Modern PBM Reporting: How It’s Different and Why It Matters

Choosing a Pharmacy Benefit Manager (PBM) is one of the most important decisions an employer can make. To truly assess your PBM's value, you need to look beyond promises and focus on the transparency, accountability, and realized savings they deliver. This is where reporting comes into play.

Comprehensive reporting allows you to evaluate the value of your PBM, analyze costs and savings, and verify whether the promised savings are truly being realized. In an industry where complexity and opacity are common, effective reporting isn’t just about numbers—it’s about ensuring your PBM is genuinely working in your best interest.

Why Is PBM Reporting Important?

Reporting is the foundation of effective pharmacy benefit management. It provides the visibility you need to understand your plan’s financial performance, make data-driven decisions, and hold your PBM accountable. 

Here’s why reporting is essential:

Evaluating the Value of Your PBM
Comprehensive reports allow you to assess whether your PBM is delivering the savings and value promised. By comparing costs, utilization trends, and savings metrics, you can determine if your PBM’s pricing structure aligns with your financial goals.

Thorough Analysis of Costs and Savings
Detailed cost breakdowns help you identify cost drivers, track savings by program, and measure the impact of cost-containment strategies. This level of visibility enables you to make proactive adjustments to optimize your pharmacy benefits strategy.

Proving Transparency
This is where the concept of “transparency” is put to the test. Transparent reporting shows exactly where your money is going, how savings are being realized, and whether costs are being hidden behind complex pricing structures. It ensures that your PBM is genuinely working in your best interest.

Without robust and regular reporting, you’re essentially flying blind, making it difficult to understand the real impact of your pharmacy benefits strategy or hold your PBM accountable.

Common Reporting Practices from Legacy PBMs

Legacy PBMs are notorious for providing overly complicated reports that are difficult to interpret. These reports are often dense, inconsistent, and focused more on discounts than actual net costs. This complexity isn’t accidental—many legacy PBMs design reports to obscure costs, making it difficult to see where your money is going.

Here’s what you’re likely to encounter with legacy PBM reporting:

Intentionally Intricate Reports
Reports are often unnecessarily complex, requiring expert interpretation to understand. Data is presented in a convoluted way, making it difficult to identify cost drivers, track savings, or evaluate the overall value of your pharmacy benefits strategy.

Limited Access and Hidden Costs
Access to detailed or customized reports often comes at an extra cost (for your own data!), and reports are typically not available on demand. This delayed access limits your ability to make proactive adjustments to your strategy.

No Guidance or Context
Legacy PBMs typically provide little to no context, leaving you to figure out what the numbers mean. This lack of guidance makes it challenging to draw meaningful insights or make informed decisions.

Discount-Based Metrics
Legacy PBMs focus heavily on discounts rather than net costs, which can be misleading. A high discount percentage doesn’t necessarily translate to savings if the base cost is inflated. This approach obscures the true value of the savings programs and makes it difficult to evaluate cost efficiency.

This type of reporting creates dependency on the PBM to interpret the data, reducing your control over your pharmacy benefits strategy. It also raises questions about the accuracy and honesty of the numbers being reported.

What Modern PBM Reporting Should Cover

Modern PBMs are changing the narrative by providing transparent, actionable reports that empower employers to make data-driven decisions. They prioritize clarity, simplicity, and real-time access to data, ensuring you always have the information you need at your fingertips:

Here’s what to expect from modern PBM reporting:

1. Per Member Per Month (PMPM) Metric

Per Member Per Month (PMPM) is a key metric that calculates the average cost of providing prescription drug benefits per member each month. It includes all expenses such as administrative fees, drug costs, and rebates. PMPM is a straightforward, transparent way to evaluate cost efficiency.

PMPM = (Total Annual Healthcare Costs / Number of Members) ➗ 12

Why It Matters: PMPM allows you to compare your plan’s cost efficiency against industry benchmarks, track spending trends over time, and measure the impact of cost-containment strategies. It provides a clear, unbiased view of your benefits plan’s financial health, helping you make smarter, more strategic decisions.

What To Look For: Modern PBMs provide real-time PMPM reporting with benchmarks tailored to your industry and demographics, giving you a clear view of your plan’s performance and how it compares to others.

2. Savings Through Programs

Savings programs are essential for reducing drug costs, but the value they deliver depends on transparent reporting. Modern PBMs provide detailed reports on realized savings by program, top drugs by cost and savings, and return on investment (ROI). This transparency allows you to see exactly where your savings are coming from and how effective each program is.

Why It matters: Savings programs can be complicated, and legacy PBMs often use complex calculations and hidden fees that obscure the true value of the savings. Transparent reporting shows exactly how savings are achieved and who benefits, helping you avoid hidden costs and maximize value.

What To Look For: Ask for real-time reporting with detailed breakdowns of savings by program and by drug. Reports should clearly show how savings are applied and confirm that all cost benefits flow to you, not the PBM. This level of transparency allows you to evaluate the effectiveness of each savings program and make data-driven decisions to optimize your pharmacy benefits strategy.

3. 100% Passed-Through Rebates

Rebates are one of the most significant cost-saving mechanisms in pharmacy benefits, but they can also be one of the most misunderstood. The way rebates are reported makes all the difference in determining whether the savings are genuinely passed on to you or quietly retained by the PBM.

Legacy PBMs often use complex rebate structures with hidden fees and vague reporting practices. They may retain a portion of rebates or inflate costs through spread pricing, making it difficult to see the true value of the savings. This creates a conflict of interest, as the PBM profits from steering members to higher-cost drugs with better rebates.

Modern PBMs, on the other hand, prioritize transparency by offering 100% passed-through rebates. This means every dollar saved is credited back to the client, with no hidden fees or markups. The key to proving this transparency is in the reporting.

Why It Matters: Passed-through rebates can provide substantial savings, but only if they’re truly transparent. Without clear reporting, it’s impossible to know if the savings are being passed on to you or pocketed by the PBM. This is especially problematic if the PBM relies on spread pricing or other hidden profit mechanisms.

Clear and transparent reporting on rebates helps you verify:

• How much rebate was earned for each drug.
• Where the rebate money comes from (e.g., manufacturers).
• How and when the rebate is applied to your costs.

This visibility allows you to see the full value of the rebates and ensures that no hidden fees are cutting into your savings. It also builds trust by proving that your PBM is genuinely working in your best interest.

What To Look For: Modern PBMs should provide detailed, transparent reporting on all rebates, ensuring you always know exactly where your money is going. Here’s what to look for:

• Breakdown by Drug and Program: Detailed reporting that shows rebate amounts for each drug and savings program. This allows you to track which programs are delivering the most value.
• Source and Timing Transparency: Reports should specify where the rebates are coming from (e.g., drug manufacturers) and when they are applied to your costs.
• Clear Rebate Flow: You should be able to see the entire rebate process, from negotiation to application, to verify that every dollar is being passed through.
• No Spread Pricing or Hidden Markups: Reports should confirm that there are no hidden fees or markups that reduce the overall value of the rebate.
• Consistent Tracking Over Time: The ability to track rebates over time helps verify consistent savings and ensure there are no discrepancies or hidden costs.

Transparent rebate reporting provides full visibility into the value of your savings programs, helping you make data-driven decisions about your pharmacy benefits strategy. By choosing a PBM with clear, detailed rebate reporting, you can maximize cost savings and eliminate conflicts of interest.

4. Experience Metrics

Experience metrics provide essential insights into the quality of service your PBM delivers to both your members and your organization. These metrics measure responsiveness, satisfaction, and overall support, helping you evaluate the effectiveness of your pharmacy benefits strategy beyond just cost savings.

Legacy PBMs typically offer limited or generic experience metrics, focusing on high-level satisfaction scores without actionable insights. This lack of detail makes it difficult to gauge the true member experience or the quality of account support.

Modern PBMs provide comprehensive experience metrics that give a clear view of how well they are serving your members and supporting your organization. This transparency enables you to hold your PBM accountable and ensure service quality meets your expectations.

Why It Matters: Experience metrics reveal how effectively your PBM supports your members and manages your account. They help you understand whether members find the PBM easy to use and responsive to their needs, and whether the account team is proactive, strategic, and efficient. Without these insights, it’s impossible to know if your PBM is meeting service expectations or to identify areas for improvement.

What To Look For: When evaluating experience metrics, look for detailed, transparent reporting that covers both member experience and account management. This includes response times for inquiries and authorizations, satisfaction scores with context to understand feedback, and availability across multiple channels. Proactive outreach metrics, such as educational programs and cost-saving notifications, demonstrate a PBM’s commitment to supporting members beyond just transaction processing.

For account management, the focus should be on how quickly issues are resolved, the frequency and effectiveness of strategic planning sessions, and independent client feedback to validate account management quality. Comprehensive experience metrics give you full visibility into the quality of service and support being delivered, ensuring your PBM is delivering both cost savings and a positive experience for your members and organization.

Demand Meaningful Reporting from Your PBM

In an industry notorious for complexity and opacity, transparent reporting is essential for maximizing the value of your pharmacy benefits strategy. Demand on-demand access, real-time data, and transparent reporting from your PBM.

With modern PBMs like SmithRx, you gain full visibility into your pharmacy benefits strategy, empowering you to make informed, data-driven decisions. If you’re ready to move beyond outdated, complex reporting, let’s connect and see how SmithRx can transform your pharmacy benefits with reporting that matters.