Friday, November 27, 2009

A new trend?

Imagine this... just when the United States Senate is preparing to debate the health care bill that was sent over by the House, one of the leading health care providers in the country decides to no longer accept medicare payments. Granted, this is at a single facility but it may become the norm as a government option is becoming a very real possibility.

So what is happening? A branch of the Mayo Clinic will stop accepting payments from Medicare after the turn of the year. Here's the link.

But why would anybody opt out of a contract with the government?

Ummm.. the article tells you exactly why
  • Low payments
  • Slow payments

Personally, I'm happy to see a provider step away from a contract that loses money. It's not a good business model to operate at a loss. I took one economics/business class during my second year of college and if I learned anything it was that you can't continue to run a business if continually loses money.

If only somebody in the pharmacy world would take a look at insurance contracts before just blindly signing on the dotted line. At my previous position, our wholesaler offered a service where they took care of all of our third-party contracts. Nobody at my company even looked at the terms before we were locked into another year of the take-it-or-leave-it terms dictated by the insurance company. And then they wonder why reimbursements are falling.

Pharmacists need to speak up when they see the piss-poor reimbursements from the insurers. Between the $4 generics and the free antibiotics, we're digging ourselves into a hole.

When an insurer sees that one provider is willing to provide a product or service for a low fee, the insurer starts steering the contract language to drive our reimbursements down to that level.

We, as pharmacists, think that we are being competitive by driving our prices down. We think that lower prices will attract more patients, which in turn will increase revenue. We are playing into the hands of the insurance companies. They have teams of accountants, actuaries, and lawyers whose jobs are to decrease the insurers expenditures. Who's looking out for us? Sally at Drug Wholesale Company?

The point of this post is this... we can have a pie-in-the-sky view that people want to pay us based on our clinical knowledge, and that can be our end goal. But right now, our services are tied to a product. And we need to make sure that the reimbursement for the product includes an adequate fee for our clinical skills that we use on each and every prescription that crosses in front of us. If the contract isn't good enough, we don't need to sign it.

Mayo Clinic, I applaud you for having the boys to pass on an poor contract. Hopefully more providers follow your lead.


Anonymous said...

Yes, I agree with you....have you noticed how many of our claims are MAC'ed since the $4 generics and the free antibiotics. But when so many of us work for corporations that only see the volume or how much foot traffic is potentially generated by these schemes, the power is out of our hands. I'm afraid that Pharmacist gave up any control a very long time ago.

ThePharmacyIdealist said...

I totally agree. The problem is, unless a large group of pharmacies in an area band together to change contract terms, then nothing will change. However, that may not even work since I recall talking about cartels in my economics classes and how they usually don't last due to each individual having a competitive advantage to backing out of the group.

The only real answer is a nationalized healthcare system. That way everyone is working towards the same goal of reducing overall medical costs and hospitalizations. Any time you carve out the medication benefits from the medical benefits the only incentive on the medication side will be to lower medication costs leading to lower reimbursement.

I am not sure what the answer is, except it would be nice if one of the major corporations decided to demand better contracts. Contracts will reimbursements in the form of product cost + set dispensing fee.


Eric Durbin, RPh said...

Cost plus a practical dispensing fee is the goal. MTM isn't going to be a moneymaker for pharmacies as the cases aren't being rolled out from the PDP providers.

I don't see a nationalized system as the answer, however. It you look at how government health plans reimburse pharmacies, you'll see that they nickle and dime us the most. As long as private insurance exists, at least there is a chance at a profit. HR 3590 is already placing limits on our reimbursements.

Couple the crappy governmental reimbursements with all of the red tape that a government-only system (think Medicare-B type rules applying to all prescriptions) would impose on pharmacists and you'll see pharmacists fleeing.

The answer is to charge like dentists do. Fee for service and like the patients submit to their insurance. The patients could then decide if they want low-priced meds or higher levels of service for a higher fee.

The question is how do we get there?