Short fills eliminate medication waste and reduces costs

According to CMS, rationale for short fills includes decreasing environmental waste, discouraging drug diversion, giving patients time to determine if they can tolerate a medication and savings for Medicare and Part D sponsors. The savings were expected to be more than $1.8 billion in 2018, assuming a rate of 32% discontinued first fills. And short fills seem to be gaining traction in the commercial population as well.

Results of a nine-month study of a partial-fill program for 15 oral oncolytics authored by Atheer A. Kaddis, PharmD, show that 41% of patients discontinued therapy after the first month of the prescribed therapy with nearly 20% stopping after one partial fill, attributed to adverse effects cited by patients. While the percent of discontinued first-fill drugs is still relatively high despite the partial fill, the rate could reach as high as 70% otherwise, Kaddis says.

Some say that a partial fill is really a reduction-of-waste program, while others have pointed out the potential for impact on quality of care. A third group sees a partial fill as a medication-support and education tool. The reality is that depending on the services that surround the partial-fill plan design, it can be any or all 3. The best of the partial-fill programs have aspects that include:

  • Clinical evaluation of potential side effects and efficacy prior to completing the secondary-portion fill of the medication.
  • Ensuring that a patient still needs the medication. This may include issues such as admission to an inpatient facility in the interim or a change in circumstances, such as diagnostics, clinical goals, or death.
  • Addressing medication adherence issues associated with the medication.

There two areas of concern associated with partial fill that has been identified and that is when there is little or no clinical interaction between the partial fill and the completion of the fill. Second, patients would have to return for additional pills if the therapy works, causing additional dispensing fees. In short, the partial-fill model can reduce unnecessary fill completion and, therefore, reduce costs.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 265)

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.
 

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

— Tip —
Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

Cross-walk HCPCS codes to NDC codes for granular medical benefit drug claim (MBDC) information

A National Drug Code or NDC is a numeric system to identify drug products in the United States. A drug’s NDC number is often expressed using eleven digits in a 5-4-2 format (xxxxx-yyyy-zz) where the first five digits identify the manufacturer, the second four digits identify the product and strength, and the last two digits identify the package size and type.

NDC codes are defined based on the labeler and Food and Drug Administration segments. The segments identify the labeler or vendor, product (within the scope of the labeler), and trade package (of this product).[1]

  • The first segment, the labeler code, is 4 or 5 digits long and assigned by the Food and Drug Administration (FDA) upon submission of a Labeler Code Request. A labeler is any firm that manufactures, repacks or distributes a drug product.
  • The second segment, the product code, is 3 or 4 digits long and identifies a specific strength, dosage form, and formulation for a particular firm.
  • The third segment, the package code, is 1 or 2 digits long and identifies package forms and sizes. In very exceptional cases, product and package segments may have contained characters other than digits.

While the labeler code is assigned by the FDA, both the product and package segments are assigned by the labeler. While in the past labelers may have had the opportunity to reassign old product codes no longer used to new products, according to the new FDA validation procedures, once an NDC code is assigned to one product (defined by key properties including active ingredients, strength, and dosage form) it may not be later reassigned to a different product.

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The acronym HCPCS originally stood for HCFA Common Procedure Coding System, a medical billing process used by the Centers for Medicare and Medicaid Services (CMS). Prior to 2001, CMS was known as the Health Care Financing Administration (HCFA). HCPCS was established in 1978 to provide a standardized coding system for describing the specific items and services provided in the delivery of health care.[2]

Such coding is necessary for medical benefit drug claims submitted for Medicare, Medicaid, and other health insurance programs to ensure that insurance claims are processed in an orderly and consistent manner. Initially, use of HCPCS codes was voluntary, but with the implementation of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) use of the HCPCS for transactions involving health care information became mandatory.

Problem(s)

MBDC or medical benefit drug claim information is not as readily available as the data for retail pharmacy claims. The primary reason, I believe, is that self-insured employers are not demanding it before the services agreement is executed. Further yet, why would anyone ask for information they don’t fully understand or would have to admit they don’t understand?  The costs are too high to continue ignoring this important issue.

Second, the data when available is often incomplete. In order to evaluate cost and clinical performance employers must have a data set which includes HCPCS codes, NDCs, ICD 10 diagnosis codes and that’s just for starters. This information will allow you to evaluate clinical effectiveness, optimize dosing and vailidate pricing among others.

Last and most important point. The University of Minnesota College of Pharmacy published a study two years ago titled, Medical Benefit Drug Claims: Assessing the NDC Documentation Gap. The last year of the study looked at a total of 62.1 million traditional pharmacy claims and 14.6 million MBDCs (19%). For those claims, the cost was $4.74 billion and $2.64 billion, respectively. While MBDCs represented only 19% of total claim volume, they accounted for a whopping 36% of total cost! So, what’s the moral of this story?

Sources:
[1]: https://en.wikipedia.org/wiki/National_Drug_Code
[2]: https://en.wikipedia.org/wiki/Healthcare_Common_Procedure_Coding_System

Bureau of Securities Releases Rule to Impose Fiduciary Duty on Brokers

New Jersey Bureau of Securities is proposing new N.J.A.C. 13:47A-6.4 to establish, by regulation, the common law fiduciary duty and apply it to broker-dealers and agents, and to codify it for investment advisers and investment adviser representatives.

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The Bureau believes that the proposed new rule is necessary to ensure that persons involved in the securities markets are uniformly held to a high standard in their dealings with the general public and is necessary to ensure the welfare of New Jersey investors.

Under the New Jersey regulation, brokers would have to make recommendations about securities and provide investment advice “without regard to the financial or any other interest of the broker-dealer, agent, adviser, any affiliated or related entity … or any other third party.”
Brokers also must recommend the “best of the reasonably available options” when opening or transferring assets to a specific type of account or suggesting that clients purchase securities or other investments.
Tyrone’s Commentary:
 
While no such rule exists [yet] for health insurance brokers or PBMs, it would likely deliver these protections to pharmacies, patients and self-insured employers alike:
 
Fiduciary responsibility: The model requires PBMs to have a fiduciary duty to its health plan clients. This means PBMs have a legal responsibility to protect the financial interests of their health plan clients.
 
Patient OOP costs: This section prevents a health plan or its PBM from setting patient copays or coinsurance at a higher level than the actual cost of the drug to the health plan (or its PBM).
 
Conflict of interest: Requires a PBM to notify health plan clients if the PBM has a conflict of interest. For example, when a PBM owns its own pharmacy operations, it may want to drive business there, instead of focusing on the most cost-effective drug distribution for its health plan client.
 
Rebate transparency: The act requires a PBM to report rebates and fees in a variety of ways including compensation or remuneration of any kind received or recovered from a pharmaceuticalmanufacturer attributable to the purchase or utilization of covered drugs by eligible persons. 
 
Limiting PBM requirements on pharmacies: Some PBM contracts limit which drug wholesaler or distributor a pharmacy can buy from. Those PBM-specified distributors may serve the PBM’s financial interests more than a pharmacy’s.
 
The good news is purchasers of PBM services don’t have to wait for legislation to benefit from fiduciary standards. All you have to do is require it from the PBM you choose to do business. The benefit is almost always lower costs and better patient healthcare outcomes.

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 264)

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

 

How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.
 

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

— Tip —

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

“Don’t Miss” Webinar: How to Slash PBM Service Costs, up to 50%, Without Changing Vendors or Benefit Levels

How many businesses do you know want to cut their revenues in half? That’s why traditional pharmacy benefit managers don’t offer radical transparency and instead opt for hidden cash flow opportunities such as rebate masking. Want to learn more?


Here is what some participants have said about the webinar.

“Thank you Tyrone. Nice job, good information.” David Stoots, AVP


“Thank you! Awesome presentation.” Mallory Nelson, PharmD
 
“Thank you Tyrone for this informative meeting.” David Wachtel, VP

“…Great presentation! I had our two partners on the presentation as well. Very informative.” Nolan Waterfall, Agent/Benefits Specialist


A snapshot of what you will learn during this 30 minute webinar:

  • Hidden cash flows in the PBM Industry such as formulary steering, rebate masking and differential pricing 
  • How to calculate cost of pharmacy benefit manager services or CPBMS
  • Specialty pharmacy cost-containment strategies
  • The financial impact of actual acquisition cost (AAC) vs. maximum allowable cost (MAC)
  • Why mail-order and preferred pharmacy networks may not be the great deal you were sold
 
Sincerely,
TransparentRx
Tyrone D. Squires, MBA  
3960 Howard Hughes Pkwy., Suite 500  
Las Vegas, NV 89169  
866-499-1940 Ext. 201


P.S.  Yes, it’s recorded. I know you’re busy … so register now and we’ll send you the link to the session recording as soon as it’s ready.

Electronic Prior Authorizations (ePA) Save Plan Sponsors Time and Money

Certain drugs on a formulary may require prior authorization (PA) before a patient can receive the medication. Drug Prior Authorization is a utilization management tool that requires the prescriber to provide clinical information (e.g. lab values, chart notes, etc.) in order for the payer to make a determination whether it will pay for the drug. 
 
The country’s first fiduciary-model PBM – Click to learn more

The traditional prior authorization process relies heavily on fax and phone and involves  prescribers, payers, pharmacists, and patients. The National Council on Prescription Drug Programs (NCPDP) noted several problems with the current state of drug prior authorization and the cumbersome flow of information1:

 
·    “Prescribers often are not aware that a PA is needed until the prescription claim is rejected at the pharmacy. This leads to delays in 1) the opportunity to discuss the PA process with the patient 2) the potential to prescribe another medication, and 3) the patient’s treatment beginning as anticipated.“

·    “Pharmacists are often playing middlemen, contacting the prescriber to initiate a PA, and notifying the patient of the coverage restriction. They spend time contacting the prescriber, either by phone, fax or via a secure transaction. They may also contact the payer to determine the status of the PA request and update the patient.”
·    “Patients may learn of the need for a PA when they attempt to obtain their medication. They are then faced with the choice of waiting for the PA process to be completed, paying the full price for their prescription or not obtaining the medication.”
 
·    “For payers the current manual process may result in delays as data received via phone or fax cannot be systematically reviewed. As more processes are handled electronically, reverting to paper, phone, or fax for communication between payers and prescribers may cause delays. “
With electronic Prior Authorization (ePA), the process is automated as the provider initiates the PA electronically at the point of prescribing within the EHR or electronic health record. According to the covermymeds scorecard, payers can expect to receive the most benefit from ePA solutions2:
  •     Time and cost savings due to the reduction in phone calls and faxes
  •     Decrease in time to therapy to improve member satisfaction and outcomes
  •     Increased medication adherence to limit unnecessary hospitalizations
  •     Complete and accurate initial submission of PA requests
  •     Possible real-time determinations based on preset, payer-specific criteria

Understanding the Complexity of DIR Fees

The Centers for Medicare and Medicaid Services (CMS) describe DIR fees as “fees, payments, or payment adjustments made after the point-of-sale that change the cost of Part D covered drugs for Part D sponsors or PBMs must be reported to CMS as Direct or Indirect Remuneration (DIR).”1  

Source: Diplomat Pharmacy

DIR fees originated in Medicare Part D, however, these fees are now utilized for commercial plans. Pharmacies are charged DIR fees by PBMS after the point of sale.  DIR fees may be based on pharmacy performance, ability to participate in a preferred network or as reconciliation between negotiated price and a claim.2  DIR fees have come under scrutiny by pharmacies.  According to the White Paper: DIR Fees Simply Explained, DIR fees “create losses in revenue that, at times, may surpass the acquisition cost of the drug itself.” Moreover, certain pharmacy organizations have advocated for DIR fee reform. 3    

Based on a survey by the National Community Pharmacy Association (NCPA), a large majority of independent community pharmacy owners do not know what their final reimbursement will be at the point of sale and that it takes 4 to 12 months before they know the final reimbursement figure. 4 
For plan sponsors and patients the financial impact of DIR fees are even less transparent. Two big issues surrounding DIR fees for plan sponsors and members, who to a large extent are unaware DIR fees even exist, are:

1) DIR fees hide the true cost of the drug, from the plan sponsor, to the PBMs financial benefit. For example, PBMs might break-even on retail pharamcy network discounts on the front-end only to make up for it on the back-end through DIR fees. PBMs should be negotiating these discounts on behalf of the client then passing these savings onto plan sponsors. At the very least, PBMs should be disclosing their take home on these fees to plan sponsors.

2) Members cost share (i.e. coinsurance) too doesn’t take into account the PBM’s true cost when DIR fees are collected. If these fees were applied at the point-of-sale these plan participants would pay less and in some cases significantly so.

As a first proactive step to manage DIR fees, pharmacies should understand their contract and the various conditions therein. The NCPA DIR Fee FAQ guidance document asserts that pharmacy owners should manage these fees by performing “due diligence when evaluating contracts and make sure you are aware of and understand all of the different terms and conditions contained in your contract including network pharmacy manuals when incorporated by reference into a contract.

Alternately, make sure any contracting entity that might negotiate on your behalf (PSAO) explains to you the parameters of all of your contractual terms.”5

1) https://www.cms.gov/newsroom/fact-sheets/medicare-part-d-direct-and-indirect-remuneration-dir
2) https://www.specialtypharmacytimes.com/news/white-paper-dir-fees-simply-explained/P-1
3) https://www.nacds.org/news/pharmacy-groups-praise-cms-progress-on-dir-fee-reform-to-lower-patients-out-of-pocket-drug-costs/
4) https://www.ncpanet.org/newsroom/news-releases/2018/02/09/ncpa-survey-pharmacy-dir-fees-plague-both-community-pharmacies-and-their-patients
5) http://www.ncpa.co/pdf/dir-faq.pdf

Reference Pricing: “Gross” Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 263)

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.


How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.
 

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

— Tip —

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

Robbing Peter to Pay Paul: Co-Pay Accumulator Programs Could be Doing More Harm Than Good

Click to Enlarge
Some experts say co-pay accumulators drive down drug prices as patients seek cheaper drugs. But the programs also add value for people who are ill and dealing with health issues.
Co-pay accumulator programs began appearing in 2016 in employer-provided private health plans and in Affordable Care Act marketplace plans. The programs change the way out-of-pocket costs are calculated if members use a manufacturer’s discount card or coupon to reduce prescription costs.

Members can download discount coupons or cards from a drug company’s website or get them from their doctors. They are used with their insurance; in some cases, members pay as little as $5 or $10 for their medication. But the total cost for the medicine counts toward your deductible, substantially lowering your out-of-pocket costs for future refills.

If a plan has a co-pay accumulator adjustment program, members can use a co-pay assistance card or coupon. But the drug’s full cost won’t count against the deductible. And most assistance cards have a dollar limit on how much they will pay.

Tyrone’s Commentary:

A co-pay accumulator program which focuses only on employer cost share without consideration for patient outcomes or satisfaction can be a disaster. Consider these three points:

1) Plan sponsor Rx costs will decrease. As a result, medication adherence will also decline. 
2) Expect higher hospital costs due to lower adherence of critical medications.
3) Members might become disconnected from their employer so look for low moral or higher absenteeism.

I’m not suggesting that these programs are bad. What I am saying is that before implementing a co-pay accumulator program to evaluate the overall impact first or it could turn out to be a case of robbing Peter to pay Paul (see #2 and #3 in this list).

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