• 22 Nov 2010

Assurant Health Gets Optimal Results with Custom PBM Program

GET OPTIMAL RESULTS WITH A CUSTOM PBM PROGRAM


CHALLENGE

With operations in 45 states and a membership of approximately 800,000 covered lives, Assurant Health is the market leader in individual medical coverage, in addition to providing small business, short-term, and student health insurance products. Throughout its 115 year history, Assurant Health has been on the forefront of innovations such as health savings accounts and health reimbursement arrangements.

In order to meet the needs of today’s changing healthcare environment, including a shift from low- to high-deductible plans and an increased need for customization, Assurant Health needed to find a better way to manage its pharmacy benefit.

COURSE OF ACTION

Working with Thomson Reuters, Assurant Health developed a three-phased approach to maximize the value and return on investment of its prescription benefit program.

First, the company developed a custom contract template that integrated its specific objectives into a legal document. By incorporating key items such as revenue source disclosure, termination rights, audit protocols, and a lack of competitiveness clause into the contract, Assurant Health was able to protect themselves versus the pharmacy benefit manager (PBM).

The company then developed a custom RFP that allowed them to negotiate from a position of power to meet their specific requirements. The RFP included items such as performance guarantees, pricing models, allowances, and specialty medication pricing. Once the RFP was released, Thomson Reuters helped evaluate the bidders’ responses for deviation from the requirements, as well as calculating the expected savings from each proposal.

The third and final phase of the program was to implement an annual PBM audit once a vendor was selected. Assurant Health designed an audit process based on its custom contract that analyzed a minimum of 89 attributes on 100 percent of the claims processed. Using established methodology and employing reverse logic techniques, the audit process eliminated variation due to discount tactics and other factors that could be subject to interpretation.

RESULTS

As a result of its custom contract, RFP, and auditing processes, Assurant Health has uncovered substantial savings for both the organization and its members.

By negotiating better guarantees and performance measures with their pharmacy benefits managers upfront, Assurant Health expects to recover more than $880,000 in the first three years.

According to Peter Bacon, vice president of business alliances at Assurant Health, “The decision to hire outside, unbiased advice was critical as I looked at all of our options to analyze potential PBM opportunities. Assurant Health is not always the easiest carrier to satisfy since our expectations are so high. The experts at Thomson Reuters were willing to work long hours to meet our very tight timeframe. They were instrumental in delivering a solution that was unanimously approved by Assurant Health senior management. I truly believe that no one else could have provided the value that Thomson Reuters delivered to us. I hope that our competitors do not find Thomson Reuters and continue to use the usual PBM consultants.”