The PBM solution is a compendium of practical, field tested strategies that fit special situations that administration officials deem necessary. Plans are customized to meet their particular objectives for the group addressed. The goal is a plan that provides the best benefit program for their client needs. The strategies employed apply calculated and reasonable restrictions on almost every aspect of a prescription. These include - the ingredient cost to sponsor and provider, co-pays, days-supply, dosage, deductibles and maximums, and so forth.

PBM FEATURES A FULL PORTFOLIO OF CONTROLS & INTERCEPTS 

PBM systems evolved over 20 years by trial and error. The original PBM system emulated the real-time attributes of bank and credit card processing pioneered and developed by the banking system.

The impact of accelerating and expediting business Operations was as dramatic a twentieth century

 paradigm for financial institutions as was the industrial revolution was for the manufacturing industry. The dream of a paperless records paradigm for business was also spawned by this technological breakthrough.

This new communication technology alone brought immediate cessation to most of the fraud encountered by insurance companies using fee-for-service methods in the pre-PBM period leading up to 1985. The mere application of real-time, online transaction processing by accessing current eligibility databases eliminated most fraud perpetrated by people that were previously terminated or by those that gained access to bogus eligibility documents.

That fraud issue was estimated to have contributed over 15% to 20% of drug benefit expenditures. As sponsors recognized the power of data-access immediacy provided by online systems they realized that further, more important, management techniques of their drug benefit programs was possible.

The first issue addressed was to make available dispensing options of substituting more inexpensive drugs that were therapeutically equivalent to the more expensive, popular Brand drugs. The application of adjustable co-pay strategies accomplished a great reduction in “PMPM” (Benefit Cost per person per month).

PMPM soon became the single, most utilized barometer of benefit plan performance for administrators and sponsors. Such performance measurement uniquely provided by PBM systems on a real-time basis. This led to the development of more effective premium formulations enabling a greater confidence in offering profitable benefit plans.

The following strategies came in due course by experience with trial and error cost containment measures:

• Imposing $Deductibles and $Maximums (by period) utilization limits;
• Limiting quantities to maximums for a certain time period;
• Intercepting gender incompatibilities for certain specialty drugs;
• Intercepting duplicate therapies (same class of drug for one patient);
• Intercepting same drug simultaneously ordered at multiple drug stores on same day;
• Limiting refills until the previous refill expired on a pace set by the prescribed days-supply;
• Rejection of certain drugs types designated as not covered by the Plan (e.g. cosmetic, cessation drugs, contraceptives, etc.)
• Prior Authorization ( a manual approval) mechanism for overriding drugs rejected by the basic plan;
• Application of variable co-pays to maximize use of Generic drugs;
• Limiting certain drugs to prescribed-only by the appropriate Specialists;
• Limiting Rxs for drugs not common to the practice of certain Specialists.

One of the most cost effective cost containment measures was the development and use of “Formularies”.  These are drug lists used for limiting prescribing to only those drugs contained in that list for a customized Benefit Plan.

These lists may be designated as "closed" or "open" to allow exceptions when approved by the issuance of a Prior Authorization for a particular patient. (Negative formularies may be used from time to time. These lists also designate drugs banned for a plan. The choice of such a formulary is ordinarily based on conditions that make maintenance of the list more convenient manage.)

The formulary strategy has a particular benefit to Benefit Plans that are designed to address the specific needs of specific and targeted chronic diseases. This is of major importance to Benefit Plans expecting 100% utilization as is the case with only Chronic Disease coverage. Those covered require uninterrupted and continuous drug therapies.

These lists are oftentimes designated for dispensing only by Mail Order delivery since dispensing is a continuum of replenishment. For that reason it is called a Maintenance Drug program. The PBM system may reject Rxs presented in the normal POS service in order to maintain the more inexpensive Mail Order scheme.

PBM systems also provide a plethora of important management tools formulated as reports for display or hard copy where the number of Rxs or dollar amounts are listed in numerical size order of largest to smallest values for easy discernment of over-utilization problems.

These, over 30 reports, are presented by focusing on either utilizing members, Physicians, drug stores or by drug types. Appropriate corrective action may be called for when apparent problems appear in these reports. The corrective action or actions oftentimes call for changes to the Plan in use.

In these cases, changes can be made immediately by applying the TeleCLAIM PlanBuilder module in real-time mode or launched by a designated commencement date for the change.

Special software modules are oftentimes employed to signal or intercept drug interactions and/or inappropriate dispensing for gender, age, and disease types. This collateral facet of PBM adjudication processing is usually referred to as Drug Utilization Review or by the acronym “DUR”. This is an optional feature of the PBM system but oftentimes not employed due to the subscription expense involved with a license for the programs and the proprietary database required.

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