Managed Care/ PBM

Maximizing Profit Potential for PBM

IndustryManaged Care/ PBM
ProblemThe client provides a supplemental PBM program for patients to lower their out of pocket costs. The client wanted to improve generic purchasing via different wholesalers to lower their cost of goods. They also wished to review their current medication list in order to identify both savings opportunities and areas for improved inventory management.
PHSI SolutionPHSI completed a detailed analysis of wholesaler prices on the identified drug products using client provided information. PHSI also reviewed the pharmacy’s drug list and inventory. By readjusting minimum and maximum quantities of medications available to be ordered, both on hand inventory and out-of-stock situations improved. This minimized the on-hand quantity of stagnant products while increasing the average inventory turns per year.
ResultsUtilizing the pricing analysis provided by PHSI, the client was able to optimize their purchasing efficiency when negotiating with wholesalers. The client also saw an increase in inventory turnover reflecting a growth in business performance. PHSI continues this service on an annual basis to further reduce costs allowing for both expansions in sales and financial profit.

Management of MAC List for PBM’s Major Retail Pharmacy Contracts

IndustryManaged Care/ PBM
ProblemA PBM client was contracted with various national pharmacy retailers. Included in these contracts were guaranteed Generic Effective Rates (GER) established by the different parties. Appropriate MAC lists were needed to adhere to the agreed upon GER rates for each pharmacy chain.
PHSI SolutionPHSI utilized monthly claims data and current AWP pricing to manage the MAC list for the PBM. Based on utilization data or market place changes, PHSI was able to adjust the MAC list accordingly while meeting the contracted GER.
ResultsRoutine management of the MAC list allowed the PBM to follow through on the GER guarantees. PHSI was able to address any possible deviations early in the year rather than during an annual review. The client maintained beneficial relationships with the retail chains and prevented financial penalties. PHSI continues to monitor market pricing and utilization data to update the MAC lists to continue meeting these GERs.

Process and Claims Audit

IndustryManaged Care/ PBM
ProblemThe PBM was preparing for an upcoming audit from an important client that was looking to validate that the PBM is compliant with the terms and performance guarantees specified in the client agreement. The PBM requested that PHSI conduct a pre-audit of the client's agreement to prepare the PBM for the upcoming audit.
PHSI SolutionPHSI examined a year's worth of data to conduct a claims audit, reviewed the terms of the agreement including performance guarantees, and conducted interviews with PBM management to prepare the PBM for the client’s auditors. As part of the process and claims audit, PHSI analyzed the PBM’s process and procedures and made recommendations for operational improvements.
ResultsThe PBM was well prepared for the client audit and passed the review with outstanding results. The project provided a risk mitigation strategy by equipping the PBM with the knowledge to successfully navigate the client’s audit while improving its operational processes.

Organizational Turnaround

IndustryManaged Care/ PBM
ProblemThe PBM's prior authorization process needed to be rebuilt due to the increased volume of requests. The existing process was inefficient, causing delays that resulted in service issues with their clients. The organization requested an operational assessment to streamline the processes allowing the business to handle future growth and complexity of prior authorization decision criteria while minimizing the addition of new staff.
PHSI SolutionThe PBM’s prior authorization process required an operational turn around. PHSI investigated the root cause of the operational problems focusing on people, process and technology areas. PHSI used cost accounting techniques to benchmark operational processes and identify true cost of processing prior authorization requests. PHSI recommended an organizational restructuring, process improvements, and technology enhancements that increased operational capacity and throughput. Management controls were established to manage workflow, focus efforts on lowering costs and improving quality.
ResultsThe clients operations were stabilized and improved results were achieved as new management was hired to manage the prior authorization process. The implemented changes improved the work flow and enabled the PBM to operate more efficiently.

Merger and Acquisition Due Diligence

IndustryManaged Care/ PBM
ProblemThe client was interested in acquiring a PBM and required an independent assessment of the performance of the target's pharmacy network agreements and assistance with predicting the drug spend and mix over the next three years. The client also needed a synergies analysis with their existing contracts.
PHSI SolutionPHSI analyzed six months worth of claims data and summarized the information by pharmacy chain. PHSI provided a confidential way to provide a risk assessment and potential benefits of a combined entity.
ResultsPHSI's independent analysis and risk assessment enabled the client to obtain an outside perspective for the financial opportunities of an acquisition. This information assisted the client in determining how aggressive they wanted to be when bidding on the PBM.

PHSI Creates Pharmacy Chain MAC to Meet PBM Contract GER Guarantee

IndustryManaged Care/ PBM
ProblemA PBM contracted with a national pharmacy chain for a MAC list with a specific Generic Effective Rate (GER) guarantee. The PBM’s current MAC list did not achieve the contracted GER rate.
PHSI SolutionTo meet the GER guarantee, PHSI utilized pharmacy claims data to create a MAC list specific for that pharmacy chain that met the contracted GER rate.
ResultsPHSI was able to provide the PBM the information that would ensure the GER for the contracted retail chains, meeting the contractual agreement with the pharmacy chain. PHSI continues to update the MAC lists to continue to meet these guarantees based on market pricing and utilization changes.

PHSI Tracks PBM Rebates

IndustryManaged Care/ PBM
ProblemAn employer group contracting with a PBM wished to track their rebate receivables to determine outstanding balances for each fiscal quarter and to ensure the PBM’s client guarantees were being met.
PHSI SolutionPHSI created a tracking spreadsheet and provided quarterly updates to the employer group by balancing the remittance reports against the monthly claims adjudication reports. PHSI was able to identify a large number of claims that had been excluded from the rebate remittance.
ResultsPHSI was able to work with the PBM to identify the cause of the claims discrepancy and ensure that the client received their full pay amount. PHSI continues to monitor to ensure that rebate guarantees are being met.

Mail Service Operational Assessment

IndustryManaged Care/ PBM
ProblemA pharmacy benefits management company wished to increase profitability by developing more innovative uses of their mail service resources and operations systems. The company wanted to restructure and modernize their business procedures to maximize efficiency.
PHSI SolutionPHSI visited the management company and evaluated current mail service operating procedures and measurement tools. PHSI also reviewed technology software resources available to the company and analyzed financial reports. After gathering information and evaluating the management company’s current strategic plan, PHSI created three separate alternative operational procedures that included management systems, financial incentives, and software usage. These alternative strategic plans were prioritized by the estimated savings opportunity and again by the degree of difficulty and risk to implement the plan.
ResultsThe management company gained new strategies for mail service operational efficiencies in order to run their business effectively, realize maximum profitability, and minimize potential losses.

Conversion from Multiple Platforms to a New Claims Processing System

IndustryManaged Care/ PBM
ProblemA growing PBM wanted to coordinate several books of business under a single claims processing software system using a service bureau arrangement. Previously, the claims processor used First Databank (FDB) as their drug database, but the new processor uses Wolters Kluwer’s Medi-Span drug database. FDB plan edits and formularies needed to be converted to Medi-Span GPI (Generic Product Identifier) codes.
PHSI SolutionPHSI analyzed the formulary and plan edits to isolate FDB codes that required conversion to Medi-Span codes. Based on NDC matches, GCN (Generic Code Number), and GSN (GCN Sequence Number) codes were converted to Medi-Span GPI codes. PHSI also converted therapeutic class GC3 codes to GPI codes.
ResultsThe client leveraged PHSI expertise to meet the aggressive conversion schedule and experienced a smooth transition. In the process, the client consolidated a number of high maintenance formularies and plan edits into more efficient GPI wildcard lists that reduced ongoing maintenance efforts.

PHSI Provides Independent Due Diligence for Client Considering Acquisition

IndustryManaged Care/ PBM
ProblemA managed care client wanted an independent assessment of a potential acquisition and asked PHSI to analyze the prospect's operations, business strategy, and senior management capabilities.
PHSI SolutionPHSI toured the company, analyzed financial statements, interviewed senior management, and reviewed their business strategies to determine if they were short term focused or were robust enough to compete in the market long term. PHSI suggested follow-up items for our client to validate prior to making an offer for the business.
ResultsA report of PHSI findings and recommendations was discussed with our client's senior management enabling them to use the independent assessment in their decision process.