By Marialice S. Bennett, Dawn Blank, Janice Bopp, Jennifer James and Mathew Osterhaus
By exploring new markets and overcoming common barriers to compensation, pharmacists can increase the revenue flow from their patient care services.
Program Review
The article examines common barriers to obtaining compensation for pharmaceutical care services and offers practical strategies to overcome them. Much of the information comes from the experiences of pharmacists who are among the pioneers in implementing community based pharmaceutical care services and obtaining compensation for their programs. This article looks beyond traditional third party reimbursement from insurance companies to identify other potential purchasers of pharmaceutical care services, especially employers and cash-paying consumers.
Background
In the past decade, pharmacists have made remarkable strides in developing and implementing a wide range of pharmaceutical care services. Pharmacy journals have published numerous articles describing innovative, effective, and convenient pharmacist-led patient services, ranging from preventative care such as immunization to disease management services for a growing number of chronic ailments, including diabetes, asthma, obesity, and dyslipedemia.
Despite significant advances in the delivery of pharmaceutical care, pharmacists
continue to face difficulty in obtaining compensation for these services. For
many, this challenge remains the roadblock limiting the wider adoption of pharmacy-based
patient care services. "Reimbursement issues continue to haunt pharmacy,"
note the authors of
A Practical Guide to Pharmaceutical Care. "Of all the obstacles
to pharmaceutical care, these seem to be the most really and difficult to overcome."
Published surveys confirm that compensation is one of the most challenging aspects of implementing pharmaceutical care services. In 1996 Wickman et al. surveyed 76 community pharmacists in Georgia to gather information on their billing practices. Of the 52 pharmacists who respond, only 26% were documenting and billing for pharmaceutical care interventions. Moreover, of the claims pharmacists had submitted to insurance companies, only 35% had been paid.
Norwood et al. reported similar findings in a 1998 study. These authors surveyed
25 community-based ambulatory pharmacies in 15 states that had converted their
traditional practices into ones based on pharmaceutical care. At the time of
the study, the pharmacies had been providing pharmaceutical care (including
programs for asthma, diabetes, hypertension, and dyslipidemia) for an average
of 20 months. However, only 8 of the 25 pharmacies (32%) had received revenues
from the provision of pharmaceutical care at the time of the study, and none
has received significant revenues from their services.
As Norwood et al. emphasized these findings should not be discourage pharmacists
from providing pharmaceutical care, but, rather, focus more attention on improving
the flow of revenues that can be obtained from these services. Without compensation,
it is not financially feasible for pharmacists to provide pharmaceutical care
over the long term. Moreover, if pharmacists do not charge for the pharmaceutical
care they provide, they will lessen the perceived value of these services in
consumers' minds and fail to create the positive image needed to change payers'
perceptions and expectations of the profession as a whole.
To help improve the flow of revenues from pharmacy-based patient care services, this article examines common barriers to compensation and offers strategies to overcome them.
Surmounting Internal Barriers Within Pharmacy
One of the most common obstacles to compensation is an attitudinal barrier among pharmacists. Surprising, even many pharmacists who have begun to offer pharmaceutical care services are reluctant to ask for payment. Obviously, if pharmacists do not charge for their services, they cannot expect to be paid for them.
A variety of factors may cause pharmacists to resist charging for pharmaceutical care (or set disproportionately low fees). In part, this reluctance is rooted in a long tradition for pharmacists to earn their living on the products they dispense. As with any major change, the transition to a new system, in which payment is based on providing a service rather than selling a product, is difficult. In addition, some pharmacists lack confidence in their ability to implement pharmaceutical care and hence are reluctant to charge for services they do not yet feel competent to provide. Still others may feel patient care services such as education and counseling are professional obligations that should remain separate from financial considerations.
However, pharmacists should consider that no other health care professional would provide similar patient care services and not expect to charge them. Those who have confronted and overcome an attitudinal barrier to compensation offer these suggestions for others who are struggling with this transaction:
Let customers know you do more than fill prescription. Although pharmacists consistently rank as among the most trusted and respected health care professionals, consumers (and many health care providers) often fail to recognize the pharmacist's roles in patient care beyond dispensing. Identify ways to demonstrate your expertise in providing patient care services to the public and to other health care providers. For example, Matthew C. Osterhaus, an owner of Osterhaus Pharmacy in Maquoketa, Iowa, stations computer monitors in the pharmacy's patient counseling areas that allow the pharmacist and patient to review medications together. The pharmacy also has patient health education videos available in its private counseling booths and a health education television channel in its waiting area.
Educating physicians about your services is also important. A physician's recommendation to use your service can have a significant positive influence on a patient's decision to do so. In the Norwood et al. study, pharmacists who conducted professional visits with physicians to promote their pharmaceutical care services were more likely to receive compensation. One method is to contact physician practices in your community and ask to present an overview of your patient care services. To secure an appointment in a busy office, it may help to offer to provide lunch for the staff while they hear your presentation. This approach to gaining the attention of busy physicians has worked well for pharmaceutical sales representatives and can work for pharmacists, too.
Believe in the value of your services and have the confidence to request payment. Avoid getting into the habit of giving your services away for free. Doing so can lessen or negate the perceived value of your services in the minds of potential payers. For the same reason, be cautious about waiving fees to promote sales during the initial launch of a pharmaceutical care service. If no fees are asked initially, parents are likely to be extremely resistant later on, when they are asked to pay for services they have become accustomed to receiving for free. If a program is introduced at a discount fee, be sure that advertising materials clarify that the service will be available at a special lower rate for a limited time only and include the actual cost of the program when the promotion ends.
Brush up on basin sales techniques. Although most pharmacists have little background in sales and marketing, to successfully obtain compensation they mist learn to be comfortable in talking about pharmaceutical care and its cost. Aggressive sales techniques are neither necessary nor appropriate; rather, pharmacists need to be able to clearly and succinctly discuss the features, benefits, and price of pharmaceutical care with potential customers. The authors of A Practical Guide to Pharmaceutical Care recommend that pharmacists learn to describe each patient care service in just 15 seconds - about the amount of time that most customers are likely to listen with attention. As illustrated in Figure 1, this quick and concise presentation should contain the following three components:
Don't apologize for charging for your pharmaceutical care services. Pharmacists who come across as guilty, uncertain, or ill at ease about their pricing policies send the wrong message to potential patients. On the other hand, speaking with confidence about your services and fees helps to convey their value and importance to potential purchasers. Avoid sounding tentative or apologetic about your fees, such as in this example:
"Mrs. Webb, with all these prescription and nonprescription medications you're taking, I think you might benefit from sitting down with one of our pharmacists for a medication review session. Unfortunately, we have to charge for this service."
A more persuasive and positive way to state this same information would be to say:
"Mrs. Webb, with all these prescription and nonprescription medications you're taking, you could benefit from a personal consultation with one of our pharmacists, who would review your medications for you. Our professional fee for this service is $30."
Another key is to close the sale with confidence. In this example, the pharmacist might close by stating, "This service takes about 20 minutes. We have the time now or we could schedule an appointment for you on another day this week."
Exploring New Markets for Pharmaceutical Care
The majority of Americans have health insurance coverage through a third party payer, either an employer sponsored health plan or a publicity funded program, such as Medicare or Medicaid. In 1998, 62% of Americans (168 million) received health care benefits through employer-based coverage, either some form of managed care or a traditional indemnity plan.
Logically, then, pharmacists have traditionally focused their compensation efforts on submitting claims to third party payers, particularly insurance companies. However, the dominance of third party payers should not blind pharmacists to other possible purchasers of their services. When developing a marketing strategy, all potential purchasers of pharmaceutical care services should be considered. In particular, two often-overlooked markets are proving to be profitable for some innovative pharmacists: cash-paying consumers and employers, especially those who have self-insured health care plans.
Patients as Purchasers
According to the Employee Benefit Research Institute, personal out-of-pocket spending for health care totaled $199.5 billion in 1998, or about 17% of total health care expenditures. Pharmacy-based programs geared toward cash-paying customers are thus a potentially important source of revenue, and a number of pharmacists have tailored their pharmaceutical care programs to serve this group of purchasers.
For example, Don Downing, pharmaceutical care coordinator for the Washington State Pharmacists Association (WSOA), said that his organization is developing pilot programs for pharmaceutical care that solely target consumers who are willing to pay cash for pharmacist-provided services. "We initiate new projects based on three criteria: first, that there is a demand for the service at the consumer level; second, that the consumer has no expectation that their insurance will cover it; and third, that pharmacists can provide the service," he said.
In the last few years, WSPA has implemented several pharmaceutical care programs that have proven to be successful in attracting cash-paying patients. The first such service was its pharmacy-based immunization program. Since 1995, when this program was introduced, Washington pharmacists have provided nearly 200,000 immunizations. Because so many consumers have been willing to pay out of pocket for immunizations, a number of Washington pharmacists have decided to drop their status as Medicare-eligible providers, said Downing. (Pharmacists who are Medicare providers cannot accept cash payments for immunizations from Medicare recipients; they must instead bill Medicare for this service.)
Most recently, WSPA implemented the Emergency Contraception Pilot Project, which aims to increase women's access to emergency contraception. The program has trained more than 2,000 pharmacists statewide to provide emergency contraception and counseling services within collaborative practice agreements. Because insurance plans do not cover this service, women pay out of pocket (typically, $30 to $35) for the service. The fee includes a consultation with a pharmacist and, if appropriate, a prescription contraceptive. "The program has been a win-win situation," Downing said. "Patients are very pleased with the service, our abortion rates have dropped precipitously in Washington, and pharmacists are earning money that they would not have otherwise made."
Janice Bopp, owner of Mar-Main Pharmacy in South Bend, Indiana, has similarly refocused her patient care services to serve cash-paying customers. Revenues from the pharmacy's patient care services, which include counseling for dyslipidemia, diabetes, natural hormone replacement therapy (HRT), and dietary supplement use, are largely derived from patients' out-of-pocket payments. The pharmacy's transition away from billing third party payers reflects the staff's increasing confidence in asking consumers to pay directly for patient care services and a growing willingness of their customers to do so.
Pharmacy-based serviced services in the areas of wellness and preventive health are particularly well suited to direct payment from consumers. Generally, managed care organizations and other third party payers do not cover most disease prevention and wellness programs, so consumers usually expect to pay for these services themselves. Consumer demand for these services is also strong because of the growing public interest in self-care, disease prevention, and healthful aging.
Evidence gleaned from recent studies points to the willingness for many consumers to pay out of pocket for pharmacy-based patient care services. One example can be found in the results of the Project ImPACT: Hyperlipidemia study, a community pharmacy-based demonstration project to improve patient adherence to prescribed therapy for dyslipidema. Of the 232 patients in the study who were asked for payment, 75% (174) paid an average of $35 per visit. By comparison, of 121 third party payers billed for services, 53% (64) paid and average of $30 for each visit billed. Another example can be found in the Wickman et al. survey of community pharmacies in Georgia. In this study, 100% of the 34 claims submitted to insurance companies were paid.
When offering a cash-based patient care service, pharmacists who serve this market suggest these general guidelines:
Offer services that consumers expect and for which they are willing to pay out of pocket. For example, weight management programs can be an excellent cash-based service because consumers are accustomed to paying for commercial weight-loss programs, such as Weight Watchers and Jenny Craig. Also, despite the documented health benefits of weight loss, most health insurance plan do not cover weight management services and patients therefore do not expect third party reimbursement.
Choose services for which consumer demand is high - and for which pharmacists can fill an unmet need. Continuing the previous example, more than half of all Americans are either overweight or obese, so demand is extremely high for weight management counseling and support in most communities. Also, because many over weight patients use prescription or nonprescription medications is an attempt to shed excess pounds, pharmacists are strategically positioned to offer education and support in this area.
Similarly, Bopp said her pharmacy has received an outstanding response to its consulting services on natural HRT. This service, which is described in the case in Figure 2, geared to the growing number of baby boom women who are entering the menopause and desire a natural alternative to standard HRT. Because most physicians are not familiar with natural forms of HRT, pharmacists who have specialized knowledge in this area of drug therapy are uniquely positioned to provide services this niche market.
Set fees carefully and provide customer-friendly payment plans. Setting the price at an acceptable level is key to attracting cash-paying customers. Services such as immunization, weight loss management, and emergency contraception tend to work well as cash services because the fees are relatively low and affordable. For example, a flu shot might cost $10 to $15 - an amount that many customers are willing to pay out of pocket.
Flexible and convenient payment plans also can encourage more patients to
use these services. For example, Bopp offers her patients the choice of paying
by cash or credit card, with the further option to use a credit card, with the
further option to use a credit card installment plan to spread payments over
several months. Some pharmacies allow patients to establish individual charge
accounts that are collected in full every 30 days. Another option is to segment
a service into sessions that can be purchased individually at a slightly higher
price than the package deal for the entire program.
Be clear and straightforward with potential customers about your pricing policies. Misunderstandings can arise when patients expect services to be reimbursed by their health insurers while the pharmacist expects patients to pay in cash. Let patients know before you provide service if they will be directly responsible for payment. If the possibility exists that their insurance company may reimburse for the service, offer to assist patients in clarifying the terms of their coverage, such as offering to call the insurer. In all cases, provide a receipt for your services, so patients can attempt to seek reimbursement from their insurers on their own, if they desire.
Employers as Purchasers of Pharmaceutical Care Services
The pharmacy community often overlooks employers as direct purchase of pharmaceutical care services. Because many companies purchase employee health benefits through a commercial insurer, employers are typically viewed as indirect influencers of the decision to purchaser pharmaceutical care at best. In fact, employers, particularly those who self-fund their workers' health benefits, constitute a huge - and largely tapped - market for pharmaceutical care services.
Employers who have self-funded plans (also called self-insured plans) pay for their participants' health care claims directly out of their own income or assets. These employers have a strong incentive to implement cost-effective health prevention and wellness programs for employees, because they pay directly for their participants' health care claims. In contrast, employers with commercial plans pay premiums to purchase health insurance coverage directly from an insurer. In this case, the insurer, not the employer, assumes the risk for the plan participants' health care services.
Because self-funded insurance can reduce employers' expenses for health care
benefits, the number of employers offering this type of plan is growing. As
shown
In Figure 3, a significant number of employers have self-funded plans.
With the rising cost of pharmaceuticals a major issue in the business community, the present is an opportune time for pharmacists to discuss with employers the many ways in which pharmaceutical care services can reduce health care costs and improve patient outcomes. With total prescription drug costs estimated to double from $105 billion to $212 billion between 1999 and 2004, many employers are highly motivated to implement innovative programs to curb these costs. According to a recent study by the Health Insurance Association of America and Blue Cross/Blue Shield, spending for prescription drugs is projected to rise by 15% to 18% for each of the next 5 years.
Employers are concern about not only the cost of health care, but also the quality of services and the effects of disease prevention and management programs on workers' productivity, morale, and quality of life. Pharmacists who are interested in presenting their programs that document the benefits of pharmacists' interventions on both the cost and quality of health care.
Examples of wellness programs that pharmacists have conducted in the workplace include smoking cessation, weight management, and immunization. Such prevention-oriented programs are attractive to many employers prevention-oriented programs are attractive to many employers because, in addition to helping to reduce the long-term cost of health care, they also can boost employee morale and productivity.
With a smoking cessation or weight management program, one method of compensation is to charge each participant an up-front fee - for example, $175 for a series of four smoking cessation classes plus telephone follow-up. The employer then can agree to reimburse participants for the entire amount if they succeed in reaching the program's goals (for example, if a participant stops smoking within a given time frame). This pricing method helps to motivate participants to adhere to the program recommendations and provides initial compensations for the pharmacist.
Targeting Self-Funded Employers
Several successful collaborations have recently been developed between groups of pharmacists and employers with self-funded health insurance plans. One of the best-known programs is the nationally acclaimed "Asheville Project," a collaborative effort involving the North Carolina Center for Pharmaceutical Care and the City of Asheville, which self-funds its health insurance plan for covered municipal employees, family members, and retirees.
The Asheville Project was initially designed to improve the care of city employees with diabetes while reducing their medical costs. The program, started in 1997, pairs specially trained local pharmacists with patients who have diabetes. Each patient receives free medication, a blood glucose monitoring system, and diabetes education classes. Patients visit the pharmacists on a regular basis, usually monthly, to review the results of their daily glucose monitoring and receive other diabetes education and care; they also make regular visits to their physicians. According to John Pl Miall Jr., Ashville's director of risk management, participating pharmacists receive varying amounts of compensation, depending on the time and legal of each intervention, but the average fee for a monthly, 20-minute patient visit is about $40 (telephone interview, September 8, 2000).
Both the City of Asheville and the participant patients have experienced dramatic benefits from the program. During the program's first year, the city saved more than $25,000 in health care expenses for 38 participating employees, after deduction of program start-up costs (J.P. Miall Jr., telephone interview, September 8, 2000). More than 90% of the participants also showed significant improvements in blood glucose levels, and the average number of sick days was reduced by half, from 12.66 to 6.2 days. Quality-of-life surveys demonstrated that the majority of patients felt happier and healthier.
Based on these favorable results, Asheville expanded the program in 1999 to include pharmacist care for patients with asthma and, more recently, for those with dyslipidemia or hypertension. In early 1999 a second large employer was added to the program. Mission St. Joseph's Health System, the largest employer in western North Carolina, with approximately 10,000 covered members, agreed to offer the pharmacy-sponsored wellness programs in diabetes and asthma.
Self-insured employers also are the primary market for Outcomes Pharmaceutical Health Care of Des Moines, Iowa. The company, which is owned and operated by a group of Iowa pharmacists, provides a range of pharmaceutical health care and consulting services. One of its services, the Outcomes Encounter Program, aims to reduce the cost and improve the quality of prescription drug benefits for patients by reimbursing pharmacists for documented interventions (see Figure 4).
Employers, who pay Outcomes a monthly fee for this service, receive regular reports that summarize the frequency and nature of their participants' encounters. These reports also estimate the resulting cost avoidance from the program. Outcomes guarantees that employers will save the entire cost of the Encounter program through avoided expenses for expenses for pharmaceuticals, medical and hospital care - or Outcomes will refund the difference at the end of the fiscal year.
Jon-Scott Johnson, risk manager for the City if Ames, Iowa, recently contracted with Outcomes to manage drug therapy for the city's 1,600 covered members. Johnson said he was motivated to use the Encounter Program because of his increasing recognition that pharmacists are instrumental in reducing the cost and improving the quality of the prescription drug benefit. In the first month of the program, Johnson said the city had already achieved substantial cost savings, estimated at more than $5,000 on an annualized basis. He added that the program would likely reduce drug-related health costs and improve the health and productivity of city employees.
Iowa pharmacist Matthew C. Oserhaus, who helped to establish Outcomes and now participates in the Encounter program, said the service benefits, employers, pharmacists, and most importantly, patients. "Outcomes is going to show employers how pharmaceutical care works, and demonstrate that pharmaceutical care can really make a difference in health care quality and cost," he said.
Other Employer Programs
In some cases, pharmaceutical companies can be important marketing allies for pharmacy-based patient care services. For example, a manufacture of blood glucose monitors recently helped to fund a series of pharmacist-led educational seminars for diabetes patients. In this program, patients who purchased a box of glucose meter test strips gained entrance to the seminar series. During the series, each patient received a free blood glucose meter along with important diabetes self-care information. The manufacturer reimbursed the pharmacists for their patient education services; the fee was comparable to what they would have billed an insurer for the same service. Pharmacist Dawn Blank, who helped to establish a diabetes practice at an Osco pharmacy in Indianapolis, has led such seminars and found them to be an excellent source of referrals to her pharmacy's diabetes care program.
Improving Reimbursement from Third Party Payers
Given the vast dominance of third party payers in controlling health care payments, it is critically important that pharmacists continue to seek compensation from these purchasers and work to reduce the rate of rejected claims for pharmaceutical care services. The basic steps involved in submitting claims for patient care services to third party payers have been described in more detail elsewhere. Briefly, the major components of this process are to:
Unfortunately, even when all of these steps are carefully followed, many pharmacists report that their claims are not paid in a timely manner, become lost or mired in a payer's bureaucracy, or are rejected, sometimes to help improve rates of reimbursement from third party payers.
Train yourself and your staff to fill out HCFA 1500 forms. HCFA 1500 forms may seem intimidating at first, but most pharmacists report that this paperwork becomes easy with practice. Pharmacists who have never filled out this form before may want to ask a more experienced colleague for advice or check to see if a workshop or seminar on this topic is offered in their communities. Also, when uncertain about how to enter specific data for a particular patient, call the patient's insurer and ask for instructions. Most pharmacy dispensing systems also have the potential to generate HCFA 1500 forms, but this feature is greatly underused. Pharmacists should refer to the Coding and Reimbursement Guide for Pharmacists, produced by Saint Anthony's Publishing, for a complete discussion of codes that may be applicable to pharmacy services.
Try to include a statement of medical necessity with your claim submission. By confirming that the service the pharmacy will provide is a necessity part of the patient's treatment, a statement of medical necessity increases the likelihood of payment. A case example in which a certificate of medical necessity was used to obtain reimbursement from an insurer is shown in Figure 5.
Look for ways to stream the claim submission procedure. Some pharmacists are hesitant to submit claims because of the administrative time and perceived hassle involved. To improve efficiency and free pharmacists' time, consider delegating the responsibility for claims work to a trained clerical worker whose schedule includes regular time each week for managing claims submission and follow up. Another option is to turn over the pharmacy's claims submission and tracking tasks to an outside billing service. These companies typically charge pharmacists a percentage of the reimbursed claims each month and may have a monthly minimum fee.
For pharmacists who provide immunization services to Medicare recipients, roster billing can be an important time saver. The roster form allows the pharmacist to submit claims for up to 10 patients on a single claim form, eliminating the need to fill out multiple forms. Currently, immunization is the only service for which Medicare recognized pharmacists as eligible patient care providers.
Follow up on rejected claims. When a claim is rejected, call the third party payer to find out the reason. Many times, claims are rejected because of easily correctable problems, such as minor omitted data or an incorrect entry. Sometimes, simply talking with a different staff person within the payer's system can lead to acceptance of a denied claim. Be prepared to show evidence that the services you provided were medically necessary and provide documentation of your services from the patient's chart, along with any referrals or recommendations you made.
A Practical Guide to Pharmaceutical Care recommends setting up an appointment with the payer's case manager to discuss a rejected claim. If the case manager also denies the claim, a clinical pharmacist from the medical benefits division of the insurance company should be contacted. If the claim continues to be denied, the pharmacist may wish to contact the patient's employee benefits manager, who can speak to the insurer on the pharmacist's behalf.
Summary
In the past decade, the pharmacy profession has made remarkable strides in implementing a wide range of pharmacy-based patient care services. To foster greater awareness of the value of these services among payers and to ensure the long-term success of pharmaceutical care, pharmacists need to focus more attention on obtaining compensation for these services. In the long run, pharmacists are likely to receive greater net profits from pharmaceutical care than from dispensing. As Norwood et al. noted, pharmacies keep all the revenues they receive from pharmaceutical care as profits and to cover operating expenses, whereas they keep only about 29% of the revenues from the sale of products.
By exploring innovative markets for pharmaceutical care services and continuing
to improve rates of reimbursement from third party payers, pharmacists can further
enhance the revenues they obtain from their growing array of patient care services.