Pharmacy benefit managers (PBMs) are third-party companies that administer and manage prescription drug benefits on behalf of large employers and organizations, health insurers, Medicare Part D drug plans, pharmacies, and other payers. PBMs were originally developed with convenience and cost-savings in mind. Their aim was to help simplify the drug claims process and to contain and reduce prescription drug costs.
PBMs are considered the pharmaceutical middlemen. They process prescription-related claims and help manage prescription drug costs by negotiating with drug manufacturers and wholesalers on behalf of their clients to control spending. According to The Commonwealth Fund, PBMs help determine total drug costs for insurers and pharmacies. In an August 2018 Stat News article, John Arnold explains that PBMs represent consumers from multiple large employers and insurers, acting as giant buying networks—with significant buying leverage—in the pharmaceutical market. Ideally, PBMs use this buying leverage to lower the total cost of drugs and pass the savings along to consumers.
PBMs are more than just middlemen, however. PBMs are now involved with:
- Developing and updating formularies, ie., the list of generic and brand name prescription drugs which will be approved and covered under insurance plans
- Negotiating medication rebates with drug manufacturers
- Negotiating reimbursements, medication discounts, and delivery fees with local pharmacies
- Determining what pharmacies are included in a prescription drug plan’s network and managing distribution within networks
- Performing drug utilization reviews
- Overseeing patient compliance
- Processing and paying claims
- Providing discounted mail order and specialty pharmacy services
Concerns and Proposed Reforms
There is some concern within the healthcare industry regarding a lack of transparency in the PBM arena and the percentage of benefits and rebates that are passed through from manufacturer to consumer. Policymakers have considered reforms to address these concerns, which could include greater regulation of PBMs – and pass through percentages – at the state and/or national level. Several states and the Centers for Medicare & Medicaid Services (CMS) want to limit or ban spread pricing, where a PBM charges a higher rate to a payer than it reimburses to a pharmacy and keeps the difference.
In contrast to these concerns, however, a survey of health plan and PBM personnel found that the percentage of manufacturer rebates passed through to health plans increased from 78 percent in 2012 to 91 percent in 2016. In addition, CMS found that PBMs’ ability to negotiate larger rebates from drug manufacturers has helped lower prices and slow the growth of drug spending over the last three years.
Pharmacy benefit management is a reality in the healthcare arena and has become a key fixture in the hospice world over the last 15 to 20 years. Hospices must pay for all patient medications associated with a hospice diagnosis, making the negotiating and purchasing power offered by a PBM even more critical.
In addition to their purchasing power, PBMs offer the pharmaceutical expertise required by hospice agencies. Hospice regulations mandate that a pharmacist oversee the medication plan of every patient, which is usually not available with a local pharmacy provider, and which can be difficult without the interface capabilities a PBM offers (see Your EMR-PBM Interface, below). With a PBM, hospice agencies also have access to medication data by patient, diagnosis, or day for analysis and reporting.
Hospice PBMs offer important support and education services, as well, including 24-hour support (crucial for hospice providers), hospice Emergency or Comfort Kits, on-line portals for nurses, and even nursing CEUs (Continuing Education Units).
Choosing a Hospice PBM
Cost is a major factor in the selection of a PBM, of course, but many of the biggest hospice PBM players will be very similar from a strictly financial perspective. Be sure to evaluate the PBM’s per diem vs per drug rate options.
Agencies must first consider the formulary vs non-formulary drug offerings of each PBM, which can differ greatly from one PBM to another. A formulary is the list of prescription drugs (generic and brand name) that a PBM covers, and into which tier (cost-sharing level) each drug is categorized. The best potential match for your hospice agency will be a PBM with a formulary that matches your patient population and your agency’s most common diagnoses.
Another important consideration for hospices when selecting a PBM is ensuring that your EMR system can communicate with the chosen PBM. Make sure the PBM — and your EMR vendor — are willing and able to integrate their systems for your agency’s benefit. A seamless flow of data from your EMR system to your PBM will eliminate double entry of patient data and help to reduce medication errors. It also can save countless hours of nursing time.
Your EMR–PBM Interface
Delta Care RX is the PBM of choice for Hospice of the Piedmont in Charlottesville, Virginia, and Willamette Valley Hospice (WVH) in Salem, Oregon. Delta Care utilizes preferred networks of local pharmacies for same-day service, ensuring that the majority of hospice agencies’ medication dollars are spent within the communities they serve. Delta Care also offers customized report generation including CR-8358 and CR-10573, e-prescribing for controlled and non-controlled medications, telehealth consulting with physicians and pharmacists, and assistance with state-specific PDMP (Prescription Drug Monitoring Programs) participation and compliance.
At Piedmont and WVH, nurses enter patient demographic, health, and medications data into their NDoc® Hospice EMR (including ADT information, diagnosis, height and weight, allergies, preferred pharmacy, etc.) and the data flows automatically into the Delta Care system. Medications are reviewed by a Delta Care pharmacist and added to the patient Medication List in the Delta Care system.
Christina Jaramillo, WVH Quality and Compliance Manager, says the NDoc-Delta interface means fewer data entry errors and more time saved for nurses. Intake nurses “are saving approximately 20 minutes per admit with the medication integration,” she says.
Lara Fisher, Process Improvement and Innovation Manager at Piedmont, agrees: “Our integration… has really helped us ensure that the information in our EMR matches what gets profiled in our PBM. We started with just the ADT [data], which was a time saver for our Intake, but now we have the medications going across to help our nurses not have to duplicate their efforts. It takes care of the ‘profiling’ step for us, and it even works for our IPU workflow to Pyxis!” Fisher says that Piedmont is looking forward to the next phase of integration, “when Delta allows the e-prescribe workflow to be initiated from NDoc on new orders.”