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Pharmacy Management (P1 Spring) > Third-party payers > Flashcards

Third-party payers Flashcards

1
Q

______ _is a public or private organization that reimburses for ALL or PART of the patients RX DRUG COSTS.

A

Third-party

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2
Q

T/F?

Third- party patient payments are made DIRECTLY to the PHARMACY

A

True

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3
Q

What type of patient has all or part of RX drug cost paid by an ORGANIZATION.

A

Third-party patient

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4
Q

Name the 2 types of 3rd parties.

A

Public and Private

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5
Q

T/F?

PRIVATE 3rd parties government entities.

A

False
PUBLIC
ex. Medicaid and Medicare

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6
Q

_______ 3rd parties are INSURANCE COMPANIES that pay for RX cost.

A

Private

ex. Manufacture’s w/ patient assistance programs

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7
Q

___ ___ Patients’ are responsible for 100% of the payment for all prescription drug costs at the time of service.

A

Private Pay

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8
Q

Private Pay patients are also referred to as ___ .

A

Cash patients

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9
Q

Payment is made directly to the pharmacy by the patient for which type of 3rd parties?

A

Private Pay

Indemnity

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10
Q

T/F?
Private pay patients do not have any health insurance coverage or an insurance plan that does not cover prescription drugs.

A

True

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11
Q

Name the 3rd Party

Patients’ are responsible for 100% of the payment for all prescription drug costs at the time of service.

A

Indemnity Insurance

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12
Q

What’s the difference between Private pay patients and Indemnity patients?

A

Indemnity patients

pay for their prescriptions and are later reimbursed by the insurance company

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13
Q

What are the 2 types of Private Pay methods?

A

Indemnity

No insurance

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14
Q

What are PBMs?

A

Prescription benefit mangers

-hired to by third-party payers to provide prescription claims processing and establish pharmacy networks

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15
Q

What are the 4 other services provided by PBMs?

A
  • Rebate negotiation with manufacturers
  • Formulary development
  • Drug utilization management
  • Disease state management
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16
Q

How does 3rd party payments effect pharmacy management?

A 
Private-pay= pharmacy determines what price to charge patient 
Third-party= reimbursement is determined by a contract between the 3rd party and the pharmacy.
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17
Q

T/F?

Level of reimbursement from 3rd party contracts VARIES.

A

True

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18
Q

What needs to be considered when signing a 3rd party contract?

A

Gross margin

- the difference between reimbursed price and the cost of goods sold

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19
Q

T/F?

PHARMARCIES determine network participation.

A

False

-PBM

20
Q

T/F?

Cost of dispensing is greater for cost of 3rd party RX in opposed to Private-pay RX.

A

True

21
Q

Is net profit greater for Private pay RX or 3rd Party Rx?

A

Private pay

22
Q

T/F?

Third party RX net profits have lower reimbursement and increased cost of dispensing.

A

True

23
Q

Reimbursement Rate is typically the lower of the two:

A
  • price from RR formula

- usual and customary (cash price)

24
Q

AWP

A

average wholesale price (MRSP)

25
Q

WAC

A

wholesale acquisition cost (what did the wholesaler pay for the drug)

26
Q

EAC

A

estimated acquisition cost (what do we think pharmacies paid for this drug)

27
Q

MAC

A

maximum allowable cost

28
Q

T/F PBM dispensing fees are intended to cover the “cost of dispensing”

A

TRUE

29
Q

Things to consider when evaluating Financial Impact of reimbursement rate?

A
  • cost of dispensing
  • average net profit comparison
  • differential analysis
30
Q

Average dollar amount it costs for a pharmacy to dispense a prescription over and above the cost of the drug product

A

cost of dispensing

31
Q

Why is cost of dispensing important? (2)

A
  • establishing adequate pricing structure

- evaluation of third party insurance

32
Q

costs associated with providing prescription services?

A

direct cost (salaries associated with Rx activities, rx packaging)

33
Q

costs SHARED within the business?

A

indirect cost (proportionate to the size of Rx dept and proportionate to rx sales)

34
Q

Fixed COD or Variable COD expenses?

Rent, utilities, security, advertising, computer support, advertising, “other”

A

FIXED COD expense (do not change when RX volume increases or decrease)

35
Q

Fixed COD or Variable COD expenses?

Rx vials, Rx transmission fees, delivery costs, credit card fees

A

Variable COD expenses (Expenses DO change when RX volume increase or decrease)

36
Q

Is labor a fixed or variable expense?

A

difficult to determine may be different depending on the scenario and change in rx volume

37
Q

T/F Rule of Thumb, RX volume has to change about 20% before you make a “labor change”

A

TRUE

38
Q

T/F If the contribution margin is NEGATIVE, then it suggests that the contract should be accepted

A

FALSE: POSITIVE

39
Q

Last step in determining the effect a third-party contract will have on ______

A

pharmacy financials

40
Q

What is the effect of the decision to accept / decline a third-party contract on CUSTOMERS? (2)

A
  • Customers will be forced to go elsewhere in network to obtain their prescriptions
  • Customers may not “understand” why they have to go elsewhere
41
Q

What is the effect of the decision to accept / decline a third-party contract on the PHARMACY’S IMAGE? (2)

A
  • Customers may view the pharmacy as one that “doesn’t accept a lot of insurance plans”
  • Customers may view the pharmacy as one that provides exceptional service and avoids “every contract out there”
42
Q

What is the effect of the decision to accept / decline a third-party contract on remaining private-pay customers?

A

If a pharmacy accepts lower RR, then it may make-up lost revenue by increasing private-pay prices

43
Q

________: requires pharmacies to extend their lowest price or reimbursement rate to the third party

A

“most flavored nation” clause

44
Q

_________:requires pharmacies to participate in ALL of the third party’s plans if it wants to participate in any one plan

A

“all products” clause

45
Q

What are possible strategies for pharmacies to maintain profit? (3)

A
  • increase RX volume
  • diversify sources of revenue (MTM, DME, Specialty services)
  • decrease expenses
46
Q

________ pharmacy agrees to charge the patient no more than the amount specified by the contract

A

accepting assignment

47
Q

T/F Pharmacy CANNOT “balance bill” the patient

A

TRUE

Pharmacy Management (P1 Spring) (11 decks)

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