As we navigate the complexities of modern healthcare, where costs often skyrocket and the demand for more affordable solutions intensifies, stakeholders such as self-funded employers, brokers, third-party administrators (TPAs), and consultants are actively exploring innovative solutions. Central to this evolving discourse is the role of Pharmacy Benefit Managers (PBMs). Functioning at the pivotal juncture between patients, healthcare providers, and drug manufacturers, PBMs are emerging as transformative entities shaping the economics and efficiency of drug distribution.
What are Alternative Funding Routes in Healthcare?
Alternative funding routes in healthcare refer to various methods and programs that provide financial assistance to patients, providers, or healthcare organizations to help cover the costs associated with medical care and treatment. These alternatives exist to address the rising expenses of healthcare and to ensure that individuals have access to necessary medical services, even if they cannot afford them outright. Here are some common alternative funding routes in healthcare:
- Patient Assistance Programs (PAPs): These programs, often sponsored by pharmaceutical companies, offer free or heavily discounted medications to individuals who cannot afford them. PAPs typically have income eligibility criteria and are designed to assist patients with specific medical conditions.
- Copay Assistance Programs (CAPs): CAPs help patients cover their out-of-pocket costs, such as copayments and deductibles, for prescription medications. These programs are often offered by drug manufacturers and foundations.
- Foundations and Nonprofit Organizations: Many foundations and nonprofits provide financial assistance to patients for medical treatments, equipment, or other healthcare-related expenses. These organizations may focus on specific medical conditions or populations in need.
- Government Assistance Programs: Government-funded programs like Medicaid, Medicare, and the Children’s Health Insurance Program (CHIP) offer healthcare coverage to low-income individuals and families. These programs can significantly reduce the financial burden of medical care.
- Clinic Pharmacies and Safety Net Providers: Some healthcare facilities, especially those in underserved areas, have their own pharmacies and offer discounted medications and services to patients who cannot afford them elsewhere.
- Community Health Centers: Federally funded community health centers provide affordable healthcare services to underserved populations. They often offer a sliding fee scale based on income to ensure access to care.
- Pharmacy Benefit Managers (PBMs): PBMs, like MaxCare, can explore various funding options to help patients access medications at lower costs. They facilitate access to assistance programs.
- Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs): These tax-advantaged accounts allow individuals to set aside pre-tax income to cover qualified medical expenses. They can be used to pay for a wide range of healthcare costs.
- Medical Grants and Scholarships: Some organizations and foundations provide grants and scholarships to medical professionals or students to encourage careers in underserved areas or specific medical specialties.
- Hospital Financial Assistance Programs: Many hospitals have programs in place to assist patients with their medical bills. These programs may provide discounts or offer payment plans based on income.
- Medical Crowdfunding: Crowdfunding platforms enable individuals to raise funds from the public for their medical expenses. This approach has become increasingly popular, especially for rare or costly treatments.
- Employer-Based Health Programs: Some employers offer wellness programs, health reimbursement arrangements (HRAs), or other health-related benefits to help employees manage their healthcare costs.
The Expanding Role of PBMs in Healthcare Funding
Historically, PBMs were seen mainly as intermediaries connecting drug manufacturers and health plans. Key responsibilities attributed to them included maintaining the drug formulary and liaising with pharmacies. Today, however, as healthcare paradigms shift, PBMs are no longer just the middlemen; they are strategic partners essential to a cost-effective healthcare system.
Diving Deeper: The Dynamics between PBMs and Drug Manufacturers
Leveraging Negotiation Power: PBMs create and manage formularies, which are lists of drugs that are covered by an insurance or health plan. Being included on a PBM’s formulary can significantly increase a drug’s sales, so manufacturers are often willing to offer rebates in exchange for their drug being placed on a preferred tier.
Also, PBMs can promote the use of cheaper generic drugs or therapeutic alternatives. This capability pressures brand-name drug manufacturers to offer better deals to maintain a competitive edge.
Prioritizing Value Over Volume: Modern PBMs are shifting the narrative from sheer transactional volume to therapeutic value. This focus ensures that patients are not just receiving medications but are getting treatments that genuinely make a difference.
In the past, the emphasis for many PBMs was often on handling as many drug transactions as possible, which could translate to greater profits. This approach, while economically driven, did not always ensure that patients were receiving the best treatments for their conditions. Now, there’s a growing focus on the therapeutic value – which means emphasizing the effectiveness and appropriateness of treatments for individual patients’ conditions.
The new narrative suggests that modern PBMs are placing a greater emphasis on ensuring that the drugs patients receive truly benefit them. Instead of merely distributing medications based on cost or agreements with pharmaceutical companies, PBMs are now considering how well these medications work in real-world settings. For instance, a cheaper drug might not necessarily be the best choice if it’s less effective or has more side effects than a slightly more expensive option.
This shift in focus aligns with a broader move in healthcare towards ‘value-based care’, where the emphasis is on patient outcomes and the overall value of care rather than the volume of services provided. By prioritizing therapeutic value, PBMs are becoming more integrated into this broader healthcare initiative, ensuring that medication management plays its part in achieving the best patient outcomes.
This new direction also presents challenges. Evaluating therapeutic value is complex, requiring sophisticated data analytics, real-world evidence, and clinical insights. However, this direction also offers opportunities for better collaboration between PBMs, healthcare providers, pharmaceutical companies, and patients. The end goal would be a more holistic and patient-centric approach to care where the effectiveness of treatments is paramount.
Understanding Rebates: Much of the dialogue between PBMs and drug manufacturers is centered on rebates and discounts. While this benefits healthcare providers by making treatments more affordable, it also offers drug manufacturers an incentive by potentially increasing the use of their products. This balance ensures mutual benefits, a hallmark of successful collaboration.
PBMs establish a formulary, which is a list of covered drugs. Drugs on this list are sorted into tiers based on their therapeutic efficacy, safety, and cost-effectiveness. Drugs in lower tiers often have lower co-pays, while drugs in higher tiers or those not on the formulary may have higher out-of-pocket costs or may not be covered at all.
Rebates are offered by the drug manufacturer to the PBM after a drug has been purchased. In essence, after the pharmacy dispenses the drug and the PBM pays for it, the manufacturer gives some money back to the PBM. The rebate’s size often depends on various factors, such as the drug’s volume, formulary position, or whether the drug has therapeutic competitors.
Conclusion: Time for Collaborative Action
The horizon of healthcare funding is expansive and promising. With PBMs at the forefront, there’s an undeniable promise of a future that is efficient, affordable, and patient-centric. For all invested parties, the call of the hour is collaboration. As the dynamics between PBMs and drug manufacturers continue to mature, there lies untapped potential for self-funded employers, brokers, TPAs, and consultants to drive a new era in healthcare.
It’s important to note that the PBM industry and its practices have been a topic of debate. Critics argue that PBMs may not always pass on the savings from rebates to consumers, leading to higher drug prices. There have been calls for more transparency in the PBM industry to ensure that the savings from manufacturer negotiations directly benefit consumers.
However, not all PBMs are the same. At MaxCare, we face continually rising drug prices through our proactive and tailored solutions that are key to controlling prescription costs. MaxCare, as a pass-through model PBM, stands out in the healthcare industry for its comprehensive approach to exploring alternate funding routes. This approach goes beyond the conventional manufacturer coupon plan and encompasses a wide array of patient assistance options. Let’s delve deeper into how MaxCare excels in this aspect and why it’s crucial in today’s healthcare landscape:
- Diverse Patient Assistance Options: MaxCare recognizes that patients face various financial challenges when it comes to accessing the medications they need. Hence, it doesn’t limit itself to just one type of assistance. Instead, it embraces a diverse set of options, including Patient Assistance Programs (PAP), Copay Assistance Programs (CAP), Foundations, and Clinic Pharmacy and Alternate Sites.
- Holistic Approach: MaxCare’s approach is holistic, addressing the unique needs of each patient. It acknowledges that what works for one individual might not work for another. By providing a wide range of options, MaxCare ensures that patients have access to the most suitable assistance program for their specific circumstances.
- Advocacy for Patients: MaxCare goes above and beyond by actively working on behalf of the employee or patient to identify the best alternate funding option. This advocacy ensures that the patient isn’t left to navigate the complex world of healthcare assistance programs alone. The patient can rely on MaxCare’s expertise and commitment to securing the most favorable funding solution.
- Manufacturer Coupon Plan: While MaxCare extends its services far beyond manufacturer coupon plans, it doesn’t neglect this valuable option. Manufacturer coupons can significantly reduce the out-of-pocket costs for patients and their employers, and MaxCare ensures that this option is explored and utilized when appropriate.
- Transparent and Pass-Through Model: MaxCare’s pass-through model in the PBM industry ensures transparency in pricing and a focus on the patient’s best interests. It avoids hidden markups or conflicts of interest, aligning its goals with the well-being of the patients it serves.
MaxCare’s commitment to exploring and considering alternate funding routes in healthcare sets it apart as a PBM. Alternate funding is a complex and multi-faceted subject and should be considered on a group-by-group basis. By offering a wide array of patient assistance options and actively advocating for patients and their employers, MaxCare ensures that individuals receive the financial support they need to access essential medications and treatments. MaxCare’s promise as a truly transparent PBM is to provide an unbiased synopsis of all options and considerations related to alternate funding for self-funded employers. In an era where healthcare costs are a significant concern, MaxCare’s approach is a beacon of hope for those seeking affordable and accessible healthcare solutions.