Cost of Dispensing Survey: That’s a Wrap!
by George L. Oestreich, PharmD, MPA, Government Payer Consultant

The payer team has been working with Mercer on the Cost of Dispensing (COD) Survey project for over a year. The project had two phases – Phase 1: Cost of Dispensing Survey to have national and regional HTC pharmacy cost of dispensing; and Phase 2: Cost of providing clinical services to create a disease management/care management add on fee. Phase 1 of the project has been completed and below is a summary of the project and the report.

Purpose and Background:

We undertook this project to support higher reimbursement rates for HTC pharmacies. Federal regulations (the Covered Outpatient Drug Regulation) required each state develop a professional dispensing fee survey for the pharmacies in their state to cover the actual cost of receiving, processing, and delivering a prescription for a Medicaid recipient. There could be no profit in the calculation nor could services unrelated to dispensing the product be included. By its very nature, this disadvantaged HTC pharmacy programs, but we had further issues because the low volume of prescriptions dispensed by each HTC was used to calculate the per prescription dispensing fee. This resulted in dispensing fees of $1,000 to $2,000 or more, that though accurate, were significantly higher than other specialty pharmacies. These were seen as outliers and were excluded from the state’s COD analysis. This meant that HTCs received the same – lower – dispensing fee as all other pharmacies, even if it did not cover their costs as the regulations intended.

Hemophilia Alliance representatives received guidance from state and federal partners that a separate COD survey would be the best way to universally secure a more reasonable HTC dispensing fee. We knew that even with a higher dispensing fee, HTCs would still be short revenue needed to reimburse for the additional required services for their patients. Therefore, we would enumerate the “other” services required for the comprehensive care model and develop a way for how those might be reimbursed in addition. This would be Phase II of the project that would springboard off the COD survey results.

The Alliance engaged Mercer, a consulting firm that prepared approximately half of all the state COD surveys. Mercer also recruited a Medicaid Advisory Board of state Medicaid pharmacy directors to act as advisors to the project. With this “buy in” from Medicaid pharmacy directors (chosen strategically to ensure a broad-based respected group), we would be in good shape to advocate for a reasonable HTC dispensing fee and ultimately secure additional reimbursement from the states for non-dispensing services provided to patients.

The Alliance and Mercer worked with a group of HTCs to vet the COD survey and modified it using a format modeled from required HTC reports to facilitate participation. HTC participants were assured the information would be held in confidence and not shared at a level that could inadvertently disclose the unique information each respondent would share.

Results and Next Steps:

• Mercer received thirteen (13) COD Surveys from member HTCs. Based on the limited amount of data, the results are not statistically valid and cannot be used on a national or regional basis.
• One of the 13 HTC respondents was able to use their COD survey data to get their Medicaid agency to make a significant change to improve reimbursement while they consider a more thoughtful approach to reimbursing bleeding disorder products.
• The data from the completed COD was compared to a previous survey completed approximately 10 years ago and the results were similar but still not statistically valid.
• The COD Survey report has been shared with the Medicaid Advisory Board and the feedback received was “The Advisory Board believes that state Medicaid programs would not be likely to use the report’s results to make program change to their current reimbursement methods.”

While the results are disappointing there are a few next steps we can take to work together with state Medicaid programs:

• The HTCs that participated in the COD Survey can use their data in discussions with their own Medicaid program.
• To be effective, Medicaid advocacy has to be truly local. To be successful, each HTC has to have a solid working relationship with its state Medicaid agency. We at the Alliance can frame the topics, interpret the regulations, process, and participate in meetings. The primary support must be local.
• With the advent of new treatment paradigms such as Hemlibra and especially gene therapy, there will be even more pressure to control product and services costs separately. That makes now a very good time to meet with your Medicaid agency. We can build a very compelling argument for exclusively using the HTC network to bring gene therapy to the bleeding disorders community.
• Adequate reimbursement for the comprehensive care model and related services is necessary so that HTCs can continue to provide services at their current level of quality and efficiency. The more data you have related to cost of dispensing and cost of providing the clinical services will be very helpful in your discussions with your Medicaid agency.
• Finally, phase 2 of the project – building off of the survey results to develop a way to reimburse for the other services – is still under review. We will update Alliance members if it moves forward.

The Hemophilia Alliance team is here to support you and work with you on your advocacy journey with your state Medicaid agency. We must be unified and targeted in our efforts to secure adequate reimbursement for the services you provide. And last, but not least it is important to know your Medicaid agency personnel and help them know you, your value, and your needs. We work for you!