Summary
A national hospice care organization with 17,000 members and $19 million in pharmacy benefit costs partnered with Quest Analytics Group in 2023. Following multiple acquisitions, the organization needed to consolidate fragmented pharmacy benefits into a single, optimized program. Through a comprehensive analysis and competitive RFP process, Quest delivered $5.2 million in first-year savings—significantly exceeding initial projections.
Problem
The organization, which provides both facility-owned and in-home hospice care across the country, faced the challenge of managing pharmacy benefits for a workforce spanning from California to Maine. After an introduction from a national benefits broker, the organization engaged Quest to consolidate pharmacy coverage inherited from three separate benefit arrangements:
- Two distinct PBM contracts from acquired companies
- One fully insured plan with inflated, non-transparent costs
Our no-fee benchmarking analysis uncovered several critical issues:
- Incorrect drug categorization across all benefit sources, distorting pricing and rebate calculations
- Ineffective clinical oversight by PBMs, resulting in prescriptions for low-value or less-effective medications
- Rebate disqualification terms for multi-source and limited distribution drugs
- Hidden administrative fees embedded in contract language
- Inflated cost structure within the fully insured plan, misaligned with actual plan performance
Our analysis estimated potential savings of $2.26 million annually through consolidation and optimization.
Solution
Quest Analytics Group conducted a formal RFP process, soliciting bids from five PBMs: the incumbent, two large PBMs, and two mid-market providers.
We strategically structured the RFP to include critical oversight mechanisms:
- Annual audits to verify compliance and surface ongoing savings opportunities
- Quarterly monitoring to prevent future pricing errors
- Specialty drug oversight across both pharmacy and medical benefits
- Member outreach programs to support transitions to lower-cost, clinically appropriate therapies
- Requirement that the selected PBM absorb all consultant and broker fees
Throughout the process, the broker maintained decision-making authority, supported by Quest’s data analysis and strategic guidance.
Success
Quest’s intervention delivered outstanding results for the hospice care organization:
- Delivered $5.2 million in actual first-year savings—well above the projected $3.5 million in guaranteed savings
- Reduced pharmacy costs by 27%
- Consolidated three fragmented benefit arrangements into one streamlined, cost-effective plan
- Preserved member experience despite significant plan design changes
Shifted all consultant and broker fees to the PBM, eliminating direct administrative costs - Implemented a national formulary with appropriate utilization controls
- Strengthened audit and clinical oversight protocols across both pharmacy and medical benefits
The winning bid was awarded to a new national PBM, demonstrating Quest’s ability to drive meaningful competition and secure the most favorable terms—regardless of incumbent relationships.