Healthcare Payer Client Sustained PBM Contract Relationship While Yielding $110M in Recurring Cost Savings Through Contract Improvement
Situation
A large managed care organization covering more than one million lives was spending nearly $2.2B with their PBM annually. The MCO’s contract terms were unfavorable, and their fee schedule and administrative costs were not market competitive.
Approach
AArete analyzed the PBM contract and created a comprehensive negotiation strategy, leveraging AArete’s industry market intelligence. Negotiations leveraged the MCO’s long-standing relationship with the PBM to target administrative costs, discount rates, minimum rebate guarantees, performance guarantees and other terms.
Results
AArete helped negotiate $110 million in recurring savings while supporting MCO advisory related to contractual language that would further protect the MCO and enhance PBM transparency through recent legislation changes.
