For Labor and Union prescription benefits plan administrators, maintaining a robust benefits plan while keeping the lights on is a major balancing act. Unlike employer groups, Labor and Union group administrators don’t have the opportunity to generate additional funds or expand their budget.
Over the past five years, one union group’s welfare fund reserves were decreasing at a concerning pace. Much of this had been in response to trying to cover rising drug costs while still providing members with the drugs they depend on. With the help of Truveris, the fund has been able to rebuild its reserves, while navigating a difficult prescription benefits landscape.
Prescription Drug Coverage & a Dwindling Reserve
In early 2012 the fund had established acceptable reserves to manage the benefits of its members. With the implementation of the Affordable Care Act, the fund’s board of trustees voted to include coverage for specialty drugs like those used to treat Hepatitis C. This inclusion was seen as a necessity from an ethical standpoint, but the added costs significantly reduced reserves by millions of dollars in 2014.
Through 2015, the fund’s reserves were further depleted by rising prescription costs and increased member utilization. The significant costs required to cover drug inclusions along with the cap coming off in 2014 resulted in the fund’s reserve dwindling significantly — down to nearly half of what it had been just four years prior. Labor and Union groups regularly face this kind of decision: how to maintain the balancing act of providing needed drug benefits to members while not risking financial instability. The answer often comes from dipping into critical reserves and investments.
Getting a Better Renewal Rate with a Current PBM
When Truveris and the Union first began talking in 2015, the fund was coming off a three-year contract with its current Prescription Benefit Manager (PBM).
“I think when I have a company like Truveris on my side, they are able to provide me some guidance beyond what my normal actuary and consultants can give...”
The fund’s Director initiated discussions with Truveris about taking the fund out to bid, or securing a better renewal rate with their current PBM. Through a competitive reverse auction bidding process, Truveris secured an improved renewal offer from the incumbent PBM, saving the fund millions and leading to an overall reduction in year-over-year costs.