Capital RX – Validation Institute Podcast Ep 15

In this engaging conversation, Capital RX demonstrates its effective partnership with the Validation Institute, emphasizing their joint effort to promote transparency and accountability in healthcare. The validation by the Validation Institute has notably bolstered Capital RX’s ability to deliver verified savings and maintain contractual integrity. This collaboration highlights their mutual commitment to enhancing healthcare outcomes and managing costs for plan sponsors and administrators.

Key Takeaways from the Discussion with Capital RX

  1. Validation Institute’s Role: The Validation Institute has enhanced Capital RX’s credibility by confirming their commitment to savings and contractual integrity. This validation assures clients that the cost reductions and contract terms presented by Capital RX are both measurable and reliable.
  2. Importance of Transparent Partnerships: Capital RX emphasizes the need for transparent relationships with vendors in the healthcare and pharmacy sectors. These transparent practices are crucial for managing costs effectively and ensuring that fiscal responsibilities are clear and upfront.
  3. Technological Innovations: Capital RX is leveraging cutting-edge technology to streamline operations and improve efficiency within the pharmaceutical benefits space. Their use of a single ledger system and modern adjudication platforms reduces the time and labor needed to manage health plans.
  4. Member Experience Focus: The company is committed to enhancing the member experience through seamless integration of services and clear communication channels. This approach not only simplifies patient care but also ensures that services are delivered efficiently and transparently.


Validation Institute:

We’re excited to be joined for this discussion by Capital RX’s Chief Growth Officer, Kristen Begley, PharmD. She’s a pharmacist by training with a wealth of pharmaceutical supply chain, digital health, and health tech experience. Kristen is a former benefits consultant who worked in women’s health, building a value-based care model in digital front door, and you’ve now been at cap RX for over a year. I hope I got all that right. So glad to have you with us, and thank you for joining us today.

Kristen Begley:

Thank you so much. Glad we could line up this time together.

Challenges for Plan Sponsors and Administrators in Healthcare

Validation Institute:

So let’s start off with what you see as the main challenge or challenges for planned sponsors and administrators to deal with this year. It doesn’t have to be pharmacy specific, but I’m sure we’ll talk about specialty later.

Kristen Begley:

Uh, that sounds great. There are a few things that do come to mind. I would say payers, especially employers—I know it’s a core base for you all—they’ve got a lot on their plates right now, and they know healthcare is costing everyone too much.

I would say that the irony here is one of our few bipartisan moments is that everyone’s working on shrinking healthcare costs, and it is a huge pain point for employers.

Um, and I would say most HR and even CEOs and CFOs really do understand that their people are their most valuable asset, but it’s always that kind of tug of war between top line growth and operational costs.

So I think everyone understands today employees are under a lot of stress. Economy inflation, mental health, financial well-being are all priorities for payers and particularly HR employers, and that’s really who we’re speaking with at the end of the day.

And if I could, I would love to kind of circle back to those bipartisan efforts. I would be remiss if I didn’t talk about the CAA, particularly as it comes into effect for employers.

I feel like HR has really been dumped on with the administrative task of being plan fiduciaries in the healthcare sector, knowing that their brokers are being paid appropriately, knowing that their vendors are not taking too much money too.

So they really needed to become, you know, data analytics, evaluate their brokers and all the fees that have been earning. So it’s really everybody’s responsibility to understand the total cost of healthcare, and we’re just starting to see the tip of the iceberg when it comes to the lawsuits coming out saying were the buyers of our healthcare much like the 401K issues that happened many years ago—good fiduciaries of the plan and making sure that the premium increases weren’t too high. So lots to do for payers right now.

Achieving Negative Cost Trends in Pharmacy Benefits

Validation Institute:

Wow, and we know the pharmacy benefit as a component of total spend consumes more plan dollars and resources every year, year on year, and capital RX provided us data for 10 of your employer groups that have been with you for one to three years and have anywhere from 400 to 21,000 enrolled members. We’ve reviewed that, and it satisfied the components to achieve a validation for savings, which complements your validation for contractual integrity. So congratulations on that, but um, how can other planned sponsors achieve a negative trend?

Kristen Begley:

Oh, that’s a long discussion, and I’m sure it’s the silver bullet everybody’s looking for, but there are a number of things that you know a planned sponsor can make sure that they shrink the balloon, and what you’re really looking for, and I’ll touch on a few things, is an aligned partner, align vendors, whether it’s medical or pharmacy, that are transparent, and we’re all trying to push that back to that bipartisan legislation, and you know, you can get to a negative cost trend and be able to explain to your leadership, you know, what is the volatility driving your cost up.

So let’s start off with the align partner at capital. We have a single ledger model that leverages acquisition costs on drugs, which is nadac, which means we don’t control what’s a brand, what’s a generic, what the cost of the drug is.

It should be much more simple in the United States, and I think that some people that listen to this will probably know that we testified in DC not too long ago talking about the whole infrastructure, but the point of this is, can you follow the money trail with your PBM partner or your medical partner? Can you audit it? Is there two ledgers?

Is what we say, you know, is there a buy and a sell that you can’t see? If that is the vendor partnership that you are committed to, you’ll definitely have difficulties making sure that you’re getting a fair price. Do you have clarity and rebates? If I bring it back to pharmacy, is everything flowing back to you?

And the reason you should care about that is the moment your vendor partner makes money off of you spending more, it’s a problem whether that’s on generic drugs, reclassifying drugs, whether that’s on rebates.

If they make more money when you spend more money, that is a really significant problem in the healthcare system, so you need to confidently be able to say yes, I know, you know, what money my vendors are making, and I can audit that.

Trust is highly important there. Second, and this is where I’m going to be a dorky pharmacist. Drug mix… You know, most people don’t think about the fact that only 1.5 percent of claims drive 50 percent of their spend.

Truly, your RFP should be down to the drug level. I know it sounds complicated, and most people kind of let this go because specialty was a small part, but we know it’s really driving the medical spend.

We all know it. It’s a complicated thing, but at the end of the day, you should be able to measure this. You should know what formulary does my PBM have, what do the bidders have, what prior authorization approval rates does my PBM drive? Are they approving more drugs because they make more money with more expensive medications, which I think is a lot of the conflict that is in particularly the pharmacy space?

And by the way, again, to be the, you know, dorky pharmacist here, older drugs are safer. They’ve been taken by more people. So just because you see a commercial on TV doesn’t mean that you should take that latest and greatest drug because they’ve probably been used by less than one percent of the population, and there’s always side effects.

It takes us years and years and years to learn those things. And then thirdly, after alignment, drug mix, I’d say guarantees. I found that in the PBM industry, and the reason I left the PBM industry is because, you know, we were all measuring discounts and rebates off of a start price that we really didn’t know.

So asking your PBM to give you a per member per month guarantee is hugely critical, and frankly, your CFOs actually will know what you’re talking about because I trust your CFOs absolutely know what they spent last year on healthcare, their PM PM.

And if they had a vendor that said this is what you’re going to spend next year and we’re putting our fees at risk so that we can guarantee that you’re going to spend this the following year, it’s easy math for anybody to understand.

So, it’s really important that you start pushing these vendors to have accountability on the total spend because really, they’re the ones approving the drugs, they’re the ones building the formularies, they’re the ones doing the auto refills, and the prescription drug space where you may end up giving your employees 15 months of therapy instead of 13 months of therapy, and you’re the one that’s paying for it.

So these are all small things, but they really do add up, and the costs that you know, pharmacy is in today, the trend that it’s in, it’s important that as fiduciaries of the plan, you’re looking to this level in the RFP process.

Leveraging Technology to Enhance Healthcare Efficiency and Outcomes

Validation Institute:

I have to say, Kristen, you being a dorky pharmacist has given these people a lot of great information. So let’s talk technology and how does that help improve costs and outcomes?

Kristen Begley:

So no offense to all the dorky other pharmacists out there. I love being a pharmacist, so I will roll that back a little, but um, I will say, you know, technology should be invisible, and the two things that you know, from our perspective, that’s really helping us and helping our clients with technology is one, in the pharmacy space, technology hasn’t been innovated in 20-30 years.

Very old systems, very old code, coding, so what makes us special and why we can compete with the big three is that we are operationally more efficient, so what takes them hundreds of man-hours to, um, you know, build a plan design, transfer a plan, they have to throw a lot of bodies, it takes weeks or months sometimes to make a change.

It really takes us minutes or at most 24 hours to make these changes or onboard. We had a blank sheet of paper even when it comes to our health plan business. You know, we built Judy, which is short for adjudication.

That’s our adjudication platform after, you know, Medicare regs were put out, so we didn’t have to shoehorn our system. We knew exactly what we were building for, so it’s our operational efficiency, but okay, that’s a little boring.

So I’d say the most important thing is the member experience. Our call center, all of our systems, it’s one seamless adjudication platform from eligibility to member cost share to clinical programs.

We even can let other vendors outside of us approve medications if say it’s a concierge vendor that they would like to have control of prior authorizations, or it’s the health system themselves.

We can allow people into our system to see what’s going on with members. When a member calls in, everybody knows what’s happening, and it’s not a patchwork of 30 systems altogether.

I just think there’s been a lot of frustration and a lot of innovation on the EHR side, on the hospital side, where a claim is born, but zero almost almost zero Innovation on the payer side, and if we’re going to move to value-based care and really change this model, and you and I know and we’ve been talking about value-based care for 20 years, I think we need to innovate our healthcare technology on the payer side.

The adjudication platforms are just not built for it, and whether it’s getting rid of fee for service on the medical side or getting rid of spread pricing on the pharmacy side, if we’re going to move to value-based care so that it’s all aligned and providers are paid for good outcomes and healthy patients, we need better payer systems, so we’re really excited for the future and believe that we can provide that infrastructure to the healthcare system.

Prioritizing Member Needs and Regulatory Changes in Healthcare

Validation Institute:

I very much agree with all that, and we’ve touched on cost trend, specialty, technology, and a little bit about the consumer. Remember, but what do you see as mattering most to the health plan member and healthcare consumer and member. What do you see as mattering most to the health plan member and health care consumer and what do you see out there that needs to be addressed to help improve their experience.

Kristen Begley:

Um, one, I do think given the size of the healthcare industry, we do need to see regulation, and we are starting to see that regulation in DC. That’s an easy one to attack, and there’s no reason we shouldn’t have clarity, particularly on drug pricing in my world.

It should be as simple as buying something over the counter, right? You know what Tylenol costs, whether you’re insured or uninsured, you work at a big employer, you work a small employer.

The Russian roulette will behind the counter where the PBM has a lot of control of dialing up the price or dialing down the price or reclassifying drugs, so we need to see regulation.

I believe in the pharmacy space, it’s the most access health care benefit. Um, and it should be fair. There’s no reason that this shouldn’t be a commodity, and we all know what Lipitor costs, so to speak, or generic Lipitor.

Hopefully, everybody’s taking generic. Um, we’re far from interoperable between payers, providers, and consumer apps. These things are slowly changing. I hear the right things out of the health systems and the payer others.

Trust me, people download apps from when their doctor tells them to download, download an app. They’re not as good at downloading apps from their health plan or PBM tells them to download an app, so we need a place in the healthcare ecosystem that is any front door that patients can be educated, you know, those moments in care.

Sometimes you’re a patient, sometimes you’re a consumer, depending on what you’re buying. Are you, do you have cancer, being a patient and things are catastrophic for you, and it’s hard to make decisions, or are you a consumer where you’re looking for your latest you know, gerd or upset stomach medication? So we need to simplify things a lot.

The healthcare system is very hard to navigate, including the cost of it and the revenue, so I think us explaining as providers, and I will say this, I’ll give a shout out to all my favorite pharmacists, you know, pharmacists are the most underutilized resource out there, so we need to get them more into the education ecosystem because they are a trusted one of the most trusted healthcare providers out there.

So we need to leverage that and get education local, regional providers, and pharmacists all to help with visual virtual care. So I think it’s a super exciting time in healthcare and really glad to be part of it, and I, you know, thank you for having us.

Validation Institute:

Well, this has been some great information, and Kristen, thank you for joining me today.

Kristen Begley:

Perfect, thank you, and for everyone out there that wants to learn more about Capital RX and to read their validation, go to Thank you very much and have a great day.


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