Pharmacy Reimbursement Surviving and Thriving in the World of Prescription Benefit Managers Cindy...
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![Page 1: Pharmacy Reimbursement Surviving and Thriving in the World of Prescription Benefit Managers Cindy Puffer RPh Managed Care Pharmacy Operations Manager Pharmacy.](https://reader030.fdocuments.us/reader030/viewer/2022032707/56649e0c5503460f94af522c/html5/thumbnails/1.jpg)
Pharmacy Reimbursement Surviving and Thriving in the World of
Prescription Benefit Managers
Cindy Puffer RPh Managed Care Pharmacy Operations Manager
Pharmacy Services May 29, 2014
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Outline the Evolution of Drug Benefit Management
Understanding Pharmacy Benefit Management (PBM) pricing
Understanding PBM Relationships
Opportunities to Improve Outcomes and Control Costs
Learning Objectives
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Institution Overview
Engagement
July 1, 2006 merger createdThird largest higher education,
public institution in Ohio
Discovery
Excellence in learning
UT Mission: To Improve theHuman Condition through:
University of Toledo Medical Center
University of Toledo
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Unique Model Sitting on Both Sides of the House
Copay incentivesin placeGPO pricing 90 day supply
Main Campus Outpatient Pharmacy 2 unions, AAUP and CWA
81% employee prescriptions filled
HSC Outpatient Pharmacy 1 union AFSCME, 90.6% filled at UT
Two UT Outpatient Pharmacies
Fill 85% UT employee
prescriptions
![Page 5: Pharmacy Reimbursement Surviving and Thriving in the World of Prescription Benefit Managers Cindy Puffer RPh Managed Care Pharmacy Operations Manager Pharmacy.](https://reader030.fdocuments.us/reader030/viewer/2022032707/56649e0c5503460f94af522c/html5/thumbnails/5.jpg)
1980’s PBM’s emerged as an industry • Goal to administer prescription drug insurance benefits
• Interventions • Drug interactions • Limited DUR
• Transmitted claims electronically• Managed a network of pharmacies • Negotiated rebates for the first time • Administered prescription drug cards • Offered limited mail service fulfillment
Evolution of PBMs
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Evolution of PBMs
1990’s PBM industry experienced significant growth • Plan administration expansion
• HMO/Managed Care/Self-funded• Expansion of rebates • Aggressive mail order growth • More clinical services
• DUR/Retrospective DUR/Interventions/Disease Management/ Drug interactions
• More competitive rebates • Expansion of data offerings
Mid 1990’s Pharmaceutical manufacturer involvement • Eli Lilly and Bristol Myer Squibb purchased PBMs
• Goal of establishing greater presence in managed care arena
• Secure formulary status for their products
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Early 2000 led to increased PBM competition • PBMs began to offer enhanced clinical services
• Enhanced DUR review• Enhanced prior authorization • Clinical account management • Increasingly sophisticated data driven strategies
• Consumer behavior modifications • Provider data • Enhanced member level data
• PBM mergers and acquisitions and consolidations • Negotiate better discounts and rebates • Lowered reimbursement for network pharmacies• Lowered Rx benefit costs for clients
Evolution of PBMs
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Manages the reimbursement for prescription drugs for plan sponsors/adjudicates drug claims
Consultation for benefit design
Creates and maintains pharmacy retail networks
Ongoing pharmaceutical manufacturers rebate programs
Growth in specialty mail service
Relational partnerships
Evolution of PBMs - Today
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Maintains a P&T committee and develops a national formulary• Customized for individual plan • Mailings to members when formulary changes
Enhanced clinical programs • Drug utilization review• Disease management• Prior authorizations• Clinical programs • Specialty pharmacy management • Compliance and persistency programs• Provider education• Specialty clinical programs • MTM program administration
Evolution of PBMs Today
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Reporting Capabilities • Plan performance review• Review and analyze of historical data • Strategic planning • Utilization trends• Suggestions for plan optimization • Suggestions for copay reengineering • Adherence reporting MPR/PDC• Synchronization programs
Plan Administration • Marketing • ID cards • Coordination of benefits • Audits
Evolution of PBMs – Today
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PBM Terminology
Plan Sponsor - sets the benefit design • Employer • Health plan• Government plan
Copayment• Portion paid up by the member • Can be set up to incentivize pharmacies • Can lead to responsible behavior
Dispensing Fee • Payment made to the pharmacy in addition to ingredient cost • Fee for services provided • Pharmacist labor, cost of bottles, labels, etc.
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PBM Terminology
Administrative Fee • Plan sponsor fees • Per claim fee to cover cost of processing the claim and
account management • Typically 0.35 per claim
Class of Trade • Retail • Group purchasing organization • 340B
Benefit Design • Parameters by which the plan is set up • Plan sponsor vs. Patient cost share • Copayment vs. Coinsurance
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Rebates • Discounts negotiated from manufacturers • Purported to be a benefit to the prospective plan sponsor• Plan sponsor receives % of rebate or flat guaranteed amount
per claim • Payable to the plan sponsor • PBM tricks to capture “lions share” of the rebate
• Rebate broken down into several categories• Access to formulary– do not share • Fees for marketing or other activates
• Not characterized as rebates• Not shared with plan sponsor
• Performance – market share driven l
PBM Terminology
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Understanding PBM Pricing Three PBM Pricing Models
Traditional Model • No disclosure of fees • Difficult to follow the funding sources • Spread pricing in place • Rebates are an important source of revenue
Transparent Model • PBM reveals information regarding revenue streams
Transparent/Pass-thru model • Administrative fee only revenue source for the PBM• Revenue stream revealed
• Per claim or per member charge • 100% rebates to the plan sponsor or no rebates • No incentive to promote certain drugs for rebates• Model used by University of Toledo
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Understanding PBM Pricing
Average Wholesale price/AWP• Subject of lawsuits in 2007 with FDB and McKesson • Gross inflation of AWP 2-4% • Unreliable benchmark
Actual Acquisition Cost / AAC • Pharmacy actual cost of the drug
Average Manufacturer Price/AMP • Average Price paid to the manufacturer by wholesaler• Price available to retail class of trade • Reflective of discounts and price concession • 79% AWP ( AWP-21%)
Average Sales Price / ASP • Estimated average acquisition cost • Basis for payment from Medicare Part B transplant only • 106% AWP
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Understanding PBM Pricing
Wholesale Acquisition Cost / WAC • Not reflective of actual acquisition cost • Not inclusive of discount or rebates
MAC or maximum allowable cost • Unit price established by the PBM for a multi source drug • Developed for PBM clients • May be amended from time to time PBMs sole discretion • PBM can change the drugs it includes or excludes into
MAC whenever it desires • Specify maximum unit ingredient cost payable• Create different MAC lists for different clients
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Understanding PBM Pricing Contract Language
Common contract formulas determining how plan sponsor is invoiced :
Retail generic drugs invoiced at the lowest of: 1) PBM's MAC OR 2) The retail pharmacy usual and customary OR 3) AWP-18% = 82% of AWP
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Understanding PBM Pricing Strategies Used by PBMs To Increase Profits
PBMs insert MAC into contract language • Allowing PBM to define MAC • Allowing PBM to manipulate MAC
• Include or exclude MAC when advantageous to PBM • Change the drugs that are included or excluded • Select price determined by the PBM • Change the MAC list at any time
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Exclude generics from MAC list• Option one drops off • U&C typically above AWP• Plan sponsor is invoiced the generic drug at AWP-18% • Pharmacy reimbursed at generic rate of AWP -70%
• Equivalent to a brand discount • Robs client of generic savings • Resulting in enormous profits for the PBM
Retail generic drugs invoiced to the client at the lowest of: 1) PBM's MAC OR 2) The retail pharmacy usual and customary OR 3) AWP-18% = 82% of AWP
Understanding PBM Pricing Strategies Used by PBMs To Increase Profits
![Page 20: Pharmacy Reimbursement Surviving and Thriving in the World of Prescription Benefit Managers Cindy Puffer RPh Managed Care Pharmacy Operations Manager Pharmacy.](https://reader030.fdocuments.us/reader030/viewer/2022032707/56649e0c5503460f94af522c/html5/thumbnails/20.jpg)
Includes a generic on MAC but• PBM sets a MAC price that is weaker than AWP -18%
• MAC price now the lowest of the three alternatives • PBM will invoice client at AWP-18% which is lower than
AWP – 70% that they reimburse the pharmacy
Retail generic drugs invoiced at the lowest of: 1) PBM's MAC OR 2) The retail pharmacy usual and customary OR 3) AWP-18% = 82% of AWP
Understanding PBM Pricing Strategies Used by PBMs To Increase Profits
![Page 21: Pharmacy Reimbursement Surviving and Thriving in the World of Prescription Benefit Managers Cindy Puffer RPh Managed Care Pharmacy Operations Manager Pharmacy.](https://reader030.fdocuments.us/reader030/viewer/2022032707/56649e0c5503460f94af522c/html5/thumbnails/21.jpg)
The PBM can also select any MAC price it wants• Includes the generic drug on the MAC list • Selects MAC for which the product is not available to the
pharmacy • Can pick and choose a subset of generics to provide
guaranteed reimbursement
lRetail generic drugs invoiced at the lowest of:
1) PBM's MAC OR 2) The retail pharmacy usual and customary OR 3) AWP-18% = 82% of AWP
Understanding PBM Pricing Strategies Used by PBMs To Increase Profits
![Page 22: Pharmacy Reimbursement Surviving and Thriving in the World of Prescription Benefit Managers Cindy Puffer RPh Managed Care Pharmacy Operations Manager Pharmacy.](https://reader030.fdocuments.us/reader030/viewer/2022032707/56649e0c5503460f94af522c/html5/thumbnails/22.jpg)
Balloon Strategies
• Squeeze one element of pricing matrix • Another element “pops” out somewhere else • Example lower admin fee = nonnegotiable dispensing fee
Clinical Service Fees • Prior Authorizations become higher
Administrative fees for the • Electronic transmission fees 0.35 • Cost PBM 0.13 • No fee for mail order
Understanding PBM Pricing Strategies Used by PBMs To Increase Profits
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PMB Relationships The Role of the PBM in the Flow of Money
Consumer
Drugs dispensed $ Cost-sharing amount
$ reimbursement for plan share
$ Payment for drug and admin % of manufacturer rebates $
Real time billing for Rx
Prescription drugs Negotiate Rebate $
Pharmacy
Wholesaler
Plan Sponsor Benefit design
PBM
Manufacturer
Inventory transfer
Contracting
for rebates
$
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Plan Sponsor Perspective
• Demand full pricing disclosure • Know the spread between plan pays and PBM
reimbursement to the pharmacy• Know the pricing model being utilized
• Transparency vs. Pass-thru • Know your definitions • Know charges for clinical services • Indicate an “out clause” in contracts in case of any issues
arise
Opportunities to Improve Outcomes and Control Costs
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Pharmacy Perspective – Student Health Insurance
• Get involved in the Student Health Insurance RFP committee • Negotiate reimbursement rates for the pharmacy if this
does not impact the premium• AWP – 10% + $2.50
• Negotiate reimbursement for pharmacist MTM • Become MTM certified and utilize APPE students • Pharmacist CPT codes
• 99605: Medication therapy management service(s) provided by a pharmacist, individual, new patient face-to-face
• 99606: 15 minutes, established patient• 99607: Each additional 15 minutes
• $45.00 per 15 minute increment
Opportunities to Improve Outcomes and Control Costs
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Pharmacy Perspective – Student Health Insurance • Know definitions • Control MAC• Set copays to incentivize students to your pharmacy • Advocate for OC’s, acne, smoking cessation to be included in
the plan • Partner with PBM to offer specialized opportunities for
students • Sponsoring health fair, career day events etc
• Partner with a College of Pharmacy to be a part of a pharmacy residency program
• Continue outreach programs for students • Continue to hire students when possible • Engage on University committees • Partner with affiliate to obtain GPO pricing
Opportunities to Improve Outcomes and Control Costs
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Opportunities to Improve Outcomes and Control Costs
Pharmacy Perspective - Employee Benefit • Partner with HR to offer a cost saving model for employee
prescription benefits • Educate HR on the plan design and rebates
• Prepare a business plan demonstrating cost saving• Partner with academic medical center to engage in affiliate
agreement for discounted pricing • Engage in copay re-engineering project to demonstrate cost
savings • Use a portion of the savings for staffing
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Incentivize employees to utilize in-house pharmacy • UT 1.5 million in savings 2013• Push envelope on clinical programs and IT capabilities
• Gaps in Care • Synchronization Programs • Adherence program • Specialty medication pharmacy
Negotiate better reimbursement rates for your pharmacy • Pass-thru transparent model – no rebates
Opportunities to Improve Outcomes and Control Costs
![Page 29: Pharmacy Reimbursement Surviving and Thriving in the World of Prescription Benefit Managers Cindy Puffer RPh Managed Care Pharmacy Operations Manager Pharmacy.](https://reader030.fdocuments.us/reader030/viewer/2022032707/56649e0c5503460f94af522c/html5/thumbnails/29.jpg)
Medicaid
Union
Health Plans
Employer
DrugManufacturer
Rebates
Clin
ical
Tool
s
Dru
g U
tiliz
atio
n Re
view
Member
Web PortalPriorAuthorization
Mem
ber
Help
Desk
Form
ula
ry
Service
s
Pharmacy
Network
Long-Term Care
Medicare
Knowledgeable Pharmacy and Plan Sponsor
Teams
Opportunities to Improve Outcomes And Control Costs
PBM Partnerships
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Questions
Cindy Puffer RPh Managed Care Pharmacy OperationsUniversity of Toledo Medical Center 3000 Arlington Avenue Toledo Ohio 43614 419-383-6668