How pharmacy benefits fit into a level-funded plan
A level-funded plan pairs a predictable monthly payment with self-funded mechanics. The employer pays a fixed amount covering administration, stop-loss protection, and a claims fund, and member claims are paid out of that fund as they come in. Depending on the arrangement, unused claims funding may be settled or refunded after the plan year.
Pharmacy usually rides inside the package. It is often bundled with the carrier, TPA, or program administrator rather than contracted on its own, so there is no separate pharmacy agreement to read. That leaves the pricing, the rebates, the fees, and the decision rights hard to see from the outside. What you can inspect or change is set by the contracts in force.
What employers should examine
This is where the money and the decisions actually sit.
01
Claims-level drug pricing
What the plan is billed for each fill, and how that compares to what the pharmacy was paid. An aggregate discount measured against list price can look strong while the individual claims underneath it do not.
02
Rebates and manufacturer revenue
Rebates are only part of what manufacturers pay. Administrative fees, data fees, and other payments can flow to the PBM or an intermediary under names that are not “rebate,” and they are usually governed by a different clause than the one you were quoted.
03
Administrative and dispensing fees
Per-employee-per-month administration, per-claim charges, clinical program fees, dispensing fees, network and data fees. Some of them are paid to parties the employer never contracts with directly. The ones that grow with spend deserve the most attention.
04
Specialty-drug costs and routing
Specialty is a small share of claims and a large share of spend. Look at which pharmacy fills these prescriptions, how the price is set, and whether the routing follows the clinical need or the vendor economics. In a small group, one specialty member can move the whole year.
05
Formulary decisions
Who owns the formulary, how often it moves, and what notice members get before it does. Placement can follow manufacturer revenue rather than cost or clinical evidence, and the difference is invisible from the outside.
06
Prior-authorization visibility
Who writes the criteria, who reviews the requests, and how long a decision takes. Approval and turnaround rates say more about how the benefit treats your members than any service-level promise.
07
Reporting and underlying data
A summary describes the benefit. Claim-level data lets you check it. Find out which one you get, in what format, and how often.
Questions to ask your carrier, TPA, or PBM
- 01Can we review pharmacy claims at the line-item level?
- 02Which rebates and other manufacturer payments are generated, and where do they go?
- 03What fees are charged across the pharmacy benefit?
- 04Who controls the formulary and specialty-drug routing?
- 05Can we export the underlying data and share it with an independent reviewer?
Whether an employer can review, replace, or carve out its PBM depends on the carrier, TPA, contract, and plan structure.
What makes a PBM auditable
If a number on your pharmacy report looked wrong, could you open the records underneath it and find out why? That is the test. Everything else is a dashboard.
What you usually get
Summary reporting
- Spend rolled up by period and category.
- Discount and rebate performance stated against guarantees you cannot recompute.
- Metrics chosen by the party being measured.
What lets you check it
Auditable administration
- Claims itemized rather than rolled up.
- Fees named individually instead of folded into a price.
- Rebates credited to the plan and shown as they arrive.
- Formulary and prior-authorization decisions attached to the criteria applied.
How Kanurra works
Kanurra gives employers access to the data underneath their pharmacy spending: claims, rebates, formulary decisions, and the costs behind each claim.
- Built for self-funded and level-funded employers.
- Real-time claims data that can be reviewed at the line-item level.
- Rebates received are credited back to the plan.
- A straightforward per-employee administrative fee.
- Visibility into claims, formulary decisions, rebates, and how pharmacy costs are managed.
What Kanurra earns on, and what it refuses to earn on, is spelled out on the about page. To see this run against your own claims rather than described, request an audit.
Frequently asked questions
What is a level-funded PBM?
Not a separate kind of company. It is the pharmacy benefit manager serving a level-funded plan, whether it comes bundled inside the carrier or TPA program or is contracted on its own. The difference from a self-funded arrangement is usually access: pharmacy arrives inside a package, so the employer has to ask for what a standalone contract would have spelled out.
Does every level-funded employer choose its own PBM?
No. In many programs the PBM comes with the package and is chosen by the carrier or program administrator. Some arrangements allow a different PBM or a pharmacy carve-out, often only at renewal. Your contract and plan documents settle it.
Can an employer audit a bundled pharmacy benefit?
Sometimes, and usually less completely than expected. Audit rights, the data you receive, and whether you may hand it to a third party are all contract terms rather than defaults. Ask what claim-level data you are entitled to, in what format, and how far back it reaches.
What information is needed to evaluate PBM performance?
Claim-level detail with drug identifiers, quantities, dates, and the amounts charged to the plan and paid by the member. The full fee schedule, the rebate terms, and what has actually been credited. Definitions matter as much as the numbers: discount off list and generic effective rate can each be measured more than one way.
What pharmacy costs should a level-funded employer review?
Total pharmacy spend split between the plan and members, specialty spend and how few claims carry it, the highest-cost claims and where they were filled, generic substitution patterns, and every administrative and dispensing fee. Then rebates, net of anything retained along the way.
How can Kanurra help evaluate an existing PBM arrangement?
Kanurra runs a PBM audit against your own claims: pricing, rebates, fees, and specialty spending, with the detail shown rather than summarized. It is a review of the arrangement you have now, not a commitment to change it.
See what is happening inside your pharmacy benefit
Review the claims, rebates, fees, specialty spending, and pharmacy costs affecting your plan.
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