Exam 2 Flashcards

Question

Monopolistic competition

Answer 1

relies on product differentiation

Answer 2

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

Answer 3

Multiple sellers of similar products (antihistamines)

Answer 4

– one buyer (government purchasing health care)

Answer 5

– many sellers, few buyers (insurers/PBMs)

Answer 6

* 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

Answer 7

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

Answer 8

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

Answer 9

– 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!

Answer 10

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

Answer 11

– 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

Answer 12

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%

Answer 13

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

Answer 14

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

Answer 15

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

Answer 16

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

Answer 17

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!

Answer 18

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

Answer 19

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

Answer 20

* 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

Answer 21

* AAC = actual price paid by pharmacies – Prices vary considerably by drug (brand ≈ AWP–17%) – Deeper discounts on generic drugs = more profitable

Answer 22

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.?

Answer 23

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

Answer 24

What pharmacy pays for drugs

Answer 25

– 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

Answer 26

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

Answer 27

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

Answer 28

drug ingredient cost (product) + cost of dispensing (service) + net profit Vary from drug to drug.

Answer 29

less than 10% use this model

Answer 30

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

Answer 31

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

Answer 32

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

Answer 33

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

Answer 34

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

Answer 35

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.

Answer 36

↑ 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

Answer 37

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)

Answer 38

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

Answer 39

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

Answer 40

AWP (know the AWP, wish they knew AAC)

Answer 41

estimating good net prices

Answer 42

– Estimated acquisition cost (EAC)

Answer 43

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

Answer 44

Difference between AAC & EAC cost containment approaches – Purpose: prevent overpayment for generic drugs * Maximum allowed prices based on average market prices

Answer 45

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

Answer 46

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

Answer 47

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

Answer 48

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

Answer 49

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

Answer 50

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

Answer 51

Overall goal: payment accurately reflects costs

Answer 52

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

Answer 53

– Reimbursement > pharmacy costs = profit

Answer 54

– Reimbursement < pharmacy costs = loss

Answer 55

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

Answer 56

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

Answer 57

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.

Answer 58

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

Answer 59

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

Answer 60

– 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.

Answer 61

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.

Answer 62

EAC: used by PBMs to reimburse pharmacies

Answer 63

limit on generic drug prices for government programs

Answer 64

limit on prices for generic drugs

Answer 65

National average of AAC

Answer 66

cash price for uninsured

Answer 67

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.

Answer 68

* 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)

Answer 69

(set amount that you receive regardless on how much that drug is used) or a combination of the two approaches

Answer 70

– 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.

Answer 71

required minimum 23.1% rebate brand and 13% rebate generic

Answer 72

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

Answer 73

accountability and reduced drug spend

Answer 74

– 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)

Answer 75

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?

Answer 76

* 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.

Answer 77

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

Answer 78

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

Answer 79

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

Answer 80

traditional pharmacy, manufacter, wholesaler to pharmacy

Answer 81

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

Answer 82

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

Answer 83

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

Answer 84

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

Answer 85

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

Answer 86

* 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

Answer 87

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.

Answer 88

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

Answer 89

* 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

Answer 90

* 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

Answer 91

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

Answer 92

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

Answer 93

Quality and accreditation Clinical programs Manufacturer involvement

Answer 94

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.

Answer 95

* 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.

Answer 96

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.

Answer 97

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.

Answer 98

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.

Answer 99

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.

Answer 100

* 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.

Answer 101

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

Answer 102

– 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

Answer 103

* Providers salaried (remove incentives to overutilize healthcare) (similar to managed care in us and gatekeepers and hmos)

Answer 104

* 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

Answer 105

*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

Answer 106

* Each province/territory has a different health insurance plan

Answer 107

* 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

Answer 108

– 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)

Answer 109

* 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)

Answer 110

– 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

Answer 111

– 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

Answer 112

* 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

Answer 113

– 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

Answer 114

* 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

Answer 115

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

Answer 116

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

Answer 117

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

Answer 118

retrospective * Prescriptions, MTM services – Billed to patient’s prescription drug insurance

Answer 119

– 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

Answer 120

– 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

Answer 121

– 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)

Answer 122

– 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.

Answer 123

– 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

Answer 124

– 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

Answer 125

* 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

Answer 126

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

Answer 127

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

Answer 128

– Very uncommon – Discounts may be available

Answer 129

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

Answer 130

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.

Answer 131

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

Answer 132

–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.

Answer 133

* 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

Answer 134

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)

Answer 135

* 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

Answer 136

* 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

Answer 137

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

Answer 138

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)

Answer 139

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.

Answer 140

“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.”

Answer 141

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.

Answer 142

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

Answer 143

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

Answer 144

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

Answer 145

(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.

Answer 146

Iron triangle of health care cost, quality, access

Answer 147

* 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

Answer 148

* 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

Answer 149

* 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

Answer 150

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

Answer 151

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

Answer 152

* 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

Answer 153

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

Answer 154

* 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

Answer 155

* 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!)

Answer 156

* 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!)

Answer 157

* 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

Answer 158

* 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

Answer 159

* 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

Answer 160

* 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

Answer 161

* 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

Answer 162

* 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

Answer 163

* 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

Answer 164

* 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

Answer 165

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

Answer 166

prices of related goods expectations with respect to future prices and income

Answer 167

list prices are less than or equal to net prices

Answer 168

pbms use it as a basis for reimbursement to pharmacies

Answer 169

A MAC price is not available for all generic drug

Answer 170

NADAC + dispensing fee

Answer 171

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

Answer 172

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

Answer 173

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

Answer 174

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.

Exam 2 Flashcards

(210 cards)