Pharmacy benefit management (PBM) is a reality in the healthcare industry and has become a critical component of hospice care over the last 15 to 20 years. Hospices must pay for all patient prescriptions linked with a hospice diagnosis, emphasizing the importance of a PBM’s negotiation and purchasing power.

Along with their purchasing power, PBMs provide hospice agencies with the pharmaceutical expertise they require. For example, hospice regulations require that a pharmacist oversee each patient’s prescription regimen, which is typically not available through a local pharmacy provider and might be challenging without the interface capabilities provided by a PBM (see Your EMR-PBM Interface, below). Additionally, hospice agencies can analyze and report prescription data by patient, diagnosis, or day when using a PBM.

Hospice PBMs also provide critical support and education services, such as 24-hour support (critical for hospice clinicians), hospice Emergency or Comfort Kits, nurse-specific online portals, and even nursing CEUs (Continuing Education Units).

Choosing a PBM for Hospice

Of course, the cost is a significant aspect in selecting a PBM, but many of the largest hospice PBM players will be reasonably similar financially. Consider the PBM’s per-diem vs per-drug rate possibilities.

Another critical factor to consider when picking a PBM for hospices is ensuring that your EMR system communicates with the chosen PBM. Ascertain that the PBM — and your EMR vendor — are willing and capable of integrating their systems for the benefit of your agency. A continuous data flow from your EMR system to your PBM eliminates double entering of patient data and contributes to the reduction of drug errors. Additionally, it can save nurses numerous hours  \of time.

Certain hospices collaborate directly with a pharmacy that offers the comprehensive services often associated with a PBM, such as medication reviews, medication management, and utilization reports, in addition to clinical consulting for symptom and pain management. Often, those services, in addition to medicine delivery, are required on a 24-hour basis by the hospice care provider. As a result, choosing between a community pharmacy and a PBM is frequently a lengthy and costly process for the hospice provider.

Recent purchases in the billions of dollars imply that medicine utilization for hospice and palliative care patients is a lucrative business.

When it comes to charging a PBM, there are essentially two types: per-diem and fee-for-service. Therefore, how do we decide between the two? The majority of hospices choose the least expensive alternative. Therefore, what is the least expensive PBM pricing option?

I assure you that this is not one of those posts that you read and then find yourself still without answering your question. You will have your response after this brief read. First, let me discuss the advantages and disadvantages of the two hospice PBM price choices.

Pricing on a per-diem basis

The Advantages

• You have a specific figure to work with. This makes it easy to budget for your monthly pharmaceutical costs.
• You have a minimal range of medications. A medical director who does not adhere to a rigorous formulary can be your worst enemy regarding prescription expense savings.
• You maintain consistency in the treatment of your nurses and personnel. The entire purpose of Per-Diem Pricing models is to keep inside the formulary. This simplifies matters for your staff.

The Negatives

• You are obligated to pay regardless of the circumstances. So, for example, even if you have multiple patients on service who are on highly low-cost meds, you will still be required to pay the agreed-upon Per-Diem. In other words, you occasionally save money and occasionally lose money.
• You will incur costs for non-formulary medications and services. For example, if a patient is on a few non-formulary medications, you will pay the per-diem AND the non-formulary medications.
• You develop an erroneous perception of your PPD (Per Patient Day) cost. Simply because your Per Diem Price is $9 does not mean that your PPD is $9. When calculating your PPD, don’t forget to include the cost of non-formulary drugs and services.

Pricing on a per-service basis

The Advantages

• You are only charged for what you consume. Whether the drug is on the formulary or not, you pay the same amount. Similarly, if you do not order any patients’ prescriptions during their stay with your hospice, that patient’s pharmacy fee is $0.
• You now have more pharmacological therapy alternatives. There are no price penalties associated with the medications that your hospice selects for a patient. This degree of adaptability may result in improved patient care.
• You have more information about how your money is spent. Each month, you will receive a bill detailing all of your hospice medications and their associated costs.

The Negatives

• You are unaware of the expense of your drugstore. Because it is dependent on the medications the patient is taking and the pharmacy they used, you will not know until the end of the month when you receive the bill.
• You have individuals on an excessive number of drugs. With no price penalty for non-formulary medications, it’s natural to be less concerned with reducing a patient’s medication regimen, mainly when your medical director is the one who prescribes them all.
• Your Medical Director determines the cost of your medications. Typically, Medical Directors do not consider the cost while prescribing medication. With “freedom of prescription,” it’s natural to order the most expensive medication because it’s the “most effective.”

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