Employers and plan sponsors continue to seek valuable, cost-saving pharmacy benefit solutions for their plan participants. A common consideration for self-funded employer groups, and sometimes fully-insured groups, is carving in or carving out pharmacy benefits from medical benefits.
The Difference Between Carve-In and Carve-Out Pharmacy Plans
Carve-in pharmacy plans are integrated into an employer’s medical benefit. These plans are typically coordinated by a medical health plan vendor. Under this approach, employers have one point of contact for both their medical and pharmacy benefits, with generally no direct contact with a pharmacy benefit manager (PBM).
Carve-out pharmacy plans allow employers to detach their pharmacy plans from the medical benefit and contract separately with a PBM vendor. Therefore, employers can choose their PBM vendor without the influence of the medical vendor.
Analyzing Carve-In Pharmacy Plans
While carved-in pharmacy plans may streamline the administration process, they often lack transparency and flexibility. For example, plan performance reviews help determine if vendors are fulfilling the needs of the group and carrying out their guarantees. However, when benefits are bundled, plan details are often not communicated, and employers are unable to see the details behind their discount and rebate guarantees.
Pharmacy plans integrated into an employer’s medical benefits are often overshadowed due to the size and influence of the medical vendor. They may be less flexible in terms of customizing plan designs and lack the ability to fully personalize plans to fulfill plan participants’ unique needs. With less focus on pharmacy, there may also be slower reactions to industry developments. Additionally, carve-in pharmacy plans may not have direct communication with clinical experts who can help groups implement clinical programs that fit their plan needs. Less attention to plan details may result in under-utilized clinical programs, leading to more fraud, waste, and abuse.
Analyzing Carve-Out Pharmacy Plans
Carve-out plans have a lot to offer employer groups, including customization, adaptability, insight, and oversight.
By carving out pharmacy plans, employers have the flexibility to shop around and design a benefit plan that best meets the needs of participants at a lower price. Additionally, the ability to have a flexible plan design allows employer groups to react swiftly to industry changes and adjust their plans for maximum value.
Carve-out pharmacy plans often involve direct contact with clinical experts who provide perspective and insight on patient health and plan design. The proactiveness of clinical experts largely contributes to patient well-being and plan success.
Lastly, carved-out pharmacy plans provide oversight to employer groups. They offer employer groups a greater understanding of their pharmacy spend and the ability to negotiate better deals based on informed decisions. Audit rights, claims data, clear definitions, discount and rebate guarantees, and market checks are strong elements of a pharmacy benefit carve-out.
Recommendation: Carve-Out Pharmacy Benefits
Self-funded employer groups can receive the best value for their pharmacy benefit both health-wise and financially by carving out their pharmacy plans. The strong clinical focus, financial transparency, and tailored plan designs are invaluable. Minimal disruption to plan participants is crucial when switching to a carve-out pharmacy plan. Although there was a time where gaps in integration came into question, unified data-sharing trends have made integration seamless today. To ensure a smooth transition for both employer groups and plan participants, we recommend contracting with a trusted partner dedicated to serving members’ needs.
National CooperativeRx is a member-owned, not-for-profit cooperative. Plan sponsors with carve-out pharmacy benefits experience a simplified contractual process with National CooperativeRx. On behalf of plan sponsors, we negotiate one master contract with a PBM that offers exceptional savings. From there, we create custom plans to meet the specific needs of groups, designed and overseen by our expert account managers and in-house clinicians. Our contract terms, pricing, guarantees, and claims data are fully disclosed to our plan sponsors. Additionally, we conduct yearly market checks and independent audits to ensure best-in-class pricing and return all audit recoveries to our plan sponsors.
If you are interested in learning more about National CooperativeRx, please contact us here.
