A New Reimbursement Model for Pharmacy?

MARCH 01, 2007
Fred M. Eckel, RPh, MS, Pharmacy Times Editor-in-Chief

We are experiencing the latest in a series of attacks on reimbursement rates: the shift to an Average Manufacturer Price basis for Medicaid prescriptions. The Coalition for Community Pharmacy Action has argued that under the proposed scheme we pharmacists will receive less than the true acquisition cost of generic drugs. By losing money on every prescription, we would essentially be subsidizing the system.

Even the federal watchdog, the Government Accountability Office, agreed with this cost analysis in a recent report. Yet, many pharmacy advocates doubt whether the acknowledgment of potential problems will result in enough changes to the proposed scheme to assuage our concerns.

This finding should lead us to consider broader questions. Why is our message not being heard, despite considerable efforts on our behalf? Are we being outgunned by more powerful lobbying interests? Could the shift in power in Congress lead to a more favorable hearing for our concerns?

Clearly there is unlikely to be a lessening of the pressure on reimbursement and dispensing fees. The government and the public see drug pricing as a major contributor to soaring health care costs, and we will be expected to make sacrifices. Perhaps it is time to consider how we can move to a reimbursement model that focuses on the cognitive aspects of our work, where drugs would be treated as commodities, and our reimbursement would no longer be tightly bound to the cost of specific products. In fact, payment would primarily be for services whose value is independent of drug cost.

Many may see this approach as very risky, because pharmacists are not widely reimbursed for these cognitive services today. Sometimes, however, we need to take risks in order to make real progress. This model would take pharmacists out of the business of trying to survive on wafer-thin margins based on the difference between drug acquisition cost and prescription reimbursement. It could help achieve the goals that we all want: better outcomes and, as a result, lower health care costs, while rewarding pharmacists for their expertise.

This is not a pipe dream. Already the PQA, a pharmacy quality alliance, is working on ways to measure the quality and effectiveness of these services. Once we have measures in place, reimbursement becomes practical. Widespread adoption of such a model may be years away, but it may represent a future that is both desirable and necessary for the survival of our profession.

Mr. Eckel is professor and director of the Office of Practice Development and Education at the School of Pharmacy, University of North Carolina at Chapel Hill.

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