The Stretch Test: How Flexible is Your Health Plan's PBM Partner?

July 8, 2020

By Eric Culley and Bob DiRenzo 

While many PBMs tout flexibility, there's a limit to how far they're willing or able to bend. Several key criteria can help you decide who is serious about meeting your health plan's unique needs.

We're all flexible—to an extent. For those of us with several decades under our belts, it's no mean feat to touch our toes without bending our knees. For gymnasts, on the other hand, it's nothing to pull off a split.

Pharmacy benefit management (PBM) partners are much the same way. Across the country, health plans tell us that flexibility is one of the top characteristics they're seeking in a PBM solution. They want to fit the PBM to their specific goals and those of their market—such as the disease burdens of their populations, the preferences of their physician networks, and their state regulations.

But flexibility is relative, and there's a limit to how far each PBM can—or will—bend to align with a health plan's goals and local circumstances. With some PBM partners, you might be able to flex both your formulary and utilization management (UM) criteria to best fit the needs of your plan. In others, you could get stuck with someone else's "national" solution to your local issues.

So how can you distinguish those PBMS that truly are the most flexible from the others? Here are several likely indicators—by no means an all-inclusive list—you can use to gauge a potential or existing partner. Evolent's PBM team has used all these tactics, in various combinations, to provide solutions to meet our health plan partners' specific pharmacy goals.

The Typical Flexibility Offered by PBMs

Most PBMs will take some steps to accommodate your specific needs. These may include:

  • Tailored scope of services. You shouldn't have to order a four-course meal to get dessert, and you shouldn't need to buy an entire PBM solution to meet your needs. A PBM partner should have the flexibility to deliver a fully outsourced pharmacy department model, but it should generally also be able to offer a la carte services to perform functions that are no longer economical for your plan to support. If you want to keep certain high-performing functions in-house, such as formulary management, that should also be an option that is usually available. Health plan pharmacy departments, facing constant pressures to control staffing costs and carve out functions, appreciate a PBM partner that can deliver a tailored set of services with results you expect out of your own team at a defined operating cost.
  • Many options for network design. We've seen and done it all, from helping plans direct more of their members to their own in-house pharmacies, to guiding plans on how best to maximize value from thousands of pharmacies across the country. Basic flexibility means accommodating multiple pharmacy networks while maintaining strong network discounts.
  • Copay and benefit design. PBMs should generally give plans wide latitude to use their pharmacy benefit design to support their clinical and organizational goals, and to integrate with programs across the organization. For example, eliminating copays for medications used to treat diabetes can help improve compliance, which may result in patients with better blood glucose control and fewer medical complications.

Characteristics of the Most Flexible PBMs

These are some of the likely signs that a PBM is truly interested in meeting your needs and invested in your plan's success.

  • Health plan representation on the Pharmacy and Therapeutics Committee. When plans outsource their pharmacy benefit, they frequently outsource their clinical voice, with no representation on the P&T. But some forward-thinking PBMs give voting seats to the health plan—typically a pharmacy director or medical director who, in Evolent's experience, contribute significantly to the quality of decision-making. Understanding the nuances of the local market, these members can offer different perspectives and spur healthy dialogue to help reach the best decisions directly impacting the plan.
  • The opportunity to guide formulary and UM criteria. The plan can assist in defining the drug list and criteria to be met for different drugs to be covered. Additionally, having a plan representative on the P&T Committee can help ensure that clinical coverage objectives for your pharmacy benefit do not differ from those of the medical benefit, resulting in provider and patient confusion and dissatisfaction.
  • Acceptance of upside and downside risk. While rare, a willingness to have "skin in the game" is a signal that your PBM will adapt to increase chances of your success. (Because it's also their success.) A fully aligned PBM might build a risk arrangement around the Medicare STARS program, agreeing to return a program of program fees to the client if it fails to reach specific ratings with targeted STARS measures. When there's a true partnership model in place, you can be sure the PBM will be on the lookout for improvement opportunities and can pivot to capture them.
  • Mutually beneficial performance goals. PBM contracts often set a low bar for return on investment by selecting performance targets that they almost always meet. For example, they might set goals for unit cost but shy from more ambitious utilization goals to help meet the plan's unique PMPM budget. For the partnership to thrive, the targets must be meaningful and roll up to the health plan's key performance indicators. We align our performance goals with our partners, either in helping to set a PMPM budget target or annual savings for the year. Personal incentives for PBM employees who support the health plan should often be tied to meeting your goals.
  • Accountable, customized performance reporting for your market. The PBM partner tracks and reports on medical expense initiatives—identifying drugs where money is being saved, or could be, as new programs and plan changes are rolled out. Suppose that Humira is your top trending drug, wreaking havoc on your budget. Is your PBM identifying and implementing solutions beyond increasing rebates on Humira? To determine how the trend can be better managed, the PBM partner should support an end-to-end assessment of the drug's utilization that encompasses how well the prior authorization program is managing utilization, the net cost of treatment for each indication, which providers are prescribing, and which pharmacies are dispensing it. The solutions need to be deployed quickly and monitored routinely to achieve your plan's objectives.
  • Preferred, exclusive and custom arrangements for specialty drug management. A true PBM partner uses its analytics and expertise to craft innovative benefit and network designs for specialty drugs. Such designs can pull on any number of levers, such as copay cards, steerage to select pharmacies, and a combined medical/pharmacy utilization management solution. A flexible partner also has the operational wherewithal to carry out the strategy. Suppose your plan has collaborated with dermatologists in your provider network on use of specialty biologics for psoriasis that requires tight coordination with your PBM's prior authorization call center. Many PBMs are unable to adapt their processes to execute your strategy, which leads to provider abrasion, member disruption and a failure to achieve your goals.  

Interested in discussing how a flexible PBM can enhance your health plan's performance? Contact us.   



About the Authors

Eric Culley 

As vice president of pharmacy services, Eric is responsible for leading the Evolent pharmacy enterprise, consisting of teams who work with clients on all aspects of their pharmacy benefit and improving overall plan financial performance of prescription drug benefits for employee, commercial, Exchange, Medicare and Medicaid lines of business. This includes establishing quality programs, oversight of utilization management, strategic planning, managing specialty pharmacy for both the drug and medical benefits, and maintaining profit and loss responsibility for the department.

Bob DiRenzo

As managing director of pharmacy strategy and analytics, Bob is responsible for leading teams who work with Evolent’s partners to develop pharmacy strategies, evaluate clinical pharmacy programs and improve overall plan performance. Prior to joining Evolent, he served in executive management and consulting roles at Pharmaceutical Strategies Group, Pharmacy Data Management, and Medco. He has managed all aspects of prescription drug benefits covering all lines of business.

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