Reimbursement Anxiety: Combatting the Concerns

Pharmacy Practice in Focus: OncologyMarch 2015
Volume 2
Issue 1

Revenue stream bridges benefit community pharmacy in the transition to quality-based reimbursement.

Revenue stream bridges benefit community pharmacy in the transition to quality-based reimbursement.

Most people will agree that health care is expensive. However, the cost of health care truly becomes a concern when it is not just expensive, but also inefficient and, therefore, wasteful. Over the past 2 decades, the US health care system has become costly to patients, taxpayers, and employers. Our volume- and quantity-driven system rewards more care, but not necessarily better care. To remain profitable in today’s health care market, providers must push more office visits, perform more surgeries, run more magnetic resonance imaging scans, and deliver more supplies than ever before. This broken system and its costs have led many to agree that improving our health care system is a top priority.

In late January, US Secretary of Health and Human Services Sylvia Burwell announced a 4-year goal to transition the Medicare program from fee-for-service toward outcomes-based reimbursement.1 This announcement provides a glimpse of where our health care system is heading. The federal government is the single largest purchaser of health care in the United States and cannot afford to continue reimbursing providers for the quantity of care delivered. Medicare has to find a way to purchase high-quality, cost-saving health care. Community pharmacy can be a solution for Medicare’s quest for quality and is quickly attracting attention as a key player.

Ask any community pharmacist and he or she will say they don’t know what our profession will look like in 10 years. What they do know, however, is that community pharmacy looks much different than it did 10 years ago. Over the last decade, we’ve seen implementation of the Medicare Part D program and the Affordable Care Act’s Health Insurance Marketplace, and in many states, the expansion of Medicaid. More people now have prescription drug coverage, which brings community pharmacy into the health care reform debate. Community pharmacy is one of the few places where greater volume simultaneously lowers overall costs and improves care. It’s been well documented that a focus on appropriate use of medication at the pharmacy level can result in improved patient outcomes and lower health care costs. This is good news for community pharmacies that deliver clinical services and utilize patient adherence monitoring programs because pharmacies are seen as a part of the solution to a large problem. However, community pharmacy is faced with sizable challenges in adapting to this new outcomes-based model.

For years, community pharmacies have been reimbursed for the prescription medications they dispense, plus a dispensing fee. These payments and fees have fluctuated over the past several years, but have remained community pharmacy’s standard form of reimbursement. With a new emphasis on pharmacy quality, the standard pharmacy reimbursement model is changing. This change brings concern and anxiety to most community pharmacies.

In a meeting last year, I listened as a health plan executive explained to a room full of pharmacy executives why pharmacy must take more responsibility for the entire patient, not just their prescriptions. In response, an executive from a national pharmacy chain made a statement followed by a question that resonated with me, as it would with most community pharmacists. He said, “We recognize the importance of pharmacy-driven clinical services and the impact they have on our patients. The problem is that the majority of our revenue comes from the dispensing of medication. How do we painlessly get from a reliance on dispensing reimbursement to a reliance on quality-based revenue?” This is the source of most community pharmacy reimbursement reform anxiety. How do we transition from fee-for-service to performance- and quality-based pharmacy reimbursement? To survive the transition, community pharmacy must leverage quality-based revenue streams.

Many community pharmacies first saw quality-based incentives in the Medicare Part D program’s medication therapy management (MTM) cases. MTM cases are created based on the identification of an at-risk patient. Patient cases are then assigned to pharmacies, and pharmacies have the opportunity to complete the case, lower risk, improve outcomes, and receive reimbursement. Community pharmacies have seen evidence that reimbursement for MTM case completion fails to cover the cost of delivering the service and that time spent dispensing prescriptions is more profitable than the same amount of time spent working MTM cases. Each point has led to low national MTM completion rates. Fees paid for this clinical service should not be viewed as a loss, however, but as a payment bridge to an outcomes-based model. MTM fees alone will not allow community pharmacy to completely evolve, so they must be supported by additional bridges, such as health plan/pharmacy benefit manager pay-for-performance (P4P) programs, transition of care agreements with health systems, and various other performance incentives being implemented.

The most visible bridge comes from P4P programs. Several US health plans have allocated resources to reward their network pharmacies for performance. These performance bonuses are often based on current Medicare Part D star rating program criteria and can result in thousands of dollars a month in additional pharmacy revenue from individual plans. Since most of these P4P programs use similar pharmacy measurement criteria, pharmacies that perform well for one plan will likely perform well with other plans. Health systems are also being held accountable for quality and are searching for pharmacy partners that can drive quality care for their discharged patients. Many managed Medicaid plans are also looking for community pharmacy partnerships to improve quality and care for their beneficiaries. Pharmacies with a strong focus on quality have the opportunity for a greater number of patients to be driven to their doors, as well as opportunities to receive additional revenue for patient management under these models.

Change is scary for community pharmacy when it involves long-standing standard reimbursement models. However, this massive shift in reimbursement philosophy can be made easier for community pharmacy with the exploration of additional revenue stream bridges to soften the blow. If community pharmacy is to survive health care evolution, it needs to implement clinically focused programs into pharmacy work flow that will drive quality. To fund these programs, community pharmacy must aggressively engage health care partners that offer incentives and rewards for success. The more partners community pharmacy can engage, the easier it will be to build the revenue bridges needed to shift from the current feefor- service model to a scenario in which pharmacies are reimbursed for quality.

Community pharmacists are the most accessible and often most underutilized health care providers in the system. If community pharmacies can allocate resources to clinical services and be rewarded for positive outcomes, the future is bright. To fully transition from the current fee-for-service reimbursement model, the system must maximize the use of the community pharmacist. When this happens, our once costly health care system becomes the best bargain around.

Tripp Logan, PharmD, received his pharmacy degree from the University of Missouri-Kansas City School of Pharmacy in 2002. After graduation, he returned to his native Charleston, Missouri, to practice pharmacy with his father, Richard. The Logan family currently owns and operates 3 independent community pharmacies in southeast Missouri, with a strong focus on medication adherence. In early 2013, they launched MedHere Today, a medication adherence and pharmacy performance consulting service for pharmacies. Their goal is to integrate patient- and performance- focused patient monitoring programs into community pharmacy work flow, drive program growth within these pharmacies, and use the resulting data to improve pharmacy performance ratings, and thus strengthen their client pharmacies’ position in the health care marketplace.Dr. Logan is a registered pharmacist in the state of Missouri and currently practices at L & S Pharmacy, Medical Arts Pharmacy, and New Madrid Pharmacy. Tripp also serves in work group leadership at the Pharmacy Quality Alliance, is a Good Neighbor Pharmacy National Advisor, and is senior performance and adherence consultant at MedHere Today.


  • Burwell SM. Progress towards achieving better care, smarter spending, healthier people. US Department of Health and Human Services website. January 26, 2015.

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