Mike graduated from the University of Iowa with a BS in Pharmacy in 1991 and completed his Ph.D. in 1998. He has over 20 years of practice experience, over half of which is as a pharmacy owner. Areas of expertise also include technology in practice, including integration with data sources.
Pharmacies are being paid less and less for prescription drugs, and adequate reimbursement for clinical services is still not a reality. At the same time, pharmacies are being evaluated on performance, and this requires investments in the practice. Keeping the bottom line balanced means that today’s pharmacy owner needs to maximize efficiency in their pharmacy department and find new revenue streams to help fill the widening gap between overhead and drug product reimbursement until reimbursement for services can add significantly to the bottom line.
Chain drug stores rely on extensive front ends to buoy pharmacy department sales. Independent pharmacies often cannot leverage an extensive front end in the same manner. This does not mean, however, that the independent pharmacy cannot use their front end to support their overhead during this paradigm changes in pharmacy.
Don’t try to beat the Big W
Over the years, I have emphasized that the chain pharmacies around me are not my competition. They do things in ways we would never consider. Conversely, they do not generally have the flexibility and latitude to attempt things an independent pharmacy could try. So, when selecting products for the the front end (over the counter) section of the pharmacy, it is always a good idea to strive to find products that the chain pharmacies not or cannot stock. Quality merchandise is also something that will set an independent apart from a retail chain pharmacy. The trick, however, is to jump-start the sales of these products.
While an independent pharmacy might shy away from mass market merchandise, there is no reason that the independent cannot look at some of the common retail strategies used by the chain drug stores. Of specific interest today is the use of tie-ins at the point of sale. Tie-ins are those items hanging next to the thing you were looking for. In a grocery store, grated Parmesan cheese might be hanging on the shelf right next to the spaghetti sauce. If you are looking for one, you are more likely to impulse purchase the other.
The Prescription Tie-In
An independent pharmacy can take this strategy and really make it shine by integrating the pharmacists clinical knowledge during the final verification phase of each prescription checked in the pharmacy. Many drugs either are dependent upon, or deplete specific vitamins / minerals or other nutrients from the body. These nutrients can become tie-in marketing opportunities for the pharmacy. While this is not a new strategy, this strategy can be optimized and made successful with a little advance planning. The result can be a significant boost to revenue to help offset the decreases seen with prescription drugs.
Examples of possible tie-ins might include:
Recommending a Coenzyme Q10 supplement for patients taking HMG Co-A inhibitor (e.g. atorvastatin, lovastatin, pravastatin etc).
Recommending a pro-biotic to patients taking a broad spectrum antibiotic
Recommending a vitamin and mineral supplement to patients taking diuretics
Strategies
Be selective: choose a product line that is unlikely to be stocked by , or unavailable at chain stores. This might be a premium brand with a high quality standard.
Start Simple: There are dozens of classes of medications that have potential tie-ins for supplement sales. Rather than overwhelm the pharmacy staff and the patients, start with a few select classes and grow the program from there
Think Clinically: While there are dozens of class of medications with potential tie-ins for supplement sales, some of these are better documented than others.
Research before you sell: Be sure you understand the mechanisms and pathways. Having this knowledge helps earn the patient trust and understand that you are providing more than just product, but knowledge.
Train your staff: Be sure that all of your staff understand what the program is and how it is going to be executed. Be sure that the pharmacists are familiar with the research done above.
Document: If a patient is flagged for consultation about their medication and, after considering the pharmacist’s rational for the recommendation to purchase a supplement, the patient declines, document the outcome.
Plan follow-up: Do not flag the same patient for consultation and recommendation of a supplement every time they come into the store. Remember that this is a professional consultation. Instead, document the outcome in a manner that all pharmacy staff will know when the consultation was made, the patient’s response, and when to follow-up (e.g. approach patient in 6 months to re-visit the topic)
Our pharmacy is beginning the implementation of this type of program. We have chosen Ortho Molecular Products as our “premium” brand of supplement. One advantage for choosing Ortho Molecular is their “Pharmace Replete” program designed to help tie-in sales. This includes materials that my be helpful to a pharmacy wanting to implement this type of program.
Kevin Schweers with NCPA posted a piece about the PBM industry last month on “The Dose” (NCPA’s blog). It is an interesting read and ties in with some of the themes here on the Thriving Pharmacist’s Blog. You can read his post at That Man Behind the Curtain? Pay No Attention
One of the more interesting aspects of writing a blog for public consumption is the great conversations that can take place as a result. One such conversation took place this evening when two delightful gentlemen called me to discuss some of my observations in The Rewards of Performance. These gentlemen represented the plan that I discussed in the post and they wanted help clarify a few points I had made.
While some of their discussion centered around things that were corrected previously in some spots but not updated throughout the post (I am a pharmacist, not a copy editor), they had one very important clarification surrounding my logic on 90 day fills.
As it turns out, the plan in question (that was not named) does not, in fact, have a reduced dispensing fee for 90 day supplies. This invalidates the math done (since struck from the post) and changes one of my concussions. Based on this new information, the pharmacy would indeed benefit marginally from increasing their 90 day fill rate. The trade-off now is $150 for achieving a 25% rate for 90 day fills versus a loss of eight dispensing fees (down from 12 with monthly fills).
The logic behind incentives for 90 day refills, however, is still something that this author disagree with. While 90 day fills may be associated with better estimated compliance (based on claims data) with 90 day fills, this also creates a difficulty for pharmacists to spot actual adherence problems (see Claims Data is not Clinical Data). They also decrease the number of potential interactions the pharmacist can have with the patient to collect information that can improve outcomes beyond simple compliance. These interactions are where pharmacists can have the greatest impact on patient care and savings in healthcare expenditures.
I look forward to future conversations with these gentlemen, and other readers of this blog. One of the main reason this blog exists is to encourage a thoughtful conversation about many of the issues in pharmacy.
Every medication has the potential for unwanted effects, but some medications deserve a little more attention from the pharmacist. While pharmacists both understand and advise patients on potential and realized ADRs on a daily basis, few take the time to maximize their impact and, further, to document this important clinical work.
A Continuing Medication Monitoring (CMM) Workflow
Every pharmacy has a workflow. Many “traditional” pharmacies focus their workflow on the dispensing role of the pharmacist, and this does not put the proper emphasis on the potential of the pharmacist to make meaningful clinical interventions. In order for pharmacists to establish their relevance in a modern healthcare environment, pharmacies need to redesign their workflows to transition the pharmacist a dispensing focused role to a interventionist role.
Technicians play an important role in allowing the pharmacist the flexibility to engage with the patient as an interventionist. While the pharmacist is still required to complete the final verification step in most states, technicians can be leveraged to handle many of the non-clinical tasks the pharmacist traditionally has done. Some states even allow technicians to check other technicians for routine refills, further freeing the pharmacist to concentrate on clinical issues. It is the view of the authors of the Thriving Pharmacist, though, that the pharmacist should stay in the prescription workflow. This is because by being available on the counter, the pharmacist has best access to the patent, an attribute that will be leveraged heavily below.
We have also added pharmacists to our staff to achieve what we sometimes refer to as a “slack” pharmacist. This pharmacist is not tasked with working the counter (performing the final verification and CMM). Their job involves a working on a variety of other services in our pharmacy. This pharmacist also serves as a pressure-release valve for the pharmacist performing CMM. If a patient needs additional education, counseling, or one-on-one time with a pharmacist, the “slack” pharmacist can be used to hand-off duties during a busy time of the day. These also include completing documentation for more clinically involved interventions started during the final verification and CMM stages of the workflow.
Identifying Potential ADRs
The pharmacist acting as an interventionist needs to focus not only on the prescription(s) being filled at the present time, but also in the entire patient profile. For this reason, having access to a clinically-tuned profile is helpful (see the discussion “A Clinical Profile” in “Continuous Medication Management (CMM) and the Profile“). Armed with a easy-to-use profile, the pharmacist is almost ready to bring ADR screening into the workflow. One last preparatory step if helpful, though. As stated earlier, every drug has potential ADRs. It is often useful to start with a subset of drug classes on which to focus and to create a protocol to follow. Once this is decided, and the appropriate information is communicated to the appropriate pharmacy staff, the hunt is on.
Example Program
In working with a local Quality Improvement Organization (QIO), our pharmacy decided initiate a new, focused, ADR screening program centered on three classes of medications with significant ADR risk. These three classes were:
Diabetic Medications
Anticoagulants
Narcotic Pain Medications
These categories of medications were updated in our clinical documentation system to be flagged (color-coded) in order to alert our pharmacists to focus in on these medications with respect to ADRs. While the focus of our initial efforts could have included any number of different categories with significant potential ADRs, these categories have significant issues and are well represented in our practice.
ADRs were further divided into two categories
Potential ADRs – Things that the patient may experience but are not yet identified or confirmed
Confirmed ADRs
New intervention categories matching the above were added to our clinical documentation software (PharmClin) to document ADR related pharmacist activity.
During the final verification stage of the prescription workflow, our pharmacists review the complete clinical patient profile, including a screen for drugs in the selected class, looking for potential ADRs. With the color coding of these classes of drug classes, this is a quick step. The pharmacist can then create an intervention in the documentation system focused on the drug(s). This intervention can then be printed and added to the will call with the patient’s prescriptions for pick-up.
Example printed tag to include with patient will-call. Pharmacist can then document presence of ADRs with any specific notes.
It is at the point of sale where the pharmacist has the opportunity to have the greatest impact on patient care. The register clerk, seeing the note in the above patient’s order, calls the pharmacist over to the register. After a quick review of the printed note, the pharmacist can ask the necessary questions to quickly ascertain if the patient is experiencing unwanted effects from the medication. Based on what is discovered, the pharmacist can initiate a variety of possible outcomes:
If the results are negative, or not a serious issue, the pharmacist can then make notes on the printed intervention, and, when they have a few moments on the counter, complete the intervention with the gathered information.
If the patient needs additional counseling or education, the pharmacist can move them to a semi-private counseling area and hand-off care to the “slack” pharmacist.
If information needs to be forwarded to the prescriber, a detailed SOAP note addressing the issue along with specific recommendations for the prescriber can be created (again, the “slack” pharmacist may be called into duty).
Discussion
The process described is not unique, nor is it particularly innovative. Pharmacists in a variety of practice settings can and do uncover the existence of ADRs and work with the patient to enhance outcomes. The key point, however, that differentiate the discussion above from many more traditional workflows is the documentation of the actions taken in a clinical record. If it is not documented, then the value of the pharmacist is essentially lost.
Conclusion
Pharmacists are capable of impacting patient care every day. The profession is renowned as being one of the most accessible health care providers. It is not, however, until pharmacists start to document their interventions that they will be recognized as true interventionists. This step is critical to the advancement of the pharmacist to provider status. Having a clinical records system is becoming critical to make every encounter with the patient count.
Yesterday, our pharmacies received an update from a major Part D plan in our area. This update stated:
Effective immediately, [plan] will continue to cover brand name ABILIFY at the non-Preferred Brand Tier. The generic, aripiprazole, will NOT be covered for the [plan] members. Please continue to dispense ABILIFY rather than substituting the generic product…
Given that the generic product is already close to half the price of the brand Abilify and falling (generic 5 mg aripiprazole down by roughly $100 in the last 3 weeks), one has to question the reasoning for this policy. Manufacturer rebates that lower the cost of the brand name drug to offset the difference in price compared to the generic may be the reason such a policy exists. Our state Medicaid program leverages rebates in a similar way.
Another observation made was that plan members’ co-pays are going to remain high for what is now a generically available drug. This policy is an example of cost shifting in Medicare Part D plans. The patient will be paying a non-preferred brand name drug co-pay (for this plan, 33% of the adjudicated amount, which equates to roughly $310 per month) instead of a generic co-pay ($7 per month), a significant difference.
It is important to note that, unlike a Medicaid program, where the use of rebates lowers the cost of medications for the payor AND patient co-pays are generally very low ($1-3), rebates in the non-transparent world of Medicare Part D are not applied to the adjudicated amount. This means that a prescription for Abilify 5 mg will adjudicate for roughly $950 per 30 days, and the patient will be responsible for 33% of this amount. The generic (assuming a generous, non-MAC reimbursement of Average Wholesale Price (AWP)- 25% )** would result in a total adjudicated amount of about $725. Ignoring any rebates, the cost of the brand name Abilify to the PBM would be lower (about $640) than the generic product (about $712). All of the difference (not counting any rebates) is due to a shift in co-pay to the patient.
The other, possibly less noble reason, however, is that the PBM may profit from a better “spread” for brand name drugs (see an unscientific analysis of CMS data in “Examining Medicare Part D Transparency“). Between the cost shifting of the medication to the patient and the markup that the PBM takes above the reimbursement made to the pharmacy, this type of policy may represent a significant windfall to the PBM at the expense of both the patient and Medicare. The lack of transparency in Medicare Part D (and other PBM run commercial plans) is costing everyone.
** In reality, this generic medication would likely be subject to a MAC (Maximum Allowable Cost) price, and reimbursement to the pharmacy would be closer to $500-$550 per 30 day supply. This turns the equation upside down without rebates from the manufacturer of the brand name drug. The cost shifting, however, remains and the patient is still paying a large percentage of the cost for the brand name drug. If rebates were handled equitably, the patient copay would reflect a generic copay instead of a non-prefered brand name tier.
Pharmacy as a profession has suffered over the last 10 years. Downward pressure on reimbursement for drug product, combined with a dearth of payment to pharmacies for professional services has led to the closing of hundreds of pharmacies over the past years. The economic pressure being excerpted on pharmacies is leading to the adoption of what we have dubbed “the Stripped Down Model” of pharmacy.
The concept of the PBM originally started as a service to act as an intermediary between pharmacies and the insurance payor, facilitating the processing claims. Today, the PBM industry sells a “network” to insurers, giving their patients access to pharmacies. The PBMs have expanded their services to include formulary management and other services purported to help contain costs for the payor. When the Medicare Part D benefit rolled out, Medicare entrusted this benefit to the PBMs to run, and by and in large, legislators believe that Medicare Part D is a success story.
Pharmacists, however, generally have a different, more negative, view of the PBM. At the same time as pharmacies have struggled, Pharmacy Benefit Managers have regularly reported record profits. Pharmacists, those in the trenches working with patients, are concerned with the amount of money being spent by Medicare on the “middle man” PBM industry. For the most part, the “spread” between what the PBM pays the pharmacy for drug product and what the PBM in turn charges the payor is concealed. There is little transparency in the PBM industry to date. From a pharmacy perspective, pharmacists generally wonder just how much of a success Medicare Part D would be if there were more transparency.
Recently, the Centers for Medicare Services (CMS) released detailed information on prescription drug spending for the 2013. The press release (including some interesting summary data) is available here, and for those with a thirst for raw data, the details are available here. This data is reportedly some of the most comprehensive data released by CMS to date, and it offers significant insights into the Medicare Part D benefit.
As a pharmacist and pharmacy owner, two tables from the press release immediately struck a chord with me. These tables have been copied from the CMS press release and reproduced below:
Given that the tables report Total Drug Cost and Total Claim Count, it is possible to calculate the average cost per prescription to Medicare for any of the drugs in the tables above. This, combined with estimates of pharmacy reimbursement for the same drugs will give insight into the amount being retained (sometimes called the “spread”) by the Pharmacy Benefit Managers (PBMs) charged with administration of Medicare Part D.
Assumptions
Keep in mind that the lack of transparency with the data still limits firm conclusions from being made. For example, the proportion of 30 day to 90 day fills for any given drug is not known. Likewise, the tables above do not differentiate different strengths of a drug, lumping all strengths together. On the pharmacy side, the cost of goods will vary some from pharmacy to pharmacy and region to region. The cost and profit data being presented below is assumed representative, understanding that the while the data was pulled from a specific demographic region and patient population, it is likely in general agreement with national data.
Methods
For each drug in Table 1a and Table 1b, Medicare Cost/Claim was calculated by dividing the Medicare total drug cost by the Medicare total claim count. The result is an aggregate value, representing all possible day-supply and strength combinations.
For the same drugs and time period reported by Medicare, prescription claims for Part D plans for a midsize independent pharmacy were examined, and the Pharmacy Reimbursement (also known as the adjudicated amount) and cost basis of the drug product were extracted. From these values, the following were calculated:
Cost/Claim minus Pharmacy Reimbursement = PBM Spread
Pharmacy Reimbursement minus cost basis = Pharmacy profit
Transparency Approximated
Estimated Pharmacy Profit and PBM Spread for the Top 10 Generic Drugs in 2013Estimated Pharmacy Profit and PBM Spread for the Top 10 (Brand Name) Drugs by total cost for 2013
Discussion
Generic Drug Profit and Spread
The pharmacy data represented above appears to agree with the CMS data well. While the pharmacy data set size is only a small fraction of the CMS data set size, each drug is represented by more than 500 claims, with most drugs represented by more than 1000 claims. The average pharmacy profit for these 10 drugs during 2013 was just over $6.50, and this appears to be in line with anecdotal reports of prescription profit during 2013. It is interesting to note that if the estimate of pharmacy reimbursement is reasonably close to the average across the United States, the PBM is taking roughly half as much as the pharmacy makes for each prescription. Keep in mind that the PBM does not need to maintain drug inventory, and has almost no patient care expenses to cover. The average estimate of more than $3.50 per generic prescription being paid to the PBM begs the question “what value is being received for the money being paid to the PBM?”
Top 10 (Brand Name) Drug Profit ant the Spread
Unlike the generic data, there are some obvious difficulties with the Brand Name data set. The amount of reimbursement exceeded the total adjudicated amount for one drug. This problem is likely attributed to how certain brand name drugs are priced. Crestor and Junivia, for example, cost pharmacies about the same amount per tablet regardless of the strength being dispensed. Other drugs, like Abilify, increase in cost with an increase in strength. Given the small sample size for many of the brand name drugs represented here, it comes as no surprise that Abilify does not match the CMS data well. This is likely explained by the pharmacy data representing a higher proportion of the higher strengths of Abilify (20 and 30 mg strengths) than the aggregate CMS data. Conversely, despite having only 87 and 80 claims each, Crestor and Januvia do match, likely because the cost per tablet is independent of strength. Because of this discrepancy, Abilify was omitted from average and total calculations in the table. Additionally, the pharmacy data did not include any prescriptions for Revlimid in the data period, so Revlimid was also excluded from average and total calculations.
It is important to note that with the exception of Adair, the small sample size for pharmacy claims could skew results. Based on the dispensing profile of the pharmacy, the most likely skew would be toward the dispensing of a 30 day supply. Such a bias would result in an overestimation of profit for the pharmacy (with 30 day fills generally being accompanied by a higher dispensing fee and lower discount on Average Wholesale Price (AWP). A overestimated pharmacy profit would tend to underestimate the spread (PBM profit) for the drug.
The average pharmacy profit for the 8 brand-name drugs (omitting Abilify and Revlimid) was close to $26 in 2013. By comparison, the PBM profit (spread) was estimated to be $39 per prescription (about $14 MORE than the pharmacy makes).
Being in the Wrong Business
Where this exercise gets interesting is when one extrapolates the profit made by ALL pharmacies for the top 10 generic and Top 10 drugs by cost. Multiplying the profit per prescription for the pharmacy by the total number of claims for each drug, it is estimated that all pharmacies billing Medicare Part D (combined) made a profit of about $3.5 billion. Based on these calculations, all of the Medicare Part D Pharmacy Benefit Managers (a relatively small group of companies) are estimated to profited $3.25 billion (combined) on the spread. A significant amount of this profit would appear to com from brand name medications. The PBM insudstry is making this profit without having employees in the trenches caring for patients, without any investment in brick and mortar stores, and with inventory and equipment needed to actually dispense prescriptions. It also excludes any profit the PBM makes by participating as a provider of Mail Order prescriptions thru its own pharmacies. The lack of transparency into PBM accounting also precludes attribution of any brand-name drug rebates, which may, or may not, be included in the information reported by Medicare.
Conclusions
This exercise is far from a scientific evaluation of the data that CMS has released, though results seem to correspond with the apparent profitability that the financial results for many of the largest pharmacy benefit managers show. It would take a significant effort to determine a more accurate, national, estimate of pharmacy costs for these drugs in order actually quantify the amount Medicare Part D spends on “managing” the benefit. The purpose of this quick exercise, however was to make some general assumptions, and gain an insight into just how much money may being retained by the PBMs. It is no coincidence that the PBM industry and insurance industries have signfificant lobbying efforts in the nation’s capital. The stakes are quite high for these industries. If the quick estimates above are even reasonably close, the public, along with Congress and Medicare should take notice.
Almost $23 billion of an estimated $64 billion spent by Medicare on drugs 2013 was spent on these 20 drugs alone. From this $23 billion, the calculations above estimate that $3.25 billion was paid to administrators of the Part D plans. If accurate, it means that PBMs took more than $8 billion in 2013 for their services. Real savings could be realized by Medicare by increasing transparency of PBMs and limiting the spread allowable for Medicare Part D administrators much in the same way that the PBMs have limited pharmacy reimbursement thru tools like MAC pricing lists. The Congressional Budget Office (CBO) estimates that Part D spending will total $76 billion in 2015. Transparency could easily shave several percentage points from this, and that adds up quickly.
I have always been critical about the use of prescription claim data in measuring adherence, though I understand that it is one of the only mechanisms readily available to estimate adherence. Discussions that emerged from “The Rewards of Performance” led to a closer examination of Mirixa SSI claims this quarter.
For those that don’t know, the Mirixa SSI Retail Stars Adherence Intervention Program alerts pharmacies of patients with poor compliance (percentage of days covered or PDC) taking one or more medications being emphasized thru the EQuIPP measures. These alerts are based entirely on claims data. The pharmacy is paid $12 for each case completed and $2 if the pharmacy attempts to complete the case and the patient declines to take part.
I asked my clinical director to summarize the SSI activity our pharmacy has seen during the first quarter of 2015. Here is what she reported:
We received 12 SSI Retail Stars Adherence Interventions Program notices
Each one of these required an average 20 minutes of pharmacist time
Many of these 12 , once the discussion started, required the pharmacist to do a medication reconciliation to address the issue.
All 12 (100%) of these SSI cases WERE FALSE POSITIVE adherence issues
It is quite clear, for at least the first 12 cases this year at our pharmacy, claims data does not tell a compelling story about compliance. Consider some examples:
Falsely Identified:
Patient fell and broke his hip in late Feb. He underwent surgery and was hospitalized for 3 weeks. Patient is also a part of pharmacy’s synchronization program. We will be re-syncing medication at upcoming fill.
Falsely Identified:
On 9/16, our pharmacist discussed the change from simvastatin to atorvastatin with the patient. He asked if he could finish simvastatin left at home (as suggested by his doctor). We agreed this was fine (as the change was not prompted by an ADR to simvastatin). The 9/12/14 fill of atorvastatin will obviously last >90 days since he finished simvastatin first. We continue to monitor his compliance regularly with all medications.
Falsely Identified:
Last 3 refills were appropriate: 12/6/14, 1/5/15, and 2/2/15. Reviewed patient profile as Mirixa Platform identified non-compliance for Simvastatin, Metformin, and Lisin/HCTZ. Compliance issue was falsely identified and last three fills/refill history looks appropriate. Intervention was documented into Mirixa Platform. Patient reported no issues with medications at pick-up
Falsely Identified:
Per Pharmacy records, compliance is appropriate and claims were billed through new processor. Refill history: 1/2/15, 2/9/15 Patient was recently hospitalized a couple of weeks ago.
Falsely Identified:
Refill dates include: 1/5/15,1/19/15,2/2/15,2/16/15,3/2/15. This non-adherence falsely-identified.
Falsely Identified:
Reviewed patient profile as Mirixa Platform identified non-compliance for Glipizide. Compliance issue was falsely identified and last three fills/refill history looks appropriate (11/10/14, 1/10/14, 3/2/15). Patient fills 60 days at a time. Intervention was documented into Mirixa Platform. Patient reported no issues with medications at pick-up
Falsely Identified:
Patient’s record shows adequate and timely compliance. All medications are lined up to fill around the 25th each month. Pharmacy refill history shows refill dates this year of: 12/26/14, 1/21/15, and 2/25/15.
Falsely Identified:
Pharmacy dispensing software indicates that medication is being filled appropriately with last 3 refills dates of: 12/4/15, 1/7/15, and 2/6/15. Additionally, patient is enrolled in pharmacy’s medication synchronization program and medications are reviewed by pharmacist monthly for ADRs, changes, and promotes adherence.
The use of claims data to alert a pharmacist to a potential problem is a benefit to both the PBM and the pharmacy. Unfortunately, the reliance of pharmacy quality measurements (i.e. EQuIPP) on PDC taken from claims data is seriously flawed. Some might consider our first quarter to be an aberration statistically. This is not the case. Our in-house compliance screen (see “Addressing Compliance“) routinely finds that a significant number of apparent compliance issues have legitimate explanations. The current mechanism for evaluating pharmacy is certainly flawed, and new measures that actually measure the impact that pharmacists can have on patient outcomes are desperately needed.
Side Note:
In “The Rewards of Performance” it was pointed out that the example plan withheld money paid for SSI cases by Mirixia from performance payments for overall EQuIPP based measures. This is essentially double jeopardy for the pharmacy. With a payment of a mere $12 per case (if completed), a pharmacy spends more on pharmacist salary than they are being paid for the case. To aggravate the matter, the pharmacy’s PDQ may already being hurt by the compliance in question, possibly reducing their performance rating and reward. Now it is becoming apparent that the claims based compliance may not have been an actual problem to start. Withholding the amount in the performance payment just adds insult to injury.
It should come as no surprise to anyone active in pharmacy that CMS has started to emphasize quality and performance as a part of the metrics being used to grade pharmaciesPharmacy Benefit Managers (PBMs). The mechanism for this evaluation are the Star Ratings, and these the pharmacy specific metrics are subdivided into several disease specific measures. Pharmacies receive scores for each measure, and the Medicare Part D Prescription Drug Plans (PDPs) are scored by CMS based on their own measures along with an aggregate of the pharmacy specific performance numbers for all of their network pharmacies. The metrics are collected and calculated by PQS (Pharmacy Quality Solutions) thru the EQuIPP platform.
Pay for Performance
Recently, 2014 performance reports have begun to emerge, and pharmacies are starting to see the fruits of their quality oriented labor. The harvest, however, appears to be a little disappointing. Below represents the report and payment made by a Medicare Part D PDP (Prescription Drug Plan) to a medium size independent pharmacy*.
Performance Report with Payment information for a medium-sized independent pharmacy (filling 250-350 Rx per day)*
Description
The pharmacy represented above is fairly successful with respect to the performance measures. The Medicare Part D plan in this report likely represents only a small fraction of the pharmacy’s Medicare Part D patient population (likely less than a few hundred patients in total). The adherence (prescription drug compliance or PDC) measures for the first two measures (ACE / ARB / DRI and Statins) are well above the 5 star goals, and represent a small subset of the pharmacy’s patient population (around 40-50 patients each). The other two EQuIPP measures represent a very small population of patients (15-16 patients), and a single patient can dramatically affect the pharmacy’s scores (consider that with so few data points, a single patient can raise or lower a score by almost 7%). There does not appear to be any weighting of performance pay based on this type of bias, which is out of the control of the pharmacy.
Another notable observation is that a high performing pharmacy can be paid a premium for very high results. The first two measures show a payment rate of 125% (a 25% premium) for exceeding the 5 star goal. The performance scale extends from 125% down to 0% based on performance. There is not a clear indication where the break in reimbursement levels are being made.
By the Numbers
Some interesting details of the “pay for performance” model being used by this plan emerge from this from this table.
The total amount of performance incentives available to this pharmacy for 2014 (the entire year) was $1190. (this assumes a 25% premium is available for all measures and the pharmacy exceeds all goals significantly.
The pharmacy serves between 51 and 109 Star Measure Medication patients that are enrolled with this plan. (it is difficult to know how many patients are represented in more than one category)
15% of performance pay was assigned to non-star ratings (non-EQuIPP) measures. These include 90-day fill rate and Generic Dispensing Rate.
For EQuIPP Measures, performance incentives average $5.63 per patient per year
By patient, incentive payments work out to be below $6 to about $20 per patient per year (depending on the number of patients that fall into more than one category).
Payments made for Medication Therapy Management (MTM) Stars Intervention** are being counted as payment already received by the pharmacy
Discussion
The amount being paid for outstanding pharmacy performance by this plan is anemic. For each patient falling into a star-ratings category, pharmacy has the potential to increase revenue by a maximum of $20 per year. In order to maximize this incentive, a pharmacy is going to have to spend money on programs to improve outcomes. Programs like Med Sync and compliance packaging all have significant overhead, and the potential incentives do little to ensure a pharmacy will maintain a positive margin for improving quality.
The use of non-equip measures for 15% of performance incentives is a troubling trend. Remember, it is the patient, not the pharmacy or the PBM, that ultimately should have the choice of a 90-day fill. Many patient prefer regular visits to their pharmacy. While some research supports the thought that 90-day refills increase patient compliance, these studies rely on claims data, making the assumption that actual compliance is directly related the patient having possession of the medication. In truth, leveraging 90-day fills removes only one potential obstacle to adherence, a trip to the pharmacy, while numerous other possible reasons for non-compliance remain. One drawback of 90 day supplies is that compliance issues take longer to recognize. With 30 day refills, the pharmacy can address issues of compliance with the patient within the first 30 to 45 days of therapy, whereas issues with a 90 day supply will not start to become evident for close to 4 months, well after the patient has poor compliance developed habits.
Extended-day supplies have other consequences to both patients and pharmacies. Patients who receive 90 days supplies are offered savings thru discounted co-pays. The incentive available to the pharmacy for a high 90 day fill percent (with the above example, achieving more than 25% of star-rating drugs dispensed as 90 day supplies) is $152 per year. A typical 90-day pharmacy contract offers a $0 dispensing fee to the pharmacy while the 30 day dispensing fee paid to a pharmacy is typically no less than $0.50 per Rx If the pharmacy moves from 4% up to 25% 90-day supply fill rate, the pharmacy would be forfeiting $200 dollars in dispensing fees in exchange for only $152 in incentive payments. In this case, a pharmacy failing to make the “grade” on 90-day fill rate is actually better off, and the patient retains their choice of 30 or 90 day fills.***
Another troubling trend is the deduction the plan makes for payments received by the pharmacy for Mirixa (Medication Therapy Management or MTM)adherence related cases. The plan is essentially creating a ceiling on the total amount a pharmacy can receive for its work. This ceiling includes both incentives and any money available for MTMadherence related case payments. The pharmacy represented in the report above completed 100% of the adherence related Mirixa cases assigned to it in 2014 and received $310 for their work. A typical MTM work-up takes 30 to 60 minutes of pharmacist time, and the effective reimbursement rate is poor, even for a highly efficient pharmacy. The deduction of the Mirixa payments flies in opposition to the quality metrics supposedly being rewarded by this system. By this method, pharmacies with a large number of MTMadherence relatedpatients cases have the potential reach their incentive ceiling entirely by completing MTM these cases. This pharmacy would then receive little to no additional quality bonus dollars for maintaining exceptional EQuIPP scores. It is unclear if these pharmacy would actually have to pay money back to the plan if their MTMadherence related case payments exceeded their “maximum” quality payment.
The problem with using a star ratings system (like EQuIPP) it that it only indirectly measures quality. Compliance can be artificially elevated without actually modifying a patient’s adherence simply by enrolling patients in a Med Sync program or leveraging automatic refills. Claims data will trend towards improved adherence with these programs, but is the patient actually taking the medication? Ultimately, the quality measures will have to evolve to include metrics that better reflect the value pharmacists can contribute to the system. Right now, the quality measures are better suited to drive patients to large, robotic mail order pharmacies that can show outstanding PDC values based solely on claims data. Pharmacists offer considerably more to the patient than an indirect measure of adherence, and the measures should emphasize the strengths of pharmacists, and focus less on product.
Conclusions
This is just a first example of how plans are trying to incentivize pharmacies to emphasize quality. Many pharmacies are taking this challenge seriously, spending significant amounts of resources to improve their scores. The current reward model, however, is in serious need of revision. Without reimbursement on par with the value pharmacist contribute to healthcare, this model will not survive. Only time will tell where we are headed. Until then, pharmacists need to step up to the plate, as it were, and show the patient and the payor that they are capable of improving outcomes. Pharmacists can make a significant contribution to lower total health care costs. We need to get out there and make every encounter with the patient count!
Footnotes
* While this chart represents real data from an actual pharmacy report, it is possible that pharmacies may see different reimbursement based on things like contracts, PSAO affiliations, geographic region etc. This graph is for illustration purposes only.
** Updates are represented by strike thru text and added italic corrections. Updated information was provided by PQS.
Each of us has a name. For many of us, it was the name our parents gave to us. Others have nicknames they have elected to use. I know a few people who go by their middle name and still others may have legally changed their name for a variety of reasons (my favorite is a pharmacist who legally changed his first name to Rx—Rex, get it?).
We all have a name we prefer. Maybe many are not all that picky about the which is used. Me, I answer to just about anything. Really.
When I became a partner in my pharmacy, I became the third male owner, I found patients would address me about a third of the time by any of my real names (Mike, Michael, hey, you!). Frequently, patients would address me as one of my business partners names.
At one time worried about these de-personalized interactions with my patients. I would feel the need to be recognized and correct the patient. With time, however, I became adept and recognizing when someone was talking to me because I couldn’t count of the salutation to give me context.
Today, I answer to just about any name. Specifically, though, I am comfortable answering to Bernie, Bill, and Randy. I no longer spend time correcting patients. I have come to understand what was really going on. Each patient has “adopted” one of us as their pharmacist.
The patient has made a positive association with one of my past or present business partners. The fact that they recognize me as that person in proxy is a one of the highest forms of compliment that can be given. It means that I am being recognized both for what I have done, and for what my business has accomplished.
As a side note, however, I will take action if my paycheck doesn’t have my name on it. I have to draw the line somewhere!
Pharmacy and pharmacists are navigating uncharted waters. The reason is the many the recent and significant changes in healthcare. Two very different factions emerging within the profession:
Medications as a commodity and
Pharmacists as providers of care
The competition between these factions will shape pharmacy and healthcare for years to come. Will one faction win over the other, or will the profession move in two different directions?
Medications as a Commodity
The mechanics of this faction are complicated, and there are many different parties actively involved. The net effect for pharmacy is a severe reduction in reimbursement for the drug product. Historically, pharmacies and pharmacists have earned their living providing both medication and care, but being paid only for the medication component. The downward pressure on reimbursement has resulted in what we have previously named “the stripped down model of pharmacy.”
The ramifications for the commoditization of pharmaceuticals are significant. Only by ramping up volume can a pharmacy continue to meet overhead costs. Increasing efficiency can take a pharmacy only so far down this path before the bottom line becomes negative. The largest single overhead expense in a pharmacy is wages, and one person can only fill or check a finite number of prescriptions in an hour.
Mail order pharmacy has pushed efficiency to the logical end, where one pharmacist (which is legally required in most states) is “checking” thousands of medications a day. Robotics and automation run the “pharmacy” in these operations. These large prescription mills can deliver an almost limitless number of prescriptions every year without any human intervention. Medications show up in the mail box, and the patient has to contact an unknown pharmacists over the phone if they have any questions or concerns.
Even with a highly efficient operation, retail pharmacies across the country are struggling to maintain profitability given the ever decreasing reimbursement this model provides. Smaller pharmacies across the country are closing at an alarming rate. Many of these pharmacies service more rural areas of the country, creating in interesting dilemma for patients. This Darwinian process of survival of the biggest could have severe repercussions as healthcare evolves. In this faction, efficiency has come at the expense of patient care.
Pharmacists as Providers of Care
On the other side of the battle are the pharmacists working with patients to ensure therapeutic outcomes. In direct contrast to the high efficiency, robotic or automated systems required in the above model, a care oriented practice may have several pharmacists working at any given time. The difference is what is being provided. While the patient ultimately receives a medication (product), they are also receiving service and care. The pharmacists review the patient’s medications, look for and address real and potential problems with the patient and their doctor(s), and work with the patient to ensure that they are obtaining the optimal outcomes. Pharmacists ensure medications are used safely and effectively.
At the present time, pharmacies are still being paid primarily for product, and it is likely that no matter which direction the profession of pharmacy ultimately follows, reimbursement for the drug product will forever be limited. Future support for the pharmacist as a provider of care will have to come from a fee for service model. Medicare and other are starting now recognizing the importance of pharmacists providing care to enhance patient outcomes. Even a single pharmacy has the potential to save a payor millions of dollars yearly by providing quality care (this will be the focus of a future post here).
A fee for service or pay for performance system will eventually need to become reality. Until reimbursement for service catches up to the importance of pharmacists providing care, pharmacies that have embraced the service model are struggling to stay in business. It may not be until Medicare recognizes pharmacists as providers, allowing them to bill for clinical services to the patient’s medical benefit, that the pharmacy as a service model gains widespread traction in our healthcare system.
Winners and Losers
In case it isn’t clear, there are no clear cut winners. Pharmacies and pharmacists will continue to struggle on both sides. What is becoming forgotten is the patient, who has the most to lose.
It is likely inevitable in the current health care system, that medications will become a commodity. Reimbursement for the product in the future will probably only be sufficient to cover basic overhead. It is with the emergence of reimbursement to pharmacists for care that the fate of pharmacy as a profession rests.
If I had to pick a faction to win, however, it would be the pharmacy as a service model. In this regard, the profession of pharmacy has a lot in common with the professional airline pilot. Consider that today’s airplanes can take-off, fly and land without a pilot, much like a prescriptions filled by an automated pharmacy. Now ask, would you want to fly in a plane without a pilot? Who will be there if something doesn’t go as planned, and the automated system cannot land the plane? Similarly, how safe would you feel if there were no one looking over your medications to ensure that there were no potential or real problems? Who will answer questions about the medications and how to best take them, and will they know you? Pharmacists providing care are an important part of the health care system. Until the time when pharmacists are recognized as providers, pharmacists will need play on both sides of the equation: making their practice as efficient as possible while at the same time going the extra mile to make every encounter with their patients count!
