Case Study No. 1
Our client is a distribution company in the Midwest. They
have approximately 5,000 employees and 11,000 total members.
Stephens Consulting Services (SCS) began Audit services in
August of 2006. Unfortunately, the PBM delayed the audit process and remains unresolved to date. In June 2006 SCS
signed a contract to provide RFP Service to our client. The
RFP requested transparent quotes from providers. A timeline,
the RFP questionnaire and a claims file of 41,000+ claims
was forwarded to six PBM’s for processing. The PBM’s
were to review the SCS written contract, note their concerns
and return it with a completed RFP questionnaire. The expectation
is that the provided contract would be the contract used with
as few changes as necessary. SCS utilized our software to
review the returned claims and produced a data analysis that
compared the PBM’s savings potential.
The results of the Data Analysis ranged from a 2.1% to 14.4%
savings with the incumbent bringing back a 9.2% savings based
on approximately a seven million dollar drug spend. Finalists
were interviewed concerning transition, implementation and
disruption. Guarantees approaching the results of the data
were negotiated, methodology for calculating the savings was
agreed upon and both were entered into the contract. The contract
also contained a provision for the PBM to send all processed
claims in an agreed upon format to SCS twice monthly, the
current MAC List, definitions of AWP Source, Brand/Generic
Determination, DAW logic, yearly renegotiation of rates and
rebates and transparency holding the PBM to a single source
of revenue, Administration Fees. The Agreements were signed
and our client had a new PBM and a new lease on pharmacy benefit
management services starting January 1, 2008.
In March of 2008 SCS requested Implementation Sheets, data
and additional information from the current PBM in preparation
for an audit of the first three months of PBM processing.
Within two weeks of the initial information request the PBM
informed SCS that there was a problem with the billing rates.
The problem was found to be the PBM omitting the MAC pricing
on Mail Service generic claims. Our quarterly Audit procedure
revealed an overcharge of $101,000. The client has received
the reimbursement and through our monthly review of data,
we have verified current contract terms are being used.
Case Study No. 2
Stephens Consulting Services (SCS) began working with a southern
trucking firm in late 2004. The firm has over 5,000 employees
and over 10,000 participating members in their pharmacy plan.
The 2004 pharmacy benefit plan was a well designed 3-tiered
copay plan serviced by a major pharmacy benefit manager (PBM).
Our first discussions with the firm were about moving to a
more “transparent” contracted pricing that would
assure better generic pricing and a better outcome even with
an increase in administration fees. The firm’s management
elected to renegotiate contract pricing in lieu of moving
to a totally “transparent” contract. The contracted
pricing was improved and the plan was moved to a more limited
formulary. With the copay design in place, both changes helped
move the members to a higher level of generic utilization
and even some elimination of marginal prescriptions purchased.
The next contract change was for 2006 and 2007. The plan
was moved to a “transparent” pricing and increased
administration fee. With this move, the brand AWP % discount
was decreased but in trade, we took advantage of “pass-through”
pricing and better discounts on generics.
The tables show “savings” for 2007, showing the
financial difference obtained in plan changes and contract
The most dramatic change occurred in both Generic utilization
and the drop in Generic discount. The 54.3% decrease in Retail
Generic cost per claim shows the potential for “transparency”
The savings per Brand claim was less dramatic but still significant.
Most PBMs offer formulary choices with some form of this type
of “restricted” or “limited” formulary.
Even with a single formulary, plan design options with Step
Therapy, Quantity Limits and strong Prior Authorization rules
can affect the outcome in this manner.
The savings for 2007, compared to the 2004 level of contract
terms was $6,860,232.
A potential move for this firm is a reduction in Administration
Fee and a more realistic average Rebate per claim……..our
Case Study No. 3
Stephens Consulting Services (SCS) was retained to aid a
hospital district in Texas to develop a state mandated pharmacy
program for the area’s indigent population. The group’s
membership is for people who do not have private insurance
and meet certain eligibility criteria for the Plan.
SCS was initially contracted to analyze the pharmacy claim
data for the pharmacy program. An analysis was performed and
renewal negotiations with the PBM commenced along with a search
for alternate PBM services. The final decision for the ongoing
PBM services and the need for a full RFP has not been reached
at this time.
The program is mandated to stretch their allotted dollars
as far as possible. Following discussions with the group’s
personnel, SCS agreed to produce a software program to assist
in triaging all new and refill prescriptions being provided
to the members. The one of a kind software triage program
encompasses all of the restrictions of the pharmacy program
while performing direct generic and therapeutic interchange
suggestions, recommendations and associated savings. The program
also tracks the three prescription fill allowance outlined
by the program, suggests the possible Pharmacy Assistance
Program (PAP) availability from pharmaceutical manufacturers
and suggests possible claims to be filled through the pharmacy
discount program in partnership with the National Association
Recently, SCS was able to incorporate client specific pharmacy
claims history in to the program allowing the group personnel
to see the pharmacy claims history while discussing current
pharmacy needs and triage information with each of their clients
all within one program.
This service, while unique, demonstrates the data analysis
and computer innovation capabilities of SCS. This alliance
also shows the breadth and depth of SCS’s commitment
to its clients.
Case Study No. 4
Stephens Consulting Services (SCS) was contracted last year
to conduct an audit for a large metropolitan county in Illinois.
The County has over 30,000 active lives and close to 20,000
retiree lives. The audit revealed overcharges of over $350,000
for the active group and $70,000 for the retirees. The plan
design for the audit period was a simple, flat and single
tiered copay that had a Member copay share of less than 10%.
During the audit, through our discoveries, the County instituted
a 3-tiered copay. An open plan for drug coverage was tightened.
Several unacceptable PBM processing procedures brought to
light by the audit were examined and changed with the PBM.
Total savings for this year are estimated to exceed $5 million.
Case Study No. 5
Stephens Consulting Services (SCS) was contracted to conduct
an audit for a southern Missouri health plan with membership
over 35,000 lives. The audit of a major PBM revealed inaccurate
processing of MAC pricing, several drug coverage issues, missed
copay penalties for DAW assigned claims and even a large dollar
amount of missed dispensing fee assignments. SCS investigated
the PBM savings program designed to adjust prescribing habits
and member compliance. The result showed the PBM expense greatly
exceeded the savings and the program was dropped. Due to inflexibility
of the PBM to improve pricing and to make processing and contract
changes, the group had us conduct an RFP for a new PBM. The
RFP was conducted and a new PBM was hired. With changes made
to PBM processing, better pricing on generics and elimination
of an inappropriate “savings” program, a look
back survey shows the group saving up to $2 million per year.