy pricing. Its PBM rebates page covers rebate tracking and how rebate amounts are credited to the plan. Kanurra does not add extra charges to drug claims through spread pricing or markups. It gives the plan all the drug maker rebates it receives and charges one set fee per employee each month. This fee is listed in the contract. Employers should always check their PBM contract to understand how they are charged.

How PBM Audits Help Employers

A PBM audit helps employers check their current drug plan and understand its costs. It looks at the details behind drug claims and costs, not just summary reports.

Depending on the available data and audit scope, areas to review may include:

• Prescription claims and the amounts charged to the plan.
• Pharmacy payments and applicable dispensing fees.
• Manufacturer rebates and the amounts credited to the plan.
• Administrative fees and relevant contract terms.
• Specialty-drug spending and other significant cost areas.

An audit can help employers find issues that need a closer look. It can also help them ask better questions about their current PBM or a new one. An audit does not mean an employer must change PBMs. Kanurra offers a PBM audit to help employers review drug claims, prices, and other costs. Checking the current plan first can help employers understand their options before making a decision.

Pharmacy Benefit Management for Self-Funded and Level-Funded Employers

In a self-funded plan, the employer pays for its employees’ covered health claims. Employers need to understand drug costs, PBM contract terms, and claim details to manage their employer pharmacy benefits. Kanurra helps employers learn about these topics through its self-funded PBM services.

In a level-funded plan, the employer usually pays a set amount each month. This payment may cover claims, plan services, and stop-loss protection. Employer pharmacy benefits may be part of this plan. Employers should check what their plan covers and what details they can review. Learn more about Kanurra’s level-funded PBM services.

These plans work differently. Employers should check their contracts to understand their costs, what information they can see, and how they can check their PBM’s work.

Switching PBMs: What Employers Should Consider

An employer may want to change its PBM if the service is not meeting its needs, costs are unclear, or reports are hard to understand. Before making a change, it should check its contract, fees, and rebates. It should also plan for workers who take regular medicines or need approval for certain drugs.

A transition plan may need to address:

• Eligibility and claims data transfer.
• Member communications and prescription benefit information.
• Existing prior authorizations and specialty medications.
• Pharmacy network arrangements.
• Timing, responsibilities, and implementation requirements.

Changing PBMs is not the only way to review drug benefits. Employers can first check their current costs and contract to decide if a change is needed. Kanurra shares guidance on PBM switching and implementation. Employers can also explore PBM alternatives to learn what to consider when comparing different PBMs.

Conclusion

Pharmacy benefit management helps employers take control of the cost of medicines for their employees. Employers can better manage their employer pharmacy benefits by looking at drug costs, fees and rebates. They do not always need to switch their pharmacy benefit manager. They can first check their plan, costs and contract to see if it fits their needs.

Kanurra helps self-funded and level-funded employers take control of their pharmacy benefits. Its services include looking at drug claims, prices, rebates and fees. Kanurra also helps employers look at their choices when changing pharmacy benefit managers. Want to find out how Kanurra can help your business take control of pharmacy benefits? Contact Kanurra to talk about your needs.