How pharmacy benefits fit into a self-funded plan
In a self-funded plan, the employer generally takes responsibility for paying covered claims instead of paying an insurance company a fixed premium to assume that risk. The employer may work with a third-party administrator or outside provider to manage administration, claims, networks, and other functions, while stop-loss coverage can help protect against unusually large claims.
That makes the pharmacy benefit different from a line item that can simply be handed to a carrier and forgotten. The PBM processes prescriptions, manages the pharmacy network, applies the formulary, handles rebates and manufacturer arrangements, and determines what the plan is charged for each prescription, but the employer is ultimately funding the benefit. For employers evaluating a more auditable approach, Kanurra focuses on helping plans better understand and manage their pharmacy benefit economics.
The important question for a self-funded plan is not just what the PBM says it saved, but what the plan actually paid. Employers should be able to see the price behind each claim, understand every fee, know where rebate dollars went, and verify that the benefit is being managed in the plan’s interest. That is where auditability becomes more than a reporting preference: it becomes a practical way to understand the economics of self-funded healthcare spend and manage it more effectively.
What employers should examine
This is where the pharmacy spend becomes understandable.
Claims-level drug pricing
A PBM can report a strong overall discount while individual claims still contain spread or other pricing differences. Aggregate performance does not tell you what happened on a specific fill.
You should be able to open a claim and see the underlying drug cost, dispensing fee, amount charged to the plan, and any applicable rebate. This level of visibility is essential for evaluating self-funded healthcare costs.
PBM spread and markup
Ask whether the PBM makes money from the difference between what the pharmacy receives and what your plan pays.
Under a spread arrangement, the amount the plan is billed can be different from the amount paid to the pharmacy. That difference can be difficult to see in a standard utilization or savings report.
An auditable self-funded PBM should make the economics visible rather than asking you to rely on a summary number.
Rebates and manufacturer payments
Rebates can represent a meaningful part of pharmacy economics, but the word “rebate” does not tell you the full story.
Ask which manufacturer payments are generated, what other fees are associated with them, when the money is received, and how much is credited back to the plan.
The important number is not simply the rebate percentage. It is what your plan actually receives and how those dollars affect your total self-funded healthcare costs.
Administrative and pharmacy fees
Review every fee associated with the pharmacy benefit. That can include administrative fees, dispensing fees, clinical program fees, data fees, network fees, or other charges included in the PBM arrangement.
A low-looking PEPM fee does not tell you the full cost if additional revenue is generated somewhere else in the contract. Your team should be able to identify every way the PBM gets paid.
Specialty-drug spending
Specialty drugs can represent a large share of pharmacy spend even when they account for a much smaller number of claims. For a self-funded plan, that makes specialty management especially important.
Look at the highest-cost claims, where those prescriptions are being filled, how pricing is determined, whether specialty pharmacies are being required, and whether the routing decision is based on clinical needs and cost evidence.
One or two high-cost members can materially affect a smaller plan’s pharmacy spend and overall self-funded healthcare budget.
Reporting and underlying data
A dashboard can tell you what happened. The underlying claims data lets you check why it happened.
For a self-funded employer, that distinction matters. You should know whether you can access claim-level information, how often it is updated, what fields are included, and whether you can export the data for independent review.
A report is useful. An auditable record is better for managing self-funded healthcare with confidence.
What makes a self-funded plan PBM auditable
If your company is paying the claims, you should be able to follow the money.
What you usually get
Summary reporting
- Total pharmacy spend by month or quarter
- Generic, brand, and specialty utilization
- Discount guarantees presented against benchmark prices
- Rebate totals shown without the underlying claim detail
- Performance metrics selected and calculated by the PBM
What lets you check it
Auditable administration
- Claims itemized down to the individual fill
- Pharmacy acquisition cost and dispensing fee visible
- No hidden spread between the pharmacy payment and plan charge
- Rebates credited back to the plan and shown in the ledger
- Fees identified separately rather than embedded in another number
- Formulary and prior-authorization decisions tied to the criteria applied
- Data available for review outside the PBM’s own reporting dashboard
Summary reporting is useful information, but difficult to independently verify. For a self-funded employer, auditability means being able to move from the total at the top of the report all the way down to the individual claim underneath it.
How Kanurra works
Kanurra is built around a simple model: make the pharmacy benefit understandable at the claim level.
The drug cost passes through at the price Kanurra pays the pharmacy. There is $0 spread or markup, and 100% of manufacturer rebates Kanurra receives are credited to the plan. Kanurra’s revenue comes from one flat, disclosed per-employee-per-month administrative fee.
- Built for small and mid-size self-funded and level-funded employers
- Claims data that can be reviewed at the line-item level
- Pharmacy cost and dispensing fees shown separately
- $0 spread or markup on claims
- 100% of received manufacturer rebates credited back to the plan
- One flat per-employee-per-month administrative fee, disclosed in the contract
- Visibility into formulary and prior-authorization decisions
- Specialty spending that can be reviewed rather than hidden inside aggregate reporting
The goal is not to give you another dashboard. It is to give your team a pharmacy benefit they can actually inspect.
Kanurra also does not require a network change as part of its model. Before a transition, it can run a disruption analysis, handle eligibility and member communications, and maintain continuity around open prior authorizations, specialty, and GLP-1 therapies. The full sequence is on switching PBMs, and plans that carry less of the risk themselves have their own page on level-funded PBM.
Frequently asked questions
What is a self-funded PBM?
A self-funded PBM manages the pharmacy benefit for an employer-sponsored plan where the employer generally carries the financial responsibility for covered claims. The PBM handles functions such as claim processing, pharmacy networks, formulary management, and other pharmacy-benefit services.
Is a self-funded plan the same as a self-funded health plan?
Yes. “Self-funded plan,” “self-funded health plan,” and “self-insured plan” are commonly used to describe an arrangement where the employer or plan sponsor assumes responsibility for paying covered healthcare claims. The exact structure can vary, including whether the employer uses a TPA, ASO arrangement, or stop-loss coverage.
Why does PBM auditability matter more for self-funded employers?
Because the employer is funding the claims. Every dollar spent on pharmacy ultimately affects the plan’s healthcare costs. A difference between pharmacy acquisition cost and the amount charged to the plan, retained rebates, or additional fees can therefore affect the employer directly. The first step is knowing what is actually inside the number your PBM reports.
What should a self-funded employer look for in a PBM?
Start with economics. Look for claim-level pricing, clear pharmacy payments, auditable fees, rebate treatment, formulary ownership, specialty-drug management, prior-authorization processes, and access to the underlying data. The easiest test is simple: take one prescription from your report and ask whether you can trace exactly how the plan arrived at the amount it paid.
Can a self-funded employer audit its PBM?
That depends on the contract and the data and audit rights available to the plan. A useful audit should go beyond a high-level discount guarantee. It should examine actual claims, pharmacy pricing, rebates, fees, specialty spending, and the terms that govern how the PBM earns money. Kanurra offers a no-cost claims audit that runs your existing pharmacy claims through its flat-fee model and shows the economics line by line.
How does Kanurra make money?
One flat per-employee-per-month administrative fee. Kanurra does not earn money through spread, retained rebates, formulary placement, pharmacy steering, or volume-based fees.
Does switching PBMs mean changing pharmacies?
Not necessarily. Kanurra’s current model is designed around keeping the existing pharmacy network rather than requiring members to change pharmacies. Before implementation, Kanurra runs a disruption analysis and works through eligibility, member communications, prior authorizations, specialty, and other transition details.
How does Kanurra help a self-funded employer?
Kanurra gives the employer visibility into the parts of the pharmacy benefit that are often summarized: claim-level pricing, dispensing fees, rebates, formulary decisions, prior authorization, and specialty spending. The goal is simple: make it possible for the employer to check the math rather than accept the PBM’s summary of it.
See what is happening inside your self-funded plan's pharmacy benefit
Your company funds the benefit. You should be able to see where the money goes. Review your claims, rebates, fees, specialty spending, and PBM pricing before making another decision based on a summary report.
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