AH027 - What is Pharmacy Benefit Management? With Jillian Lonson and Jean Beman, Part 1

Transcript

Lightly edited for clarity.

[00:27] Justin Venneri: Hello and thank you for joining us for this episode of the Astonishing Healthcare podcast. This is Justin Venneri, your host and Director of Communications at Capital Rx, and we're going to try something a little different with a series on “what is pharmacy benefit management” -- really with two of my favorite colleagues. I'm not playing favorites, I promise to everybody else, but I'm just trying to highlight as many of my super smart colleagues as is humanly possible. And I would love more to come on the podcast, and we can mix in all sorts of subject matter expertise from outside Capital Rx as well.  

But I realized we jumped right into the podcast scene with AJ and building a PBM (AH001). But we didn't really dig in on what is a PBM. So, I've got Jillian Lonson, Senior Director of Benefit Administration Operations, and Jean Beman, Manager of Benefit Operations and Administration in the studio with me, and we're going to try and explain, quote unquote, everything you need to know in a helpful, not boring way. Jillian and Jean, thanks so much for taking the time.

[01:22] Jillian Lonson: Of course. Happy to be here.

[01:24] Jean Beman: Thank you so much.

[01:25] Justin Venneri: So, this is part one, and how about we start off with your backgrounds quickly, Jillian, tell us a bit about your path to Capital Rx and what your day to day is like.

[01:33] Jillian Lonson: Sure. So, I have always been in the pharmacy space with my very first job being a pharmacy tech at a local grocery chain many, many years ago. I secured my first position in PBM after I graduated college and I really never looked back. I have held positions at a few different consulting firms in my career -- always in the pharmacy space, though. But I always find myself back on the PBM side.  

While PBM seems like a big industry, it's really a small world, and one of my fellow coworkers here at Capital Rx had reached out to me, I think it was back in 2020, to ask me if I was interested in a role here. I was looking to get out of the consulting space and took the opportunity, ran with it, and have not looked back since then. I've always loved benefit management -- funny enough was my very first department I worked in after completing school.  

Day to day for me and my team really circulates around all things related to benefit configuration and test validation. Benefit touches all aspects of a claim when it processes at the pharmacy. So we are really involved with various areas when it comes to the benefits administration piece. My team is responsible here at Capital Rx for both building and validating pharmacy benefit configurations for new clients and any existing clients that want to change their plan offerings throughout the year. We work with so many different areas, and I feel like I am constantly learning something each day.

[03:00] Justin Venneri: Got it. And Jean, you work closely with Jillian as manager of benefit ops and administration. So same question to you. How'd you end up here with us and what's your average day like?

[03:10] Jean Beman: Sure. My history actually started way back when I was 18. I got a job at Long's as a pharmacy clerk and slowly fell down the rabbit hole of pharmacy as I learned more and more and gradually grew a passion for Medicare. Eventually I started working for the provider side and got interested in what was going on in the backend because I wanted to be able to see all the coding and everything that was occurring within the system itself. And I got a job with a PBM, was there for about five years and worked my way up from an analyst all the way to manager, then found an opportunity with Capital Rx and took it immediately.  

And in moving forward day to day, it's really -- nothing is the same from one day to the next because we do have so many various types of requests. Really, our day does not get boring. We always have something new that we need to do. And to Jillian's point, we learn something new every day as well. So I think it's a really fun environment to work in, for sure.

[04:07] Justin Venneri: That's awesome, and we're so glad you're here. So, let's get right into it. What is a pharmacy benefit, and what's a pharmacy benefit manager? I'd love to hear the easiest way you describe us to friends or family if they ask. Jean, you want to go first?

[04:20] Jean Beman: Sure. So the easiest way that I can explain it to relatives, because it is very hard to explain that you work in a PBM, is basically if you take your pharmacy card to the pharmacy, if you're under our client base, meaning that we built your benefits, my team is essentially responsible for coding how your prescription benefits will process, meaning what your co pays are, your drug coverage, how your accumulations work, and so on and so forth. So essentially, we are the back-end controllers of how all of your prescriptions work.

[04:52] Justin Venneri: Jillian, anything you'd add?

[04:53] Jillian Lonson: Yeah, so just really aligning with Jean there, I think when I explain to my family, because I will say I work at a PBM, and they're like, what does that mean? Pharmacy benefit manager. So I have the same explanation: you know, when you go into the pharmacy and your child needs an antibiotic because they're sick? We make sure that that medication processes correctly for your pharmacy benefit so you can leave the pharmacy paying your $5 copay or whatever it is, and you're on your way.

Content Related to What PBMs Actually Do

• ‍What Is the Role of a Pharmacy Benefits Manager (PBM)?‍
• Pharmacy Benefits 101: What is a Formulary?
• Replay – The Story of a Claim

[05:23] Justin Venneri: All right. And the responsibilities of a PBM. AJ, our CEO, he always talks about the hundreds of behind the scenes tasks that PBMs perform. Jean, I'll start with you. Overall, primary responsibility: adjudicate claims. What else goes into that?

[05:39] Jean Beman: Yeah, so really peeling back the layers, there's a lot more we do behind the scenes. So one is data exchange and reporting. They're both two very large aspects that are overlooked, I think, a lot of the time, and they do really hold a lot of value in process, especially to ensure that our plans are properly functioning as intended.

[05:58] Justin Venneri: And, Jillian, what are some other key functions or some other things that may be going on behind the scenes that people don't realize?

[06:06] Jillian Lonson: You know, I really hate to downplay it, but there are really so many key functions that go into getting a claim to process, starting with the pharmacy entering in the key details of a patient's prescription to all the back end details that the claim is processed against in a matter of milliseconds to ultimately returning a response back to the pharmacy. It's quite magical when you think about it. And if you break down each aspect of a claim, there are so many layers that many may not even think of, like, how does the network come into play? Can I even go to this pharmacy? If so, then is my medicine that my doctor prescribed covered? If so, how much do I need to pay? Do I have a deductible? Does my medication require prior approval? Can I only get a certain amount of pills? There are just so many stops along the way to make sure that the antibiotic your child may need for an ear infection processes accurately against your pharmacy benefits. And that's really our job.

[07:01] Justin Venneri: And those benefits, how do you ensure all the pieces are set up correctly? I'm trying to think of the best place to start, maybe with the formulary. Jillian, you want to go first?

[07:11] Jillian Lonson: Sure. So what requires a prior authorization or quantity limit or really any type of clinical edit, we like to say, is foundational and a claim would not process without a formulary attached. It's where all the drugs or products are designated with a tier value, so that influences how much you pay at the pharmacy. Some products require a prior approval, like I mentioned earlier, and your doctor may need to submit required information to our clinical call center here at Capital Rx to ensure that the medication you need is most appropriate for you. So really, part of my team's job is to make sure that the correct formulary is attached on the correct plan when we configure your pharmacy benefits.

[07:53] Jean Beman: And to add on to that with our clinical programs. It's a little bit different because we code in our user interface according to the plan elections that are selected, meaning that our clinical programs are largely built as a back-end process with a UI component of a checkbox, essentially to trigger the individual logic. So, we then take that logic, and we test it according to the plan specs and validate in our batch outputs that those are functioning as intended. So we don't have to do all of the additional legwork to build out these clinical programs. Our development team has already done the majority of the legwork here, which is very, very nice as well.

[08:27] Justin Venneri: Excellent.

[08:28] Jillian Lonson: Just to add on to what Jean said -- you know, I mentioned previously, there's just so many different layers that go into building a benefit. So, I'd like to also touch on the network because that is a key component and it's really a critical element when it comes to my team making sure that your plan is set up correctly.  

A lot of people wonder, can I even go to this specific pharmacy? Because what if it's out of my plan’s network? You know, what if you go to a specific pharmacy that's preferred and what you pay is less than going to another pharmacy, for example? You know, these are all things that my team configures on each plan, and we work extremely closely with our network pricing and provider relations teams. They are the folks responsible for contracting with the thousands and thousands of pharmacies out there and then building the networks that my team will then take and attach to each pharmacy benefit in JUDI.

[09:19] Justin Venneri: So, okay, we've got the plan. A new client comes to you and has their plan specs. We have the formulary, which is the list of drugs that are covered. You have the network, which is the list of pharmacies. And the clinical programs are overlaid so that, you know, you know, for utilization management or otherwise, what the rules are about accessing the medications. Jean, we go to get our medication at a pharmacy in the network. How do the co pays and the accumulators get set up?

[09:47] Jean Beman: Sure. So, let's start with co-pays. From a very basic level, copays are set up for network channel. There's a co-pay table to set up to match how a plan's networks are designed. So, if you go to a retail pharmacy, you're going to get retail co-pays, versus if you go to a mail order pharmacy, you'd be subject to the mail order co-pays.  

We check all network channel co-pays to make sure that they're behaving as intended in our batch testing. In addition to that, any other additional programs such as ACA, we also check to validate that those copays are also likewise functioning from the backend logic that's in place for them. With accumulators, accumulators are set up for an overall network perspective, unless we have a client who has a custom deductible or maximum out of pocket, meaning that they want it to, you know, apply specifically to specialty medications or, you know, what have you. We elect these values table by table in the user interface and set up customizations to drive any client requested accumulations and validate that all this works. Again, in our batch testing to ensure that everything is bucketing as intended and that the full plan is functioning comprehensively as intended.

[10:49] Justin Venneri: Accumulation means it's literally the accumulated spending. So, you have a bucket that goes against the member's deductible, for example, for a type of plan they have. Is that raching?

[11:01] Jean Beman: Yep, that's exactly right. Yeah. So with the deductible, it would be member is subject to paying 100% of the cost. And that's the first phase, typically in a commercial plan, and then the secondary phase, which also buckets at the same time, is the maximum out of pocket, which then normally, and typically once that is met, the member will pay $0.

[11:19] Justin Venneri: And so in setting up a plan now we have our plan pretty much set up. So that's pretty much part one of the series. And we'll tackle some of the next level topics in a following episode, including configuration, a little bit more about testing and such. I'd love to hear a story or something you think maybe underappreciated about the basics or the actual plan setup process. Jillian, you want to take a quick stab at that?

[11:47] Jillian Lonson: Yeah, sure. So, I think, you know, goes to my earlier point, benefits, while it sounds so general and basic, it gets very, very granular. You know, some of our clients require very custom requests, and it takes a lot of brainpower to execute and operationalize.  

And so while we say benefits are, you know, you go into the pharmacy, you get your medicine, and you walk out the door, there's so many micro steps along the way. And if one of those pieces is incorrect, then you potentially have a member disruption. You know, you can't get your medication for your child who's sick, you're paying $5 instead of your $0 copay. And to some, that may seem like a lot, or you thought you didn't have a deductible, and actually you have $1,000 deductible. So, we have to make sure that all of those pieces are set up 100% accurate so that the member has the best experience at the pharmacy. And that's really our job. So, I don't want to downplay it too much, but there's multiple layers to that onion to successfully set up even one benefit in JUDI.

[12:59] Justin Venneri: Okay, thank you. And Jean, maybe one more for you, just because I will ask this at the end of the second episode too. As far as plan setup goes, anything particularly astonishing or amazing that you've seen that you can share? Of course, that just stands out as an example of something interesting that's happened during a plan set up process or a unique scenario you've experienced.

[13:21] Jean Beman: Yeah, so I think actually watching the evolution of JUDI in our plan build environment has actually been the number one most astonishing thing. We gained the capability to bulk load benefits for a plan build for the first time, and it was absolutely mind blowing. In my past life, we could only get as far as loading basically just the components that we could then use to manually build a plan. We couldn't do all of this all in one; it wasn't just an easy upload. Whereas now our development team essentially just sidestepped, overcomplicating plan builds so that everything involved in a build can literally be loaded in one excel file and it loads in a matter of minutes, which is incredible. In my past life, manually building a plan was minimum of 20 minutes. So, the fact that this is minimized down to about two makes a huge, huge difference in efficiency for us.

[14:11] Justin Venneri: Very cool. Okay, well, thank you both for taking the time to explain everything that goes into building the pharmacy benefit and what a pharmacy benefit is at a high level. And for now, thank you both for taking the time to explain everything.

[14:24] Jillian Lonson: Absolutely. We look forward to talking again.

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