Pharmacy Benefits: Pass Through vs. Traditional
As benefit consultants, we’re constantly challenged with ways to reduce overall healthcare costs for our clients. One option that can be overlooked is analyzing their pharmacy benefits and what type of contract models they’re using. It can be a daunting task, but it’s certainly one that can be achieved with the right guidance.
In the Pharmacy Benefits Management (PBM) world, several pricing contract models are utilized. The two most popular are
So, what’s the difference between a
Which PBM is right for you?
A Pass Through model offers the following options:
- Contracts are fully disclosed and transparent
- The client pays what the PBM pays
- PBM passes all discounts and rebates back to the client
- The client pays an administration fee to PBM for each claim or on a PMPM arrangement
- Gives client greater control over pharmacy spend
A Traditional model offers:
- Zero or greatly reduced administration fees, which equal less out of pocket costs for the client
- Share in rebates and discounts
- Not transparent
- Most popular model, but not necessarily the best option
Both types of contracts have their pros and cons. But before a choice is made, you should complete a true analysis of each model to determine which is best for your situation.
The ‘A’ Team is just one step away, and we’re always happy to help.
If you need help determining which model is right for you or need clarification on anything here, contact us.
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