CareFlite Cut Prescription Spending by 40 Percent – Here’s How

CareFlite is used to saving lives in the most dire of situations, but the Grand Prairie nonprofit has also been saving on their healthcare spend. By focusing on prescription drugs, the company has saved hundreds of thousands each year on prescriptions alone.

Prescriptions can represent 18 to 23 percent of total healthcare spending for companies, even though only a few years ago the took up only 10 percent of healthcare spending. In 2016, CareFlite spent $863,000 on prescriptions alone for its 660 employees. But three years ago, partially-insured CareFlite moved to an independent pharmacy benefit manager with the help of David Goldfarb, president of DSG Benefits Group.

“Part of what we do is reinvent the wheel,” Goldfarb says. “The wheel is not sustainable. Employer-sponsored health plans are inefficient with tremendous waste. There has been a decade or more of heading in the wrong direction.”

When the insurance carrier also owns the pharmacy benefit manager, a conflict of interest exists. The carrier will try and make the pharmacy part of the plan as profitable as possible. Goldfarb says he tries to unbundle the different services in health insurance, so that companies can select the services they need.

The new PBM did not use rebates, which can obfuscate the true costs of drugs. Instead, the new manager provided straightforward fees that can be audited at the end of the year so that the PBM can be held accountable. In 2017, CareFlite spent $773,000 on prescriptions, more than 10 percent in savings. In 2018, prescription spending went down again to $722,000, totaling 16.4 percent in savings since 2016. In 2019, CareFlite is projected to spend just $507,000 on prescriptions, nearly 40 percent in savings.

Another tactic CareFlite employed was to separate specialty medications from the rest of the healthcare spending, as these medications can be a huge driver of healthcare spending. They created a separate stop-loss program for specialty drugs in order to be prepared for illnesses that can cause specialty prescription spend to jump from  $5,000 or $10,000 to $250,000 in a year. Stop-loss can be great protection for those moments. In 2019, specialty drug spend represented 34.7 percent of their of total health plan costs, which was below the below industry average of 44.7 percent.

The company also emphasized the use of generic drugs, with no copays for generic drugs, and they even cover over-the-counter medication with a copay of $5 or under.

Goldfarb says that these changes are much easier to make for companies that are self-funded or partially self-funded, because the companies can have better access to claims data, and that fully insured companies are often at the mercy of insurance carriers.

If you look at the CareFlite organizational chart, it is upside down, and for Jim Swartz, CareFlite’s President and CEO, this is because he sees his role as serving the internal customer. For a nonprofit like CareFlite, who runs 911 service, air transport, and other medical transport services all over North Texas, healthcare savings means more investment into life-saving infrastructure. But for Swartz, who swears in all employees with the mission statement of the organization, maintaining a quality culture and benefits are essential.

“For me it is personal. If you take care of the employees, you have the right to expect them to take care of the customers,” Swartz says.