Panel Blog Series: Alternative Funding Methods

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by AJ Somaini, Pharmacy Consultant, and Steve Tardanico, Executive Vice President at Reimbursement Specialists, Inc.; EBS Gillette event session leaders

It has been almost a decade since the Affordable Care Act (ACA) was passed by Congress, and with the tighter regulations imposed on health plans came just as many alternative funding methods designed to offset the monetary detriment to employer sponsored health plans caused by the ACA. Among trends like captives, private exchanges, and partially self-funded plans, came two more focused solutions: Rx Carve Outs and Participating Funding Arrangements (PFA).

Rx Carve Out

As the cost of healthcare continues to rise, so does the cost of medications. On average, employers are finding that only 1% - 2% of claims are driving more than 30% of their total Rx spend. It is predicted that within one or two years, specialty medications will represent 50% of the total pharmacy spend. And while those anger-inducing headlines like Sticker shock: Drugs with price hikes of up to 1,200% can feel like the root of the problem, the real issue is actually in the industry’s propensity to hike up the cost of drugs that have already been in the market as newer competitors are introduced. And with these costs rising, the savings these Pharmacy Benefit Managers (PBMs) are passing along – like rebates and negotiated discounts – are going directly to your medical carrier instead of your organization.

There is a way to cut the carrier out of the equation and contract directly with the PBM (like Express Scripts, for example) for groups that are self-funded. And we’re seeing more and more organizations consider self-funding with Rx carve outs for the purpose of retaining rebates, obtaining deeper discount pricing, and having greater control over their clinical management programs.

In my upcoming presentation at EBS and The Hartford’s Gillette Stadium Event, we’ll discuss:

  1. Transparency: Carve in vs. Carve out

  2. Leveraging scale to access large market pricing and clinical management

  3. Contract definitions and how they impact your plan cost

  4. Is your TPA / Medical carrier / PBM offering you the best price / management and service that aligns with your organization

So before you join the session, consider: How much does your organization spend on medications annually?  Do you have a direct contract with the entity providing that service that clearly states how the pricing will be applied to your claims?  Do you receive any rebates from your current pharmacy benefit manager? Do you have the ability to compare formularies to ensure costly low value medications are not covered?

Participating Funding Arrangement (PFA)

The average employer cost of a group health plan in 2018 was almost $7,000 per employee. It’s safe to say that no organization aims to leave money on the table when it comes to medical insurance premiums – especially since health insurance tops the list as one of the most sought after employee benefits. Yet the average first year surplus for the over 90% of RSI clients across market segments is a whopping $55,000. That’s $55,000 these organizations are spending on their employee’s healthcare that is going unused.

So what if your organization could take back some of that money left on the table every plan year? With a unique alternative funding method, known as the Participating Funding Arrangement (PFA), you can change how you control spend in your employer sponsored health plan.

The PFA executes the three C’s to control:

  1. Control Cost – Positive Cash Flow Opportunities

  2. Control Coverage – Deductibles, Copays, Non-Covered Services, etc.

  3. Control Claims Avoidance – Design benefits that actually remove or reduce claims costs

If you have heard the following.  “the rates are the rates” or “the coverage is the coverage” we look forward to teaching you how untrue these statements really are. Get ready to roll up your sleeves with us and start taking back control of your health plan.

Join AJ Somaini and Steve Tardanico from Reimbursement Specialists, Inc. at EBS’ 4th Annual Gillette Stadium event on Thursday, September 19th to learn the stepwise approach to incremental savings in your Rx spend, and how to trim the fat off of your employer sponsored health plan using a Participating Funding Arrangement. Sign up for one of four Alternative Funding Methods sessions using the RSVP & Sign Up button below.


AJ Somaini has over 7 years’ of direct patient care experience in multiple pharmacy practice settings. Before coming to Confidio, he practiced as a Licensed Pharmacist and Clinical Liaison with Rite Aid Pharmacy. AJ delivered immunization clinics for large, self-funded corporations, completed medication therapy management cases, and designed and executed medication compliance programs. He has also managed diabetic patients under collaborative practice agreements, worked in long-term care, and acted as a pharmacy consultant. AJ has also served as an adjunct faculty member at Albany College of Pharmacy and Health Sciences for 6 years.

AJ’s experiences have given him a comprehensive view of the healthcare system and has allowed him to understand the importance of a value-based approach for both the plan sponsor and the member as it relates to pharmacy.

AJ graduated with a Doctorate of Pharmacy degree from Massachusetts College of Pharmacy and Health Sciences in Boston in 2009. AJ and his family live just outside of Burlington, Vermont.


 

Steve Tardanico is the EVP of Reimbursement Specialists, Inc (RSI). He has 18 years’ experience in health insurance, third party administration, and employee benefits. His career began at Blue Cross Blue Shield of Massachusetts where he spent ten years as a Manager, Trainer, and Sales Executive. 

Over the last 8 years Steven has worked with RSI to expand and enhance their proprietary claims avoidance programs and cost containment strategies. As the leader of RSI, Steven currently oversees product development, underwriting, carrier integration and business development for RSI.

Steven’s expertise includes underwriting partially self-funded medical and dental plans, ROI-based administration, telemedicine, employee benefits, COBRA administration, training and product development, and HRA, HSA, and FSA administration.

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