Latest news with #PBMs
Forbes
17 hours ago
- Business
- Forbes
Group Health Plan Funding: Alternative Considerations For Employers
Teah Corley is the founding principal and CEO of EmployerAdvocates. The landscape of employer-sponsored healthcare is rapidly evolving, with rising costs (registration required) driving the need for innovative funding alternatives. As a group health plan consultant for more than 20 years, I have seen many small and mid-sized employers—particularly those with fewer than 200 employees—think their only viable option is a fully insured plan through a national carrier. However, this approach often defers critical cost controls and financial advantages to the insurance companies. The Hidden Costs Of Fully Insured Plans In a fully insured model, employers relinquish control over cost containment and forfeit pharmaceutical rebate revenue. These rebates—paid by manufacturers to pharmacy benefit managers (PBMs) to secure approved drug list (formulary) placement—are retained by insurers rather than benefiting the employer's health plan. Additionally, fully insured employers often lack access to transparent claims data, making it difficult to analyze cost drivers or implement strategic savings initiatives. Ultimately, cost-containment options are limited, and premium increases leave employers with little recourse beyond plan design changes or cost-shifting to employees. Exploring Alternative Funding Models For many employers, the prospect of self-funding can be daunting due to concerns over cash flow and risk exposure. However, alternative strategies—such as level funding and group captive models—could offer a reasonable middle ground, enabling cost control and financial flexibility without assuming the full self-insured risk. Level funding mirrors the structure of a fully insured plan, but with a crucial distinction: When claims are lower than expected, employers can recoup surplus funds rather than losing them to an insurer. In a fully insured model, this excess funding is retained by the insurance carrier. The level-funded model provides greater financial predictability while offering the potential for cost savings. For employers seeking even greater control, group captive funding allows employers to share risk through risk pools spread among multiple employers. Under this model, each participant self-funds claims up to a predetermined stop-loss threshold, beyond which costs are covered by a shared risk layer and, ultimately, a reinsurance policy. This structure allows smaller businesses to leverage the benefits traditionally reserved for large self-funded employers, such as lower pharmacy spend—in my experience, employers often see a 13% to 15% reduction in drug costs when transitioning from a fully insured to a self-funded model with full rebate pass-through. This number is also consistent with what we hear from our peers across the country. Other benefits may include: • Full transparency into claims data for strategic cost management • Retention of pharmaceutical rebates to offset expenses • Reduced administrative costs and ability to plug-and-play best-in-class vendors • Greater control as self-funded employers control their own custom plan designs and implement custom cost-containment solutions Employers also have the option of advanced funding models whereby a plan's full three-year projected liability, plus a buffer (often 15% to 25%), is underwritten and funded in advance. This three-year advanced funding is provided via a private capital raise with a capital partner that retains the risk with the employer leveraging the interest earned on a large sum over three years. This model creates a static, reliable budget and fixed monthly contribution over 36 months. The corpus is held in a special purpose entity trust and the health plan's monthly fixed costs and claims are paid from the trust. The trust itself carries the debt at a 102% collateralization level. This advanced funding strategy can be wrapped around and co-exist with a fully insured, level-funded or self-funded model to create stability and predictability over an extended period beyond the traditional one-year policy cycle. Making The Right Choice For Company Needs I've noticed employers that employ 50 to 200 people are the most vulnerable to the misconception that the only option for an employer this size is to fully insure its health plan risk through an insurance carrier. Historically, selecting a fully insured plan was the only option for employers in this size range. Captive models that allow employers to share a layer of risk at the stop-loss level have gained momentum in recent years as a mechanism for allowing smaller employers to self-fund a portion of health plan risk to gain greater control over cost containment. Many employers operate under the misconception that self-funding exposes the plan to open-ended risk. To the contrary, self-funded plans that incorporate a layer of stop-loss insurance or a shared captive layer of risk have a known maximum liability, very similar to fully insured plans. The key difference is that self-funded plans have access to greater transparency, control and cost-containment flexibility. When it comes to the risks that employers need to know about to make fully informed decisions, it's important for employers to fully understand the policy terms and limitations. For example, a self-funded strategy with stop-loss or a captive funding strategy will include a stop-loss insurance policy to protect the employer from upside risk. Each policy type has a maximum liability, but may also contain limitations or exclusions. It's also important for employers to fully understand the "attachment point" or the maximum liability that the employer will be responsible for versus what liability the stop-loss or captive will assume. Reading and understanding the policy terms and exclusions to fully understand the maximum liability can help employers better mitigate risk exposure. The Future Of Employer-Sponsored Healthcare As healthcare costs continue to rise, employers can explore innovative funding strategies to maintain affordability and control. Level funding and captive models may present compelling alternatives that help balance risk, transparency and financial efficiency. For forward-thinking businesses, these approaches could offer a pathway to sustainable, cost-effective healthcare solutions—without sacrificing the quality of employee benefits or financial stability. Employers may want to request a funding analysis from their broker or consultant to compare and contrast the financial implications, pros and cons of each funding model to make fully informed decisions. The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
American Press
3 days ago
- Business
- American Press
Jim Beam column:CVS lawsuits won't solve PBM concerns
CVS has been targeted by three lalwsuits filed by the Louisiana attorney general for irs questionable practices.(Photo courtesy of Louisiana legislators and the state's citizens got acquainted near the end of this year's fiscal session with organizations we have heard little about — pharmacy benefit managers (PBMs). Large employers and health insurance companies pay PBMs to act as middlemen to negotiate drug prices. House Bill 358 by Rep. Dustin Miller, D-Opelousas, was one of three measures filed dealing with PBMs. A conference committee changed the bill and it ended up saying that no permit to operate a pharmacy can be granted or renewed to a pharmacy that is wholly or partially owned or controlled by a pharmacy benefit manager. Miller's bill passed the House 95-0 and the Senate 37-0. However, the House rejected changes made by the Senate and a conference committee was eventually appointed to iron out the differences between the two chambers. The PBM change that was inserted into the bill by the conference committee was accepted by the House but the legislation died in the Senate. Senate President Cameron Henry, R-Metairie, later explained that there was no testimony on that complicated change in the bill. Donald Trump Jr., a friend of Louisiana Gov. Jeff Landry, said that bill should pass the Legislature. Landry got so upset when it didn't, he is still threatening to call a special session to pass it. If a Trump says do it, Landry always goes to war in order to get it done. The Advocate reported that Amy Thibault, a spokesperson for CVS, which owns both a PBM and a nationwide chain of drug stores, said the bill would have forced it to close its 119 stores in Louisiana. She said it would affect about 1 million patients across the state and 22,000 patients who receive high-cost specialty drugs that smaller pharmacies find difficult to handle. An anti-PBM bill did pass. Rep. Michael Echols, R-Monroe, sponsored HB 264 that passed both houses unanimously. The newspaper said it favored independent pharmacies by prohibiting PBMs from steering customers to pharmacies they own and by mandating that discounts negotiated by PBMs go to employers and consumers. Echols' bill has been sent to Gov. Landry, but he hasn't signed it or vetoed it yet. However, we know he's still upset because The Advocate reported that the state has filed three lawsuits against CVS accusing it of 'unethical and deceptive acts' in its use of customer data for political lobbying. All three cases allege that CVS violated Louisiana's Unfair Trade Practices and Consumer Protection Law. One lawsuit says the text messages CVS sent to its customers were 'inaccurate, misleading and deceptive.' And that they were intended to incite fear among vulnerable people. The second suit alleges the company has used its size and control of insurers, PBMs and drugstores to squeeze out competition and drive up drug costs. The third lawsuit accuses CVS of abusing its market power to 'inflict economic harm' and impose unfair fees on independent pharmacies 'under threat of being expelled from the CVS network.' The Center Square said CVS Health is pushing back against claims that the company engaged in deceptive, anticompetitive practices. In a statement, CVS called the lawsuits 'without merit' and pledged to defend itself vigorously. CVS said, 'Our communication with CVS customers, patients and members of the community was consistent with the law.' Rather than filing lawsuits, state Sen. Kirk Tallbot, R-River Ridge, had a better solution. When the Senate refused to approve Miller's bill he sponsored Senate Resolution 209. The resolution requests the Louisiana Department of Health to study the impacts of prohibiting pharmacy benefit manager ownership of pharmacies in Louisiana and to submit a report to the Legislature. I found a helpful explanation about PBMs at in a story that said they were created to negotiate better deals for consumers on medicines. However, it said instead PBMs 'have sometimes driven up the cost of prescriptions — while also putting the survival of community pharmacies at risk.' So, it's possible that Landry and legislators should do something to prevent that from happening, However, rushing to judgment with lawsuits seldom solves major problems. More information on PBMs would better serve the legislators who pass this state's laws and the people who are served by the state's drugstores. Henry said Miller's bill wouldn't have taken effect until 2027. Instead of lawsuits, PBMs can be debated during the 2026 legislative session to give legislators the background they need on PBMs. Jim Beam, the retired editor of the American Press, has covered people and politics for more than six decades. Contact him at 337-515-8871 or Reply Forward Add reaction
NBC News
4 days ago
- Business
- NBC News
Republicans dealt a setback on their big bill as Senate referee disqualifies key provisions
WASHINGTON — Republicans suffered a blow Thursday after the Senate referee ruled that a series of health care cuts and savings in their sweeping domestic policy bill are ineligible for the party-line path they're using to get around the chamber's 60-vote threshold. Senate parliamentarian Elizabeth MacDonough, who adjudicates procedural disputes between the two parties, has disqualified several provisions, including Medicaid rules prohibiting funds without verification of immigration status, reimbursement changes to contracts with pharmacy benefit managers (PBMs), provider tax restrictions aimed at saving federal dollars, and new limitations surrounding eligibility for Affordable Care Act funding. The disqualified provisions total between $200 billion and $300 billion in savings over a decade, said Matthew Fiedler, an expert in health care policy and economics at the Brookings Institution. That's a problem for Republicans, who are aiming to pass the "One Big Beautiful Bill" for President Donald Trump's agenda through the Senate in the coming days. The House-passed version of the legislation was already projected to add $2.4 trillion to the national debt over the next 10 years, and additional red ink could make Republicans even more nervous about voting for the final product. 'Everything is challenging, but they're all speed bumps,' Senate Majority Leader John Thune, R-S.D., told reporters on Thursday. 'And we have contingency plans — Plan B, and Plan C, we'll continue to litigate it.' Thune also admitted that the goal of starting votes on the bill Friday was 'still an open question.' Republican leaders are hoping to send the legislation to Trump's desk by July 4. But while the rulings could set back the timing of Senate votes on the bill, Republican aides maintained that they aren't fatal to the overall bill. In some cases, they indicated they will return to the drawing board and reword the problematic provisions to comply with budget limitations, most notably on the Medicaid provider tax. In other cases, they will accept the outcome of the revoked provisions, which is a normal part of these party-line bills. Republicans are using the "budget reconciliation" process so they can pass the bill in the Senate with a simple majority, cutting Democrats out of the process and avoiding a filibuster. But only certain types of bills are eligible for this process. And it's not all bad news for Republicans from the parliamentarian: the new work requirements for able-bodied adults to access Medicaid were deemed compliant with Senate rules. Those provided the largest share of the health care spending cuts in the legislation. Democrats said they were relieved by the ruling on the provider tax, a provision that some members of both parties worry will create pain for hospitals. 'The provider tax is devastating to our hospitals, particularly our rural hospitals, and so I'm glad it's gone,' Senate Minority Leader Chuck Schumer, D-NY, told reporters. 'But we tell the Republicans, and for the sake of our health care system, don't come up with something just as bad or worse.' The decisions by MacDonough add to a lingering list of disputes that Republicans must resolve. The fate of Medicaid continues to be a thorny subject for many GOP lawmakers. House conservatives like Reps. Andy Harris, R-Md., and Chip Roy, R-Texas, are threatening to torpedo the revised bill for softening the House's clean energy funding cuts. And an expansion of the cap on state and local tax deduction, or "SALT," remains a red line for blue-state House Republicans, while GOP senators don't care for it. Some conservatives lashed out at MacDonough, calling for her to either be overruled by senators or fired by Thune. 'The WOKE Senate Parliamentarian, who was appointed by Harry Reid and advised Al Gore, just STRUCK DOWN a provision BANNING illegals from stealing Medicaid from American citizens,' Sen. Tommy Tuberville, R-Ala., wrote on X. 'This is a perfect example of why Americans hate THE SWAMP.' 'THE SENATE PARLIAMENTARIAN SHOULD BE FIRED ASAP,' he said. MacDonough was appointed by then-Senate Majority Leader Harry Reid, D-Nev., in 2012, and is well-respected by leaders on both sides of the aisle. But Sen. Roger Marshall, R-Kansas, also said MacDonough needs to go and called for term limits for parliamentarians. "She's been here since 2012; she has a lot of power," Marshall told reporters. "I don't think anyone should stay here that long and have power where she doesn't answer to anybody." Thune wouldn't directly answer if he was open to firing her. He suggested Republicans knew the parliamentarian could rule that some provisions in their bill didn't comply with Senate reconciliation rules. "We're pushing the edge of the envelope, trying to get as much done as we can," Thune said. Thune and a handful of other GOP senators — including Sens. Lindsey Graham of South Carolina, and Bill Cassidy and John Kennedy, both of Louisiana — said they oppose overruling MacDonough, meaning there are currently not the votes to do so given the GOP's narrow 53-47 majority. And Sen. Susan Collins, R-Maine, the chair of the Appropriations Committee, pushed back against Tuberville and others Republicans' calls to oust MacDonough. The parliamentarian has rankled both parties in the past: In 2021, she ruled against Democrats' provision hiking the minimum wage to $15 in then-President Joe Biden's Covid relief package. 'I totally disagree' that the parliamentarian should be fired, Collins told reporters. 'What comes around goes around when it comes to the parliamentarian. She may rule a way you like one day, the way you don't the next. She has a job to do.' Meanwhile, Democrats say they will keep challenging the provisions in the legislation under Senate rules, depicting the cuts as a way to pay for "tax breaks for billionaires." 'Democrats are continuing to make the case against every provision in this Big, Beautiful Betrayal of a bill that violates Senate rules and hurts families and workers,' said Sen. Jeff Merkley, D-Ore., the ranking member of the Budget Committee.
Business Wire
6 days ago
- Health
- Business Wire
Study Finds Trump's Most Favored Nation Drug Proposal Could Still Raise Out-of-Pocket Costs Without PBM Reform
BOSTON--(BUSINESS WIRE)--Out-of-pocket drug costs for seniors may rise under President Trump's Most Favored Nation (MFN) proposal if policymakers do not address the role of pharmacy benefit managers (PBMs), according to a brief released today by the Pioneer Institute. Smith and Popovian's brief hypothesize that under the Inflation Reduction Act (IRA), PBMs faced lost revenue due to federal price controls, leading them to shift costs to patients. According to Pioneer Institute's IRA Tool, out-of-pocket costs rose by 32 p Share The MFN proposal aims to link U.S. drug prices to the lowest prices in developed countries. However, if rebate contracting remains in place, lower drug prices could still translate into higher out-of-pocket costs for seniors, who may be forced to skip medications to avoid the financial burden. 'We can say with confidence that pharmacy benefit managers are profiting substantially from rebates, fees, and concessions tied to popular medications commonly prescribed to seniors,' said Dr. Bill Smith, co-author of the brief with Dr. Robert Popovian. 'These rebate payments can reach into the billions each year, creating strong incentives for PBMs to maintain the current system, even though many seniors on Medicare cannot afford the rising out-of-pocket costs. Policymakers must address this imbalance and ensure drug pricing works for patients, not just middlemen.' Under the current U.S. pharmaceutical market, PBMs negotiate deals with drug manufacturers promising better coverage in exchange for rebates, various concessions, and fees. To fulfill these contracts, PBMs may increase patients' out-of-pocket costs or impose extra paperwork to steer patients toward certain drugs. While generous rebates can sometimes reduce costs and administrative burdens, the system also incentivizes PBMs to favor higher-priced drugs that offer larger rebates, resulting in higher overall patient costs. This rebate system is largely unregulated and operates behind the scenes. PBMs argue rebates help lower overall drug costs and keep insurance premiums down. However, the lack of transparency creates incentives that don't always benefit patients. Smith and Popovian's brief hypothesize that under the Inflation Reduction Act (IRA), PBMs faced lost revenue due to federal price controls, leading them to shift costs to patients. According to Pioneer Institute's IRA Tool, out-of-pocket costs rose by 32 percent on average for nine commonly prescribed drugs, with seven seeing significant increases. 'Simply put, for the drugs with prices lowered by federal controls, seniors ended up paying more out-of-pocket,' said Dr. Popovian. 'If drug prices fall under the President's new policy but the flawed rebate system remains, patients will still struggle to afford their medications, and well-intentioned policies will backfire.' This warning follows last month's launch by Pioneer, a public tool to monitor the real impact of federal drug price controls under the IRA. The Medicare Drug Access Tracker focuses on Medicare patients served by the four largest PBMs, which cover 87 percent of the market, tracking whether price controls improve affordability over time. Pioneer's initial analysis found out-of-pocket costs increased for seven of nine drugs studied. Key findings include an average cost increase from $74.51 to $98.42 and individual drug cost hikes ranging from $10.56 to $316.81. The public can access the tool at and the full study at Dr. William S. Smith is Senior Fellow & Director of Pioneer Life Sciences Initiative. Dr. Smith has 25 years of experience in government and in corporate roles. His career includes senior staff positions for the Republican House leadership on Capitol Hill, the White House Office of National Drug Control Policy, and the Massachusetts Governor's office where he served under Governors Weld and Cellucci. He spent ten years at Pfizer Inc as Vice President of Public Affairs and Policy where he was responsible for Pfizer's corporate strategies for the U.S. policy environment. He later served as a consultant to major pharmaceutical, biotechnology and medical device companies. Dr. Smith earned his PhD in political science with distinction at The Catholic University of America. Dr. Robert Popovian is the Founder of the strategic consulting firm Conquest Advisors. He also serves as Chief Science Policy Officer at the Global Healthy Living Foundation, Senior Healthy Policy Fellow at the Progressive Policy Institute, and Visiting Health Policy Fellow at the Pioneer Institute. He previously served as Vice President, U.S. Government Relations at Pfizer. One of the country's foremost experts on every significant facet of biopharmaceuticals and the healthcare industry, he is a recognized authority on health economics, policy, government relations, medical affairs, and strategic planning. To learn more about Dr. Popovian please click here. Pioneer empowers Americans with choices and opportunities to live freely and thrive. Working with state policymakers, we use expert research, educational initiatives, legal action and coalition-building to advance human potential in four critical areas: K-12 Education, Health, Economic Opportunity, and American Civic Values.
American Press
7 days ago
- Business
- American Press
PAR talks pharmacy bill, possible Medicaid cuts
(Special to the American Press) Prescription costs and pharmacy benefit managers (PBMs) were a target at the tail end of the 2025 legislative session that ended earlier this month. In the aftermath, three lawmakers joined the Public Affairs Research Council of Louisiana on a webinar last week to discuss the regular session: Senate President Cameron Henry, House Criminal Justice Vice Chair Vanessa LaFleur and House Appropriations Chairman Jack McFarland. Several bills were discussed, including House Bills 264 and 358. These bills focus on PBMs, the middlemen between drug manufacturers and health insurance providers. HB 264, which was passed by the state senate, places new restrictions on PBMs to ensure transparent practices and increase pharmaceutical savings for customers. The legislation requires PBMs to pass rebates and discounts onto customers and prohibits PBMs from sending customers to their pharmacies. The bill, HB 358, was halted in the state senate in the last hours of the regular legislative session after the state senate opted to not introduce the legislation. HB 358 would have prohibited the Louisiana Board of Pharmacy from renewing or granting permits for pharmacies owned or operated by PBMs, ultimately banning PBMs from owning retail pharmacies in Louisiana. HB 358's provisions would not have taken effect until Jan. 1, 2027. Henry said the long implementation period gave some lawmakers pause, stating the bill died at the state senate primarily because the bill 'didn't go through the normal legislative process.' 'There wasn't committee hearings on the senate side of the house side, no public testimony, the most basic things you need to do when you're doing something of this magnitude that's going to affect literally everyone across the state,' he explained. 'At the end, that late day, being that late in the sessions, having an implementation date that long out, members really feeling uncomfortable … let's study the effect of this.' Proponents of the bill believe the move will lead to lower pharmaceutical drug costs. But those opposed said the closure of pharmacies in Louisiana would disrupt healthcare, worsen health outcomes and increase drug costs for patients, according to a Pharmaceutical Care Management Association release. Gov. Jeff Landry took to social media the day after the legislative session ended to declare his plans for a special session to 'lower your drug prices.' Henry said a special session to address HB 358 is unlikely. The state senate did pass a resolution requiring the Louisiana Department of Health to study the potential impacts of HB 358, which must be completed before the 2026 regular legislative session in March. Federal Medicaid Changes However, Henry said to expect a special session if the over $90 billion cuts to Medicaid included in the 'Big Beautiful Bill' is passed with no implementation period. Nationally, there are particular concerns about the $400 billion cut to provider taxes that fund Medicaid for 49 states. For Louisiana, the loss could total $4 billion, which would have 'devastating' effects on rural hospitals and medical providers, he said. 'We can't handle a huge drop immediately. What we'd do there would not be pleasant, but we have to do it.' House Criminal Justice Vice Chair Vanessa LaFleur echoed Henry, stating that budget cuts would have to be made in special session if the Medicaid funding is immediately pulled. 'As much as I don't like the idea, if it happens the way we anticipate, we'll be back in special, we'll be making cuts because we have to. It's just the unknown.' Henry has been in touch with U.S. Sen. Bill Cassidy, U.S. House Speaker Mike Johnson, and U.S. House Majority Leader Steve Scalise to warn them of the potential negative impact of Medicaid cuts on the state. 'They're aware of it, but they're also aware that the rest of the country wants changes,' he said. 'The idea of waste, fraud and abuse sounds good, but it all depends on how you define it.' A two-to-three-year implementation period with the opportunity for amendment is 'the most realistic thing we can ask our delegation.'
