Situation

A large managed care organization covering more than one million lives was spending nearly $2.2B with their PBM annually. The MCO’s contract terms were unfavorable, and their fee schedule and administrative costs were not market competitive. 

Approach

AArete analyzed the PBM contract and created a comprehensive negotiation strategy, leveraging AArete’s industry market intelligence. Negotiations leveraged the MCO’s long-standing relationship with the PBM to target administrative costs, discount rates, minimum rebate guarantees, performance guarantees and other terms. 

Results

AArete helped negotiate $90 million in recurring savings while supporting MCO advisory related to contractual language that would further protect the MCO and enhance PBM transparency through recent legislation changes.