Still Struggling to Find Their Role: Community Pharmacy Participation in ACOs

Pharmacy Practice in Focus: OncologyAugust 2015
Volume 2
Issue 3

Pharmacists have the opportunity to make a tremendous impact on outcomes and efficiency, especially in chronic disease management.

A component of health care as critical as pharmacy calls for direct engagement.

Accountable care organizations (ACOs) are groups of physicians, hospitals, and other health care providers that join together to take responsibility for the cost and quality of patient outcomes.1 ACOs and other new payments models do not, however, include the costs of pharmacy services in the total cost of care.2

Pharmacists have the opportunity to make a tremendous impact on outcomes and efficiency, especially in chronic disease management. Pharmacy services in communities have greatly expanded in recent years to include medication therapy management, comprehensive medication reviews, immunizations, and medical education and counseling, and community pharmacies have developed strategies to participate in ACOs. However, ACOs currently lack direct incentives for community pharmacy participation.

The American Pharmacists Association continues to push for inclusion of the Medicare Part D prescription plan benefit into ACOs and other integrated care delivery models.2 Unfortunately, pharmacists are not recognized by Medicare with “provider status,” which has limited their opportunities for reimbursement for the services they deliver to patients. Additional barriers, such as health information technology (HIT) and electronic health record (EHR) access, have stifled the effective integration of community pharmacy into ACOs. Recent developments highlight setbacks and advances affecting the future role of community pharmacy participation in ACOs. In late 2014, Walgreens (the first retail pharmacy to establish ACO relationships) ended 2 of its 3 ACO contracts, citing barriers to exchanging information, challenges related to physician engagement, and poor financial returns.3 Developments this year, however, signal encouraging changes: Washington and Oregon now join California in establishing provider status laws for pharmacists that permit them to receive payment or reimbursement for their services.4

Will these changes foster more integration of community pharmacies in ACOs or will they still struggle to find their role in the ACO environment? To answer some of these questions and identify additional barriers, Directions in Pharmacy interviewed John Friend, founder and managing member of Value Stream Partners LLC in Tucson, Arizona.

Q: How can community pharmacy provide value to an ACO?

A: Pharmacists and patients have a unique relationship, and the connectivity and frequency of good contact distinguishes community pharmacy from other care providers. For integrated care, you want to look for points of access that are reliable and trusted. When considering the more central issues of adherence or impact on the care of complex patients or those with multiple chronic conditions, pharmacists play a very direct role in clinical management.

In many ACOs, the degree of collaboration and integration between providers is still a struggle. There are many types of people who participate in the provision of care that are not frequently identified. In ACOs, there was a lot of focus on primary care as the central character, but every party needs to be integrated in care delivery. Pharmacy represents a significant advantage over other care sites because the costs are very reasonable.

Q: What are the value points, and why is community pharmacy uniquely positioned to provide that value?

A: As you launch an ACO, it is difficult to know the patient population. Getting to know your patients allows you to do 2 things: (1) care for them, and (2) count on them as reliable in your ACO (on the financial side). Community pharmacy provides the ability to know patients as close to home as possible. The pharmacists are aware of their patients’ real issues and concerns, some of which enter the clinical domain (eg, an unsafe environment or caregivers who are disengaged). Patients spend a lot of time in their pharmacies, and they may be closer to home than their physician offices. Moreover, patients may have a stronger relationship with their pharmacists than their primary care physician. The value of time that patients can get with pharmacists uniquely positions community pharmacy as an important player in the provision of care.

Q: Why are community pharmacies still hesitant to participate in ACOs?

A: The role of pharmacy is unclear. If Medicare Part D was included from the beginning, it would be different. The impact of pharmacy, however, is as strong, so it really doesn’t matter. The first vision of an ACO centered on transformation of the primary care setting. As a result, attention to pharmacy and other sites was secondary. Some pharmacy services were considered when ACOs were initially designed, and those who pressed the role of pharmacy suggested “mobile care teams.”

Recent success of this concept was evidenced by a program launched by Community Care of North Carolina. Because it used community-wide resourcing and provided value in the broader community, it made for a rational investment. However, when I was initially designing ACOs and being approached with services with similar attributes, they couldn’t afford to do it (they were struggling with the “normal” investments of an ACO). The idea of a mobile care team with a pharmacist at a very high price point was something that many ACOs could not weave into their business plan. That maybe drew a distance, and the ACO reaction was, “Maybe we can’t afford to engage pharmacy” at this time, and they focused on primary care. There was perhaps a little bit of cost overload (and what was being suggested for mobile care teams may have been excessive as opposed to what community pharmacy can do every day in their pharmacy to make an impact).

Also, community pharmacy feels as though they haven’t really been encouraged to participate in ACOs. They should more aggressively seek integration into the care design and acknowledgement as critical care providers in the ACO population. If pharmacy makes a compelling argument for integration in care redesign activities of the ACO, they become central to the solution and from that point, rules of participation in the business plan will become clearer.

Q: What do you think was the reasoning behind Walgreens’ decision to leave 2 out of 3 ACOs this year?

A: There were probably several factors. The one they remained in was a high-cost setting. The Centers for Medicare & Medicaid Services has tried hard to create a model that wouldn’t penalize efficient markets, but the balance isn’t perfect. Largely, it was probably a market-specific decision or it could have come down to the partners (which were minorities to the primary care providers). The silos we created within ACOs really haven’t gone away, although we hope they are in the process of changing. In this market, there was probably a high level of patient movement, so you didn’t know your panel well and it becomes hard to manage (hence why inclusion of pharmacy is important). That could play into the decision on whether to continue with an ACO in a market. Some markets are more conducive to ACOs than others.

Q: With states starting to move toward recognizing pharmacists as providers, is this a much-needed first step toward pharmacies participating in ACOs or is there more work that needs to be done?A: A regulatory designation is not critical, but can only help. Many physicians and physician delivery networks believe they are better suited to do some services (eg, medication reconciliation). Failure to integrate and build the professional dialogue among all caregivers is more of an issue than a regulatory designation.

There is currently a reassessment of the practice limitations and regulatory constraints on some providers, and whether the same level of limitation/oversight is detrimental and needs to be relaxed. If pharmacist designation as providers expands the scope of license, the greater scope will be very beneficial when integrated into an ACO environment. It will also make pharmacy a more significant and upfront consideration.

Q: If the cost of pharmacy services were included in the total cost of care, would it encourage ACO participation?

A: Yes, but only because if pharmacy services were included, they would be targeted. Because they are not included, they are very effective interventions that have a huge impact on the cost of care and the associated risk. You could spend more in pharmacy and make someone highly adherent to therapy and the cost of increase in pharmacy spend is not a risk to the ACO today, but the benefit of doing so has a very large impact on cost in others settings (eg, emergency department visits due to unmanaged diabetes).

Better management through pharmacy services is very beneficial to ACOs. Strangely, the lack of inclusion of Part D is an incredible opportunity for ACOs to focus on solutions without a lot of risk (ie, it is predominately a reward environment). Had costs initially been considered, ACOs would be more inclined to engage with pharmacy partners. Participation in an ACO model bends your business plan. For example, in a primary care office, you’re going to have to do more with the same amount of resources.

Q: Beyond payment, HIT and EHR access, and provider status, are there additional barriers to effective integration of pharmacists in ACOs?

A: There are other barriers that aren’t talked about much that are even more meaningful. The original premise of ACOs was that patients have a very consistent orbit around their chosen primary care provider. However, patients move around and are getting care from a variety of places, and ACOs’ reach didn’t cover the spectrum. One of the largest obstacles when designing ACOs is the methodology of patient assignment and the ability to use a few more incentives for patients to seek care from ACO-integrated providers. Risk is substantially more difficult when you can’t identify your patient population. That is probably the single largest problem within the ACO movement.

Failure to know the population makes it very difficult to consider taking on the risk of a transient population. ACOs were meant as transitional phases to get to risk-bearing programs. In the marketplace, there is a divide between those who believe they can manage things well and are looking forward to it in next-generation business models and many who think there’s a lack of stability in the program and structure and they prefer to defer risk as long as they can.

ACOs need to move to a risk environment. To do that, they need to solve the problem that may keep pharmacy on the sidelines and improve panel identification. ACOs need to create an incentive model that is strong enough to incent all the various participants in the value stream.


  • Summers L, de Lisle K, Ness DL, Kennedy LB, Muhlestein D. The impact of accountable care: how accountable care impacts the way consumers receive care. Leavitt Partners website. Published May 2015. Accessed July 5, 2015.
  • Yap D. Community pharmacy to CMS: integrate pharmacists’ services into ACOs. American Pharmacists Association website. Published July 1, 2014. Accessed July 5, 2015.
  • Jeffery SM. Walgreens severs ties with ACOs. Pharmacy Times website. Published March 24, 2015. Accessed July 5, 2015.
  • Bonner L. Pharmacist provider status now law in Oregon. American Pharmacist Association website. Published June 18, 2015. Updated June 19, 2015. Accessed July 5, 2015.

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