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Optimize Performance Based Pharmacy Reimbursements

Over the last several years, PBMs and other payers have instituted performance-based contracts which leverage Direct and Indirect Remuneration fees to alter prescription-level reimbursement. While each individual contract can be complex, the burden placed on pharmacy organizations is magnified due to the wide variety of structures, measures, thresholds, and attribution methods. To maximize overall pharmacy reimbursements, work through the following steps:

Learn how to optimize performance based pharmacy reimbursements

  1. Understand contracts’ structures, the individual measures, and how the measures interact with each other
  2. Design a patient engagement approach that addresses key barriers to improving the measures
  3. Determine which contract to focus your immediate efforts on – note that this may change throughout the year
  4. Prioritize patients to receive the most impactful, cost-effective interventions based on their individual characteristics
  5. Learn from each interaction to improve your program’s performance

Done thoroughly, the above steps will help drive maximum total pharmacy reimbursements. We will look at each of these steps in more detail below.

Understanding contracts’ structures, individual measures, and how the measures interact

  • Contract structures are important to understand upfront. Pharmacies can be measured on an absolute scale (e.g., statin population adherence must exceed 95% to achieve maximum reimbursement) or a relative scale (e.g., the highest performing 10% of the pharmacies for the year will receive maximum reimbursement.) Organizations with a large number of pharmacies may be compared to the scale at an individual pharmacy level, or might be aggregated together before being compared to the scale.
  • Thresholds can vary widely, without much consistency between PBMs or payers.
  • Attribution methods may differ as well. How patients are attributed to individual pharmacies is often the subject of discontent. Two primary means are common 1) attribution to the pharmacy with the most recent fill; or 2) attribution to the pharmacy with largest portion of the patient’s fills.
  • Measures typically incorporate CMS Star measures endorsed by Pharmacy Quality Alliance: Medication Adherence for Diabetes Medications, Hypertension (RAS Antagonists), Cholesterol (Statins), and Statin Use in Persons with Diabetes. Some programs have additional measures or substitute measures for pharmacies that predominately distribute specialty medications.

Two of the aforementioned measures interact with each other: Medication Adherence for Cholesterol (Statins), and Statin Use in Persons with Diabetes. Without much detail and/or without understanding the interaction, a patient engagement program might positively impact one of these while negatively impacting the other one.

Key Takeaway: Understanding these items is the first step in crafting a patient engagement program that simultaneously supports the health of the patient while maximizing overall reimbursement.

Design a patient engagement approach that addresses key barriers

In relation to adherence, there are two patient engagement categories that dominate industry programs: 1) interventions that use counseling to understand barriers and provide long-term approaches to address those barriers; and 2) interventions that focus on facilitating the refill process; i.e, encouraging the next refill, synchronizing refills across medications, converting patient to a greater number of days supply, or other services. When creating an overall engagement approach, it is important to ensure that both of these types of interventions are adequately covered.

Interventions that use counseling to understand barriers to adherence are a critical part of addressing underlying patient behaviors. For example, a patient will often not reveal they are having side effects or experiencing issues managing multiple medication schedules. These problems are often not exposed unless someone is asking the correct questions. Once revealed, the barriers to adherence may be complex to address, but in many cases the patient will have resources available that he or she may not be aware of (for example, transportation assistance provided by their health plan).

In addition to counseling interventions, interventions that focus on the refill process are important to include in a patient engagement program as well in order to make the process to obtain medication as simple and convenient as possible. Despite the prevalence of retail pharmacy programs that automatically order medication refills, many patients, for a variety of reasons, do not take advantage of that service, or do not pick up their refills when ready. Therefore, pharmacies must have a defined and organized program that includes regular outreach to patients in order to overcome potential issues in the process. Examples include reaching out to the patient before the refill is due, working with the prescriber to get a new script if the current one is out of refills, and converting the prescription to a longer day supply to reduce the frequency of the refill process. Unfortunately, these programs have a tendency to “over-communicate” to patients, which results in patients opting-out of future communications. This can create a negative perception of the pharmacy. For a person on multiple medications, it is not unrealistic for that person to have over a dozen calls a month from their pharmacy (and it is even worse if they use multiple pharmacies!).

Key Takeaway: Most effective patient engagement approaches leverage both categories of interventions in order to address root causes of non-adherence and facilitate needed intervention.

Determine the contract on which to focus your immediate efforts

To illustrate the decision that a pharmacy organization must make, look at three contracts:

  1. Contract A – Based on year-to-date performance, expectation is for results to be firmly between two thresholds in middle tier performance. To achieve the top tier, 200 more patients will need to be adherent.
  2. Contract B – Based on year-to-date performance, expectation is to barely surpass the lower threshold to make the middle tier of performance. If 20 patients do not remain adherent, results will go below the threshold, and enter the lower tier of performance.
  3. Contract C – Based on year-to-date performance, expectation is to be just below the higher threshold to make the top tier. To achieve the top tier, 30 more patients will need to be adherent.

If there is only enough time and resources to adequately support 40 patients, which 40 should be chosen? Should focus be placed on Contract C, getting all 30 of those patients over the threshold, and potentially sacrificing the 20 patients from Contract B who may need support?

Is it less important to get to the next tier on Contract C and provide support for the 20 patients in Contract B? Should efforts be divided across all three in hopes of supporting all contracts for the next year? Should more people be hired so 300 patients can be supported, allowing all contracts to move to next tier?

Unfortunately, the answer is more complicated than this example shows, particularly since there are dozens of contracts that are measured independently. To fully answer the question, it is important to know the level of reimbursement that each tier in this example represents, and also how likely each patient (in each population) is to be adherent. This example is also very simplistic. In reality, all the factors described above will be important to answering the question of where efforts should be focused.

Key Takeaway: Understanding where to focus your immediate efforts is a dynamic process which may often result in shifting priorities throughout the year.

Prioritize patients to receive the most impactful, cost-effective interventions based on their individual characteristics

Focusing on the contract alone is not enough. To maximize potential reimbursement, decisions must be made regarding which patients will receive interventions and the specific intervention that will be most effective. The best way to identify specific patients is to predict the likelihood they will achieve the targeted result by the end of the year. If the patient is highly likely (or highly unlikely) to achieve the targeted result, then efforts to influence their behavior can be better utilized on patients whose end-of-year result is less certain. Making an accurate prediction is not trivial. Due to dynamics of patients’ lives, simply looking at last year or year-to-date statistics is not sufficient to accurately predict end-of-year results (particularly early in the year). In some cases recent changes in a medication regimen will impact future adherence behavior but will not be evident in either prior year or year-to-date adherence metrics.

Additionally, to maximize the impact and efficiency of engagement efforts, the likelihood of patient response to each type of intervention available should be predicted in a way that ensures attainment of targeted end-of-year results and desired patient outcomes. Operational metrics, like the percent of people who answer the phone, can be deceiving. The impact of interventions on desired results/outcomes is what really differentiates one approach from another.

Key Takeaway: In order to determine the best use of resources, likelihood of success for each intervention, and anticipated end of year result, will need to be predicted. This will help lead to effective goal attainment and patient outcomes.

Learn from each interaction

The previous steps require a deep understanding of patient population and a highly sophisticated view of the effectiveness of interventions. To truly maximize the impact, certain questions need to be asked after every interaction: Who is responding? How are they responding? What intervention is the most effective in this exact situation? What should be changed? What situations are not appropriately addressed by the set of interventions currently available?

Determining the answer to these questions on a regular basis is not trivial. Thankfully, with today’s artificial intelligence (AI) and machine learning capabilities, these questions can be answered and immediately included in future recommendations. An AI platform can analyze the patient population, perform the predictions, make recommendations, and analyze the results of those recommendations on a near real-time basis. By leveraging an AI platform, you can drastically increase the effectiveness and efficiency of a medication adherence program, and significantly increase patient engagement.

Key Takeaway: To optimize the overall program, a system should be leveraged that can learn from every interaction and constantly adjust the intervention recommended. This will help continue to increase the effectiveness of the program, and attain most impactful results.


When put all together, managing the dozens of individual contracts, measures, patient populations, and results is daunting. However, utilizing an artificial intelligence platform that automatically prioritizes patients for specific interventions can increase results, improve reimbursement, and ensure desired patient outcomes. AI applies a deep understanding of specific populations to improve interventions on an ongoing basis. It also applies continuous learning to further refine recommendations, and increase overall impact.

To learn more about AllazoHealth’s AI technology and how it can help drive maximum total pharmacy reimbursements, contact us today.