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THIRD PARTY Rx PROGRAM BASING DISPENSING FEES ON PHARMACY SERVICES

Executive Summary

THIRD PARTY Rx PROGRAM BASING DISPENSING FEES ON PHARMACY SERVICES in New Jersey is one of 13 state and private programs cited in a recent report for representing potential trends in third party Rx programs. The Natl. Council of State Pharmaceutical Executives' report is based on the results of an open-ended survey by 42 state pharmacy assn. execs. The council explained that the report is "intended to examine the current third party developments and trends in the pharmacy marketplace" and "serve as a basis for future research." The private New Jersey Program, run by the Natl. Rx Administrators, ranks participating pharmacies in one of five classes according to criteria such as the availability of 24 hour emergency service, patient medication profiles, Rx refill monitoring, and prospective utilization review, the report notes. For example, a carrier under the program pays dispensing fee of $3.75 for a Class 1 pharmacy, which dispenses "in accordance with all state laws and regulations," and a $4.25 fee for a pharmacy ranked Class 5. In order to achieve Class 5 status, a pharmacy must provide: 24 hour emergency Rx service, patient medication profiles, Rx consultation services, prospective utilization review, Rx refill monitoring, product selection and "the exercise of professional responsibilities" such as continuing education, OTC consultations and participation in pharmacy organizations. All pharmacies receive an additional $1 for compounded Rxs. The report identifies inadequate dispensing fees and reimbursement of product acquisition costs as two of the major problems that exist with third party Rx programs. Other problems cited by the report include infrequent payments, inadequate notice of cancelled beneficiaries, insolvencies of third party programs that are not licensed insurance companies, and unfair audits utilizing "statistically invalid projection techniques." In addition, the report contends that some programs deny subscribers freedom of choice, use restrictive formularies and mandate "unilateral contracts" wherein a pharmacy can choose only to accept or reject a participation agreement, and is subject to amendments of the agreement without pharmacy consent. The report also makes five recommendations in the area of third party programs including a natl. symposium to educate pharmacists to be held in the fall of 1984 in an as yet undetermined site in the Midwest. The symposium to be sponsored by the council, would focus on such issues as the organization and development of third party Rx programs, the operation of various programs, antitrust guidelines and assn. approaches to dealing with new developments in the area. A series of similar state symposiums to follow were also recommended in the report. The five recommendations, approved by the council's executive cmte. and members at its annual meeting on May 5, also call for the development of prototype plans for marketing to third party administrators through a "natl. marketing strategy using state assns." The report recommends further research on utilization rates of Rx benefits in indemnity (major medical) v. service plans as well as the cost effectiveness of pharmacy care. The other recommendations included a semi-annual update of the survey and a conference of pharmacy and third party payor related groups "to improve communications." The council's efforts may be complemented by APhA's increased involvement in the realm of third party Rx programs. The assn.'s plans to establish a "Blue-Ribbon" natl., multi-practitioner conference on third party programs were announced May 7 by APhA interim President Maurice Bectel at that assn.'s annual meeting in Montreal. Copies of the report may be obtained for $200 from: Dr. David Clark, Indiana Pharmacists Assn., 156 E. Market St., #900, Indianapolis, Indiana 46204.

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