Comprehensive Care (CHCR – $0.08) is now able to support its newly designed at-risk Pharmacy Cost-Savings Program with fully-guaranteed performance bonds. This was essential, as these bonds give CompCare the ability to guarantee its clients the successful delivery of pharmacy benefits management services at a verifiable and mutually agreed upon per member per month (PMPM) cost savings.
When CompCare manages the prescription drug benefit of a health plan, it receives a fixed fee, per member per month. In exchange, CompCare assumes the financial risk of paying for the plan’s members prescription drugs as well as performing ancillary pharmacy management services.
The traditional Pharmacy Benefit Manager (PBM) business model is based on the spread between what the PBM reimburses the pharmaceutical supplier and what the PBM charges the health plan customer. Today, this spread is around $8 to $20 per script.
CompCare’s new Pharmacy Savings Center Program, which was developed over the past year and a half, works exclusively with a network of selected PBMs. In this model, the PBM only charges the health plan partner the exact same amount that was paid to the pharmacy. A low administrative fee is added to the charge and is the only margin for the PBM. This “administrative fee” is in the range of $1 to $3 per script – significantly less than the margin in the spread model.
Based on this model, CompCare calculated how much it would be able to save a health plan that was spending $300 million on non-psychotropic drugs and $30 million on psychotropic drugs annually. After analyzing the drug spend over a random ninety-day period, CompCare determined that it could offer the health plan a 10% reduction, or $33 million annual savings, thanks to its new Pharmacy Savings Center Program.
Now thanks to the surety bond, CompCare is positioned to guarantee those savings to its clients. The need for a bond in this case is obvious. Anytime a company offers such a drastic cost reduction, eyebrows are raised in disbelief. So CompCare needs a guarantee to back up its claims. Thanks to the performance bonds, CompCare can guarantee its proposed cost savings. It was really the missing piece of the puzzle for CompCare to start marketing its pharmacy program.
CompCare has already signed contracts with PBMs and now it has the all-important surety bonds. CompCare’s management is confident that its new pharmacy program will lead to substantially higher margins and increased business.
The Company is in the process of hiring a sales team to introduce the program to health plans and self-insured companies and knowing that CompCare’s management doesn’t sit still, our guess is they’re already negotiating pharmacy deals with several parties at this very moment.
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