Unit 2 review Flashcards
Define the basic economic concept of demand and the relationship outlined in the law of demand.
-Limited resources influence consumer demand for health care
-Decrease in price=increase in quantity demanded
change in quantity demanded
Assumes price of good/service changes
change in demand
Assumes price of good/service held constant, horizontal shift on graph, represents healthcare system
Explain the factors that lead to a change in demand for a product or service
price of good, income of consumers, number of consumers in the market, attitude, tastea, and preferences of consumers, consumer expectations of future prices and income.
Define the basic economic concept of elasticity of demand
Measures how responsive is the reaction to a price change
factors that impact the elasticity of demand for a product or service
availability of substitutes(more substitutes=more elastic), price relative to income(more expensive=more elastic), necessity v. luxury, short run v. long run
Define the basic economic concept of supply and the relationship outlined in the law of supply.
-Similar to demand, but from supplier perspective
-Increase in price=increase in quantity supplied
True or false: a change is quantity supplied is caused by demand not a change in supply.
False. Caused by change in supply. Independent of demand
Explain the factors that lead to a change in supply for a product or service
techniques of production, number of sellers in market, resource costs, price of related goods, seller expectations with respect to future prices and income
perfect competition
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
Standard structure
monopolistic competition
relies on product differentiation
monopoly
one seller(brand name)
oligopoly
multiple sellers of similiar products(antihistamines)
Explain how the economics of health care is different from the economics of other industries.
-Numbers of buyers and sellers
-Entry and exit (licensing, accreditation, etc.)
-Variation in products, services, and quality
-Full and free information
-Inelastic demand
-Universal demand
-Unpredictability of illness
-Health care as a “right”
-Supplier-induced demand
-Third-party insurance and -patient-induced demand
Describe how the economic performance of the healthcare system could be improved.
patients aware of costs, provider feedback about performance, reimbursement incentives/penalties, balancing cost and value
list price
estimated average price for a drug, publically disclosed, price before discounts and rebates
net price
actual price paid for drug, closely gaurded secret, price after discounts and rebates
Estimated price
payer estimate of net prices
drug pricing terms used by manufacturers
Wholesale acquisition cost(WAC), set the list price
the factors that influence manufacturer drug prices, and the rationale for those prices.
Production costs
Research and development costs
Taxes and other costs
Profits
factors influencing how much wholesalers pay for drugs
Discounts based on volume, prompt payment, sale of short dated products, performance metrics
associated pricing terms with wholesalers
average manufacturer price(AMP): WAC-X%
factors influencing how much pharmacies pay for drugs
Size of discount tied to market power
Chain v. independent pharmacy
Group purchasing organizations(GPOs)
Combined purchasing power for small pharmacies
Profit tied to buying/selling prices
associated pricing terms for pharmacies
-Average wholesale price(AWP) WAC+20%
-Actual Acquisition cost(AAC) AWP-17%
Describe the factors influencing how much patients pay for drugs without insurance and associated pricing terms.
U&C price=drug ingredient cost(product)+cost of dispensing(service)+net profit
Describe the ways in which PBMs interact with other parts of the healthcare system to impact drug prices
-PBMs interact with manufacturers: rebates and formulary placement
-Offer reimbursement to pharmacies
-Employers / health plans contract with PBMs to manage drug benefits
Describe the structure and goals of contracts between pharmacies and PBMs
Stipulate services be provided by pharmacies in exchange for specific reimbursement, Specify roles and responsibilities,
Goals: increase patient access, quality, and safety, lower costs, increase prescription volume and profits
Describe PBM drug reimbursement
Estimated acquisition cost(EAC): AWP-20%
PBM cost containment approaches
prevent overpayment for generic drugs, Federal upper limit(FUL): Medicaid, requires 3+ drugs on market, Maximum allowable cost(MAC): differs for each payer
payer cost
Payer cost=product cost+service cost-patient cost sharing
Ingredient cost:
best guess by PBM of what it cost pharmacy to acquire drug, may over/underestimate
total pharmacy payment
Total payment: product cost+cost of service+ net profit
Describe the “lesser of” provision in pharmacy contracts and how it impacts pharmacy reimbursement.
Contracts state PBM will pay the lowest of 3 approaches:EAC+dispensing fee, MAC+dispensing fee, Pharmacy’s usual and customary charge
how pharmacies can lower cost of dispensing.
Automation, Fewer pharmacist and more techs, Increase Rx volume, Shorter operating hours
Discuss how Wisconsin Medicaid reimburses pharmacies for prescription drugs.
-Requires all pharmacies to provide AAC
-Used to determine “National Average Drug Acquisition Cost” or NADAC
-Reimburse [NADAC or WAC+0% or MAC]+ dispensing fee
Describe factors impacting the size of rebates, and the implications of drug rebates for manufacturers, PBMs, and employers/health plans.
-Ability to move market share
-Number of competitors(more competitors=more rebates)
-Preferred status on formulary
-OBRA ‘90 law-mandated Medicaid rebates
Discuss issues associated with PBM profits and compare how spread pricing and transparent business models affect PBM profitability.
-Spread pricing-profits a PBM makes from buying drugs and reselling them
-Rebates are major source of profit
-Shift towards transparent business models
Describe pharmacist roles within drug information
Timely and accurate research and evaluation of literature including: comprehending study designs, statistical analyses, study limitations, applicability, and clinical significance
Describe pharmacist roles within formulary managment
Work on a P&T Committee made up of physicians, nurses, practitioners and pharmacists to create a formulary that benefits patients
pharmacist role in utilization management
A set of techniques used in the PBM industry to encourage safe, effective, and economical medication use
pharmacist role is client managment
-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
Industry relations and contracting
Responsible for establishing, maintaining, and enhancing effective relationships with pharmaceutical manufacturers and negotiating contracts with respect to rebates and discounts
provider services
The development, monitoring, and maintenance of retail, mail and specialty pharmacy networks. This may include broad, limited, preferred, and/or client custom networks
Population Health
Design, implement and monitor outcomes of population-based clinical programs
Government Programs
Current Medicare topics of interest: medication assisted treatment (MAT), safe use of opioids,medication adherence, and compounding
Identify PBM cost control strategies and summarize their goals.
pharmacy payments, generic substitution, rebate, formularies, disease management programs, mail service programs, Drug utilization review(DUR)
Identify unique pharmacist roles within a specialty pharmacy.
-Quality and accreditation
-Manufacturer involvement
-Clinical programs
Describe characteristics of a specialty pharmacy product.
No standard definition, cost and complex
filling a specialty drug prescription
-Provider orders prescription
-Benefits investigation
-Prior authorization and appeals
-Financial assistance
-Pharmacist evaluation
-Consult rom pharmacist
-Delivery
-Pharmacist clinical management
Describe access barriers to specialty drugs and ways to address these barriers.
Completion of prior authorization and appeals, Connecting patients with additional resources
Limited distribution drug model
-Manufacturer sells meds directly to pharmacy and has more control over terms and prices
-Only pharmacies within limited network can even purchase drug
-Pharmacies outside of LDD network cannot access the drug
Specialty contract distribution model
Medication only available through one wholesaler
Tradition distribution model
-Multiple wholesalers
-Pharmacies can ‘shop’ around for best price
-No restriction on access
Socialized medicine:
-Healthcare is financed and provided by the government
-Government employs healthcare practitioners and owns healthcare facilities
-UK, Cuba
National Health Insurance Model
-Single-payer, government-run, universal health insurance program
-Care mostly delivered by non-profit private hospitals
-Healthcare services financed by the program with the negotiated reimbursement
-Canada, South Korea, Taiwan
Decentralized National Health Program
-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
UK Health care system
National Health Service(NHS), financing through taxation, universal access, 10% drugs have a copay, capped at $104 pounds/year, long wait list so some get private insurance, medical tourism
Canada Healthcare System
Medicare, hospitals are non-profit are reimbursed with Medicare, long wait lists, 2/3 have private insurance to supplement
Germany healthcare
requires everyone to get private health insurance, funded by taxes on income, government helps set prices of services and drugs
Compare the health care systems of other countries with the United States.
The US has less government involvement, Bigger role of private sector, more spending, less distribution of resources, and lots of disparities in access to care and health outcomes.
Compare drug policies in other countries with the United States.
Drug policy in other countries:
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
Describe the differences between laws and regulations.
Legislative (laws): Statutes give guidance, define authority
Administrative (rules): Regulations give detail and outline enforcement within delegated authority
Describe a medication shortage
a supply issue that affects how the pharmacy prepares or dispenses a drug product or influences patient care when prescribers must use an alternative agent
common causes of shortages
Manufacturing issues
delays/capacity
Raw materials
Increased demand
Loss of manufacturing
Discontinuation
proposed ways to address shortages
-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)
Pharmacy and Medically Underserved Areas Enhancement Act
Pharmacist can be reimbursed for services provided in medically underserved areas
Equitable Community Access to Pharmacy Services Act.
-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
-Reimbursement authorized for 85% (or 100% during a declared emergency) of the applicable amount
Capitation(prospective)
Prepayment:fixed amount regardless of services provided, Incentive to decrease utilization costs and length of hospitalization stay
Per diem(prospective)
Paid flat rate per day regardless of actual cost, Incentive to decrease utilization cost similar to capitation, no incentive to control length of stay
Diagnosis-related groups(DRGs)(prospective
Paid flat fee for each diagnosis or disease state, Incentive to decrease utilization cost and length of stay, Used by Medicare A and Medicaid for hospital care
Value-Based Purchasing (VBP) Program
Created by the Affordable Care Act for Medicare patients, incenticve payment program for hospitals, reward quality care
Describe characteristics and give examples of emerging integrated, interdisciplinary care approaches
-Accountable Care organization (ACO)
-Patient centered Medical Home (PCMH)
-based on incentive based payments
Describe the implications of prospective and non-prospective payment systems on the use of prescription drugs and pharmacy services.
prospective-pharmacy is a cost center, balance between lowest cost and patient outcomes
non-prospective: pharmacy is a revenue generator
Describe how clinical pharmacist services are billed and reimbursed
Most insurance plans will not pay for clinical pharmacist services, WPQC is a group paying pharmacist for MTM and CMR/s services on FFS basis
Describe and discuss the need for health care reform in the United States.
cost, access, quality
Describe how the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) impacted the healthcare system.
Largest overhaul of Medicare since 1965
Created medicare part D and current Part C plans
E-perscribing
Health Savings Accounts
health savings accounts (HSAs)
-Must be enrolled in a HDHP
-Funds roll over and accumulate year to year
-Good for young, healthy people
flexible spending accounts (FSAs)
-Can be used with any type of insurance
-Funds lost at end of year
-Need accurate budgeting
-Plans may allow 2.5 grace period or carry over up to $640(2024)
Describe the implications of high deductible health plans.
Catastrophic coverage
Low premiums, high deductibles
Describe the major provisions in the Affordable Care Act (ACA)
-Affected almost every aspect of healthcare:Pre-existing conditions, Limits on coverage, Premium increases, 10 essential health benefits, Preventive care at no cost
-Modified/repealed: Insurance mandate
subsidies/expansion, Health insurance marketplace, Oral contraceptives
Describe how the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) impacted the healthcare system.
changed the way medicare reimbures doctors, focus on quality and value
Describe the prescription drug provisions in the Inflation Reduction Act of 2022.
impacts medicare part D, federal govn. negoitites price, rebates if price raises faster than inflation, insulin cap, cost sharing vaccines
