Educational Objectives

Transcription

1 Medicaid AMP 2007: Adjusting to Survive and Thrive Presented by: Charlie Sewell, Senior Vice President for Government Affairs, NCPA Keith Hodges, RPh, Gloucester Pharmacy Charles Cottrell, RPh, Medical Center Pharmacy Jerry Shapiro, RPh, Uptown Drug and Surgical Dan Benamoz, RPh, Pharmacy Development Services 3:00 p.m. - 5:00 p.m., Saturday, October 13, 2007 Anaheim, California Evaluation # P This program is approved by NCPA for 0.20 CEUs (2.0 contact hours) of continuing education credit. NCPA is approved by

2 Educational Objectives Program: Medicaid AMP 2007: Adjusting to Survive and Thrive Presenters: Charlie Sewell, Senior Vice President, Government Affairs, NCPA Keith Hodges, RPh, Gloucester Pharmacy Charles Cottrell, RPh, Medical Center Pharmacy Jerry Shapiro, RPh, Uptown Drug and Surgical Dan Benamoz, RPh, Pharmacy Development Services Objectives: 1. Discuss the current status of legislation and litigation regarding average manufacturers price and the Medicaid federal upper limit. 2. Estimate the impact of the new Medicaid federal upper limit on your pharmacy s financial outlook. 3. Discuss options for the community pharmacist on lessening the business impact of the new Medicaid benchmark. 4. Identify the new currency of this millennium. 5. Express how to uncover the hidden fortune that lies dormant within your own customer base. 6. Identify the strategic marketing advantage that all independents have over their competitors. 7. Explain how you can add 20% to your bottom line without spending anything on marketing. 8. Identify at least three non-traditional methods of communicating with your customers.

3 Danny Cottrell is a community pharmacist in Brewton, Alabama. He is a 1979 graduate of Auburn University and has been working at Medical Center Pharmacy in Brewton since he was 15 years old. He is also a partner in Buy Rite Drugs, a 10 store chain of pharmacies in Florida, georgia, and Alabama. Cottrell has served as President of the Alabama Pharmacy Association as well as serving 15 years on the board of Associated Pharmacies Inc. He currently serves on the NCPA Legislative committee and has been on Alabama's Medicaid advisory committees for years.

4 Dan Benamoz is a 1981 graduate of The Albany College of Pharmacy. He started his career with Rite Aid Corporation and became a district supervisor before leaving to devote full-time to his own medical supplies practice. In 1986, he was awarded a United States Patent for the transdermal application of steroids with ultrasound that still continues to be a widely used procedure in orthopedic and sports medicine. In 1992 Dan s pharmacy began servicing long term care facilities and grew that business to service 37 facilities in less than 3 years. In December 2003, Dan authored an industry White Paper. His article, The Future of Retail Pharmacy: If Mail Order Can- Then Why Can t We?, has been published in several industry publications including Drug Topics, The Florida Pharmacy Journal and PharmacyNow.com. Six weeks after his article was published several prominent chains, including CVS, Hook s Drug and Happy Harry s, changed their corporate policy to no longer accept third party contracts that contained a mandatory mail order provision. In 2004, Dan developed a web based employee management software system, My Virtual Manager, which is rapidly growing in popularity amongst independents across the country. My Virtual Manager has been lauded for its ease of use and rapid impact on improving communication with employees as well as increasing employee efficiency, productivity and accountability. In 1996 Dan founded Pharmacy Development Services, Inc. and is now a national consultant who coaches independent pharmacy owners in management systems and business development strategies. As a successful businessman and registered pharmacist, he has earned the distinction of being known as an independent pharmacy activist and retail pharmacy turnaround specialist. Dan has empowered pharmacy owners nationwide with his innovative marketing programs while stressing the importance of taking control of one s business while still enjoying the pleasures of a personal life. Learning how to run one s business, rather than having it run you, has become his motto for success. He is a frequent speaker at state and national conferences, conventions and trade shows.

5 Medicaid and AMP October 2007 Anaheim, California Impact of the 2005 Deficit Reduction Act Lowers monies paid to state Medicaid programs to reimburse pharmacists for generic drugs GAO estimates that, on average, pharmacy will be reimbursed at 36% below cost for generics OIG says pharmacy will be reimbursed below cost for 19 of 25 high-expenditure Medicaid drugs 5 of the remaining 6 also have reimbursements below cost if the cost to dispense is considered How the Numbers Work DRA Medicaid cuts are $8.4 billion $8 billion cut directly from pharmacy on generic reimbursements Pharmacy represents only 2% of Medicaid spending $4.9 billion in federal savings/$3.5 billion in state savings 1

6 What is AMP? Manufacturers report the average price paid by wholesalers for drugs distributed to the retail pharmacy class of trade Determined without regard to customary prompt pay discounts extended by manufacturers to wholesalers Community Pharmacy Faces a Ticking Time Bomb AMP goes into effect January 30, 2008 Public website posting of AMP data is expected in Dec./Jan. Why AMP Does Not Work for Pharmacy Reimbursement AMP was created to determine drug manufacturers Medicaid rebates It was never intended as a pharmacy reimbursement baseline AMP data includes prices not available to retail pharmacy AMP data shows a 60-day lag time, despite regular fluctuations in market price paid by retail pharmacy 2

7 State Dispensing Fees State dispensing fees average $4.50 State dispensing fees average $6.00 less than the actual cost to dispense According to international accounting firm Grant Thornton the national average is $10.50 State cost of dispensing range from $8.50 in Rhode Island to $13.08 in California Thousands of pharmacies with large Medicaid patient bases may be forced to close Many more will be unable to afford to serve Medicaid patients State Dispensing Fees AL 70% TN 68% MS 67% CO 66% States over 60% - 36 States under 60% - 15 NE 55% IA 54% CA - 49% Medicaid Savings from Greater Generic Utilization Brand Scripts Filled 116,400,880 Brand Dollars Spent $18,064,747,884 Brand Avg $ per Script $ Brand Fill % 39.5% Generic Scripts Filled 178,229,109 Generic Dollars Spent $3,903,980,231 Generic Avg $ per Script $21.90 Generic Fill % 60.5% 3

8 Medicaid Savings from Greater Generic Utilization Each 1% moved to Generic saves: $201,731,027 Annual savings with generic fill of 65%: $907,789,622 Savings for Medicaid over 5 years: $4,538,948,109 HR 3140 Saving Our Community Pharmacies Act S 1951 Fair Medicaid Drug Payment Act Patient access to prescription medicines must be preserved Pharmacists must be reimbursed fairly by Medicaid so they can continue to provide access HR 3140 Uses Retail Acquisition Cost (RAC) as the baseline for pharmacy reimbursement instead of AMP Uses the median RAC instead of the lowest AMP Backs out any price concessions not available to community pharmacy A FUL based on RAC x 150% will allow states to pay pharmacies accurately and preserve patient access Sets generic definition at 3 or more therapeutic equivalents, not just 2 Creates a generic directive to encourage generic usage and provide a financial offset 4

9 S 1951 Makes necessary improvements to the AMP model Requires the use of the weighted average AMP instead of the lowest AMP Excludes special pricing not available to retail pharmacy from the calculation of AMP Uses a 300% multiple instead of 250% to establish the FUL Sets generic definition at 3 or more therapeutic equivalents, not just 2 Congress Must Act Now Probably less than 30 legislative days left between now and January 30, 2008 Energy & Commerce Committee and Senate Finance Committee are key Majority of the Senate Finance Committee support S 1951 Competing House Bills make passage more problematic Finding the appropriate legislative vehicle is a major concern US Chamber of Commerce has endorsed both bills 5

10 Taking Uncle Sam to Court Over AMP CCPA has retained two national law firms CMS s final rule on AMP is contrary to the plain language of the federal statute CMS s final rule on AMP is contrary to Congressional intent CMS s final rule on AMP is contrary to CMS s prior application of that statute Taking Uncle Sam to Court Over AMP The final CMS rule includes in the AMP calculations many transactions that have nothing to do with prices paid by wholesalers for drugs distributed to retail pharmacy A legal challenge is difficult and costly Winning would buy time but Congress ultimately has to fix the mess that they created 6

11 Adjusting To Survive & Thrive Dan Benamoz, RPh, CEO Pharmacy Development Services, Inc. Lantana, Florida Prigogine s Definition of Dissipative Structures

12 AMP s Impact Life during AMP implementation Life after AMP Life before AMP Only those who risk going too far can possibly find out how far they can go. T.S. Eliot 1. Find out what the market wants. 2. Go out and get it. 3. Give it to them.

13 It s NOT About The Product

14 Any Business ONLY Gets Paid For Solving Problems. Want to make more money? SOLVE MORE PROBLEMS! What The Top Marketers Know That You Don t Two Volunteers Needed

15 1. Increase the NUMBER of customers. 2. Increase the SIZE of transactions 3. Increase the FREQUENCY of transactions What is the front end? What is the back end? Understanding the back end opportunities model.

16 Your Competitive Advantage Mass Merchandising vs. Relationship Marketing (Educational Based Marketing) $$$ $$$ Databases Are The Currency Of The New Millenium $$$ $$$

17 BEWARE! This can be more lethal than a computer virus! AUDIO POSTCARDS AUDIO BY VOICE TESTIMONIALS Nothing beats word-of-mouth advertising

18 VIDEO MESSAGING VIDEO VOICE MESSAGING FREE Recorded Messages WARNING Before you buy medical equipment from anybody, call this toll-free number and listen to this important FREE recorded message 24/7. (888) ext The back side of your business card is valuable real estate. Never leave this blank.

19 REMEMBER... Your life can mean more than just work!

20 Learning Assessment Questions Program: Medicaid AMP 2007: Adjusting to Survive and Thrive Presenters: Charlie Sewell, Senior Vice President, Government Affairs, NCPA Keith Hodges, RPh, Gloucester Pharmacy Charles Cottrell, RPh, Medical Center Pharmacy Jerry Shapiro, RPh, Uptown Drug and Surgical Dan Benamoz, RPh, Pharmacy Development Services Questions: 1. are the currency of the new millennium. 2. Relationship building requires multiple customer contacts throughout the month. True False 3. An effective strategy for developing relationships with customers is through educational based marketing. True False 4. Which of the following are ways to grow your business? A. Increase the size of transactions B. Increase the frequency of transactions C. Attract new customers D. All of the above 5. It costs a lot of money to utilize technology to effectively market your business. True False

21 Learning Assessment Answers Program: Medicaid AMP 2007: Adjusting to Survive and Thrive Presenters: Charlie Sewell, Senior Vice President, Government Affairs, NCPA Keith Hodges, RPh, Gloucester Pharmacy Charles Cottrell, RPh, Medical Center Pharmacy Jerry Shapiro, RPh, Uptown Drug and Surgical Dan Benamoz, RPh, Pharmacy Development Services Answers: 1. Databases 2. True 3. True 4. D 5. False