The ability of hospital pharmacies to manage patient assistance programs (PAPs) is being challenged by a number of major health care industry trends. If hospitals and pharmacies hope to continue providing prescription medications to uninsured and underinsured patients without draining their own drug budgets, they must take the necessary steps to keep pace with those trends.

Drug manufacturers offer PAPs to make their pharmaceutical products affordable to patients without the financial means to pay for them. Assistance comes in two general forms:

  • Co-payment assistance. The first type is help with co-pays, including co-insurance and deductible support (depending on treatment setting). The manufacturer will pick up some, or all, of the patient’s out-of-pocket responsibility for prescription medications and fund the balance due to the hospital pharmacy.
  • Replacement drugs. The second type comes in the form of the pharmaceutical donations. The health system or hospital pharmacy will provide the prescription medication to the patient for free and the drug manufacturer will replace the product back to the provider at no cost.

How Hospital Pharmacies Can Optimize Patient Assistance ProgramsThe benefits to all three stakeholders are clear. Drug manufacturers move product and maintain their market share. Hospital pharmacies maintain cash flow and/or their drug inventory. And patients receive the medications they need without undue financial hardship.

Six reasons patient assistance programs are getting more complicated to administer

This seemingly simple arrangement has gotten far more complicated as the health care delivery and financing systems in the U.S. have grown in complexity. Among the many factors making PAPs more challenging to manage are:

  • Drug costs. The cost of traditional medications continues to rise. So does the price tag on specialty drugs to treat complex or chronic medical conditions. With some costs exceeding $10,000 per month, many of these treatments are not an option for patients without some form of manufacturer sponsored financial support.
  • High-deductible health plans. The main driver making PAPs more challenging to administer is the shift from a payer-based financing system to a patient-based financing system via the growth in high-deductible health plans (HDHPs). HDHPs have increased patients’ out-of-pocket financial responsibilities, which has had a direct impact on their ability to pay for these treatments.
  • Prescription drug benefit tiers. The design of health plan benefits has become more complex, with many plans having four or more tiers for their prescription drug coverage. Each tier comes with its own co-pay and deductible levels, along with its own approved drug formulary.
  • How Hospital Pharmacies Can Optimize Patient Assistance Programs 2
  • Provider consolidation. Hospitals continue to expand their footprint by merging with, or acquiring other hospitals, health systems and physician practices. This creates additional—and often disconnected—entry points for patients who need medications. Applying PAPs consistently across all prescriber and dispensing sites becomes extremely difficult.
  • Uninsured rates. The number of uninsured people has declined largely due to the insurance mandates from the Patient Protection and Affordable Care Act. There are still millions of people without insurance or benefits who need prescription drugs for their medical conditions. There also are millions of people who have health coverage for the first time and who may not understand their prescription drug benefits. There is also another portion of the population who are unaware they may not be fully covered for their medical conditions.
  • Value-based care. As hospitals assume more clinical and financial risk under value-based reimbursement contracts with third-party payers, effective medication management becomes mission critical. From a profit and loss (P&L) perspective, a pharmacy is not in the financial position to simply give these costly medications away for free. From a clinical and population health perspective, the pharmacy has a responsibility to provide these medications to the overall benefit of the community. All that makes effective PAP management essential.

In addition to the six challenges, each manufacturer and each individual drug may have a custom PAP. As a result, hospital pharmacies are faced with the incredibly difficult task of managing a part of their operations that is increasingly important to the overall success of their organizations.

Three strategies to improve PAP management performance

So how do hospital pharmacies make the nearly impossible possible? The strategies they should deploy fall into three areas:

  • Education and training. Hospital pharmacies need to educate their staff on the variety of health plans patients have access to and all the different drug benefit designs within each plan. They must be aware of the different PAPs available and the mechanics of each as they apply to “eligible” patients. They must have the competencies required to ascertain the ability of patients to pay their share of prescription costs. Ongoing education and training programs are essential in all three areas, and participation should be required by staff from any prescribing and dispensing site within the hospital.
  • Technology. Hospital pharmacies need to implement PAP management tools. Those tools should include a robust database that gives them visibility into every facet of PAP management. One key feature is a current roster of PAPs available to patients and their respective eligibility requirements. Users must be able to match patients to PAPs based on the clinical and financial data available in host systems: diagnosis, disease stage, appropriate medications, alternative medications, insurance status, benefit levels, ability to pay and other available financial details. Access to PAP management tools must be available at all patient touchpoints in real time. That allows staff to work out healthcare finance details at, or before, the point of service rather than chasing reimbursement post treatment.
  • Professional support. For many hospital pharmacies, the education, training and technology required to effectively manage PAPs are too costly and cumbersome to administer in-house. Many providers elect to outsource some, or all PAP management to a third party that has the clinical and financial expertise, as well as the technology infrastructure to drive meaningful results. Some providers believe outsourcing is cost prohibitive or they may lose the opportunity to personally interact with their patients. Both of those perceptions may be more than offset by the ability to enroll more eligible patients in PAPs, maximize the pharmacy’s drug recovery savings and increase overall patient satisfaction. Additionally, a vendor is able to scale with hospital pharmacies as their organizations expand to meet the demands of their patients. The vendor should be considered an extension of the facility, making PAP management a true team effort.

With the appropriate education, training and technology—whether staffed internally or outsourced —hospital pharmacies can track their PAP management and effectiveness. They will know their drug spend, how much of that spend was allocated to uninsured and underinsured patients (in aggregate and by individual patient), and how much of that was recovered through PAPs. Using analytics to ensure ROI is necessary.

Hospitals can and should use that information to drive further PAP performance improvements to meet their mission of making life-saving drugs available to the patients regardless of their ability to pay.

Related: Learn more about McKesson’s pharmacy optimization services for hospital pharmacies

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About the author

Craig Dolan is the VP of Advisory Services for McKesson RxO, which provides pharmacy services that are driven by people and powered by technology to help track, manage and grow pharmacy operations. He completed his bachelor’s degree and his Doctor of Pharmacy degree at Duquesne University as well as a Masters of Business Administration at Monmouth University.

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