The shift to value-based reimbursement is affecting every facet of health care. For all stakeholders, it means transitioning from fee-for-service medicine to outcome-based payments. For independent pharmacies, it means transitioning from a fee-for-prescription revenue model to a diversified revenue model based on the value clinical services create for payers and patients.

Independent pharmacies must make that transition as their prescription revenue and margins compress. By focusing on expanding and improving clinical services, pharmacies will put themselves in a position not only to remain viable in the new value-based reimbursement environment but to thrive in it.

Independent pharmacies should take the following five steps to expand and improve their clinical services with the end result being better business performance and profitability.

1. Install systems to regularly monitor clinical and financial performance

What gets measured matters, and you can’t improve what you don’t see. It’s essential for independent pharmacies to put systems in place to track and report their performance on clinical and financial measures. Pharmacies can use EQuIPP, or Electronic Quality Improvement Platform for Plans & Pharmacies. The system captures pharmacy clinical performance data that contracting payers use to get their star ratings from Medicare. EQuIPP gives pharmacies a scorecard that reports their performance, identifies gaps in performance and highlights opportunities to improve.

To track and report their financial performance, independent pharmacies should review their monthly profit and loss statements. They should use P&L statements to identify trends in financial performance and seek opportunities to decrease operating costs and improve efficiencies. They should use a financial analytics reporting tool, but it could be done by spread sheets on a computer for smaller operations.

2. Implement action plan to improve clinical measures to reduce fees and increase bonuses

Payers charge fees and pay bonuses to network pharmacies that help them with their star ratings from Medicare. Fees vary based on clinical and operational performance. Payers charge more to pharmacies that miss their performance targets. Payers charge less to pharmacies that meet or exceed their targets. Relatedly, Medicare makes quality bonus payments to health plans that achieve 4, 4.5 or 5 stars on its rating system.

It’s smart business for pharmacies to know what clinical measures are most important to health plans and then take the necessary actions to improve their performance on those measures. The Centers for Medicare & Medicaid Services recently released its star-ratings measures for 2018. The four Medicare Part D measures that pharmacies have the most ability to impact in 2018 are:

  • Medication adherence for diabetes drugs
  • Medication adherence for hypertension drugs (e.g. RASA)
  • Medication adherence for cholesterol drugs (e.g. statins)
  • MTM (medication therapy management) program completion rate for CMR (comprehensive medication review)

Focusing on tactics that drive better results on those four measures will lead to better clinical outcomes for patients but also lower fees and bigger bonuses for pharmacies.

3. Choose medication interventions that create additional financial benefits

Many of the same interventions pharmacies can use to improve their clinical performance scores also may be reimbursable services. That creates a revenue opportunity separate from fees and bonuses derived from participating in a plan’s preferred pharmacy network.

One tactic is medication synchronization in which a patient picks up multiple prescription medications at the same time each month. Appointment-based medication synchronization improves adherence, which helps a pharmacy’s star-rating clinical performance score and generates more prescription revenue for the pharmacy. Med sync also improves workflow and reduces operating costs by enabling the pharmacy to fill patients’ prescriptions all at once rather than one at a time whenever patients walk in the door.

Other clinical services that create a dual financial benefit to pharmacies include:

  • CMRs, which is a Medicare Part D star-rating measure that pharmacies can bill for separately
  • Behavioral coaching, which drives adherence measures Vaccine and immunization programs, which can contribute to several health plans’ Medicare Part C measures and can be billed for separately

Pharmacies should consider clinical services that will benefit their particular patient population, drive star-rating measures and are reimbursable services.

4. Engage patients to take ownership of their own medication use

None of the first three steps will work unless pharmacies take step four, and that’s engaging patients in their medication behaviors.

The most effective ignition point for patient engagement is med sync. It’s effective because it creates a dedicated point of contact between the patient and the pharmacy. The conversation actually begins before the scheduled monthly pick up when the pharmacy confirms the next appointment and talks to the patient about his or her other health care needs.

For example, the pharmacy may know that the patient needs a flu shot or a vaccine. The pharmacy can offer to provide the service when the patient comes in. The pharmacy may identify a patient’s barriers to adherence and offer behavior coaching or gaps in medication use and offer MTM services. In-person conversations created by med sync always should be about the patient’s health or medication needs first and then about what services the pharmacy can offer to meet those needs.

5. Partner with providers and payers to improve medication services available to their patients

Pharmacies should use the same approach to build clinical partnerships with payers and providers that result in business benefits for the pharmacies. It should always be about how the pharmacy can help the health plan’s enrollees or the provider’s patients, not about the pharmacy’s balance sheet. It’s not about dropping off a pamphlet saying the pharmacy offers these services. It’s about building relationships.

One way for an independent pharmacy to build such a relationship is to specialize in medication use by patients with specific chronic medical conditions. Payers and providers are seeking clinical partners who can help them control treatment costs of patients with chronic diseases like diabetes and hypertension. If a pharmacy can optimize a patient’s medication use, it will be a valued partner and start a relationship that can lead to the referral of patients to the pharmacy for other services.

Demonstrating a medication expertise in a particular area combined with the personal touch and convenience offered by a local independent pharmacy – home drug delivery and 24/7 access to the pharmacist, for example – lay the foundation for that deeper relationship.

By taking the five steps I’ve described above, independent pharmacies will benefit from healthier patients and healthier balance sheets.

Health Mart is an innovative franchise program designed to enhance an independent pharmacy's ability to compete with chains, mail-order programs, and other independents. Health Mart provides franchisees with services and programs that help them compete more effectively in today's retail pharmacy market>

Related: Learn about McKesson’s solutions for independent pharmacies.

Key Steps to Improve Business Results
  1. Monitor clinical and financial performance
  2. Implement action plan to improve clinical measures
  3. Choose medication interventions with financial benefits
  4. Engage patients in their medication behaviors
  5. Partner with providers and payers for improved patient services
Crystal Lennartz

About the author

Crystal Lennartz is the VP of Pharmacy Performance at Health Mart Atlas. She leads the team responsible for managing a high-performing pharmacy network across independent and small to medium chain pharmacy segments. She has both a Doctor of Pharmacy and Master of Business Administration from Drake University, after which she completed an APhA-ASHP Accredited Residency in Pharmacy Practice with an emphasis in community care.

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