Reduced medical spending associated with integrated pharmacy benefits.

Objectives: Although pharmacy benefit carve-outs are promoted as a cost-containment tool, their impact on medical spending is not well understood. We compare the health care spending of Blue Cross and Blue Shield of Louisiana (BCBSLA) members covered by an integrated ("carved-in") pharmacy benefit with that of members covered under a pharmacy benefit carve-out.

Study Design: Matched, longitudinal cohort study.

Methods: We identified members with coverage through an employer contracting for administrative services only (ie, self-insured) and determined whether they received a pharmacy benefit through BCBSLA. We matched members with and without integrated benefits using a baseline year and compared their medical spending trajectories in 3 subsequent years. These comparisons were repeated in the subset of patients with chronic comorbidities.

Results: Among patients with chronic illnesses, relative growth in per-member per-month (PMPM) medical spending was significantly lower in the integrated benefit group by the second and third follow-up years. Neither the level nor the growth of PMPM medical spending significantly differed in the full population sample, although point estimates suggest that the integrated benefit members may be on a lower cost growth trajectory over time.

Conclusions: Members with chronic illnesses receiving an integrated pharmacy benefit experienced slower medical cost growth compared with members covered by a pharmacy carve-out. Group leaders and brokers should consider the additional cost savings achieved by integrated pharmacy benefits when comparing the total costs of carve-in vs carve-out prescription drug programs.