Having Skin in the Game

Independent pharmacies are in a difficult position in today’s health care climate. By themselves, they have little power to negotiate with larger companies, especially the predominant Pharmacy Benefit Managers (PBMs) that represent well over 90% of all patients in most markets.  In business, there is power in numbers. Enter the Pharmacy Services Administrative Organizations (the PSAOs).

Historically, pharmacy owners paid little attention to their PSAO. The PSAO did their job signing contracts and negotiating on the pharmacy’s behalf, allowing the independent pharmacy owner to take care of their patients. Today, however, the face of pharmacy and reimbursement has changed dramatically, bringing the PSAO into the crosshairs of pharmacy owners everywhere.

If you were to ask the upper management of a PSAO what their job is, they would likely state that they are responsible for providing access to lives for their constituent pharmacies. Pharmacy owners, on the other hand, are more worried about their bottom line. What good does having access to lives do for the pharmacy if those lives do not make the pharmacy money, or worse, lose the money [See “A Dual Edge Sword” for a related discussion].

The disconnect is clear. The PSAO, representing a large number of pharmacies, must find a balance acceptable to all of its members. The PSAO looks to:

  1. Negotiate the best possible contract terms for their pharmacies
  2. Maintain the customer base of member pharmacies to the best of their ability and
  3. Grow the potential customer base of the member pharmacies.

None of these are easy for the PSAO as they have to represent a diverse group of stores representing a variety of geographic regions and economic climates. Even though the PSAO may represent thousands of member pharmacies, the Pharmacy Benefit Managers often dictate terms. The PBMs have a monopsony like position in the market.

Pharmacy Owners, on the other hand, are much more likely to be myopic in their view of a contract. They have significant personal risk in the form of payroll and inventory. Having “skin in the game” tends focus them on reimbursement details and the bottom line. With such a difference in goals, it is no surprise that some pharmacy owners are critical of their PSAO. How can a PSAO sign contracts for its constituent pharmacies that may cause them to go out of business? To some pharmacy owners, the PSAO might be considered to be as harmful to pharmacies as the PBMs. The PSAO does not appear to have any skin in the game, and therefore appears to have little to lose.

Recently, it was revealed that a number of PSAOs had opted out of one specific Medicare Part D preferred network for 2015. Only one larger PSAO signed this contract. Obviously there was something in the contract that effectively persuaded most PSAOs from signing with the network on behalf of their member pharmacies.

In the above case, it was not just reimbursement rates that were the problem. The network contract also specified that the pharmacy needed to maintain minimum Generic Dispensing Rates (GDRs) during the course of the year. Failure to do so would result in penalties enforced at the end of the year. This type of contract is potentially catastrophic to a pharmacy that fails to meet the requirements. The resulting chargebacks from such a failure have the potential to cause significant pressure on cash flow and liquidity for the business.

a PSAO that puts its own skin in the game, however, is a game changer

So why did one PSAO elect to sign this contract? The answer is surprising. The PSAO that signed the contract decided to put some “skin” into the game itself. The PSAO determined that they were confident that they could monitor their stores and help coach stores in jeopardy, effectively working together to maintain the minimum GDR during the course of the year. At the end of the year, if a pharmacy fails to maintain the minimum GPR, the PSAO, not the pharmacy, would pay the penalty.

Access to lives is important. Access to a PSAO that puts its own skin in the game, however, is a game changer. I hope that more PSAOs realize that they need to have skin in the game as well.

Addressing Compliance

[dropcap color=”white” background=”black” style=”square” size=”large”]T[/dropcap]he pharmacist has access to their patient’s refill history. With the history, the pharmacist can assess medication persistence, which is something a prescriber cannot readily assess.

Consider the following scenario: while performing final verification and doing Continuous Medication Monitoring (CMM) you notice that the patient does not appear to be taking one of their medications correctly. The patient appears to be taking roughly half of all scheduled doses. As the pharmacist, you decide to approach the patient in order to correct this compliance issue.

Before making this intervention, however, consider that you really know very little about the situation. While your data shows non-compliance, there are many possible explanations and only one of them is the patient being unwilling or unable to take the medication as prescribed.

Before approaching the patient, consider some of the possibilities. The following is representative of issues we have seen, but is certainly non exhaustive.

  • Samples. Yes, there are still samples being handed out by physicians. If the patient is on a name brand drug, this is certainly a possibility.
  • Mail order or another pharmacy. As pharmacists, we generally are not fans of this type of pharmacy, but the possibility that the patient has another source.
  • Prescriber – Pharmacist communication. It is fairly common in our practices to have the prescriber send the patient a letter of follow-up after an office visit. Often, the prescriber makes changes to the patient’s drug therapy in these letters but fails to include the pharmacy in the correspondence.  The patient may be taking the drug correctly, but the pharmacy doesn’t know it (yet)
  • Medication hoarding. Often I find patients will have acquired massive stockpiles of their medications. Once they have done this, their apparent compliance starts to fall.
  • Drug side-effects or adverse events. The patient will be the first one to know if a medication effects them in an undesirable way.  The patient may self-adjust their dose to avoid these effects. They do not always think to share this with the prescriber or the pharmacist.
  • Therapeutic goals. Related to the self-adjusted dose for ADRs, patients often adjust their dose themselves based on how they feel. As crazy as this might seem, the patient is often justified. Many patients I have seen over the years have adjusted their blood pressure and cholesterol medication doses themselves without letting anyone know. The prescriber often assumes that the dose being taken is what they prescribed. What matters here is that the patient is attaining the goals the prescriber and patient have established.
  •  True Non-compliance. The patient cannot or will not, for one or many reasons, take the medication as prescribed.

Understanding that there are many different possibilities for the refill pattern being observed necessarily impacts the approach used. Instead of asking the patient why they are not taking their medication as prescribed, one needs to enter into a fact finding mission.

One approach that we have found useful in our practice is the use of open ended questions. Typically we explain what we have noticed and then ask the patient to fill us in on any changes. For example:

“We noticed that your refills for this medication were often late. We are often the last to know if the prescriber made any changes. How are you taking this medication now?”

By taking blame for “not knowing” about any possible changer, we have tried to make the assessment less confrontational. Generally, this tactic helps illuminate the underlying reasons for what we have observed. Most of the time, a good reason actually exists for the late refills.

Once the reason is understood, the appropriate action can be planned. Often, the persistence data is a false-positive for a compliance issue, and the pharmacist only needs to document the reasons for the late fills. If there is are true obstacles to compliance, the pharmacist can further intervene and help coach the patient to improve compliance. Of course, this too should be documented. Lastly, the pharmacist needs to schedule a follow-up to re-assess the patient. Our practice typically re-evaluates the patient’s compliance (even false positive cases) in 90 days.

Pharmacies and pharmacists have a unique opportunity. Our businesses bring our patients to us regularly. This means we can see and interact with them at a minimum of several times a year and often several times each month. Pharmacists need to make every one of these encounters count.

Compliance and Persistence in Continuous Medication Monitoring (CMM)

There has been a lot of interest lately in Medication Synchronization programs as a way to improve a pharmacy’s EQuIPP measures, especially as they related to measures of Proportion of Days Covered (PDC). While there are a number of possible ways to implement Med Sync, it is important to not lose site of the actual goals of therapy.

For years, mail order pharmacy has touted cost savings based on the supposition of improved patient compliance. As it turns out, these assumptions were often flawed due to the disconnect between the billing / shipping of the product and the patient actually taking the medicament. Indeed, automated refills of any nature, including mail order or Med Sync programs, will show improved compliance (based on claims data including the day supply and dates of refill), magically augmenting a pharmacy’s performance with respect to PDC.

While many pharmacies would be thrilled to improve their PDC related measures, making an investment in Med Sync appealing, the real story is both more interesting and harder to document.

The more important measure, and one that is not adequately measured by EQuIPP or other PDC style metrics, is the rate the patient takes their medication correctly. There is a subtle, yet important difference between these. The PDC is based only on claims data, which comes from the information written on the prescription. The latter is a combination of the instructions given to the patient by the prescriber directly (which are often at odds with those written) and the patient’s willingness or ability to follow thru with these directions.

Many Pharmacy Management Systems will flag early or late refills for the pharmacist or technician to follow-up with, but in reality these are difficult to leverage. For example, If a patient with 100% compliance to the prescription’s directions, picks up meds four our or five days early over the course of a few months (simply out of convenience), they could easily be 2 or more weeks late on the current refill without actually being out of medication. A calculation looking at 3 to 6 months of the dispensing record gives a more accurate picture of the patient’s compliance and persistence in taking their medication.

One of the tools we use daily in our pharmacy is Continuous Medication Monitoring (CMM). Each time we refill any medication for a patient, we carefully look at the entire patient profile. For each prescription in the patient’s profile, a persistence score is calculated over time using the total number of days dispensed (corrected for future days) versus the actual days passed. While this can be done manually, our software automatically flags any prescriptions showing any drop.

When we notice an unexplained drop in persistence for any medication, we can approach the patient to inquire if anything has changed. Quite often, any changes in persistence are explained not by the patient’s inability to follow the regimen prescribed, but by new instructions given to them by the prescriber that have not been communicated to the pharmacy.

Thru the use of CMM, these types of issues can be addressed with the patient at the counter. From there, the prescriber can be approached to provide a new prescription with updated instructions. In the end, compliance was not the problem, but communication between practitioners.

As you consider implementation of a Med Sync program, be sure to keep in mind that compliance and persistence are more than just claims data. Be alert for evidence of changes, and “Make Every Encounter Count” when you have the patient in front of you.

The Stripped Down Model of Pharmacy Practice

What does a pharmacist do? The answer to this question depends on who you ask, with patients, health care providers other pharmacists, PBMs and insurance companies offering a wide array of responses.

Maybe a better question to ask is this: “What is a pharmacist paid to do?” Based on reimbursement from Pharmacy Benefit Managers (PBMs), pharmacists are only paid for the product they dispense, and then, only the most inexpensive generic medications. Many times, pharmacies are not even receiving a dispensing fee for their work, let alone a professional fee for services rendered.

In other words, over the past 20 years, pharmacy has evolved into what we call the “Stripped Down Model” of pharmacy practice. This model has become the de facto prototype for pharmacies in the United States. Unfortunately, a low-cost model is not synonymous with patient care and lower overall healthcare costs.  Pharmacists concentrating only on dispensing the correct medication to the patient are doing little to improve patient outcomes and healthcare quality and, in fact, may easily be replaced by automation or less expensive providers.

This shift to a volume driven profession is not optimal  for patients or the health care system, and all of us are all to blame for this. Pharmacists have precious extra time to perform patient care services in many practices for a variety of circumstances including  pharmacy management emphasizing metrics of wait time and volume to their staff, patients wanting their medications to be cheap and fast, and PBMs and Insurance companies wanting to maximize profits and their bottom lines.

The Stripped Down Model doesn’t really use a pharmacist, and in truth as mentioned previously,  pharmacists can potentially be replaced by robotics or technician based dispensing models, creating additional savings for the “system” thru mitigation of expensive pharmacist salaries.

…the profession of pharmacy needs to work to create a network of truly high performing pharmacies and pharmacists.

While I believe that the above scenario is possible, I see another direction for pharmacy. Despite the oppression of this stripped down model, pharmacists across the country still work to apply their clinical skills and make interventions on behalf of the patient. Pharmacists can and are impacting healthcare by decreasing costs and more importantly improving patient outcomes.

Even Medicare is starting to understand, with the new emphasis on quality indicators. Pharmacists and pharmacy performance are about much more than prescription volume. It is the patient outcomes that matter.

As the paradigm of pharmacy changes, the emerging model should leverage the pharmacist for what they can do. In other words, a model that pays pharmacists to care for patients through appropriate mediation management. Pharmacists should be financially recognized for ensuring that patients are using safe and effective medications in the most cost-effective way so that they achieve optimal therapeutic outcomes.  In the coming days, weeks, months and years, the profession of pharmacy needs to work to create a network of truly high performing pharmacies and pharmacists. Pharmacists will need to work to become recognized for what they do and they will need to be paid to do it.

Pharmacists will need to “make every encounter count” with their patients!

A Two Edged Sword

An  recent informal poll asked pharmacy owners to decide between two choices for their pharmacy practices:

  • Being in as many preferred networks as possible, regardless of the financial reimbursement, OR
  • Not participating in preferred networks that charge Direct / Indirect Renumeration (DIR) fees, regardless of the volume decrease my business will see. 

Ignoring any middle ground for a moment, neither of these options are particularly appealing. I would venture that most independent pharmacy owners would have a difficult time answering the question. Both options are difficult roads that have the potential to bankrupt a pharmacy in the long-term. I do not see preferred networks becoming less popular, and expect that they will become even more prevalent in years to come.

If I have to choose, I will always choose access. I feel that access will offer the most likely path to the long-term survival of the profession of pharmacy. I am not alone in my thoughts on this, either. This question is essentially the one that Pharmacy Services Administrative Organizations (PSAO) have to make on behalf of their constituents. And looking at the current landscape of preferred networks and independent pharmacies in the United States, PSAOs have, more often than not, chosen access to lives.

If I have to choose, I will always choose access.

Yet I hear pharmacy owners wanting to opt out of preferred networks giving them access. I have heard some owners argue that their patients are so loyal to them that they would not lose their customers if they were not in the preferred networks: their patients will pay more to continue to support “their” pharmacy and pharmacist. I am certain that I have a large contingent of very loyal patients, but I am unwilling risk my business on this type of experiment. Even if all of my current customers were completely committed to my stores without respect to price, I would gradually lose business thru natural attrition. Attracting new customers would be a significant challenge as a provider outside the preferred network. Potential patients without previous experience with my practice would need to be willing to pay more for what they may otherwise perceive as the same product. Without ready access to new customers, there is virtually no hope for growth and sustainability.

The way I see it, the Pharmacy Benefit Managers (PBMs) are driving pharmacy to a stripped down model. As pharmacists and pharmacy owners, we can either we can accept this model, or fight back to change the future of pharmacy. At least if I have access, I can work with my current and new patients to generate other streams of revenue,  to grow the practice, and to define what pharmacy is and why it is important to patients and the health care system. This fight will be difficult given the anemic reimbursement and DIR fees offered by preferred networks. In my opinion, though, being in the game and working to change the profession of pharmacy is a lot more likely to be successful in the long run. The alternative is downright frightening.

 

I don’t like the current landscape of pharmacy and healthcare,  and it is going to take hard work to change it. Giving up access, to me, is simply wrong.   Micheal Lefoeuf once said “Every company’s greatest assets are its customers, because without customers there is no company.”  Access to our patients is our lifeline!

All Aboard!

Awhile back, I was involved in a discussion with some colleagues and the topic of pharmacist centric blogs was broached. A quick search on Google showed a variety of blogs. After exploring some of these, it became obvious to me that few, if any, of these blogs were dedicated to growing and nurturing the profession.

Pharmacy practice is changing, and not always for the better. We want to use this blog to share our experience, our successes, and our failures. We want to create an ongoing discussion of what needs to be done improve the pharmacy, the pharmacist, and the profession.

Over the past decade, we have spent many thousands of dollars and thousands of hours improving and defining our practice. During that time, hundreds of visitors, from all over the country, have come to see what we have done. One of the most intriguing comments a visitor has made sums up the theme of this blog.

A few years back, we had an executive from an insurance company visit our pharmacy. This executive started out our meeting by telling us…

When we pulled into your parking lot, we were concerned that you would be struggling to survive…

You see, our independent pharmacy is immediately surrounded by three large chain pharmacies. I often remark that “I could hit all three with a golf ball and a 9-Iron from our parking lot.” After stepping inside our practice, however, this same executive proclaimed…

Not only are you surviving, you are thriving!

Over the years, we have been asked for input by pharmacies across the country on how they might improve their practices. This blog will try to highlight the changes we see coming, how we are addressing the challenges and what you can do to become a thriving pharmacist.

Stay tuned, the train will soon be leaving the station.