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Executive Summary

REVCO IS FIRST CHAIN MEMBER OF PROPOSED NATIONWIDE PHARMACY PPO organized by Mesa, Arizona-based First American Health Concepts (FAHC). In a May 6 press release, FAHC noted that the "first pharmaceutical provider that contracted to participate in the program was Revco Discount Drugs, America's largest retail drugstore chain, with over 2,000 outlets in 28 states." The program, known as "America's first Pharmacy Card" (APC), has "the need to contract with approximately 15,000 stores, in order to meet the access requirements of the company's APC sponsors," FAHC said. The group "is contacting retail organizations throughout the country, inviting their participation in the program," the company said. Among those being asked to participate are other chains and independent stores connected to state pharmacy service administrative organizations. Under the plan, pharmacists are paid a set fee by the APC cardholder at the time of purchase. The cardholder pays FAHC a "negotiated discount price" for the prescription at time of purchase. The negotiated discount is the average wholesale price or the usual and customary charge, whichever is less, explained Michael Comick, FAHC Director of Pharmaceutical Services. Subsequently, the client can receive reimbursement from his or her third party payor at the reimbursing group's prescribed percentage. Comick described the APC plan as "basically . . . a fee for service type of program for the pharmacist in that they're out of the loop financially after the individual has come in and received the product because [the client pays] the money up front." He added: "Pharmacists don't have to worry about claims processing . . . eligibility verification . . . [or] the float that seems to occur with alot of the third party payors who seem to be a little slower than they should be." The APC plan is still in the "developmental" stage, though cards have been distributed and will be accepted at Revco stores, according to Comick. Currently, the service is available to individual subscribers of 44 insurance organizations. Among carriers already contracting with FAHC are members of the company's initial health care cost containment venture, Eye Care Plan of America. Enrollees include Ohio State Life, American Continental Life, Best Life Assurance Company, and Allied Group Assurance Trust. In return for assuming the administrative responsibilities for the plan, FAHC is paid an enrollment fee from participating stores and a set monthly fee from member insurance companies and other sponsoring organizations.

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