Managed Care - January 2008 - (Page 36) Original intent AWP originally was set to equalize prices between the east and west coast. This uniform pricing was to benefit consumers and insurance plans. AWP today is being moved to the sideline with new pricing structures being implemented by federal payers. The use of WAC (wholesale acquisition price) is intended to reduce price variability in parts of the supply chain, and the emerging use of ASP (average sales price) by the Centers for Medi- pharmacy accountability. Pharmacy pay for performance will be described in the pharmacy vendor agreement, and will specify the measurement of data points to set baselines and achievement levels for specific tasks. Expanded use of generics is easy to implement with a bonus-per-claim paid based on a threshold level reached in a monthly or quarterly period. Because the cost difference between brands and generics is significant, pharmacies should be able There is no change in accountability when we offset the retail store’s loss of profit on the ingredient cost spread by increasing the dispensing fee. care & Medicaid Services (CMS) in the Part B program further encourages stability of the drug price. Most recent is the introduction of widespread use of AMP (average manufacturer’s price). The AMP reflects the rebates and discounts paid to both long-term care buyers and pharmacy benefit managers, but it affects only the multiplesourced medications we call generics. AMP is a component in the FUL (federal upper level/ limit) calculation, and helps to drive down the FUL rate. For retail pharmacies, the upshot of all these developments is a severe reduction in profit on generics. Retail pharmacy fears that the new FULs, placed in federal and state programs last fall, may remove too much profit, threatening the existence of small pharmacies. To reduce this financial impact, retail associations have disseminated studies advising that dispensing fees should be in the range of $10 to $12 to lessen the financial burden, especially on the small independent store. Pharmacies generate profits currently by buying drug ingredients low and selling prescriptions high and receiving a dispensing fee. But from the payer’s point of view, there is no change in accountability when we offset the loss of profit on the ingredient cost spread by increasing the dispensing fee. to accept the idea of a payment per claim for achievement of certain generic usage rates, or of payment based upon conversion of a branded medication to a generic. Arranging a payment related to persistence and compliance with chronic disease medications can also reward both the pharmacy and the plan, not to mention the member who enjoys better health. Developing this with the claim processor is as simple as evaluating the days between refills on specific medications. The pharmacy may be rewarded for increasing medication compliance related to specific diseases to be monitored (e.g., diabetes and hypertension). Pharmacies may also be given an incentive to assist in dispensing preferred formulary agents and to lessen the use of nonformulary agents when possible. Targeted pharmacy case management promoted by PerformRx to address patients who have unique needs in hepatitis C, hemophilia, or other rare disease also carries the opportunity to implement pay-for-performance programs for pharmacy services. Incentives Overall, the communication capabilities of contemporary claim processing systems are better than ever. They are faster and more complete. With this comes greater opportunity for more utilization management, just as it has happened with medical services. In retail pharmacy, we have not yet seen large leaps toward accountability. Using pay-for-performance options will stimulate creation of edits, processes, and other tools that will favor accountability, accuracy, quality, and performance. MC Now’s the time For this reason, the time to start pharmacy pay for performance may be at hand. With the implementation of the AMP and ASP drug pricing processes, we have an opportunity to move into 36 MANAGED CARE / JANUARY 2008
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