Accenture research reveals that more than half of medium to large US employers currently carve out or plan to carve out pharmacy benefits—contracting directly with pharmacy benefits managers (PBMs)—within the next year.

At the same time, a convergence of several market factors could actually reverse this trend. Health payers should be asking what this potential shift means for their organizations—and how they can leverage an integrated medical and pharmacy offering to influence this potential shift.

The search for value

Desperate to drive down high and rising costs, employers and brokers are increasingly choosing self-funded products and pharmacy carve-outs in search of rebates and other discounts.

Health payers have felt the sting of revenue loss and network discount erosion in the wake of this exodus. In fact, many major health payers are investing heavily to develop a vertically integrated offering with the goal of reversing the carve-out trend and increasing consumer engagement.

But if they want to compete for—and win—business, payers must demonstrate the value of their integrated offerings to employers and brokers. Success means proving the value, not just promising it.

From carve-outs to carve-ins

While there is a trend among employers toward carve-outs today, national payers could reverse this trend due to recent changes in the market, such as:

  • Flurry of billion-dollar deals. As a result of a series of mega-mergers, every national payer is positioned to deliver an integrated offering. All five of the largest national payers now either own, or are owned and integrated with, a major PBM.
  • Embrace of industry disruption. According to the Accenture 2018 Employer Healthcare Survey, most employers think a combined health and pharmacy benefits company would have a favorable impact on the marketplace and agree that the formation of these new health companies has caused them to rethink their benefits strategy.
  • Pressure to lower costs. The continued pressure to drive down drug costs and pass savings to healthcare consumers is cutting into the value of carve-out PBMs. The market is already seeing newly combined companies pledge to pass point-of-sale rebates directly to consumers for new employers purchasing their products.

Going beyond the card

Even as these trends fuel the shift to carve-in pharmacy benefits, integration must be operationalized in ways that demonstrate and guarantee value to stakeholders, starting with these fundamentals:

Win at pricing

Price will still determine which PBMs employers select, whether it is a carve-in or a carve-out. With operational synergies, economies of scale and margin stacking from an integrated offering, major payers are able to translate bundled medical and pharmacy into more competitive pricing.

Improve care with data

Payers can rethink how pharmacy data is used to identify and influence the management of conditions and claims. This requires reshaping the operating model to ensure accountability for medical and pharmacy data and to enhance coordination of care, and ultimately, improve medical outcomes.

Enrich experiences

With an integrated offering, payers can improve customer retention by reducing administrative burden. Payers act as trusted advisors for employers while simultaneously minimizing effort and uncertainty for members.

Put skin in the game

If payers are singing the praises of an integrated offering that carves in pharmacy, shouldn’t they be willing to guarantee some level of cost savings? Accenture’s analysis of the market’s expectation for performance guarantees based on validation suggests that the answer is a resounding “yes.”

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Scott Brown

Managing Director – Accenture Health

Scott Whaley

Senior Manager – Strategy


Julianna Clark

Business Consultant – Strategy


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