THIRD PARTY-INDUCED COST SHIFTING IN COMMUNITY PHARMACY PRACTICE (INDEPENDENT)

JON T STONE, Purdue University

Abstract

The objectives for this study were to: (a) identify the percentage of independent community pharmacy prescriptions covered by major third party programs throughout the United States, (b) estimate the degree to which reimbursement rates from the major third party providers were inadequate, (c) determine the existence and amount of any cost shift subsidy paid by private-pay customers, (d) assess the relationship of eight secondary independent variables to the amount of the cost shift subsidy paid by the private-pay customers, (e) determine the importance of reasons for a pharmacy's participation in third party prescription programs, and (f) identify third party-induced problems experienced by independent community pharmacies. Data were collected on ten prescription medications randomly selected from the top 200 prescribed drugs and the top 20 prescribed generic drugs. Prescription pricing information and third party reimbursement rates were collected for each medication. Responses from 418 independent community pharmacies provided the basis for analysis. Third party prescription programs were found to cover 32.1 percent of all prescriptions dispensed in independent community pharmacies, with State Medicaid programs as the largest single third party provider. Third party reimbursement rates were significantly lower than single rate prescription prices and private-pay prices for a majority of the prescriptions examined. Medicaid reimbursement rates were responsible for 73.6 percent of the total third party reimbursement inadequacies. Private-pay customers were found to pay an average cost shift subsidy of $0.48 per prescription due to inadequate third party reimbursement. The percentage of all prescriptions filled pursuant to third party reimbursement was significantly associated with the magnitude of cost shifting. Pharmacists were found to participate in third party programs because of a motivation to serve the needs of the individuals who patronize their pharmacies. Additionally, pharmacists felt trapped into participation, but hoped for better treatment by third party programs in the future. Third party-induced problems identified by independent community pharmacists were classified into seven categories: reimbursement problems, administrative problems at the pharmacies, claims payment problems, administrative problems at the third party programs, contractual problems, operational problems at the pharmacies, and other problems.

Degree

Ph.D.

Subject Area

Pharmaceuticals|Business costs

COinS