Top 3 Things You’ll Learn
- What claims integration is
- Who benefits from integrated medical and pharmacy data
- Why integration isn’t just available for PBMs
As any broker knows, it’s important to have a playbook for all selling situations. In my discussions with brokers about RxBenefits’ self-funded solution and eliminating carve-out to TPAs, I always found the topic of integration to play a pivotal role. All I needed to do in a sales or finalist meeting was ask whether integration was important to the group, and I knew the broker was going to ask the next rep about their company’s ability to “integrate.” This is because while it may not be top of mind for the broker to ask, at the end of the day integration is an important differentiator that is not just available for pharmacy benefits managers (PBMs). Integration can extend to the TPA and serve as a new value add they can offer to their clients.
Why TPAs Need Integration
TPAs sell a couple of key components that the big medical insurance carriers cannot offer: the best service, true plan customization, and hands-on medical management. Their goal is to treat the employer’s money as if it were their own. Therefore, the ability to integrate – while having the best contracts and clinical oversight available – is important to providing an optimal pharmacy benefits program.
All of this raises some questions: What is integration, who does it really help, and why can’t a TPA offer it?
Coordinating in “Real Time”
The insurance definition of integration is the ability to see and coordinate medical and pharmacy claims in “real time.” Integration connects the members claims experiences behind the scenes so that they don’t have to worry about paying more than their plan guided out-of-pocket amount. Integrated benefits enable the carrier to keep unnecessary claims out of the system, eliminating wasteful spending and reducing member dissatisfaction.
I hope you caught “real time” being in quotes. It’s important to note that “real time” in the insurance world isn’t truly real time as you or I would expect it to be. After a patient visits their provider, they need to wait for that provider to submit the claim to the insurance carrier. The member could easily fill one or multiple prescriptions before the medical claim hits the system, which is not exactly real time. Essentially, “real time” refers to as close to the actual time as possible.
How Claims Integration Works
Now consider how things work between a TPA and their PBM. Some brokers criticize the coordination between the TPA and their PBM as slow and clunky, to the point that neither company knows what the other is doing. However, given today’s technology, most PBMs can send and receive daily accumulator files to their TPA relationships. These files are the key to keeping members happy and their dollars in their pockets. No more reconciliation needed – just like the big carriers.
Besides the ability to send daily claims files to their TPA clients, some PBMs also can grant their TPA customers access into their systems to view claims flow in real time to help them better service their groups and coordinate with their own medical management team. Add to this the ability to send a file detailing all prior authorizations (PAs) that have occurred and sharing the methodology for a PA, and the TPA has more than enough information to be integrated.
Hidden Costs of Carrier-PBM Integration
Taking everything into account, what if I told you that the large insurance carriers’ integrated health plans (Blues, United, Cigna, and Aetna) have pharmacy costs that run 4.3% higher than other insurance offerings? Maybe 4.3% doesn’t seem like a lot, but what does that really equate to for your clients? For $100K an employer spends on prescription drugs, 4.3% could cover a building rent payment. On $1M in pharmacy spend, 4.3% could cover an employee salary.
As you’re thinking about a way to show what 4.3% of pharmacy spend means to a broker, client, and prospect, let’s dive deeper into what’s driving this differential. I would like to tell you it’s something you wouldn’t expect, but truly, it’s revenue. For most plans, the carrier is keeping the rebate dollars, begging the question, what is their motivation to deny a PA? What incentive do the carriers have to clean up their formulary and remove low clinical value drugs? What’s in it for them to carefully verify the appropriateness of a prescription?
The Bottom Line
It’s time to shift the focus to your clients and their members. This means changing the perception of what plans can be integrated and how carving-out pharmacy to a TPA backed by a Pharmacy Benefits Optimizer (PBO) could be the best way to control pharmacy plan costs. Only then can we truly start talking about how to zero in on prescription drug cost drivers and optimize pharmacy spend.
RxBenefits Book of Business Analysis, 2021