Optimizing Your Level-Funded Plan’s Prescription Benefit

Unlock Savings with Your Level-Funded Plan: Creative Solutions for Better Pharmacy Benefit Management

If your group is currently using or considering a level-funded plan, you may feel limited in your ability to manage prescription drug costs, especially for high-cost specialty medications. While many level-funded plans (about 75%) don’t allow carving out the pharmacy benefit, it’s important to find vendors that do offer this flexibility. With the right partner, you can unlock savings and take more control of your pharmacy spend.

Here are some key strategies to consider for optimizing your level-funded plan’s prescription benefit:

1. Carve-Out the Pharmacy Benefit (Where Possible) While most level-funded plans do not allow for a pharmacy benefit carve-out, it's helpful to seek out vendors that offer this option. Even if carving out isn’t possible, knowing your options and working with vendors that are open to creative solutions will set your group up for success. Carving out the pharmacy benefit means working with an independent PBM that provides transparency and flexibility, enabling you to:

   • Tailor the formulary to better meet your group’s needs.

   • Negotiate more favorable terms for drug pricing, network access, and administrative fees.

   • Utilize specialty vendors for high-cost medications, creating additional opportunities for savings.

   
   

2. Save on Specialty Drugs with Prescription Assistance Programs (PAPs) For level-funded plans struggling with the high cost of specialty medications, Prescription Assistance Programs (PAPs) can offer significant relief. These programs, often funded by drug manufacturers, help eligible employees access expensive medications at reduced or no cost. By incorporating PAPs, employers can:

   • Lower the overall pharmacy spend without sacrificing member access to critical medications.

   • Reduce out-of-pocket costs for both the employer and the plan members, making the plan more affordable and sustainable.

     
     

3. Optimize the Formulary Partnering with a PBM that allows for this flexibility is key to managing costs in a level-funded environment. To maximize cost savings, look for opportunities to optimize the formulary by encouraging the use of:

   • Lower-cost alternatives like generics or biosimilars, which can deliver the same therapeutic benefits as brand-name drugs at a fraction of the cost.

   • Utilization management tools like prior authorization and step therapy to ensure members are using the most cost-effective treatment options.

     
     

4. Specialty Drug Management High-cost specialty drugs are a significant driver of pharmacy costs in level-funded plans. However, by partnering with a specialty vendor, you can tap into programs that offer predictable and sustainable ways to manage specialty drug costs like:

   • International sourcing: Access the same FDA-approved medications from international markets at lower prices.

   • Specialty pharmacy carve-outs: Work with vendors who specialize in managing high-cost medications, ensuring better pricing and more effective cost controls.

     
     

5. Customization and Transparency with Independent PBMs When carving out the pharmacy benefit is an option, independent PBMs can provide the customization and transparency needed to better manage costs. This allows you to:

   • Design a plan that works for your group, with customizable formularies, network pharmacies, and cost-saving solutions such as mail-order services and preferred drug lists.

   • Avoid hidden fees with independent PBMs, for transparent pricing and clear contracts, making it easier to track and manage your prescription drug costs.

Even if your current level-funded plan doesn’t allow for a full carve-out of the pharmacy benefit, it’s still possible to implement cost-saving strategies by partnering with the right vendors. Look for those that offer flexibility in formulary management, PAP programs, and specialty drug sourcing. By taking advantage of these tools, you can ensure predictable, sustainable savings for your group while providing access to the medications your members need.

Explore how APC's Exclusive PBM Cost Solutions can help your level-funded plan control pharmacy costs and unlock new savings opportunities for your group.