What is a Pharmacy Carve Out Plan?

What is a Pharmacy Carve Out Plan?


Do you know how much your company spends on pharmacy benefits? Many employers and benefits managers don’t, and they’re left feeling stuck in a plan from their medical provider that they can’t oversee or control. With the cost of pharmacy benefits rising each year, businesses are turning to carve out plans that allow them to work directly with a pharmacy benefit manager (PBM) for more plan oversight and less cost.

What Is a Carve Out Plan?

A carve out is one of two options employers have for managing different medical benefits provided to their employees. In a carve out plan, employers contract with an outside company to provide benefits focusing on a specific disease, like diabetes, a treatment, like cancer treatments, or a particular service, like pharmacy benefits.

In contrast, a carve in plan leaves all health care arrangements in the hands of a single medical provider. In the case of a pharmacy benefits plan that’s carved in, a company’s medical provider holds the PBM contract, handling the benefits offered and costs while the company remains one step removed.

What Is a Pharmacy Carve Out Plan?

A pharmacy carve out is when employers separate, or carve out, their prescription drug benefits from their major medical plans to contract directly with a PBM. Many companies, from large Fortune 500s to small and medium-sized business, are carving out pharmacy benefits — and for good reason. In contrast to a carve in strategy, carve out plans give employers better control over pharmacy benefit costs, a crucial consideration as the costs of prescription drugs continue to rise.

Carve out plans give employers transparency into their pharmacy benefits, allowing them to have greater understanding and control of spending, negotiate better deals, and ensure the program is performing as promised. Contracting directly with a PBM gives employers direct access to the cost of their pharmacy benefits, and the data to evaluate program performance.

Why Companies Are Turning to Carve Out Plans for Pharmacy Benefits

Prescription drug coverage is the most utilized health care benefit, trending annually at 15 percent to 25 percent. With the cost of prescription drugs rising, the resulting increase in health care spending is impacting companies’ bottom lines. Carved-in employers often feel held hostage by their carriers, as they can’t access accurate data about their pharmacy benefits spend.

Carve out plans, however, offer transparency and control, both critical components for helping employers and employees manage prescription drug costs. They also give employers direct access to PBMs who are knowledgeable about pharmacy benefits. With prescription drug prices soaring, a carve out plan allows companies to focus attention on managing pharmacy benefits costs separate from the rest of their medical plan. In addition, maintaining an effective pharmacy benefits plan keeps patients from shouldering too much of the cost of prescription drugs.

A carve out plan offers employers one solution for offering a complete pharmacy benefits program while also keeping spending on track. The first step is to find a PBM that provides the transparency and cost savings employers need. For companies considering a carve out plan, Truveris can help. Our technology combined with our team of experts from across the pharmacy benefits ecosystem helps companies get the best PBM contract prices.

Truveris brings transparency to the complex prescription drug ecosystem. We help organizations manage their relationships with PBMs, and help you feel certain that you are maintaining affordable, high quality coverage for your employees.

Send us an email to learn how we can help facilitate your relationship with your current PBM, or help you find a PBM that’s right for you.

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Topics: Trends, Insights & Analysis, Enterprise Employers, Brokers, Pharmacy Carve Out

Posted by

Truveris Team