Reimbursements for prescription drugs

Discuss the history of third-party reimbursement for prescription drugs and its impact on pharmacy management. 

Two clauses seen occasionally in pharmacy contracts are the most favored nation clause and the allproducts clause. The most favored nation clause requires pharmacies to extend their lowest price or reimbursement rate to that third party. It is customary for third parties to require that the pharmacy charge the third party its U C price if it is lower than the third party s reimbursement formula price. However, having to give the third party the lowest reimbursement rate of all the other third-party rates is not customary The allproducts clause requires pharmacies to participate in all the third party s plans if it wants to participate in one plan. A pharmacy may want to choose only some of a third party s plans depending on the reimbursement rate and number of customers affected. Some states prohibit all-products clauses. These clauses became especially problematic with the advent of discount cards and more recently with the implementation of Medicare Part D. Discount cards are given or sold to people who do not have insurance coverage for prescription drugs. People who have a discount card pay a price that is determined by a reimbursement formula rather than the U C pharmacy price. As noted earlier, the reimbursement price usually is less than the pharmacy s U C price, so pharmacies receive less revenue. Some of the discount cards are administered by PBMs and other third parties, and pharmacies may prefer not to accept a third party s discount card even if they accept patients with insurance from that third party. Pharmacies... 

A carve-out plan typically pays all pharmaceutical claims because they are filed electronically. A traditional major medical paper-based plan might incur higher costs as a result of the shoebox effect. This is a result of patients paying for prescription drugs, saving and then submitting their receipts for reimbursement at a later date, usually all at the same time and near the end of the year. 

Review of the effect of external factors on costs and returns on pharmaceutical R D, including new drug regulation, tax policy, product liability law, direct R D subsidies by the National Institutes of Health (NIH) and other government research bodies, and reimbursement policies (both private and public) for prescription drugs. 

About the Author Dr. Urmie is an Assistant Professor in the Clinical and Administrative Pharmacy Division at the University of Iowa College of Pharmacy. She received a B.S. in pharmacy from the University of Wisconsin and worked as a community pharmacist prior to returning to the University of Wisconsin for graduate school, where she received an M.S. in pharmacy administration and a Ph.D. in social and administrative sciences in pharmacy. Her teaching interests include insurance and reimbursement in pharmacy, health insurance, the U.S. health care system, and pharmacy management. Her main areas of research are prescription drug insurance and consumer preferences related to health care use. 

This scenario is a common occurrence in pharmacies of all sizes and types across the country. Pharmacy managers and owners are forced to make difficult decisions about whether to accept or reject third-party plans pharmacists and patients deal with the consequences of those decisions. A thirdparty is defined as an organization that reimburses a pharmacy or patient for all or part of the patient s prescription drug costs. Since most prescriptions dispensed in pharmacies today are paid for by third parties, it is essential that pharmacy managers and pharmacists understand the effect of third parties on pharmacy operations. 

Pharmacies have third-party patients and private-pay patients. Private-pay patients, sometimes referred to as cash patients, are people who do not have any health insurance coverage or people who have health insurance that does not cover prescription drugs. From the pharmacy s perspective, patients who pay the pharmacy directly for their prescriptions and later are reimbursed by their insurance company often are indistinguishable from private-pay patients. This type of prescription drug insurance, called indemnity insurance, used to be common, but it now has been replaced largely by service benefit plans. Under a service benefit plan, the patient may pay the pharmacy a predetermined portion of the prescription cost, but the pharmacy is reimbursed directly by the third party for most of the prescription cost. 

Providers are the pharmacists and physicians. PBMs contract with retail pharmacies to reimburse for drug costs at negotiated discount rates. Claims data — prescription number, date, drug name, quantity dispensed, physician name, and cost — flow back to the PBM. Concurrent drug utilization alerts, such as potential drug interactions or duplicate therapy, are transmitted back to the pharmacy before the prescription is dispensed. Once reviewed by the pharmacist, the claim is then adjudicated and the pharmacist learns from the PBM the amount paid and what copay to collect. 

Direct claim. The plan member pays for the prescription at the pharmacy, then submits a claim form for reimbursement. This was the most common method before the use of electronic claim submissions. Discount prescription card system. Plan members are issued a card or coverage document to be presented at the pharmacy when a prescription is filled. The member pays 100% of the negotiated discormt-ed cost of the prescription. This method has become more popular with Medicare eligible patients who do not currently have prescription drug coverage, but join or purchase a card program from a third-party organizahon such as AARP or the manufacturer. 

Fully reimbursed bcisic treatment drugs or essential drugs (137 active substcmce groups) patients pay the fixed prescription charge, the same price for all drugs from this list. 

The Health Care Financing Administration (HCFA) establishes the policies that individual State Medicaid programs must adhere to. In the realm of prescription drug reimbursement, rules were established in 1987 for multisource drugs. Upper payment limits based upon estimated... 

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