Why Carving Out Your RX May Be a Good Idea

 In Group Health Insurance

Why Carving Out Your RX May Be a Good Idea

Carving Out Your RX

As an employer, finding the right prescription plan is an important factor in your employee benefits offerings. If you’re looking for a way to reduce costs and give your employees better options, then carving out your RX is a good idea.

A pharmacy “carve-out” allows a plan sponsor to choose a Pharmacy Benefit Manger (PBM) to manage prescription drug benefits on their own. They are standalones from the PBM who is contracted with the health plan which administers claims. Carve-out RX plans can be either fully insured or self-funded.

The advantages of “carve-out” plans provide a strong case for switching gears on your plan. Here’s how to carve out your RX for the benefit of your personal budget or employee benefits plan.

How to “Carve Out” Your RX

The first step is to begin the carve-out process with an employer’s health plan for prescription drug coverage. Prescription benefits are one of the best money makers for insurance carriers and even specific PBM’s, but that doesn’t have to mean you lose money. Small employers with 50 or fewer employers can now use self-funded prescription plan options to reduce costs.

The next step is to use the right Prescription Benefit Manger. The goal is identifying one who is transparent and clearly working for you, not the pharmaceutical or insurance companies. They should only charge for prescriptions processed. With their help, you can isolate rebates that add to cost savings for you.

Another important part of this process is to do your own research. It’s a good idea to understand how the Average Wholesale Pricing (AWP) discounts work. The primary reason is to get a good handle on what pricing is acceptable and what isn’t. Discounts aren’t always the most important selling point. High discounts could in fact reveal a higher mark up on prescription costs for generic drugs than is acceptable. Higher priced drugs are particularly vulnerable to this type of ‘up-selling’. A professional PBM can isolate the correct pricing for your prescription plan reducing the overall costs.

Finally, hiring a transparent PBM not only helps you reduce costs based on a consistently lower prescription drug plan, it also enables you to reap benefits as factors change within the industry. They also guarantee compliance, disease management and advocacy for your employees. To determine how to carve-out your RX plan, hire a HCI who can do the heavy lifting for you.

3 Advantages of Carving Out Your RX

PBMs provide immediate discounts and improved clarity in your employee benefits plans. But here are three specific benefits of using them to carve out your RX.

  • Flexible Plan Designs Reduce Costs

Instead of paying for coverage on rarely used, and extremely expensive, prescription drugs, you can work with a PBM who can in turn create a detailed plan that is flexible to the needs of your employees. This allows you to adjust with the market, reducing coverage in areas where prices are higher than normal. Flexibility is always an advantage in the insurance market.

  • Pass-Through Rebates

Professional PBMs allow you to get better pricing through rebates. They will invoice you for every drug dispensed according to the PBM’s cost for the drug. This means you get prescriptions at wholesale prices after rebates. These pass-through costs are one of the greatest advantages to carve out RX plans.

  • Audit Rights

With a carved-out prescription plan, you have the right to audits. This includes claims audit, operational assessments, and rebate audits. This guarantees complete transparency on costs and expenditures. Access to pharmacy claims data also ensures you’re getting the best deal available.

Employers Benefit Greatly from Carve-Out Plans

Cost containment is the number one reason of carving out your RX plans. Prescription drug care is by far the most used healthcare coverage employee benefit. Pharmacy costs take care of about 30% of all healthcare costs. With an increase in prices for prescription drugs, it’s logical that employers will turn their attention to carve-out plans for their employees.

If you’re interested in better controlling pharmacy benefit costs, then carving out prescription drug benefits from your major-medical plan, is a good route to go.

To benefit from transparent drug pricing, auditing control, reduced costs for prescriptions, and so much more, consider carving out your prescription drug plan for your employee benefits.

For more information about carving out your RX in Texas, contact the HCI team. We’d be happy to help.

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