building a positive pbm vendor relationship

Building a Positive PBM Vendor Relationship

NASCHIP Meeting October 15, 2008

Amie Goldman, CEOHealth Insurance Risk-Sharing Plan [email protected]

Vernita Bridges-McMurtrey,Executive DirectorMissouri Health Insurance [email protected]

Alan Kellogg R.Ph.HealthLinX, [email protected]

Ken Anderson, PresidentIPC, [email protected]

Introduction of Presenters

Why Embark on a PBM Procurement

BackgroundPharmacy Benefit Management included in Plan Administrator contract.

PBM was a subcontractor to TPA


ConsequencePBM contract not competitively bid

Fees are small portion of total TPA costPBM cost is more than admin fee (e.g. rebates and drug pricing)Quickly evolving market

Questions about accountabilityWho is the Customer?


Goals of ProcurementDirect partner offering best value

Competitive Administrative FeeLowest Net Cost for Drugs (pricing and rebates) w/guaranteesClinical Programs Focused on Cost and Quality

Continued high levels of customer servicesAggressive performance standards with financial penalties

Continued Transparency and 100% Pass-Through100% manufacturer revenues returned to HIRSP No spread on retail, mail or specialty pricingOnly margin is on admin feeFavorable audit requirements


Solutions to Drug Benefit ManagementBenefit changes and InnovationsValue Based Benefit DesignsIntegration of Pharmacy, Medical and Lab DataQuantifying the Return on Investment in Value Based ClaimsSpecial Pharmacy Plan DesignsImplementation StrategiesStrategies to Increase Medication ComplianceTechnology Solutions

www.health-linx.com

The Procurement Process - RFP

RFP Types– Pass through vs. traditional pricing– Per script vs. PMPM Administrative Fees– Yes/No/Deviation vs. Question/Response

Selection of Potential Bidders– Limit if possible– Allows focus on grading and time spent with

bidders– Evaluate marketing philosophy and statements– Survey of Health Pools and Local Market Leaders

www.health-linx.com


Requirements of Bidders– Determine Goals for the Plan– Current Services/Claim Volume– Mix of Customer Service/Price/Clinical Programs

WantedRFP Production– Bidder Notification/Intent to Respond– Electronic RFP– Electronic Data File-Actual Claims, HIPAA

Compliant– Pricing Documents

www.health-linx.com


RFP Areas– General Information (Plan

Info)• Timeline• Instructions to Bidder• Proposal Requirements• Ethics Requirements

– Bidder History– Claim Administration– Mail Service– Reporting– Account Services

– Audit/Fraud and Abuse– Communications– Clinical Services– Network Management– Price/Performance

Guarantees– Professional/Ethical/Legal– Specialty– Pricing– Contract– Therapeutic Comparison

www.health-linx.com

The Procurement Process –Contracting

– Value of incorporating the contract into the process

– Verify elements of pricing, service and clinical– Attach the RFP– Performance Guarantees– True-up and Settlements– Auditing rights for claims and rebates– Termination language on pricing, rebates,

run-outs

www.health-linx.com

The Procurement Process – Pitfalls

– Simplification of a complicated program– Embark on an RFP using a public RFP– Selection based upon pricing only– Selection based upon clinical services only– Proper selection, poor contracting– Rapid changes in the marketplace

• Specialty Drug/Specialty Drug Rebates• New pricing schemes and interpretation by bidders• Changes in benchmark pricing

1061 Peruque Crossing Court • O’Fallon, Missouri 63366 • (636) 614-1344Fax (636) 639-8021 • E-Mail: [email protected] • Website: www.ipc-inc.com

1061 Peruque Crossing Court • O’Fallon, Missouri 63366 • (636) 614-1344Fax (636) 639-8021 • E-Mail: [email protected] • Website: www.ipc-inc.com

Building and Managing a Positive PBM Vendor

Relationship

Building and Managing a Positive PBM Vendor

Relationship

NASCHIP ConferenceOctober 15, 2008

IPC Presentation on Managing and Auditing IPC Presentation on Managing and Auditing Prescription Benefit AdministratorsPrescription Benefit Administrators

NASCHIP Conference 2008

Managing the Vendor RelationshipManaging the Vendor RelationshipVendor Implementation and System Testing• Start as Early as Possible• Clearly Define Implementation Plan

o Eligibility Datao Benefit Design

• Copays and Deductibles• Clinical Edits and Incentives• Special Handling and COB

o Historical Claim Data• Clinical Edits• Open to Fill Mail Order Prescriptions

o Communicationso Billing and Payment

• Establish System Testing Processes and Review• Customer Service – Pre and Post Implementation

13NASCHIP Conference 2008


Managing the PBM Vendor RelationshipManaging the PBM Vendor RelationshipContract Compliance• Periodically Validate

o Pricingo Benefit Setupo Incentiveso Performance Guarantees

Customer Service• Training and Scripting• Retraining and Re-scripting• Customer Service Call Reports and Call Monitoring

Administrative Services and Systems• Eligibility Maintenance, Card Production and Welcome Kits• Claim Billing and Payment• Grievance and Appeals



Managing the Vendor RelationshipManaging the Vendor RelationshipAccount Management• Day to Day Service with Questions and Escalated

Complaints• Objective Reporting and Recommendations

Clinical Services – High Risk Pool Population• Balancing Appropriate Care with Barriers to Service

Managing Escalated ComplaintsDiagnosing Vendor Mismanagement• Awareness of Root Causes Leading to Ongoing Issues



Managing the PBM Vendor Relationship – Auditing


Post-Implementation Audit• Contract Pricing Terms• Benefit Design• Key Services

o Clinical Programso Operationalo Administrative





Claim Audit• 100% Claim Audit• Annually

o Claim Pricing – MAC, Discount, Drug Codingo Benefit Design – Copayments, Coverage Limitations

Contract Audit• Quarterly

o Performance Standards• Annually

o True-up Arrangements• Rebate• Pass-through Pricing

o Performance Guarantees





Integrity Audit – Fraud Waste and Abuse (FWA)• Provider• PBM• Member

Clinical Program AuditAuditing for Vendor Success



What Now?What Now?Assess your current prescription drug administrative arrangementWhat is your trend rate?• Year over year• Compared to industry or NASCHIP averages

How is your services?• Member access to care• Responsiveness to your issues

How old is your current agreement?• Every Three years pricing improves• New Management requirement evolve

If your are not comfortable with your answers to these questions, you may want to explore benefits of competitively bidding, or updating your administrative arrangementDefine goalsAssessing resourcesBoard Presentation and Buy-in


QuestionsQuestions