Third-party payers

Question 1

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

Answer 1

Third-party

Question 2

T/F?

Third- party patient payments are made DIRECTLY to the PHARMACY

Answer 2

True

Question 3

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

Answer 3

Third-party patient

Question 4

Name the 2 types of 3rd parties.

Answer 4

Public and Private

Question 5

T/F?

PRIVATE 3rd parties government entities.

Answer 5

False
PUBLIC
ex. Medicaid and Medicare

Question 6

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

Answer 6

Private

ex. Manufacture’s w/ patient assistance programs

Question 7

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

Answer 7

Private Pay

Question 8

Private Pay patients are also referred to as ___ .

Answer 8

Cash patients

Question 9

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

Answer 9

Private Pay

Indemnity

Question 10

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

Answer 10

True

Question 11

Name the 3rd Party

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

Answer 11

Indemnity Insurance

Question 12

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

Answer 12

Indemnity patients

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

Question 13

What are the 2 types of Private Pay methods?

Answer 13

Indemnity

No insurance

Question 14

What are PBMs?

Answer 14

Prescription benefit mangers

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

Question 15

What are the 4 other services provided by PBMs?

Answer 15

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

Question 16

How does 3rd party payments effect pharmacy management?

Answer 16

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

Question 17

T/F?

Level of reimbursement from 3rd party contracts VARIES.

Answer 17

True

Question 18

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

Answer 18

Gross margin

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

Question 19

T/F?

PHARMARCIES determine network participation.

Answer 19

False

-PBM

Question 20

T/F?

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

Answer 20

True

Question 21

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

Answer 21

Private pay

Question 22

T/F?

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

Answer 22

True

Question 23

Reimbursement Rate is typically the lower of the two:

Answer 23

• price from RR formula

- usual and customary (cash price)

Question 24

AWP

Answer 24

average wholesale price (MRSP)

Question 25

WAC

Answer 25

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

Question 26

EAC

Answer 26

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

Question 27

MAC

Answer 27

maximum allowable cost

Question 28

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

Answer 28

TRUE

Question 29

Things to consider when evaluating Financial Impact of reimbursement rate?

Answer 29

- cost of dispensing - average net profit comparison - differential analysis

Question 30

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

Answer 30

cost of dispensing

Question 31

Why is cost of dispensing important? (2)

Answer 31

- establishing adequate pricing structure | - evaluation of third party insurance

Question 32

costs associated with providing prescription services?

Answer 32

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

Question 33

costs SHARED within the business?

Answer 33

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

Question 34

Fixed COD or Variable COD expenses? | Rent, utilities, security, advertising, computer support, advertising, “other”

Answer 34

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

Question 35

Fixed COD or Variable COD expenses? | Rx vials, Rx transmission fees, delivery costs, credit card fees

Answer 35

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

Question 36

Is labor a fixed or variable expense?

Answer 36

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

Question 37

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

Answer 37

TRUE

Question 38

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

Answer 38

FALSE: POSITIVE

Question 39

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

Answer 39

pharmacy financials

Question 40

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

Answer 40

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

Question 41

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

Answer 41

- 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”

Question 42

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

Answer 42

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

Question 43

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

Answer 43

"most flavored nation" clause

Question 44

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

Answer 44

"all products" clause

Question 45

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

Answer 45

- increase RX volume - diversify sources of revenue (MTM, DME, Specialty services) - decrease expenses

Question 46

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

Answer 46

accepting assignment

Question 47

T/F Pharmacy CANNOT "balance bill" the patient

Answer 47

TRUE