Lonny-NW Pharmacy Convention - c.ymcdn.comc.ymcdn.com/sites/ · PDF fileOutlook on the Business Horizon for Community Retail Pharmacy Presented by Lonny D. Wilson, D.Ph. CEO, PPOk

Outlook on the Business Horizon for Community Retail Pharmacy

Presented byLonny D. Wilson, D.Ph.

CEO, PPOkl il @ [email protected]

Disclosures

Lonny Wilson is CEO of PPOk which provides various products and services related to MAC pricing analysis and audit services.

Learning Objectives

1. Identify trends in MAC price erosion

2. Identify methods to maximize reimbursement for generic drugs

3. Identify audit triggers and ways to avoid becoming a target

Third Party Market

Continued Price Erosion

Brand Name

AWP-17% and greater

WAC plus % to WAC minus %p

Generic Drugs

MAC Effective Rates

AWP-66% to AWP-80%

Causes for Price Erosion

• PBM market saturation

• Win business by reducing reimbursements

• Brand name spread is basically gone

• Increased pressure on MAC spreadp p

• Payer RFP’s with Generic Effective Rate (GER) Requirements

Causes for Price Erosion

• Performance Based Guarantees with Bonus Incentives

• Consultant & Broker Involvement

• Generic Drug Net Cost Disparity Between Big• Generic Drug Net Cost Disparity Between Big Box Chains & Independents/Regional Chains

MAC Price Erosion 5 year History

Past Metrics

MAC: AWP-62%

AAC: AWP-80%

18% Margin Differentialg

New Metrics

MAC: AWP-78%

AAC: AWP-85%

7% Margin Differential

• Generic Dispensing– 2006 – 63%

– 2010 – 78%

– 2012 – 80%

– 2013 – 85%

MAC Price Erosion 5 year History

2013 85%

• Independent PharmacyPressure to purchase at lower prices

Development of alternate distribution models

• Chain PharmacyContinued pressure to purchase at lower prices

MAC

Generic Price Erosion

AAC

AWP –80%

TIME

Past Present Future

AWP –88%

• AWP = $100• AWP - 80% = $20• 40% less = $12 = AWP - 88%

Self Assessment 1

Continued price erosion is due to:

A)PBM market saturation, Elimination of Brand spread, and acquisition cost disparity chains vs. independentsp

B)Stronger emphasis on Payer’s requiring Generic Effective Rate (GER) guarantees and increased involvement with Consultants & Brokers

C)All of the above

D)None of the above

Self Assessment 1

Answer: C – All of the above.

Commercial PBM1Generic Effective History

Yr/Month GER Average Profit/Rx-Gen Average Profit/Rx-BrandDec '10 68.15% $10.05 $11.07Jan '11 66.27% $10.69 $10.93Feb '11 68.05% $9.98 $13.24Mar '11 68.87% $9.70 $13.34Apr '11 71.14% $9.38 $13.82May '11 70.87% $8.75 $13.49Jun '11 72.51% $9.65 $14.11Jul '11 73.08% $10.34 $14.37Aug '11 74.07% $9.05 $14.47Sep '11 74.14% $8.83 $14.13Oct '11 74.95% $8.83 $14.19Nov '11 75 70% $8 18 $14 33Nov 11 75.70% $8.18 $14.33Dec '11 75.13% $8.19 $14.20Jan '12 74.05% $9.07 $14.59Feb '12 74.61% $8.53 $14.44Mar '12 76.82% $8.41 $13.57Apr '12 76.91% $9.26 $14.26May '12 77.84% $9.26 $14.39Jun '12 77.70% $9.11 $14.89Jul '12 78.96% $9.24 $13.83Aug '12 77.18% $9.81 $14.02Sep '12 78.28% $9.56 $15.05Oct '12 77.64% $9.76 $14.97Nov '12 77.47% $9.48 $15.19Dec '12 77.10% $9.70 $15.22Jan '13 77.71% $9.76 $14.82Feb '13 77.44% $9.99 $15.43Mar '13 77.26% $10.40 $15.76Apr '13 77.29% $10.54 $15.99

Average Profit Brand vs. GenericCommercial PBM1

$15.00

$20.00

$25.00

$0.00

$5.00

$10.00

Dec

'10

Feb

'11

Ap

r '1

1Ju

n '1

1A

u g '1

1O

ct '1

1D

ec '1

1

Feb

'12

Apr

'12

Jun

'12

Aug

'12

Oct

'12

Dec

'12

Feb

'13

Apr

'13

Generic Avg Profit Per Rx

Brand Avg Profit Per Rx



$15.00

$20.00

$25.00


$0.00

$5.00

$10.00

Dec

'10

Feb

'11

Ap

r '1

1

Jun

'11

Aug

'11

Oct

'11

Dec

'11

Feb

'12

Apr

'12

Jun

'12

Aug

'12

Oct

'12

Dec

'12

Feb

'13

Apr

'13





$20 00

$25.00

$30.00

$35.00

$40.00


$0.00

$5.00

$10.00

$15.00

$20.00

Dec

'10

Feb

'11

Ap

r '1

1Ju

n '1

1

Au g

'11

Oct

'11

Dec

'11

Feb

'12

Apr

'12

Jun

'12

Au g

'12

Oct

'12

Dec

'12

Feb

'13

Apr

'13





$15.00

$20.00

$25.00


$0.00

$5.00

$10.00

Dec

'10

Feb

'11

Ap

r '1

1

Jun

'11

Aug

'11

Oct

'11

Dec

'11

Feb

'12

Apr

'12

Jun

'12

Aug

'12

Oct

'12

Dec

'12

Feb

'13

Apr

'13





$15.00

$20.00

$25.00


$0.00

$5.00

$10.00

Dec

'10

Feb

'11

Ap

r '1

1

Jun

'11

Aug

'11

Oct

'11

Dec

'11

Feb

'12

Apr

'12

Jun

'12

Au g

'12

Oct

'12

Dec

'12

Feb

'13

Apr

'13



Medicare PBM1Generic Effective History

Yr/Month GER Average Profit/Rx-Gen Average Profit/Rx-BrandJan '11 75.48% $11.51 $12.61Feb '11 74.03% $12.57 $13.53Mar '11 74.15% $12.71 $13.72Apr '11 74.12% $12.75 $11.84May '11 75.40% $12.11 $11.79Jun '11 76.51% $11.87 $11.50Jul '11 77.35% $11.45 $11.31Aug '11 77.77% $11.37 $12.36Sep '11 77.60% $11.05 $12.69Oct '11 76.85% $11.46 $15.70Nov '11 77.08% $11.32 $12.86Dec '11 75 60% $11 70 $12 79Dec 11 75.60% $11.70 $12.79Jan '12 77.07% $9.75 $13.40Feb '12 78.89% $8.41 $14.01Mar '12 78.00% $9.25 $13.94Apr '12 76.83% $10.97 $13.37May '12 78.07% $11.50 $14.42Jun '12 79.35% $11.67 $10.38Jul '12 80.56% $11.08 $10.09Aug '12 80.48% $11.26 $10.60Sep '12 80.79% $11.36 $13.16Oct '12 81.12% $10.99 $13.25Nov '12 81.46% $10.70 $13.07Dec '12 81.35% $10.76 $11.42Jan '13 80.13% $10.83 $10.21Feb '13 81.14% $10.67 $10.27Mar '13 81.11% $10.72 $10.10Apr '13 80.86% $10.81 $10.04

$15.00

$20.00

$25.00

Average Profit Brand vs. GenericMedicare PBM1

$0.00

$5.00

$10.00

Jan

'11

Mar

'11

May

'11

Jul '

11

Sep

'11

Nov

'11

Jan

'12

Mar

'12

May

'12

Jul '

12

Sep

'12

Nov

'12

Jan'

13

Mar

'13




Yr/Month GER Average Profit/Rx-Gen Average Profit/Rx-BrandNov '11 82.53% $8.27 $11.17Dec '11 86.92% $12.77 $15.76Jan '12 77.20% $10.40 $19.34Feb '12 79.10% $9.59 $19.46Mar '12 79.39% $9.91 $18.74Apr '12 79.89% $9.83 $15.39May '12 79.15% $11.38 $14.97Jun '12 81.82% $9.50 $15.84Jul '12 82.81% $9.86 $14.94Aug '12 81.15% $10.75 $15.98Sep '12 80.87% $11.27 $16.16Oct '12 81 03% $11 35 $16 70Oct 12 81.03% $11.35 $16.70Nov '12 81.46% $11.22 $16.79Dec '12 81.77% $11.13 $17.54Jan '13 81.22% $11.34 $16.81Feb '13 82.18% $10.79 $18.15Mar '13 81.86% $11.00 $18.19Apr '13 81.95% $11.02 $18.44

$15.00

$20.00

$25.00


$0.00

$5.00

$10.00

Nov

'11

Dec

'11

Jan

'12

Feb

'12

Mar

'12

Apr

'12

Ma y

'12

Jun

'12

Jul '

12A

u g '1

2S

ep '1

2O

ct '1

2N

ov '1

2D

ec '1

2Ja

n'13

Feb

'13

Mar

'13

Apr

'13




Yr/Month GER Average Profit/Rx-Gen Average Profit/Rx-BrandApr '11 75.33% $12.40 $12.11May '11 76.14% $11.91 $12.23Jun '11 78.82% $10.92 $12.44Jul '11 78.75% $11.26 $12.51Aug '11 78.90% $11.07 $13.14Sep '11 78.41% $11.16 $13.06Oct '11 78.01% $11.72 $13.21Nov '11 77.56% $11.69 $12.72Dec '11 75.90% $12.14 $12.11Jan '12 76.28% $12.59 $13.06Feb '12 76.43% $12.14 $13.92Mar '12 76 48% $12 25 $13 88Mar 12 76.48% $12.25 $13.88Apr '12 76.14% $12.41 $13.25May '12 77.57% $12.13 $13.06Jun '12 79.73% $11.43 $13.81Jul '12 79.85% $11.62 $13.67Aug '12 80.10% $11.47 $13.68Sep '12 80.09% $11.45 $13.75Oct '12 81.33% $10.81 $13.93Nov '12 81.82% $10.50 $13.89Dec '12 81.45% $10.64 $14.18Jan '13 82.02% $10.50 $13.70Feb '13 82.49% $10.50 $14.26Mar '13 82.23% $10.86 $14.17Apr '13 82.23% $10.66 $14.35

$15.00

$20.00

$25.00


$0.00

$5.00

$10.00 Generic Avg Profit Per Rx



Yr/Month GER Average Profit/Rx-Gen Average Profit/Rx-BrandDec ‘10 76.68% $13.44 $19.02Jan '11 74.71% $14.10 $18.87Feb '11 75.11% $14.05 $19.62Mar '11 74.97% $13.78 $19.71Apr '11 75.42% $14.00 $19.91May '11 75.37% $14.17 $20.12Jun '11 75.99% $14.64 $20.22Jul '11 76.85% $14.03 $20.35Aug '11 77.44% $13.73 $21.06Sep '11 77.25% $13.79 $20.98Oct '11 77.47% $13.84 $21.10Nov '11 77 73% $13 77 $21 09Nov 11 77.73% $13.77 $21.09Dec '11 77.85% $13.71 $21.22Jan '12 75.92% $13.99 $22.36Feb '12 76.85% $14.04 $22.58Mar '12 76.22% $14.74 $22.56Apr '12 75.53% $15.28 $22.08May '12 74.63% $16.71 $21.93Jun '12 72.89% $19.23 $21.90Jul '12 73.71% $18.99 $21.94Aug '12 74.61% $18.25 $22.74Sep '12 78.15% $15.17 $22.74Oct '12 78.14% $15.57 $22.93Nov '12 78.24% $15.59 $22.79Dec '12 77.75% $15.77 $23.23Jan '13 75.36% $15.94 $13.54Feb '13 75.58% $15.98 $13.83Mar '13 76.12% $15.56 $13.88Apr '13 76.63% $15.23 $14.07

$15.00

$20.00

$25.00


$0.00

$5.00

$10.00

Dec

'10

Feb

'11

Ap

r '1

1

Jun

'11

Aug

'11

Oct

'11

Dec

'11

Feb

'12

Apr

'12

Jun

'12

Au g

'12

Oct

'12

Dec

'12

Feb

'13

Apr

'13




Yr/Month GER Average Profit/Rx-Gen Average Profit/Rx-BrandJan '11 69.91% $15.15 $10.26Feb '11 58.03% $12.90 $10.94Mar '11 64.90% $16.73 $9.92Apr '11 75.56% $12.89 $18.56May '11 75.48% $13.00 $17.77Jun '11 76.14% $13.43 $17.86Jul '11 76.82% $12.93 $18.21Aug '11 77.43% $12.66 $19.44Sep '11 77.24% $12.64 $18.58Oct '11 77.45% $12.76 $18.98Nov '11 77.57% $12.71 $18.62Dec '11 77 65% $12 57 $18 33Dec 11 77.65% $12.57 $18.33Jan '12 77.17% $9.95 $11.34Feb '12 77.36% $10.10 $12.11Mar '12 76.24% $11.05 $11.82Apr '12 75.41% $12.29 $8.28May '12 75.09% $14.05 $9.58Jun '12 74.47% $14.96 $8.25Jul '12 76.36% $14.34 $9.55Aug '12 75.68% $14.96 $11.94Sep '12 75.29% $15.61 $11.99Oct '12 75.41% $15.76 $16.37Nov '12 75.37% $15.92 $16.66Dec '12 75.16% $15.99 $17.13Jan '13 75.18% $16.10 $14.45Feb '13 75.46% $16.07 $14.66Mar '13 75.87% $15.83 $14.81Apr '13 76.40% $15.51 $14.98

$15.00

$20.00

$25.00


$0.00

$5.00

$10.00

Jan

'11

Mar

'11

May

'11

Jul '

11

Sep

'11

Nov

'11

Jan

'12

Mar

'12

May

'12

Jul '

12

Sep

'12

Nov

'12

Jan'

13

Mar

'13



Monthly Dispense SummaryAll Rx's Cash Rx's Insurance Rx's

Retail Cost Fee Retail Cost Fee Retail Cost Fee

New 174,845.38 139,954.54 34,890.84 6,990.04 3,125.00 3,865.40 167,855.34 136,829.55 31,025.79

Refill 176,967.43 145,588.35 31,379.08 3,995.84 1,742.76 2,253.08 172,971.59 143,845.58 29,126.01

Total 351,812.81 285,542.89 66,269.92 10,985.88 4,867.76 6,118.48 340,826.93 280,675.13 60,151.80

Averages

Retail 65.26 33.19 67.36

Cost 52.97 14.71 55.47

Fee 12.29 18.84% 18.48 55.69% 11.89 17.65%

Rx's 5391 331 5060

Percent of Total Rx's 6 14% 93 86%Percent of Total Rx s 6.14% 93.86%

Brand

Retail 252,577.53 3,515.47 249,062.06

Cost 231,598.83 2,505.53 229,093.31

Fee 20,978.70 1,009.94 19,968.75

Ave. Fee 15.08 8.31% 20.20 28.73% 14.89 8.02%

Rx's 1391 25.80% 50 15.11% 1341 26.50%

Generic

Retail 99,235.28 7,470.41 91,764.87

Cost 53,944.06 2,362.23 51,581.82

Fee 45,291.22 5,108.18 40,183.05

Ave. Fee 11.32 45.64% 18.18 68.38% 10.80 43.79%

Rx's 4000 74.20% 281 84.89% 3719 73.50%

Self Assessment 2

At what generic effective rate for MAC do you begin selling below your actual cost?

A) AWP – 70%

B) AWP – 82%

C) AWP – 90%

Self Assessment 2

Answer:

B) AWP – 82% - 85%

Market Review

• MAC Price Erosion

• >80% Generic Utilization

• BN vs. Generic Profitability

• Wholesalers Net Profit estimated at 8%

$155.861%

$68.927%

$24.29%

Revenues (billions)Total = $272.3 billion

$2.531%

Gross Profits (billions)Total = 8.8 billion

Exhibit 21: Big Three Wholesalers, Revenues and Gross Profits, Brand vs. Generic Drugs, 2010

61%27%

$0.45%

$4.656%

Brand-Name Drugs (Direct Distribution)

Brand- Name Drugs (Warehouse Deliveries)

Generic Drugs

Source: Pembroke Consulting estimatesResults are presented for calendar year 2010. Revenue data include related businesses that are not reported separately and Canadian distribution, but exclude other businesses, such as medical-surgical products distribution or technology services. Note that these figures represent an industry average model. Any individual wholesaler’s performance will vary based on sales mix, customer mix and other factors.

Exhibit 27: Big Three Wholesalers, Return on Invested Capital, 2007 to 2011

%

Calendar Quarter End

Source: Barclays CapitalDetailed financials for Cardinal Health are not available prior to 2008 due to the Carefusion spinoff.

The Motley Fool2 Major Trends in McKesson's Favor

Without much fanfare, health care giant McKesson (NYSE: MCK ) steadily racked up solid gains of 27% over the past year and 67% over the last three years. How did the company achieve these kinds of returns? More importantly, can McKesson keep it up? The answers lie to a large degree in examining the following two major trends powering the company's growth.

2 Major Trends in McKesson's FavorHigher profits from genericsMcKesson's revenue growth over the past few years isn't too shabby. However, profits grew

even faster.

MCK Revenue TTM data by YCharts.

A significant factor behind the company's strong profit growth is the increased use of generic drugs.

2 Major Trends in McKesson's Favor2013 will see a definite fall-off in the number of high-sales drugs going off patent. However, we should note a couple of things. First, the years from 2014 through 2016 will bring a temporaryfrom 2014 through 2016 will bring a temporary resurgence in new generics. Also, even as the trend wanes, companies like McKesson will continue to reap the rewards from the accumulated effects of the large number of generic drugs on the market. The generic trend should remain squarely in McKesson's favor.

2010-2011 Prescription Drug Benefit Cost and Plan Design Report

Methodology

The Pharmacy Benefit Management Institute (PBMI), an independent education and research organization, conducted its annual drug benefit plan design survey of U.S. employers from March through May 2010.

Completed surveys from 372 employers representing 5,846,069 members are included in the analysis. The number of members reported by a respondent is for the benefit plan for which the survey was completed, not necessarily all of the members covered by the respondent for all plans offered.

Self Assessment 3

What methods have been effective in obtaining concessions on MAC pricing?

A) Contacting PBM and requesting price adjustments

B) Using mafia connections to intimidate PBM

C) Using automated processes to identify inadequate MAC and electronically communicating with PBMs

D) Refusing to stock generic product/therapeutic substitution

Self Assessment 3

Answer:

A) Contacting PBM and requesting price adjustments

C) Using automated processes to identify inadequate MAC and electronically communicating with PBMs

and

D) Refusing to stock generic product/therapeutic substitution

Proposed Contract Language

• MAC CAPMAC Effective Discount Rate will not exceed AWP-XX%, PBM shall reimburse Pharmacy the difference between the actual AWP Effective Discount Rate and AWP-XX%. MAC Effective Discount Rates shall be calculated as TotalMAC Effective Discount Rates shall be calculated as Total Ingredient Cost Paid (MAC claims only) divided by Total AWP (MAC Claims Only).


MAC lower than invoice costIf a Participating Pharmacy cannot purchase the MAC drug at the price established by PBM, PSAO shall notify PBM who will then have seven (7) business days, after receiving such notification, to produce written evidence to PSAO documenting the MAC drug can be purchased at or below PBM’s MAC compensation level from at least two United States suppliers which:a) Are generally available to all Participating Pharmacies,b) Would not impose minimum volume restrictions on the Participating Pharmaciesb) Would not impose minimum volume restrictions on the Participating Pharmaciesc) Have PBM’s MAC drug available on an on-going basis, andd) Have distribution areas that service the Participating PharmacyIf PBM is unable to produce such evidence, it shall immediately adjust the MAC price to a level to which it can prove availability from at least two United States suppliers as described above. Each Participating Pharmacy shall have the right to retroactively reverse and resubmit claims made under the prior MAC amount from the date of the prescription service and PBM agrees to make payment under the revised MAC amount. It is further acknowledged and agreed that single source and multi-source branded pharmaceutical products shall not be subject to PBM’s MAC. PBM will provide updates to MAC list upon request by PSAO.


Price Effective Date – Retro AWP Price Changes“Average Wholesale Price” or “AWP” means the average wholesale price for a Prescription Drug or other pharmaceutical product, as published by Medi-Span® or another nationally recognized pricing source at the discretion of PBM. PBM agrees to update AWP at least

h b i k d h ll l l t i b t b donce each business week and shall calculate reimbursement based on the AWP Price Effective Date as published by Medi-Span® or another nationally recognized pricing source. PBM shall allow Provider to reverse and resubmit claims to address retro-active AWP price changes, ie., Fill Date is equal to or greater than AWP Price Effective Date but AWP Price change was loaded after claim was submitted for payment.

Self Assessment 4

What contractual terms would help address unfair MAC pricing?

A) MAC Cap

B) Allow pharmacy or PSAO to produce evidence of MAC being lower than invoice cost

C) Allow pharmacy to reverse and resubmit

D) Utilize Medispan price effective dates

E) All of the above

F) None of the above

Self Assessment 4

Answer:

E) All of the above

OVERSIGHT

In order to provide Pharmacy Benefits Management or any of the services included under the definition of Pharmacy Benefits Management in this state, a Pharmacy Benefits Manager or any entity acting as one in aManager or any entity acting as one in a contractual or employment relationship for a Covered Entity must first obtain a license from the Board, and the Board may charge a fee for such licensure.

OVERSIGHT

The Board may subpoena witnesses and information. Its compliance officers may take and copy records for investigative use and/or prosecutions. Nothing in this paragraph limits this State’s Attorney General’s use of itsthis State s Attorney General s use of its investigative demand authority to investigate and prosecute violations of the law

PBM CONDUCT REGARDING COVERED INDIVIDUALS ENSURING CONFIDENTIALITY OF PERSONAL

HEALTHCARE INFORMATION

• Not directly contact a Covered Individual by any means (including via electronic delivery, telephonic, SMS text or direct mail) without the express written permission of the Plan Sponsor and the Covered Individual

• Not transmit or provide any personally identifiable demographic, drug, utilization or claims data to a pharmacy owned by, affiliated with or under contract with the PBM or Plan Sponsor if the Covered Individual has not voluntarily elected in writing to obtain prescription services at the pharmacy owned by affiliated with or contracted with the PBM or Plan Sponsor

REQUIRED PBM PRACTICES/DUTIES TO COVERED ENTITIES

• A PBM shall provide, upon request by the Covered Entity, information regarding the difference in the amount paid to Providers for prescription services rendered to Coveredprescription services rendered to Covered Individuals and the amount billed by the PBM to the Covered Entity or Plan Sponsor to pay for prescription services rendered to Covered Individuals.

REQUIRED PBM PRACTICES/DUTIES TO COVERED ENTITIES

• When a Covered Individual’s out-of-pocket cost or co-pay is percentage based, the PBM shall calculate the percentage owed or the amount of the co-pay based upon the amount actually paidthe co pay based upon the amount actually paid to the pharmacy for the medication in question.

PBM REQUIREMENTS WITH RESPECT TO PAYORS AND PROVIDERS

• To ensure a Covered Individual’s Access to prescription drugs, the PBM shall, with respect to contracts between a PBM and a Provider:– Include in such contracts the basis of the

th d l d tili d t d t i thmethodology and sources utilized to determine the MAC pricing of the PBM, update MAC pricing at least every seven calendar days, and establish a process for the prompt notification of such pricing updates to Providers;


– Use the Published Drug Price Effective date from the pricing source used, i.e., Firstdata, MediSpan, or other nationally recognized pricing source to calculate reimbursement on prescription drugs.

Maintain a procedure to eliminate products from the– Maintain a procedure to eliminate products from the list or modify MAC rates in a timely fashion in order to remain consistent with pricing changes in the marketplace.


– Provide a reasonable administrative appeals procedure to allow a Provider to contest MAC rates. The PBM must respond to a Provider who has contested a MAC rate through this procedure within 15 calendar days. MAC price increases shall be15 calendar days. MAC price increases shall be given if the MAC rate established by the PBM is below the Providers invoice cost. If a price update is warranted, the PBM shall make the change retroactive to the fill date reported by the Provider and shall make the adjustment effective for all Providers.


– Adjust MAC values in the event the MAC rate is below the Provider’s invoice cost documented by the Provider.

– Not require Providers to dispense medication if the reimbursement for the medication is below thereimbursement for the medication is below the Provider’s invoice cost.


• The PBM shall not require accreditation or licensing of Providers other than by the Board or other state or federal government entity.g y

Strategies for Success

• Increased Volume

• Decreased Margins

• Embrace Technology

• Embrace Use of Social Media

• Medication Refill Synchronization

• Tighter Management

• Diversification of Products and Services

• Cater to Changing Customer Base

Opportunities

• Adherence– 28% of first fill prescriptions Never get filled

• MTM

OPPORTUNITIES

• Prescription Reconciliation

– 35% of Patients with CHF result in readmissions as a result of improper drug compliance and Non reconciliation of drugcompliance and Non-reconciliation of drug therapy

– Hospitals/Health Systems to be paid based on quality performance metrics

Pharmacists Can Play a Vital Role!

Be Ready to Change!

Opportunities Await Those Who can ppInnovate, Implement and Perform

PROTECT YOUR PHARMACY AGAINST UNFAIR AUDIT PRACTICES

• Audits will increase significantly

• PBMs apply Part D requirements to Commercial Plans

PBM’s Dictate Audit Process

• PBMs look for more than just Fraud

• Billing Errors– Not Fraud!!– Represent a significant portion of audit dollars

recovered

• Contractual Obligation to Payers

• Required for Part D Participation

Why do PBMs Audit?

• Healthcare Reform

• Revenue Opportunity for PBM

Common Audit Triggers

• Claims Data Mining– Number and cost of claims submitted– DEA/NPI– DAW, Qty/Days Supply, Rx Origin Codes– NDC Dispensed vs. Billedp– Short Cycle LTC

• Patient Location Codes• Pharmacy Service Type

• Prescriber Profiling• Patient Profiling• Tip Solicitation and Fraud Hotlines

• Training is Key!!

• Big Picture Understanding Yields Better Result

Staff Training

• HIPAA and FWA Training

• Documentation Requirements– Comprehensive and Consistent– Online training tools are continually updated

State Specific Requirements PBM Specific Requirements

Audit Summary Report

April 2013 Activity

Value of Audit Preparation

Average/Audit% PBM Recovery from Total

Claims Audited

Pharmacy Alone

Value of Claims Audited $27,956.84

Initial Audit Recovery $ 22,286.38

Final Audit Recovery $ 22,274.56 79.7%

A i t ith A lAssist with Appeal

Value of Claims Audited $ 6,405.72

Initial Audit Recovery $ 3,662.99

Final Audit Recovery $ 847.06 13.2%

Assist with Audit and Appeal

Value of Claims Audited $ 24,942.12

Initial Audit Recovery $ 807.41

Final Audit Recovery $ 205.37 0.8%

*Based on data from 585 audits thru April 2013

Self Assessment 5

PBMs audit because:

A) They like to harass pharmacies.

B) CMS and Employers require audit.) p y q

C) Both A and B.

D) None of the above.

Self Assessment 5

Answer

B) CMS and Employers require audits) p y q

Self Assessment 6

True or False:

PBMs audit and recover only when claims are yfraudulent.

Self Assessment 6

Answer:

FalseFalse

QUESTIONS?

Lonny-NW Pharmacy Convention - c.ymcdn.comc.ymcdn.com/sites/ · PDF fileOutlook on the Business Horizon for Community Retail Pharmacy Presented by Lonny D. Wilson, D.Ph. CEO, PPOk

Documents