Financial transparency remains the linchpin to a successful business relationship between an employer and a pharmacy benefit manager, reveals a recent study by the Pharmacy Benefit Management Institute.

For the second consecutive year, PBMI's research shows a strong correlation between transparency and employers' satisfaction.

The 2007 findings "reinforce that the way PBMs conduct business does impact employer satisfaction with their services," says Dana Felthouse, president of PBMI.

This correlation exists because transparent contacts and working arrangements typically reflect open, honest and two-way communication between the PBM and the corporate client, Felthouse explains.

Sharing the numbers

"PBMs are under a lot of scrutiny right now and they are becoming more transparent because of it," says Edward J. Walsh, vice president of employee benefits operation at New York-based Cook, Hall and Hyde, Inc., an independent insurance and risk management company.

With a more transparent relationship, the employer will feel there is money being left on the table, especially with rebates, he adds.

The Arizona-based institute, which focuses on drug benefit programs, asked 442 employers, representing 15.4 million beneficiaries, to rate on a scale of one to 10 the overall service and performance of their PBMs.

Under the rating system, 10 represented the highest level of satisfaction.

Nearly 85% of firms that said they had a completely transparent or somewhat transparent financial relationship with their PBMs rated the services of those PBMs much higher than employers that said their financial relationship was not transparent, PBMI reports.

Employers that were "extremely satisfied" with financial transparency gave their pharmacy benefit managers a rating of 8.8 on overall service and performance.

They were particularly impressed -handing out ratings of 9.0 - with administrative functions on identification cards and production and clinical services related to formulary management and rebates.

Conversely, the employers that indicated that they are "somewhat" satisfied with transparency gave their pharmacy benefit managers an average performance rating of 7.9.

In addition, respondents that acknowledged they are "somewhat dissatisfied" or "extremely dissatisfied" with transparency rated their pharmacy benefit managers performance at 7.5 and 5.9, respectively.

Disease management and online tools

Employers that awarded the 5.9 rating to their PBMs were especially unhappy with clinical services on disease management programs (4.3) and formulary management and rebates (5.0).

Disease management services have probably been ranked low for some time, but employers rating those services are starting to see some improvements, says Felthouse.

"If you go back to the advent of disease management programs in the 1990s, some PBMs created the services through the drug benefit exclusively. We know now after ten plus years, you need to have an integrated effort among both the pharmacy benefits and the medical benefits," she notes.

Technological improvements and more integration of medical, drug and lab data are making it such that PBMs, health plans and employers are working together more closely, Felthouse adds.

The low rating of disease management programs "is only one piece of the full scope of services that the PBM provides."

PBMI also notes employers that began a relationship with their PBMs in the year of the survey gave their PBMs slightly lower overall ratings than employers that had worked with a PBM for three or more years.

Some suggest that, once the difficulties of plan implementation were resolved, employer satisfaction increased.

Yet this is not always the case. For example, employers that began their relationship with their PBM in 2002 rated overall service and performance a 7.8, while those that started their relationship in 2004 and 2003 handed out ratings of 8.0. Relationships that stared in 2005 received a rating of 7.4.

A new administrative function was added to the 2007 survey.

Employers were asked to rate their satisfaction with their PBM's Web site for members.

"Most PBMs have invested resources in providing Web-based services for members, and we wanted to begin tracking how PBMs performed on that service," says Felthouse.

Employers that were extremely dissatisfied with their level of financial transparency rated their PBM's Web site 6.2, while somewhat dissatisfied respondents scored their PBMs 7.4.

In contrast, somewhat satisfied and extremely satisfied employers handed out 7.8 and 8.6, respectively.

Online content aside, "the basis of trust begins with pricing," asserts John R. Adler, the national practice leader at Wisconsin-based TRICAST, Inc., a company that manages pharmacy benefit risks.

Past litigation against PBMs regarding their pricing now means they have to try to create trust again in the employer-PBM relationship and to do this means going to a transparent model, he adds.

Visit http://ebn.podhoster.com to download Bridgeford's "Five Minutes With ..." podcast with TriCast Inc.'s John Adler discussing PBM transparency.