A maintenance medication wrap-around program gaining ground among some self-funded middle-market employers demonstrates that when it comes to health benefits, sometimes it costs less to pay a bigger share.

Under the program, employers that pay 100% of the cost of 90-day prescriptions of generic maintenance medications filled by Clarendon Hills, Ill.-based mail order pharmacy EBC Rx L.L.C.'s Rx "n Go program are slashing their pharmacy benefit costs by 10% to 25%.

By removing cost as a barrier, employers are seeing medication compliance rates improve for plan members with chronic conditions, which they hope translate into longer-term cost savings.

However, critics say some pharmacy benefit manager contracts prohibit working through another provider, and there are instances when generic drugs bought at retail cost less than the mail-order program.

Rx "n Go was introduced to the self-funded midsize employer market in 2010 by health benefits industry veteran Robert Gilmore and investment banker Mort Jorgensen after they purchased the firm, which originally was established to serve the uninsured and underinsured markets.

“It was originally started as a direct-to-consumer business. We saw the application for the midsize self-funded employer market. It's a way of addressing three key areas—cost, choice and compliance,” said Mr. Gilmore.

“We don't try to replace their current PBM. We wrap around what they're doing now. The member makes the decision as to what works for them. They can go retail, but then they pay the plan rate. If they go to Rx "n Go, they get it free, but they must go mail-order. Then we invoice the employer $25, $50, $75 or $100, depending on the medication,” Mr. Gilmore said.

Savings accrue to the employer through increased use of generic drugs, which cost significantly less than brand-name drugs, and through Rx "n Go's lower prices, which are derived from bulk purchasing.

Orlando Neal, assistant vp and director of pharmacy analytics at Kansas City, Mo.-based Lockton Cos. L.L.C., said he has been studying Rx "n Go's program to determine whether it is a viable option for some of his clients.

“Is there a true savings when using this type of model? There could be. They do have leverage with getting drugs cheaper from the pharmaceutical makers. A small boutique like Rx "n Go can probably save 15% off the cost of drugs because they don't have the PBM overhead,” he said.

After being introduced to the company by a new middle-market client, Fred Garfield, principal and senior vp of benefits at Orland Park, Ill.-based Horton Group Inc., has brought the idea to other employer clients.

“It's an added perk for the plan members, plus you get claims data, which you don't always get when people go to Wal-Mart to get their prescriptions filled. Those claims don't run through the system,” he said, explaining that discount pharmacies generally don't transmit prescription data to PBMs if the cost is less than a plan member's copayment.

Rx "n Go's billing statements provide a breakdown of drug utilization to the employer. The company also can provide data to the employer's third-party administrator or PBM to combine with other metrics used to track overall health benefit utilization.

“When you factor in that there is no additional cost to employees and a great savings opportunity for the employer, it is truly a win-win scenario we are encouraging all of our clients to review,” said Michael Booth, vp of Westmont, Ill.-based benefit consultant Mid American Group Inc.

However, some health benefits experts expressed reservations about Rx "n Go's program.

“PBM contracts usually have exclusivity provisions that prohibit employers from doing this,” said Guy Morrison, senior vp of employee benefits at the Marsh & McLennan Agency L.L.C. in Atlanta. The discounted pricing contained in PBM contracts “is predicated on their getting a certain amount of generic mail-order business, which is highly profitable for the PBM.”

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Hitesh Patel, vp at Aon Hewitt in Chicago, said many drugs on Rx "n Go's list may be available at discount retail pharmacies for less than the provider's lowest tier of $25 for a 90-day fill.

Other health benefit experts advise that employers use the Rx "n Go program to track utilization, not just prescription fill rates, to make sure that plan members actually take the medications designed to manage chronic conditions and prevent longer-term health issues.

“Most of the literature suggests that making medications available will improve compliance, but even when you eliminate the obstacles, you can't force them to take it,” said Dr. Atman Singh, chief medical officer at Willis North America in Phoenix. “You have to build in other incentives” to ensure that plan members are taking care of their chronic conditions, he said.

Felicia Wilhelm, CEO of Chicago-based TPA Prairie States Enterprises Inc., said “it's easier to measure prescription drug utilization than whether plan members are getting recommended screenings and other aspects of care.”

Stephanie Ward, vp of account management at Corporate Synergies Group L.L.C. in Mount Laurel, N.J., said one reason many insurers want to keep pharmacy management in-house is that it can provide an early warning if plan members are not in compliance.

“For example, if a patient is diagnosed with a heart condition and they obviously aren't filling their maintenance medication, the health plan may intervene and do outreach,” Ms. Ward said.

Dr. A. Mark Fendrick, co-director of the Center for Value-Based Insurance Design at the University of Michigan in Ann Arbor, also criticized Rx'Go's focus on generics.

“While I applaud programs that attempt to increase the medication possession rates of pharmaceuticals, my strong preference would be not just to make generic drugs free, but to lower copayments on the high-valued, evidence-based drugs that we know are substantially underutilized,” he said.

“Anything that saves employers money, employers are going to look at. But at the end of the day, it's not just saving money on the cost of drugs. It's all about getting people healthier and lowering total medical costs because people are taking the drugs,” concluded Larry Boress, president and CEO of the Midwest Business Group on Health in Chicago.