Follow-up: The System is Broken.

Many practitioners, both prescribers and pharmacists, responded to Tuesday’s article The System is Broken. Most were in agreement with the frustrations described, and many had experienced similar issues with their own patients. Some pointed out that the immediate release guanfacine’s labeled indications only include hypertension while the extended-release guanfacine, a more expensive formulation, is indicated for ADHD. This is an excellent point. It likely explains PBMs rejection of the prior authorization requested by the prescriber. It is also an excellent example of the need for practitioners and PBMs alike to use clinical judgement.

It is about the Patient

So why would the prescriber have ordered the immediate release guanfacine 1 mg twice a day instead of the a once-a-day 2 mg extended release version? The answer is simple: you treat the patient, not the monograph. Is the patient receiving safe therapy, is the therapy effective, and are they achieving the desired therapeutic outcomes? In the case here, then patient has been stable on the therapy for quite some time and has been achieving their therapeutic goals. It was only a change in insurance (a new Medicare Part D plan) that occurred on January first that precipitated the problem.

The resolution to the problem was to change the patient’s therapy to meet the PBMs arbitrary rules. This change, however, has consequence:

  • The patient will require additional monitoring (which will likely include visits additional office visits to the prescriber) to ensure the change continues to achieve the therapeutic goals.
  • The extended release version of the medication, while being available generically, costs significantly more (in excess of $200 per year) than the immediate release version.

To summarize: the patient was to be moved to a different version of the same drug based only on the existence of an official indication. The PBM applied little, if any clinical judgement (a fact that is further highlighted by their recommendation to use metoprolol,  a beta blocker, for hypertension when the patient was already taking atenolol). What is worse, the PBM is not responsible for added costs to patient care that resulted from the change: Medicare Part B will shoulder these costs. Not only does this change cost Medicare Part B, it also costs the drug plan (Medicare Part D) more.

So remember: treat the patient, not the symptoms. Medicine and pharmacy are much more than memorizing and applying recipes. Our patients are real people. We have to think. Follow the simple mantra of  Is the patient receiving safe therapy, is the therapy effective, and are they achieving the desired therapeutic outcomes? Doing this is one more way to make every encounter count!

The System is Broken

For the past month we have been working with one our psychiatrists who is treating a mutual patient of ours. This patient has an intellectual disability, lives in a group home, and has significant history of depression with anxiety and attention deficit hyperactivity disorder (ADHD). One of his mediations that he has been taking for over five years is guanfacine. As we have tried to fill this medication for him, the PBM has rejected the claim because the PBM wants him to try a first line agent for hypertension. Herein lies the problem. The psychiatrist’s office has sent in different prior authorizations (PA) informing the PBM the reason the patient is taking guanfacine. Here, the guanfacine is for the treatment of ADHD, and not treatment of hypertension. Each time the PA has been denied, and each time the PBM directs the psychiatrist to use a first line antihypertensive, such has amlodipine, atenolol, or benazapril. What makes this even more frustrating is the fact that this patient also has hypertension and he is being successfully treated with metoprolol.

So my question is “Who makes these decisions?” First, we have a patient whose ADHD has been stable on a medication—guanfacine, the drug is relatively inexpensive, and it has been proven effective. Secondly, if the PBM is really watching over the patient and their medication profile, then why would they recommend a beta blocker (atenolol) when the patient is already taking a beta blocker (metoprolol). To be honest, this is why providers (prescribers and pharmacists) become frustrated with the system—the PBM is not taking the time to look at the individual case and, in fact, is making recommendations that are harmful to the patient.

The patient is frustrated, the psychiatrist is frustrated, and we are frustrated. We will not withhold treatment for this patient, but we have to trudge through the murk and mire of the system set up by the PBM who “supposedly” hires clinical pharmacists to monitor these situations and make clinical decisions. I am not so sure this is the case and, if so, the clinical pharmacist fell asleep at the wheel with this patient. So we become the one who is left “holding the bill”. The system takes up valuable time from both the prescriber’s office and the pharmacy which is time that is taken away caring for other patients.

It is time for a system overhaul. The current system is broken, does not optimize patient care, and penalizes the providers, in the trenches, who are actually caring for the patients. In fact, the relationship between the PBMs and providers has become antagonistic. If we use the current case as our example, what else can we provide to the PBM with regard to the patient’s clinical record to receive an appropriate clinical decision? As a health care provider, I am liable for the decisions that I make regarding my patients and their drug therapies. I take responsibility for the decisions that I do make, which means that I assume the risk as well. PBMs should also be liable for their decisions, because, as this case example demonstrates, their clinical carelessness can have negative consequences for the patient.

As our health care system embraces quality performance, and providers are being held to certain standards of care. Third party administrators (TPAs) such as PBMs should also be held to the same standards. This requires better systems,  improving the communication between providers and PBMs. A reasonable start might simply be provider access to a live person—preferably someone who is clinically trained, and a reduction in the length of time for decisions regarding medication coverage to be made. We need to remember the adage, “Its all about the Patient” as we look for ways to improve the system. Right now it seems to be anything but the patient!

 

Is There Anything Special About the 90 Day Supply?

The other day, I received an email notice from a Medicare Part D PBM: [highlight style=”yellow,”]UPDATE: You have Cases[/highlight]. The message continued on to state:

30-90 Conversion with $50 Payment for Positive Outcome

I will be the first to admit that when I read case, I immediately thought of a clinical opportunity. The conversion of a prescription from a 30 day supply to a 90 day supply does not really implement any of the myriad of clinical skills I have accumulated over the years. What is more interesting is the remuneration being offered: $50 for a successful conversion (Note: I am assuming that a successful conversion means a single one-payment for converting all maintenance medications to 90 day supplies). A complete medication review (CMR) earns us about $60—only about $10 more—while taking significantly more time and requiring actual clinical expertise. The value being attached to the conversation to extended-day supplies by the PBM begs the question, what is so special about the 90 day supply?

Spoiler alert: there is nothing special about 90 day supplies. To understand why, one has to consider the plan’s motives. For a company, motive generally comes down to one thing: money. Either the plan makes more money when 90 day fills are used, or it costs them less money. Logic supports both assertions; the PBM often pays the pharmacy less for a 90 day supply (a lower markup on the drug and lower, or even zero, dispensing fee). But this doesn’t really explain the significant incentive being offered. I believe that there is more to this story. I believe that the motive includes the Medicare Star Ratings program. The plan stands to receive significant rewards from Medicare for attaining a 5 star rating.

Currently, the Medicare Star Rating system contains four active measures, and one display measure. Three of the five measures focus on patient compliance over three therapeutic categories: ACE / ARBs, Diabetic Meds, and Statins. High risk medications is the fourth measure. The fifth measure, Comprehensive Medication Review completion rate, CMR, became a full measure this year. The current display measure is Statin use in Diabetes, which may eventually become an active measure.

The PBM itself has few mechanisms to impact any of the Star Measures; it is the network pharmacies the PBM uses that are able to influence the PBMs Star Measure scores. Anything that the PBM can do, including incentives paid to the pharmacies or other tactics, to improve the measured compliance for the patients enrolled in their plan will likely impact its bottom line. Compliance is difficult to directly measure without significant effort. Because of this, surrogate measures of compliance are used by Medicare. Two methods of estimating compliance are Mean Possession Rate (MPR) and the Percentage of Days Covered (PDC). Medicare is using the PDC as the basis for the Star Measures involving compliance. A quick literature search reveals there are articles describing increases in MPR and PDC for patients receiving 90 day fills.

I searched for and found several different recent studies on 90 day supplies. Many health plans and payors pointed to a single article (reference 1 below) done by CVS health when discussing 90 day fills for their covered lives. Another often referenced publication (reference 2 below) was done in collaboration with Walgreens. Another PBM, OptumRx, also published a short study evaluating the impact of 90 day fills on compliance.  The conclusions of each study showed “improved adherence” when 90 day supplies were issued.

Interestingly, each of these three publications either explicitly state or infer scheduled, or automatic refills. In other words, the prescriptions were refilled every 90 days without respect to a request by the patient. This has long been a technique use by mail order pharmacies. By not studying the patient’s at will refill requests, the results show significant bias. Automatically filling prescriptions will inflate MPR and PDC without actually impacting compliance. The surrogate measure has essentially been subverted. The same increase in MPR or PDC could be accomplished by automatically refilling / mailing the prescription at any arbitrary interval.

So let’s circle back to the beginning, with the case opportunity to convert patents to 90 day supplies. Our pharmacy has exceeded the CMS threshold for PDC based Star Measures since day the measures were first published. We are routinely in the top 20% nationally with respect to our Medicare patients’ PDC based measures in all three categories. We have done very, very well despite having only a small minority of patients receiving 90 day fills. In fact, we have found that we are able to keep much better track of our patients’ compliance seeing them every 30 days. We have significantly more engagement with our 30 day patients than our 90 day patients.

So in a nutshell, I don’t believe that the 90 day supply is special in most cases. In fact, I consider 90 day fills to be a more of a negative influence on patient care. Not only are pharmacies paid less for both the drug and our effort for a 90 day supply, but our ability to engage with and monitor our patients is also significantly diminished. Make no mistake, I do believe that, if one of the reasons for this 90 day incentive program was to impact compliance, it is a move in the right direction. It is be a promising development, and additional evidence that the PBMs are looking to pay pharmacies for high performance. I simply believe that the program, as such is mis-directed. I would prefer to have PBMs pay an incentive for exceeding the CMS threshold levels for the Star Measures than simply pay a one time reward to move patients to 90 day fills.

References

  1. Community Pharmacy Automatic Refill Program Improves Adherence to Maintenance Therapy and Reduces Wasted Medication.
  2. Medication Days’ Supply, Adherence, Wastage, and Cost Among Chronic Patients in Medicaid

  3. New adherence study: 90-day Home delivery beats 90-day retail

Compliance: Working the Numbers of PDC

Every month I await the e-mail from PQA telling me that my latest EQuIPP scores are ready. If I want to impact my scores, I need to understand the numbers behind them. Today I thought I would remind everyone how the EQuIPP compliance score, the PDC or Percentage of Days Covered, is calculated for a pharmacy.

While compliance might seem like an easy topic, it is far more complicated: compliance for patients is aggregated into a score representing the overall compliance of all patients in the pharmacy. Several assumptions are being made in order to do this.

Defining Patient Compliance

If I miss a dose once a month, most would consider me compliant. But what about missing one a week? A line needs to be drawn somewhere, and EQuIPP has arbitrarily drawn this line at 80% of days covered. This means that someone missing 5 or fewer days worth of medication in an average month is considered compliant. According to PQA, compliance is a binary (YES / NO) attribute. Either the patient is compliant, or they are not compliant, in any given month.

But EQuIPP cannot tell if a patient takes a drug 80% of the time. They are relegated to using claims data. Percentage of Days Covered (PDC) is calculated based on dispensing data from the pharmacy. PDC accounts for early or late refills by looking at the total number of days worth of drug the patient has in their possession during a period of time. For example, if a patient fills a 30 day supply of medication, and then refills the prescription 25 days later (5 days early) the second month, and 40 days later (10 days late) the third month, the PDC would be calculated based on the previous two fills as:

60 days of medication / 65 days elapsed * 100 = 92% — Based on the EQuIPP definition, the patient is compliant.

Note that the assumption is that the patient is out of medication when the refill is processed. This assumption can create erroneous calculations when used over short periods of time. In the example above, this assumption may actually overstate compliance as the patient has only taken 50 days worth of medication in 65 days and was just picking up a refill before going on vacation. It can take several months for the PDC to stabilize and more accurately reflect patient compliance. This creates additional questions for which I don’t have good answers.  For example: what is the start date for the calculation? For a new patient to the plan, it will be their first fill date after they enter the plan. But for a patient that did not change plans, how far back is the first fill date? I am assuming that the PDC is using calculating compliance over some defined period of time, probably 6 to 12 months.

Defining Compliance for the Pharmacy

Every patient included in the EQuIPP measures will be labeled as either Compliant or Non-Compliant for a given month. From this pool of patients, the pharmacy’s compliance rate is calculated. This is simply the number of compliant patients over the total number of patients. A rolling 6 month average of this calculation is the number seen in the EQuiPP dashboard.

Improving Your Measure

As many have observed, the easiest way to impact a pharmacy’s PDC for a given drug category is to target patients just falling short of the 80% threshold for compliance. Consider a pharmacy with a Diabetes PDC score of 80% with 100 patients enrolled. The CMS threshold for this measure is currently 82% and the Top 20% threshold is 92.5%. In order to move the pharmacy above the CMS threshold, two patients that are currently non-compliant need to become compliant. Likewise, moving 13 patients into compliance will move the pharmacy into the top 20%. Targeting patients with compliance between 75-79% will have the best chance for quick and easy success for the pharmacy.

To do this, a pharmacy has to identify the low hanging fruits: the patients falling just short of 80% compliance. The EQuIPP platform has the capability to show you outliers, but in practice, we have not found this very useful. Other products (Mevesi, PrescribeWellness,  McKesson and others), have platforms to help you identify the outliers. These tools are retrospective in nature because they generally use data that is pulled from your dispensing system at regular intervals. All of these tools are designed to be used outside the dispensing workflow to create a list of potential patients to target.  Once you have the list, you need an implementation plan to put the data to work. Other tools, like PharmClin, flag patients during the dispensing workflow, allowing you to target the patient in real time, avoiding the need for additional implementation. I prefer real-time identification of patients for two reasons: it takes less time and effort to identify the patients needing targeting and the data is always current. 

Taking Action

If you are starting with a list of targets, you will need a battle plan. One possible tactic is to place a note or flag on the patient record to alert the pharmacist or technician that the patient is a target when they initiate a new prescription or refill. This allows the pharmacy staff to approach the patient at the time they pick-up the medications. Another method is to contact patients outside the prescription workflow by appointment or by phone. Ultimately, the goal is to initiate a conversation with the patient.

At this point, with the patient in front of me or on the phone, I tend to be careful with how I proceed. Remember, claims data gives us very little real information. The patient may not actually be non-compliant: they may have a very valid reason for their compliance history. For this reason, I always try to be neutral when starting a compliance conversation. I might ask, for example:

I see that your refills for metformin are less frequent that I would expect. Has the dose the doctor wants you to take changed?

We often find perfectly reasonable reasons for PDC based compliance problems. Physician samples, dose changes not communicated to the pharmacy, and alternative drug supplies are commonly seen explanations found in our practice. If the dose has changed, we can fix the compliance problem by getting a new prescription from the prescriber. For other explanations, I simply document the intervention with the patient and revisit compliance in 3 months. Our use of the clinical documentation system PharmClin makes the this easy and automatically allows us to schedule a follow-up for the problem.

Sometimes, I find that the patient doesn’t tolerate the drug well, and has backed off of the dose as a result. The physician may have instructed the patient to do this temporarily, with instructions to gradually increase the dose. Metformin is a common example. Finding this, I work with the patient and prescriber to ensure that the patient achieves the desired outcome without unnecessary effects. This might mean helping the patient with their gradual dose increase, or recommending a different drug entirely. Either way, the “compliance” problem can be both documented and successfully addressed.

Addressing Non-Compliance

Most pharmacies use a medication synchronization program to address compliance problems. While this is a valid plan, it is most appropriate in the case that a patient forgets to order refills or stop in to pick up refills. I am careful and investigate a host of other possible reasons that the patient doesn’t refill their prescription on time before asking them if they are interested in synchronization.  Again, I proceed with caution. Is the reason financial? Might the reason be related to the time of administration or restrictions on what can or cannot be taken with the medication? I work hard to understand the reasons before creating a patient specific plan. If the issue is financial, finding a less expensive alternative might be needed. If the patient simply struggles with getting to the pharmacy, offering our delivery service is a reasonable intervention. Finally, if the patient forgets to order refills or has difficulty remembering to pick up medications at the pharmacy, the benefits of synchronization are a great way to help the patient become more compliant.

MedSync

One final note about medication synchronization. While this tool can be very successful in addressing compliance issues, the reasons for its success in our pharmacy are not what you might think. Filling a prescription on a regular frequency will, of course, correct the claims based PDC score. But in our pharmacy, med synchronization’s success comes from the increased level of engagement our staff have with the patient. By calling the patient each month, we can ascertain if any changes have been made and gather important informant about any problems the patient is experiencing. Additionally, we are able to approach the patient about other topics including what their therapeutic outcomes are and if they are meeting them. In short, we work hard to make every encounter count!

Re-Blog: “Your Health Plan Has a Serious Drug Problem.”

Pharmacists have been attempting to educate other about pharmacy benefit manager (PBM) tactics,  but few outside the profession understand the complexity and implications. Recently, however, congress and other have started paying attention to the associated costs of the PBM middleman. Benefit Design Specialists recently wrote about the implications in their blog, and it is an excellent summary of the problems. Click here to read their post entitled Your Health Plan Has a Serious Drug Problem.

Re-Blog: Apple, FBI, and the Burden of Forensic Methodology

What does the current court order requiring Apple Computer to assist the FBI by “hacking” into a criminal’s phone have to do with pharmacy? One word: privacy. More and more, our patients are using their “smart phones” to keep and store their health records. Apple even includes Health Kit in their core operating system on their phones, which allows the user to store and display many different types of protected health information (PHI) in what is essentially a mini electronic health record (EHR).

It appears that many are siding with the FBI in this case without fully understanding the legal ramifications of the case. If you are interested in why the FBI’s request is far more intrusive to your patients’ privacy, skip over to Zdziarski’s Blog of Things and read Apple, FBI, and the Burden of Forensic Methodology, an excellent summary description of the implications of this case. After reading it, consider how save any PHI stored on a phone would be if Apple loses this case.

The Benefits of MedSync

My business partner, Randy McDonough has spent a lot of time traveling and speaking about MedSync at town hall meetings hosted by our affiliation (HealthMart). He continues to be surprised by how many pharmacies have not heard about, or have little interesting Medication Synchronization. We believe that there is a lot of value in this MedSync; our pharmacy has seen a significant impact since our program was implemented.

Just about a year ago, our pharmacy started really pushing a medication synchronization program. We went from a paper file based program to an electronic system. When we started our push, we had about 50 patients enrolled, and the program was labor intensive. One year later, the process is much more streamlined, and we how have over 400 patients enrolled. Our overall goal is to have about 30% of our active patients enrolled in the synchronization program. In one year, we are about half of the way to that goal. A secondary goal of our program is to enroll up to a third of our synchronization patients in our SuperSync program.

While we do charge for the enhanced packaging option included with SuperSync, there is no cost to our patients for our basic sync program. This is unusual for us; we make it a rule to charge for services our pharmacy offers. Our basic synchronization program is an exception to this rule. The reason is simple: while synchronization benefits the patient, by decreasing the complexity of managing their prescriptions and the number of trips they make to the pharmacy, it also has significant benefits for our pharmacy. The 15% of our patients enrolled to date were approached specifically because they represented more than 15% percent of our retail prescription volume. Our average sync-enrolled patient has more than 5 medications; many have significantly more.

The benefit for our pharmacy is primarily centered around our ability to anticipate our synced prescription workload. With our synchronization program, we can leverage our knowledge of the patients sync date to:

  • postpone stocking expensive medications until just before they are needed, decreasing store inventory and improving cash flow,
  • plan and distribute workload throughout the week, improving wait times for our non-sync patients.
  • review patient medication utilization, and prepare targeted clinical interventions before the patient appears in the pharmacy.

The last benefit requires some explanation. Our clinical staff, while managing our synchronization schedule, also have used the opportunity to review the patients’ medications and utilization. Beyond reviewing maintenance mediations, our pharmacists are now also looking at other aspects of each patient, like immunization history, to identify patients that may need additional services. Specific interventions are printed and added to the will-call bag containing their medications to be picked up. This allows our pharmacists to talk to the patient when they come it, fill in these gaps in our clinical records, and offer additional services, like immunization, if indicated.

The benefits of our MedSync program and the associated changes in workflow efficiency is most visible on Saturday. Our pharmacy is only open for a few hours on Saturday mornings, with limited staff working this day. Historically, Saturday was a very difficult day for our pharmacists. The volume of prescriptions filled per hour was often equal to many week day mornings, but was being managed by a much smaller staff. Since implementing our synchronization program, this has changed significantly. The volume of prescriptions filled on a Saturday is how less than half of what it was before. This reduction is largely due to the redistribution of these prescriptions throughout the week.

One year into our program, we are seeing other benefits as well. Patients that have enrolled appreciate the convenience it provides. This helps cement our relationship with our patients, creating additional loyalty. While the number of visits our sync patients make to the pharmacy may actually decrease as a result of synchronization, the actual level of engagement with them has increased as a result. This additional engagement has helped us promote other paid services to our patients and thereby expand our revenue opportunities. The impact and opportunites afforded by our synchronization program are certainly broader than we first anticipated.

Sharing the EHR

Back in December, Drug Topics published Kroger pharmacy’s shared EHR pilot project a success, which described a study completed by an Ohio chain and a local family practice provider. The essence of this study was to observe the benefit of giving a select pharmacy access to the medical provider’s Electronic Health Record (EHR).

This study was certainly not unique, though. Many pharmacies have created similar collaborations. Our pharmacy, for example, has access to our shared patients with a local hospice and a nursing home. The advantages described in Drug Topics are certainly real. Access to a this additional information enables the pharmacist to better ensure that patient is receiving the most effective and safe therapy, and that the desired outcomes are met.

But not all is rosy in these scenarios. The current lack of integration between pharmacy management systems and EHR of the office or organization creates an extra step in the clinical workflow for the pharmacist. Any documentation the pharmacist has to make must be made both in the EHR and the pharmacy management system.

The problem is not limited to the exchange of information between the pharmacy and the office. Collaboration between general practitioners and specialists is hampered by the lack of communication between different vendor’s EHR implementations. This single fact represents one of the biggest reasons that the facsimile (fax) still remains a predominant tool in healthcare. Paper is a common denominator as the document can be scanned into the EHR.

Our Experience with the EHR

In our pharmacies, or employees regularly have multiple systems running on their workstations. This includes our pharmacy management system, our clinical management system (PharmClin), MTM management systems like Mirixa and Outcomes, and multiple EHR windows for the offices with which we routinely collaborate. This requires significant attention to detail and a bit of computer savvy.

Any given problem found by our pharmacists is entered into at least two different systems. Fortunately, many of these systems are free-text based, and our pharmacists can simply copy and paste information between applications to minimize the extra work required to complete documentation on all platforms.

A bigger problem, however, is the reciprocal communication channel. The doctors and nurses at the remote offices do not have a way to easily pull information from the pharmacy’s prescription system. The most common information prescribers are interested in is an accurate medication profile. In lieu of a two way exchange, a copy of the patient’s medication profile with all of our notes by our clinical documentation system (PharmClin).

Despite the challenges of working with multiple EHR products, the benefits still far exceed the associated cost. The improved communication allows our pharmacists to better identify problems in the patient’s drug therapy, monitoring plans and therapeutic goals.

As we continue to navigate the currently evolving transition in pharmacy toward a care centered model, we are continuing to look for new ways to improve communication with the providers. This means that we are constantly connecting with the providers in an attempt to improve our communication.

Luck and the Narrow Network Contract

Narrow network, or preferred network pharmacy contracts are generally offer the pharmacy lower reimbursement in exchange for access to the network’s patient base. Previously we discussed how participation in narrow networks may not actually drive patients in your direction (The Flip Side of Access to Lives). Today I wanted to talk about the math behind these contracts.

Preferred Reimbursement.

In general, a narrow network contract is not very lucrative. Several contracts that I have seen describe in terms of a Generic Effective Rate or GER. This GER defines the average discount on Average Wholesale Price (AWP) the benefit manager will take when it sets its Maximum Allowable Cost (MAC) prices for generic drugs. Historically, an non-preferred network contract might define a GER in the range of AWP – 78%. The narrow network contracts I have seen often have a GER that exceeds AWP-90%.

Doing the Math (or Why Sign a Preferred Contract?)

Before signing a contract, a pharmacy or their contracting organization will evaluate the reimbursement offered to be sure that the agreement is in the best interest of the pharmacy or pharmacies involved. Doing this involves some assumptions on what the pharmacy or pharmacies will dispense to patients in the contract. It is the assumptions that can make or break the analysis once the contract is signed and in force.

The primary assumption is mix of drugs that will be dispensed. The contract promises that the benefit manager will pay out, over all drugs and pharmacies covered by the contract, a GER that averages the discount on AWP defined in the contract. An analysis of the profitability of a contract might take historical dispensing records and calculate an estimate of MAC price from the AWP and GER. This then can be compared to an estimate of the net acuisistion cost for each drug.

Why You can Still Lose When the Average is Profitable

My contracting organization signed a narrow network contract because their analysis showed that while the reimbursement was aggressive, it was still profitable. How then, could I loose money on the plan? The answer buried in the statistics. Remember that all MAC prices are going to average AWP – GER. Profit, however is determined by the difference between the actual MAC  and the actual Net Cost.

Consider the top 10 drugs in my pharmacy listed in the table below. Using the AWP / Unit, one can calculate an estimated MAC price for each drug (Est. MAC based on GER). Once a claim is processed, one can capture the Actual MAC price being returned, and calculate the Effective GER. The last two columns calculate the estimated and actual profit or loss per unit for these top 10 drugs.

All

Based on these calculations, my top 10 drugs should be profitable at the contracted GER (the Estimate Profit/Loss per unit averages $0.215), with only one product underwater. The reality is very different, however. The Effective GER for the top 10 drugs in my pharmacy is much higher than the contract specifies (averaging over 96%). Instead of 1 drug being underwater, 6 of 10 are underwater. The average reimbursement over all 10 drugs actually just below zero.

The next table below shows the top 10 drugs dispensed so far this year in the example narrow network:

Narrow

Note that while several of the top 10 drugs match the previous table, there are several drugs on this list that appear in at a spot greater than 20 on the overall list. The sample size here is smaller (none more than 6 prescriptions), but after one month, the drug mix already appears fairly stable. Of interest in the table is one drug that does not appear in the top 200 (Quetiapine 50 mg). This becomes important in the discussion below.

Like the previous table, the estimated profit and loss using the contracted GER are positive: none of the top 10 drugs here are estimated to be losers. Looking at the actual adjudicated MAC rates reveals that the average effective GER for these 10 drugs is, like the overall list above, higher than the contractual rate. In this table, the net profit is positive. The reason that the average profit for the top 10 drugs is above zero is the presence of the single outlier drug: Quetiapine 50 mg. This drug, which is otherwise not it the top 200 drugs our pharmacy dispenses, has a high AWP with a MAC price discounted near the contracted GER. It is a stark contrast to the others: a winner. Removing this one drug from the list drops the actual profit down to zero.

This illustrates the danger of using an average GER in a contract. The plan can, and apparently does, discount common best selling drugs at rates far in excess of the contractual GER. Other, less common, drugs will be discounted at lower, more profitable rates to generate an average over all pharmacies that meets the contractual requirements. But if a given pharmacy doesn’t dispense a mix of products containing a sufficient sample of winners, they will quickly trend to either zero or negative profit.

For a given pharmacy, therefore, a preferred network contract becomes a gamble. Will I at least break even? Will I average a few dollars for each prescription over the year? Or will I actually pay the benefit manager, in the form of a net loss, for the privilege of filling prescriptions for my patients? This gamble is compounded by continuing patient migration to narrow network plans in order to save money. Over 75% of patients are now enrolled in a preferred network plan, and that number will only increase with time.

What Do I Do?

In all likelihood, the implications of the current batch of narrow network contracts is just now becoming apparent to those pharmacies participating. After a single month, for example, our pharmacy has managed a profitable mix for one of the more aggressive networks. This, of course, will need to be watched carefully as our mix changes with time. Other networks we are enrolled in use Voodoo DIR fees, which makes assessing our position virtually impossible in the near term.

But pharmacies do have options. Many states have adopted laws that regulate the MAC prices of drugs. It is very important that pharmacies exercise their voices, submitting underwater MACs for review, and reporting problems to the appropriate agencies when the benefit manager fails to implement a meaningful change. While our contract for reimbursement is tied to the GER, we are still entitled to be paid the cost of the drug product. We are still entitled to the protections offered by our laws. Despite the severity of contracted GERs, most common drugs are profitable if the benefit manager actually uses that rate. An average GER can be either fair or unfair to a pharmacy, depending on how the benefit manager manipulates individual MAC prices. It is in our interest fight and ensure we are paid fairly under the contract’s terms.