All Engines
Healthcare Economics Engine

PBM Spread Pricing Detection

Detect hidden spread between ingredient cost reimbursed to pharmacy vs. amount billed to plan, quantify total spread revenue, and identify recoverable overcharges

The Hidden Profit Layer

Your PBM says they reimburse pharmacies "at cost." But when you audit the claims, you find they reimbursed the pharmacy $42 for a generic—and billed you $87. That $45 difference? It's called spread. Your PBM pocketed it. Multiply that across 500,000 Rx claims and you've funded their Vegas trip.

Spread Per Claim
$2-$12
average hidden markup
Spread PMPM
$8-$22
typical plan leakage
Detection Rate
<15%
plans audit spread

What Fails Without This Engine

  • Can't see spread: PBM report shows "plan cost" not actual pharmacy reimbursement
  • No benchmark: don't know if $87 for generic atorvastatin is fair or inflated
  • Retroactive recovery impossible: spread captured monthly, audit happens yearly
  • Contract vague on "at cost" definition—PBM uses that ambiguity

Real-Time Spread Detection

Our PBM Spread Pricing Detection Engine benchmarks every claim against NADAC + MAC pricing, identifies outlier reimbursements, flags spread revenue opportunities, and generates audit reports with recoverable overcharges itemized by NDC and pharmacy.

Spread Detection Algorithm
// Real-time claim audit FOR each claim IN pharmacy_claims: plan_cost = claim.ingredient_cost + claim.dispensing_fee // Benchmark ingredient cost nadac_price = GET_nadac(claim.ndc, claim.fill_date) mac_price = GET_mac(claim.ndc, state, claim.fill_date) benchmark = MIN(nadac_price, mac_price) // Calculate spread spread = plan_cost - (benchmark + reasonable_dispensing_fee) IF spread > $5 OR spread_percent > 15%: // High spread detected FLAG claim for audit recovery_opportunity = spread × claim.quantity CATEGORIZE spread: IF spread > $50: "Extreme outlier — likely error or fraud" IF spread $10-$50: "Significant spread — review contract" IF spread $5-$10: "Moderate spread — track trend" // Aggregate by pharmacy pharmacy_total_spread = SUM(spread BY pharmacy_id) IF pharmacy_total_spread > $50K: FLAG "High-spread pharmacy — investigate relationship with PBM" // Generate recovery report total_spread = SUM(all flagged claims) potential_recovery = total_spread × recovery_probability where recovery_probability = 60-80% (contract dependent) OUTPUT: - Total spread PMPM - Top 20 NDCs by spread revenue - High-spread pharmacies - Recoverable amount by month

Engineering Architecture

Core Components

  • NADAC Benchmark: Compare plan cost vs. National Average Drug Acquisition Cost
  • MAC Pricing: Validate against Maximum Allowable Cost by state
  • Spread Aggregator: Calculate total spread PMPM and by pharmacy
  • Recovery Engine: Generate itemized audit report with recovery targets

Detection Metrics

Spread Detection
85-95%
claims flagged
Avg Spread/Claim
$3-$18
varies by NDC
Total Leakage
$500K-$2M
annual per 10K lives
Recovery Rate
60-75%
contract dependent

Real-World Applications

Generic Atorvastatin Spread Audit

  • Claim: Generic atorvastatin 40mg, 90-day supply
  • Plan cost billed: $87
  • NADAC benchmark: $9.50 (90 tablets)
  • Reasonable dispensing fee: $12
  • Expected cost: $21.50
  • Detected spread: $65.50 per claim
  • Annual recovery on this NDC alone: $245K

High-Spread Pharmacy Network

  • Identified 12 pharmacies with >$100K annual spread
  • Common ownership: PBM-affiliated specialty pharmacy chain
  • Total spread from these 12: $1.8M/year
  • Contract breach: 'at cost' reimbursement clause violated
  • Audit demand sent, recovery negotiated: $1.1M
  • New contract clause: mandatory NADAC validation

Expose Hidden Spread Revenue

Benchmark every claim against NADAC + MAC. Detect spread pricing in real-time. Generate audit reports with itemized recovery targets. Stop funding PBM profit margins.

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