What type of agreement does a PBM enter into when acting as an insurer?

A capitated agreement is a contract in which a Pharmacy Benefit Manager (PBM) receives a fixed amount of money per member per month (PMPM) to manage all of the pharmacy benefits for that member. This type of agreement allows the PBM to have financial predictability while incentivizing them to manage drug costs effectively. The fixed payment covers the cost of pharmaceuticals and associated services, which means that the PBM must find ways to deliver care efficiently within the budget established by the capitation fee.

In the context of PBMs acting as an insurer, a capitated agreement aligns their financial incentives with the overall goal of controlling costs. If the costs of the medications prescribed or the total pharmacy utilization exceed the capitated payment, the PBM takes on the risk. Conversely, if they manage to control utilization and costs effectively, they can keep the excess funds, promoting the practice of efficient healthcare management.

While the other types of agreements mentioned have specific applications and contexts, they do not accurately represent the scenario where a PBM operates in an insurer-like capacity. Shared savings agreements often relate to collaborative cost-saving initiatives rather than fixed payments. Fiduciary agreements pertain to trust and responsibility for managing another party’s assets but do not define a payment structure