by Dennis M. Sponer, CEO, ScripNet, Inc.
For Workers’ Compensation (WC) payers, whether private or public, carrier or self insured, make-buy decisions about Managed Care Organizations (MCOs), Third Party Administrators (TPAs) and Pharmacy Benefit Managers (PBMs) are based on many factors. Professional reputation, timely and responsive customer service, and ultimately – how it improves patient outcomes, are all very important. But with costs on the rise and organizations wanting to focus on their core competence, outsourcing has become a common industry practice for many WC payers. Outsourcing is based on the premise that an outside firm can perform these activities at a lower cost than staffing the function internally. But to select and cost-effectively manage a PBM, TPA or MCO, it is best to understand specifically what they do to contain costs (drug prices and utilization in the case of a PBM) and what pricing options the PBM offers for its services. This article, Part 1 of this series, deals with PBM Cost Containment Activities. Part 2 will deal with PBM Pricing.