Previously, I explained how our healthcare system creates an environment favorable to inadvertently promoting misaligned care activities among pharmacy and medicine. I highlighted how each of the following issues contributes to the problem:
- Outdated fee-for-service reimbursement system,
- Pharmacy’s lack of access to EMR information,
- Physician’s incomplete active current medication information, and
- The inability for direct communication between doctors and pharmacists
In this article, I want to propose a few innovative concepts that may address most of those aforementioned core gaps after setting the stage for how pharmacy works today.
How pharmacy reimbursement works
Under the current system, there are two components that make up the final compensation that pharmacies receive when dispensing a prescription: the drug product and the dispensing fee. The pharmacy may generate a small profit on the drug product itself depending on the purchase price of the medication from the wholesaler. The dispensing fee covers the pharmacist’s time in evaluating the prescription’s accuracy, efficacy, and safety, as well as counseling the patient on optimal use.
Unfortunately, pharmacies can’t go to the bank with that total amount just yet. The final piece of this puzzle, known as DIR fees, comes months after the transaction between patient and pharmacy is complete. DIR fees, or Direct and Indirect Remuneration, is the practice of taking money back from pharmacies after a medication has been dispensed based on the results of “value-based quality metrics”. The pharmacy benefit management industry uses this tactic to serve their own interests and wallets, but then subsequently creates great unpredictability in the community pharmacy’s business model.
Let’s not accept this status quo as the only payment framework possible for our healthcare system. My solution to this problem is simple: Stop taking monies from medications already dispensed, and start lowering future reimbursement fees based on not meeting quality benchmark scores. Pharmacy is quickly becoming viewed as a commodity due to our historical focus on generating revenue based on medication acquisition cost against product reimbursement. This has minimized the clinical value we bring to the patient care team.
A new way of doing business
Let’s flip that model on its head by reimbursing pharmacies exactly what was paid to acquire the medication product with no added profit margin. Then, add in a baseline fixed-dollar dispensing fee that would cover costs related to the pharmacist providing their medication expertise to the patient and coordinating any issues with the provider. Finally, adjust the dollar-dispensing fee up when quality metrics are met or down when they are not. The adjustments would apply to future, not past, dispensing as is currently the case.
This reimbursement schema would eliminate the unfair advantage large nationwide pharmacies currently hold over small independent pharmacies due to the ability to leverage cheaper drug prices and rebates. By placing all pharmacies, regardless of size, on a level playing field, pharmacies would be able to compete on providing the best patient care for better reimbursement. This also eliminates the need for pharmacies to worry if they will be in the red on drug costs (a daily occurrence under our current pharmacy reimbursement system) and frees time up to provide optimal patient care. The question is:
Is pharmacy ready to let go of drug margins and move toward the future of patient-centered care?
This ideal optimal patient care system only works when medicine and pharmacy adjust their reimbursement systems together. A simpler reimbursement strategy can be applied to overhaul primary care reimbursement as well and will allow doctors to play an even greater role leading the patient team. Changing from fee-for-service for primary care to a fixed per patient per month payments (which already exists in the Direct Primary Care model) would alleviate the current restrictions on doctors to require unnecessary appointments and relax the 3,000+ patient panels per provider.
Is there an innovative payer outside of the healthcare-industrial complex ready to significantly take on the status quo?
Payment and behavior are inextricably linked. By shifting away from a transactional model to a population management business model of primary care, we can move healthcare towards focusing on lowering total cost of care together. When pharmacy and medicine can get paid to ensure the patient’s well-being every step in their journey, then we will all be allowed to realign our services to benefit each other. This is the first step in reintegrating pharmacy and medicine on the patient care team. Once we have everyone on the same team with the same goal, our next focus must be on improved doctor-pharmacist communication to ensure our newly aligned goals are reached.
Vinay Patel, PharmD
Vinay Patel is the Pharmacist Director of Clinical Operations at a regional home delivery pharmacy, serving over 10,000 low-income patients in 5 states. He has 10 years of combined management and clinical experience, which includes leading cross functional healthcare teams to implement innovative clinical programs across medicine and pharmacy. His impact in medicine includes managing chronic care for over 2,000+ patients face-to-face within many primary care clinics by integrating within a healthcare team with nurses, physicians, social workers, dietitians, and mid-level providers. His management experience includes engineering an effective clinical operations strategy to help a managed Medicaid client successfully meet Asthma and Diabetes HEDIS program measures. He is passionate about bringing simple solutions that can help our dysfunctional healthcare system and emphasizing how healthcare professionals can work as a team for optimal patient care. He lives in Morrisville, NC with his wife and 2 children and is always looking to partner with other healthcare innovators to create the future of medicine.