October 19, 2020

Beware Preferred Vendor



At Apex, we’ve discussed how we take pride in having a stable of pharmacy benefit manager vendors and no preferred PBM vendor.

However, we want to address another trend we are seeing in the marketplace – Medical Third Party Administrators (TPAs) “preferring” select PBM vendors and partners.

While this in theory sounds like a good idea – streamlining of data, integration of medical and pharmacy deductibles and out of pocket fees, etc. – it’s important to understand preferred relationships of any kind. Who benefits from this streamlining – the self-funded employer, or the TPA/PBM?

Many TPAs prefer pharmacy benefit administrators in order to allegedly cut down on red tape. However, a smart and savvy broker and their self-funded employer’s head of HR, CFO, and CEO will be sure to ask questions surrounding this preferred relationship, such as:

  • Are there any other, additional costs to the self-funded employer for using a preferred vendor, either on the TPA side, the PBM side, or both?
  • Are there any data integration fees? If so, what are they?
  • Are there any third parties also being paid behind the scenes (per claim or otherwise) for a preferred PBM vendor?
  • Who will absorb the extra costs if there are extra costs for using a preferred vendor?

Many of these agreements bind self-funded employers to contracts that they never even see between the TPA and the preferred PBM. Why would an employer ever sign an agreement that binds them that is completely hidden from a review?

Also, preferred integration can lead to hidden revenue streams, with limited accountability and maximum exposure to your company’s bank account.

It’s important to understand what these costs are when using a non-preferred PBM vendor with a TPA. Don’t let non-preferred PBM status scare you away, either. The best solution might be using a TPA with a non-preferred PBM vendor.

One size does not fit all.

If your TPA has reached out and shared with you it will now only work with a handful of preferred PBM vendors, we can help.

Contact us, and we can chat with you about the best solution for your self-funded plan and your members, which isn’t necessarily a preferred vendor. It’s only preferred if it’s preferred for your self-funded plan.

Erin L. Albert

Authored By

Erin L. Albert, MBA, PharmD, JD, PAHM

Pharmacy Benefit Practice Leader
Meet Erin L.