Will the ACO Model Affect Pharmacy Revenues?

April 14, 2016

Medicare Payment Rules for Pathology Services


The United States till the recent past was operating under a fee-for-service payment system, in which healthcare providers were paid based on the provision of individual services. However, since the increase of third party insurers, this model has resulted in suboptimal performance and has been associated with serious cost-efficiency issues.


The Accountable Care Organization (ACO) was proposed as a mechanism to slow rising health care costs and to improve quality of care for Medicare beneficiaries. Specifically, under the ACO model, networks of physicians and other practitioners are needed to partner with hospitals to manage and improve health care quality, while reducing costs. Optimized medication use, often involving the use of medication management services, is essential for positive health outcomes, especially among high-risk patients with chronic ailments. So far, data indicates that only 33 to 50 percent of patients with chronic conditions currently adhere to drug therapy, often resulting in clinical deterioration and unnecessary hospitalizations. In addition, the US health care system currently spends an estimated $290 billion each year on unnecessary medical services resulting from misuse of medications and more than $177 billion annually on treatment of avoidable adverse drug events (ADEs), many of which can be averted with enhanced medication management.

In such a scenario, pharmacists can have a vital role in helping patients manage their medications. Till very recently, few Accountable Care Organizations engaged pharmacists in care delivery. But this changed on October 1, 2013, when the legislation was passed in California to grant pharmacists healthcare provider status within the state. This legislation, went into effect January 1, 2014, and declared pharmacists as healthcare providers with the authority to provide patient care services. As such, pharmacists have widespread opportunities to help patients manage drug therapy to achieve desired outcomes, improve compliance rates, avoid preventable adverse drug events (ADEs), reduce hospitalizations/emergency room visits, and thus decrease health care expenditures. Thus, incorporation of pharmacists into team-based health care models such as ACOs can help to improve patient care and decrease health care costs.

MTP Program-

But can pharmacists increase their Revenue Cycle Management when engaged with ACOs? Are their revenues showing a profit, given the number of pharmacies that have shut in the recent past? Presently, many organizations have incorporated and integrated pharmacy services via medication therapy management (MTM) programs, which are expected to be the basis for pharmacist activities under the emerging ACO model. Pharmacists are thus moving away from not just dispensing drugs over the counter, but also becoming consultants and medication managers in the coordinated care environment of ACOs. The role is already accepted in the Medicare space under the Medication Therapy Management (MTM) program. Pharmacists also now provide ongoing medication monitoring and recommend follow-up interventions with prescribers as and when necessary.

However, depending on the payer, pharmacists may also use some CPT codes when looking for reimbursement. Three pharmacist-specific CPT codes (99605, 99606, 99607) were established for the delivery of MTM services and are used by Medicaid, private health insurers, or Medicare. MTM for Medicare Part D beneficiaries is among the most prominent types of direct patient care services that are reimbursed by payers today. However, pharmacists who practice in walk-in clinics, urgent care facilities, or inpatient or outpatient facilities may have to negotiate contracts with different payers or self-insured employers. Nevertheless, when there is an "incident to" concept where a pharmacist can bill services under a physician's National Provider identifier number (issued by CMS), reimbursement is 100 percent of the Medicare fee schedule as opposed to only 85 percent when the service is billed specifically under the pharmacist's number.

Thus, pharmacy revenues can be improved with a bit of pro-activeness on the part of pharmacists integrated with deep knowledge of billing and coding, which if outsourced, can help provide for a more robust Revenue Cycle Management Process for pharmacies.


Category : Practice Administration