Medical Insurance for Prescription Drugs However, management does not have to be mysterious and confusing. While some pharmacy benefit managers may play games with your benefits, SpectrumPS offers complete openness, a policy of no conflicts of interest, and flexible options for meeting your needs.
People who work in the pharmacy benefits management industry traditionally have a bad habit of taking advantage of their clients and members. Watching the video Pharmacy Benefit Manager (PBM) Games, you can see the issues that might come from conflicts of interest.
It’s important to remember that not all PBMs are the same.
Consider how hospice Medicare benefits have evolved over the past few years. The typical “per diem” pharmacy price model will soon be phased out due to changes in Medicare. Despite this, some sellers, typically those selling by mail order, insist that the per diem model is the best option. This paradigm is already outdated, making it useless for hospice administrators concerned with cutting costs without sacrificing the quality of care.
The question is, “What do we do now?” so let’s examine the situation.
The Business Model Based on a Per Diem Payment System
The writing is on the wall when we consider Medicare’s latest adjustments. We can no longer ask “whether” the per diem pharmacy benefits management business model would fail but “when.” There will be a transition period for hospices that have switched to PBMs or a per diem pharmaceutical solutions provider. Their service provider’s wholesale price structure will no longer be viable. At most, this is a minor inconvenience, and at worst, it causes extra work and costs you money.
Some of the largest hospice care networks in the United States will weather a storm of expensive, annoying fee increases and administrative snafus in the coming year as their vendor plays catch-up with Medicare.
Reducing Costs Through the AWP Discount Model
Retail pharmacies and pharmacy benefit managers (PBMs) that use an AWP-minus pricing model to serve their customers will likewise run afoul of Medicare’s payment policies and the bottom lines of their customers. Currently, those businesses are providing an AWP less a discount percentage, usually between 40 and 60 percent. It would appear that the reductions being offered are reasonable. However, healthcare organizations are losing money on every patient they treat. Exactly how is this conceivable?
Typically, the cost of generics is substantially less than the nominal fee. Take, for example, Olanzapine 5mg 30 tablets, with an AWP of $396.04. Incredible, considering the drug can be purchased at a local drugstore for less than $10. Even with a 40% AWP discount, the cost to a hospice for 30 tablets of Olanzapine 5mg would be $237.63. This also holds for a wide variety of other hospice drugs. The gap between a prescription’s price and what hospices can pay has expanded considerably over the past few decades.
PBMs (and many independent pharmacies dealing directly with hospices) promote an “AWP minus a Discount” model, so they have no problem with the misleading impression that they offer large price reductions. Their secret margins also allow them to make grand displays intended to draw customers’ eyes where they want them to go. Once they have established a pharmacy benefits connection in a given region, they will do almost everything to keep it.
When do we move on to Step Two? What alternatives do hospice administrators have if the PBM per diem model is obsolete and the non-transparent fee for service approach pads rates at the expense of their client’s financial health? At SpectrumPS, we’ve pondered this subject extensively, and we believe we have an answer: the efficient pass-through model. Let’s check this out.
We at SpectrumPS are proud to have pioneered the “Hospice TaperTM” pass-through PBM purchasing approach, which has significantly impacted the pharmaceutical market. This is the first time in the history of hospice pharmacy solutions that a client has received such detailed information on the price of their medications. In what way does it conceal anything? The customer can audit the hospice drug provider anytime under a pass-through purchasing arrangement where fiduciary standards are met. In addition, the pass-through rates are outlined in the client and PBM’s contract. That which is thus is not named or defined in a general way. The value offered to the client and the associated fees are disclosed upfront.
How can one make sense of the offers made by potential pharmaceutical vendors when there are three distinct business models to consider? Specifically, we recommend a cost comparison breakdown similar to the one provided here. It is important to compare drugs to see what hospices are hiding.
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