| Method for providing consumer choice and equalizing pharmacy provider availability in prescription medication dispensing plans -> Monitor Keywords |
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Method for providing consumer choice and equalizing pharmacy provider availability in prescription medication dispensing plansRelated Patent Categories: Data Processing: Financial, Business Practice, Management, Or Cost/price Determination, Automated Electrical Financial Or Business Practice Or Management Arrangement, Health Care Management (e.g., Record Management, Icda Billing)Method for providing consumer choice and equalizing pharmacy provider availability in prescription medication dispensing plans description/claimsThe Patent Description & Claims data below is from USPTO Patent Application 20060184391, Method for providing consumer choice and equalizing pharmacy provider availability in prescription medication dispensing plans. Brief Patent Description - Full Patent Description - Patent Application Claims
FIELD OF THE INVENTION [0001] The present invention relates generally to the field of filling prescriptions for consumers. More particularly it relates to prescription payment benefits made available by health plans, employer groups, governmental entities and other organizations to their employees and/or members. BACKGROUND OF THE INVENTION [0002] Many employees and members ("consumers") of health maintenance organizations, employer groups and government entities have their purchases of personal prescription medications subsidized by payments to pharmacies through prescription benefit plans ("plans") offered by those health maintenance organizations, employer groups and government entities. Under such plans, a consumer receives a prescription for a medication from his or her physician and submits it to a pharmacy to be filled. The pharmacy checks to see that the consumer is a member of a plan with which the pharmacy has a contract and that the medication and dosage prescribed are within the approved scope of the plan contract. Upon verification of these requirements, the pharmacy dispenses the medication to the consumer. The consumer pays the pharmacy a "copay" amount, less than the normal cost of the medication. The pharmacy receives the balance of the payment for the medication and its dispensing services from the prescription benefit plan, which is managed by a "prescription benefit manager" ("PBM") with whom the health maintenance organization, employer group or government entity ("payer") has contracted to manage the plan. The PBM invoices the payer (i.e., the PBM's customer) for the consumer's transaction, along with a charge for its contracted fee, and from the funds paid by the payer the PBM pays the pharmacy's balance due. [0003] Medication usage is commonly differentiated between acute care usage, which is short term (30 days or less) administration to treat immediate illnesses or conditions, and maintenance usage, which is long term (more than 30 days) treatment of chronic illnesses or conditions such as hypertension, high cholesterol levels, arthritis, neurology conditions and the like. Maintenance medication dispensing and usage represents a major health care cost (on the order of 75% of prescription costs for many plans, especially due to the aging of the American population) and therefore control of maintenance prescription costs is a principal function of the prescription benefit plans. Dispensing pharmacies are normally of two types: retail pharmacies (which are local neighborhood businesses where the consumer appears in person, can meet with a pharmacist, orders his/her medication and can usually leaves a few minutes later with the dispensed medication in hand) and mail order pharmacies (which are large facilities, usually not open to individual consumers' personal visits, but from which a consumer's medication order received by mail or through the Internet is subsequently filled and dispensed to the consumer via mail or courier service). It is normally recognized by the industry that acute care prescriptions are dispensed primarily by retail pharmacies, since the consumer frequently needs the medication immediately and cannot accept the multi-day delay inherent in submitting and dispensing prescription medications from the mail order pharmacies. [0004] On the other hand, PBMs and benefit consultants commonly strongly urge or even mandate that consumers in the plans that they administer obtain their maintenance medications from mail order pharmacies. It is a widely held belief that mail order pharmacies may have lower operating costs and may offer greater discounts available on medication coverage. To the extent that such is the case, use of mail order pharmacies may be a desirable cost control strategy if other contractual terms remain equalized. However, several factors can complicate the analysis of use of mail order pharmacies versus use of retail pharmacies especially for dispensing of maintenance medications. For instance, some PBMs own mail order pharmacies, and therefore it is to their financial benefit to steer the consumers in their plans to their captive pharmacies whether or not that is in the best interest of the consumers. Further, to the extent that business is diverted unreasonably from retail pharmacies to mail order pharmacies, the former are deprived of income. Since the retail pharmacies are commonly localized businesses (in contrast to mail order pharmacies), their ability to survive to provide the local retail service is impaired. This is true even when a local pharmacy is part of a larger chain pharmacy organization, since decline in income of a local site could lead the chain to close that local site, notwithstanding that other locations of the chain's pharmacies remain in business. Further, there are many variables in the pricing of medications and the costs involved in inventories, dispensing equipment, transportation of medications to the pharmacy and later to the consumer and staffing, that have been shown to affect whether mail order does or does not have a financial advantage over retail in the dispensing of medications. All that can be said is that, properly managed, both types can be financially and commercially viable. [0005] Further, and very significantly, there is a question of availability of choice for the consumer, since in many cases a consumer would like to have the option of dealing either with his/her local pharmacy or a mail order pharmacy. Numerous studies have established that for many prescription consumers, direct contact with a pharmacist is very important. Professional pharmacists are held in very high regard by consumers and their advice is eagerly sought. Most consumers are not knowledgeable about medications and a prescribing physician's schedule may not provide sufficient time for a consumer to be able to get what he or she believes to be sufficient information from the prescribing physician about all aspects of concern about a prescribed medication. Consumers want to be able to speak directly to their pharmacists for more information about their medications and receive detailed answers to their questions and concerns, especially when a maintenance medication which will be taken by the consumer over a prolonged period is involved. It is well known that the prospects for a consumer's (patient's) successful implementation of a medication regimen are greatly enhanced when the consumer/patient understands and is comfortable with the medication prescribed. Such direct and personal contact with a pharmacist is frequently difficult for a consumer to obtain from a mail order pharmacy, and even when available will almost certainly not involve a pharmacist who is "local" to the consumer and his/her community. [0006] Conventionally brand name prescriptions are priced by starting with a nationally published "average wholesale price" (AWP) and discounting this figure. A dispensing fee is then added to this number. A mail order or retail 90 day prescription is priced the same way with the exception that the mail order discounts are greater and there may or may not be a dispensing fee. On the other hand, in the prior art systems generic drug claims usually employ an additional variant for pricing. This is a concept known as "maximum allowable cost" (MAC) pricing. MAC is the concept of paying a set price for a product on a per unit basis. Since multiple manufacturers may produce the same generic drug and dosage, the MAC price is applied regardless of the manufacturer or that particular manufacturer's AWP. In the prior art plans, it is common that 30-day prescriptions are paid at the lower of a) AWP minus a discount plus a dispensing fee or b) MAC plus a dispensing fee, while 90-day prescriptions are paid solely at AWP minus a discount. In the common situation where mail order pharmacies do not fill 30-day prescriptions and many 90-day prescription consumers are routed by PBMs solely to mail order pharmacies, the system becomes biased, in that the consumer and payer may actually pay more for one 90-day prescription compared to the dispensing of three 30-day prescription for a particular medication dispensed. This leads to consumer and payer dissatisfaction. The payer has an expectation of budgeting for a set discount for 90 day prescriptions since is the traditional 90 day method for reimbursement. When a lower of MAC or AWP model is used a payer can not guarantee an overall generic performance. The pharmacy has an expectation to be reimbursed a set amount for dispensing the 90 day prescription. When a lower of MAC or AWP model is used the pharmacy can not be sure of its reimbursement. [0007] Prescription care plans function by assigning a "processor control number" (PCN) to each consumer prescription claim. Since at present retail pharmacies typically dispense prescriptions in short-term (30-day or less) quantities and mail-order pharmacies dispense prescriptions in long-term (usually in either 60-day or 90-day) quantities, this means that a PBM is typically required to set up multiple PCN's for acute versus maintenance drug benefit designs, although each retail or mail order pharmacy is accustomed to identifying a single PCN to a consumer prescription claim for a specific payer's plan. As noted, consumers and payers want to be able to choose where they get prescriptions filled. However, when a pharmacy undertakes to dispense both short-term and long-term quantities, the pharmacist or pharmacy staff must now in effect choose between two PCNs for the same payer. Since the consumer only presents one identification card, this process can cause confusion at the pharmacy. This is counter productive to traditional workflow. It can cause confusion and delays at the point of sale transaction that impact both the consumer and the pharmacy. It may also reduce the number of 90-day supply prescriptions that are filled at the retail level which impacts the cost structure for the payer. [0008] It is not the intention of the present invention to determine any conclusion as to the relative merits of mail order pharmacies versus retail pharmacies. Rather it is the intention of the present invention to meet the long-felt and widely expressed desire by consumers, payers and pharmacists to make both equally financially available under a prescription benefit plan such that consumers can have a legitimate choice as to where and how they obtain their prescription medications, the payers will have a legitimate choice about how their contract plans will be structured, and pharmacists in both types of pharmacies can practice their profession successfully. SUMMARY OF THE INVENTION [0009] For simplicity in the discussion below the invention will be described by division of prescription quantity fulfillments into two categories: a) "short term", "acute care" or "30-day" quantities, all of these terms being considered synonymous, and b) "long-term", "maintenance" or "90-day" quantities, all of these terms also being considered synonymous. Further, the terms "quantity", "quantity of dosage units" and "days supply" are also considered to be synonymous as applied to the number of medication pills, tablets, capsules, etc., or amount of medication liquid dispensed to the consumer upon fulfillment of the prescription request. It will be understood, however, that these terms are so used for brevity and convenience, and that regardless of the choice of terminology the method of the present invention is equally applicable to management of all prescription fulfillment and dispensing of medications in any dosages or quantities. Similarly, the particular total days' supply of a dispensing prescription, whether the exemplary and commonly used 30- and 90-day quantities, or 14-, 60-, 100-day or any other quantities, is to be understood to be within the scope of the invention. Those skilled in the art will be readily able to calculate and apply the appropriate discount and other payments for any desired dispensed quantity or medication. [0010] The present invention provides an innovative pharmacy-based program that allows employees/plan members who take long term maintenance medications to have a choice between obtaining such medications from a mail order pharmacy or a local retail pharmacy outlet, by effectively balancing plan reimbursement and discount payments such that both types of pharmacies are compensated essentially equally, while taking into consideration the relative operational strengths and weaknesses of each type. The consumer thus is pleased, by having a choice of pharmacies based on his/her own perceptions of the merits of each and particularly in not being deprived of such choice because of financial biases in the plan's provisions. The payer also is pleased, since the plan members are content and the plan costs are economically reasonable. The pharmacy industry as a whole also benefits, since undue biases toward mail order are avoided, retail pharmacies can effective participate in the overall dispensing of all medications and each part of the industry is able to compete on the basis of its merits of its customer service and value. [0011] In its basic embodiments, the plan operates by having the PBM set a target cost for medications and dispensing services which it will pay according to contracts it enters into with the pharmacies, and similarly having contracts with its customers (the payers) as to the target costs and it management fees that it will charge the customers under the plan. A key component of this invention is that reimbursement rates are set that benefit the pharmacy, the payer and the consumer. The pharmacy target costs are based on a combination of industry-accepted medication cost schedules and negotiated discounts, calculated such that the payments to the pharmacies will all be substantially equal for a given consumer's medication, dosage and quantity prescription, taking into account the different operating characteristics and costs of retail pharmacies versus mail order pharmacies in terms of factors such as consumer contact and education, economies of scale in inventorying, staffing requirements and the like. [0012] In many of its embodiments the plan of the invention includes a method to ensure that the payer, the pharmacy and the consumer are not disadvantaged. We have called this method the "true-up" feature. A lower of AWP or MAC price model is applied. At the conclusion of a set period of time the reimbursement performance is measured and compared to a guaranteed value. If the value is above or below the targeted discount, the AWP or MAC prices are adjusted ("trued up") to compensate moving forward for the next set time period. These small adjustments are made every set time period to ensure performance balances to an overall guaranteed value. In this manner the payer benefits from the MAC pricing on individual generic products and benefits from assurances that the overall guaranteed performance is maintained, the pharmacy benefits by the assurance that it will be paid at an overall guaranteed discount performance number and the consumer benefits by paying a co-payment that is reflective of the lower of MAC or AWP and thus is not disadvantaged by electing the one time 90-day fill as opposed to having the same prescription filled three separate times for a 30-day supply. [0013] An additional aspect of the current invention is its ability to simplify prescription ordering procedures for the pharmacies. When a pharmacy sends a prescription to a PBM for processing, they utilize a computer system and transmit on-line a request of payment to the PBM. This is called an on-line adjudicated claim. A pharmacy communicates to the PBM by sending an on-line adjudication claim to what is known in the industry as a "switch" company. There are two sets of numbers that are important to this transaction. The first is what is known as the "business identification number" (BIN). The BIN identifies the PBM that is processing the claim. The switch company recognizes this BIN and routes the claim to the appropriate PBM for processing. The second number is known as the PCN, described above. Once a claim has been routed to the appropriate PBM, the PCN directs the claim to the appropriate plan or payer within the PBM for processing. The adjudicated claim contains important information such as patient identification, drug and dosage, and days supply for which the medication is intended to be dispensed. The pharmacy enters this information and then transmits the claim electronically. Once routed to the PBM, the PBM reviews the claim and determines if the patient is eligible, if the drug is approved for dispensing, what portion the patient should pay as a co-payment, and at what rate should the pharmacy be reimbursed. In addition the PBM verifies that the days supply is an approved benefit for the member. As noted in the Background, since the consumer only presents one identification card, availability of different quantities and design benefits for the same medication with different PCNs can cause confusion at the pharmacy. The pharmacy staff member must decide whether to submit to the appropriate BIN the PCN for the 30 day benefit or the PCN for the 90 day benefit. If the incorrect PCN is used, the PBM will reject the claim until the PCN error can be corrected, thus delaying filling of the prescription for the consumer. [0014] The current invention eliminates the need for multiple PCNs for the same medication for a given payer. Under the present plan each medication for a given payer has only a single PCN regardless of the quantity (number of days' supply). The pharmacist need only provide the basic data of medication identification, dosage and quantity along with the single PCN for that medication and the BIN for that payer plan. Through editing procedures internal to the PBM itself, the PBM can review the claim and based on the days supply provided by the pharmacist, correctly apply the benefit structure for the member and the appropriate reimbursement to the pharmacy. This unique editing feature enables a pharmacy to have to select and submit only a single PCN for the consumer's medication for review. This process saves time and confusion for the consumer and the pharmacy and ensures a greater utilization of the 90 day benefit which saves the payer. This applies not only to retail pharmacies, which may have a only small staff to handle such administrative matters and thus appreciate the simplification of their tasks, but also large mail order pharmacies, since elimination of the need to select among multiple PCNs for many prescriptions may allow staff to be reduced or some staff members to be reassigned to other tasks. [0015] The foregoing, together with other features and advantages of the present invention, will become more apparent when referring to the following specification, claims and accompanying drawings. BRIEF DESCRIPTION OF THE DRAWINGS [0016] The present invention will be better understood from the following detailed description of an exemplary embodiment of the invention, taken in conjunction with the accompanying drawings in which like reference numerals refer to like parts and in which: [0017] FIG. 1 is a process flow diagram showing the typical routing of a prescription approval and reimbursement request in many of the current prior art plan systems currently in the marketplace. [0018] FIG. 2 is a process flow diagram showing the typical routing of a prescription approval and reimbursement request in the method of this invention. DETAILED DESCRIPTION OF THE INVENTION [0019] When a consumer receives a prescription for medication from a physician, the consumer either goes to a retail pharmacy or utilizes mail order to have the prescription filled. If utilizing a retail pharmacy, the consumer walks into the pharmacy and presents the prescription to a pharmacist or pharmacy staff member. The pharmacy enters the prescription into a computer, which sends the information to a telecommunications switch, or routing, company. Next, the switch company sends the information to the correct PBM with which the pharmacy has contracted for the type of prescription. The PBM determines the benefits the consumer is eligible for, i.e., whether the prescription is eligible for fulfillment based on the terms of the payer plan that the consumer is under. The PBM reports back through the switch company to confirm the amount of medication the consumer is eligible for, copay amount if required, and certain safety messaging if appropriate. In most cases a prescription is approved and filled without question or delay, since the consumer's prescription meets all of the applicable requirements of the plan that the consumer is under. There are, however, a number of common reasons why a prescription may not be approved for fulfillment, which must be reported back to the pharmacy so that the consumer can, if possible, make the necessary corrections or obtain further physician input to allow resubmission of the prescription. Continue reading about Method for providing consumer choice and equalizing pharmacy provider availability in prescription medication dispensing plans... Full patent description for Method for providing consumer choice and equalizing pharmacy provider availability in prescription medication dispensing plans Brief Patent Description - Full Patent Description - Patent Application Claims Click on the above for other options relating to this Method for providing consumer choice and equalizing pharmacy provider availability in prescription medication dispensing plans patent application. ###  How KEYWORD MONITOR works... a FREE service from FreshPatents1. Sign up (takes 30 seconds). 2. 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