The pharmacy benefits management (PBMs) industry is a rapidly growing and evolving sector of the healthcare industry. Hospice PBM Organization is contracted by hospice health plans, employers, and government agencies to manage prescription drug benefits for their members, employees, or enrollees. In this role, PBMs are responsible for negotiating discounts and rebates with drug manufacturers, managing the formulary, and processing and paying claims for prescription drugs. In recent years, the PBM industry has come under intense scrutiny from policymakers and the media for its role in the rising cost of prescription drugs.
As a result, PBMs have been increasingly transparent about their business practices and have taken steps to improve their image. One way they have done this is by contracting directly with patients to provide them with discounted prescription drugs. PBMs typically offer two types of contracts to their clients: pass-through and administrative service only (ASO). The PBM acts as a middleman between the payer and the pharmacy in a pass-through contract. The PBM does not mark up the price of the drugs; instead, it charges a flat fee per transaction.
In an ASO contract, the PBM takes on more risk by assuming responsibility for managing the pharmacy benefit. The PBM may also receive a portion of the savings it generates through its negotiations with drug manufacturers. The most common type of contract between PBMs and their clients is the ASO contract. This type of contract offers several benefits to both PBMs and their clients. First, it allows PBMs to share in the savings they generate through their negotiations with drug manufacturers. This gives PBMs an incentive to keep costs low. Second, ASO contracts give PBMs more.
Types of contracts between PBMs and their clients
There are three main contracts between PBMs and their clients: the pass-through contract, the administrative services only (ASO) contract, and the risk-sharing contract. The pass-through contract is the most basic contract between a PBM and a client. The PBM acts as a middleman between the client and the pharmacies in this contract. The PBM does not assume any financial risk in this type of arrangement. The ASO contract is more complex than the pass-through contract. In this contract, the PBM agrees to provide certain administrative services to the client, such as claims processing and benefit design. The PBM does not assume any financial risk in this type of arrangement. Risk-sharing is the most complex contract between a PBM and a client. In this arrangement, the PBM agrees to assume some financial risk in exchange for a higher level of compensation. The amount of financial risk taken by the PBM will vary from one contract to another.
The most common type of contract between PBMs and their clients
The most common contract between PBMs and their clients is a fee-for-service contract. Under this type of contract, the PBM agrees to provide certain services to the client in exchange for a fixed fee. The services typically included in a fee-for-service contract are claims processing, formulary management, and pharmacy network management. There are several benefits to a fee-for-service contract. First, it allows the PBM to focus on providing quality services to the client without worrying about making a profit. Second, it gives the client more control over their budget, as they know exactly how much they will pay for each service. Finally, it provides more transparency and accountability from the PBM, as the client can see exactly what they are paying for. There are also some drawbacks to a fee-for-service contract. First, it can be difficult to negotiate a fair price for all the services the PBM will provide. Second, the PBM may be less likely to take risks and innovate under this contract. Finally, the client may be less potential to receive discounts on drugs or other services if they are not part of a larger group.
The benefits of a PBM-client contract
There are many benefits of a PBM-client contract. The most obvious benefit is that it helps to ensure that the client will receive the medications they need at a fair price. In addition, a PBM-client contract can help to protect the client from unexpected costs or changes in their medication coverage. It can also help the client keep track of their medications and ensure that they are taking them as prescribed. Finally, a PBM-client contract can help to build trust between the client and the PBM.
The drawbacks of a PBM-client contract
There are some drawbacks to having a contract with a PBM. For one, the client may only sometimes get the best drug price. This is because PBMs often have exclusive contracts with certain pharmacies, which means that the client may have to pay more for their medications than they would if they went to a different pharmacy. Additionally, PBMs often require clients to use their mail-order pharmacy, which can be inconvenient and may offer an extra level of service than a local pharmacy.
The future of PBM-client contracts
The future of PBMs-client contracts is shrouded in uncertainty. The industry is undergoing a period of consolidation, and it is still being determined what the landscape will look like in the coming years. Many factors could impact the future of these contracts, including changes in the healthcare system, the evolution of the pharmacy benefit management industry, and the needs of PBMs’ clients. PBMs and their clients must stay abreast of these changes and adapt their contracts accordingly. The most successful relationships will be those that can evolve with the changing landscape.
After discussing the contracts between PBMs and their clients, it is clear that the most common type is the fee-for-service contract. This contract offers many benefits to both parties, but some drawbacks should be considered. Overall, PBM-client agreements will likely continue to be an important part of the healthcare industry in the future.
Read Also: Does hospice provide physical therapy?