This is a quick follow-up to the recent post about commercial insurance and businesses Ignorance, Inertia, and the Pharmacy Benefit. Among the observations made was a surprising tactic–some insurance companies refuse to carve out the pharmacy benefit from their insurance product offerings. If they do allow a carve-out, the medical insurance premiums often increase rather than decrease. I have long speculated that there are financial incentives for the insurer at work here but I had little to back up that assertation.
Recently, however, it was pointed out to me that there is often language within the insurance contract with the employer that supports this assertion. Specifically, the following statement came from one insurance plan:
[Insurance Company] may receive from these providers discounts for prescriptiondrugs dispensed to you. Neither the group or you* are entitled to receive any portion of any such payments and/or other allowances.
Furthermore, most of these contracts include language about rebates similar to this:
The Pharmacy Benefit Manager may share a portion of those rebates with [Insurance Company]. Neither the Group nor you are entitled to receive any portion of such reabates…
Both of these statements corroborate my speculation about insurance companies and pharmacy benefit managers sharing the financial gains which come from the PBM spread and manufacturer rebates.
Medical Insurance is, at its basic level, a simple transaction. The insurance company purchases resources at a discount and sells these to end user, often a company, at a profit. This paradigm appears to have been corrupted over the years by apparent greed for profit. To make matters worse, the current trend of vertical integration, being done in the name of efficiency, further mask these types of agreements.
Perhaps more businesses need to take a closer look at Amazon, Berkshire Hathaway, and JPMorgan’s current strategies. Creating local healthcare programs without outside interference of middlemen may seem daunting, but the experience may be liberating for the company and the local providers.
With all that is happening in healthcare today, now is the time for the grass-roots patient care initiative to come to the forefront. Employers contracting directly with both pharmacy and medical providers offers some significant advantages both in levels of care and cost. Eliminating the middleman is truly the next logical step in saving money in healthcare. Now is the time for you to make your mark. Make your next goal to speak with local business owners in your area about the significant savings and improved outcomes possible by working with your pharmacy directly. Get the grass-roots care message out!
Footnote
* The contract quoted above actually had some grammar issues–gasp! The full quote in the contract is included below for completeness. The edited version uses the exact language from the second quote within the same contract. The only change was replacing the word With with the word Neither. This makes sense and was consistent with language elsewhere in the contract.
[Insurance Company] may receive from these providers discounts for prescription drugs dispensed to you. With the Group nor you are entitled to receive any portion of any such payments and/or other allowances.
