Carve-In vs. Carve-Out: What's The Difference?

It used to be that carving-out pharmacy benefits was just for the ‘big guys” and, if you weren't one of them, you had to accept the pharmacy plan that came with your health plan.  That’s not the case anymore. Plans sponsors of all sizes are looking at their pharmacy benefit plans, often carving-out a different option.

Adopting a carve-out strategy offers several significant advantages for the plan sponsor and plan participants. The advantages of choosing a stand-alone Pharmacy Benefit Manager (PBM) include:

• Better control of drug costs and stronger, disease-specific cost- management programs

• Competitive drug pricing with guaranteed financial and operational obligations on the part of  the PBM

• Detailed analyses and reporting to help explain cost drivers and identify savings opportunities

• Greater innovation focused on controlling drug costs 

• Greater proactivity in recommending patient and plan specific solutions that save money and improve the quality of care realized by patients

• Greater flexibility in plan design and clinical program offerings

As with any aspect of business, it is critical to understand the relationship that you are engaged in. And pharmacy is no different. As self-funded plan sponsors, it is critical to understand and capitalize on the contractual relationship between you and your insurance carrier, health plan and/or PBM.