Tag Archives: Greg Callahan

Best practices for PBM rebate audits

Auditing the administration of the rebate program, including dollars paid, is a proven strategy for improving plan sponsor profitability, prescription drug affordability, and the management of pharmacy benefit manager (PBM) contracts.

The purpose of a PBM rebate audit is to evaluate whether the PBM accurately invoiced the pharmaceutical manufacturers and then whether the correct rebate amount was paid to the plan sponsor for the audit period. Rebate audits identify lost or late revenue by focusing on the accuracy and timing rebate payments from pharmaceutical manufacturers to the PBM and subsequently the plan sponsor.

A comprehensive audit usually takes place in two stages. The first stage is a review of the claims for the audit period. In the second stage, consultants are typically required to travel on-site to the PBM’s location to review pharmaceutical manufacturer contracts.

To learn more about rebate audit services, read this article by Milliman’s Greg Callahan and Janus Desquitado.

Important PBM contracting provisions and strategies

Plan sponsors’ prescription drug costs continue to increase year over year and remain as one of the fastest-growing components of the healthcare dollar. One of the most important ways plan sponsors can lower healthcare costs without significantly changing their benefits is to look for opportunities to improve their pharmacy benefit manager (PBM) contracts.

The success of the plan’s pharmacy benefit depends on effective contracting. PBM negotiations typically involve a number of contractual provisions, which are critical to delivering competitive pharmacy benefits on a cost-effective basis. This paper by Milliman’s Greg Callahan and Brian Anderson explores a few important PBM strategies that can be used to reduce costs and quickly evaluate whether a current or new PBM contract is effectively managed.

Blockchain technology will affect PBM relationships

The primary purpose of the pharmacy benefit managers (PBM) is to serve as an intermediary among pharmacies, drug manufacturers, and payers. PBMs manage formularies, negotiate discounts and rebates, and process and pay prescription drug claims through a web of electronic transactions.

Blockchain could potentially transform the relationship between payers, pharmaceutical manufacturers, wholesalers, and pharmacies by offering an alternative, transparent mechanism for processing, pricing, and validating prescription transactions. This approach could lead to less waste, reduced pricing variations between pharmacies, and a better app-based purchasing experience for consumers, through transparency of the true cost of prescription drugs.

Milliman consultants Brian Anderson, Gregory Callahan, and Michael DiPrima provide more perspective in their article “How blockchain technology will disrupt the PBM-payer-pharmacy relationship.”