Partnership & Collaboration: Why PBMs and Health Plans Should Sync on Regulatory Change Management 

June 21, 2023

Justin Venneri

In Capital Rx’s Government Programs: Behind the Scenes with Jason Barretto, Jason, our Vice President of Government Programs, shares how his experience at health plans over the prior 15+ years helped to shape his understanding of the industry and the complexities of the relationship between pharmacy benefit managers (PBMs) and health plans.

In this second part of the Q&A, we focus on the importance of coordination, collaboration, and visibility in providing health plans with appropriate support for system enhancements and process changes, especially when interpreting a regulator’s intent behind the need for an enhancement. Historically, PBMs have prioritized cost-effectiveness, but with so many new laws being considered and passed that directly impact PBM business practices across the U.S., it’s time for a change. The Q&A highlighting Jason’s answers to the questions is lightly edited for length and clarity.

Collaboration between health plans and PBMs is crucial. There should never be surprises for clients, right? So, for something like regulatory changes, how do you approach collaboration with health plans? 

Right. For me, that was one of the biggest gaps I’ve seen in the relationship between health plans and PBMs. The PBM’s focus was always on how to implement a change in the most cost-effective manner. They’d come up with a solution, release it, and then you were at their mercy. And for the most part, there was – and best I can tell, this is still true – very little conversation about what was being designed or released to support a system enhancement or process change. There was very little transparency into the process, and that was where a lot of pain points originated.

It's understandable for health plan executives to feel this way. You want to understand how the PBM reads and views the intent of the regulation. I’d ask myself, “Do they understand the intent?” The intent is critical. The regulators always have an idea in mind as they write policy changes. If you don’t know what they are trying to solve for - if you’re not in the know – or don’t understand what the intent is, the execution can fall short of intent.

So, at Capital Rx, we ensure that clients understand how we’re viewing the intent every step of the way, what we’re proposing, and that there’s every opportunity to weigh in on the solutions. I think that’s critical because health plans are the contract holders. They own the membership and relationship with regulators, so we should absolutely be collaborating with them.

Can you give us an example or two of a system enhancement or process change? It sounds like you ask for one thing and get something else.

Unfortunately, yes. If you need an elaborate cake, they give you a cupcake. Most PBMs are looking at their bottom line and asking, “How can we meet the intent, as we understand it, at the most basic level with minimal cost?”

A good example is there was a Medicaid plan in Florida, and part of a new regulation said that when a member switches from fee-for-service to managed care or from one managed care organization to another MCO, you must allow them to fill their prescriptions for the first 30 days at their current dispensing pharmacy regardless of whether it's in your network. The members needed to be able to go where they already had their medications being dispensed without disruption. The PBM took this as, “Okay, we’ll take your network and wrap it with a more expansive network that we have.”

I said, “But that doesn’t really meet the intent. A member must be able to fill the prescription where they are until they can switch to an in-network pharmacy. How do you know the pharmacies in the extended network encompass all pharmacies in FL?” What I learned after a lot of back and forth was that there was a system limitation that didn’t allow non-network pharmacies to submit claims. It’s worth noting that those sorts of limitations don’t exist with JUDI®.

Why is that a big deal?

Because therein lies part of the problem when discussing regulatory change management or any type of change. Are you and your PBM partner getting to the intent? Or are you trying to find the straightest line to something you think is the solution at the cheapest cost?

To that end – getting to compliant solutions that meet regulators’ intent - what can you tell us about how you and the team at Capital Rx keep up with regulatory changes and ensure that our solutions comply with current regulations? 

We subscribe to federal and state registries to get the communications directly, we also subscribe to third-party services that interpret and disseminate information, and we leverage our internal and external legal and compliance resources to help ensure that we’re interpreting the regulatory guidance and requirements correctly.  

The team here has so much experience working at and with health plans, so we can take all this information in, organize and interpret it, and produce documentation to share with clients efficiently. Then, we can ensure that we’re on the same page with our clients and that we’re addressing the intent of the requirement or change.

Also, through our account teams, which pharmacists lead, we can share our views on the guidance or law in a way that everyone can understand and appreciate. I wish I could have had this kind of visibility and support. You know the proposed solution and implementation date and are involved in every step. Clients can even speak with our subject matter experts (SMEs) directly if they have any clinical, data-related, or legal questions.

Related Content

        Replay: PBM Legislation: Navigating State and Federal Regulatory Changes and How They May Impact You

        Government Programs: The True Meaning of Customization 

        JUDI® is a Tech-Enabler – A Case Study

Contact us if you’d like to learn more about Capital Rx and what JUDI can do for your pharmacy benefit program and beneficiaries.

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