True transparency is one of our guiding principles at MaxCare, and we always want you to understand exactly what you are paying for in your pharmacy benefit plan.
In this article, we explain how specialty carveout can significantly reduce the cost of your prescription spend, including some key factors to consider when deciding if specialty carveout makes sense for your plan.
What is specialty carveout?
Specialty drugs are a class of high-cost oral or injectable medications prescribed to treat complex and rare conditions. Due to their complex nature, these medications have a high price tag and are a growing expense for both employees and employers. On average, one to two percent of plan members account for half of the total prescription plan cost. The growing financial impact of specialty medications has led to the exploration of additional strategies for managing this growing expense for the plan and members.
Specialty carveout strategies have grown in popularity and the utilization of alternate funding to cover high-cost specialty medications continues to be an attractive solution to many plans. Often, drug manufacturers who produce specialty medications offer patient assistance programs that can help offset the cost of these medications. The plan excludes these medications from the plan benefits and sources them through alternate funding.
MaxCare clients have saved over $2 million in the first six months of 2022 through utilizing specialty carveout alone. While MaxCare encourages the use of alternative funding programs, the choice to implement this solution is up to each individual company and plan.
Considerations when deciding whether to implement specialty carveout includes:
A. Additional steps for members
Though specialty carveout can offer significant savings to the employers and their employees, this process can create additional steps members must take to access their specialty medications. Ultimately, the goal with specialty carveout is to save the plan and the member money while ensuring the member receives the medication they need.
When a high-cost medication is not covered by the plan, the pharmacy benefit manager (PBM) can assist the member with alternate funding from the manufacturer. If the member doesn’t qualify for manufacturer assistance, the plan can agree to make a coverage exception so the member can still get the medication they need.
B. Specialty carveout – Loss of rebates
Rebate loss is a consideration when deciding to implement Specialty carveout. Medications provided through alternate funding and manufacturer’s assistance are not eligible for rebates. However, the savings provided by these programs far outweigh the loss of rebates.
Our team at MaxCare can help you evaluate the savings from specialty carveout and the impact to rebates.
C. Plans grandfathered by Affordable Care Act
When the Affordable Care Act (ACA) went into effect, plan holders had the opportunity to have their existing plans grandfathered into the system. However, changing plan design and reducing plan benefits can impact this status.
If a plan wants to change their pharmacy benefit design to exclude specialty medications, this change could result in the plan losing grandfathered status. However, in other cases it may simply be viewed as a plan enhancement, and this is why it is important for plans to work closely with their PBM to understand this impact.
The plan should carefully evaluate the cost savings provided by specialty carveout versus the cost of losing their grandfathered plan status.
MaxCare is here to help
Specialty carveout can be a great cost-containment solution for plans. As mentioned previously, there are many things to consider when evaluating if specialty carveout is the right choice for your plan. Our goal at MaxCare is to help you understand all of your options so you can make the best possible decision for your plan and your employees.
We’d love to speak with you about the MaxCare difference and help you evaluate your current plan and whether specialty carveout or other programs make sense. Contact us to learn more.