Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

411 > Exam 2 > Flashcards

Exam 2 Flashcards

1
Q

Define the basic economic concepts of demand

A

Demand: limited resources influence consumer emand for health care

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Law of demand

A

decrease price, increase quantity demanded
Increase price, decrease quantity demanded

The cheaper something is, the more we want
The more expensive, the less we can afford
As price goes up, quantity decrease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Explain A,B,C Demand Curves, See quizlet

A

A: movement along demand curve, change in quantity demanded depdeing on a product or service, as you chang
Prices it impacts the goods or service, we do not see this in healthcare, not representative

B: even though the price changes, quantity does not change. Pay any amount for that good or service, do not see
This in healthcare. Not willing to pay any price. Example: child with genetic condition, 100% die before 5
But there is a cure, new gene therapy, extend life expactency, willing to pay any amount of money to save life, not
Typical of what we see in healthcare but there is an exception.

C: shift in the demand curve or change in demand. Best fit for what happens in healthcare. Even though price
Doesnt change, there are factors that can impact our demand for healthcare services.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Which demand curve is most representative of healthcare

A

C

Change in demand

C: shift in the demand curve or change in demand. Best fit for what happens in healthcare. Even though price doesn’t change, there are factors that can impact our demand for healthcare services.

In healthcare, we do not manipulate price, OTC products is an example of one only. What drives? Need not dema

We are going because it is driven by need.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Explain the factors that cause a change in the demand or supply of a product or service.

A
  1. Prices of related goods
    – Brand vs. generic, preferred vs. non-preferred drugs on formulary
  2. Money income of consumers (higher income, more elective surgeries, brand name drugs)
    – Elective procedures, brand drugs vs. self-treatment
  3. Number of consumers in the market
    – Aging population, new drug indications
  4. Attitudes, tastes, and preferences of consumers
    – Behavior impacted by popular trends, social influence, peer pressure
  5. Consumer expectations with respect to future prices and income
    – Fear of flu vaccine shortage leads to increased demand for flu vaccines, fill all prescriptions before deductible goes up on january 1st
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How Might Insurance Coverage Impact demand?

A

increase demand becuase now services can be used

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How Do Drug Ads Impact Demand?

A

Number of consumers, attract more people to using your drug (3)
Trying to impact peer pressure or preferences for particular drug (4)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How Do Providers Impact Demand?

A

prescribe more

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Who responds to drug ads more,insured or uninsured patients? Why?

A

insured because it might be covered

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

An insurer lowers copayments for generic drugs to $5 and keeps copayments for brand name drugs at $10.

The demand for (use of) generic drugs does not increase. Why?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Elasticity of demand

A

Might have changes in prices, if there is a change in price, elasticity of demand explains how responsive is the reaction to a price change. Do not try to explicitly change demand but when it does what is the reaction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Elasticity of Demand, see quizlet for curves

A

A: most elastic, most responsive to a price change, price sensitive
Ex. choosing a gas station, even by a few cents, large changes in the quantity of gas demanded at particular place because lot of places to go, drive across town to save cents even if you lose money in long run.
University :3.55, 10 cents cheaper, drive extra miles to get gas cheaper
Small difference in price, large change in quantity demanded
B: more vertical, not as flat the slope. Inelastic slope.
Large price change to change quantity of a good that is demanding. Insensitive to price
Very little impact on good

C: perfectly inelastic good, can change the price all you want and wont change the impact or demand. Pay any price you want

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Best elastic curve for healthcare

A

Best fit for healthcare? B
Need large changes in price to impact demand but does not have a huge impact.
Even large changes in price will have a small impact.
Not jumping from doctor to doctor because a couple bucks cheaper

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Explain the factors that impact the elasticity of demand of a product or service

A

Availability Of Substitutes(more substitutes=more elastic)
– Role of complements (demand for two products change together)
– Broader description = more inelastic; narrower description = more elastic
* Broad: antifungal (no alternatives); Narrow: specific agent (many alternatives)

Increase price, demand goes down, demand for all the other goes up even though did not change prices of any other antihistamines. More elastic, multiple to choose from. More substitutes=more elastic

Diabetic, need to buy all the components like monitor, lancet, change demand for all other products. Increase price of monitor, demand for all the products goes down. Prices go down, increase demand

Only use antifungal, no alternatives, inelastic demand.

Class of drug antifungul: no alternatives, inealastic

More elastic, if you look at specific antifungul product.

Same idea and depending on therapeutic class or specific product can impact the elasticity of demand

  1. Price Relative To Income
    – More expensive = more elastic

Bigger proportion of our impact = more elastic than inexpensive purchases

House or car, think about purchase vs dollar candy bars,

  1. Necessity vs. luxury – Luxury = more elastic

Type one diabetic need insulin, demand is inelastic, pay lots of money for product to stay alive
Demand for eyelash serum, not necessity, elastic

  1. Shortrun And.long run
    – Tradeoff between time and money; long run = more elastic
     Short term or long term

Longer time frames, longer time more alternatives, substitutes or wait for prices to go down.

Short term: emergency, demand inelastic, no time to invest in alternatives.

Price of gas increases: short term: still need to get to work or school, get gas in car, demand is inelastic have to still do these things

Long run: have time to consider alternatives, hybrid cars or buy a bike. Cheaper alternatives, elastic.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Exam questions: (when a price does change, how does that impact demand)

A

…

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Is the demand for prescription drugs elastic or inelastic?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Does prescription drug insurance increase or decrease the elasticity of demand for prescription drugs?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What role does the MD play in influencing a patient’s elasticity of demand for prescription drugs?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

changes in quantity demanded

A

assumes price of good/service changes
what is our demand for a good/service as price changes

price vs quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

change in demand

A

assumes price of good/service held constant

what impacts our demand for a good/service at that price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

elasticity of demand

A

assumes price of good/service changes

how does a change in price impact our willingness to pay for a good/serivce?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Supply

A

similar to demand but from supplier perspective

Increase price,increase quantity supplied
Decrease price, decrease quantity supplied

Upward slope, as price increases, the supplier is williong to increase quantity they provide, make more of it, make more money

Price goes down, produce less of it, not as profatiable,

Change in quantity supplied vs change in supply

change in supply not caused by change in demand (independent)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Factors leading to change in supply:

A

1.Techniques of production
– Impact of technology (equipment, supplies, production methods,
management)
2. Number of sellers in market – More sellers = more supply
3. Resource costs
– Materials, wages, taxes, etc.
– Drug shortages; government subsidies or tax breaks
4. Prices for related goods
– Price change one for one good impacts supply of related goods
5. Seller expectations with respect to future prices and income
– Upcoming vaccine shortage leading to increased short-term
production or withholding supply from market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

perfect competition

A

Standard structure for many industries
– Characteristics
* Many buyers and sellers – no concentration of power
* Freedom of entry and exit – enter/leave at will
* Standardized products – many interchangeable substitutes
* Full and free information – complete knowledge of prices, quality
* No collusion
– each organization acts independently

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Monopolistic competition

A

relies on product differentiation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

supply side: Monopoly

A

Monopoly: one seller (brand name drugs)
Ex. mylan-epipen pricing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Supply side: Oligopoly

A

Multiple sellers of similar products (antihistamines)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Demand side Monopoly

A

– one buyer (government purchasing health care)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Demanded side oligopoly

A

– many sellers, few buyers (insurers/PBMs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Explain how the economics of health care is different from the economics of other
industries.

A
  • Numbersofbuyersandsellers
  • Entry and exit(licensing,accreditation,etc.)
  • Variation in products,services,and quality
  • Full and free information
  • Inelastic demand
  • Universal demand
  • Unpredictability of illness
  • Healthcare as a“right”
  • Supplier-induced demand
  • Third-partyinsurance and patient-induced demand
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Describe how the economic performance of the health care system could be improved.

Some people say market forces will not work why?

A

Strategies used to reduce costs in other industries don’t work in health care
– Increase supply (e.g., more providers and facilities)
– Increase competition (e.g., compete on price)
* Too much concentration of power (monopoly > competitive)
– Need for increased government role
– Regulate health care as a public utility
– Approach used in other countries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Can economic performance of the health care system be improved
Some say market forces will work? How?

A

1.Make patients aware of prices and costs
* Itemized receipts, vary patient cost sharing
2. Provider feedback about performance
* Role of autonomy / freedom to practice medicine?
3. Reimbursement incentives / penalties
* Prospective payments (transfers risk to providers) * Medicare bonus payments & penalties
4. Balancing cost and value
* Patients isolated from costs = increased demand for services
(patient-induced demand)
* Exclude low value care to prevent waste of health care resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

List price

A

– Estimated average price for a drug (“sticker price”)
– Often publicly disclosed
– Price before discounts & rebates
* Usually not a true representation of what is actually paid!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Net Price

A

– Actual price paid for drug
* Closely guardeds ecret!
– Price after discounts & rebates
* Less than or equal to list prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Estimated Price

A

– Payer estimate of net prices
– Commonly determined based on list prices
* May or may not be an accurate guess!

Goals of drug pricing?
Manufacturers
Wholesalers
Pharmacies
Patients

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Describe the factors that influence pharmaceutical

A

Manufacturer sets the list price (wholesale acquisition cost (WAC)

Prices determined based on:
– Production costs
– Research & development costs*
– Taxes and other costs
– Profits
* Problem: List price doesn’t reflect actual costs!

Proportional allocation of revenue 2003-2015,

Research is 17%, profits 20%, marketing 30%, taxes 5%

Top 10 most profitable industires: pharma generic 30% and pharma major 25.5%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

manufacturer drug prices and the rationale for those prices.

A

Manufacturer rationale:

Cost of research & development
– $2.6 billion for an average drug
– Increasing complexity of biologic drugs
* Potential for savings to the healthcare system
– Hepatitis C drugs ($84k) vs liver transplant ($600k)
* Strategic position relative competing products on the market or in the pipeline
– Innovative vs “me-too” drugs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Describe the factors influencing how much wholesalers pay for drugs and associated pricing terms.

A

Purchase drugs from manufacturers
* Negotiate drug prices based on WAC
– Discount examples: volume discounts, prompt pay discounts, sale of short-dated products, performance metrics, etc.
* Work with relatively small margins
– Reinforces need for efficient operations
– Relatively small contributor to drug prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

Wholesaler buying drugs from manufacturer
– List price:
-Net Price:

A

– List price: wholesale acquisition cost (WAC)
– Net price: average manufacturer price (AMP)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q
  • AMP
A

actual price paid by wholesaler
– Typically pay WAC–2% to WAC–5% for brand drugs
– Deeper discounts on generic drugs
* Usually more profitable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Specialty wholesalers:

A

Specialty drugs differ in important ways from traditional medications
– High cost
– Potential for more frequent or severe side effects
– Typically have additional education and monitoring requirements – Limited or exclusive product distribution
* Specialty wholesalers provide specialized services for specialty drugs
– Ensure drugs meet handling, storage, delivery, and documentation requirements
– Ensure product integrity and reduce the risk of counterfeiting or tampering
* Primarily serve specialty pharmacies and health systems – More info in specialty pharmacy lecture!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Describe the factors influencing how much pharmacies pay for drugs and associated pricing terms.

A

Pharmacies purchase drugs from wholesalers
– May also buy from manufacturers
* Negotiate drug prices based on WAC
– Discount examples similar to wholesalers
– Size of discounts tied to market power
* Chain vs independent pharmacies
– Group purchasing organizations (GPOs)
* Combined purchasing power for small pharmacies
* Profitability tied to buying/selling prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Pharmacy buying drugs from wholesaler

List price:
Net Price:

A

– List price: average wholesale price (AWP)
– Net price: actual acquisition cost (AAC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

AWP

A
  • AWP = estimated price paid by pharmacies – AWP≈WAC+20%
    – Historically used as basis for reimbursement – Heavily criticized price – fallen out of favor
  • Not reflective of true market prices
  • Easily manipulated
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

AAC

A
  • AAC = actual price paid by pharmacies
    – Prices vary considerably by drug (brand ≈ AWP–17%) – Deeper discounts on generic drugs = more profitable
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Describe the factors influencing how much patients pay for drugs and associated pricing terms.

A

Purchase drugs from pharmacies
* “Self pay” system when no insurance involved – E.g., uninsured or choose not to use insurance
– Indemnity insurance structure
– ~10% of prescriptions dispensed
* Pay full retail price for drugs
– Usual & customary price (U&C)
* Often referred to as “cash price”
* Impact of coupons, discount cards, etc.?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

What factors do pharmacies consider when determining the price of a drug

A

U&C price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

Describe the following components of pricing from the pharmacy’s perspective:

Overall goal

A

payment accurately reflects costs, need to bring in more, cost them to dispense, go out of business
– What happens if it does not?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

Drug ingredient cost

A

What pharmacy pays for drugs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

Cost of dispensing

A

– Costs other than drug (salaries, benefits, electricity, rent, etc.)
*include “Reasonable” profit, usual and customary price appropriately, make profit. Set too low, lose money, set too high, go elsewhere

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

If pharmacy wants to know how much they pay for their drugs, what pricing term do they look at?

A

Actual acquistion cost (they pay to get it from the wholesaler)
Get payed enough for the drug ingredient price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

How can a pharmacy increase profits?

A

Cuts staffing, impact cost of dispensing
Use of automation,
Mail order pharmacies
Negotiate for bigger discounts and rebates
Filling more prescriptions, cost of dispensing
Increase U&C price that you charge, some level of risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

U&C price =

A

drug ingredient cost (product) + cost of dispensing (service) + net profit

Vary from drug to drug.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

Uninsured

A

less than 10% use this model

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

Chain profits

Manufacturers WAC $250, AMP= WAC-5%= 237.50 —> wholesalers—> AWP= WAC+20% =$300, AAC= WAC-4% =$240 pharmcies U&C=$300–> patients

A

Wholesaler buys from manufacturers, WAC list price as $250, wholesalers can negotiate 5% discount and paid AMP.

Pharmacy buys drug from wholesaler, AWP

They are going to negotiate with wholesaler, need to sell for more than bought from manufacturers

Wholesaler profit: $2.50 sold it for 240 and wholesaler bought it for 237.50, not a huge profit so efficiency is important

U&C: selling for $300, buying it for $240

Pharmacy profit: $60

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

Describe the factors influencing how much PBMs pay for drugs and associated pricing terms.

A

Play fundamental role in negotiating prices paid for drugs
– Primarily interact with manufacturers & pharmacies
* Employers / health plans contract with PBMs to
manage drug benefits
– Expect decreased costs, improved quality & safety, etc.
Components of pricing:
– Administrative costs
* E.g., claims processing, disease management programs
– Performance metrics
* E.g., customer service, clinical quality, cost management
– Drug rebates from manufacturers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

Third-Party Prescription Industry

A

Third Party Prescription Industry:
Acquisition Of Prescription Drugs Involves Multiple parties
– Patient, prescriber, pharmacy, PBM
* Third party payer: Any entity other than the patient
or health care provider that reimburses and manages
health care expenses
– Insurance companies, PBMs, governmental agencies,
managed care organizations, employers, etc. – >90% of drugs paid by a third party
* Contributes to complexity of healthcare system
– Not directly involved in patient care, but influences decisions made throughout process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

PBM activities

A

PBM activites:
Negotiating with pharmacies for reimbursement / payment of prescription drugs
2. Negotiating with pharmaceutical manufacturers for drug rebates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

Describe the structure and goals of contracts between pharmacies and PBMs and why a pharmacy may decide to accept or reject a contract.

A

Contract between pharmacy and PBM

  • Participating pharmacy agreements
    – Stipulate services to be provided by contracting pharmacies in
    exchange for a specified reimbursement
  • Participating or in network pharmacies; preferred pharmacies
  • Contracts specify roles and responsibilities
    – Services To Be Provided(e.g.,dispensedrugs,counselpatients,MTM)
    – Specify Reimbursement Amounts(e.g.,fordrugorserviceprovided) – Other details(e.g.,planlimitations,exclusions,audits)
  • Goals for contracts
    – PBMs:↑patient access to pharmacies,↑quality,↑safety,↓costs – Pharmacies:↑prescription volume,↑profits
  • Contracts are negotiated between pharmacy and PBM – Balance Between Costs and access
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

Pharmacy contract Example:

Pharmacy Contracts:

Pharmacy AAC: $240
* U&C price of a drug: $300

A

PBM Reimbursement:$229
* Patient Copay: $25
* Total Payment To Pharmacy:$254
* Why Might A Pharmacy Agree To This? – (They may decide not to!)

Paying 240 and getting 254, make a small profit every time you dispense this drug.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

Why do pharmacies accept contracts:

A

↑ prescription volume
– PBMs negotiating on behalf of many patients
* ↑ business, leverage business, negociate for cheaper prices

– Make up lost profits in another area
* U&C price for uninsured patients goes up, control over price
* Sales Of Non-prescription products(e.g.,OTCs,food,etc.) most pharmacies have OTC sections
– Loss of business if refuse contract
* Continue to see patients
* Don’t Evaluate Things if contract is in their best interest,
– Need to ensure PBM and pharmacy following contract
– Need to ensure profitability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

Describe PBM drug reimbursement and associated pricing terms.

goal

A

PBMs “buy” access to drugs & pharmacy services from pharmacies
* Goal: pay net (actual) price (AAC) want to know these prices, hard to know (ideal goal but dont know what it is)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

Information available

A

list prices (WAC, AWP, U&C price) know these prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

Estimate price

A

insurance estimate of net prices using the list price. (could be very close to net price or very inaccurate)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

What is the list price that is most relevant?

A

AWP (know the AWP, wish they knew AAC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
66
Q

PBMS save money through

A

estimating good net prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
67
Q

Estimation approach used by PBMs:

A

– Estimated acquisition cost (EAC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
68
Q

– Estimated acquisition cost (EAC)

A

Approximates purchase price using list price minus a percentage
– E.g., AWP–20% (reimburse pharmacies with this price), WAC + 2% list plus or list minus, historically AWP most commonly used

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
69
Q

Pharmacy income

A

Difference between AAC & EAC

cost containment approaches

– Purpose: prevent overpayment for generic drugs
* Maximum allowed prices based on average market prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
70
Q

1st approach for PBMS

A

1st approach:
– Federal upper limit (FUL) (max price they will pay for that drug)
* Only applies to state Medicaid programs
* Requires 3+ drug products on the market, set price drop and list prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
71
Q

2nd approach for PBMS

A

2nd appraoch
– Maximum allowable cost (MAC)
* Differs for each payer (public vs private, varies by PBM) (vary from payer to payer) (no certain number of drugs on market) (caps so they do not pay any higher to prevent overpayment for generic drugs)
* Not available for all generics (e.g., new generics)
* Example: WI Medicaid average MAC = AWP–65%

Prevent overprice on generic drug only

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
72
Q

How is ingredient cost determined?- Payer perspective

A

– EAC: best guess by PBM of what is costs pharmacy to acquire drug – May overestimate or underestimate actual cost – implications?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
73
Q
  • How is dispensing fee determined?Payer perspective
A

– Fixed amount paid to pharmacy for each prescription dispensed
– Negotiated between pharmacy and PBM * Pharmacy wants high, PBM wants low

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
74
Q
  • How is patient cost sharing determined?Payer perspective
A

Function of insurance policy
– Copayment, coinsurance, deductible
* Total Payment = Payer cost + Patient cost shari

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
75
Q

Payer perspective
Payer cost =

A

ingredient cost (product) + dispensing fee (service) - patient cost sharing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
76
Q

Pharmacy perspective reimbursement overall goal

A

Overall goal: payment accurately reflects costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
77
Q

Total payment

Pharmacy perspective reimbursement

A

Total payment: total payment received for drug – Includes PBM and patient payments!
* Drug ingredient cost
* Cost of dispensing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
78
Q

Profit? Pharmacy perspective reimbursemen

A

– Reimbursement > pharmacy costs = profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
79
Q

Loss Pharmacy perspective reimbursemen

A

– Reimbursement < pharmacy costs = loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
80
Q

Pharmacy perspective reimbursement

total payment=

A

drug ingredient cost (product) + cost of dispensing (service) + net profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
81
Q

“Lesser of” provision:

A

contracts state PBM will pay lowest of 3 approaches:
1. EAC + dispensing fee
2. MAC + dispensing fee
3. Pharmacy’s usual and customary charge

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
82
Q

Private payer example:

A
  1. [AWP–16% to AWP–22%] + dispensing fee or
  2. MAC + dispensing fee or
    Typical private PBM dispensing fees ≈ $1.50 to $3.00
  3. U&C cost (rarely)
    U&C costs already include dispensing costs!but in reality costs $10-15 to dispense.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
83
Q

Reimbursement in community pharmacies

A

Dispensing fees vs actual costs
–Professional fee, cost of the service
–Wisconsin: mean = $15.00 (low volume), $9.73 (high volume) (2017)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
84
Q
  • Problems with low fees & low drug reimbursement?
A

Cant make up the losses, lose revenure and profits, out of buisness.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
85
Q

Implications for pharmacy participation in PBM networks?

A
86
Q
  • How can pharmacies lower their cost of dispensing?
A

– Automation, fewer pharmacists/more techs, ↑ Rx volume, shorter operating hours, etc

Fill more prescription, same amount of people, twice as many, cost of dispensing will do down
Automation
Weekend hours or evening hours.

87
Q

Discuss how Wisconsin Medicaid reimburses pharmacies for prescription drugs.

A

Unique reimbursement approach
– Affects ALL state Medicaid programs, only medicaid programs
– Requires pharmacies to provide or report AAC, report to external party, medicaid never saw, used third party payer, used this information from all community pharmacies as new list price, NADAC.
* Used to determine “National Average Drug Acquisition Cost” or
NADAC
-Idea that they will reimburse fairly
-only government can do, private cannot
– Reimburse [NADAC or WAC + 0% or MAC] + dispensing fee
* Remember the “Lesser of” provision! Least of these approaches
-on average it costs pharmacies that much, NADAC, poor job of negotiating discounts, provides incentive to pharmacies.
* WI cost of dispensing study (2017)
– Ensure pharmacies are fairly reimbursed
– New fees based on total annual prescription volume: * 0-34,999 prescriptions: $15.69 per prescription
* 35,000+ prescriptions: $10.51 per prescription
Reimbursed not just for the product but also the service.
Low volume store= less than 100 prescriptions a day, get paid $15.69, reasonable, small profit built in
Higher volume store= cost of dispensing is lower, fill more prescriptions with same # of people, smaller dispensing fee of $10.51, some profit built into that if average pharmacy.

-limited pharmacies to make significant profit on product side.

88
Q

List price, suggested average price for a drug what acronyms

A

WAC, AWP

89
Q

Net price, actual price paid for drug (after discounts)

A

AMP, AAC

90
Q

Estimated price, insurance estimate of net prices

A

EAC: used by PBMs to reimburse pharmacies

91
Q

FUL- dont classify these as net or list

A

limit on generic drug prices for government programs

92
Q

MAC- dont classify these as net or list

A

limit on prices for generic drugs

93
Q

NADAC- dont classify these as net or list

A

National average of AAC

94
Q

Usual and Customary Price- dont classify these as net or list

A

cash price for uninsured

95
Q

Describe the rationale for rebates, factors impacting the size of rebates, and the implications of drug rebates for manufacturers, PBMs, and employers/health plans

A

Pharmaceutical manufacturer drug rebates
– Payments in exchange for formulary placement * More favorable = larger rebates
* Goals of rebates:
– Manufacturers: increase market share
– PBMs: reduce net cost of drugs
* PBMs “buy” drugs from manufacturers and “sell”
to employers / health plans
* PBM may keep part of rebates as payment

Patient is not involved at all, all handled after the fact.

96
Q

After market discounts

A
  • Volume discount (able to use our drug a little bit, give a little rebate, more people bigger rebate, lot of people, even bigger rebate, how much you receive is dependent on volume)
97
Q

Flat Discount

A

(set amount that you receive regardless on how much that drug is used)

or a combination of the two approaches

98
Q
  • What influences rebate amount?
A

– Ability to move market share
– Number of competitors (↑ competitors = ↑ rebates)
– “Preferred” status on formulary
– OBRA ‘90 law – mandated Medicaid rebates (manudacteres are required to give state medicaid programs a flat rate rebate) pays least of any payer.

99
Q

Medicaid required minimum

A

required minimum 23.1% rebate brand and 13% rebate generic

100
Q

Private plans: Rebates

A

mainly branded drugs, varies widely, can be 25% of WAC
Compete in rebates, bigger rebates for multiple drugs.
Preffered, bigger rebates

101
Q

Rebate money is a big focus in public programs because

A

accountability and reduced drug spend

102
Q

Are rebates publically exposed by PBMS

A

no

103
Q

What happens with rebate money

A

– Part D plans
– Other private plans
* Payer perspective: Is it worth it?
– “Brand – rebate” vs price of generic alternatives
– The “new generic” paradox (new generic is released, some insurance only contiune to cover brand name and not generic)
– Impact of manufacturer co-pay coupons? (bypass formulary!) (no favorable formulary placement, bypass by passing out co-oay coupons, free, if it is non preffered, insurance pays much more for drugs, preffered no need for copay coupons, insurance pays more and leads to total cost of drugs going up even if cheaper to patients, more expensive to payers, increased premeiums)

104
Q

PBM profit

A

buy drugs from pharmacies and sell drugs to emploeyers and health plans
Difference =profits

Rebates are a major source of PBM profit, depends on how much is kept by PBM, lack of transparency

Debate over excessive PBM profits, save money on drug spending vs increasing overall health care costs?

105
Q
  1. Describe characteristics of a specialty pharmacy product.
A
  • No standard, universally accepted definition
  • Variation across manufacturers,
    pharmacies, and health plans
  • Dosage forms:
    – oral, injectable, or infusible
  • May self administered by the patient or
    administered in a clinic
    Ex. Transplant Medications

All about cost and complexity (treatment regimens, devices, special handling or storage, rare disease states)

Common disease states: GI, Rheumatology, Dermatology, Oncology, Hepatology, Neurology, HIV, Growth disorders, hemophillia, fertility, pulmonology.

106
Q

Define a specialty pharmacy and describe what differentiates them from a traditional pharmacy.

A

Speciality: (level of patient monitoring, special storage facilities,

Common Disease States
* Cystic Fibrosis
* Hemophilia
* Hepatitis C
* Inflammatory Conditions
– Dermatologic Conditions
– IBD
– Rheumatoid Arthritis
* Multiple Sclerosis
* Oncology
* Pulmonary Arterial Hypertension
Additional Services
* Benefits Investigation
* Copay assistance
* Device training
* Outcomes-based clinical management
* Prior authorization
support
* Shipping and logistics

107
Q

Retail
Pharmacy

A

Common Disease States
* Allergy & Asthma
* Diabetes
* Digestive Health
* Dyslipidemia
* Family Planning
* General Polypharmacy
* Hypertension

Additional Services
* Immunizations
* Medication
synchronization
* MTM services
* Smoking Cessation
* Over-the-counter
products

108
Q
  1. Describe the rationale for limited networks and the impacts on pharmacies and patients.
A

PBM’s create own specialty pharmacy, and generate most revenue in specialty pharmacy.
Access to product and access to reimbursement

109
Q
  1. Compare and contrast different specialty pharmacy distribution models

3 different models:

Traditional drug:

A

traditional pharmacy, manufacter, wholesaler to pharmacy

110
Q

Speciality contract

A

manufacter, speciality wholesaler, separate account for speciality wholesaler. Agreed to manufacturer, only sell to x,y and z pharmacy.

111
Q

Limited distribution drug model

A

cut out wholesaler completely, manufacter makes direct contracts to a pharmacy for a specific drug product.

112
Q

Impact on pharmacies for drug models

A

More expensive, set the pricing, individual pharamcies and contracts.
Not easy to get a lot of different contract and make sure everything is legal is correct
Smaller independent pharmacies harder to get into the business, legal team. Manage lot of minute contracts

113
Q

Impact on patients- drug models

A

Restricted access, only one speciality pharmacy
Have to go to different pharmacy to have access
Raises price of drug

114
Q
  1. Describe pharmacist roles in specialty pharmacy.
A

Clinical Roles:
* Integration between specialty pharmacy and clinics
minimizes patient effort in resolving issues or questions
– Pharmacists with staffing components in both specialty
clinic and specialty pharmacy
* Collaboration on therapy management and treatment
algorithms
* Product verification and quality assurance
* Patient management
– First dose device teaching
– Disease state and drug management

115
Q

Administrative roles

A
  • Expansion of specialty pharmacy services
    – Prior authorization and copay assistance
    – Contracting and drug access
  • Maintaining accreditations
  • Ensuring specialty pharmacy metrics are
    being met
    – adherence scores
    – disease state metrics
116
Q
  • Pharmacists working at PBMs and
    insurances
  • Industry pharmacists
  • Consulting
A

…

117
Q
  1. Describe fundamentals of pharmacy benefit manager (PBM).
A

Pharmacy Benefit Manager (PBM) directs
prescription drug programs and processes
prescription claims by negotiating drug costs
with manufacturers, contracting with
pharmacies and building and maintaining drug
formularies.
These cost-saving strategies help lower drug
costs and promote member health.

118
Q
  1. Identify practice opportunities for pharmacists within PBMs.
A
  1. Drug Information
  2. Formulary Management
  3. Utilization Management
  4. Client Management
  5. Industry Relations and Contracting
  6. Provider Services
  7. Population Health
  8. Government Program
119
Q

What is a formulary?

A
  • A list of prescription medications that have been evaluated by a P&T
    Committee made up of physicians, nurses, practitioners and pharmacists
    to offer the greatest value both clinically and financially to patients
120
Q

Why do we have a formulary?

A
  • Formularies are created to try to control medication costs while providing
    the best care for patients
  • Medications are typically grouped into tiers based on their cost and
    clinical efficacy
121
Q
  1. Explain approaches used to manage the cost, utilization, and quality of a pharmacy benefit.

What is utilization management?

A
  • A set of techniques used in the PBM industry to encourage safe, effective,
    and economical medication use
122
Q

Examples of utilization management

A

What are examples?
* Prior Authorization
* Quantity Limits
* Split Fills
* Mandated Specialty Pharmacy
* Step therapy
* Medical Exceptions
* Grievance and Appeals

123
Q
  1. Identify unique pharmacist roles within a specialty pharmacy.
A

Quality and accreditation
Clinical programs
Manufacturer involvement

124
Q
  1. Describe healthcare spending and health outcomes in the United States compared to other countries.
A

Large spending in private sector, no national or universal healthcare system

Spend a lot of money on private side of things

We spend more on healthcare than most of the countries spend on everything. Public: covering minority of country vs countries spend public money on all the population.

Inefficient compared to other countries.

Ranked last in care.

125
Q

Why does the US spend more?

A
  • US pays more for:
    – Doctors
  • Average salary of $218,173 nearly double that of other
    Countries

– Pharmaceuticals
* US spends $1,443 per person compared to $749 in other
Countries

– Administration
* 8% of spending compared to 3% in other countries
* Non-clinical costs: claims processing and payment, prior
authorization and eligibility determinations, quality
measurement, etc.

126
Q

Socialized medicine (Beveridge model)

A

Healthcare is financed and provided by the government

government employes healthcare practitioners, owns healthcare facilities and administers healthcare system

UK, Cuba

Government is most directly involved in every aspect of healthcare, government employes, own healthcare facilities, directly administering health care system.

127
Q

National Health insurance model

A

A single payer, government-run, universal health insurance program

care mostly delivered by non-profit private hospitals

healthcare services financed by the program with negotiated reimbursement

ex. Canada, south korea, Taiwan

Single-payer governmnet run unviersal heatlh insurance program, care is mostly deleivered by non profit hospital private providers, hospital clinic. Healthcare services are finaced through government and negociate reimbursment with private.

128
Q

Decentralized national health program (Bismarck model)

A

Required to get health insurance provided by non-profit, nongovernmental health insurance funds or private health insurance

no direct financing/delivery of care by government

ex. Germany, japan, switzerland

Government is not directly involved in providing healthcare or insurance, you are required to get health insurance that is offered by private compainies, but not directly providing the heatlhcare.

129
Q

Out- of- Pocket model

A

Lack of private or government health insurance, shortages of healthcare facilities, low expenditures and poor health outcomes

ex developing countries

Out of pocket model, no private or governmental insurance programs or a mixture of things, shortages of healthcare facilities and providers and do not spend as much on healthcare and have worse health outcomes.

130
Q

Socialized medicine: UK (direct government involvement in funding and provison of healthcare) (ranked the best)

Three innovations in NHS

A
  • National Health Service (NHS)
    started in 1946 (WWII)
  • Three innovations in NHS:
    – Universal comprehensive service
    – Financing through general
    taxation with little or no charge
    at point of service
    – Nationalization of the country’s
    hospitals, providers, acting as insurance company and company that is providing all the healthcare services as well.
131
Q

UK comprehensive coverage

A

– Preventive services; physician
services; inpatient and outpatient
drugs, etc.

132
Q

UK delivery

A

– Primary care delivered by physicians acting as general practitioners (GPs)
directly employed by government
* Act as gatekeepers for other types of care
* Pharmacists may also provide primary care!
– Hospitals are publicly owned and directly funded by the NHS
* Reimbursed on a variation of DRGs

133
Q

How are providers payed in UK

A
  • Providers salaried (remove incentives to overutilize healthcare)
    (similar to managed care in us and gatekeepers and hmos)
134
Q

UK access

A
  • Access:
    – Universal access to care
    – Care is free if visit a NHS provider
  • ~10% of prescription drugs have copays: £9 in 2019 (~$12 USD)
    – Long waiting lists (18 months) and restricted access to certain services (huge issue)
  • ~11% use private insurance for more rapid/convenient access
  • Some may travel to other countries to receive care
135
Q

Canada Healthcare
what is it called and
5 principles

A

*National health insurance program
for everyone known as Medicare
– Not the same Medicare as in the US!
* Government-financed insurance,
private facilities/providers
* Created in 1966 with 5 principles:
– Portability
– Comprehensiveness
– Universality
– Accessibility
– Public administration

136
Q

What is unique about canada

A
  • Each province/territory has a
    different health insurance plan
137
Q

Canada Delivery

A
  • Delivery
    – Primary care delivered by privately employed primary care physicians
  • Act as gatekeepers for other types of care
  • ~50% of physicians are PCPs (only <1/3 in US)
    – Most hospitals are nonprofit and privately owned
  • Negotiate reimbursement with Medicare
  • Fee-for-service payment
138
Q

Canada Access

A

– Universal access to care
– No cost-sharing for physician care, hospital services, inpatient drugs
* May have costs for other services
* BUT only developed country with universal health care that does not have universal coverage for outpatient prescription drugs
– Long waiting lists
* ~2/3 use private insurance as a supplement to Medicare for noncovered benefits (including outpatient drugs)

139
Q

Germany Healthcare- Decentralized

A
  • World’s oldest national healthcare system (since 1883)
    – No comprehensive national health plan
    – Requires employers and employees to obtain private health insurance
  • Enroll in a “sickness fund” – insurance plans provided by non-profit,
    publicly regulated corporations
    – Funded by taxes based on income
  • Each plan provides comprehensive coverage:
    – 85% enroll in a sickness fund
    – 11% opt out and buy private/supplemental coverage (better access)
    – 4% receive free medical services (e.g., unemployed)
140
Q

Germany delivery

A

– Care primarily provided by private facilities/providers
* Mix of public, private, nonprofit, and private for-profit hospitals
* Office-based physicians reimbursed using fee-for-service
* Hospitals reimbursed using DRGs

141
Q

Germany Access

A

– Majority of services free at point of service
– Approved medications covered by insurance with patient copayment
* Utilize reference pricing
– Government sets price based on performance of new drug vs competition
– Sickness funds can negotiate with manufacturers for additional savings
– Access to care considered one of the best in the world

142
Q

Describe how the healthcare systems of the United Kingdom, Canada, and Germany compare to the healthcare system in the United States.

A
  • Compared to other countries, the US has:
    – Less government involvement
  • Bigger role of private sector
  • More spending
    – Plentiful supply of physicians, technology, health resources
    – Cost-containment strategies focus on increasing cost-sharing
  • Less egalitarian distribution of resources
    – Lots of disparities in access to care and health outcomes
143
Q

Drug policy in other countries

A

– Government negotiates prices for drugs on behalf of the country
– Government decides coverage of drugs (national formulary)
– Government determines patient cost-sharing (if any)
– ↑ negotiating power = ↓ prices

144
Q

United states drug policy

A
  • United States
    – All insurers negotiate discounts, determine formulary coverage, and
    set patient cost sharing individually
  • Medicare Part D, Medicaid, VA, private insurance, etc.
  • Medicare expressly prohibited from negotiating with manufacturers on
    behalf of entire program (changing in 2026!)
    – ↓ negotiating power = ↑ prices
145
Q

Where does the socialized medicine model appear in the us?

A

Government both payer and provider: like the VA in US, closed system, pay and provide

146
Q

Where does the national health insurance model appear in the us?

A

Public government run insurance, private providers, medicare or medicaid (different provence)

147
Q

Where does the decentralized national health program appear in the us?

A

Private insurnace, have people get private insurance and all healthcare is provided, private company, private providers (medicare part d also)

148
Q

Community has what type of payments

A

retrospective

  • Prescriptions, MTM services
    – Billed to patient’s prescription drug insurance
149
Q

Hospital/clinic

A

– Typically prospective payments
* Payment for drugs tied to other health services
– Sometimes retrospective payments
* Drugs paid for separately from other services
– Billed to patient’s medical insurance

150
Q
  • Fee-for-service (retrospective payment)
A

– Paid individually for each service
* No incentives to ↓ utilization/costs
* Incentive to ↑ use – “provider-induced demand”
– Used to pay pharmacies for outpatient prescription drugs
– Common for health care services in community setting

151
Q
  • Capitation (prospective payment)
A

– Prepayment: paid fixed amount regardless of services provided
* Paid a fixed amount for each covered patient “per member month (PMPM)”
* Incentive to ↓ utilization/costs, ↓ hospital length of stay
* Risk for undertreatment with prospective payment?
– Some use to pay for health care services in hospitals, managed care
* Commonly used by managed care organizations
* Sometimes used for health services in community setting (e.g., PCP in HMO)

152
Q
  • Per diem (prospective payment)
A

– Paid flat rate per day regardless of actual cost
* Incentive to ↓ utilization/costs similar to capitation
* BUT no incentive to control length of stay
– Common approach used in managed care for hospitals
– Used by Medicare for skilled nursing facilities, home health, hospice, etc.

153
Q
  • Diagnosis-related groups (DRGs) (prospective payment)
A

– Also known as Inpatient Prospective Payment System (IPPS)
– “Bundled” payment approach
– Paid a flat fee for each diagnosis or disease state
* Incentive to ↓ utilization/costs, length of stay
– Used by Medicare (Part A) & Medicaid for hospital care

154
Q
  • Value-Based Purchasing (VBP) Program
A

– Created by Affordable Care Act for Medicare patients
* Voluntary participation
– Incentive payment program for hospitals
* Encourage hospitals to improve clinical processes of care
instead of purely cost containment
– Rewards hospitals based on quality of care provided
* Part of DRG payment withheld until end of year (2%)
* Each hospital in program assessed for care quality
– Clinical outcomes, patient engagement, safety, efficiency / cost reduction
* High performing hospitals paid bonus incentive payments

155
Q

Comparison of Payment Approaches
* Hospital admission for heart attack, heart failure
– Services provided: surgery, MD time, RN time, drugs administered,
RPh services, etc.

A
  • Approaches discussed:
    – FFS: bill each product/service individually
  • 5+ billed items (surgery, each drug, etc.)

– Capitation: set amount each month for ALL care
* Regardless of how little/much care provided regardless of setting

– Per diem: paid flat amount for each day in hospital
* Regardless of how little/much care provided

– DRG: paid flat amount for treatment of each condition
* Paid for two diagnoses: 1) heart attack 2) heart failure
– VBP Program
* Similar to DRG, but hospital could receive incentive payment at end of year

156
Q
  • Public payers (Medicare, Medicaid)
A

– Prospective payment, bundled payments
– Accreditation required to receive reimbursement

157
Q

Private payers

A

– Fee-for-service, bundled payments
– Market power to negotiate
* # of hospitals in area, # of providers, etc.

158
Q
  • Self-pay (uninsured)
A

– Very uncommon
– Discounts may be available

159
Q
  • Charity care
A

– Costs “written off” for tax purposes…
– BUT costs may be shifted to other payers

160
Q

Describe characteristics and give examples of interdisciplinary care approaches. (Chapter 9)

A

Healthcare shifting to this
* Integrated, interdisciplinary care approaches
–Groups of doctors, hospitals, and other health care
providers who come together to give coordinated,
high quality care
* Accountable Care Organization (ACO)
* Patient-Centered Medical Home (PCMH)
–Less focus on transaction-based (FFS) payments
–More incentive-based payments (e.g., VBP)
* Tied to quality, appropriateness, safety, efficiency
* Providers share risk

These programs have less of a focus on transaction-based or FFS payments, and instead provide incentive-based payments that are tied to the quality, appropriateness, safety, and efficiency of care provided. As a result, the group of providers and organizations share some of the risk of the costs of care, which is a similar idea to the managed care ideas we discussed earlier in the semester.
The main difference is that these approaches are more broad and may involve coordination across facilities or organizations, and move incentives away from pure cost containment and more towards quality and value.

161
Q
  • Prospective reimbursement (set amount)
A

–Pharmacy is a “cost center”
* Payments need to cover drugs and pharmacy services
* Balance between lowest cost and patient outcomes

162
Q
  • Non-prospective reimbursement
A

–Pharmacy is a “revenue generator”
* Pharmacy has something to “sell”
* Cover costs in other areas that are not revenue
generators
– E.g., housekeeping, food services, etc.

Conversely, when payment is on a FFS basis, pharmacy becomes what is known as a “revenue generator”. That is, pharmacy has something to “sell” in the form of drugs and services that can be used to generate a profit for the hospital. These payments can be used to cover costs in other areas that don’t generate revenue for the hospital but are necessary to ensuring the continued operation of the hospital such as housekeeping or food services. Similar to our discussion of managed care vs FFS, there are different incentives for the hospital depending on how the payments are structured. When payment is prospective, there is an incentive to be highly efficient and minimize costs, so drugs and pharmacy services may be utilized to a smaller extent. In contrast, the FFS approach actually provides an incentive to USE drugs and pharmacy services in order to generate income and profits for the hospital.

163
Q

Describe how clinical pharmacist services are billed and reimbursed.

A
  • Most medical insurance plans will NOT pay for pharmacist
    services
  • Medicare Part D
    – Part D plans required to reimburse pharmacists for providing MTM
    – Reimbursed on fee-for-service basis
  • Wisconsin Pharmacy Quality Collaborative (WPQC)
    – Group of public/private payers and pharmacies that pays
    pharmacists for providing MTM & CMR/A services to eligible patients
    – Reimbursed on fee-for-service basis
  • Wisconsin Medicaid Pharmacist Provider Status legislation
164
Q

Describe Wisconsin pharmacist provider status legislation and the basics of billing Wisconsin Medicaid.

A

Wisconsin Medicaid Pharmacist Provider
Status legislation
* 2021 Wisconsin Act 98 added pharmacists to the list of recognized
health care providers in WI whose services must be reimbursed by
WI Medicaid
* ALL pharmacists in ALL practice settings eligible
– No additional training or certification required
– MUST enroll as a Medicaid provider (not all pharmacists will do so)
– Pharmacist National Provider Identifier number (NPI) required (most
pharmacists have one)
* Does NOT change pharmacist scope of practice
– Cannot be reimbursed for services outside pharmacist scope of practice
– Pharmacists can enter collaborative practice agreements (CPAs) with
physicians to provide services outside the typical pharmacist’s scope of
practice (fairly uncommon)

165
Q

Wisconsin Medicaid Billing Basics

A
  • Billing WI Medicaid for pharmacist services (MEDICAL benefit)
    – Bill for services using HCPCS and CPT codes
  • Healthcare Common Procedure Coding System (HCPCS) and Current Procedural
    Terminology (CPT) Codes: Standardized codes that represent medical procedures,
    supplies, products and services
    – ICD-10 or Z-series diagnosis codes required on all claims submitted to Medicaid
    for medical services
  • Documentation required to support all billed medical services
    – Detail and extent of documentation must be consistent with industry coding
    guidelines
    – Pharmacist providers may need to contract with a third-party billing service
  • Details TBD
    – Appropriate billing incredibly complex and difficult
  • New software and processes for documentation, billing, reconciliation, staffing, obtain
    health plan approval as a provider, audits, etc
166
Q

Describe the role of professional associations .

A
  • Professional Associations: Seek to further a particular
    profession, the interests of individuals (members) engaged
    in that profession and the public interest
  • Typically nonprofit
  • Association Management: Field of management that
    focuses on management of associations
  • Statistics
  • 25,000 national
  • 65,000 local, state, or regional associations
  • Employ > 500,000 professionals
167
Q

and the importance of professional organization involvement

A

Helps to further your career / take charge of your career
– Professional advocacy & advancement
* Provides a network
– A community
– Idea sharing
– Mentorship opportunities
– Opportunities to participate as a volunteer
* Provides learning opportunities and broadens your knowledge
* Provides career resources
– Career resources and connections
– Targeted job postings for area of interest

168
Q
  1. Describe the levels of policy development & enforcement that impact pharmacy practice.
A

Policies shaped by practice and also advance and develop practice

ASHP develops official professional policies for the continuum of pharmacy pratice settings in integrated health systems.

Policy positions: short pronouncements on one aspect of practice

Guidance documents: statements, guidelines (programmatic & therapeutic)

169
Q

Legislative policy

A

Laws are passed by a legislative body and regulations are codified actions of administrative agencies, and have the force of law. Often times legislation is the guideline and authorization for regulatory action

Legislative: Legislation refers to the preparation and enactment of laws by a legislative body through its lawmaking process. The legislative process includes evaluating, amending, and voting on proposed laws and is concerned with the words used in the bill to communicate the values, judgments, and purposes of the proposal.

170
Q

Regulatory policy

A

“Regulatory. policy includes all policies aimed at improving the development and application of rules and other instruments public authorities use to influence the behavior of (private or public) actors in the public interest.”

171
Q

Practice Policy

A

Refers to the practice involving the design, implementation, evaluation or reform of policies through which governments or health and welfare service organizations govern the provision of benefits and services to people.

172
Q

Legislative (laws)

A

Statutes
give guidance, define
authority
Federal: FFDCA, SSA
State: Pharmacy
Practice Act (Ch. 450) &
Uniform Controlled
Substance Act (Ch.
961)

173
Q

Administrative (rules) regulations

A

Regulations give detail and
outline enforcement within
delegated authority
Federal: CFR Title 21
State: PHAR
Administrative Rules

174
Q

Identify resources to access during a medication shortage.

A

Medication Shortages Policy
* Federal: Food and Drug Administration Safety
& Innovation Act (FDASIA) requires companies
to notify FDA when manufacturing changes could
lead to supply disruption
* State: Price gouging prevention laws
* Professional: Mitigating Drug Product Shortages Policy
Position (1905)

ASHP/Drug-shortages

175
Q

Discuss the implications of the recognition of pharmacist services.

A

(II) pharmacist services furnished by a pharmacist, as
licensed by State law, individually or on behalf of a
pharmacy provider
▪ (i) which the pharmacist is legally authorized to
perform in the State in which the individual
performs such services;
▪ (ii) as would otherwise be covered under this part
if furnished by a physician, or as an incident to a
physician’s service; and
▪ (iii) in the setting located in a health
professional shortage area (as defined…),
medically underserved area, or medically

  • Expands Medicare coverage to permanently include services
    provided by a pharmacist, including incidental services and
    supplies, related to testing, drug regimens, and vaccines for
    COVID-19, influenza, and certain other illnesses
  • Provides for continued coverage of pharmacist services relating
    to testing and vaccines for COVID-19 and influenza
  • Provides for coverage of testing for respiratory syncytial virus
    and streptococcal pharyngitis (i.e., strep throat) and the
    initiation of drug regimens that are used to treat COVID-19,
    influenza, or strep throat
  • Reimbursement authorized for 85% (or 100% during a declared
    emergency) of the applicable amount

Medicare does not pay providers. Medicare pays
for services delivered by recognized and
qualified health care providers.
▪ Section 1861(s) Medical and Other
Health Services
* The benefit aims to improve outcomes & quality
achievement in Medicare Part B AND contribut directly to goals for cost savings within
Medicare Part A, including reduction in
avoidable hospitalizations, readmissions, and
emergency department visits
* Congress has the capacity to consider
multiple proposals

ASHP believes that all pharmacists have a professional
obligation to advocate on behalf of patients and the
profession.
* Pharmacists should stay informed of issues that affect
medication-related outcomes and advocate on behalf of
patients, the profession, and the public.
* ASHP urges all pharmacists to accept this responsibility and
to be advocates both within and outside the profession, in
the community, and in society as a whole to strengthen the
care of our patients.

176
Q
  1. Describe and discuss the need for health care reform in the United States.
A

Iron triangle of health care

cost, quality, access

177
Q

Describe how the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) has impacted the health care system.

A
  • AKA Medicare Modernization Act or MMA
  • Signed into law (G.W. Bush) in 2003
  • Largest overhaul of Medicare since 1965
  • Created Medicare Part D
  • Created current structure of Part C plans
  • Required Part D plans to support e-prescribing
  • Created Health Savings Accounts
178
Q

Compare and contrast characteristics of health savings accounts (HSAs) and flexible spending accounts (FSAs).

A
  • Tax -free savings accounts used to pay OOP medical expenses (+Rx drugs)
    – Annual contribution limits determined by IRS (varies each year)
  • Health Savings Accounts (HSAs)- type of plan and differ in what happens to money
    – MUST be enrolled in a HDHP (high deductible health plan) (covered on next slide)
    – Funds roll over, accumulate year to year (similar to a bank account)
  • Flexible Spending Accounts (FSAs, Flex accounts)
    – Can be used with ANY type of insurance (HDHP or traditional)
    – Funds lost at end of year (accurate budgeting important!)
  • Plans MAY allow 2 ½ month grace period OR up to $570 carry over (2022)
  • Some HSA/FSA accounts may use indemnity benefit approach (full cost upfront and reimbursed later)

2,000 HSA, keep adding, never lose

FSA, if you dont spend 2,000 whatever is left goes to the government and you lose it.

HSA- have to enroll in high deductible

179
Q

High Deductible health plans

A
  • High-Deductible Health Plans (HDHPs)
    –Catastrophic coverage
    –Low premiums, high deductibles
  • Minimum $1,500 single / $3,000 family deductible (2023)
  • Maximum $7,500 single / $15,000 family out-of-pocket limit (2023)

Prevent moral hazard
Dont know numbers, monthly premium is very low

180
Q

Describe the implications of high deductible health plans for insureres

A

Young healthy people pulled out of insurance pool
Sicker people in more traditional insurance

181
Q

Describe the implications of high deductible health plans for patients

A

Young healthy people enroll
-a lot of of medical expenses before you can use it.
-put off getting care, cant use insurance
-underinsurance

182
Q

Describe the major provisions included in the Affordable Care Act (ACA).

A
  • AKA ACA or PPACA or ObamaCare
  • Signed into law (B. Obama) in 2010
    –Most provisions phased in by January 2014
    –Was to be fully implemented by 2020
  • Biggest change to health care since Medicare/Medicaid (1965)
    –Impacted nearly every aspect of the US health care system
  • Insurance, payment, infrastructure, workforce, research, etc.
    Targeted private insurance
  • Coverage
  • Pre-existing conditions*
  • Longer coverage for young
    adults (age 26)
  • Costs
  • Ends lifetime & annual limits
    on coverage*
  • Requires insurers to publicly
    justify premium increases*
  • Care/Access
    –Insurance mandate*
    –Subsidies* & Medicaid expansion*
    –Health Insurance Marketplace*
    –10 Essential Health Benefits*
  • Prescription drugs*
    –Preventive care at no cost*
  • Oral contraceptives*
  • Modified or repealed
  • Targeted for reform

Overturned or changed since law was passed, only thing that was liked kids stay on parents insurance until 26.
-dont hold accountable for these on exam, constantly changing

183
Q

Health insurance exhange marketplace

A

increase rates of people who have private insurance, increase medicaid enrollment through health insurance exchange

184
Q

Describe how the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)
has impacted the health care system.

A
  • AKA MACRA
  • Signed into law (B. Obama) in 2015 with bipartisan support
  • Largest change to health care post-ACA
  • Changes the way Medicare doctors are reimbursed in 2019
    –Focus on quality and value
  • Shift from FFS to “pay for performance” payments
  • Use of incentives and penalties
    Payed more if you do a good job
  • Increased Medicare funding
  • Funding extension to the CHIP program
185
Q

Describe other recent health care reforms impacting pharmacy.

A
  • PBM Reform (2021 WI Act 9) (scope of practice the same)
    – Increases PBM price transparency to encourage PBMs to pass on greater proportion of rebates received from manufacturers to health plans / employers
    – Banned pharmacy “gag clauses” (charging more, pharmacists can help patients find the cheapest way to get their drugs)
    – Imposed limits on pharmacy audits & retroactive claim reductions
  • WI pharmacist provider status (2021 WI Act 98) (scope of practice the same)
    – Established pharmacists as providers in the WI Medicaid Program & requires reimbursement for pharmacist patient care activities
  • Contraceptive prescriptive authority (2021 WI AB36) – still pending (expand scope of practice)
    – Would allow pharmacists to prescribe oral/patch contraceptive products
  • Requires patient self-administered questionnaire and pharmacist reporting to PCP
  • Requires Medicaid payment for prescribing services (and dispensing separately!)
186
Q

Describe the general impact of health care reforms on pharmacists.

A
  • New roles for pharmacists
    – Payment incentives for team-based care involving pharmacists
    – Greater focus on patient care-oriented roles (e.g., “provider status” legislation)
  • Pharmacists can be directly involved in policymaking process
    – Serve on governmental committees, expert testimony for legislators, PSW, national associations
  • Pharmacists as patient educators
    – Explaining changes to insurance coverage & covered benefits
    – Assistance with navigating the US health care system
    – Assistance with identifying eligibility, enrollment
  • Pharmacists need to stay current on new laws and policies
    – Understand impact on and implications for pharmacy practice
    – Answering questions / explaining to patients (of varying political backgrounds!)
187
Q

PBMS:

  1. Drug Information
    What is drug information?
A
  • Timely and accurate research and evaluation of literature, including:
    comprehending study designs, statistical analyses, study limitations,
    applicability, and clinical significance
    What are examples?
  • Drug monographs/drug class reviews
  • Pipeline assessment
  • Client inquiries
  • Utilization management development
188
Q
  1. Formulary Management
    What is a formulary?
A
  • A list of prescription medications that have been evaluated by a P&T
    Committee made up of physicians, nurses, practitioners and pharmacists
    to offer the greatest value both clinically and financially to patients
    Why do we have a formulary?
  • Formularies are created to try to control medication costs while providing
    the best care for patients
  • Medications are typically grouped into tiers based on their cost and
    clinical efficacy
189
Q
  1. Utilization Management
    What is utilization management?
A
  • A set of techniques used in the PBM industry to encourage safe, effective,
    and economical medication use
    What are examples?
  • Prior Authorization
  • Quantity Limits
  • Split Fills
  • Mandated Specialty Pharmacy
  • Step therapy
  • Medical Exceptions
  • Grievance and Appeals
190
Q
  1. Client Management
    What is client management?
A
  • Management and coordination of the clinical relationship with existing
    clients
  • Works to improve the quality of care while controlling or decreasing
    overall health care costs
    Pharmacist’s role
  • Recommend, implement and evaluate clinical programs and services
  • Responsible for the account relationship and ultimate retention of the
    account and growth of the business
191
Q
  1. Industry Relations and Contracting
    What is Industry Relations and Contracting?
A
  • Entails pharmacoeconomic activities and rebate contracting with
    manufacturers
  • Handles contracting strategies and management, financial decision
    making, economic modeling, and budget impact analysis
    Pharmacist’s Role
  • Responsible for establishing, maintaining and enhancing effective
    relationships with Pharmaceutical Manufacturers and negotiating
    contracts with respect to rebates and discounts for formulary inclusion
  • Provide formulary decision support through appropriate cost modeling,
    rebate forecasting and budget impact analysis for clients and sales
    prospects
192
Q
  1. Provider Services
    What is provider services?
A
  • The development, monitoring, and maintenance of retail, mail and
    specialty pharmacy networks. This may include broad, limited, preferred,
    and/or client custom networks.
    What are examples?
  • Pharmacy credentialing
  • Pharmacy contracting
  • Pharmacy auditing
  • Development of quality networks
  • Network compliance
193
Q
  1. Population Health
    What is population health?
A
  • Defined as “the health outcomes of a group of individuals, including the
    distribution of such outcomes within the group”
  • An approach to health that aims to improve the health of an entire population
    How do we manage this?
  • Design, implement and monitor outcomes of population-based clinical
    programs
    What are examples?
  • Retrospective Drug Utilization Review (RDUR)
  • Concurrent Drug Utilization Review (CDUR)
  • Prospective Drug Utilization Review (PDUR)
  • Pharmacoadherence
  • Respiratory Health Management
  • Pharmacogenomics
194
Q
  1. Government Programs
    What is Government Programs?
A
  • Entails pharmacy benefit management in the government setting (Medicare and
    Medicaid), and meeting Medicare and Medicaid requirements
  • Divisions within Government Programs may include: Formulary, Utilization
    Management, Prior Authorization, Client Management
    Pharmacist’s Role
  • Medicare benefit is highly regulated and has strict requirements
  • The Centers for Medicare and Medicaid Services (CMS) strives to make regular
    improvements to the Medicare Program
    −New guidance released on a yearly, quarterly, monthly, and even daily basis
  • Current Medicare topics of interest: medication assisted treatment (MAT), safe use
    of opioids, medication adherence, and compounding
195
Q

Manufacturer Relations
(Quarterly Buisness Report) (QBR)

A

Data providing insight to manufacturer on various metrics including
* Cycle Time
* Turn Around Time
* Conversion Rate
* Adherence
* Payer Dynamic Profile
Provide data based on specific manufacturer’s needs in contract

196
Q

Which of the following are factors leading to changes in demand

prices of related goods
availability of substitutes
resource costs
expectations with respect to futire prices and income

A

prices of related goods

expectations with respect to future prices and income

197
Q

a demand curve showing changes in the quantitiy demanded is most reflective of the US health care system

true or false

A

false

198
Q

An oligopsony is an example of a demand-side market structure where there are many sellers but few buyers

true or false

A

true

199
Q

Which of the following is false about the various types of drug prices

estimated prices are payer estimates of net prices

net prices include discounts and rebates

list prices are less than or equal to net prices

the average manufacturer price (AMP) is an example of a net price

A

list prices are less than or equal to net prices

200
Q

which of the following is true regarding the average wholesale price (AWP)

it is a net price

pbms use it as a basis for reimbursement to pharmacies

it is an accurate reflection of true market prices

it is used when a wholesaler buys a drug from a manufacturer

A

pbms use it as a basis for reimbursement to pharmacies

201
Q

Which of the following is true about the maximum allowable cost (MAC) prices used to determine PBM reimbursement?

all private payers use the same MAC prices

the MAC price can only be determined once there are 3+ drugs on the market

A MAC price is not available for all generic drug

The MAC price is used to prevent overpayment for brand name drugs

A

A MAC price is not available for all generic drug

202
Q

Which of the following payment approaches is not included in the “lesser of” provision of private PBM contracts with pharmacies

usual and customary price

EAC + dispensing fee

NADAC + dispensing fee

MAC + dispensing fee

A

NADAC + dispensing fee

203
Q

Private PBMs typically pay dispensing fees that fairly reimburse pharmacies based on the actual cost of dispensing a drug

true or false

A

false

204
Q

Which of the following is true regarding manufacturer drug rebates with PBMs

They may be structured as flat discounts off the price of the drug

fewer competitor drugs on teh market means manufacturers are forced to offer larger rebates

by law, manufacturers are required to offer rebates to medicaid programs

volume discounts varry vased on the PBM’s ability to increase market share for a drug

A

They may be structured as flat discounts off the price of the drug

by law, manufacturers are required to offer rebates to medicaid program

volume discounts varry vased on the PBM’s ability to increase market share for a drug

205
Q

Pharmacy benefit managers negotiate drug costs with manufacturers, contract with pharmacies, and maintain drug formularies to lower drug costs and promote member health

true or false

A

true

206
Q

Which of the following is false about pharmacist roles within PBMS

provider services involves the development, monitoring and maintenance of pharmacy networks

industry relations and contracting involves the management and coordination of the clinical relationship with existing clients

utilization management involves the use of a set of techniques to encourage safe, effective, and economical medication use

drug information involves the timely and accurate research and evaluation of literature.

A

industry relations and contracting involves the management and coordination of the clinical relationship with existing clients

207
Q

soecialty pharmacies are required to provide data and report certain metrics to pharmaceutical manufacturers as part of their contracts in exchange for access to certain specialty drugs

true or false

A

true

208
Q

Which of the following is TRUE about health care spending in the United States compared to other countries

the Us spending significantly less than other countries on non-clinical (administrative) costs

the us spends more on health care than most countries spend on their entire economy

the us has spent more on healthcare than other countries only in the recent years

public health care expenditures are significantly higher in the US than other countries

A

the us spends more on health care than most countries spend on their entire economy

209
Q

Which of the following is true about the four basic healthcare models?

in socialized medicine, care is mostly delivered by non-profit private hospitals

in the national health care insurance models, the government employs healthcare practioners and owns healthcare facilities

in the national health insurance model, there is negotiated reimbursement between the government health insurance program and providers

in the decentralized national health program, there is little or no direct financing or delivery of care by the government.

A

in the national health insurance model, there is negotiated reimbursement between the government health insurance program and providers

in the decentralized national health program, there is little or no direct financing or delivery of care by the government.

210
Q

When it comes to demand for prescription drugs, numerous studies have found that the price elasticity of demand is less than 1, ranging from -0.18 to -0.60, a situation referred to as “inelastic demand.”

A

….

411 (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions