Value-based care is reshaping the relationships between your independent pharmacy and the managed care plans with which you do business. Pharmacy services administrative organizations (PSAOs) can help make those relationships work for both sides. PSAOs can also help those relationships work for your patients.

Let’s look at how the role of PSAOs has evolved and what it can do for your pharmacy. I’ll also outline the five main attributes to look for when making your selection.

From contract signer to strategic advisor

When you think about the healthcare reimbursement landscape today, it’s very transactional. In recent years, we’ve seen an increasing shift in the healthcare reimbursement landscape from fee for product or service to performance-based reimbursement. That’s true if you’re a hospital, physician or an independent pharmacy.

For hospitals and physicians, performance means outcomes like readmissions, infection rates or costs. Performance also means outcomes for your independent pharmacy. Your outcomes could be clinical, like adherence rates for certain drugs. They could be operational, like sticking with an approved formulary or increasing the dispense of generic drugs, also known as generic dispense rate (GDR). Your challenge is knowing what you’re being measured on and what activities influence those metrics to ultimately drive better patient outcomes and improved reimbursement.

The Right PSAO Partner Can Enhance Your Independent Pharmacy PerformanceThat’s where a PSAO comes in.

Traditionally, a PSAO was focused on offering centralized managed-care solutions to help pharmacies manage their contracts. Those core business services included:

  • Reviewing and administering contracts
  • Credentialing
  • Central payment services
  • PBM issue resolution

But as the reimbursement landscape evolves, so should a PSAO’s role. A PSAO should offer those core services to your pharmacy. But it should also serve as your strategic advisor working on your behalf with payers and pharmacy benefits managers (PBMs).

A PSAO should be your advocate by promoting and educating plans on the performance and capabilities of its network. The PSAO should work with payers and PBMs to build the performance measures that are right for pharmacies in its network. It should give you access to the services and tools that help you meet those performance measures, too. And most importantly, the PSAO should be your coach as you work to achieve those outcomes.

That is the new PSAO value proposition.

Converting the value proposition into benefits

I know that all sounds good on paper. But what does it mean for your pharmacy in practice? Here are some of the best ways a PSAO can help your pharmacy solve some of your most pressing day-to-day problems.

    The Right PSAO Partner Can Enhance Your Independent Pharmacys Performance Fact
  • Identifying additional reimbursement opportunities. Declining profit margins is a major challenge for your independent pharmacy. The right PSAO can help you find reimbursement opportunities and make sure the money you are entitled to is not being left on the table.
  • Helping you reduce DIR fees. Meeting the outcome measures in your contracts can reduce your DIR fee obligations and maximize performance-based opportunities. That’s why it’s important to know what your clinical and operational outcome measures are, and how they affect your reimbursement—something a PSAO can help you determine.
  • Reviewing and explaining complex contracts. Your PSAO signs hundreds of contracts with payers and PBMs on your behalf. While these contracts could be typically offered to you directly on a “take-it-or-leave-it” basis, the PSAO provides the expertise to review and administer the contracts with the success of your business in mind. As contracts continue to increase in complexity, one of the biggest benefits PSAOs offer is helping your pharmacy understand the key contract components and the impact the contracts have on your business.
  • Expanding your preferred pharmacy networks. Partnering with the right PSAO can give you access to the preferred pharmacy networks of leading health plans and PBMs. The ability to continue to serve the patients in those networks is critical to the long-term success of your business. This can ultimately drive more patients and more prescriptions to your pharmacy. And, more prescription volume means more revenue. In addition, as the PSAO continues to drive better patient outcomes and achieve higher performance, that will result in differential and increased access to performance-driven networks.

How to choose the right PSAO for your pharmacy

Now that you know what a PSAO can do, how do you choose the right one for your independent pharmacy? Here are five qualities I suggest you look for when selecting a PSAO:

  • Market position. Does the PSAO have a network of pharmacies that makes it an attractive contracting partner for health plans and PBMs? That results in more invitations to participate in preferred networks, under more favorable terms, and gives you access to more patients.
  • Contracting expertise. Is the PSAO knowledgeable about PBM and payer contracts and value-based care models? That’s essential in including and tracking the right outcome measures in your contracts.
  • Technology support. Does the PSAO offer technology to enable and enhance your understanding of your business? Contract and payment terms and performance-based contracts are getting more complex. You need support managing your business effectively and access to advanced analytic capabilities. Both will help you understand and track your reimbursement more efficiently.
  • Performance focused. Is the PSAO focused on clinical and operational performance and offering you the tools and solutions to drive better patient outcomes? That can help improve care and reimbursement at the pharmacy and network level. For example, your PSAO should be offering solutions that improve medication adherence, like medication therapy management or medication synchronization.
  • Solution support. Does the PSAO offer services and tools to help you manage your business and meet your performance goals? A PSAO should offer you the coaching resources, tools and solutions (e.g. online applications and portals) to help you organize your business and make it easier for you to focus on servicing your patients.

When your pharmacy chooses to work with a qualified PSAO partner, you’re taking a proactive approach to tackling some of the biggest challenges your pharmacy faces today. You’re taking a smarter approach to working with complex payers and PBMs. You’re aligning with a strategic partner who can find reimbursement opportunities and boost your bottom line. And most importantly, you’re picking a partner who can help you transform both business and patient outcomes for the better.

Related: Learn more about McKesson’s managed care contracting services for independent pharmacies

Eyad Farah

About the author

Eyad Farah is the VP/GM for Health Mart Atlas, McKesson’s Pharmacy Services Administrative Organization (PSAO), which offers industry leading centralized managed care solutions for independent and small medium chain pharmacies. He spent two years as the VP of Business Development & Strategy for AccessHealth and was responsible for the long-term strategy and business development opportunities. Prior to joining McKesson, Eyad worked at Super-Pharm, the largest retail pharmacy chain in Israel, and oversaw the operations of one of their leading drug store branches. Eyad holds a B.Sc. Pharm degree from the Hebrew University of Jerusalem in Israel and a Master’s in Business Administration (MBA) degree from the Wharton Business School in Philadelphia.

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