Real Savings vs. Discount Claims: What to Look for in PBM Reporting

When you evaluate a traditional Pharmacy Benefits Manager (PBM), they promise the moon and stars: you’ll see amazing savings and an exceptional experience for your members. Then post-onboarding, the sub-par reality of partnering with a legacy PBM brings you right back down to earth. Turns out, even with "guaranteed" rebates, your business’ pharmacy spend is higher on average and you’ve been flooded with member complaints about issues, long wait times, and poor service.

What was sold as a dream come true is playing out more like a nightmare. 

The only way forward is through measuring against your goals to determine the actual financial and business implications of your partnership. When it comes time for your first business review or benchmark meeting, you’ll need the right strategy to ask the tough, but necessary questions of your traditional PBM. 

In this article, we’ll give you the tools you need to hold your legacy PBM accountable. Discover which promises you can actually validate and learn more about modern PBMs and the transparent, measurable experience they’re bringing to the table.

Holding Your PBM Accountable for the Promises They Pitched

Traditional PBMs

When it comes time to review your traditional PBM’s promises, you may face barriers to measuring impact in a meaningful way. While the PBM says they’ve delivered the rebates they promised, your per-member, per-month (PMPM) costs have increased. How is that even possible? If you push to see the data behind these rebate claims you’re faced with opaque explanations or excuses about the cost of medications. You get no visibility into if you’ve missed getting the full rebate and if your PBM has kept some percentage for themselves. What’s more, any possible justification for your costs going up due to ingredient cost hikes is completely unverifiable because you’re not given access to comprehensive claim analysis on a drug-by-drug basis.

Digging deeper, you realize your data is being held hostage by your legacy PBM and reporting against it to track progress and savings is virtually impossible. If they do offer some visibility it could be for an extra fee and still done on the PBM’s terms—not your own. Unfortunately, there’s often no meaningful way for you to track your results or hold your traditional PBM accountable under these conditions.

Modern PBMs

With a modern PBM, your reporting experience will be 100% on your own terms. At the very core of modern PBMs, like SmithRx, is a fundamental belief that employers deserve total transparency and access to their data. 

Rather than basing their incentive structure on “discounts” that end up costing you more in the long run, modern PBMs commit to delivering the lowest net cost by passing on 100% of rebates to plan sponsors. What’s more, that’s a promise that you can back up with data. With every claim, you’ll see the real ingredient cost your PBM paid, who they paid out, and the rebate that was passed along to you. This radical transparency makes it possible for you to accurately track and measure against true program savings.

So, what’s the catch? There is none. Legacy PBMs use confusing contracts and rebate retention to make money and keep you paying more per-member. At SmithRx, we charge a flat fee PMPM and provide your members with an exceptional experience. This means you know for certain what you’re getting: no guessing, no hidden fees, just real, quantifiable value.

What to Look for in PBM Reporting

Reporting is one of the most crucial tools to improving your pharmacy benefits program. It’s important to structure your reporting around cost transparency and true savings. To achieve this, you’ll need insights into a few different things. 

• Drug and Program Savings: A detailed breakdown of cost information, such as total plan spend, PMPM costs, and what was paid to pharmacies. 

• Cost Information: Reporting around the impact of savings programs on your bottom line. A modern PBM will give you full transparency into how their savings strategies are performing. 

• Rebate Impact: Rebates are a significant component of prescription drug pricing, and an effective report should clearly show the full amount of rebates received from manufacturers and how they are being passed back directly to you. Without this transparency, it's impossible to verify that the PBM is honoring its contractual commitments and you’re receiving the full value of the rebates.

• Data Ownership and Access: It’s crucial that you have 100% ownership over your data. Having complete and timely access to claims data allows you to perform independent audits, conduct a deeper analysis of your members’ health trends, and make informed decisions about future benefit design. 

• Customer Service and Support: Alongside financial metrics, your pharmacy benefits manager should report on their ability to support your members and administrative staff. Reports should include data on call center performance, such as average hold times, call resolution rates, and member satisfaction scores. A PBM that provides excellent, proactive customer service can improve member adherence to prescribed medications and reduce administrative burdens for your team. 

A true partnership can’t be one-size-fits-all—you should always look for a PBM that provides reporting on your terms that aligns with your needs.

Comparing Legacy vs Modern PBM Guarantees

Legacy PBMs typically offer “guarantees” that are a collection of promises tied to opaque pricing models and minimal rebate pass-through. These guarantees are frequently presented in complex contracts with numerous exclusions and definitions that can be manipulated to the legacy PBM’s advantage. This allows them to meet a guarantee in one area while underperforming in another, or to profit from the “spread” between what they charge you and what the PBM actually pays at the pharmacy.

Modern PBMs, like SmithRx, offer a totally transparent, 100% pass-through model based on a simpler, more direct approach to pharmacy benefits savings. These PBMs work by charging a clear administrative fee and then passing all rebates, discounts, and other savings back to the client. On top of that, they focus on getting you the lowest net cost using PMPM guarantees, rather than rebate guarantees. This model provides genuine financial accountability and aligns the PBM’s interests with your own, because their revenue is not dependent on the price or volume of drugs, but rather on the service they provide.

What to Look for in a PBM Partner

It’s essential that your PBM partner embraces fiduciary alignment. Under the Employee Retirement Income Security Act (ERISA) your business is a fiduciary—which means that you have a legal responsibility to act in the best interests of your health plan and its members. A great PBM partner will share in this commitment and structure their business accordingly. How do you gauge their ability to fully practice fiduciary alignment?

When it comes to evaluation for a new PBM partner or for renewal, here’s an example of what to ask your PBM for:

• Full Access to Data: Ask about how you can access data on claims, pricing, and savings in real-time. Can you get detailed reports or dashboards that provide insights into drug costs and overall plan performance? Is the reporting in real-time?

• Rebate access and 100% Pass-Through: Are rebates negotiated with manufacturers and passed on to your plan? How are they applied to your overall drug costs? Is it 100% pass-through or not?

• Savings Impact: How do you report on how you drive volume to lower the cost of drugs?

You’ll likely find that a traditional PBM can’t or won’t answer these questions—and that’s because they have something to hide. 

Luckily, navigating pharmacy benefits doesn’t have to feel like digging for buried treasure (or savings). With the right partner, you’ll get true transparency and accountability. Modern PBMs ensure you know where your money is going and enable you to make informed decisions that genuinely lower costs and improve your member experience. 

Curious about the real, quantifiable difference SmithRx has made for employers? Speak with a member of our team to discover how we can transform your pharmacy benefits experience.