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What is a Pharmacy Benefit Manager?

Prescriptions blocked from processing

 Pharmacy Benefit Managers coordinate between pharmacies, insurance carriers, and other third party administrators in order to  guarantee payment and process pharmacy claims. Pharmacy Benefit Managers are shortened to PBMs, and the number of claims processed by PBMs have grown exponentially in the past decade. 

In fact, a PBM probably is responsible for processing the medications your doctor writes every month. And yet, you probably don't even know the name of the company that touches every one of your claims and stores your personal health information (PHI). Although PBMs are engaged in processing your medication they do not work for the patient and they have no interest in the standard of your healthcare. 

The three largest PBMs in the industry are CVS Caremark, Cigna (Express Scripts), and United Health Group (OptumRX). These PBMs handle private insurance, medicare, worker's compensation, and auto no-fault.  Drugchannels.net estimates for 2020

...The big three PBMs—CVS Health (including Caremark and Aetna), the Express Scripts business of Cigna, and the OptumRx business of UnitedHealth Group—processed about 77% of all equivalent prescription claims. The top six PBMs handled more than 95% of total U.S. equivalent prescription claims.

If you have ever called the pharmacy benefits phone number on your insurance card, you might have experienced frustration or even anger. Unfortunately, PBMs are meant to act as gatekeepers in the best interest of the insurance carrier. They contract with insurance carriers and third party administrators (TPAs) with the promise of reducing pharmacy costs for the carrier. They manage in this in a couple of different ways. 

The first is that they "choke" the number of pharmacy claims allowed to process with a series of restrictions and rules. In previous post, I discussed Debbie the Vet Tech who got scratched by a cat. The pharmacy benefit manager who contracts with her employer's worker's comp insurance might automatically reject all medications that cost over $50 for a First Fill on a claim, and they may require prior authorization on all antibiotics. In this way, they protect the insurance carrier from paying $50 it might not want to spend, but it does absolutely nothing to help Debbie with her infected finger. 

stacks of money they make off the patient

The second way they reduce costs is that they contract in-network pricing with pharmacies. The pharmacies agree to accept payments at a percentage of their normal insurance rates. So Debbie's antibiotic might have an average wholesale price (AWP) of $5 and retails at $15, and the pharmacy will agree to accept paying of $7.50 instead of $10. The PBM then bills the Insurance for $10 instead of the retail $15, pays the pharmacy, and makes $2.50 for the exchange. The insurance carrier saves $5 off retail, thus reducing overall pharmacy claim costs. They can use this demonstrable reduction in costs to negotiate better contracts with employers, thus securing future profit. 

Who is left out of this circle of profit? 

Debbie. 

Who might go home that night without her antibiotics? 

Debbie. 

Patient Services Solutions is here to cut through all that red-tape and complications. We have the necessary experience to navigate the rules, restrictions, requirements, and denials to secure approval and verify Debbie will receive her medications. 

Pharmacy Benefit Managers exist to make a dollar off every patient and every pharmacy, but they have no obligation to help any patient or any pharmacy. Stop dealing with them--let us deal with them for your. 


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