Month: July 2015

Search Engines and Pharmacy

One trait of a thriving pharmacy is a good patient base, and a patient base is always in a state of flux. Patient move away, move into nursing homes, or otherwise just evaporate. To continue to thrive, a pharmacy needs to continue attract new customers. Advertising, therefore is important.

The advertising continuum can range from simple to inexpensive. For example, word of mouth and reputation can result in regular referrals from current patients or other health care providers. Other times, advertising is broader (and more expensive), like a television or radio advertisement to let the public know about a new or important service you offer.

Every pharmacy will have a favorite advertising outlet. Some might find newspaper most effective, others might find that television, radio or a medium like a billboard on a busy road are superior. One newer method of advertising is the placement of materials online within search results. Google, Bing and Yahoo! all sell advertising space that matches your advertisement to searches that are likely to be associated with potential patients and customers for your services.

Computers were becoming mainstream in the late 70’s and early 80’s, and those that grew up in that time period (Generation X) are generally very computer savvy and now in their 40’s and 50’s. Generation X is also starting to required medications as they enter middle age. In other words, Generation X’ers are prime targets as new potential pharmacy customers. Online advertising (e.g. Google AdWords and other programs) is a very appealing way to target these individuals to get your pharmacy’s message across. Internet advertising has real potential to a business like a retail pharmacy. Internet advertising, however, is still in its infancy, and its effectiveness for pharmacy is largely unknown.

Putting an advertisement to appear in search results from providers like Google, Yahoo! or Bing is not straight forward if you are a pharmacy, though. All of the major search engine companies have policies on advertising pharmaceuticals or pharmacy services, and these policies state that internet pharmacies must have a VIPPS or e-advertiser credential (both available from NABP) in order to advertise.

The VIPPS Program is designed to identify legitimate internet pharmacies from the plethora of illegal internet pharmacies that exist. NABP describes the benefits of certification  as:

With thousands of rogue sites illegally selling prescription drugs, VIPPS offers a way for legitimate sites to set themselves apart.

A NABP VIPPS endorsement will set a pharmacy back $6000 initially and up to $5000 annually. The endorsement involves an on-site survey and verification of licensure along with verification of compliance with a host of policies that lend credibility to an online pharmacy. Internet pharmacies often do not cater to walk-in customers, and may not even have a storefront. The site survey to verify the legitimacy of the business is an important part of this certification.

Welcome to Pharmacy Jeopardy

Alex Trebek: “The answer is: A brick-and-mortar store with a simple website selling prescriptions to local customers in for in-store pickup.”

You: “What is a retail pharmacy, Alex?”

BZZZZZT!

Alex: Sorry, that is incorrect. The correct question is “What is an Internet Pharmacy”

You see, if…

  • your customers pick up in store, or receives home delivery from your own employee, and
  • only rarely do you have to mail a prescription (then and only into areas you are licensed already) and
  • your store also has a website of any type, and
  • your current customers can request refills from this website…

Your pharmacy is categorized as an internet pharmacy by the search engines.

The sticking point, as far as the search engine companies are concerned, is the ability to request refills online. This is a service that is critical in today’s pharmacy world. Even patients with little aptitude with computers regularly use online refill pages at their pharmacy website (independent and chain alike). They have come to expect and demand this of their pharmacy. Unfortunately, this one service makes every brick and mortar pharmacy, in the eyes of the search engines, an internet pharmacy. And internet pharmacies have to have a certification in order to advertise on the search engines.

A VIPPS certification is overkill in this respect, and NABP recognizes this. NABP also offers an e-advertser certification that will allow the pharmacy to advertise on the search engines if it only offers online refills on its website. This certification does not involve an on-site survey; the emphasis is on a review of the pharmacy’s web site. This makes a lot more sense for actual pharmacies in established communities, but astonishingly,  NABP charges $2000 per year for this certification. When asked how they justify this cost, NABP officials referred to the “extensive website review” that they do to ensure that the pharmacy meets their criteria.

I am not sure who is doing the review of the website at NABP. I have personally reviewed hundreds of pharmacy websites over the last 10 years while involved with an pharmacy accrediting organization.  Most websites took between 5 and 30 minutes to thoroughly explore and evaluate for compliance with stringent accreditation rules. Few were exceedingly information dense> The worst of these were not difficult to review in less than 60 minutes. It doesn’t take a Ph.D. in mathematics to calculate that this works out to more than $2000/hr to review a website.

Advertising ROI

Every dollar spent on advertising is supposed to bring in profit to offset the costs of advertisement. This return on investment (ROI) is often difficult to calculate, as bringing in one new patient to a pharmacy might result in a anywhere from a few dollars per year to thousands of dollars per year in sales.

But this yearly certification is not advertising. It is only a license that allows you to spend money advertising with the search engines. One still has to purchase advertising space. The yearly tax (in the form of a certification) effectively makes each advertising campaign with a search engine substantially more expensive. The high expense, coupled with the unknown ROI on an unproven advertising medium, makes the proposition dubious for all but the most aggressive pharmacies.

Conclusions

I generally try very hard to put a positive spin on everything covered on the Thriving Pharmacist, and it is difficult to spot a silver lining for pharmacies. Even so, I will try not to disappoint.

First Conclusion: if one really wants to advertise using this method, consider disabling web based refills. This should enable an exception to be made with the search engine provider (though this is not a promise). For those patients wanting access to easy refills on the go, look into companies that offer cell phone app based refills instead. This might allow you to maintain a balance between online advertising and convenient refills.

Second conclusion: Look at search results using terms like “local pharmacy” on several search engines. Chances are that your competitors (even the chains) are suffering from the same restriction. This means that you are not at a competitive disadvantage. In my case, our pharmacy appears above local chains every time (for what reason I really don’t know). If you feel like becoming the first one to test the uncharted waters of this advertising forum, go back to the first conclusion and read it again.

Third conclusion: It would take a very large response to search engine based advertising to break even after one includes the up front and annual certification costs to advertising. That does not mean, however, that a positive ROI is not possible. With great risk, comes great reward…maybe.

Finally, if being labeled an internet pharmacy by Google, Yahoo! and Bing bothers you, let them know. Contact their advertising departments and explain why you are not an internet based pharmacy and lodge a complaint. If you would be willing to spend money advertising on their site (without a NAPB certification), ask them why they don’t want your money. With enough traction, maybe the rules will relax and allow brick-and-mortar pharmacies to avoid the NABP “internet pharmacy” tax.

Should the Tail Wag the Dog?

Here at the Thriving Pharmacist, we often write about where we believe the practice of pharmacy should going, and given the feedback we receive, there are more than a few pharmacists that agree with our direction. In a nutshell, we believe that pharmacists and pharmacies should be documenting patient care, evaluating outcomes of therapy and working with patients and prescribers to optimize medication use. There is evidence already available (some discussed on this blog previously) that pharmacists, when used in this manner, can benefit the healthcare system in significant and meaningful ways. This includes financial benefits to the healthcare systems, with significant savings realized in total health spend.

But healthcare today is very fragmented, and this creates the potential for inefficiency. The companies paid to manage the prescription benefit (Pharmacy Benefit Managers or PBMs) often have no stake in the total health spend. The primary mechanisms used by the benefit managers to save the healthcare systems money are downward pressure on the cost of medications and (more recently) DIR fees taken from member pharmacies and shifted back to the health plan. The health plans appear to be mostly unaware that pharmacists, used properly, can positively impact their bottom line in other ways.

This myopic doctrine manifested when Congress handed the Medicare Drug Benefit (Medicare Part D) over to the PBMs to run. The PBMs are only responsible for drug costs. The accountability for total health spend falls to Medicare Part B, so any programs under Medicare Part D that leverage pharmacists to increase medication compliance and improve medication related outcomes come at the expense of the PBMs with no return on the PBM investment. It comes as no surprise, then, that Medicare Part D MTM programs have been mostly non-starters, with very few patients eligible, and plans using internal resources instead of the patient’s own pharmacist to implement them. The PBMs appear to view these programs as added expense without a return on their investment.

This fragmentation is allowing the tail to wag the dog. The Medicare Part D benefit has become a “success” from the prospective of congress, with the savings the PBMs have shown. These savings have largely come at the expense of the bottom lines of the actual providers in the trenches, though. One only has to look as far as Medicare’s own reports to see that the PBM industry is doing quite well, quite possibly making as much money managing the benefit (charging a spread on each prescription) as the pharmacies actually caring for the patients. The recognition by the government that the current problem is a success further propagates the currently popular PBM strategies that have forced down the price paid to pharmacies for medications without looking at the bigger picture: medications (when used correctly) are an incredibly cost-effective way to save total healthcare costs. It is not always the least expensive medication that is going to save the system the most money in the long run, but the tail continues to argue cheap is better, and the dog doesn’t seem to be complaining.

The solution for health care, however, is just waiting to make it through congress. By giving provider status (with Medicare) to pharmacists, the real benefits of pharmacy can grow beyond Medicare Part D’s emphasis on cheap drug product. Paying pharmacists to make interventions that ultimately save the provider (Medicare part A and B) in total health spend makes significantly more sense than the current model focusing almost exclusively on drug cost. In effect, provider status for pharmacists will ultimately use pharmacists where they can save the most for the system.

Today’s assignment is for every pharmacist to have an encounter with their elected officials in Washington DC. Refer them to some of the examples discussed previously on this blog (things like the Army’s own reports, and studies looking at savings by improving compliance and other examples) where pharmacists can save the payor money. Help them understand that pharmacists are an important asset to help Medicare survive. Make your encounters count. Get help them understand the importance of Medicare acknowledged provider status to pharmacists. If they have not already signed on in support of the current bill, encourage them to do so. Help stop the tail from wagging the dog.

DIR Analysis (The Bottom-Ten)

The previous analysis of narrow network DIR fees generated significant attention, and several people were interested in more details about the medications that were severely underwater.

Notes

It is important to note that the 10 drugs listed below represent 10 drugs our pharmacy dispensed during a 3 month period to patients using one specific narrow network with a DIR fee. It is unlikely that these 10 medications are the only severely underwater products, but without a broader sample of claims data, this is unknown. Below I have established an estimate of best current (July 2015) available price using a variety of alternative generic wholesaler vendors for the drugs. Because the analysis was initiated retrospectively, determining an actual historical best available price was not feasible. For each drug, I have calculated a ratio of the approximate best net acquisition cost (after DIR fees were applied) to the product reimbursement. For example, if the best acquisition for drug X is $10 / tablet and the net payment after DIR is $2 /tablet, the ratio would be 5:1. These ratios are rounded, as contracts prevent a pharmacy from disclosing actual acquisition costs of items.

Drugs in the Trench

Amphetamine Salts XR 20 mg Caps (generic Adderall XR 20 mg) 

This medication has long been subject to underwater issues and represented 3 claims during the analysis period. Based on acquisition cost (before any rebates are applied) our pharmacy system shows losses of hundreds of dollars for this high dollar generic.  Unfortunately, because this is a Schedule II (C-II) controlled substance, buying from other sources is more challenging for a variety of reasons. It is also possible that some pharmacies could have better contracts on this medication than others. Based on our best acquisition price (after rebates): Ratio 4:1

Brimonidine 0.15% Ophthalmic Solution (10 ml)

There were only two prescriptions for this in our 3 month data set, but each one resulted in more than a $100 loss. A check of alternate generic wholesalers did not reveal any currently available product below our net (after rebate) acquisition cost. It should be noted that the other strength of this medication (Briminodine 0.2%) is significantly less expensive, possibly alluding to the basis of the ultra-low reimbursement. Ratio 6:1

Cefdinir 300 mg Capsules

This drug represented only one claim in the data set. Currently, there is a product available at a price significantly less than we paid back in March, 2015, but even with this lower priced product available today, the claim would remain underwater. It would take an acquisition cost of about $0.50 per capsule to break even. Ratio of 1.2:1

Chlorpromazine 50 mg and 100 mg Tablets

These two strengths of the drug represented ten claims during get test period and resulted in a loss of more than $2,800 by themselves. The product saw price a significant price increases back in September of 2014: the price increased by over 300%. The price has been falling slowly over the last couple of months, but remained steady during the analysis period. Reimbursement, after DIR fees were removed, were around $1/tablet (50 mg strength) and $1.40/tablet (100 mg strength). It is worth observing that the current reimbursement is in line with the pre-increase acquisition costs of the medication. Even given the best price today, losses for this drug would still be very significant. Ratio 3:1

Divalproex ER 250 and 500 mg Tablets

Our pharmacy serves many seizure patients, and because of this, we have a policy to minimize unnecessary changes in manufacturers for seizure medications that might result in the deterioration of seizure control of our patients. Reimbursement considerations make this infinitely more difficult, as the third party payor doesn’t have any stake in ER visits and hospitalization costs. This being said, our current divalproex ER products have remained stable for quite some time and have (thankfully) been the least expensive option available to us. Looking around for the best available price today (without respect to changing generic manufacturers) does alleviate some of the losses, but does not move the profit indicator out of the red. Ratio 3:1

Divalproex Sprinkle 125 mg

This product is an immediate release variant, and changing manufacturers is less of an issue. Looking at the best available price today does show one product (from a company I have never seen before) priced around $0.04/capsule. If one were inclined to trust this product (and if it was even available at this price in the first quarter of this year) one could have made a small profit on the product after the DIR fees. Therefore, this product was ignored for the purpose of ratio calculations.  Ratio 5:1

Donepezil 23 mg Tablets

There was only one prescription for this medication in the data set, but based on our best price at the time, we lost over $270. Back when the prescription was filled, only one product was available at a cost of more than $10/tablet. Today, with the a product now available for closer to $3/tablet, the loss would still not be eliminated. Reimbursement is closer to $1/tablet. Ratio was: 10:1 (would be 3:1 today)

Methylphenidate ER 18 mg Tablets (Generic Concerta 18 mg)

Back in November of 2014, the FDA determined that two of the three available generic versions of Concerta were did not meet FDA Orange Book guidelines for rate and extent of absorption, and therefore could not be considered generically equivalent (AB rated). This meant the product effectively became single source. The reimbursement, after DIR fees are accounted, hovers around the acquisition cost of the non-substitutable, less expensive product. Ratio: 5:1

Equity in Pricing

Note that contracts prevent pharmacies from disclosing their actual acquisition costs for products. It is safe to assume that larger groups of pharmacies (chains and large independent buying groups) may receive better pricing than smaller groups. By participating in a large buying group, independent pharmacies should be able to receive prices similar to large chain pharmacies, and this is mostly true. There are reports, however, of a few medications that are deeply discounted to individual groups. This is sometimes referred to as corporate contracted rates for a drug. Some of the drugs in the analysis above may be subject to these contracts, and the pharmacies receiving that special pricing may not actually lose any money on the prescriptions.

It is likely that the PBM industry leverages these deeply discounted contracts in their MAC price calculations, and this may explain some of the severely underwater reimbursements seen by pharmacies not receiving this special rate. The “black box” nature of MAC prices (the PBM considers their MAC pricing formula proprietary and a trade secret) makes it impossible to determine the reason behind underwater prices. DIR fees simply make the situation worse. Requests to the PBM to update the MAC price for a drug to account for real-world acquisition price often receive a “no adjustment required, product available at a lower price. MAC Price justified” type response. This is of little consolation to the pharmacy that cannot purchase the product at a rate even close to a break-even price. There is no “request to review” a DIR fee.

There are, however, reports that some wholesale drug companies and buying groups are looking at ways to help pharmacies (especially independent pharmacies). Currently, the wholesale drug companies and buying groups do not have skin in the game. There is talk, however, of these two groups offering pharmacies a form of price protection from severely underwater products in the form of rebates, thereby offsetting some of the losses. Without some for of safety net, pharmacists have to make some difficult choices in what to stock and not stock in their stores.

Follow-up on Performance Payments

Last week, one of the Medicare Part D plans using Mirixa for Medication Therapy Management (MTM) “dropped” a new batch of “Star Measure” alerts to our pharmacy. These have been previously discussed here on this blog.

This “drop” was not unlike previous iterations our pharmacy has seen; the patients highlighted for possible compliance issues were exclusively patients residing in group homes. Each of the patients have staff working with them to ensure that they take their medications, and all of their medications are in compliance packaging (either OPUS cassettes or other systems to enable the staff to make sure that all doses are given). Every time the patient misses a dose, the staff report the incident to us, and we document the pertinent details in our clinical documentation system (PharmClin). Needless to say, if a patient is severely non-compliant, we would know quickly (because we would be receiving calls several times a week).

If it is not obvious by now, every one of these Star Measures cases were a false positive. Each patient was, and continues to be, nearly 100% compliant (as a percentage of days covered or PDC). So why were these cases brought to our attention? The answer relates workflow.

The workflow required to handle the large number of prescriptions dispensed on the same day each month to a large group home population requires a fairly involved process that is mostly automated by our pharmacy dispensing system. Even with this automation, billing may be delayed by up to 10 days for some prescriptions*. Keep in mind that it is the billing that is delayed, not the delivery of the medications.

Discussion

What is surprising is how quickly the plan and Mirixa identified what they perceived as compliance issues. We received the notices just short of 2 weeks after the due date of the prescriptions. That is just short of amazing, and some of our patients would consider this type of “short leash” offensive (and even an invasion of their privacy) if they were aware of how tightly the benefit manager is tracking them.

In this case, the delay in billing within our workflow resulted in sixteen “opportunities” to document and collect some “clinical” reimbursement from the program. Each of these cases is an opportunity to earn $12 by responding to the case (without respect to outcome). There are, however, two caveats about this program that should be noted.

  1. Each of these $12 interventions will be withheld from the performance incentive paid to the pharmacy (by the plan) at the end of the year (assuming we exceed drug specific patient compliance metrics). In other words, each $12 is effectively just an “early” performance payment.
  2. The Mirixa system for addressing these issues is time-consuming. If a pharmacist completes the intervention completely (updating each medication and answering all prompts), it takes a minimum of fifteen minutes to complete the intervention (not counting any patient contact time). This is not cost effective, as it does not come close to covering the time spent by the pharmacist.

The Pearl

These Star Measure interventions (or SSI Performance Network Program) are a much more focused intervention than a complete Medication Therapy Management Program encounter (MTMP). The reimbursement level (at just $12 per incident) reinforces this statement. To handle these interventions efficiently, make a call to the patient (this does not merit a face-to-face) and ask some open-ended questions. Patients can become defensive when approached about compliance, so it is wise to deflect this initially, noting that there are many possible reasons for this (like physician samples, dose changes, side effects etc) and let the patient fill in the rest of the story. For example:

We have noticed that your refills of lisinopril have not been as frequent as we expected. Often, changes are made by the prescriber, and the pharmacy is the last to know. How are you currently taking the medication? What difficulties, if any, are you having with the medication?

At $12 per intervention, break-even time (at a pharmacist salary of $50/hr) for this case is 14 minutes, so this phone call has to be efficient. You need only to establish if there is a real problem and a brief explanation. The phone call might take three to five minutes to complete.

Data entry must also has to be efficient. A tip for pharmacists working this type of problem in Mirixa: do not spend time updating the medication profile. It is not obvious, but leaving this portion of the intervention unfinished will not prevent (at least for now) the intervention from being completed.  By omitting this information (and only addressing the fields that relate to the compliance issue at hand), a pharmacist should be able to complete the Star Measure intervention (call and data entry) in less than 10 minutes. This is much more in line with the actual reimbursement being offered.

Footnotes

* July 2015, with the observed holiday of Friday July 3rd, is a worst case scenario of delayed billing.

Computer ADR Screening and Real Life

Today’s post is yet another edition of  “Tales from the Counter.” This one is somewhat less clinical sciences and a bit more pharmaceutical sciences, with a measure of soapbox thrown in for good measure.

The other day, while performing CMM on a nursing care center patient being admitted, my technicians asked about a DUR Warning our pharmacy system flagged on the patient. These warnings are generated by software licensed from a third party vendor and are designed to bring possible issues to the attention of the pharmacist. The warning here read:

Prior Adverse Reaction Report

Prescribed Drug: Triamcinolone Nasal Spray

Adverse Reaction(s) have been reported with prior MORPHINE SULFATE 20 mg/ml.

Ethylenediamine Class Monograph

Essentially, the above warning is stating that the patient has had a prior adverse drug reaction (ADR) to morphine, and the newly prescribed drug (triamcinolone nasal spray) may also, therefore, cause problems with the patient.

I will let that sink in for a moment. Any pharmacists that immediately know why this was flagged are encouraged to comment below (giving yourselves a little pat on your own back), because this one is a little obscure (though there is a hint in the general description above).

The warning continues on as follows:

Discussion: Aminophylline is the ethylenediamine salt of theophylline. Hypersensitivity reactions to aminophylline including maculopapular rashes, dermatitis, exfoliative dermatitis and urticaria are thought to be primarily due to the ethylenediamine component…

Pharmacists who are still confused are thinking clinically and not pharmaceutically at this point. The ADR being flagged by the software is not due to either morphine or triamcinolone (in the nasal spray). The ADR being flagged is to an excipient (inert ingredient) that both products may share: EDTA (ethylenediamine tetra-acetic acid), which is a pharmaceutical chelating agent / preservative.

The science behind this Prior ADR Warning is sound and well documented in the primary literature, though the clinical relevance may be tenuous. The prevalence of EDTA in morphine injectable formulations is lower today, with many preservative free formulations available. Checking several references, ADR references to maculopapular rash with morphine were completely absent.

The Soapbox

In the end, it was easy to identify the prior ADR to morphine for this patient: confusion. Based on this, the triamcinolone nasal spray  represented no additional risk for the patient, and the warning was documented off as a false positive. And while this computer-generated warning was not relevant for this patient, the obscure nature of the issue is not something that most pharmacists would immediately recognize and therefore it is entirely possible that a warning like this might help prevent patient discomfort in someone down the road.

Software-aided screenings can be very beneficial, but they also complicate patient care tremendously. It takes a skillful and knowledgable professional to be able to decipher and evaluate the host of information available today. Yet, pharmacy benefit managers continue to cut reimbursement for product and this is leading to pharmacies using fewer and fewer pharmacists (because labor costs are one of the largest expenditures in pharmacy). The argument is that technicians and machines can take care of more and more of the work. Without a competent pharmacist evaluating the mountain of clinical information, though, healthcare will be taking a step backwards in safety.

It is not unlike today’s aircraft: modern computer driven avionics can take a plane into the air, to the destination, and back down for a safe landing without any human intervention. But what happens when something out of the ordinary takes place,and the computer cannot make the judgement? Would you fly in a plane capable of flying itself without a professional pilot on board just in case? Modern technology can move pharmacy into a new era of efficiency in dispensing, but in the case of actual patient care, we are still a long way from not needing a professional in the trenches.

 

 

 

Dispensing Software vs Clinical Pharmacy

keBack when I was a pharmacy student, there were still some pharmacies that kept prescription histories for their patients on paper and typed prescription labels on an electric typewriter. The Bates Number Machine was still a staple of many practices. Today, with the advances in computers and electronics, modern pharmacies in the United States use computerized Pharmacy Management Systems (PMSs otherwise known as dispensing systems) almost exclusively.

Today’s modern pharmacy software has helped improve workflow, and ensures accuracy in the dispensing pharmacy. New features are being added to these systems regularly. Today, the point of sale (register) is usually integrated, as is the telephone system (by use of an Interactive Voice Response or IVR system). Some vendors have created iPad based delivery apps and even added limited integration with clinical services like Outcomes and Mirixa. Overall efficiency in pharmacies today is very high, in large part due to these software packages.

But today’s pharmacy systems are really still one-trick ponies. Despite all of the “new” features, these systems still are centered around the dispensing function. Most pharmacists and pharmacy owners becoming aware that dispensing revenue is significantly down (despite increased prescription volume and sales) in pharmacies today.

Right now, the profession of pharmacy is in a transition period; moving from product based reimbursement to service based reimbursement. Traditionally, the services provided by pharmacists and pharmacies have been (unfortunately) given away along side the paid drug product. The payment received for the drug product historically provided enough profit to cover the professional time the pharmacist spent with the patient. Current payment for product, however, is drying up at an alarming rate, and the transition from product based reimbursement to service based reimbursement is still only in its infancy.

The discussion of pharmacy management systems, and the transition of pharmacy as a profession, are intrinsically related. In order to move the transition of pharmacy forward (and ultimately achieve “provider” status with both the State and federally, with Medicare), pharmacists need to prove that what they do outside traditional dispensing is intrinsically valuable.

Almost every newly minted pharmacist since the early 2000’s received a clinically oriented degree, a doctorate in pharmacy (Pharm.D). Many older pharmacists have even gone back and added this degree. The application of the clinical skills vested in these pharmacists, however, is not encourage by many employers. Many pharmacies continue to emphasize dispensing and prescription volume. And why wouldn’t they, because that is (still) what gets them paid.

Despite the lack of clinical emphasis in their workplace, many pharmacists continue to employ their clinical skills. The next obstacle for clinically motivated pharmacists, is their dispensing oriented pharmacy management system, because it is not designed to document the care these pharmacists are implementing. This is a significant problem facing the profession. If we cannot readily document the value we provide, how can we move forward, and transition toward an actual professional fee, or obtain provider status?

This is a real problem for today’s proactive pharmacists, and the problem is going to grow exponentially as the expectation that pharmacists demonstrate their value to the health care system grows. Pharmacies need a way to seamlessly document their actions, recommendations, and overall value to patients and the system, and dispensing focused software is woefully inadequate.

In our practice, the answer was to create our own documentation system to accumulate the interventions our pharmacists effect every day. Over the course of almost a decade, we massaged and integrated the software to the point where every one of our pharmacists record important information and face to face encounters with patients, documenting what was done, what needs to be done, and any communication with other health care providers. Thru tight integration with our dispensing system, the software has become an extension of our business model. Today the product is known as PharmClin. The core concepts of PharmClin are fundamentally simple, but put taken as a whole, and in the context of a clinically oriented practice, the package is so powerful and innovative that it is patented.

Many pharmacists have seen PharmClin in use (by visiting our pharmacies) or have seen images of the product in slides at national meetings. When pharmacists see what we are doing and how we are using PharmClin, most immediately “get it” and want to be able to do the same things themselves. What needs to happen next, is to bring this concept to the rest of the profession. This type of activity and documentation will be a game-changer for our profession. It emphasizes how every pharmacist can make encounters with their patients count.

The Tweeting, Thriving Pharmacist…

We often want to pass on things we find interesting that are not worthy of a full-length blog post. For that reason, we have added a Twitter account to the Thriving Pharmacist. Follow us at @ThrivingRPh (sorry, the full name doesn’t fit twitter’s guidelines).

We will, of course, also tweet each new blog post there, too. Twitter also enables each of you the ability to forward us possible topics or articles, as well as continue any discussions or questions about previous posts found on the blog. So all of you out there that use Twitter, consider following the @ThrivingRPh. Make every tweet count!

Of Robots and Med Sync

The Sync Workflow

Medication synchronization is a popular service offered by more and more pharmacies. The premise is two fold. One: create a convenience for your patients such that they only have to stop by the pharmacy once to get all of them medications. Two: allow the pharmacy to optimize its own workflow, as refills are now able to be scheduled like an appointment. This makes upcoming work load more predictable. The theory behind this would seem simple enough. In practice, however, synchronization is a little more challenging.  Synchronization is more than just an auto-refill feature (offered by some pharmacy management systems). It involves actively validating all medications and quantities each sync period. This means a call to the patient and quick calculations of what the patient will need for the next sync cycle.

Medication synchronization at the very basic level is just a paperwork exercise. Simplify My Meds and other programs offer a paper based workflow to plan and execute synchronization. In our practice, after starting with a simple paper based system, it quickly became obvious that the operation could be very time intensive to the pharmacy staff. We realized that the process needed to be automated if we were going to move from a few dozen patients to a few hundred or even thousands of patients. There are a variety of vendors that now offer software services for synchronization. These allow the pharmacy staff to schedule and update each sync cycle. These software packages, however, are no better than the data that they extract from the pharmacy management system, and we have seen many problems arise with inaccurate or incomplete data being pulled by the vendor. This has resulted in our staff spending extra time verifying the data before synchronization can progress. The automated systems have the potential to save time, but until the data can be presumed accurate, we are still not optimizing our staff.

The workflow of synchronization ends on the prescription counter. On a given week, we are able to schedule the filling of sync patients during less busy times of the day because we know what prescriptions need to be filled several days in advance. Even with a reasonable barometer of pending workflow, we still end up congested on our prescription counter. The process could benefit from optimization.  To do this, we need to speed our fill and check cycle, and robotics are an effective vehicle to accomplish both goals.

Rosie the Robot

Awhile back I wrote about our SuperSync program which leverages our Parata Pass robotic “unit dose” packaging robot. Our Pass-208 was named Phyllis (a play on the verb fill) was originally purchased to handle nursing home business. We have more and more patients that are electing to receive their retail medications using this method, and this has helped with our congestion issues. But as fast as the SuperSync patient base is growing, our sync program overall is growing faster. We had to make a decision: Phyllis is going to be a big sister. In the coming weeks, Max (a Parata Max) will be joining the family.

The symbiotic relationship between a robotic prescription filling robot and a med synchronization program is natural. The combination is so natural that currently Parata is offering a free year of the PrescribeWellness medication synchronization software when one purchases the machine. Using Max, our pharmacy can be actively filling med sync patients overnight, and the pharmacy tech or pharmacist can check the medications and get them to the shelf for pickup first thing in the morning.

Workflow Modifications

One of the more interesting discussions we had with respect to our workflow (working toward the upcoming installation of the robot) centered around our pharmacist’s CMM (Continuous Medication Management) program.  Our normal workflow is:

[Intake] -> Data Entry -> Filling -> Final Verification* -> CMM -> Will Call

*In our practice, we are using a New Practice Model, which allows the Final Verification step for routine refills to be completed by a certified technician who has received extra training.

The CMM component for all prescriptions (regardless of the person doing final verification) must be done by the pharmacist.

In our discussions, our Medication Sync program starts with the pharmacist doing a reconciliation of the patient medications each sync period. Our workflow, therefore, could be modified to move the CMM to the beginning of the model along with the reconciliation done by the pharmacist:

CMM -> Data Entry -> Filling (overnight by robot) -> Final Verification* ->Will Call

This further decreases congestion on our counter as a significant number of prescriptions can be filled overnight and checked by a technician and moved directly to will call. The only issues are

  1.  how to segregate new prescriptions from refills at the robot level and
  2. How to segregate Sync refills from non-sync refills

Both of these issues can probably be solved by minor modification to our clinical software system (PharmClin), which is used at the point of final verification.

Closing

While the OnePass packaging option (the Parata Pass 208) is gaining in popularity, we are also growing our regular sync customer base by leaps and bounds. Our goal is to have 30% of or customers on a sync program within the next 12 months. We have enrolled 150 new patients in the last couple of months and currently are at more than 250 sync participants. This change in our workload has lead to some issues with congestion on our prescription counter. Leveraging robotics in our workflow is one way we hope to enhance our workflow. The main goal, as always, is to be sure our pharmacists are free on the counter to perform CMM on every patient picking up prescriptions, making every encounter with the patient count.

Narrow Network DIR Fees (Analysis)

I have heard a lot different angles (mostly negative) about certain narrow network Medicare Part D plans. These plans are somewhat exclusive, and many chains and independents were not offered, or declined contracts due to the very aggressive reimbursement offered. Some aspects of the overly complicated DIR (Direct and Indirect Renumeration) fees this plan leverages have been previously discussed on this blog here.

This specific plan is so polarizing in pharmacy circles that some pharmaceutical wholesalers even have come into our store bragging that their member pharmacies (represented by their PSAO  – Pharmacy Services Administrative Organization) declined these contracts, essentially implying that stores participating in the narrow “Preferred” network were worse off having access to these lives. This is completely opposite of our feelings that access to lives is very important.

This specific plan reports DIR fees in a way that makes it very difficult to see  bottom line reimbursement; the plan reports DIR fees retroactively, attaching last months DIR fees to unrelated claims on the current pharmacy remittance information. Up until recently, when our PSAO, AccessHealth, began matching the DIR fees associated with each prescription for us, analysis of profit and loss was almost impossible. With this report, pharmacies can take a closer look at how this contract impacts their bottom line.

Analysis

AccessHealth (and presumably other PSAOs that did not sign this contract) analyzed the potential profitability of this contract before deciding to sign (or not sign). The fact that AccessHealth did sign the contract indicated that it was their belief that member pharmacies would benefit overall from this contract, fully understanding the “aggressive” reimbursement and DIR fees would make it important that pharmacies maximize this access to lives by leveraging other revenue streams to make up for the lower prescription revenue. Using the data recently provided to our pharmacy, 872 claims (January thru March) for this plan were analyzed for their impact on our pharmacy. The question being addressed is this: is participation in this narrow network sustainable for a medium to large independent pharmacy.

General Statistics:

  • This plan represented 872 claims (Jan-March), each with an associated DIR fee
  • The total adjudicated amount for these claims was $66,855 before DIR fees
  • DIR fees were withheld from 568 of these claims totaling $14,694
  • “Negative” DIR fees (money returned to the pharmacy) were paid for 317 claims, totaling $2,020

Looking at these numbers, it is interesting to note that there were over 300 generic drug claims that were reimbursed at a MAC (Maximum Allowable Cost) that was BELOW the DIR’s contracted rate. This effectively gave money back to the pharmacy in the form of a NEGATIVE DIR. This “feature” of the DIR actually may help protect the pharmacy from some overly aggressive MAC prices for certain drugs. That being said, the withheld DIRs dominated these returned DIRs. The net DIR total for this plan in our pharmacy bottom line is about $4,000 per month returned to the plans in exchange for participation in the network.

Watching the Bottom Line (Profit or Loss)

Calculating profit or loss on a prescription is normally not that difficult, and it can be usually be done at the point of sale before the prescription leaves the pharmacy. The addition of DIR fees complicates this tremendously, because these DIR fees are unknown to the pharmacy until well after remittance arrives. The pharmacy may also receive a rebate on some generic products (based on the pharmacy’s purchase volume), though the pharmacy can usually estimate the rebate before it is actually received. Not every generic product, however, may be rebatable.

Once the pharmacy knows both the DIR and the rebate, a profit or loss can be calculated for each prescription. When a prescription is reimbursed by the PBM for less than it costs the pharmacy to purchase the product, is often described as “underwater.” For the 872 claims above, more than 90% of the prescriptions were generic. Other descriptive statistics for the claims include:

  • 72 claims (8%) were “underwater” before DIR fees were applied to the claims
  • 304 claims (35%) were “underwater” after DIR fees were applied
  • DIR fees averaged an additional 19% discount from the adjudicated claim amount

To a pharmacy owner, any underwater claims are unacceptable, and the large number of underwater claims for this plan is very discouraging finding. The more important statistic, however, is the gross profit or loss for these prescriptions, and applying the rebates should offset losses and have a positive impact the pharmacy bottom line. If the estimations done by the PSAO before signing the contract adequately reflected actual claims finding, the total profit for these claims should be positive.

Before generic rebates were applied to the above claims (but after the DIR fees were withheld), the pharmacy lost $6,552 on these 872 prescriptions. The amount pharmacy receives in generic rebates is variable (dependent both on the pharmacy’s purchase volume and the other contractual obligations), and for this reason, a range of rebate rates for generic drugs was calculated. For our buying group, rebates are calculated as a percentage of invoice price for qualifying items. This type of rebate application may not be representative for other buying groups outside the one which our pharmacies maintain membership.

For the purposes of this analysis, generic rebate rates of 20%, 25%, 30% and 35% were used. These calculations assume that every generic drug dispensed was eligible for a rebate. There are cases, however, where the least expensive drug (after accounting for rebates) is not a rebatable product. The assumption that all generic drugs were subject to a rebate may, thereby, overstate the effects of rebates on the pharmacy’s bottom line. The calculations below are then only estimates that should be representative of ballpark profit or loss on these prescriptions.

In the table below, the first line (Rebate Total) represents to total rebates (based on the generic rebate rate in each column) that the generic drugs included in the 872 claims should have garnered the pharmacy. The second row is the Net Profit or Loss for the 872 prescriptions based on the rebates received, and the last row represents the average profit or loss per prescription for each of the 872 claims.

Rebate Effect
Impact of rebates on the profitability of narrow network prescriptions

Several observations can be made from the table above. The most important, however, is that significant rebates are necessary in order to even break even on these prescriptions. While the disclosure of our generic rate is restricted by contractual agreement, I will state our pharmacy did not profit from these 873 prescriptions. I will further state that few if any independent pharmacies are likely to receive rebates that exceed 25-30%.

The distribution of the profitability of the claims is also enlightening. The chart below shows profit / loss ranges in $5 increments for all 873 prescriptions after subtracting the DIR fees but before rebates were applied. There are 78 prescriptions showing a loss of more than $25. On the other side of the histogram, only 48 prescriptions profited more than $25.

Histogram
Profit Distribution of Claims before applying rebates.

After applying rebates, the histogram shifts to the right somewhat, but a large number of severely underwater claims remain. The histogram below represents a 25% rebate level (one that is assumed to be fairly representative for most independent pharmacies). The loss for these 78 prescriptions was between $8,500 (using a 20% generic rebate) to $6412 (using a 35% generic rebate). That is an average of more than a$95 loss per prescription. These prescriptions are not underwater, they reside at the bottom of the Mariana Trench. The total profit for the “highly profitable” prescriptions (netting more than $25) was between $2,698 (using a 20% generic rebate) and $2,720 (using a 35% generic rebate). The discrepancy between the heavily underwater prescriptions and the highly profitable prescriptions represents most of the losses recognized by the pharmacy. 

After Rebates
Pharmacy Profit after applying rebates (25% rebate level).

The number if “highly profitable” prescriptions do not change much after rebates, with the $20-25 bin increasing only by 1 prescription. The most noticeable change is the number of marginally underwater claims (those $10 to $15 underwater). The number of claims losing more than $25 does not change significantly because these claims are obscenely negative. The group of claims losing more than $25 deserves further examination. The graphic below further describes the left-most column in the two histograms above. This one column is broken into 6 groups: losing $25-50, losing $50-75, losing $75-100, losing $100 to 200, losing $200-500 and losing more than $500. A seventh group (the far right columns below) entitled losing less than $25 was added to house any prescriptions moving OUT of the trench. Blue bars represent losses before applying generic rebates, and the green bars represent losses after applying generic rebates.

Effects of rebates on the
Effect of Rebates on Claims losing more than $25

The effect of rebates on these severely negative claims is small. The number claims losing more than $500 does not change after applying generic rebates. There is a small shift overall to the right in the other columns (indicating the positive effects of the rebates on these prescriptions), but only one prescription losing more than $25 before rebates actually “graduated” to a loss of less than $25. In other words, these claims are so far underwater based both on MAC and the DIR fee that even a very high 35% generic rebates cannot rescue them.

Looking closer at the drugs residing at the bottom of the Mariana Trench, several high dollar generic drugs appear to be the culprits. Looking at just one example, chlorpromazine, we see a claim for 186 tablets reimbursed at $595.18 minus a DIR fee of $336.67. Based on purchase price, the prescription started out underwater by over $1200. Because the purchase price is large, the rebate is proportional, resulting in $280 to $500 being returned to the pharmacy in the form of rebates. This still leaves the pharmacy between $650 and $900 underwater on ONE prescription. In fact, removing only 15 high priced generic medications from the analysis removes most of the 73 claims residing in “the trench”. If these claims were adjudicated in a fairly, the total of the claims would graduate from a net loss of $1791.65 to a net profit of $5161.23 (using a 25% generic rebate rate), which is a net profit of more than $6 per prescription. It would seem that the MAC and DIR calculations being used by this plan break down when generic drugs are very expensive.

Closing Remarks

It should be reiterated that the across the board application of rebates to all generics is an assumption, and that this will overestimate the effects rebates actually have on the bottom line of a pharmacy. That the bottom line is still red with this over-correction only emphasizes the need for reform.

Just breaking even on a prescription by the calculations above is not enough, either. No overhead costs were taken into consideration, and these are a significant part of a pharmacy’s expenses. It has been estimated that a pharmacy has to make an average of $9 to $12 per prescription to cover expenses (including a reasonable profit). The best case scenario (using a 35% rebate level) in the analysis above falls significantly short. This means that pharmacies need to find a way to make  and additional $10-$12 for each prescription filled under this plan from OTHER services. Giving the patient a flu shot once a year, or selling the a bottle or two of over the counter vitamins 12 times a year is unlikely be enough to offset the significant losses these prescriptions currently bring to the pharmacy. I have always been a proponent of access to lives, but the above analysis shows that the pharmacy is paying the benefit manager a king’s ransom for the “privilege” of servicing these patients.

On a positive note, if the BPM were to correct their processing of a small number of medications (generic medications with very high acquisition costs) by correcting the MAC and /or and DIR components, the plan would draw considerably less ire from pharmacies and pharmacists. The concepts of MAC pricing and DIRs, if applied in a fair manner for all medications, might even be considered reasonable. The draconian manner in which it is currently being applied, however, creates significant problems. Pharmacies could address this problem by refusing to stock a small number of medications that are responsible for a majority of the losses being seen. It would be unfortunate if a shortsighted PBM’s policies resulted in a widespread loss of accessibility of certain medications to patients.

The ball is now back in the contracting organization (PSAO) to work with the PBM to address the problems outlined above. The current MAC and DIR calculation formulas appear to be broken for certain high cost generics, and this needs to be addressed immediately. Even if a pharmacy is not contracted with this specific plan, these tactics are becoming commonplace in the industry. Pharmacies need to be working closely with their contracting organizations to reform these tactics now. Normally I end each blog post by telling pharmacists everywhere to make every encounter with their patients count (a phrase so important that we even registered it as a trademark). Today I am asking every pharmacist to have an “encounter” with their PSAO. Make it count. Pharmacy is a great profession. Pharmacists bring significant value to healthcare. Reimbursement reform should be a goal every pharmacist works toward.

What does your front end say about your store?

As a pharmacy owner, I tend to visit pharmacies (especially independent pharmacies) when I travel. There is a lot of history to be seen in some stores, and even new ideas to be hatched. While visiting an independent pharmacy in Little Havana (Miami Fl) that was right out of the 1950’s, it occurred to me that the front end (non-prescription area) of a pharmacy tells a story about the pharmacy and its philosophies. Immediately I recognized that even chain pharmacies are aware of this. Consider the recent national headlines generated as CVS announced that they would no longer sell cigarettes in their stores. Their rationale was simple: cigarettes are the polar opposite of health care.  And while CVS is should applauded for this stance, the chain’s merchandise still includes many items that, while not as polarizing as cigarettes, certainly are not healthy or even related to health and healthcare.

Walking into any pharmacy tells a story. Today, the front end merchandise at many chains bears more resemblance to a grocery or convenience store than a pharmacy.  I am sure that this merchandise mix helps draw customers and profits, but it has little to do with pharmacy. Save a few aisles of over-the-counter medications and health supplies, front ends of chain drug stores today are decidedly not health care oriented. Independent pharmacies are not exempt from this phenomena, either. Many smaller independent pharmacies have front end merchandise filled with gift, antiques, cards, and other sundries.

Part of this merchandise mix is tradition, part demographic, and part customer demand. Another part, though, is survival. Today, reimbursement for prescriptions is at an all time low. The pharmacy department historically was the revenue generating area of a store, with the front end almost an afterthought. Today, without strong sales and revenues from the store front end, both independent and chain pharmacies often struggle to generate acceptable profits needed to stay viable businesses.

Independent pharmacies today are at an even bigger disadvantage today than ever before. Independent pharmacies are generally smaller than chains. Their front ends are generally much smaller, too. The strategy being used by chains really does not translate to most independent pharmacies. For the independent, the story the front end tells must be different. For independents, the front end is becoming increasing health-care centered. This differentiation from chain drug stores is one part of how independent pharmacies are trying to survive in the market today.

Our pharmacies have emphasized the apothecary style store for years. Our front end is all health related, and includes the usual assortment of vitamins, wound care, laxatives and other over-the-counter remedies. Included in the merchandise mix is a healthy dose of durable medical equipment, including walkers, canes, crutches, and wheelchairs. Our philosophy is to make the pharmacist accessible, and our pharmacists are positioned on the counter in a manner that they can easily spot customers in the store needing help and quickly step into the front end to offer personalized care and answer questions.  The image we want to project is a professional health center.

The next time you enter any pharmacy (chain or independent), take a look around and ask yourself: “what is the image that this store is projecting?” If you work for a pharmacy or even own one, ask your customers the same question, and they ask your self if that is the image you want to project.