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Management > Third-Party Payer Considerations & Audits > Flashcards

Third-Party Payer Considerations & Audits Flashcards

1
Q

What are the functions of PBMs?

A
  1. Contracted by third party payes to provide prescription claims and processing
  2. Create pharmacy netwqorks that participate in their claims management service
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2
Q

Purpose of PSAOs?

A

Used by independent community pharmacies to negotiate third-party contracts to improve bargaining power

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3
Q

What are the functions of a PSAO?

A
  1. Contraction negotiations with PBMs and Health Plans
  2. COntracting wholesales
  3. Billing support
  4. General business support
  5. Pharmacy performance analytics
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4
Q

Price that pharmacies pay the drug wholesaler/manufacturer to obtain the drug product

A

Actual acquisition cost (AAC)

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5
Q

Average of prices paid by different pharmacies for drug products, which is determined by surveying pharmacies

A

Average actual acquisition cost (AvAC)

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6
Q

Average price received by a manufacturer from wholesalers for drugs distributed to the retail pharmacies

A

Average manufacturer price (AMP)

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7
Q

List price for what drug wholesalers charge pharmacies
Overestimation of the price that wholesalers charge the pharmacy

A

Average wholesaler price (AWP)

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8
Q

Third-party payer’s estimate of the price that a pharmacy pays the drug wholesaler/manufacturer to obtain the drug product

A

Estimated acquisition cost (EAC)

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9
Q

Maximum cost that a third-party will pay for a multisource drug, represented by an average of generic drug prices from several manufacturers

A

Maximum allowable cost (MAC)

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10
Q

List price for what drug manufacturers charge drug wholesalers
Overestimation of the price that manufacturers charge wholesalers

A

Wholesaler acquisition cost (WAC)

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11
Q

What are the three different methods third parties use to reimburse for prescriptions?

A

Reimbursement ($) = AWP – 18% + $1.00 dispensing fee

Reimbursement ($) = WAC + 1% + $1.00 dispensing fee

Reimbursement ($) = NADAC + $10.00 dispensing fee

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12
Q

What are DIR fees?

A

direct and indirection remuneration fees

-fees that come in after reimbursement which tend to cut profits

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13
Q

What are the methods of DIR fees?

A

Method 1: Percent of ingredient cost
= (AWP - 18%) x contracted DIR %

Method 2: flar dir fee
= contracted flat $ amount

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14
Q

What are the steps involved in evaluating the financial impact of 3rd party plan reimbursements?

A
  1. Calculating the cost of dispensing a prescription
  2. Examining the average net profit per prescription
  3. DIfferential analysis
  4. Pro froma analysis
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15
Q

What is the average cost of dispensing?

A

$10.79

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16
Q

What are the types of cost?

A

Fixed: doesn’t change, as prescription volume changes (eqipment, license)
Variabl: costs that change directly, as prescription volume changes (vials)
Direct: costs that are completely attributable to the prescription department (labels, vials, labor)
Indirect: costs that are shared between the prescription department & rest of the store (rent, utilities)

17
Q

Average COD =

A

Total expenses / total prescription per year

18
Q

Average net profit =

A

average gross margin = Price - COGS

19
Q

What is differential analysis?

A

COmpares marginal revenue with the marginal cost of dispensing a script for a specific third-party plan

Contribution margin = differential revenue – differential cost

Accept all third-party plans that generate a contribution margin greater than zero (> 0), join it

20
Q

What are the steps to a differential analysis?

A
  1. Calculate the differnetial revenue
  2. Calculate the differntial cost: vials, label, labor
  3. Calculate the contribution margin
21
Q

How do you interpret a contribution marign?

A

greater than zero it would be beneficial to join the network

22
Q

Whart are the scenaros of pro forma analysis?

A
  1. Dont join
  2. Join (low preforming)
  3. Join (high performing)
23
Q

When is pro forma used?

A

uses information from the average net profit comparison and the differential analysis to provide a comprehensive review of the financial implications of joining a preferred pharmacy network

24
Q

What are some other considerations for third-party contracts?

A
  1. Effect on pharmacy customers
  2. Effect on pharmacy staffing
  3. Effect on pharamcy image
  4. Effect on ther 3rd parties
  5. Effect on ther sources of revenue at pharmacy
25
Q

What are the types of audits?

A

Desk: third-parties review claims data, but do not physically come to the pharmacy
Field: third-party representatives visit the pharmacy to review records and procedures

26
Q

What are the tips to avoid on stie audits?

A
  1. Use available services offered by you pharmacy’s PSAO
  2. Carefully review any insurance reimbursement contract before signing.
  3. Conduct sound dispensing and billing practices.
  4. Consistently follow the terms & conditions of the pharmacy service manual provided by the specific insurance company or PBM
  5. Request documentation of fee schedules for all prescriptions that the pharmacy fills
27
Q

What should you not do on an on site audit?

A

Do NOT provide the original documents to the on-site auditor

Do NOT leave the on-site auditor alone with your records or allow the auditor to wander the store

28
Q

Common audits for insulin?

A

Sliding scale insulin prescriptions require you to document:
1. max daily dose of insulin on the prescription
2. Who provides the additional info and their credentials
3. When you obtained this additional info

29
Q

Common audits for topicals?

A

1 FTU = 0.5 grams (adults)

30
Q

Common audits for inhalers?

A

Do not refill medication early

31
Q

General estimation for eye drops?

A

Suspension = 15 drops/mL
Solution = 20 drops/mL

32
Q

DAW0

A

No product selection indicated

33
Q

DAW1

A

Substitution not allowed by prescriber

34
Q

DAW2?

A

Substitution allowed – patient requested brand

35
Q

DAW9

A

Other/sub allowed – plan requests brand

36
Q

What need to be on all CS prescriptions?

A
  1. Patient address
  2. Prescriber address
  3. Prescriber DEA number
37
Q

Common audit descrepancies?

A
  1. Day supply: insulin, topicals, eye drops, inhjalers
  2. DAW codes
  3. CS scripts
  4. Transfer prescriptions
38
Q

What is the major dilemana paharmacies face?

A

Reduced net profit

Participate in the preferred pharmacy network = higher volume, lower reimbursement rates
Decline the third-party’s reimbursement contract = less volume, less profits

39
Q

What are the strategies for maintaining a profitable community pharmacy?

A
  1. Increase prescription volume by recruiting new third-party or private-pay customers
  2. Diversify the pharmacy’s sources of revenue.

Decrease pharmacy expenses

Management (12 decks)

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