It is becoming increasingly evident that the current Medicare pharmacy benefit (Medicare Part D) is broken. Recently, several Medicare Prescription Drug Plans (PDPs) were given the opportunity to hear about pharmacists’ activities to support clinical outcomes and patient care. The information presented included a description of significant savings a commercial plan realized due to the positive effects of pharmacists’ interventions. At the end of the presentation, the representatives from the PDPs remained silent. There was no outward enthusiasm for the patient care described and the results achieved from that care. In sort, the PDP representatives did not appear to understand how care fits into their cost-centric model.
The Focus on Drug Cost
The laser-like focus the PDPs have for trimming cost is nothing short of amazing. Examples of downward pressure on costs include extensive use of Maximum Allowable Cost (MAC) pricing and, more recently, Direct and Indirect Renumeration (DIR) fees. The dispensing fee paid by the PDP to the pharmacy has also been mostly eliminated. Once, dispensing fees (the fee paid to the pharmacy for the service of filling the prescription) measured in dollars. Today they are measured in cents, and it is not uncommon for a PDP to pay a $0 dispensing fee to the pharmacy for dispensing a 90 day supply of a medication. The end result is no appreciable profit for pharmacy for the drug product.
Consequences
When a company sees lower profits, it has to react in order to stay profitable. Pharmacy is no different. Over the last several years, pharmacies have been trimming their expenses and working on efficiencies to counter the constant downward pressure on drug product reimbursement. Eventually, each pharmacy comes to a point where further cuts to remain profitable are more onerous than closing their doors. The equation for profitability is especially vulnerable in regions with limited populations to service. Rural pharmacies are very susceptible to the PDPs cost-centric model. The rash of closings of rural pharmacies in states like Iowa has created areas without access to a pharmacy. Rural patients requiring pharmacy services are then relegated to either mail order, or a long drive to a neighboring community.
Technology has a solution creating pharmacy access in remote areas: Tele-Pharmacy. Tele-pharmacy leverages a technician driven pharmacy and a remote pharmacist capable of performing final verification. The remote pharmacist is able to communicate “face-to-face” with the patient in a live video conference to complete counseling and answer patient questions. A single pharmacist might be able to staff multiple remote pharmacy sites, reducing the overhead of each pharmacy by a portion of the pharmacst’s salary. This resulting economy might be enough to make a rural pharmacy business plan feasible.
History Repeats
Tele-pharmacy is yet another way pharmacy has tried to adapt to the model set by the cost-cutting PDPs. In the case of tele-pharmacy, however, the cost being cut is the person actually providing the care. This should be a concern to all pharmacists. Given past developments, consider a likely progression of events for tele-pharmacy:
- The number of remote pharmacies a pharmacist “manages” will undoubtedly climb with time, resulting in less and less time for the pharmacist to focus on patient care.
- Tele-pharmacy concept will be brought from rural areas into more populated centers in an attempt to further save money on pharmacist salaries.
- Seeing the costs of filling a prescription further fall, the PDPs will again reduce reimbursement, erasing any positive gains on pharmacy profit gained by the use of tele-pharmacy.
Drug Cost and Paying for Care
I understand the fixation the PDPs have on drug cost, but drug product is only a part of the pharmacy equation. Pharmacists provide much more than drug product to their patients. Pharmacists all over the country work closely with their patients. They listen to their drug and disease issue. They decipher verbal and non-verbal clues to discover drug therapy problems. These face-to-face encounter are a large part of what pharmacists do every day. While the teleconference type interaction used in tele-pharmacvyc is not ideal for patient care, it is a suitable substitute in cases where an onsite pharmacist is not feasible. But pharmacy has reached a tipping point: the current emphasis on drug cost is now significantly impacting the ability of pharmacists to care for their patients.
A New Model
This brings us full circle to the current, broken model. A new model is needed for pharmacy. A model that pays pharmacists for their positive impacts on patient care and the savings they provide in the total health spend. We are slowly moving in this direction, as Congress works to make pharmacists providers under Medicare. But even this is not enough. Congress needs to overhaul the current PDP system. Make the PDPs accountable morbidity and mortality of the covered beneficiaries. The PDPs should be see incentives for reducing hospitalizations and ER visits that decrease expenses to Medicare. Congress needs mandate the PDPs to compensate the providers for their care and contributions in helping them achieve these goals.
This new model should pay pharmacists to perform CMM (Continuing Medication Management). Pharmacists and pharmacies should also have a shared risk in these endeavors, with rewards reaped for reducing health care costs. This may sound like science fiction to some, but commercial plans and managed care organizations are already moving this way. Starting in 2016, there will be a network of high performing pharmacies in place in my state. These pharmacies will work with a payor to reduce total health spend. This network boasts a new model for pharmacy reimbursement, with shared risk and reward.
It is time for Congress and Medicare to recognize not only pharmacists as providers, but also as an important and untapped potential to improve the system. It is time to for pharmacists across the country to stand up and be heard by their representatives. Recently, the senate held hearings on the PBM industry. This means that there is no better time than now to contact your representatives. Let them know what you do every day as a pharmacist. Be sure they understand that the current model is broken and needs to be fixed. It needs attention now, now later. Make your voice heard. Make this encounter count!
