U.S. patent application number 11/266885 was filed with the patent office on 2006-08-17 for method for providing consumer choice and equalizing pharmacy provider availability in prescription medication dispensing plans.
This patent application is currently assigned to Medimpact Healthcare System, Inc.. Invention is credited to William J. Barre, Dale R. Brown.
Application Number | 20060184391 11/266885 |
Document ID | / |
Family ID | 38023835 |
Filed Date | 2006-08-17 |
United States Patent
Application |
20060184391 |
Kind Code |
A1 |
Barre; William J. ; et
al. |
August 17, 2006 |
Method for providing consumer choice and equalizing pharmacy
provider availability in prescription medication dispensing
plans
Abstract
A method is disclosed whereby consumers enrolled in a
prescription benefit plan can obtain prescription medication
fulfillment at any participating pharmacy of their choice,
regardless of whether the fulfillment is by a retail pharmacy or a
mail order pharmacy, and whether the quantity of medication
prescribed is for administration over a short period (acute care)
or a prolonged period (maintenance). The plan of this invention
operates by having the plan manager substantially equalize the
financial effects of the discounts and services fees allowed to
participating pharmacies such that both retail and mail order
pharmacies are compensated in a manner which encourages them to
accept all consumers and fill all prescriptions. Compensation is
preferably adjusted periodically by the manager to retain pharmacy
incentives. Consumers obtain choice of pharmacies, plan payers have
pleased employees and members and pharmacies obtain income from the
entire spectrum of consumers.
Inventors: |
Barre; William J.;
(Escondido, CA) ; Brown; Dale R.; (Poway,
CA) |
Correspondence
Address: |
GORDON & REES LLP
101 WEST BROADWAY
SUITE 1600
SAN DIEGO
CA
92101
US
|
Assignee: |
Medimpact Healthcare System,
Inc.
|
Family ID: |
38023835 |
Appl. No.: |
11/266885 |
Filed: |
November 4, 2005 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
|
11056496 |
Feb 11, 2005 |
|
|
|
11266885 |
Nov 4, 2005 |
|
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Current U.S.
Class: |
705/2 |
Current CPC
Class: |
G16H 20/10 20180101;
G06Q 30/06 20130101; A61Q 19/08 20130101; A61K 8/66 20130101; G06Q
40/08 20130101; A61K 8/732 20130101 |
Class at
Publication: |
705/002 |
International
Class: |
G06Q 10/00 20060101
G06Q010/00; G06Q 50/00 20060101 G06Q050/00 |
Claims
1. A method for broadening persons' access to pharmacies for
fulfillment of prescriptions under prescription benefit plans,
which method comprises: providing a prescription benefit plan
managed by a benefit manager and subscribed to by at least one
payer, under which a person affiliated with said payer may have a
medical prescription filled at any participating pharmacy;
enrolling at least one participating pharmacy in said plan to
provide fulfillment of said prescription upon request by said
person and approval by said manager; establishing a market price
for a medication dispensed based on such prescription; establishing
a discounted amount of such market price with said discounted
amount to be paid by said manager to said pharmacy for fulfillment
of said prescription; and establishing said discounted amount at a
level such that participation in said plan is substantially equally
attractive to any type of pharmacy; whereby the choice of said
person of which pharmacy to patronize for fulfillment of said
prescription is not unduly influenced by financial
considerations.
2. A method as in claim 1 wherein said participating pharmacy
comprises a retail pharmacy or a mail order pharmacy.
3. A method as in claim 1 further comprising said payer paying to
said manager in connection with said fulfillment of said
prescription by said pharmacy a reimbursement amount sufficient to
cover said discounted amount paid by said manager to said
pharmacy.
4. A method as in claim 3 where said payer further pays to said
manager an fee for said manager's service in managing said plan for
fulfillment of said prescription for said person affiliated with
said payer.
5. A method as in claim 1 wherein subscription by said payer to
said plan is by contract with said manager.
6. A method as in claim 1 wherein enrollment by said pharmacy in
said plan is by contract with said manager.
7. A method as in claim 1 wherein said market price for said
medication is determined by reference to at least one public market
price compilation regarding such medication.
8. A method as in claim 7 wherein said manager selects said public
market price compilation on which to base said market price.
9. A method as in claim 8 wherein determination of said market
place is determined by said manager by reference to a plurality of
said public market price compilations.
10. A method as in claim 1 wherein at least one of said market
price and said discounted amount is determined by at least one of
the identity of the medication prescribed, the dosage of said
medication prescribed and the quantity of dosage units
prescribed.
11. A method as in claim 10 wherein determination is based on said
quantity of dosage units prescribed.
12. A method as in claim 11 wherein said quantity of dosage units
prescribed comprises not more than about one month's supply of said
medication for said person.
13. A method as in claim 11 wherein said quantity of dosage units
prescribed comprises more than about one month's supply of said
medication for said person.
14. A method as in claim 13 wherein said quantity of dosage units
prescribed comprises at least about two months' supply of said
medication for said person.
15. A method for broadening persons' access to pharmacies for
fulfillment of prescriptions under prescription benefit plans,
which method comprises: providing a prescription benefit plan
managed by a benefit manager and subscribed to by at least one
payer, under which a person affiliated with said payer may have a
medical prescription filled at any participating pharmacy;
enrolling at least one participating pharmacy in said plan to
provide fulfillment of said prescription upon request by said
person and approval by said manager; establishing a market price
for a medication dispensed based on such prescription; establishing
a discounted amount of such market price with said discounted
amount to be paid by said manager to said pharmacy for fulfillment
of said prescription; establishing said discounted amount at a
level such that participation in said plan is substantially equally
attractive to any type of pharmacy; conducting assessment of said
participation of a pharmacy in said plan to determine performance
of said pharmacy in comparison with other pharmacies also enrolled
in said plan; and adjusting said discounted amount paid to said
pharmacy periodically in response to said assessment of said
performance to provide incentive for good performance; whereby the
choice of said person of which pharmacy to patronize for
fulfillment of said prescription is not unduly influenced by
financial considerations and pharmacies enrolled are given
incentive to provide good service to said person.
16. A method as in claim 15 wherein said participating pharmacy
comprises a retail pharmacy or a mail order pharmacy.
17. A method as in claim 15 wherein adjusting said discounted
amount in response to said assessment comprises truing up said
discounted amount.
18. A method as in claim 17 wherein truing up said discounted
amount comprises increasing said discounted amount for a pharmacy
which has exceeded performance expectations during an assessment
period and decreasing said discounted amount for a pharmacy which
has fallen short of performance expectations during an assessment
period.
19. A method as in claim 17 wherein said truing up is conducted
periodically.
20. A method as in claim 15 further comprising said payer paying to
said manager in connection with said fulfillment of said
prescription by said pharmacy a reimbursement amount sufficient to
cover said discounted amount paid by said manager to said
pharmacy.
21. A method as in claim 20 where said payer further pays to said
manager an fee for said manager's service in managing said plan for
fulfillment of said prescription for said person affiliated with
said payer.
22. A method as in claim 15 wherein subscription by said payer to
said plan is by contract with said manager.
23. A method as in claim 15 wherein enrollment by said pharmacy in
said plan is by contract with said manager.
24. A method as in claim 15 wherein said market price for said
medication is determined by reference to at least one public market
price compilation regarding such medication.
25. A method as in claim 24 wherein said manager selects said
public market price compilation on which to base said market
price.
26. A method as in claim 25 wherein determination of said market
place is determined by said manager by reference to a plurality of
said public market price compilations.
27. A method as in claim 15 wherein at least one of said market
price and said discounted amount is determined by at least one of
the identity of the medication prescribed, the dosage of said
medication prescribed and the quantity of dosage units
prescribed.
28. A method as in claim 27 wherein determination is based on said
quantity of dosage units prescribed.
29. A method as in claim 28 wherein said quantity of dosage units
prescribed comprises not more than about one month's supply of said
medication for said person.
30. A method as in claim 28 wherein said quantity of dosage units
prescribed comprises more than about one month's supply of said
medication for said person.
31. A method as in claim 30 wherein said quantity of dosage units
prescribed comprises at least about two months' supply of said
medication for said person.
32. A method for broadening persons' access to pharmacies for
fulfillment of prescriptions under prescription benefit plans,
which method comprises: providing a prescription benefit plan
managed by a benefit manager and subscribed to by at least one
payer, under which a person affiliated with said payer may have a
medical prescription filled at any pharmacy; enrolling at least one
pharmacy in said plan to provide fulfillment of said prescription
upon request by said person and approval by said manager;
conducting assessment of said participation of a pharmacy in said
plan to determine performance of said pharmacy in comparison with
other pharmacies also enrolled in said plan; and adjusting
reimbursement paid to said pharmacy periodically in response to
said assessment of said performance to provide incentive for good
performance; whereby the choice of said person of which pharmacy to
patronize for fulfillment of said prescription is not unduly
influenced by financial considerations and pharmacies enrolled are
given incentive to provide good service to said person.
33. A method as in claim 32 wherein said participating pharmacy
comprises a retail pharmacy or a mail order pharmacy.
34. A method as in claim 32 wherein adjusting said discounted
amount in response to said assessment comprises truing up said
discounted amount.
35. A method as in claim 34 wherein truing up said discounted
amount comprises increasing said discounted amount for a pharmacy
which has exceeded performance expectations during an assessment
period and decreasing said discounted amount for a pharmacy which
has fallen short of performance expectations during an assessment
period.
36. A method as in claim 34 wherein said truing up is conducted
periodically.
37. A method as in claim 32 wherein said assessment is conducted
periodically.
38. A method as in claim 32 further comprising said payer paying to
said manager in connection with said fulfillment of said
prescription by said pharmacy an amount sufficient to cover said
reimbursement paid by said manager to said pharmacy.
39. A method as in claim 38 where said payer further pays to said
manager an fee for said manager's service in managing said plan for
fulfillment of said prescription for said person affiliated with
said payer.
40. A method as in claim 32 wherein subscription by said payer to
said plan is by contract with said manager.
41. A method as in claim 32 wherein enrollment by said pharmacy in
said plan is by contract with said manager.
42. A method as in claim 32 wherein said reimbursement for said
medication is determined by reference to at least one public market
price compilation regarding such medication.
43. A method as in claim 42 wherein said manager selects said
public market price compilation on which to base said
reimbursement.
44. A method as in claim 42 wherein determination of said
reimbursement is determined by said manager by reference to a
plurality of said public market price compilations.
45. A method as in claim 32 wherein said reimbursement is
determined by at least one of the identity of the medication
prescribed, the dosage of said medication prescribed and the
quantity of dosage units prescribed.
46. A method as in claim 45 wherein determination is based on said
quantity of dosage units prescribed.
47. A method as in claim 46 wherein said quantity of dosage units
prescribed comprises not more than about one month's supply of said
medication for said person.
48. A method as in claim 46 wherein said quantity of dosage units
prescribed comprises more than about one month's supply of said
medication for said person.
49. A method as in claim 47 wherein said quantity of dosage units
prescribed comprises at least about two months' supply of said
medication for said person.
Description
FIELD OF THE INVENTION
[0001] The present invention relates generally to the field of
filling prescriptions for consumers. More particularly it relates
to prescription payment benefits made available by health plans,
employer groups, governmental entities and other organizations to
their employees and/or members.
BACKGROUND OF THE INVENTION
[0002] Many employees and members ("consumers") of health
maintenance organizations, employer groups and government entities
have their purchases of personal prescription medications
subsidized by payments to pharmacies through prescription benefit
plans ("plans") offered by those health maintenance organizations,
employer groups and government entities. Under such plans, a
consumer receives a prescription for a medication from his or her
physician and submits it to a pharmacy to be filled. The pharmacy
checks to see that the consumer is a member of a plan with which
the pharmacy has a contract and that the medication and dosage
prescribed are within the approved scope of the plan contract. Upon
verification of these requirements, the pharmacy dispenses the
medication to the consumer. The consumer pays the pharmacy a
"copay" amount, less than the normal cost of the medication. The
pharmacy receives the balance of the payment for the medication and
its dispensing services from the prescription benefit plan, which
is managed by a "prescription benefit manager" ("PBM") with whom
the health maintenance organization, employer group or government
entity ("payer") has contracted to manage the plan. The PBM
invoices the payer (i.e., the PBM's customer) for the consumer's
transaction, along with a charge for its contracted fee, and from
the funds paid by the payer the PBM pays the pharmacy's balance
due.
[0003] Medication usage is commonly differentiated between acute
care usage, which is short term (30 days or less) administration to
treat immediate illnesses or conditions, and maintenance usage,
which is long term (more than 30 days) treatment of chronic
illnesses or conditions such as hypertension, high cholesterol
levels, arthritis, neurology conditions and the like. Maintenance
medication dispensing and usage represents a major health care cost
(on the order of 75% of prescription costs for many plans,
especially due to the aging of the American population) and
therefore control of maintenance prescription costs is a principal
function of the prescription benefit plans. Dispensing pharmacies
are normally of two types: retail pharmacies (which are local
neighborhood businesses where the consumer appears in person, can
meet with a pharmacist, orders his/her medication and can usually
leaves a few minutes later with the dispensed medication in hand)
and mail order pharmacies (which are large facilities, usually not
open to individual consumers' personal visits, but from which a
consumer's medication order received by mail or through the
Internet is subsequently filled and dispensed to the consumer via
mail or courier service). It is normally recognized by the industry
that acute care prescriptions are dispensed primarily by retail
pharmacies, since the consumer frequently needs the medication
immediately and cannot accept the multi-day delay inherent in
submitting and dispensing prescription medications from the mail
order pharmacies.
[0004] On the other hand, PBMs and benefit consultants commonly
strongly urge or even mandate that consumers in the plans that they
administer obtain their maintenance medications from mail order
pharmacies. It is a widely held belief that mail order pharmacies
may have lower operating costs and may offer greater discounts
available on medication coverage. To the extent that such is the
case, use of mail order pharmacies may be a desirable cost control
strategy if other contractual terms remain equalized. However,
several factors can complicate the analysis of use of mail order
pharmacies versus use of retail pharmacies especially for
dispensing of maintenance medications. For instance, some PBMs own
mail order pharmacies, and therefore it is to their financial
benefit to steer the consumers in their plans to their captive
pharmacies whether or not that is in the best interest of the
consumers. Further, to the extent that business is diverted
unreasonably from retail pharmacies to mail order pharmacies, the
former are deprived of income. Since the retail pharmacies are
commonly localized businesses (in contrast to mail order
pharmacies), their ability to survive to provide the local retail
service is impaired. This is true even when a local pharmacy is
part of a larger chain pharmacy organization, since decline in
income of a local site could lead the chain to close that local
site, notwithstanding that other locations of the chain's
pharmacies remain in business. Further, there are many variables in
the pricing of medications and the costs involved in inventories,
dispensing equipment, transportation of medications to the pharmacy
and later to the consumer and staffing, that have been shown to
affect whether mail order does or does not have a financial
advantage over retail in the dispensing of medications. All that
can be said is that, properly managed, both types can be
financially and commercially viable.
[0005] Further, and very significantly, there is a question of
availability of choice for the consumer, since in many cases a
consumer would like to have the option of dealing either with
his/her local pharmacy or a mail order pharmacy. Numerous studies
have established that for many prescription consumers, direct
contact with a pharmacist is very important. Professional
pharmacists are held in very high regard by consumers and their
advice is eagerly sought. Most consumers are not knowledgeable
about medications and a prescribing physician's schedule may not
provide sufficient time for a consumer to be able to get what he or
she believes to be sufficient information from the prescribing
physician about all aspects of concern about a prescribed
medication. Consumers want to be able to speak directly to their
pharmacists for more information about their medications and
receive detailed answers to their questions and concerns,
especially when a maintenance medication which will be taken by the
consumer over a prolonged period is involved. It is well known that
the prospects for a consumer's (patient's) successful
implementation of a medication regimen are greatly enhanced when
the consumer/patient understands and is comfortable with the
medication prescribed. Such direct and personal contact with a
pharmacist is frequently difficult for a consumer to obtain from a
mail order pharmacy, and even when available will almost certainly
not involve a pharmacist who is "local" to the consumer and his/her
community.
[0006] Conventionally brand name prescriptions are priced by
starting with a nationally published "average wholesale price"
(AWP) and discounting this figure. A dispensing fee is then added
to this number. A mail order or retail 90 day prescription is
priced the same way with the exception that the mail order
discounts are greater and there may or may not be a dispensing fee.
On the other hand, in the prior art systems generic drug claims
usually employ an additional variant for pricing. This is a concept
known as "maximum allowable cost" (MAC) pricing. MAC is the concept
of paying a set price for a product on a per unit basis. Since
multiple manufacturers may produce the same generic drug and
dosage, the MAC price is applied regardless of the manufacturer or
that particular manufacturer's AWP. In the prior art plans, it is
common that 30-day prescriptions are paid at the lower of a) AWP
minus a discount plus a dispensing fee or b) MAC plus a dispensing
fee, while 90-day prescriptions are paid solely at AWP minus a
discount. In the common situation where mail order pharmacies do
not fill 30-day prescriptions and many 90-day prescription
consumers are routed by PBMs solely to mail order pharmacies, the
system becomes biased, in that the consumer and payer may actually
pay more for one 90-day prescription compared to the dispensing of
three 30-day prescription for a particular medication dispensed.
This leads to consumer and payer dissatisfaction. The payer has an
expectation of budgeting for a set discount for 90 day
prescriptions since is the traditional 90 day method for
reimbursement. When a lower of MAC or AWP model is used a payer can
not guarantee an overall generic performance. The pharmacy has an
expectation to be reimbursed a set amount for dispensing the 90 day
prescription. When a lower of MAC or AWP model is used the pharmacy
can not be sure of its reimbursement.
[0007] Prescription care plans function by assigning a "processor
control number" (PCN) to each consumer prescription claim. Since at
present retail pharmacies typically dispense prescriptions in
short-term (30-day or less) quantities and mail-order pharmacies
dispense prescriptions in long-term (usually in either 60-day or
90-day) quantities, this means that a PBM is typically required to
set up multiple PCN's for acute versus maintenance drug benefit
designs, although each retail or mail order pharmacy is accustomed
to identifying a single PCN to a consumer prescription claim for a
specific payer's plan. As noted, consumers and payers want to be
able to choose where they get prescriptions filled. However, when a
pharmacy undertakes to dispense both short-term and long-term
quantities, the pharmacist or pharmacy staff must now in effect
choose between two PCNs for the same payer. Since the consumer only
presents one identification card, this process can cause confusion
at the pharmacy. This is counter productive to traditional
workflow. It can cause confusion and delays at the point of sale
transaction that impact both the consumer and the pharmacy. It may
also reduce the number of 90-day supply prescriptions that are
filled at the retail level which impacts the cost structure for the
payer.
[0008] It is not the intention of the present invention to
determine any conclusion as to the relative merits of mail order
pharmacies versus retail pharmacies. Rather it is the intention of
the present invention to meet the long-felt and widely expressed
desire by consumers, payers and pharmacists to make both equally
financially available under a prescription benefit plan such that
consumers can have a legitimate choice as to where and how they
obtain their prescription medications, the payers will have a
legitimate choice about how their contract plans will be
structured, and pharmacists in both types of pharmacies can
practice their profession successfully.
SUMMARY OF THE INVENTION
[0009] For simplicity in the discussion below the invention will be
described by division of prescription quantity fulfillments into
two categories: a) "short term", "acute care" or "30-day"
quantities, all of these terms being considered synonymous, and b)
"long-term", "maintenance" or "90-day" quantities, all of these
terms also being considered synonymous. Further, the terms
"quantity", "quantity of dosage units" and "days supply" are also
considered to be synonymous as applied to the number of medication
pills, tablets, capsules, etc., or amount of medication liquid
dispensed to the consumer upon fulfillment of the prescription
request. It will be understood, however, that these terms are so
used for brevity and convenience, and that regardless of the choice
of terminology the method of the present invention is equally
applicable to management of all prescription fulfillment and
dispensing of medications in any dosages or quantities. Similarly,
the particular total days' supply of a dispensing prescription,
whether the exemplary and commonly used 30- and 90-day quantities,
or 14-, 60-, 100-day or any other quantities, is to be understood
to be within the scope of the invention. Those skilled in the art
will be readily able to calculate and apply the appropriate
discount and other payments for any desired dispensed quantity or
medication.
[0010] The present invention provides an innovative pharmacy-based
program that allows employees/plan members who take long term
maintenance medications to have a choice between obtaining such
medications from a mail order pharmacy or a local retail pharmacy
outlet, by effectively balancing plan reimbursement and discount
payments such that both types of pharmacies are compensated
essentially equally, while taking into consideration the relative
operational strengths and weaknesses of each type. The consumer
thus is pleased, by having a choice of pharmacies based on his/her
own perceptions of the merits of each and particularly in not being
deprived of such choice because of financial biases in the plan's
provisions. The payer also is pleased, since the plan members are
content and the plan costs are economically reasonable. The
pharmacy industry as a whole also benefits, since undue biases
toward mail order are avoided, retail pharmacies can effective
participate in the overall dispensing of all medications and each
part of the industry is able to compete on the basis of its merits
of its customer service and value.
[0011] In its basic embodiments, the plan operates by having the
PBM set a target cost for medications and dispensing services which
it will pay according to contracts it enters into with the
pharmacies, and similarly having contracts with its customers (the
payers) as to the target costs and it management fees that it will
charge the customers under the plan. A key component of this
invention is that reimbursement rates are set that benefit the
pharmacy, the payer and the consumer. The pharmacy target costs are
based on a combination of industry-accepted medication cost
schedules and negotiated discounts, calculated such that the
payments to the pharmacies will all be substantially equal for a
given consumer's medication, dosage and quantity prescription,
taking into account the different operating characteristics and
costs of retail pharmacies versus mail order pharmacies in terms of
factors such as consumer contact and education, economies of scale
in inventorying, staffing requirements and the like.
[0012] In many of its embodiments the plan of the invention
includes a method to ensure that the payer, the pharmacy and the
consumer are not disadvantaged. We have called this method the
"true-up" feature. A lower of AWP or MAC price model is applied. At
the conclusion of a set period of time the reimbursement
performance is measured and compared to a guaranteed value. If the
value is above or below the targeted discount, the AWP or MAC
prices are adjusted ("trued up") to compensate moving forward for
the next set time period. These small adjustments are made every
set time period to ensure performance balances to an overall
guaranteed value. In this manner the payer benefits from the MAC
pricing on individual generic products and benefits from assurances
that the overall guaranteed performance is maintained, the pharmacy
benefits by the assurance that it will be paid at an overall
guaranteed discount performance number and the consumer benefits by
paying a co-payment that is reflective of the lower of MAC or AWP
and thus is not disadvantaged by electing the one time 90-day fill
as opposed to having the same prescription filled three separate
times for a 30-day supply.
[0013] An additional aspect of the current invention is its ability
to simplify prescription ordering procedures for the pharmacies.
When a pharmacy sends a prescription to a PBM for processing, they
utilize a computer system and transmit on-line a request of payment
to the PBM. This is called an on-line adjudicated claim. A pharmacy
communicates to the PBM by sending an on-line adjudication claim to
what is known in the industry as a "switch" company. There are two
sets of numbers that are important to this transaction. The first
is what is known as the "business identification number" (BIN). The
BIN identifies the PBM that is processing the claim. The switch
company recognizes this BIN and routes the claim to the appropriate
PBM for processing. The second number is known as the PCN,
described above. Once a claim has been routed to the appropriate
PBM, the PCN directs the claim to the appropriate plan or payer
within the PBM for processing. The adjudicated claim contains
important information such as patient identification, drug and
dosage, and days supply for which the medication is intended to be
dispensed. The pharmacy enters this information and then transmits
the claim electronically. Once routed to the PBM, the PBM reviews
the claim and determines if the patient is eligible, if the drug is
approved for dispensing, what portion the patient should pay as a
co-payment, and at what rate should the pharmacy be reimbursed. In
addition the PBM verifies that the days supply is an approved
benefit for the member. As noted in the Background, since the
consumer only presents one identification card, availability of
different quantities and design benefits for the same medication
with different PCNs can cause confusion at the pharmacy. The
pharmacy staff member must decide whether to submit to the
appropriate BIN the PCN for the 30 day benefit or the PCN for the
90 day benefit. If the incorrect PCN is used, the PBM will reject
the claim until the PCN error can be corrected, thus delaying
filling of the prescription for the consumer.
[0014] The current invention eliminates the need for multiple PCNs
for the same medication for a given payer. Under the present plan
each medication for a given payer has only a single PCN regardless
of the quantity (number of days' supply). The pharmacist need only
provide the basic data of medication identification, dosage and
quantity along with the single PCN for that medication and the BIN
for that payer plan. Through editing procedures internal to the PBM
itself, the PBM can review the claim and based on the days supply
provided by the pharmacist, correctly apply the benefit structure
for the member and the appropriate reimbursement to the pharmacy.
This unique editing feature enables a pharmacy to have to select
and submit only a single PCN for the consumer's medication for
review. This process saves time and confusion for the consumer and
the pharmacy and ensures a greater utilization of the 90 day
benefit which saves the payer. This applies not only to retail
pharmacies, which may have a only small staff to handle such
administrative matters and thus appreciate the simplification of
their tasks, but also large mail order pharmacies, since
elimination of the need to select among multiple PCNs for many
prescriptions may allow staff to be reduced or some staff members
to be reassigned to other tasks.
[0015] The foregoing, together with other features and advantages
of the present invention, will become more apparent when referring
to the following specification, claims and accompanying
drawings.
BRIEF DESCRIPTION OF THE DRAWINGS
[0016] The present invention will be better understood from the
following detailed description of an exemplary embodiment of the
invention, taken in conjunction with the accompanying drawings in
which like reference numerals refer to like parts and in which:
[0017] FIG. 1 is a process flow diagram showing the typical routing
of a prescription approval and reimbursement request in many of the
current prior art plan systems currently in the marketplace.
[0018] FIG. 2 is a process flow diagram showing the typical routing
of a prescription approval and reimbursement request in the method
of this invention.
DETAILED DESCRIPTION OF THE INVENTION
[0019] When a consumer receives a prescription for medication from
a physician, the consumer either goes to a retail pharmacy or
utilizes mail order to have the prescription filled. If utilizing a
retail pharmacy, the consumer walks into the pharmacy and presents
the prescription to a pharmacist or pharmacy staff member. The
pharmacy enters the prescription into a computer, which sends the
information to a telecommunications switch, or routing, company.
Next, the switch company sends the information to the correct PBM
with which the pharmacy has contracted for the type of
prescription. The PBM determines the benefits the consumer is
eligible for, i.e., whether the prescription is eligible for
fulfillment based on the terms of the payer plan that the consumer
is under. The PBM reports back through the switch company to
confirm the amount of medication the consumer is eligible for,
copay amount if required, and certain safety messaging if
appropriate. In most cases a prescription is approved and filled
without question or delay, since the consumer's prescription meets
all of the applicable requirements of the plan that the consumer is
under. There are, however, a number of common reasons why a
prescription may not be approved for fulfillment, which must be
reported back to the pharmacy so that the consumer can, if
possible, make the necessary corrections or obtain further
physician input to allow resubmission of the prescription.
[0020] The present invention provides a system and method for a
consumer to go to either a retail pharmacy or a mail order pharmacy
and have a prescription approved and filled, whether the
prescription medication quantity is intended for 30 days or 90 days
or any other prescribed time period. Additionally, the retail
pharmacy only has to adjudicate the claim to a PBM under a single
PCN to obtain a determination of eligibility and of the
reimbursement rate. The pharmacist no longer has to determine which
of multiple PCNs is correct for a particular plan (BIN) in order to
get a prescription request adjudicated by the PBM. Further, since
the plan of this invention essentially puts all pharmacies on
equivalent financial footing, a consumer can exercise his or her
choice in selecting which pharmacy to patronize.
[0021] FIG. 1 outlines the course of a prescription request under
many of the prior art commercial plans currently in the
marketplace. A consumer 2 at 3 brings a prescription from a
physician to a pharmacy 4. The prescription identifies the
medication to be dispensed, the dosage of each tablet or other dose
unit, and the quantity of dose units to be dispensed. For the
purposes of the discussion below, a short term (acute care) dose
unit quantity will be considered to be a 30-day quantity and a
long-term (maintenance) dose unit quantity will be considered to be
a 90-day quantity. The prescription may also indicate whether a
brand name medication is required or a generic equivalent may be
substituted. The pharmacist or pharmacy staff member selects what
he/she believes to be the appropriate PCN for the consumer's plan
based on the plan BIN at 6 and sends the request by computer to the
switch (routing) company 8, which, based on the BIN and PCN
provided by the pharmacist, routes the request to the designated
PBM 10 or 10'. The recipient PBM 10 or 10' reviews the request at
12, and if all is in order in the request information and the
prescription meets the plan's formulary and eligibility criteria,
the PBM at 14 so notifies the pharmacy 4 and the pharmacy 4 fills
at 16 fills the consumer 2's prescription.
[0022] Such prior art systems may have numerous inherent or
deliberate problem areas or biases. One as noted is the requirement
that the pharmacy 4 must determine the correct PCN for the
consumer's plan. An incorrect PCN designation will result in
disapproval of the request and return to the pharmacy for
correction at 18. Further, under many of the current plans,
especially those in which the PBM owns a "captive" mail order
pharmacy and a maintenance medication is involved, the consumer 2
may be required or at least strongly urged financially to select as
the pharmacy 4 only the PBMs captive mail order pharmacy, such that
the consumer's potential choice of what pharmacy to patronize is
curtailed or eliminated right at the entry 3 into the system. (Such
financial biasing may be done either by mandating use of a specific
pharmacy 4 or by increasing a consumer's required copay or reducing
the discount available to the consumer if other than the captive
pharmacy is used by the consumer.) Such prior art systems are also
often very difficult for PBMs to monitor for optimum performance
because important decisions (such as selection of the PCN) are made
at different points in the system by different people who may have
greater or lesser understandings of the operation of the
system.
[0023] The method of the present invention is outlined in FIG. 2,
and will immediately be seen to be much simpler, more direct for
both the consumer and pharmacy, and free of biases that would
restrict a consumer's choice of pharmacy. It will also be seen that
it is much easier to monitor for performance, since at each point
the persons involved make decisions only as to those factors which
are clearly within their areas of expertise. In the present system,
consumer (now designated 32) at 33 takes his/her prescription to
any pharmacy 34 of his or her choice. Since under the present plan
all pharmacies are will be compensated on a substantially
equivalent basis for filing this consumer's particular
prescription, there is no element of bias on the part of the
pharmacy or the PBM of the consumer's plan for or against any type
of pharmacy. At the pharmacy 34 the pharmacist or pharmacy staff
member needs only to select a single PCN--the PCN assigned to the
medication itself--at 36 and send that PCN, along with the dosage
and quantity data, at 37 to the switch company 38 who in turn
routes it to the single PBM 40 who handles all requests for that
medication. The PBM internally analyzes the request at 42. Knowing
the medication itself from the single PCN, the PBM can then assess
whether the dosage and quantity prescribed are within the limits of
the plan's formulary, and whether filing of the prescription is
timely based on the consumer's past prescription fulfillment
history. The PBM may also assess whether dispensing of this
prescribed medication is appropriate in view of other medications
known by the PBM to have been prescribed previously to the
consumer. Whether or not the PBM's internal analysis procedures
involve assignment of further PCNs, subdivisions thereof, or other
procedures in strictly for the PBM to decide, and does not affect
the operation of this invention. Importantly, it does not affect
the consumer or the pharmacy and does not impose any burdens on
them, in contrast to the case with the prior art systems. Once the
PBM completes its assessment of the prescription request, it
communicates approval or disapproval (with reasons) back to the
pharmacy 34 either directly or through the switching company.
[0024] The present plan system functions by use by the PBM of
contracted discounts and fulfillment service charges between the
PBM and the various pharmacies who wish to participate in the plan.
The function is best understood by reference to the Table below, in
which an exemplary set of discounts, copays and fulfillment fees
are presented. It will be understood that the values shown are
exemplary only, and that discounts, copays and fees can and do vary
widely depending on the contractual terms consented to by the
parties to the various agreements. Commonly there may be different
terms within a plan for different medication groups or even for
different individual medications. Different pharmacies or pharmacy
chains may also have different contractual financial terms with the
same PBM, notwithstanding that all use the plan concept of the
present invention.
[0025] In the Table that follows, the present invention is shown in
the column at the far right with the current (prior art) retail
pharmacy and mail order pharmacy plans being shown in the third and
fourth columns from the left. Copays charges to consumers are in
the second column, and the Table differentiates between the
reimbursement for brand name drugs and generic drugs, which
reflects the standard industry practice. "AWP" means "average
wholesale price" of a medication or medication group, whether brand
name or generic, usually available from a single or limited number
of producers, and is commonly a price determined on a national
basis independently of the PBM, pharmacy or plan contracts. "MAC"
means "maximum allowable cost" of a generic medication, which
usually is calculated from consideration of marketplace prices for
the medication from different producers. Such pricing data are
commercially and publicly available from various sources. The data
in the Table are generally presented as a total cost per dispensed
dosage quantity, and are in the format of a "list price" such as
AWP or MAC followed by the discount from that price that the PBM
and the pharmacy have agreed to (e.g., "-15%") and by the
fulfillment fee per transaction which the PBM will pay to the
pharmacy. It is not uncommon for there to be no fulfillment fee
("+$0") especially in transactions involving generic drugs.
[0026] [Table on next page, followed by continuation of text on
succeeding page] TABLE-US-00001 TABLE 1 Discount and Payment
Comparisons Retail Pharmacy - Mail Order Pharmacy Medication
Consumer Copay 90 day quantity 90 day quantity This Invention Brand
Name Drugs 20%, 30% AWP - 15% + $2 AWP - 20% + $0 AWP - 20% + $0 (3
copays) (1-2.5 copays) (+1-2.5 copays) Generic Drugs 0%, 10%, Lower
of: AWP - 50% + $0 Target is always A) AWP - 15% +2 (1-2.5 copays)
AWP - 50% + $0 B) MAC + $2 (with copays) (3 copays) which is
obtained by using AWP - 25% + $0 and MAC + $0 in combination
Comments: Cannot usually Usually does not Puts retail and mail
compete on accept short-term order pharmacies on long-term
prescription prescriptions equivalent basis for pricing and
discounts all drugs from consumers' and payers' perspective
[0027] It will be seen from the Table that a major effect of the
claimed prescription plan as compared to the prior art is in the
handling of reimbursements for generic drugs. Generic drug
reimbursement represents a significant share of prescriptions
dispenses, generally being about 50% of prescription dispensed
nationally. It is also the portion of the industry which is most
susceptible to control by the medical reimbursement plans, since
there are numerous medication manufacturers for many of the generic
drugs, which fosters competition between them, while most of the
brand name (proprietary) drugs are available only from a single
producer. Generic drugs save money for the payer, provide consumers
with the lowest copay option and typically provide the pharmacy
with the highest profitability.
[0028] The present invention focuses not on the quantity of
medication to be dispensed (and thus on the acute care or
maintenance purpose of the prescription) but rather on the
cost/discount structure of the pharmacy reimbursement. Effectively
the retail pharmacies are given the opportunity to compete for
fulfillment of both long-term and short-term prescriptions, but
equalizing the reimbursements available under the plan. The plan,
unlike the prior art plans, does not bias consumers toward the mail
order pharmacies, which many PBMs have assumed must have larger
economies of scale, staffing and other financial factors as
compared to the retail pharmacies. Such assumptions may not always
be correct, according to some studies, but the relative merits of
the two types of pharmacies is not a factor in the present
invention, which instead is focused on giving the consumer the
ability to make his or her of evaluation and selection of which
type of patronize. It will be seen from the Table that a PBM using
the present plan will target a reimbursement rate generally
comparable to the rate accorded to mail ordered pharmacies in the
past, but does so in a manner which reflects and utilized rate
structures equally available to both types of pharmacies. This use
of different criteria to achieve a similar rate level represents a
completely novel and advantageous element of the present invention.
Thus rather than rigidly applying a single measurement based solely
on AWP, as the prior art plans did, the present plan uses a blend
of AWP and MAC criteria, and adjusts these as appropriate so that
the overall reimbursement offered to pharmacies makes this plan
competitive with the prior art plans with respect to the mail order
pharmacies while, unlike prior art plans, also equally available
and attractive to the retail pharmacies.
[0029] Consumers can be adversely affected if a true-up process is
not established, since without such a provision a consumer's
copayments for a 90-day supply could exceed three times the
traditional 30-day retail copayment.
[0030] Similar adjustments by the PBM can be negotiated and agreed
to in contracts with retail pharmacies with respect to the
dispensing fees to be paid under the plan. Prior art plans have
worked on the basis that dispensing costs are higher for retail
pharmacies because of staffing costs and lower volume over which to
expense the per-consumer dispensing costs. Increasing a retail
pharmacy's proportion of dispensing of large quantity maintenance
drug prescriptions offers an opportunity for the PBM and the retail
pharmacy to reduce or eliminate the dispensing fee portion of
reimbursement, thus reducing the costs to be passed along to the
payer by the PBM.
[0031] An important optional (but preferred) element in the present
invention is a function of continually reviewing the performance of
the pharmacies in cost control, and particularly in the area of
cost reduction by increasing the proportion of lower cost generic
drugs in the overall mixed of dispensed drugs. In the past mail
order pharmacies and some mandate plans have accomplished this
simply by requiring substitution of generics unless a physician has
required otherwise. The present invention also optionally allows
for a particularly productive approach which involves education of
the consumers so that they recognize when generic medications are
equally acceptable in their own personal health and treatment as
are brand name drugs. Education is in the realm of both the PBM and
the pharmacist, and the present invention uses the involvement of
both. Contracts with pharmacies can include provisions that
encourage pharmacists to communicate with their consumers about the
value of generic drugs, which is especially effective in the retail
pharmacy setting where the pharmacist and the consumer meet
directly. The PBM also can communicate the same message through its
regular communications with payers and their employees and members.
The pharmacy makes its highest profit margin dispensing the generic
drug. The PBM that owns the mail order pharmacy may drive higher
cost brands to maximize the formulary rebate income.
[0032] In keeping with this purpose, the present plan optionally
but preferably includes not only the PBM's continual review of
performance of all pharmacies participating in the plan, but also
periodic adjustment of the discount and cost structures to reward
those pharmacies who are operating at greater-than-expected
performance and, conversely, to provide incentive to
under-performing pharmacies to improve. This method, which we have
designated "truing up" or the "true-up" feature, ensures that the
payer, the pharmacy and the consumer are not disadvantaged. A lower
of AWP or MAC price model is applied. At the conclusion of a set
period of time the reimbursement performance is measured and
compared to a guaranteed value. If the value is above or below the
targeted discount for the period, the AWP or MAC price discounts
are adjusted to compensate moving forward for the next set time
period. If the drug mix has overperformed, the reimbursement is
increased, as for instance by reducing the discount taken by the
PBM (e.g., from a 50% discount to a 49% discount), so that
discounted amount paid to the pharmacy is increased and it
therefore receives a greater income. On the other hand, if the drug
mix has underperformed, the discount can be increased (e.g., from a
50% discount to a 51% discount) so that reimbursement--i.e., the
discounted amount paid--is reduced, which it is expected will
encourage the pharmacy to improve its performance over the next
period so that its discount can be lowered and its reimbursement
increased. Compiling performance data and making the appropriate
analyses to allow such adjustments to be made require significant
internal data collection and processing capabilities by the PBMs.
However, such capabilities are already possessed by some PBMs and
others can be expected to acquire similar capabilities in the near
future, since having these small adjustments made every set time
period (e.g., quarterly) ensure performance balances to an overall
guaranteed value.
[0033] By use of the truing up feature, the payer benefits from the
MAC pricing on individual generic products and benefits from
assurances that the overall guaranteed performance is maintained,
the pharmacy benefits by the assurance that it will be paid at an
overall guaranteed discount performance number, and the consumer
benefits by paying a co-payment that is reflective of the lower of
MAC or AWP and thus is not disadvantaged by electing the one time
90 day fill as opposed to having the same prescription filled three
times for 30-day supplies.
[0034] Separately, the plan of this invention also involves
contractual agreements between the PBM and the payers who wish to
provide the PBM's plan to their employees, members, or other
affiliated people. Such payers are commonly business entities such
as health plans, companies, partnerships or corporations, whether
large, mid-sized or small, governments or governmental agencies,
trade unions and non-governmental organizations or associations.
Each payer contracts with the PBM for the specific pharmacy
services and medication costs and fees that it is willing to
reimburse, based on the PBM's having obtained discounted costs from
the pharmacies, as well as the contracted fee that the payer is
willing to pay the PBM for managing the plan for it and its
employees or members. As with the pharmacy contracts, the payer
contracts will also vary depending on what formulary a payer is
willing to reimburse for, how many members or employees the payer
has, and so forth.
[0035] It is to be expected that PBM's which have cost driven plans
which focus primarily on mandating or influencing consumers to use
mail order pharmacies to fill maintenance prescriptions, especially
those who own mail order pharmacies, will initially see little
value in adopting the present invention. However, it is anticipated
that the present plan's focus on providing the ability to consumers
to be able to patronize the pharmacy of their choice for all of the
prescription medication needs, whether acute care or maintenance
medications, will be sufficiently attractive to such consumers that
they will encourage their employers or organizations as payers to
obtain and adopt such plans. The employers and organizations, in
turn, will demand of PBMs that they make such plans available to
the payer community, in preference to mandated or biased plans.
Under such conditions, it is to be expected that the plans of the
present invention will rapidly gain marketshare and enhance the
ability of people to be able to influence or control their own
costs of health care and prescription drugs.
[0036] Although several embodiments of the invention have has been
described above by way of example only, it will be understood by
those skilled in the field that numerous variations and
modifications may be made to the disclosed embodiments without
departing from the scope or spirit of the invention, as it is
defined by the appended claims.
* * * * *