Category: Business

Will CMS Mandate Point-of-Sale DIR?

Drug Channels published a nice summary of some proposed changes to DIR fees being considered by CMS. Adam Fein’s commentary does a good job summarizing the current challenges faced by both CMS, the patient. and pharmacies. Among the more interesting data he presents:  while manufacturers’ rebate payments to Part D plans are the largest component of the DIR pie at $29.5 billion in 2017, pharmacy price concessions (as DIR fees) have increased significantly as a share of total DIR pie, from 1.7% in 2013 to 11.4% in 2017. Of course, this comes as no surprise to anyone running a pharmacy.

Adam’s conclusion to the impact of the proposed changes if enacted:

The outcomes—higher government costs and lower manufacturer payments—create political challenges for point-of-sale pharmacy DIR. Pharmacies will cheer the change, while plans will criticize it. Meanwhile, the patient impact is mixed. An unknown number of patients will benefit from lower out-of-pocket costs, but a possibly larger number of patients will see slightly higher monthly premiums.

Jump to CMS Considers Point-of-Sale Pharmacy DIR: Another Prelude to a World Without Rebates? to read the whole article.

 

Flummoxed

I have seen a lot in my years as a pharmacy owner. And while I often discuss the sometimes questionable tactics of prescription drug plans, sometimes I encounter something so disheartening that it gives me pause. So starts this episode of Tales from the Counter.

Several times now, I have had patients question an increase in their copay upon picking up their prescription. One patient noted that their first fill cost her a $23.54 copay while this second refill returned a copay of $71.02. The patient is often surprised to find that the pharmacy rarely dictates the price of the prescription: pharmacies are contractually bound to accept the authorized amount the payer returns. Because of this, I have to refer the patient to their prescription drug plan for any questions about copays.

One consequence a plan’s contract with pharmacies is that the plan can rein in costs. The plan generally will set a generic drug’s reimbursement price to reflect the least expensive product available. This is reasonable, as not all generic products cost the same. And pharmacies work hard to purchase a product that prevents them from losing money. The result: pharmacies must periodically change manufacturers for any given generic product based entirely on the purchase price.  Ironically, in almost every case we see of disputed copays, the discrepancy is related to a change in the manufacturer of the product that we dispensed.

Let’s look at what is going on with a concrete example from a recent patient. Here, between Claim 1 and Claim 2, we changed to a different product (identified by a different National Drug Code or NDC) based on a cost difference to us of about $0.01 per capsule when contracts changed. You might be wondering why we would change manufacturers over a penny per capsule. In the case of our prescription below,  $0.01/capsule differential equates to a $1.80 difference in our cost to dispense.  That represents almost a 14% difference based on the plan’s $12.99 allowable reimbursement.

Let us take a close look at both claims side by side. Theoretically, the plan would treat both generic manufacturers the same and the allowed price and the patient copay would not change.

Claim 1 Claim 2
Product (NDC) A B
Qty 180 180
PBM Authorized $ $12.99 $80.20
PBM returned Patient Copay $ $12.99 $60.00

This is obviously not the case, as the second claim was paid at a much higher rate and the patient’s copay was significantly higher as well. In the case of Claim 1, the prescription drug plan appears to have used a different price schedule than in Claim 2.

It is very disappointing when a prescription drug plan blames the pharmacy for this type of situation, and I have been disappointed several times, with one specific plan regularly and unfairly shifting blame to the pharmacy. The general solution that a plan gives the pharmacy is for the pharmacy to use a different manufacturer’s product (NDC) so the patient will get the correct copay. This leaves me flummoxed. Shouldn’t the plan instead simply correct their price schedules so that the claim processes correctly?

At times I wonder who is actually running my pharmacy. Prescription drug plans tell me what I will get paid. By doing this, they force me to purchase the least expensive products. Now, they are telling me to use a more expensive manufacturer’s product so that our mutual patient will get the best price? This puts the pharmacy in a difficult situation. The plan is quick to tell the patient that if your pharmacy doesn’t use the specific manufacturer’s version of the medication to go to another pharmacy that will, maybe even the plan’s own mail order pharmacy.

Ironically, up to this point, the problem has only manifested with one specific Medicare Prescription Drug Plan. And each time, the plan’s customer service representatives do not mention the patient’s other choice: choose a different Medicare Part D plan.

When faced with challenges like this, it is important for the pharmacist or pharmacy owner to intervene. Work the problem and be sure the patient understands all of their options. Work to overcome the inane obstacles being thrown at the pharmacist, and above all else, Make Every Encounter Count.

Audits

 

Prescription audits are an unsavory part of every pharmacy’s day-to-day business. Jump to Scriptrxed’s recent article about PBM audits for a great primer on the topic.

 

 

I wish I could say that this type of activity was not rampant, but I constantly find myself embroiled in the audit process. Everything Scriptrxed writes has happened to my stores and a whole lot more.

 

 

Audits have becomes a cash-grab for the Pharmacy Benefit Managers. They are wildly successful in part to the laziness of pharmacy operators. I have spoken with several pharmacists, representing both independents and chains over the years, and the effort being made to respond to and fight these audits varies widely. Many have ascribed the audits as a “cost of doing business.” Some stores, most often chains, have reported to me that they do not challenge the audit findings, even if they are completely inaccurate.

 

 

Over my career as a pharmacy owner, we have faced over $1,000,000 worth of audited claims, and the PBMs have attempted to charge back over 10% of that amount. A single audit may include over 100 individual prescriptions representing as many as 250 dispense dates and may represent over $100,000 in sales. Few, if any, of the prescriptions, audited, were routine, inexpensive generics. They consisted almost entirely of expensive medications.

 

 

It is not always appreciated that contesting audit findings is exceedingly important. Over the past 15 years, I have successfully defended my pharmacies from unfair chargebacks with almost a 100% success rate. Make no mistake, I have spent a lot of time and effort doing this, but because my stores do not also have other, more profitable departments outside of the prescription department, I cannot afford to concede even a small chargeback.

 

 

In the spirit of scriptrxed’s article on audits, I wanted to share the store of a recent audit, chargeback, and challenge in this edition of Tales from the Counter.

 

 

When is a Drop a Drop?

We received a spot desk audit recently for a brand-name eye drop for glaucoma. The patient’s refill history on this Rx was erratic: sometimes a bottle would last a month, other times significantly less and sometimes more. This is something we had noticed before and our patient chart noted that the patient sometimes struggles to get the drops into their eyes.

 

 

This is not an uncommon problem. I wear contact lenses, and I use eyedrops from time to time to moisturize my eyes. I consider myself fairly coordinated, but I miss my eye periodically, and sometimes I end up dropping two or three drops into my eye. In other words, this is not unexpected.

 

 

But auditors don’t care. They apply simple rules (like an eyedrop container delivers 20 drops per milliliter — a really crude estimation by the way) and if the directions (drops per day prescribed), amount (in milliliters) and the submitted day supply don’t align perfectly, they consider it an unpayable claim and want to charge the amount back.

 

 

Working on the audit, I recognized this would be a problem, so I provided both the requested prescription copies as well as our documentation of the patient’s issues in the audit response. Of course, this did not matter as when we received the audit findings we were still assessed with a chargeback on each bottle of the eye drop.

 

 

It is at this point that it is important to appeal. Below is a redacted copy of my response to the audit findings:

 

 

Please consider this letter to be our official appeal to Audit Reference [Redacted].

The prescriptions in question, all for the same patient, were reviewed by [External Audit Company] as having an improper Day Supply (“quantity billed is above plan limitation of 30 day supply”)

[Our Pharmacy] vehemently disputes this claim made by [External Audit Company]. As a healthcare provider, we pledge to provide the best possible outcomes for our patient. The prescription in question was filled in good faith with the patient, prescriber, and the plan and its pharmacy benefit manager.

The pharmacy and pharmacist working with the patient, and not a third party audit company, are explicitly charged with determining the actual day supply the provided package represents. This involves far more than an assumed 20 drops per milliliters that [External Audit Company] appears to be using.

This invalid assumption made by the auditors is unprofessional and overlooks the fundamental therapeutic value to the payer of the medication when used properly to reduce overall health care spending.

In the case of an eye drop, one cannot simply apply an arbitrary approximation of 20 drops per milliliter to calculate day supply. One has to account for the ACTUAL directions written by the prescriber. I quote:

Instill 1 drop once daily into both eye(s)

The key word in the above statement is “into.” Any drops that miss the eye are not valid drops and do NOT count toward day supply. [Our Pharmacy] maintains that the day supply and amount billed represent accurately represent the needs of the patient in order to maintain appropriate compliance with her medication.

Any attempt to charge back any of the claims in this audit will be met by a request for arbitration as well as complaints being filed with both the State Insurance Commissioner’s office AND the State Attorney General’s office.

 

 

The reply from the third-party audit company made no changes in the proposed chargeback. At this point, an official appeal was made:

 

 

I am writing to you to express my disappointment in your company’s audit findings.  I have a Ph.D. in pharmaceutics and have decades of experience in measurement in the laboratory. Your reliance on the term “industry Standard 20 drops/ml” shows a complete lack of understanding of the science involved. Additionally, your apparent disdain for clinical outcomes is very disappointing. We are in the business of healthcare and [PBM / Third Party Audit Company] are apparently not our partners in this endeavor. We have supplied, in good faith, medications at the direction of the prescriber that are saving the payer in overall healthcare spend by decreasing both short term and long term morbidity. Your actions are in direct competition to this endeavor.

This correspondence is my official notice that I am appealing your audit findings to the fullest extent allowable in the contract. In addition, I am reporting your company to the following agencies:

The Board of Pharmacy
The Office of the Insurance Commissioner
The Attorney General’s office

If you choose to reconsider your audit findings, please let me know immediately.

 

 

I am willing to bet that many audits are not contested all the way to this point in the process. And it is almost always at this point that the audit company adjusts their findings and reverses their chargeback. Keep in mind that the audit company’s focus was was never about the patient, care, or outcomes. Nor was it about fraud, waste or, abuse. That just leaves money. They wanted it. They grabbed for it. It wasn’t until I told them twice that they couldn’t have it that they relented.

 

 

Most pharmacies are honest and not involved in malfeasance. They care about their patients. They work to improve their outcomes. They Make Every Encounter Count. Well, this is yet another example. Pharmacists need to step up and contest bogus audit findings. Make every audit about the patient and care. Fight for your patient and your practice. Help undermine the profitability of these nuisance audits.

 

 

About the Featured Image: A World War II bomber (an Avro Lancaster), now residing at the Royal Airforce Museum — Hanger 5 — located outside London, UK, is adorned with painted images of bombs representing successful bombing runs made over Germany during the Second World War. On the side, partially visible in this photo,  the text No enemy plane will fly over the Reich Territory appears – a quote from Herman Goering.

 

Data

Choice is a wonderful thing. Up to a point. Sometimes, it is possible to have too many options. And sometimes what looks like a veritable smorgasbord of choices turns out to be fantasy. This reality is beginning to appear in the clinical pharmacy software arena. Let me explain.

Just a few years ago, our pharmacy ran on two software platforms: our pharmacy management system or PMS and our in-house electronic health record (EHR). As the first sprouts of pay for performance germinated, so too did platforms to collect the data generated by the pharmacist. Soon, our pharmacy was running platforms like Mirixa and Outcomes alongside our PMS. Fortunately, we could usually cut-and-paste information from our EHR into Mirixa and Outcomes to prevent the loss of too much efficiency.

With the emergence of new pay for performance initiatives, we are seeing many new networks emerge, and often these networks require specific software solutions as a condition to participation. Today, we have had to add platforms from PrescribeWellness, DocStation, and TabulaRasa to our aresnal of software platforms as a rerequisite to participation in these new high-performance pharmacy networks.

Just keeping the workflows of each of these platforms straight is nearly impossible, and most require work outside of our normal workflow. Each platform has its own unique spin on documentation, and each does some things well and others poorly. A bleeding-edge pharmacy today must use a veritable alphabet soup of documentation software today. This is a bad precedent.

After working with a number of different platforms, a pharmacy may decide that one specific platform works best for their practice and workflow: their choice for an EHR. Like our pharmacy learned many years ago, having a single patient record repository is an asset. Even if you have to input data into the alphabet soup, having a master patient record makes managing patient care much easier. But with patient records already spread over the alphabet soup, the pharmacy would have to start over, from ground zero, with their chosen EHR platform. 

Not counting the data duplication issue, there is a more insidious problem emerging. The problem of data ownership and transportation. Each platform is a closed ecosystem, and despite the creation of the data originating in the pharmacy, each of these solutions claims some, or more likely all ownership of the data for themselves. If we assume for now that each platform will allow a pharmacy to export their patient records, the migration between platforms would still be a potential nightmare.

Today, during National Pharmacy Month, the profession stands at an important crossroads: Value-Based Reimbursement and Clinical Documentation platforms. The last time the profession stood at a similar junction was the emergence of electronic claim management. That decision did not go well for the profession, with pharmacies giving away their data only to allow a new breed of business, the Pharmacy Benefit Managers (PBMs) emerge and gain significant control over the entire industry.

The choice that pharmacists need to make today is simple. Pharmacy needs to maintain control over its own data. It is important for our patients, and it imperative for the longevity of our profession. The value of the pharmacist to the health care system does not reside in the platform they use, but in the care they provide. Pharmacy needs to resist the pressure to give away data. Pharmacists should lobby to eliminate the alphabet soup. Let quality and payer metrics define reimbursement, not acceptance of a specific vendor’s platform. This junction is not a chance encounter. Pharmacists need to make this one count!

About the Featured Image: Taken inside the “Star” stairwell in St. Paul’s Cathedral in London. This location has appeared in several movies including scenes in the Harry Potter movies (Hogwarts castle) and in Sherlock Holmes (2009).

Burnout

This is the Thriving Pharmacist, so it is possible that you are asking what I am I doing using the B word. A common definition of “thrive” per Merriam-Webster is:

thrive THrīv/ : to progress toward or realize a goal despite or because of circumstances

Thriving implies a burning desire to succeed. Passion. Achievement. But the very act of striving to thrive can and does pose a threat of burnout. It is very important to recognize the possibility before it happens to you. And if burnout does begin to emerge, it does not mean the end of the journey.

Pharmacy continues to face a lot of challenging obstacles. Just writing about them here is sometimes overwhelming.  But I cannot let that get me down. I am a glass is half-full guy. I am always trying to see things from a different, possibly less intimidating perspective: I find strength in the challenges. Tim Ferris is credited with having said:

If the challenge we face doesn’t scare us then it’s probably not that important

And it all really condenses down to this. We would not be fighting these battles if they were not important.  And they are important. Patient care is at stake!

Today, my business partner Randy McDonough will be addressing the topic of burnout in a Facebook Live event hosted on the Thrive Pharmacy Transformations — TP Transformations — facebook page. This live feed will begin at 9 pm Eastern Time /  6 pm Pacific time.

If you miss the live presentation, the recording will be also available after the event.

So consider this your invitation to this live event; your invitation to keep the fires burning brightly! We hope you can make it!

American Pharmacists Month – Transform YOUR Practice

The focus of American Pharmacists Month is often on patients getting to know their pharmacist. This October, the focus of the Thriving Pharmacist blog is going to be on pharmacists themselves.

A lot of what is written on the Thriving Pharmacist echoes the changing landscape of pharmacy practice. In order for a pharmacy to keep up with this changing landscape, individual pharmacies also need to embrace change.  Unfortunately, not all pharmacies are prepared to make these changes. Some time ago, my business partner visited with a chain pharmacy corporate executive at a college football tailgate party. During the discussion, the question was asked of the chain executive: “How many pharmacists do you think we have at our store on a Monday?” The answer is five. The chain executive’s response was “that’s four too many.” They further indicated that this was not the direction his chain would be going.

This is both disappointing and exciting at the same time. Disappointing because I truly believe that pharmacy needs to move in the direction of patient care and outcomes and not continue to focus only on inexpensive drug distribution. It is also exciting as a lack of competition from some chain operations opens the door for motivated pharmacies and pharmacy owners to create, develop and define the future of pharmacy in a professional image.

But change is hard. Just wanting to thrive is not enough. It takes both hard work and guidance. The new pharmacy landscape is much like the wild west. There are currently not a lot of examples upon which to pattern success.

The tide may be changing in some chains. The CVS / Aetna merger has created talk providing more care in the pharmacy, including from the pharmacist. But talk is cheap, and the implementation is going to be a challenge without a roadmap. 

Today marks the start of American Pharmacists Month and the Thriving Pharmacist wants to challenge all pharmacies, and even pharmacy chains, to make a commitment to the advancement of their practices. There is a great opportunity that, coincidently, aligns with American Pharmacists Month. 

Thrive Pharmacy Transformations is offering an October Cohort for the Make Every Encounter Count (TM) 30-week course. 

Make Every Encounter Count is a 30-week transformative course that guides you through a process of transforming your community pharmacy practice site. Position your community pharmacy to participate in preferred pharmacy networks and elevate patient care.​

MEEC was created through trial and error of what REALLY works, and we’ve distilled out the secret sauce to share with you! Made up of 10 modules, we’ll take you step-by-step through creating a practice that yields better patient care, a more organized workflow for dispensing, and a bottom-line that will power your business to do more.  Professional and practice resiliency – including more time to work on your business – will result! 

A free introductory module of this program is available through grant support from the Community Pharmacy Foundation (CPF). It explains the program goals and content. A new cohort for this educational program, which includes continuing education hours, starts this month. Register today! Thrive Pharmacy Transformations will also be offering their Thrive Subscribe program at no cost during the month of October. 

So make YOUR American Pharmacists Month Count! Do something to move your practice forward. Start to practice at the top of your license. Make Every Encounter Count!

 

 

About the Photo: The image was taken in Bath, UK. The writing was uncovered under the current façade and belonged to a chemist, the European equivalent of a pharmacist. The writing dates back at least 100 years.

Insurance and Cash Prices in Pharmacy

Over the last several weeks there have been a few interesting references to pharmacies having very high cash prices for medications. The soak-the-poor mentality (as Drug Channels calls it) is an unfair characterization. High Usual and Customary prices (also called U&C or the cash price) in pharmacies are directly related to the Pharmacy Benefit Manager industry applying their terms onto the market place, often severely capitating reimbursement.

It helps to have some historical context. Consider the pharmacy landscape back in the early 2000’s. Back then, I spent a lot of time tweaking our U&C or cash prices. You see, before the middle 2000’s most senior citizens did not have any prescription drug insurance: they had to pay the cash price. In order to remain competitive in my community, I had to constantly review our U&C on common generic items. This truly was an era of competitive pharmacy and the free market worked. This is easily demonstrated by the response taken by pharmacies when companies like Walmart implemented a $4 cash drug list: many pharmacies followed suit by lowering their prices. They needed to stay relevent and competitive.

Shortly therafter, something changed. Congress had passed the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) which was signed  into law on December 8, 2003. This single change almost completely eliminated the cash price market:  for the first time, most seniors would have relatively affordable prescription insurance under the new Medicare Part D program. And this is where pharmacy curation of U&C began to disappear. While $4 cash price lists and related competition continued after MMA, their importance gradually evaporated.

With the implementation of Medicare Part D, pharmacies lost a substantial amount of control over their businesses. Now, unlike traditional retail establishments, a pharmacy’s business was almost entirely composed of sales that were not sold at a price they set. They were now sold at a price set by the the insurance.

This is a good time to acquaint the reader with the basics of a network pharmacy contract’s definition of reimbursement. As a rule, pharmacy reimbursement is defined within the contract with the following language:

Reimbursement will be the LESSER of:

  • Average Wholesale Price (AWP) minus a stated percentage OR
  • The pharmacy’s usual and customary price (U&C) OR
  • The Maximum Allowed (MAC) Price

Note that contract also defines the pharmacy’s cash price as their U&C and that the pharmacy cannot submit a different price to the insurance than they would offer a cash customer. A pharmacy could not maintain multiple price schedules for insurance and cash paying customers without being in violation of their contract and at risk of being dropped from the network

Ten years ago, pharmacy reimbursement was primarily dictated by the first two arms of the contract above. As such, it was not uncommon that the pharmacy’s cash price was lower than AWP minus a percent.In addition, relatively few generic drugs had MAC prices assigned a decade ago. If we fast forward to today, that landscape has changed completely. Today almost every generic drug has been assigned a very aggressive, low MAC price. It is this change that has forced pharmacies to raise their U&C prices.

To illustrate, let’s look how the standard pharmacy contract mentioned above prices a random sample of prescriptions filled at one of my pharmacies this week. The values below are the aggregate (sum) values for all of the claims. This is real data and represent about a dozen different payers, four PBMs and over 100 different medications.

Table 1

Submitted U&C Allowable Price Cost Basis Pharmacy Profit (Loss)
$78,337.21 $10,925.26 $9224.07 $1701.2

Table 1 shows the total of the Submitted Usual And Customary prices of close to 200 random prescriptions submitted to the insurance. A total of over $78,000 was submitted to the insurance by adjudication thru the plan’s chosen Pharmacy Benefit Manager (PBM). Each PBM applied the terms in the form of the outlined contract above and returned an aggregate allowed $10,925.26 representing a aggregate profit of just over $1700 or just under $9 per prescription. This Submitted U&C of over $78,000 represents the cash price of the pharmacy, and it is very high. The soak-the-poor mentality characterization from Mr. Fein certainly seems to fit, and if we simply stopped the story here he would appear to be justified. But the story is a lot more complicated.

Suppose that I did not want to appear to be sticking it to the poor. The allowable price returned by the PBM is about 14% of the submitted U&C. What would happen if I changed my pharmacy’s Usual and Customary Price to reflect my invoice price (what I paid for the drug) plus $15? This equates to about 2% more than the PBM allowed on these claims. If I do this and re-apply the same contracts to every prescription I would get the following:

Table 2

Submitted U&C Allowable Price Cost Basis Pharmacy Profit (Loss)
$12,089.07 $9811.70 $9224.07 $587.63

Table 2 now shows a much more reasonable Submitted U&C price. U&C has dropped by more than $66,000. But more importantly, this change also resulted in a roughly $1000 decrease in what the PBM is paying for the same drug products. By lowering my U&C, my new price may now be lower than the PBM previously paid for some drugs. The result is a lower reimbursement those products. The net effect of my change is that the per prescription profit dropped from $9 to just over $3, which is well under the national average of $9-12 per prescription cost of dispensing. The reason for this decrease comes directly from the contract above, specifically the first line: Reimbursement will be the LESSER of… Another way to think of this is that no good deed goes unpunished.

Let’s look at a graphical representation of the profit of each prescription under the assumptions of both Table 1 and Table 2.

Graph 1

A couple of notes on Graph 1:

  1. Zero profit is in the not at the bottom of the graph, but instead about a quarter of the way up the Y-axis
  2. There are two lines plotted in the graph: Blue is the original U&C profit from Table 1 and red is the modified U&C profit value from Table 2
  3. the shaded represents the difference between the two schedules.

The Lesser Of language in the contract only impacts the far right side of the graphic, where the traditional (arguably high) U&C occasionally allows a pharmacy to make a significant profit on a small number of prescriptions. These are often called winners by pharmacy owners. But by lowering U&C they forfeit the winners while maintaining the underwater (losers) shown on the left side of the graphic. Changing the U&C does not impact the significant number of prescriptions that earn near zero profit or less.

This phenomena illustrates exactly why Cash Prices have risen in pharmacy and the same reasoning also applies to any medical provider that has reimbursement capitated by insurance. Reimbursement levels in healthcare have dropped so low that they are often break even or or even losses. It takes the occasional winner to offset this no-profit burden and keep the practitioner in business. To restate: in is increasingly important for every healthcare provider to ensure that they leave as little reimbursement possible on the table. In pharmacy, where the the different MAC lists kept by each of the PBMs are secret, the only way to do this is to make sure that your U&C or cash price is high enough to capture the occasional winner.

Ironically, this actually helps cement the PBM industry in their position of power over the healthcare world. They can point out that they are saving the huge amounts of money over the U&C prices. Ironically it is their own contracts that incentivize providers to raise their U&C in order to stay in business. This is a win-win for the insurance and PBMs industries, and a losing proposition for providers in the United States because most healthcare providers are also businesses. They cannot keep their doors open if they don’t make money. It is the emergence of insurance capitation has necessarily caused this inflation in the cash healthcare market.

Don’t Blink or you Might Miss Real Savings

Regular readers will recognize that this blog has discussed the tactics of the Pharmacy Benefit Managers at length. A PBM is essentially a middleman that extracts profits by controlling both sides of a transaction. The PBM industry spends most of its efforts marketing to payers. They market their services as helping to simplify the management of an employer’s drug benefit plan as well as helping to control costs. The latter claim is often disputed by pharmacists but that topic has been covered in detail previously on this blog.

But what if the PBM took this one step further? Instead of marketing to payers and plans, they marketed directly to consumers without insurance? This is exactly what has happened. In the pharmacy industry, these are what are known as discount cards. Discount cards have traditionally worked by using a technique known as a claw-back. The amount being paid by the patient includes a fee that the pharmacy must collect for the discount card. Most independent pharmacies include the adjudicated price on their receipt so the patient can readily see a claw-back. The receipt would show a copay of $18 and an adjudicated amount of $10.  Most pharmacists would then discuss how discount cards work with the customer and offer alternatives that eliminate fees paid to a middleman.

One discount card, though, has taken this to the next level, allowing the patient to pre-pay for their prescriptions online. They then take their prepaid “prescription discount card” to the pharmacy who then processes the claim through the PBM. Then pharmacy is paid directly by the PBM with the patient having already paid the PBM.

Just like transactions being paid by an insurance company, this discount card model uses spread pricing. They still make money on every single prescription, but this time the fee is much less transparent. By having the patient pre-pay, they obscure their spread as the patient is unlikely to know what the pharmacy is being paid and the pharmacy does not know what the patient already paid.

It is rare that bringing a third party into a transaction will actually save money. For this reason, most pharmacists and pharmacy owners distain discount cards of any type. I would encourage anyone without insurance, or with prescriptions that are not covered by existing insurance, to speak with your pharmacist before using a discount card of any type. There are multiple options that may exist that could save you money without paying a hidden middleman’s fees. Sometimes is important that even the patient takes time to Make Every Encounter Count!

Attribution

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.

 

 

 

The Absurd

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.