Medicare premiums may go up as rival insurers acquire pharmacy benefit managers, according to a January study published in the American Economic Journal: Applied Economics.
“The PBM has an incentive to potentially disadvantage the rival insurers, which could involve passing through a smaller share of rebates or charging them higher administrative fees,” Abby Alpert, PhD, study author and senior fellow at the Phildelphia-based University of Pennsylvania Leonard Davis Institute, said in a March 10 news release. “That’s a conflict of interest.”
Medicare Part D insurers that still worked with rival competitors’ PBMs saw significant premium hikes, suggesting steeper costs for beneficiaries. For example, as independent Part D PBMs waned, monthly premiums increased $22, or 42%, for enrollees in nonintegrated plans in the wake of UnitedHealth Group’s 2015 deal with Catamaran.
Dr. Alpert added that cost savings for insurers integrated with a PBM did not always translate to reduced premiums, though.
The researchers also measured the share of enrollees insured by companies with their own integrated PBM. In 2010, only 30% of Part D beneficiaries fell into this category, versus 80% by 2018.
Vertical integration, which includes insurers and PBMs merging, has been a hot topic in recent months, even sparking a bill in the U.S. Senate to unwind such mergers.
At the Becker's 5th Annual Fall Payer Issues Roundtable, taking place November 2–3 in Chicago, payer executives and healthcare leaders will come together to discuss value-based care, regulatory changes, cost management strategies and innovations shaping the future of payer-provider collaboration. Apply for complimentary registration now.