Consider Innovative Payment Models to Improve Pharmacy Service Sustainability


With the growing importance of pharmacy services, Chen said pharmacists should think outside the box and get creative when finding effective payment models.

In an interview with Pharmacy Times, Steven Chen, PharmD, FASHP, FCSHP, FNAP, associate dean for clinical affairs at the University of Southern California School of Pharmacy, discussed his presentation at the NACDS 2023 Regional Chain conference titled “Actionable Steps to Boost Sustainability for Clinical Pharmacy Care Services.” With the growing importance of pharmacy services, Chen said pharmacists should think outside the box and get creative when finding effective payment models.

Q: Why is sustainability a challenge for pharmacy-based clinical care services?

Steven Chen, PharmD, FASHP, FCSHP, FNAP: Yeah, it really starts with the fact that we are not recognized as providers at the federal level. And that's the essential core of it, which I think everyone in our profession understands is the source of the problem. As a result, there are no direct channels to bill for pharmacist services through Medicare or Medicaid, which sets the precedents for health plans across the nation. So, for that reason alone, it is very difficult to find ways to not just bill for pharmacy services, but bill at a level that will sustain the cost of a pharmacist. So that's really not going to go away. I think we're going to be challenged with getting provider status for our profession. I know there's some people that talk about it as something that is right around the corner. I think we have to accept that it may not be, and we need to find other ways to sustain clinical services.

Q: Why do pharmacists need to think outside the box and find innovative payment models to improve sustainability?

Steven Chen, PharmD, FASHP, FCSHP, FNAP: Yeah, boy, that's a big question, because there's so many avenues we can go with on that one. First of all, I think they have to recognize that there have been significant efforts to disrupt pharmacy in your practice. And I think just this week, there was an article that came out about Amazon and their new $5 per month generic prescriptions medication service. That plus Mark Cuban's Cost Plus pharmacy—these are legitimate threats, I think, to the traditional business of pharmacy. So, first of all, we have to recognize that if pharmacies continue to focus primarily on distribution of prescription medications or dispensing, that model is going to be difficult to grow and sustain in the long run, as these innovative methods and approaches start to take traction, and I think they will, right? But the pandemic created a shift in mindsets of people across the world and, of course, here in the US as well. And there's much more of an acceptance of the idea that we can get care remotely, including through order methods of getting medications and things of that nature. So that's number 1. Number 2, as I said before, there is currently no direct national method of paying pharmacists for clinical services that works to sustain those services. So as a result, we need to think about how can we, number 1, provide high value services that stakeholders in health care will pay for? Number 2, how do we document and prove that we're achieving those results that they seek? And then number 3, what's a payment model for work that is more value-based [and] value-centric, as opposed to fee-for-service? I think that's what we have to do in order to develop some kind of sustainability or clinical services.

Q: What innovative payment models do you review in your session?

Steven Chen, PharmD, FASHP, FCSHP, FNAP: Well, you know, after 30 years of hearing that any day now we'll get provider status, and then not getting it, we decided we're going to develop something that will first and foremost involve payers, so health care health plans, and approach them before we even think of creating something that we think will be valuable. So essentially, what we did was we approached a few large health plans here in California, and shared some results from a Center for Medicare, Medicaid Health Care Innovation (CMMI) award that we've completed, that really hit all the quadrupling outcomes: patient satisfaction or quality, lower costs, etc. And we asked, is this something that you would like to offer to your beneficiaries? And the short answer was, yes, absolutely. The longer answer was, well, we don't own clinics, you know, we're not Kaiser, we're not a series of HMOs or anything like that. So, we said, well, look, you have pharmacists in the community that are part of your network. How about if we take over trainee pharmacists [and] prepare them to provide high level medication management service versus comprehensive package management. And then using that CMMI program that we have completed, we took a look at the cost of care. And they came up with our value-based payment model, which was essentially a shared risk model, partial fee for service [and] partial bonus payments.

So, what it translates into is there's some financial risks on the table here for the pharmacists that participate, right? They have to deliver the outcomes that the health plans are seeking, for the chronic diseases with patients that are being sent to them, in order to get the full payment for that patient care. And on the flip side, the plans are happier because they're not just paying fee for service for health care, and they can with us, you know, monitor the success of these pharmacies. And for those few pharmacies that, unfortunately, aren't able to produce the outcomes the plans desire, plans can choose to discontinue their participation in the program. So, that's a really rough description of what our value-based payment model looks like.

Q: If pharmacists were to gain provider status in the future, how would that impact the sustainability of these programs?

Steven Chen, PharmD, FASHP, FCSHP, FNAP: Yes, it would solve everything. I mean, it would really make all the difference, right? We could finally bill for the services that we know are very valuable. But look, pharmacists every day are catching major medication-related problems, whether you're in hospital community, long term care, doesn't matter where you're at, they are saving lives, there's no doubt about it. Without that mechanism in place, we are really at risk of continuing to do that work. And more importantly, there's so much left on the table, right? We know that there's so much continuing patient harm that occurs because medications are not optimal. By gaining provider status, we'll be able to fill those gaps and really not only improve health care dramatically, but also reduce costs dramatically in the health care system.

Q: Is there anything you want to add?

Steven Chen, PharmD, FASHP, FCSHP, FNAP: These are great questions. I think the one thing I might add, especially in the context of community pharmacy, is kind of a line that we joke about, but really isn't a joke. And that's if you're in the business of helping to optimize medication therapy for patients in your local communities and you don't feel like you're partly doing social work, you're probably not doing the job, right? And I say that because I think pharmacists get very comfortable, as they should be, in focusing on the medications, the dosing, the interactions, the choices, side effects, etc. Absolutely critical. But we have to keep in mind that if you look at what contributes the most to a patient's overall health, health care is only about 20% of what contributes to overall health, [and] about 40% have to do with social determinants of health. And if we don't have an effective means of connecting patients to resources or social needs, we're not going to be able to impact those patients that have the greatest needs and most vulnerable in our health care system. They need the most help. We have, as we know, significant disparities in health care. And, in the end, if we want health equity and better outcomes for the most challenging expensive patients, we need to be comprehensive in how we approach patient care.

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