It’s stop-loss insurance renewal season, and for self-funded employers, the stakes can be high with regard to the impact on health care costs for the upcoming plan year. The decisions employers make throughout the plan year influence their position when renewal discussions begin. As specialty medications and emerging high-cost therapies continue to drive an increasing share of health care spending, ongoing pharmacy benefits management has become an effective strategy for stop-loss risk management and improving renewal outcomes.

 

The Role of Pharmacy Benefits in Stop-Loss Risk Management

Just 1% of health plan members can account for roughly one-third of total employer health care spending. Major medical claims and the high cost of specialty medications and emerging therapies are changing the risk landscape, creating substantial financial exposure for self-funded employers.

Pharmacy spending currently accounts for approximately 24% of total health care costs and is projected to reach 28% by 2029. The highest-cost drug claim in 2024 exceeded $2.4 million. A single claim of that magnitude can have severe implications for an employer’s overall claims experience and stop-loss exposure, and potentially contributes to laser activity during renewal.

That’s why ongoing pharmacy benefits management is critical in the overall stop-loss risk strategy, as it helps:

  • Reduce the severity and frequency of catastrophic claims
  • Identify early intervention opportunities before a claim becomes a major financial event
  • Demonstrate high-cost claims are being actively managed
  • Improve visibility into future risk

Steps Employers Should Take Before Insurance Renewal

Renewal pricing is largely influenced by the claims experience accumulated throughout the year, giving employers an opportunity to address risks before negotiating with their stop-loss carrier.

Three recommended areas of focus for self-funded employers:

 

1. Strengthen Clinical Oversight

Employers need ongoing visibility into which medications their members are using, how utilization is changing and what new therapies could impact future costs.

Innovative Rx Strategies provides a pharmacist-led approach and a unique clinical perspective through:

  • Dedicated pharmacist support
  • Monitoring high-cost and specialty medications month over month
  • Evaluating new and emerging drugs
  • Identifying opportunities for clinically appropriate cost management
  • Reviewing individual high-cost claim drivers

This ongoing oversight can help employers identify potential risks earlier, when there are still opportunities to intervene.

 

2. Use Analytics to Identify and Manage Risks

Insight into where pharmacy dollars are being spent is essential to understanding potential stop-loss exposure.

Employers should continually monitor trends in pharmacy spending, high-cost claimants and specialty drug utilization—not just review the numbers when renewal season hits.

Effective risk management should include:

  • Identifying large claim drivers and potential management strategies
  • Monitoring trends in pharmacy spending throughout the year
  • Forecasting future pharmacy spend
  • Supporting budgeting and financial planning
  • Identifying potential sources of stop-loss exposure
  • Evaluating the impact of emerging high-cost therapies

The goal isn’t to simply understand what happened, it’s to provide insight into what may happen next and determine what can be done to address it.

3. Hold the PBM Accountable

A competitive PBM contract doesn’t guarantee the best performance. Pricing, rebates, utilization and contract terms should be continuously monitored to ensure the plan is receiving the full promised value.

Ongoing PBM oversight should include:

  • Continuous monitoring of PBM performance
  • Contract review and optimization
  • Analysis of pricing and rebate performance
  • Identification of missed savings opportunities
  • Ongoing evaluation of specialty drug management

This continued management helps employers realize all available savings while providing insights into the pharmacy benefits issues that are driving overall claims costs.

 

Don’t Wait for a Laser to Address the Risk

One of an employer’s biggest concerns during stop-loss renewal is the potential for lasers: higher deductibles applied to specific individuals identified as having an elevated risk of significant future claims. High-cost specialty medications and ongoing therapies that can elevate a risk profile are often factors carriers consider when determining whether to apply a laser.

Waiting until renewal to discover that an individual or specific therapy has become a major risk can leave employers with limited options.

Year-round pharmacy benefits oversight provides a different approach. By identifying high-cost claimants, monitoring treatment patterns and evaluating emerging therapies throughout the year, employers can identify potential risk areas and take action before renewal.

 

Build a Stronger Renewal Position

The best renewal discussions aren’t based on looking back at the year’s claims and accepting the carrier’s assessment of future risk. Instead, they begin with the employer demonstrating the actions they’ve taken throughout the year to manage risk.

That’s where ongoing pharmacy benefits consulting can make a difference.

Innovative Rx Strategies’ pharmacist-led approach and ongoing PBM oversight give employers a proactive way to manage pharmacy-related risk during the entire plan year. Working alongside employers, brokers and PBMs, we identify cost drivers, evaluate clinical and financial opportunities, implement cost-management strategies and track results over time. This approach gives employers greater insight into what is driving their claims experience and equips them with the data and strategies needed to approach stop-loss renewal discussions from a stronger position.

 

Make Stop-Loss Strategy a Year-Round Effort

The most impactful stop-loss renewal strategies begin with ongoing pharmacy risk management, rather than waiting until renewal.

Monitoring specialty medications, evaluating emerging therapies, identifying high-cost claimants, analyzing pharmacy trends and holding the PBM accountable are all key to managing the broader financial risk of a self-funded health plan.

 

The Bottom Line

As pharmacy costs continue to rise and specialty medications drive an increasing share of catastrophic claims, employers can’t afford to wait until renewal season to address pharmacy risk. Year-round pharmacy benefits oversight helps identify emerging cost drivers, manage high-cost claims and demonstrate proactive risk mitigation, giving employers greater control over their claims experience and a stronger position at stop-loss renewal.

Keep the conversation going. Explore more insights from Innovative Rx Strategies or contact our team to learn how we can help turn strategy into results.