Category: Business

Back in in the 80’s, when I was in High School, I had to read the 1953 Arthur Miller play, The Crucible. The play title references a definition of the word crucible that, until I read the play, was unfamiliar to me.

cru·ci·ble noun \ˈkrü-sə-bəl\ a difficult test or challenge

After the Thriving Pharmacist published its take on Mail Order Narcotics, Elements magazine and PBA Health have followed up with their own article. Be sure to take a look here.

Business Insider recently put out an excellent article that deserves the attention of legislators and consumers alike. After reading  Linette Lopez’s article  Companies you’ve never heard of are making a killing off high drug prices, you will better understand many of the convoluted facets of this industry.

Recently, I was reviewing a new prescription for a patient. It was not the clinical ramifications of the newly prescribed Humolog and Lantus that caught my eye. What caught my attention was the fact that on one of the prescriptions I was making money and on the other I was losing money. At issue is the arbitrary nature of pharmacy-PBM contracts. A pharmacy is often reimbursement at a different rate for medication based only on the day supply it represents for the patient.

The PBM industry is operated by businessmen, and not pharmacists. Their contracts are written by lawyers, not pharmacists. It is not surprising, therefore that most of its focus is on regulatory issues and product cost, and not patient care. To wit, PBMs regularly reimburse pharmacies less for dispensing an extended-day versus 30 day supply. This is a business assumption that a practicing pharmacists would not make. Outside of the drug cost, the overhead, time, and materials vary little with the day-supply. And, if the pharmacist is doing their job, the pharmacist will have fewer opportunities to work the patient between long-term fills. This means that they may actually need to spend more time with the patient receiving long-term fills in order to monitor and evaluate the safety and effectiveness of the therapy. It is not surprise, therefore, that a pharmacist views pharmacy in a very different light than a manager at a PBM.

The problem does not stop at the PBM level, either. Most large pharmacy chains have few practicing pharmacists in their management teams. These pharmacists representing the profession at the corporate level, and look at the business of pharmacy in a very different way. They often have very different and conflicting priorities when compared to pharmacists working in the pharmacy department. The fact that so many chain pharmacies willingly sign contracts that devalue the contributions of their pharmacist clearly demonstrate this. This problem is not seen only in the corporate office, either. In a chain, the pharmacy is usually a department within a larger store, and while the pharmacy manager is hopefully, but not always, a pharmacist, the department managers typically report to non-pharmacist store managers who have their own, non-pharmacy priorities.

Finally, big business does not stop at the corporate level. Often, those successful in business gravitate to politics, and work to influence our politicians and government officials. Our elected officials often understand business much better than they understand healthcare and specifically pharmacy practice. When asked how they would characterize Medicare Part D, my senators and representatives have always been very positive, considering it a smashing success. This is because they are looking only at the costs associated with the drug spend, and not the bigger picture of care and how it impacts the bottom line in Medicare spending.

Do not mistake my description above as doom and gloom. While the Big Business is working hard to corrupt pharmacy practice, the pharmacy profession has long been lead by independent pharmacies and pharmacists in this country. And independent pharmacies are constantly innovating and demonstrating the power of patient care delivered by pharmacists practicing at the top of their licenses. This is slowly gaining the attention,  both regional and national levels, with commercial insurers being the first to take notice. Even Medicare is slowly beginning to recognize that quality pharmacy care can help save money outside of the traditional drug spend.

Like a boulder perched on a hill, eventually it will make the journey down. Every pharmacist practicing at the top of their license helps drive the momentum of the boulder. Make your encounters with your patients count. Help us push pharmacy away from big business and back to patient care.

The concept of Pay for Performance as it pertains to healthcare is simple: save the system money by performing and receive a financial reward. Fail to perform and you will reap the financial consequences. Some models even require a financial stake from the provider before they are allowed to participate. An entry fee, as it were. The potential rewards, if the provider meets performance goals, should offset or exceed the initial stake.  Some companies are apparently considering the DIR fee as a form of pay for performance. I disagree, and as proof, I offer a couple of examples. If you need a refresher on DIR fees, read DIR Fees–Why are Pharmacies in the Middle?.

CVS Caremark 2016 DIR

This summer, the CVS Caremark DIR fee schedule for 2016 began to become tangible for pharmacies all over the country as DIR fees for the first 4 months of the year were calculated and the DIR fees started to be withheld. For those unfamiliar with the current Caremark DIR program, CVS has tied the DIR fee to pharmacy performance in the EQuIPP measures. They call this a variable rate DIR, with performing pharmacies receiving a discount on the DIR rate.

To be more explicit, these plans take an additional 3% to 5%  back from the pharmacy for every Rx they supply the plan’s patients. A high performing pharmacy has to pay back 3%, a lower performing pharmacy pays back as much as 5%.

Consider my pharmacy. We were in the top 20% of all pharmacies nation wide for the entire first 6 months of 2016. This puts us at the bottom of the variable rate, so we have to give back only 3% of what we were paid by CVS Caremark. This amounts to tens of thousands of dollars taken from sales with an already thin margin allowed by the plan. The reward for being a top performer is to pay the plan less for the privilege of taking care of their patients. This is not a performance reward.

CVS Caremark would undoubtedly counter this statement, stating that they do reward performance through a different program. This program does reward performance, but the size of these rewards is merely a footnote. My pharmacy’s reward for this program was less than $2000 for all of 2015, and we maxed out every clinical category. By way of comparison, the $2000 in performance reward for the entire year is dwarfed by the estimated $60,000 per year in DIR fees for our pharmacy will pay back to CVS / Caremark. For CVS / Caremark, quality and performance, as a priority, do not appear to be in the same league as lowering the price.

Humana 2017 DIR

Recently, Humana revealed its 2017 DIR program. It bears some resemblance to a pay for performance program, but it, too, falls short. Like CVS’s 2016 plans, the 2017 Humana DIR fee is also tied to EQuIPP measures. The Humana DIR concept this: each qualifying prescription (falling in an EQuiPP measure) will be charged a $5 DIR fee. If a pharmacy maintains an EQuIPP score in the top 50% for the matching EQuIPP measure, they will receive $2 back. If the pharmacy maintains an EQuIPP score in the top 20%, they will receive all $5 of the DIR back plus an additional $1 reward.

On the surface, the Humana plan for 2017 is actually a Pay for Performance version of a DIR. Unfortunately, doing the math shows that the DIR is really just a DIR. Like a casino, Human has stacked the odds in its favor. Consider the math:

Let’s look at 1,000,000 qualifying claims — Humana would withhold $5M in DIR fees up front. To simplify the illustration, we will make two assumptions. These assumptions do not impact the actual statistical evaluation over all qualifying prescriptions, EQuIPP measures and pharmacies. Assume…

• that all pharmacies fill the same number of claims
• that all pharmacies perform identically for all three EQuIPP criteria

Now because Humana is using a percentile based comparison thru Equip we can state:

1. 50% of all pharmacies will see $0/claim back (they fell in the lower 50% on all three measures). Based on the assumptions above, this to be half of the claims (500,000 claims)
2. 30% of pharmacies will receive $2/claim (these pharmacies fell between 50% and 80%) Again, based on the assumptions above, is 30% of claims (300,000 claims), so Humana returns $0.6M ($600,000) back to the pharmacies.
3. 20% of pharmacies will receive $6/claim. This is 20% of all claims, so Humana gives back $1.2M

In the end, Humana holds $5M and gives back $1.8M. So Humana keeps $3.2M per 1,000,000 claims as shared savings.

Now it is possible that several larger pharmacies could fill a lot of Humana claims and simultaneously and hit the top end on all EQuIPP measures. If this happened, Humana could end up paying out more. If the highest performing pharmacies represented not (as simplified) 20% of claims, but 50% of qualifying claims (this is very unlikely, an extreme example), then the reward paid out would be $3M per million claims. If remaining pharmacies receiving rewards ($2 per claim) represented an equally disproportionate 40% of claims filled for patients, then Humana would pay out $800K per million claims. For those doing the math at home, this leaves the bottom 50% of pharmacies filling only 10% of all qualifying Human claims. Despite this unlikely distribution of reward dollars, Humana is still retaining $1.2M in DIR fees per 1,000,000 claims. Once again, quality and performance take a back seat to price.

So, compared to this year’s CVS Caremark DIR schedule, the 2017 Humana DIR at least resembles a pay to perform format. The reality is this, however: until the Prescription Drug Plans have their own skin in the game with respect to total health spend for these patients, there is no incentive to pay pharmacies for quality. For the PDPs, the formula will remain the same: pushing pharmacy reimbursement lower makes the PDP money. Without significant change from Medicare and corporate America, quality will continue to take a backseat to cost.

Recall the old saying: you get what you pay for. Well today, the PDPs are focused on cost. Cheaper is better. The real question will eventually be asked, can we continue to afford to ignore quality in healthcare?

Most pharmacists have stories of how the PBMs have overstepped their bounds in the arena of patient care. This blog has documented several examples over the last year, and a recent encounter serves as today’s edition of Tales from the Counter.

One of our patients was started on finasteride 5 mg by their urologist. Later the patient saw his primary care provider complaining of light headedness and dizziness. The primary care doctor changed his therapy and started him on tamsulosin 0.4 mg daily. The patient then went to the pharmacy to have his new prescription filled. The pharmacist immediately identified a duplication of therapy between the drugs and consulted with the patient. The patient related their story of adverse events with finasteride and reported that they were to stop the finasteride and start with the new prescription, tamsulosin. The pharmacists was satisfied with the patient’s response and documented the intervention in the patient’s chart.

Upon attempting to adjudicate the claim with the patient’s insurance, the processing pharmacy benefit manager also identified the duplication of therapy and rejected the claim. A rejected claim typically requires either the pharmacy enter appropriate clarification codes, often called DUR codes, documenting the resolution of the problem, or a phone call giving verbal clarification to the PBM. With this information in place, the claim would then adjudicate.

In this case, however, the PBM did not allow the pharmacy to document and receive the override.  The PBM would not allow the prescription to process without the PBM directly working with the prescriber. The PBM insisted on faxing paperwork for the physician to sign stating that the finasteride was to be discontinued and to ensure the patient would not receive both medications. Once the paperwork was completed and submitted, it would take will take 3-5 business days to complete before the claim would be allowed to adjudicate.

The patient was anxious to get started on the new medication. The pharmacist attempted to force the issue once again. Why wasn’t the pharmacy’s documentation sufficient? The representative informed our pharmacist that they needed to have written confirmation from a licensed healthcare provider that the finasteride is to be discontinued.

Our pharmacist confused. They politely informed the PBM representative that they were, in fact, a licensed healthcare provider. They offered to complete the documentation to certify that the finasteride was discontinued. The PBM representative chuckled and restated that they needed a signature from a licensed healthcare provider. I am not sure, at this point, how well the representative understood the U.S. healthcare system.

I am certain that the PBM representative was just doing their job and following established company policy. The fault lies with the company’s failure to recognize the pharmacist’s legal and ethical responsibility in the day-to-day care of patients. It seems that the PBM believes that they are the entity responsible for caring for the patient. In this case, however, the PBM crossed the line from useful to obstruction.

In this case, the PBM needs to be reminded that pharmacists can and do take responsibility for the care they provide their patients. They deserve respect from the PBMs. Pharmacists are a part of the healthcare team. It is time that this PBM actually joined the team as well.

Ironically, during the same shift, our pharmacist had another patient switching between these exact same drugs. Their insurance used a different benefit manager, and that company did not create any obstructions to patient care.

Have you ever seen an informercial late at night? The announcer is so energetic. They work very hard to make you really want their product. Does this sound familiar?

It slices! It dices! You will wonder how you ever got along without it! What would you pay for this time-saving wonder? $99? $59? What if we told you you could have this live-changing tool for the low-low price of $29.98? But wait! What if we double the offer. That’s two for just $29.98! But there’s more. We will throw in the…

The problem the announcer is trying to overcome is one of resistance. Sure, the product looks great. It might even be unique, one-of-a-kind, and indispensable in most every way. It can be all of those things, but most will still not lift their phone to make the call. Change is hard. And the bigger the change, the more the problem of resistance comes into play.

Pharmacy is at a transformative crossroads. The profession is nearing the end of the reimbursement for product road, and the future will necessarily be different. Many believe that the direction the profession is heading will be a healthcare model emphasizing the importance of outcomes, with a true professional fee and shared savings funding the pharmacists efforts instead of reimbursement for the product. A pharmacy model based on patient outcomes is not unprecedented. Many recent studies have shown significant benefits of pharmacists working to ensure therapeutic outcomes in patients. This has the potential to be transformative.  It is also the type of change that can be very difficult .

The resistance to transformative change in pharmacy comes from many different places:

• Pharmacists not comfortable with making clinical decisions either because the lack training or they have allowed themselves to grow rusty from too little practice.
• The payor, be it an insurance carrier or a self-insured corporation, is not familiar with the benefits of the possible transformation. They are unwilling to invest in any new model without knowing up front what their return on investment will be.
• Service vendors, those that provide support to the health care disciplines through software and technology, look at the new models of healthcare emerging and are unsure which models show the most promise.
• The patient also resists change. Many patients rarely see or speak with a pharmacist regularly. Their expectations of the profession are limited to receiving a small plastic vial filled with medication and adorned with a label containing instructions. Changes in the pharmacists activities that increase a patient’s interaction with a pharmacist are an unexpected change.

But transformative change also excites. Our pharmacies have adopted a transformative pharmacy model. It is a model we believe will eventually meld into the future of pharmacy. We have strived to overcome many of the aforementioned problems. We regularly entertain visitors in our practice. Our visitors have included an amazing spectrum of professionals including other independent and chain pharmacists, pharmacy owners, chain pharmacy managers, health-system pharmacists, local business owners, local, state and national elected representatives, insurance executives, members from academia, and service vendors of every type imaginable. After observing the model we use, everyone is excited. It is just like an informercial. Everyone has a favorable opinion and is interested in what is being done. The excitement is almost infectious. Pharmacists are especially prone to wanting to participate immediately. But in the end, few move to pick up the phone and make the call.

But like the late night infomercial, there will always be some that do decide to get up and make the call. The seeds of change are starting to sprout. The largest insurer in our state saw the potential for this model and invested some time and money to study the impact. The results were very, very positive. Today, they are working to create a new network of high performing pharmacies based on this transformative model. Getting a payor on board helped us get some traction elsewhere.

With a payor on board, the next step is getting more pharmacists and pharmacies to commit. We don’t need every pharmacist and every pharmacy owner to commit to change. We only need a few, and Iowa has many pharmacists and pharmacies that are progressive. Addressing patient resistance is perhaps the simplest to achieve. Open communication with the patient before implementing changes goes a long way toward patient acceptance.

As it turns out, the most difficult challenge has been getting the service vendors to buy into a new model. Some of these vendors believe that their current products are adequate for the new model. Others fail to understand the requirements of the new model. There are software and workflow solutions that have been created to support the pharmacist in this new model, but as of now, they not yet ready for commercialization. Getting these tools to the pharmacists who need them is proving a significant hurdle. Given the slow but steady acceleration of this transformative model, it is inevitable that this last hold-out will also start to move.

Change is hard. Transformative change is even harder. But not changing is ultimately the hardest, because failing to evolve dooms one to extinction. Make the call. Make every encounter count!