Vendor performance guarantees are now a familiar part of the renewal cycle. But even a well-intentioned guarantee does not necessarily prevent increases in costs or fees, or ensure that anticipated savings will materialize. The practical value of the guarantee depends on how the commitment is defined, measured and applied in the contract.
Whether renewing with an administrative-services-only carrier, pharmacy benefit management (PBM) or care-management program, vendor sales professionals often highlight “zero increase” pricing or “performance guarantees” as a way to create predictability and align incentives. In many cases, these provisions can be genuinely helpful by encouraging discipline on both sides, creative service improvements and providing an objective framework for measuring results.
