Carve-In vs Carve-Out: Pharmacy Benefits Options for Employers

When considering carving out your pharmacy benefits plan, it’s important to understand the key differences between the two arrangements.

What is a Carved-In Pharmacy Plan?

In a carved-in arrangement, the pharmacy benefit is baked in with the medical benefit, usually run by a large health plan or a third-party administrator (TPA). In that type of arrangement, the plan sponsor has little visibility into the performance of their pharmacy benefit. There aren’t client-specific rates or rebates. There usually aren’t auditing rights. Maybe most importantly, they don’t have the oversight of their plan, and there’s no way to hold the health plan accountable for the performance of their pharmacy benefit.

What is a Pharmacy Carve-out?

In a carved-out arrangement, that means the pharmacy benefit is peeled away from the medical benefit and managed outside of the health plan’s influence. This is great for plan sponsors as they have more visibility into their pharmacy contract. They have auditing rights, and typically discounts and rebates are guaranteed at the client level. This gives the plan sponsor the necessary insight into how their plan is being run from a clinical perspective, giving them more options as it relates to proactive and tailored clinical management.

Comparing the Options

When I talk to brokers about the options to carve out or remain carved in, what their plan sponsors want, and how we can achieve their goals, the first step is to conduct a financial analysis. Give us a claims file and some contract information, and we can run an apples-to-apples comparison of how your client would have purchased those drugs on the same dates of fill to see if there’s an opportunity for savings or better management of that pharmacy plan under a carve-out contract.

How RxBenefits Can Help

In our free comprehensive pharmacy analysis, we look at everything from guarantees, rebates, single source generic language — terms and conditions that might not favor the client. From there we run a side-by-side, claim-by-claim analysis to look for financial opportunities. We even take it a step further by looking at clinical opportunities, by drilling down into that claims utilization to find opportunities to eliminate waste but also maximize healthcare outcomes for members.

Download our free ebook to find out more about the differences in carving-in versus carving-out pharmacy benefits.

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