Third-party payers contract

Although community pharmacists pay close attention to the types of third-party payer contracts to ensure that they understand the reimbursement timetables, in many instances they are not able to influence the... 

The pharmaceutical industry has an important social contract with the public to discover and develop medicines that have value in extending and enhancing life. Simultaneously, the industry must maintain its profitability both to ensure the future stream of innovations and to provide investors with a return. Balancing the responsibilities to the public and to shareholders is further complicated by the inefficiencies of the global patent system, the disease burden of poor developing countries, national price control systems, and third-party payers. 

A significant concern in pharmacy is the level of reimbursement specified in these contracts. In 2000, the average third-party reimbursement for a prescription was 15 percent lower than what a patient would pay for the prescription without third-party reimbursement (USDHHS, 2000). This difference may have increased in recent years because third-party payers have continued to decrease their reimbursement rates. There also are substantial differences in reimbursement rates across third-party payers. For example, many state Medicaid programs reimburse at far better rates than private third-party payers. 

The reimbursement rate, or price, for a third-party prescription is based on a reimbursement-rate formula that is specified in the contract between the pharmacy and the third-party payer. The reimbursement-rate formula almost universally consists of two parts the product cost portion and the dispensing fee. The product cost portion is intended to pay the pharmacy for the cost... 

It is crucial that pharmacy managers understand the impact of third-party payers on pharmacies as well as understand and use the decision-analysis tools described in this chapter to evaluate carefully third-party contracts. It also is important that pharmacy managers and owners manage expenses carefully and think creatively about developing new sources of revenue. Third-party payment for prescriptions will continue to be an important issue in pharmacy in the future, and pharmacy managers need to be aware continually of changing reimbursement levels and other third-party issues. 

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