Learning Objectives At the end of this discussion attendees should - - PDF document

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Innovations in Pharmacy Benefits Management

Michael Azzolin, PharmD | MBA | COO PharmD on Demand

Learning Objectives

• At the end of this discussion attendees should

be able to:

– Be able to describe the potential opportunities and threats to rural hospitals relative to PBM transformation – Understand how PBMs use prescriptions to manipulate profits – Understand the importance of retaining local health system involvement in the medication related care of patients in the community – Describe the role rural hospitals can have in clinically and financially supporting patients and their communities from a pharmacy perspective

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https://ny.curbed.com/2018/6/11/17450366/nyc-taxi-medallions-bankruptcy-auction

How PBMs Work

RX Drop off

• Prescription

presented

• Next

Adjudication

• PBM Engaged
• Claim processed in

real time

• Insurance charged

Dispensing

• Claim paid /

rejected

• Meds provided
• Copayment made

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• Clawbacks
• DIR Fees
• Spread Pricing
• Gag Clauses
• Steering

Clawbacks

Your Plan Plan Name Insurance Card ID #: 123456789 Name: Jane Q Sample Copay: OV: $15 ER: $100 RX: VALUE $5/15/30/50/20% Deductible may apply Visit: www.yourinsplan.com/clawbacks

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Clawbacks

• Mr. Smith’s Rx HTN Med

– $50 Copay

• Cost to Pharmacy

– $8.50

• Full Negotiated Retail Price

– $12.00

• Difference between pharmacy’s reimbursement and Copay

– $38

• Amount ”Clawed Back”

– $38

Gag Clauses

• A Contractual restriction between a PBM and a pharmacy

which prevents a pharmacist from telling a patient when the same medication can be purchased for less money if paid for with cash instead of through insurance with a copay

• Gag Clauses are no longer allowed in PBM contracts in
• Georgia. However, in order for the patient to realize the

savings each prescription has to be evaluated and disclosed by the pharmacist in order to capitalize on savings

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Spread Pricing

Comparable drugs for the treatment of a chronic illness

• Drug 1 and Drug 2 work equally as well
• The patient has less side effects from Drug 1

– Drug 1 is on the higher priced tier ($50 Copay) – Drug 2 is on the lower priced tier ($30 Copay)

• The PBM bills the insurance $100 for either drug
• The PBM has negotiated a lower price for Drug 2
• The patient is incentivized to use the lower copay drug
• The PBM keeps the “Spread” between the 2 either way

https://www.bloomberg.com/graphics/2018-drug-spread-pricing/

Not everybody reads the legal notices inside the Ottumwa Courier. But in January, Iowa pharmacist Mark Frahm noticed something unusual in the paper. For years, Frahm’s South Side Drug bought pills from distributors, and dispensed prescriptions to the Wapello County jail. In turn, the pharmacy got reimbursed for the drugs by CVS Health Corp., which managed the county’s drug benefits plan. As he compared the newspaper notice with his own records, and then with the county’s, Frahm saw that for a bottle of generic antipsychotic pills, CVS had billed Wapello County $198.22. But South Side Drug was reimbursed just $5.73. So why was CVS charging almost $200 for a bottle of pills that it told the pharmacy was worth less than $6? And what was the company doing with the other $192.49?

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https://www.bloomberg.com/graphics/2018-drug-spread-pricing/

Frahm had stumbled across what’s known as spread pricing, where companies like CVS mark up—sometimes dramatically—the difference between the amount they reimburse pharmacies for a drug and the amount they charge their clients. It’s where pharmacy benefit managers (PBMs) like CVS make a part of their profit. But Frahm says he didn’t think the spread could be thousands of percent. “Middlemen have to make some money, but we didn’t expect it to be this extreme,” said Frahm, who said his pharmacy lost money in the jail account last year because CVS paid so little. “We figured everyone was playing fair.”

Patient Steering

• Associated with PBM owned pharmacies and

insurances

• Process of dictating that a patient must use

mail order or a specific pharmacy by rejecting claims at the point of adjudication

• May also be associated with higher copays if

the patient chooses to use a non-affiliated pharmacy

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• State
• Pharmacy Patient Fair Practices Act (2017)
• HB 276 / SB 103 (2017)
• PBM Anti-Steering Bill (2019)
• HB 233 and HB 323
• Federal
• Pharmacy and Medically Underserved Areas

Enhancement Act (2017-2018)

• HB 592 / S. 109
• Employee Rx
• Discharge Dispensing
• Contract Pharmacy1
• Corporate Pharmacy
• Nursing Home Rx1

1 If applicable

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Reasons to Consider

• Revenue Generation
• Own use and decreased insurance costs1
• Assurance of Adherence
• Through ACA, hospitals have been asked to ensure

patients stay better for 30 + days post admission

• Prescription drug Programs give hospitals’ the

control needed to manage that compliance

• Transitions of Care improvements
• Clinical Pharmacy Management
• Labs
• Past Medical History considerations
• 1. For Employee Prescriptions and fully self insured hospitals

Employee Prescriptions

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Discharge Dispensing

INSURANCE PAYMENT GPO cost GPO Savings 340B cost 340B Savings (Hospital Revenue) ICS/LABA INHALER (COPD) 400.55 $ 373.80 $ 26.75 $ 0.65 $ 399.95 $ ICS/LABA INHALER (COPD) 526.45 $ 491.28 $ 35.17 $ 0.11 $ 526.33 $ β-BLOCKER WITH N.O. ACTIVITY 266.38 $ 250.80 $ 15.58 $ 0.55 $ 265.78 $ SMOKING CESSATION PACKS 436.45 $ 384.25 $ 52.20 $ 16.40 $ 420.02 $ MODIFIED RELEASE PPI 279.18 $ 260.10 $ 19.08 $ 0.33 $ 278.88 $ FACTOR Xa INHIBITOR 426.00 $ 301.20 $ 124.80 $ 88.50 $ 337.20 $ BIGUANIDE / PPP-4 INHIBITOR 436.71 $ 370.20 $ 66.51 $ 0.70 $ 436.11 $ LONG ACTING INSULIN 274.42 $ 242.70 $ 31.72 $ 85.25 $ 189.22 $ ICS/LABA INHALER (COPD) 332.88 $ 298.00 $ 34.88 $ 48.60 $ 284.38 $ CNS STIMULANT (ADHD) 300.22 $ 282.60 $ 17.62 $ 42.10 $ 260.02 $ TOTALS 3,679.24 $ 3,254.93 $ 283.19 $ 424.31 $ 3,396.05 $ GROSS PROFIT (TRADITIONAL FILL) GROSS PROFIT (PATIENT DISCHARGE DISPENSING PROGRAM)

Discharge Dispensing

• JO presented to the ED with DKA. He had been using the insulin pod

(Omnipod), which he could no longer afford due to a lack of insurance

• coverage. Subsequently, he stopped taking it. He was in the hospital for 7

days due to related complicating factors.

• Upon discharge, we were able to use 340B drugs to dispense all 7 of his

discharge prescriptions for a total of $70.40. Two of these prescriptions were for Lantus and Humalog which retail for more than $250 and $300

• respectively. We were able to dispense them to him for $10.20 each. The

insulin supply given at discharge should last about 70 days, at which point he will need to follow up with his doctor.

• He was discharged today and his total charges to this point are $8,609
• dollars. Hopefully these discounted prescriptions will prevent another

hospitalization for this gentleman.

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Discharge Dispensing

• SA presented to the hospital with acute exacerbations of complications

associated with liver cancer. Upon admission the patient was found to be

• n multiple medications including Lexapro 10 mg daily for depression and

anxiety associated with the psychological affects of his cancer.

• The hospital pharmacist noted the dose of Lexapro was contraindicated in

liver cancer due to the buildup of toxic metabolites associated with the elimination of the drug in this condition and recommended a reduction in dose to 5 mg.

• Upon discharge, the patient was ordered to resume home medications

and the initial discharge prescriptions included one for Lexapro 10 mg as well as a prescription for Norco 10/325mg for pain (hydrocodone with acetaminophen).

• Since the prescriptions were being filled at discharge by the hospital

pharmacy the medications were intervened on and changed through collaboration between the attending MD and pharmacist.

Nursing Home Rx

• Traditionally Outsourced
• Pharmacy provided med carts, prescriptions and

pharmacy services

• Revenue from Part D and third party plans

realized by the pharmacy

• Hospital is billed for Part A medications
• Limited formulary adherence and transitions of

care support

• Limited (if any) 340b utilization, even if

applicable

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Nursing Home Rx

• Opportunities in Hospital owned SNF
• Hospital pharmacy eligible to fill Rx’s for NH Patients:
• Rule 480-13-.01 Definitions
• The Board authorizes the holder of a hospital pharmacy license to

service patients of Nursing Homes, Long Term Care Facilities or Hospices as long as these entities are under the same ownership as the hospital pharmacy….

• Revenue from Part D and third party plans realized by the

HOSPITAL

• Part A medications not marked up
• Hospital pharmacy can work with medical staff to enhance

clinically and cost effective formulary management and improve transitions of care outcomes

• 340b Utilization
• Provider Based vs. Rural Health Clinic

Contract Pharmacy

• 340b Eligible hospitals only
• Method of extending 340b savings to prescriptions

filled in the community

• Hospital keeps difference between 340b cost of

drug sold and traditional retail price in the form of revenue

• Minus the cost of a processing fee and dispensing fee
• Based on eligible “child sites” of the hospital
• Net expenses and outpatient charges for eligible

services / clinics must meet cost report requirements

• Winner’s only model recommended; Records

should be easily self auditable

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Corporate Pharmacy

• For Fully Self Insured employers and insurance company’s providing

traditional insurance

• Provided through hospital
• Eligible to corporations and plan members who partner with the hospital
• Incentivizes employers and insurances to incentivize employees to use

the hospital’s outpatient clinics

• Pharmacy charges per patient clinical pharmacy management fee
• Drugs sold at acquisition cost
• Not adjudicated
• Completely circumvents PBMs
• Fully self insured employers and traditional plan providers are the

beneficiary’s of the drug cost savings (promotes incentivization to use hospital services)

• Hospital is beneficiary of increased business from employees of

participating employers and plan providers

Traditional Pharmacy

Hospital Visit Traditional Pharmacy Primary Care Traditional Pharmacy Readmission

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Corporate Pharmacy

Hospital

Employer / Insurance (Beneficiary

• f Savings)

Clinical Pharmacy (Quality and savings based fee) Outpatient Clinic (PPC / RHC) (Increased Visits)

Dispensary

Learning Objectives

• Be able to describe the potential opportunities and threats

to rural hospitals relative to PBM transformation

• Understand how PBMs use prescriptions to manipulate

profits

• Understand the importance of retaining local health system

involvement in the medication related care of patients in the community

• Describe the role rural hospitals can have in clinically and

financially supporting patients and their communities from a pharmacy perspective

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706-389-9500

www.pharmdondemand.com