tci Medicare Compliance & Reimbursement - 2003 Issue 26

Medicare Rx: FINANCIAL ANALYSTS: DRUG-ONLY PLANS A NO-GO

The Medicare prescription-drug legislation being debated in Washington proposes private drug-only insurance plans - presumably operated by pharmacy benefit management companies - that would take on some insurance risk to participate in the program. Two financial analysts at a June 18 forum sponsored by the Center for Studying Health System Change had a word for that scenario: impossible. "I do not see any PBMs absorbing risk," said Alliance Capital Management Senior Vice President Norm Fidel. In normal business practice, PBMs manage drug benefits as an insurance company carve-out and take only administrative risk, said Fidel. In the past...

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