Test 3 Pharmacy Networking and Contracting Flashcards
How does PBMs handle risk in their contracting with sponsors or health plans?
- they do not assume financial risk; makes it the responsibility of the sponsor
- they give a performance standard to their sponsor; if they do not meet it, the sponsor can enforce a penalty
components of sponsor contract
- includes specific costs
- performance expectations
- typical fees
- performance guarantees
Process of rx claim reimbursement
- PBM pays the provider
- health plan or sponsor reimburses the PBM
components of a PBM contract with a pharmacy provider
- Services and standards expected of the pharmacy
- Record retention requirements
- Electronic communication standards
- Requirement for compliance with formulary
- Expectations for online, real-time claims transmissions
- Reimbursement policies
- Enrollment fees paid by the pharmacy
- Advertising and marketing privileges
- Prior authorization policies
define zero balance billing
Pharmacy may charge a member the full copay even if U&C or contract is less than the copay
AWP
- Average Wholesale Price
- The list price published in commercial publications. If not supplied directly from the wholesaler then it is calculated using a markup of WAC. If supplied by the manufacturer it is called SWP or suggested wholesale price.
WAC
- Wholesale Acquisition Cost
- This is the list price for a product when sold by a manufacturer to a wholesaler. It is determined by the manufacturer.
AMP
- Average Manufacturer Price
- The price reported to CMS which represents the average price paid to the manufacturer by wholesalers.
- actual selling price to the wholesalers
AAC
- Actual Acquisition Cost
- This is the final price paid by the pharmacy after all discounts are removed. This price is not published or reported and is determined by self-report, audit or invoices.
EAC
- Estimated Acquisition Cost
- Used by Medicaid programs (can be used by commercial plans as well), EAC is calculated to estimate AAC.
- Typically based on a discounted AWP or an inflated WAC.
- EAC = Unit List Price +/[Unit List Price*%]
- (EAC*Units) + Dispensing Fee
FUL
-
MAC
- Maximum Allowable Cost
- Defined individually by both commercial and government payers as a method for reimbursing multi-source drugs.
- The same price is reimbursed for a given drug formulation and strength regardless of the manufacturer.
- (MAC*Units) + Dispensing Fee
NADAC
- National Average Drug Acquisition Cost
- survey of what pharmacies are actually paying for their drugs
General Reimbursement Equation
Reimbursement Rate = Product cost + Dispensing fee
define COD
- Cost of Dispensing
- all the pharmacy’s costs related to dispensing a prescription, other than the cost of the product
Importance of COD
- important when negotiating contracts
- if contracted dispensing fee is too low, may need to reject
COD formula
Total expenses = Labor + Direct costs + Indirect costs
COD = Total expenses / Total Rx volume
