Supermarket pharmacies never planned for managed-care prescriptions to balloon to 50% of all prescriptions filled at retail. Supermarket pharmacy directors may want to plan now to meet projections of 80% in the next few years.
For many supermarket pharmacies, including some that may refuse to acknowledge it or maybe don't even know it, managing the managed-care part of the business has spiraled out of control -- or soon will.
It's not that pharmacy directors haven't tried. It's just that the business has grown so big and so quickly that most are playing catch-up and using tools adapted from the accounting department that were never intended to be used to sort out the intricacies of third-party plans.
The executives of The Pharmacy Fund, many of whom are from the banking industry, have brought a fresh perspective to the problems pharmacies face in trying to track third-party claims and payments. (See story on Page 4.)
In putting together a new computerized financial system called Rapid RxEmit (pronounced Rapid Remit) to purchase pharmacy's third-party claims, The Pharmacy Fund is bringing to the light of day some questionable business practices of third-party payers that pharmacists have felt powerless to do anything about.
The former bankers weren't prepared for what they found. For example, normally one would expect the creditor, the one who is lending money -- in this case, the pharmacy -- to be in the driver's seat, said Tom De Fazio, a consultant to The Pharmacy Fund. Instead, it is the debtor, the third-party plan, that seems to have all the power in this relationship, added Jeff Greene, president of The Pharmacy Fund. The third-party payer decides how much the pharmacy provider is due for services provided. Not only are pharmacies no longer in control of setting their own prices, often they don't even know how much is owed to them because of varying payment cycles and changes that occur in the processing of claims payments.
Another practice, one that would be frowned upon in financial circles, is that of third-party payers routinely commingling the funds they receive from plan sponsors, and then paying out from this general fund to pharmacy providers.
Setting up a system to track payment of third-party claims has turned out to be far more involved than the bankers originally thought, leading The Pharmacy Fund to invest $6 million to develop its computerized system, twice the $3 million originally envisioned.
Services that the Rapid RxEmit system will provide when it is launched next month include: reconciling third-party payments with claims; maintaining credit ratings for third-party payers; measuring payments and payment cycles against the terms of the original third-party contract, and electronically transferring payment for all adjudicated claims, minus a discount fee, to the retailer's bank account in 24 hours.
The complexities of monitoring third-party claims, combined with loose controls, have invited abuse in the form of stretched-out payments for claims, reduced payments or even lack of payment.
"This service can help pharmacies police the third-party payers," said Terry Cater, pharmacy director at Save Mart Supermarkets, which has been testing the system. "No one has ever done that before."
When asked if third-party payers are acting in good faith, Greene replied indirectly: "The government continues to gather testimony that some of the insurers don't pay their bills as efficiently, timely and accurately as they might."
Unlike pharmacies that simply write off relatively small, outstanding third-party claims, The Pharmacy Fund will track down every penny of every claim it purchases. "We will hold companies accountable to the letter of the contract signed. No better, no worse," said Greene.
Whether a supermarket decides to purchase The Pharmacy Fund service is an individual business decision, arrived at by crunching the numbers and comparing the cost of the service vs. the money that could be saved, including payment for claims that now "fall through the cracks."
To be sure, pharmacy directors serious about gaining control over this growing part of the business do have other options. They can build their own system. Also, some services provided by Rapid RxEmit can be obtained elsewhere. Condor Corp., Pelham, Ala., for example, will reconcile third-party payments for a flat fee of 10 cents to 15 cents per claim.
Even those who decline the Rapid RxEmit service as too expensive, not needed or not needed yet owe a debt to The Pharmacy Fund for airing out these questionable practices and giving pharmacists a tool with which to fight back.
The experiences of The Pharmacy Fund in setting up this service and the perspective it has brought should serve as a wake-up call to community pharmacy, not only that pharmacies need to regain control of their businesses and plan for the future, but that pharmacists have been much too trusting for too long.
