Author: Michael Deninger

One of the more challenging concepts that has arisen in health care with the move toward pay for performance is term attribution.  A common definition of the term is:

Attribution: The method to which a patient is connected to a health care system, provider, physician or pharmacy and the extent to which that provider takes responsibility for the care of the patient.

While this concept appears simple on the surface, depending on how one defines the word connected, the result is not always consistent or predictable. In health care, patient attribution is typically linked to claim activity. The amount of claim activity and the date in a claim made impact attribution assignment. This can create some interesting connections.  Let’s look at a few examples.

Patients that transferred to another pharmacy in January or February and have not had any prescriptions filled in three or four months from our pharmacy are still attributed to us. The patient is likely attributed to both pharmacies at this time.

A patient that came to our pharmacy to receive a nebulizer and the associated acute medications is then attributed to our practice. They came to us because their own pharmacy does not stock or bill for durable medical equipment. Because of the new attribution, the insurance then asks us to do Medication Synchronization on the patient even though another pharmacy fills all of their chronic medications.

A patient that came to our pharmacy to receive a vaccination becomes attributed to us. While this is the only drug product we have ever provided to the patient, their insurance requests us to perform a Comprehensive Medication Review (CMR).

Patients that have passed away continue to be attributed to our pharmacy months after their death.

Attribution, as it turns out, is relative. In some instances, a single claim can generate a connection, resulting in attribution. In other plans, a patient might need to fill a majority of their prescriptions at a pharmacy to be attributed to that provider. There is not hard and fast rule: each plan has their own policies.

Attribution is often sticky — it doesn’t promptly stop if a patient’s claims cease. I call this fringe attribution — a patient is no longer actively using a provider but continues to maintain a connection. Fringe attribution is rational. Claims data doesn’t contain the reason for a change in provider, so attribution often extends for several months before expiring. Even in the case of a patient that has passed away, attribution does not abruptly end. The insurance plan must accept claims for a period of time after death. Often, it takes 6-7 months with no new claims before attribution of the deceased is allowed to lapse.

Fringe attribution can be either good or bad for the provider. For example,  being eligible to perform extra services like a  CMR can enhance revenue available to a provider. An attributed patient that does not regularly use a provider could either positively or negatively impact the provider’s performance scores. It is well known that a significant portion of healthcare spending happens near the end of life. A recently deceased patient will often negatively impact a provider’s total cost-of-care metrics for several months before their attribution ultimately wanes.

So attribution is a complex concept with many nuances. Because attribution is more and more often  linked performance measures, this nuances can impact a practice’s bottom line. For that reason, it is very important to understand how attribution impacts your practices. A better understanding of your practice’s attribution profile allows you to better anticipate changes as they occur so you can Make Every Encounter Count.

Last month I wrote about Metrics and the fact that many of the currently used pharmacy measures are becoming compressed—the range of scores is rapidly approaching a point where you can do no better.

Today I offer proof in the form of the current pay-for-performance program being run by one national health plan. This pay-for-performance plan is based on a DIR fee that is either partially or fully returned if you achieve scores above the 50th percentile and the 80th percentile in key metrics. Let’s take a look at the first quarter for 2018’s requirements to achieve this performance bonus.

The three metrics here are all PDC (percentage of days covered) compliance measures. In order to meet the minimum requirements and obtain some of the DIR fee back, a pharmacy has to have over 90% of its patients taking their medication appropriately. Let that sink for a moment. Over half of the pharmacies in this plan maintain a patient population that is more than 90% compliant. That is a large number of both patients and pharmacies. But then it becomes absurd. In two of the three measures, a pharmacy can only reach the top 80% of pharmacies if every single patient they have in that plan is compliant. 

Now there is a positive side to that absurd statement. It is possible for more than the top 20% of pharmacies to reach the top 80% marker But if that happened I would imagine that the scoring rubric would be modified.

“…if everyone is super, no-one is.” – Syndrome from The Incredibles.

So the compression of metrics that I have predicted for the past two years has actually already happened. It shows that there are a lot of pharmacies and pharmacists making every encounter count. Unfortunately, the result is a little depressing as more and more pharmacies are not being rewarded for otherwise stellar performance.

Most pharmacists by now are at least aware of EQuIPP scores. These metrics can be used to guide pharmacies looking to improve quality in specific areas as well as their use as a part of the basis for reimbursement from payers. The Top 20% value for a given quality measure was never intended by its creators to be used as a basis for reimbursement. It has always been intended as a motivator for pharmacies to see where the top performers are at. But this did not stop almost every payer in the industry from using it as the basis for most of their performance payments. Virtually every Medicare Part D plan with a DIR fee has attached performance payments to a pharmacy achieving top 20% status in given metrics.

As this blog predicted would happen, the Top 20% watermark for every current EQuIPP quality measure has also become more and more compressed. Pharmacies have been working hard on their practices to improve their quality and by extension their metrics. As a result, individual EQuIPP score required to break into the top 20% have consistently increased with time. Currently, for one plan, a pharmacy has to have over 95% of its patients being compliant for each measure to gain entrance into the top 20% club and, by extension, receive top performance rewards. The compression of this value ultimately undermines the entire validity of the EQuIPP metrics. It has created a watermark that is rapidly becoming all but unobtainable.  

For example, consider a pharmacy with > 90% of their patients meeting the compliance scores. This is score well above the 5-star watermark for Medicare. A few years ago this result would have found them included in the top 20%. Today they would be on the outside looking in. In fact, once a pharmacy has increased patient compliance to greater than 90%, there is less and less a pharmacy can effectively do to further increase their performance measures. They have reached a point of diminishing returns. Reaching the top 20% essentially becomes a lottery, with the natural randomness of patient behavior impacting the pharmacy’s score more than the work being done by the pharmacy. Our own pharmacies regularly spent months at a time in the top 20% over the last several years. Today our scores are even higher than they were and yet we bounce in and out of the top 20% by a few tenths or hundredths of a precent every reporting period.

Ultimately, metrics are not going to disappear. They have their place both as a basis for reimbursement as well as motivation for the participants. But the current measures being used have significant limitations. I see little reason for EQuIPP to continue to report a top 20% value. It was never intended as a metric upon which to base reimbursement. It is rapidly becoming a meaningless, unreachable goal. A more meaningful value to report might be a the mean pharmacy performance for plan.

If the EQuIPP measures stopped reporting the top 20% values for individual metrics today, payers would continue to base performance payments on arbitrarily high compliance requirements. The reason, in large part, is that the measures are only surrogate values being used to estimate quality. They do nothing to directly measure patient care and therapeutic outcomes. It is essentially impossible to quantify how much or little a pharmacy achieving a given EQuIPP score actually saved the health system. In order to really impact quality, metrics will need to mature significantly.

Ultimately, it will require a more direct measurement of outcomes. This will better demonstrate the value that an outstanding pharmacy provides to the health system. An example of a such a measure would be total health spend. One commercial insurer based quality program we participate in calcualtes anticipated healthcare spend for each patient based on actuarial and historical data. The pharmacy is then measured by their ability to impact this number.  If a pharmacy comes in under-budget with respect to its patients’ health care spend it has credible evidence of savings created for the payer. Any savings a pharmacy can create can be, in part, shared with the pharmacy as a performance bonus. A win-win.

Metrics are important. But while they obviously will have financial reimbursement implications in a pay for performance healthcare system, metrics ultimately should be about improving patient care. The best metrics move beyond simplistic measurements like medication compliance and look at the patient as a whole. The best metrics may not even focus on a given plan or population of patients, but instead on the provider as a whole. We have a long way to go before metrics develop this level of robustness. So until then, make every encounter with your patients count. Reimbursement will eventually depend on it.

On April 10, PCMA posted INDEPENDENT DRUGSTORE LOBBY AGENDA RAISES GOVERNMENT COSTS, INCREASES DEFICIT on their website. This post appears to correspond with significant backlash being seen by the Pharmacy Benefit Manager industry in several states around the country. PCMA is an industry group for the PBM industry, and the post is a great example of propaganda designed to detract legislators and other decision makers from the real issues that are being brought forth in this country. I wanted to address each of their points here [emphasis is theirs].

Destabilizing Medicare Part D by Imposing Expensive New Mandates: Proposals to require point-of-sale payment of pharmacy price concessions would increase drugstore profits, raise premiums for beneficiaries and increase costs for taxpayers. An analysis by Milliman on direct and indirect remuneration (DIR) in Medicare found that from 2017 through 2026, DIR is projected to save $308.2 billion, and reduce beneficiary premiums by $48.7 billion.The Centers for Medicare & Medicaid Services (CMS) recently found that requiring plans to apply pharmacy price concessions at point of sale would increase government costs by $16.6 billion over 10 years, and increase beneficiary premiums by $5.7 billion. CMS did not impose the mandate in its final Part D rule.

This statement contains two different issues lumped together. Let us address them one at a time

• PCMA is against making PBMs adjudicate claims accurately at the point of sale claiming that it will increase costs. But the timing of the DIR fee (at the point of sale or one to three months later, does not have to have any impact the amount for the DIR.  PCMA might argue that the tying of performance measures to DIR fees necessitates a delayed calculation. But in truth the same thing can occur by using the currently posted scores for the current claims. The savings would not be changed by doing this. Simply stated, there is absolutely no excuse that a company that is paid to administrate millions of claims for Medicare to not be able to give the pharmacy a transparent adjudicated price including any DIR at the point of sale. The current implementation, with DIR calculated and collected well after the medication has been dispensed makes the fees non-transparent to both the pharmacy and Medicare. In essence, PCMA is arguing that non-transparent DIR transactions are better. But who stands to benefit from non-transparent DIR fees? Only the PBMs could possibly benefit.
• PCMA  then goes on to cite a report that predicts that DIR fess will save Medicare Money. But  DIR fees have been in use for several years already. So why are they not citing actual savings? Perhaps they are not that compelling?

The next statement PCMA makes is this:

Eliminating Lower-Cost Popular Preferred Pharmacy Plans in Medicare: Proposed mandates would increase spending by $21 billion over 10 years, according to research from The Moran Company. The Federal Trade Commission (FTC) wrote a letter to CMS warning that: “Requiring prescription drug plans to contract with any willing pharmacy would reduce the ability of plans to obtain price discounts based on the prospect of increased patient volume and thus impair the ability of prescription drug plans to negotiate the best prices with pharmacies.”Medicare Part D enrollees overwhelmingly favor drug plans featuring lower-cost pharmacies. According to CMS, 99.9% of Part D enrollees are in these plans.

This statement is based in part on the assumption that any given national pharmacy chain is willing to sacrifice profit in order to drive pharmacy customers into its stores. By excluding the chain’s competitors in order to obtain the contract, the PBM can coerce further discounts from the pharmacy chain. All of this is unfortunately true, but PCMA is once again misdirecting us. Pharmacy reimbursements are already exceedingly low across the board for both preferred and non-preferred pharmacies alike. Pharmacies regularly average only a few dollars profit for a prescription. One can therefore argue that the difference to Medicare given an any willing provider provision would only modestly impact savings. This brings us back to motive: the elephant in the room. MAC prices. PCMA goes on to state:

Increasing Generic Medication Costs by Gutting the Use of Maximum Allowable Cost (MAC) lists: Legislation would undermine Maximum Allowable Cost (MAC) lists, which are a key cost-savings tool that ensures payers aren’t overpaying pharmacies for generic drugs. Forty-five state Medicaid programs, as well as virtually all Medicare Part D and commercial insurance plans, use MAC lists to reduce costs. The Health and Human Services Office of Inspector General (OIG) touted “the significant value MAC programs have in containing Medicaid drug costs.” The OIG also recommended that states strengthen MAC programs, not weaken them. A white paper authored by a former special counsel at the FTC notes that “legislative or regulatory measures that limit, restrict, or interfere with MACs are likely to have several unintended adverse consequences,” including higher prices and tacit collusion among pharmacies.

I want to thank PCMA for putting this one last. This is the motive we have been waiting for, and it is a really great way to emphasize the distortion that PCMA is using in their document. Mac lists are being touted by PCMA as a tool to save money, but in truth MAC lists are the bread and butter of the profitability of the PBM industry. Any threat to make these more transparent , or in their words to gut them, jeopardizes the PBMs bottom line.

PCMA would like you to believe that the PBMs regularly have to overpay for generic drugs. But unlike 10 years ago when MAC lists were only used on a handful of common generics, today almost every generic available is on a MAC list. And the PBMs completely control these lists, often paying pharmacies less than it costs the pharmacy to buy the drugs being dispensed. Coupled with a preferred pharmacy contract, the PBM has additional leverage to further lower the MAC  they pay preferred pharmacies.

But while MAC prices certainly can be linked to savings, previous analysis done here by the Thriving Pharmacist using Medicare’s own numbers show that these savings are not all being passed back to Medicare. The truth is that PBMs actually use multiple MAC lists. One list to pay pharmacies, and one to charge the payers for what they pharmacies dispensed. By paying pharmacies from one list and turning around and charging the payer more for the same product, PBMs have become extremely profitable. And recent hearings at the state level have shown that the PBMs can make more money on a prescription than the pharmacy that dispensed the drug and cared for the patient. What PCMA is concerned with is that increased transparency of MAC lists would hinder the profitability of the PBMs themselves.

As I have mentioned already, PCMA is a an organization representing the Pharmacy Benefit Manager industry. Everything they say needs to be considered biased toward its own members. The PBM industry has become a multi-billion dollar per year profit powerhouse yet PBMs are still just a middle-man in the health care industry. Now is the time for our legislators and elected officials to really scrutinize both the business practices and consolidation of the PBM industry continues to occur. They need to make this encounter count because if they don’t there may not be anything left to fix.

Today in Des Moines, the House Government Oversight Committee held a hearing looking into PBMs and the high prescription drugs. Several pharmacies and a national PBM were requested to appear. Our own Randy McDonough was one of those asked to speak.

You can view the committee meeting on Facebook (search for JohnForbes4Iowa). The direct link to the video, which does not require login to Facebook, is available here.

What is interesting to me are the items the the PBM avoided answering. Their silence speaks volumes. Perhaps they would rather not address some things and hope people forget the questions. Now is the time to rally other states and our federal legislators as well. Pharmacists provide care. We need to fight to be paid for that care.

In a April 6 article, The Columbus Dispatch is reporting that a national PBM CVS Caremark is again in how water for what it pays pharmacies compared to what it charges the payer. The interesting aspect of this article is that it appears to pit CVS Caremark against Aetna, a company that CVS is attempting to purchase. Read the entire article here.

Just in time for your Easter reading pleasure, this freshly posted article from Business Insider offers a great summary of recent PBM media coverage. Follow this link to read more.

In January, a PBM made headlines when it started aggressively dropping pharmacy reimbursements in several states. Arkansas pharmacists were among the first to recognize the problem and organize a response. Iowa pharmacists followed when they too observed the significant drop in reimbursement. The Iowa Pharmacist Association and state legislators immediately went to work. Shortly thereafter, the PBM promised to review their new prices.

But the promised changes were not going to be retroactive. That meant that we had to observe data for several more weeks in order to get an idea of the scope and significance of any changes. Today we have updated data and we can make some general assessments about the adjustment the PBM made in Iowa.

The measure we are using to follow the MAC price adjustments is percent of claims processed under cost. These are sometimes referred to as underwater claims. While many pharmacists will maintain that no claims should ever be reimbursed below cost, this is an unreasonable expectation. Not every pharmacy has access to the same purchasing sources, nor do they have identical purchase volumes. So underwater claims will always exist. The number of underwater claims, however, should always be low. Very low. This is because overall margins in today’s healthcare environment are extremely tight; even a few significant underwater claims can quickly overwhelm a provier’s financial viability.

Without further delay, let’s look at the data.

The graph shows the percentage of underwater claims for two stores.  Store 1 (in blue) has a higher overall prescription volume and also adjudicates more claims with the PBM in question than does store 2 (orange).  It is important to note that while it may appear that the lower volume store (store 2 in orange) may have been impacted less by the increase in underwater claims, low volume stores often have higher expenses per prescription dispensed. For this reason, store 2 may actually have a higher chance to feel the impact of the sharp increase in underwater claims than does store 1 .

Several observations can be made from this graphic.

• Not all stores are impacted identically when a price structure changes is made by a PBM. Prescription mix will play into how much impact a given pharmacy may experience.
• Before the current problem with the PBM arose, underwater reimbursement for claims processed with the PBM were averaging less than 1% of claims adjudicated (0.72% between the two stores). Dates on the graph representing this period are the weeks of 12/9/17 to 1/13/18
• A large spike in underwater claims occurred around the week of 1/20/2018. Underwater claims spiked to to between 15 and 25% of adjudicated claims This represented an increase of 3000%.
• Around mid-March reimbursement problems abated, with underwater claims settling between 3-5%

At first glance, it would appear that this was a victory for pharmacies in the State of  Iowa. Pharmacies, legislators and the Iowa Pharmacy Association put pressure on the PBM which resulted in a correction being made.  While it is easy to get excited about success, it is important to note that after the correction, the percentage of underwater claims was still roughly 300% higher than before the incident. For smaller pharmacies with higher expense/rx ratios, the updated prices may still represent a significant financial burden. Additionally, the PBM, by not making these changes retroactive, have legally kept millions of dollars due to the pharmacies.

In other words, this is a hollow victory.  While I understand that there will always be underwater claims, they should not represent even 1% of claims. The PBM industry is very profitable despite adding little or no real value in terms of patient care. It is not unreasonable to expect the PBM industry to have excellent and fair reimbursement for every drug in every market. That is what they are supposed to be doing. Instead. they continue to leverage their non-transparent, anti-competitive tactics to extract profits for themselves from the healthcare industry.

Despite getting the PBM to make a correction, the facts is that any PBM can arbitrarily manipulate reimbursement without any notice, due process, or regard to the damage the change could cause. Pharmacy as a profession cannot become complacent simply because they win a few minor battles with PBMs. We need to continue to pressure state and federal legislators to regulate the PBM industry. Pharmacies need to make each encounter with their legislators count just as they do when caring for their patients.

The various disciplines in healthcare are constantly evaluating risks. Every therapy decision, from a complex surgical procedure to the treatment of a disease with medications, is associated with some measurable risk that has to be weighed against the benefit to the patient. More and more, risk is also associated with provider reimbursement. Institutions and practitioners alike are at risk of  reductions in payments for their service if their patients do not meet performance goals. This change in the healthcare landscape, often referred to as pay for performance, has created  an interesting and challenging game board upon which the healthcare campaign takes place.

There are many of examples of provider performance penalties in healthcare. A hospital or physician’s reimbursements may be impacted when too many of their patients are re-admitted to the hospitals shortly after discharge, or a pharmacy might be penalized if they have too many patients non-compliant with certain therapies. In theory, linking provider payments to performance and outcomes seems logical. The problem is that no practitioner is an island, and many of the measures being used depend on numerous variables outside their control.

There are countless examples of inter-dependent care that make many performance based penalties a country-wide legal lottery system for healthcare providers. One practice may be surrounded by healthcare colleagues invested in working together, resulting in good scores and performance rewards for all involved. Other practices, despite wanting to positively impact outcomes, might be surrounded by other providers that are not invested in collaboration, and  as a result receive some or all of these providers receive poorer scores and reduced or zero performance payments. To make matters more complicated, the metrics being used across practitioners do not align, which does not help foster collaboration.

This is a difficult position for pharmacy. Pharmacists generally cannot make changes to prescriptions without involving the prescriber. And while they generally have great relationship with their patients, pharmacists can only go so far in coaching or working to modify patients’ behavior in metrics like compliance. For this reason, some pharmacy owners have elected to ignore performance measures. Others have elected to sell their stores. This stakes are that high.

When faced with risk, pharmacists need to become aggressive. This is the time to transform your practice. Write and send quality clinical notes to the patients’ providers. While  you may not get positive responses right away, with time these efforts will allow you to reduce your risk of being left behind. Start now. Make Every Encounter Count.

Over the years, I have necessarily had to learn a great deal about insurance. The necessity is born both from having to give guidance to my patients  who are trying to navigate this complicated topic as well as making sure my business is positioned properly to survive. One type of plan that often causes mis-understandings are the Medicare Advantage plans (sometimes called Medicare Part C). These plans privatize the Medicare part B benefit, often rolling  other benefits into the plan including a prescription drug plan like Medicare Part D at a lower cost to the patient.

These plans can be very attractive to certain patients eligible for Medicare, and these plans do offer some interesting benefits. But I have always been a little wary of these plans. If something seems too good to be true, then there probably is something being left out or not explicitly advertised. I always caution my patients considering these plans to research their decision well before signing up.

As it turns out, these plans may very well be gaming the Medicare system. In a recent report from Morningstar, insurers offering these plans are intentionally shuffling patients between plans in order to maximize performance incentives offered by Medicare. Read more about this practice, called crosswalking by following this link.