Category: Business

Minor Victory in Battle with PBM in Iowa

Previously I reported that a PBM had been making headlines in Arkansas, with the Arkansas Pharmacy Association and their legislature working to correct severe cuts being made to their local pharmacists (Arkansas Leads the Way Against Anti-Competitive Actions of PBM). Similar issues have been observed in Iowa, with pharmacists in the state pushing the Iowa Pharmacy Association and state legislators. They quickly responded to the call to action and continue to fight for local pharmacies being reimbursed fairly.

Today, the Iowa Pharmacy Association announced that their work appears to be having some positive benefits.  From a news release from the IPA:

…in response to IPA outreach and concern, they’ve conducted an internal analysis and will be making an adjustment to their pharmacy reimbursement in Iowa. This adjustment will be made later this week, or early next week at the latest.

At this point in time, the PBM has not agreed to make these changes retroactive. It is my belief that this is a tactical mistake by the PBM. Additionally, the scope of the changes will take time to analyze and it will not be clear for quite some time if the adjustments are fair.

So while it is too early to celebrate, it is satisfying to know that a grass-roots movement can escalate into a wave of support. The pressure that this support put on the PBM appears to have had some impact. While not a clinical intervention, this is yet another example of Making Every Encounter Count.

Arkansas Leads the Way Against Anti-Competitive Actions of PBM

Recently, a prominent national PBM made significant and severe adjustments to their Maximum Allowable Cost (MAC) rates for generic drugs. As a result, here in Iowa we have seen a staggering increase in our Underwater (paid less than it costs us to purchase) generic prescriptions. The week that this change is obvious in the graphic below.

Change in Underwater (paid less than cost) claims from a given PBM. December into January 2018

The data shown above is for one of our pharmacies and represents the percentage of underwater generic prescription claims for each given week from December to January. All of our pharmacies show the same dramatic increase in underwater claims. However, this did not only happen in our pharmacies. It did not even just occur in our State. It has happened elsewhere around the United States as well, with the State of Arkansas taking a lead investigating this problem and taking actions. It is interesting to note that among the reported findings, the PBM in question, which also owns a chain of brick and mortar pharmacies, may actually be paying itself at a higher rate than they are paying independent pharmacies. If true, this anti-competitive behavior may prove a catalyst in the groundswell of bad press hitting the PBM industry.

Please take some time to view an interesting press conference held recently in Arkansas which outlines some of their findings. It is quite illuminating. Follow this link. The State of Iowa appears to be interested in beginning investigations in a manner similar to Arkansas. Other states are likely to follow if these findings hold up and new examples continue to be revealed.

Make no mistake, even if State and Federal legislators begin to take action now, it will be quite some time to reverse the negative actions that have and continue to jeopardize local independent pharmacies around the country. Hang on, as this might be an interesting ride.

Am I a Part of the Problem or a Part of the Solution?

We serve a patient with severe mental disabilities living in a group home. He has full time staff assisting him with his medications. Our pharmacy provides the patient’s medications packaged to meet the rules and regulations for this type of residential care facility. These packaged medications are delivered in monthly installments.

The prescription drug plan the patient uses made some changes with the new year, and one specific change created a problem. With the new year, one important medications now requires a prior authorization. The appropriate paperwork was initiated immediately, with our pharmacy providing much of the basic information directly to the physician to be submitted. This included the quantity needed and the need for a 31 day day-supply as is required for the group home’s monthly delivery of packaged medications.

At this point it is important to note that the medication was delivered to the facility before the first day of the month to the group home. Billing could not be done until the first day of the month and until that point it was not known that a prior authorization would now be needed. We went out of our way to ensure that the patient would not be without the medications they required.

Five days after submitting the prior authorization, approval was granted. When our staff went to bill the medication that had already been delivered and was already being used, they once again received a reject. The insurance, despite the approved prior authorization, would only pay for a 30 day supply of the medication.

For most members of this drug plan, this would not a problem. But in the case of our group home resident, this change creates a logistical issue. Some months, including January, have 31 days in them.

This is where the painful part of the story starts. Talking with the Prior Auth department of the plan we were told that they could not approve more than a 30 day supply. They suggested calling the customer service phone number and asking an exception to be granted. As I was trying to support the group home staff and care for my patient, I did as asked.

During this call I was shuttled to multiple departments. Eventually I spoke with someone that appeared to understand the issue and was going to get me to someone who could help. Once I got there, however, I ran into a brick wall. I wish I could say that this was unexpected.

My request was simple. Put an exception into place to allow a 31 day supply of the drug. I was told that because I was the pharmacist and not the prescriber or the patient that I could not do this. Those that know me will immediately recognize that this upsets me. I continued the call, escalating to a supervisor who simply read off their cue cards the same information. It was not until I mentioned that I was going to complain to CMS that something changed.

After hearing me threaten to complain to CMS, I was put on hold. When they cam back, I was returned to the technician who immediately began to attempt to fix the problem. Her attempt to put the exception in place required her to make some of the same calls I previously made during this process. I noted with some satisfaction that she had difficulty negotiating the same phone tree prompts I have been using over the past two hours. During this process, she was disconnected from both her own company’s phone tree, and from me.

After spending over 120 minutes on the phone I now have to start over: I was back at square one.

Patient care is not only complex from a medication perspective, but also because of the need to jump through arbitrary hoops imposed by the health plans and their benefit managers. We are very aware that in caring for our patients, one size does not fit all. Unfortunately, many healthcare plans and their pharmacy benefit managers do not seem capable of understanding this concept. Our patients are not just faceless nondescript beings. They are living, breathing individuals. We need to ensure that they are achieving their therapeutic outcomes. We need to ensure they are getting the best possible benefit from the healthcare dollars that are being spent on their behalf.

The problem as I see it is that the plans, to a large extent, have failed to comprehend the larger picture. They have allowed the PBMs to describe the benefits of pharmacy only in terms of drug spend. With their focus on the drug product, and not on care and outcomes, the patient and the plan lose.

It is time for the plans and their benefit managers to start working to be a part of the solution, and not be a part of the problem.

Remember, caring for patients is not easy. You may not succeed every time, but don’t give up. Make Every Encounter Count

ReBlog: Abusing Drugs

Shortly after finding yesterday’s story about Express Scripts mail faux-pas, I was alerted to another news piece from prospect.org written by David Dayen covering some of CVS-Caremark’s anti-competitive behavior. This article is worth reading as it does a good job of explaining many of the more complex and dishonest tactics a PBM uses, and it also points out some of the troublesome aspects of mergers of PBMs and insurance companies. Jump here to read more.

Re-Blog: Local pharmacies losing business from accidental third-party mailer

What happens when an industry can direct entire populations? They will eventually flex their muscle and their monopoly position. An excellent example of the unchecked-power the PBM industry has over the pharmacy industry occurred in Wisconsin recently, with a PBM sending out letters to members misleading them into switching pharmacies. One of the choices, of course, was their own mail order pharmacy.

The mailing was reportedly an error, but the impact was and is very real. The misleading letter negatively is hurting many independent pharmacies in Wisconsin.. For more, follow this link.

Monopoly and the DIR fee

Recently we rolled the dice and moved our giant capsule token in the game of Pharmopoly. We landed on Community Chest and drew the infamous:

You have won second price in a beauty contest, collect $10
Community Chest

The actual prize was several thousand dollars paid back to our pharmacy from a True-Up done to correct DIR fees withheld from our remittance back in 2015. While this is good news for our pharmacy, not everyone was as fortunate. Some pharmacies landed on Luxury Tax, others drew hospital bills. In other words, the True-Up cut both ways, with some pharmacies hit very hard. Let us take a closer look at how this DIR fee was set up and why such a contract should not be allowed by Medicare.

There are two overlapping parts to the contract: a DIR and the GER (Generic Effective Rate). The DIR fee in question dictated that the pharmacy would repay the benefit manager 50% of the ingredient cost of the drug. The GER defines the average allowable ingredient cost the pharmacy will receive over the term of the contract.

The challenge arises because the PBM does not simply adjudicate each claim using the GER as the basis for ingredient cost. Instead, ingredient cost is determined by a Maximum Allowable Cost (MAC) for the drug. The MAC for a given drug can be very different from the contracted GER.  Periodically, the PBM then calculates and collects their DIR fee. This is based on the originally adjudicated ingredient cost.

Much later, the PBM will look at all claims the pharmacy has adjudicated over the course of the contract. It will then calculate the average discounted ingredient cost paid to the pharmacy and compare it to the contracted GER. From there, the PBM will either refund the difference to the pharmacy (winning 2nd place in the Beauty Contest) or collect (land on Pay Luxury Tax) the difference from the pharmacy. To better illustrate, I have adapted the following example:

Reimbursements and subsequent true-up details for two different generic drugs. These numbers are for illustrative purposes only. The contracted GER is the same for both pharmacies. The two different drugs being adjudicated have very different MAC price discounts.

Drug A:

Drug AWP = $100

Contracted GER
AWP – 90%

Drug B:

Drug AWP = $100

Contracted GER
AWP – 90%
Adjudicated MAC Price (ingredient cost) (A) (effectively
AWP-40%)		 $ 60.00 (effectively AWP – 99%) $ 1.00
Amt of DIR collected (specified as 5% of ingredient cost) (B) DIR $ 3.00 DIR $ 0.05
Amount pharmacy has been paid after DIR (Amt paid to pharmacy less DIR collected from pharmacy) (C) Net Drug
Profit		 $ 57.00 Net Drug
Profit		 $ 0.95
Contracted GER (the ingredient cost pharmacy should have been paid) (D) AWP-90%
GER ingredient cost		 $ 10.00 AWP-90% GER ingredient cost $ 10.00
Actual DIR Fee (5% of corrected ingredient cost) (E) Correct DIR $ 0.50 Correct DIR $ 0.50
Amount owed to or due from the pharmacy (True-Up) Phy owes PBM $  47.50  Phy refund from PBM $  (8.55)

 

So in the case of Drug A: The PBM overpaid the pharmacy at the point of sale by $50.00 (Row A – Row D). The DIR paid by the pharmacy was therefore overpaid by $2.50 (Row B – Row E) resulting in the pharmacy owing $47.50 back to the PBM.

In the case of Drug B: The PBM underpaid the pharmacy at the point of sale by $9.00. The DIR paid by the pharmacy was therefore underpaid by $0.45 resulting in the PBM owing the pharmacy $8.55.

The key point is that the MAC price during the course of the year does not have to mirror the contracted GER.

To this I would like to add two questions:

  1. Why not just adjust all MAC prices to the GER up front to eliminate the need for a True-Up?
  2. who gains from the added complexity and obscurity?

The answer to the first question is that there is no reason that the plan and PBM could not tie their adjudicated prices to the GER instead of using nonaligned MAC prices. By adding complexity where it is not required, the PBM must gain some financial advantage. The cost of the true-up is certainly measurable and the cost would have to be offset by some other revenue. This is yet another example of the deliberate non-transparency in this industry. This is supported by an audit on about 1,000,000 claims performed by our contracting organization that resulted in them contesting the true-up.

Medicare, the very organization that allowed the creation of the DIR fee, also explicitly states that DIR fees should, whenever possible, be calculated at the point of sale. This is not a technically challenging requirement. Despite this, many PBMs have continued to maintain that the complex calculations they use for DIR fees cannot be evaluated at the point of sale, propagating the non-transparent nature of their industry.

Congress, Medicare and the leaders of the pharmacy industry need to unite to demand more transparency in the PBM industry.

 

The Noose

Over time the Thriving Pharmacist has reported many different problems with Pharmacy Benefit Managers and the stranglehold they often have over the profession and practice of pharmacy. In many ways, pharmacy is to blame for allowing this power over itself become entrenched. At least part of this is pharmacy owners and chain executives not paying enough attention to the details of contracts.

But the PBMs themselves are also duplicitous. Consider a fax my pharmacy received the other day. This fax was a Pharmacy Network Agreement for a new plan. A fax like this is often overlooked in part because it is a densely worded legal document. Looking closely at the document, however, revealed a few interesting facts:

The pharmacy name was not included on this fax. Instead the pharmacy was identified by its National Provider Identifier. So instead of the agreement reading

[custom_blockquote style=”eg. green, yellow, purple, blue, red, black, grey”] This pharmacy agreement (“Agreement”)…between [PMB Name and address] and [Pharmacy Name] [/custom_blockquote]

it instead listed the pharmacy’s 10 digit NPI. This was obviously a computer generated document that was blast-faxed. While unusual, this was not the only interesting aspect of the contract. At the end of the 3 page contract, just above the space provided in the signature section, was the following:

[custom_blockquote style=”eg. green, yellow, purple, blue, red, black, grey”] Initials _______ indicate that you do not wish to participate in the XXX network [/custom_blockquote]

And below the signature space provided:

[custom_blockquote style=”eg. green, yellow, purple, blue, red, black, grey”] You will be automatically enrolled into the XXX network on 12/2/2017

If you do not wish to participate in the network, you must fax this signed agreement back…[/custom_blockquote]

In other words: you are will be contracted if you do nothing. You must opt out of the contract buy initialing and signing the contract.

So how does one become contracted without signing a contract that doesn’t even include your company’s name? This is a good question, but the answer probably lies in another contract the pharmacy is already participating in that allows the PBM to force an opt-out for new contracts. This type of duplicitous contract is yet another example of how the PBMs have managed to ensnare the profession of pharmacy.

If you are familiar with pharmacy over the past decade, you are probably just nodding your head. Nothing here is new or surprising. But I bring this up for a good reason. Pharmacy is entering a new era in many states, with new networks being formed that pay pharmacy for actually managing the patient and not just drug distribution. Pharmacies are being paid to improve outcomes on the medical side of the equation.

At present, there is not one set model for pharmacy payment. But as these networks mature, there will undoubtedly be companies trying to embed themselves in the middle once again. Pharmacy needs to be smarter.

[custom_blockquote style=”eg. green, yellow, purple, blue, red, black, grey”]fool me once, shame on — shame on you. Fool me — you can’t get fooled again.
— George W. Bush [/custom_blockquote]

Pharmacy must maintain control of its own destiny this time around, and this means paying attention to the details.

Pharmacy is More Than a Drug Distribution Channel

Pharmacies dispense medications, and by default are a part of the drug distribution channel. Drug Channels, a blog by Adam Fein, which covers topics across the entire pharmaceutical industry, regularly writes analyses that include pharmacy. The public has a similar perception centered on drug (medication) distribution. The dictionary is also among those that primarily identify pharmacies and pharmacists as distributors of medication. Consider two common definitions of Pharmacy and Pharmacist:

pharmacy (noun) /ˈfärməsē/ — a store where medicinal drugs are dispensed and sold

pharmacist (noun) /ˈfärməsəst/ — a person who is professionally qualified to prepare and dispense medicinal drugs.

But it is interesting to note that many pharmacists do not identify as part of this channel. Their definition of pharmacist and pharmacy would be very different, and would include, or even focus on, many aspects of patient care.  Consider AACP’s (the American Association of Colleges of Pharmacy) description of the role of the pharmacist listed on their website:

Pharmacists are essential healthcare professionals, who enhance patient care and promote wellness.

While the disconnect between the public’s perception of pharmacy and the professionals engaged in its practice is troubling, one needs to look no further than the “top” pharmacies (at least as far as drug distribution goes).  Represented on the list are such giants as Walgreen, CVS, Rite-Aid, and many, many mail order pharmacies. Unfortunately, most Americans use pharmacies that, as a rule, focus only on drug distribution. Very little patient care takes place in the large retail pharmacy chains and mail order pharmacies.

One reason this perception has been so pervasive is the nature of the industry that has grown around pharmacy over the last 30 years. The main beneficiary of a product-focused definition of pharmacy is the pharmacy benefit manager (PBM) industry. These giants of industry are lucrative, cash generating machines. As long as pharmacy reimbursement focuses only on drug distribution, the PBM industry remains in tight control of not only pharmacy, but also pharmaceutical manufacturers and insurers.

So the fight for pharmacy comes down to a battle to change public perception.  Chain pharmacies like CVS and Walgreens are doing little to help change the public’s view of the profession, but independents and smaller chains are starting to turn some heads. There are some cracks.

The most recent fissure in the PBM oligopoly of the drug distribution channel are the emerging high performing pharmacy networks appearing at both the state and national levels. These networks are independent of the PBM industry and market not drug product, but savings on the total health spend of its patients created by pharmacy directed patient care. The same definition of pharmacy that AACP extolls. These pharmacies are paid using a very different model than the drug channel based networks. These pharmacies are reimbursed not only for the drug product dispensed, but also for the savings they generate in the healthcare system. These networks are attracting significant attention and interest.

The push for quality in healthcare and the emergence of these pharmacy networks is not a coincidence. Over the last few years, it has become increasingly apparent that by working directly with the patient to manage medication use and to achieve therapeutic goals, pharmacy can save the system a lot more than the current drug channel based model that works to manage access to expensive drugs. The difference is the pharmacist-patient relationship.

So pharmacy is at a crossroads. I do not know which definition will win going forward, but I do know that it will be pharmacy that loses if it continues to be simply a drug channel.

Pharmacists need to work closely with their patients. They need to help them reach their therapy goals. Because pharmacists see their patients regularly, they are able to create meaningful relationships with their patients. With this access, they must, in short, make every encounter count.

Dominoes

Over the last two or three months, we have been observing an accelerating pace of critical news stores focusing the business practices of both the PBM industry and Drug Manufacturers. Now, Rueters is reporting that twenty states are suing Mylan and Teva over drug pricing. Knowing what I do about lawsuits, it will be quite some time before this is resolved, but I would not be surprised if the PBM industry and drug wholesalers are soon included in this type of action. In many ways, the story of greed and corruption in the drug industry is starting to resesmble a line of dominoes, each one falling on the next.

To read the Rueters story, point your browser of choice to U.S. states sue Mylan, Teva, others for fixing drug prices.

Missing the Mark

Among the topics regularly covered on the Thriving Pharmacist are several articles discussing rewards for performance paid to pharmacies. Few of the examples shared here, unfortunately, are actually representative of pay for performance. Today, I will share yet another pay-for-performance program that misses the mark.

This program is regional, and is called Intervention Messaging, or IMRx. It is designed to increase medication adherence using real time alerts sent to the pharmacy during the claim adjudication cycle.  The plan is supposed to benefit both the patient and the pharmacy by paying the pharmacy an incentive fee for each adherence conversation they have with the patient. Payment is dependent on the patient filling the offending (late, unfilled) maintenance prescription.

Like most programs, there are positive benefits to the pharmacy:

  • The incentive payment is welcome revenue
  • The pharmacy should see additional fills, which adds additional revenue
  • The pharmacy’s adherence measures should be positively impacted, assuming the medication flagged by the program falls in an EQuIPP category.

These are all true, and one cannot contest the positives. But the program misses the point. It only addresses a problem after it has occurred. If a pharmacy successfully addresses the noncompliance , the reward becomes a one-time bonus unless the patient falls back into non-compliance. A pharmacy that is  proactive with adherence management, using MedSync and motivational interviewing techniques to ensure high levels of patient compliance, would see no reward for their work and high performance.

There should be two parts to any performance incentive: an incentive to improve, and an incentive to maintain high performance. This program, like many that have come before it, fails to address the last part. Just like pharmacists caring for patients, the performance incentive programs need to make every encounter count.