PHRM 510 - Exam 2: Lecture 9 Complete Questions And Answers Graded A+

why is there an increase of pharmacy benefit management companies? - Correct Answers Prescription drugs are a high administrative cost benefit that requires huge volumes to be cost-effective health plans & MCOs usually "carve out" prescription drug benefit to be administered by a separate PBM. pharmacy benefit managers (PBMs) - Correct Answers PBMs contract with a payer and provide service to a network of pharmacies are pharmacy benefit managers an MCO? - Correct Answersno, but they have many characteristics of managed care, including a provider network participating pharmacy agreement - Correct Answers Participating (or network) pharmacies contract to provide specific services for a specified reimbursement. If only a select number of pharmacies are allowed to contract, these pharmacies are known as "preferred" pharmacies (or providers). Participating (or network) pharmacies contract to provide specific services for a specified reimbursement. - Correct Answersparticipating pharmacy agreement PBMs are represented how? - Correct AnswersStand-alone companies; subsidiaries of insurance co.; or subsidiaries of retail drug stores PBM clients may be: - Correct Answersinsurance co, employers; unions; discount card programs; Medicare; Medicaid the big 3 PBMs - Correct AnswersCVS/Caremark Express Scripts Optum Rx PBM position in insurance market - Correct Answerspaid by patients/consumers and insurers/3rd party payers to provide Rx services to patients/consumers pharmacy benefit manager structure - Correct Answersconsumers buy health care coverage from a health plan contracts with PBM to administer prescription drugs for health plans PBMs negotiate rebates and incentives with drug manufacturer, begin mail-order program PBMs use leverage to negotiate discounts with pharmacies consumers purchase drug without any of the savings US Distribution and reimbursement system - finish - Correct Answerssee slide 8 after panapto Rx reimbursement equation - Correct Answers(Dispensing fee + ingredient costs) - patient cost sharing what is participating pharmacy agreement based on? - Correct Answersdispensing fee (fixed amount paid for every prescription dispensed) ingredient costs (based on estimate of the costs of goods sold COGS) patient cost sharing average wholesale price (AWP) - Correct AnswersThe published average "cost" of a drug product paid by the pharmacy to the wholesaler. readily available and published everywhere usually a higher price than "real"; nobody really pays this price AWP - Correct AnswersAverage Wholesale Price WAC - Correct AnswersWholesale Acquisition Cost Wholesale Acquisition Cost (WAC) - Correct Answersthe most common cost for pharmacy purchasing BRAND NAME drugs published by wholesalers not available for all drugs (only if sold to wholesalers) similar to "dealer invoice price" a car dealer pays the manufacturer AWP before and after 2009 lawsuit - Correct AnswersAWP was improperly inflated before 2009: AWP = 1.25 * WAC after 2009" AWP = 1.20 * WAC a 5% rollback, big hit to pharmacy revenues the most common cost for pharmacy purchasing BRAND NAME drugs - Correct Answerswholesale acquisition cost (WAC) The published average "cost" of a drug product paid by the pharmacy to the wholesaler. - Correct Answersaverage wholesale price (AWP) EAC - Correct Answersestimated acquisition cost Estimated Acquisition Cost (EAC) - Correct Answersusually based on a percent of the manufacturer's average wholesale price (AWP) which hopefully is higher than the actual acquisition cost (AAC) paid by the pharmacy usually based on a percent of the manufacturer's average wholesale price (AWP) which hopefully is higher than the actual acquisition cost (AAC) paid by the pharmacy - Correct Answersestimated acquisition cost (EAC) AAC - Correct Answersactual acquisition cost Actual Acquisition Cost (AAC) - Correct AnswersActual cost the pharmacy paid for the medication Maximum Allowable Cost (MAC) - Correct AnswersBrands with generics may only be reimbursed at the cost of the generic - maximum allowable cost (MAC). applies to multi-source, generic drugs (levels playing field when many generics available) determined by payer or PBM (proprietary info) represents a limit for multi-source drugs calc retrospectively, difficult to plan MAC - Correct Answersmaximum allowable cost difference between the AWP and AAC - Correct Answersearned discount earned discount - Correct Answersdifference between AWP and AAC sum of 3 other discounts: 1. volume 2. cash (early payment) 3. trade (special deals and promotions) FUL - Correct Answersfederal upper limit Federal Upper Limit (FUL) price - Correct Answersused as max price to be paid by any Medicaid program (plus the small dispensing fee) published by CMS (federal) represents a limit for multi-source drugs calculated retrospectively, not that useful used as max price to be paid by any Medicaid program (plus the small dispensing fee) - Correct Answersfederal upper limit (FUL) price Total reimbursement (plan + patient) should cover: - Correct Answersactual acquisition cost (AAC) COD (cost of dispensing) net profit break-even point (BEP) - Correct AnswersAAC (actual acquisition cost) + COD (cost of dispensing) gross margin (GM) or gross profit - Correct Answersreimbursement minus AAC (actual acquisition cost) should be sufficient to cover COD (cost of dispensing) + net profit Usual and Customary Charge (U&C) - Correct AnswersMost plans' total reimbursement for a prescription will not exceed the pharmacy's usual and customary (U&C) charge - price paid most commonly by private-pay patients due to usual and customary charge, most plans reimburse the LOWER of what? - Correct Answers1. estimated acquisition cost (EAD) + COD (cost of dispensing) 2. MAC (max acquisition cost) + COD or 3. U&C Your pharmacy has a contract with Bearcat PBM. Your contract specifies you can bill the lowest of: (AWP-15% with a dispensing fee of $8.00) or (usual and customary price). You fill a prescription for a 30 capsules of brand name antibiotic: Pharmastatin For a patient with no coverage, your usual and customary price is: $90.00 for 30 caps WAC: $240.00 for 100 caps AWP: $300.00 for 100 caps Calculate the amount billed to Bearcat PBM: - Correct Answers$2.55 per cap * 30 = $76.50 drug + $8.00 fee = $84.50 billed to Bearcat PBM if patient had no insurance and usual and customary price was $80 would only be paid $80 Your pharmacy has a contract with Bearcat PBM. Your contract specifies you can bill the lowest of: (AWP-15% with a dispensing fee of $8.00) or (usual and customary price). You fill a prescription for a 30 capsules of brand name antibiotic: Pharmastatin For a patient with no coverage, your usual and customary price is: $90.00 for 30 caps WAC: $240.00 for 100 caps AWP: $300.00 for 100 caps If your pharmacy can buy Pharmastatin for the (lower) WAC prices: how much did your pharmacy make (Gross Margin) ? - Correct AnswersYour cost: $2.40 per cap * 30 = $72.00 You bill PBM: $2.55 per cap * 30 = $76.50 + $8 = $84.50 You made: $84.50 - $72.00 = $12.50 since mid-1990s, what has happened to dispensing fees and Rx inventory costs? - Correct AnswersSince the mid -1990s, dispensing fees have declined while Rx inventory costs have increased gross margins decreased and continue to shrink how do pharmacies survive the decrease in dispensing fees and increase in Rx inventory costs? - Correct Answersincreased efficiency (automation) and decreased expenses to maintain net profit around 3% of sales control product costs (volume purchasing) and overhead costs (personnel) using automation and technicians appropriately can lower costs PBM services - Correct Answerscreate limited ("preferred") networks offering mail-order services negotiate discounts, generic substitution, and rebates claim adjudication formularies PBM preferred networks - Correct Answersdeeper discounts in return for increased volume prepare "report cards" for network pharmacies based on performance criteria, which can be used to compare pharmacies PBM mail-order services - Correct Answersrun their own or contract out take advantage of economies of scale incentives for patients to use mail order when possible savings on brands and generics rebates - Correct Answersadditional revenue from manufacturers to PBMs for placing their drug on formulary or preferred status amount of rebate may be based on level of prescribing or market share within a therapeutic class Additional revenue from manufacturers to PBMs for placing their drug on formulary or preferred status - Correct Answersrebates claims adjudication - Correct Answersreview Rx claims for payment Standardized electronic data interchange maintained by - Correct AnswersNational Council for Prescription Drug Programs (NCPDP). §Electronic claims submission, eligibility verification, and claims adjudication. Data include: - Correct Answers§Formulary status of drug §Quantity or refill limits §Copayment requirement §Generic substitutions or therapeutic alternatives §Information for DUR formularies - Correct Answerslist of approved drugs available for plan members list of approved drugs available for plan members - Correct Answersformularies types of formularies - Correct AnswersOpen - all drugs covered Closed - drugs not on formulary are not covered Incented - financial incentives to use preferred drugs tiered co-payments - Correct Answers§Lowest co-pay for preferred drugs & generics §Higher co-pays for different levels of nonpreferred drugs §Tiers (increasing order of copayments) example of co-payment tiers - Correct Answers1.Generics 2.Preferred brands 3.Non-preferred brands 4.Specialty or "Lifestyle" drugs 5.Non-formulary (100% out-of-pocket)* 1 is least co-pay, 5 is most specialty tier drugs old definition - Correct AnswersMedications generally prescribed for people with complex or ongoing medical conditions such as MS, hemophilia, hepatitis, and rheumatoid arthritis. specialty tier drugs used to need special attention specialty tier drugs typically had 1 or more of following characteristics - Correct Answersinjected or infused, (but oral specialty medications are becoming more common) unique storage or shipment requirements additional education and support required from a health care professional including REMS programs (Risk Evaluation & Mitigation Strategy) usually not stocked at retail pharmacies. current specialty tier drugs definition - Correct AnswersAny medication costing $600/month prior authorization (PA) program - Correct Answersprescriber must request prior approval from PBM in order to be covered; usually for non-preferred tier or higher tiers prescriber must request prior approval from PBM in order to be covered; usually for non-preferred tier or higher tiers - Correct Answersprior authorization (PA) program step-therapy - Correct Answersless expensive first-line drugs must be used and shown ineffective before more expensive second-line (third-line, etc.) are covered. less expensive first-line drugs must be used and shown ineffective before more expensive second-line (third-line, etc.) are covered. - Correct Answersstep-therapy therapeutic alternative - Correct AnswersPharmacists are authorized to dispense other therapeutically-equivalent drugs (based on established guidelines) for the one prescribed. Pharmacists are authorized to dispense other therapeutically-equivalent drugs (based on established guidelines) for the one prescribed. - Correct Answerstherapeutic alternative therapeutic interchange program - Correct Answers additional formulary strategies for PBM services - Correct Answersprior authorization (PA) program step-therapy therapeutic alternative slide 32 - Correct Answersdo it slide 33 - Correct Answersdo it physician profiling - Correct Answersreport card on cost and quality dimensions expenditures per patient per month (PMPM) "benchmarks" compare physician with others academic detailing (or counter detailing) - §plan representative provides physician with advice on how to reduce costs PMS provider and patient education - Correct Answersphysician profiling patient education to change behaviors to improve health PBM disease management - Correct Answersmanage patients with chronic illness maximize long-term Rx outcomes and cost-effectiveness may not always use least expensive Rx, but saves money overall ex: asthma/COPD, diabetes, CVD, depression student pharmacists opportunities in PBMs - Correct Answersinternships PGY-1 residencies pharmacists opportunities in PBMs - Correct AnswersClinical: formulary design(s); P&T committee; manage relations with pharmacies; mail-order Co.; or specialty pharmacies Operations: call centers; mail-order processing; DUR Administration/Corporate: client relations; account management;