How do Hospitals, HMOs, Pharmacies and PBMs interrelate?

1. How do Hospitals, HMOs, Pharmacies and PBMs interrelate?

2. Hospitals and HMOs • HMOs contract with hospitals for inpatient services including medication needs.

3. Hospitals and HMOs • HMOs contract with hospitals for inpatient services including medication needs. • Discharge medications are generally not included in contract.

4. Hospitals and HMOs • HMOs contract with hospitals for inpatient services including medication needs. • Discharge medications are generally not included in contract. • Hospital pharmacy is usually not contracted with HMO for outpatient medications.

5. Hospitals and HMOs • HMOs contract with Hospitals for inpatient services including medication needs. • Discharge medications are generally not included in contract. • Hospital pharmacy is usually not contracted with HMO for outpatient medications. • Hospital and HMO formularies are usually separate.

6. Issues and Conflicts • HMO and Hospital formularies cover different products.

7. Issues and Conflicts • HMO and Hospital formulary cover different products. • Patient may not be able to get discharge medication from hospital pharmacy.

8. Issues and Conflicts • HMO and Hospital formulary cover different products. • Patient may not be able to get discharge medication from hospital pharmacy. • Discharge medication may not be on plans formulary.

9. HMOs and Pharmacies • HMOs generally contract with a broad network of community based stores at a discount off AWP plus a dispensing fee per prescription.

10. HMOs and Pharmacies • HMOs generally contract with a broad network of community based stores at a discount off AWP plus a dispensing fee per prescription. • HMO generally does not reimburse for other services beyond basic dispensing.

11. HMOs and Pharmacies • HMOs generally contract with a broad network of community based stores at a discount off AWP plus a dispensing fee per prescription. • HMO generally does not reimburse for other services beyond basic dispensing. • Pharmacy must process claim through HMO’s chosen PBM system.

12. Issues and Conflicts • Pharmacies profit margin

13. Issues and Conflicts • Pharmacies profit margin • Cognitive services

14. Issues and Conflicts • Pharmacies profit margin • Cognitive services • Under a fee for service system, pharmacy is incented to increase the number of prescriptions dispensed

15. Issues and Conflicts • Pharmacies profit margin • Cognitive services • Under a fee for service system, pharmacy is incented to increase the number of prescriptions dispensed • Discounts and Rebates

16. HMOs and PBMs • HMOs contract with PBMs to provide one or more of the following: • pharmacy network • claims processing • DUR reports • formulary management • rebate management • clinical services • disease management

17. HMOs and PBMs • HMOs generally pay PBM for services based on a per claim fee schedule.

18. HMOs and PBMs • HMOs generally pay PBM for services based on a per claim fee schedule. • PBMs retain a portion of rebates collected as an additional service fee.

19. Issues and Conflicts • PBM makes more money as more claims are processed.

20. Issues and Conflicts • PBM makes more money as more claims are processed. • PBM makes more money as more brand products are dispensed.

21. Resolutions?