Clinical Performance: A Prove-It Moment for Independent Pharmacies


By Kevin Connor, VPGM AccessHealth (Managed Care, McKesson)

Payers and PBMs want high-performing pharmacies in their networks — and some are paying for it.

Preferred provider networks in healthcare aren’t new. For years, payers have created tiered networks of preferred providers in which members have financial incentives to use in-network providers. In conjunction with healthcare reform, accountable care and Star Ratings, provider reimbursement is evolving from fee-for-service to pay-for-performance. This shift to value-based care and narrow networks is beginning to impact retail pharmacies.

Changes in Criteria for Network Participation

Until recently, participation in a narrow pharmacy network was based solely on a pharmacy’s willingness to accept lower reimbursement rates, which many pharmacies agreed to in exchange for access to patients and volume. While accepting lower reimbursement is still necessary for network participation, it may no longer be enough. PBMs are beginning to evaluate using pharmacies’ clinical performance as an element in determining their inclusion in a narrow pharmacy network. (See “How Health Plans and PBMs Evaluate Pharmacy Performance.”)

Targeted Intervention Program (TIP)

    • A brief in-person or telephone consultation typically focused on a single medication
    • Average time commitment: 5 to 15 minutes
    • Depending on the specific program, TIPs typically focus on Star Ratings measures including: omissions in care (e.g., patients with diabetes and hypertension who are not taking an ACE inhibitor, ARB or direct renin inhibitor); adherence to cholesterol, hypertension or oral diabetes medication; or other specific interventions


Comprehensive Medication Review (CMR)

    • In-person, scheduled appointment that includes collecting patient-specific information, assessing prescription and over-the-counter medications to identify medication-related problems, developing a prioritized list of medication-related problems, and creating a plan to resolve them with the patient, caregiver and/or prescriber
    • Average time commitment: 45 to 60 minutes
    • Patient usually leaves appointment with a personal medication record (PMR) and medication-related action plan (MAP)


Targeted Medication Review (TMR)

  • Typically focused follow-up visit to CMR
  • Average time commitment: 15 minutes
  • Frequency varies by plan but usually no more frequently than quarterly

Clinical performance matters because Medicare Advantage plans receive bonuses based on their CMS Star Ratings, which measure their quality of care. (See “Star Ratings Explained.”) In addition to improving a plan’s bottom line, high Star Ratings also impact a plan’s reputation and marketing capabilities. For example, a five-star plan can enroll Medicare members year round. Moreover, retail pharmacy can significantly influence a Part D plan’s Star Rating, given the quality measures’ focus on adherence and proper medication utilization. So, plans are being highly incentivized by CMS to raise their rating or be terminated. As a result, plans want pharmacies in their networks that will help them achieve high Star Ratings, and they are currently evaluating the best ways to create a high-performing pharmacy network.

Payers and PBM Are Paying for Performance

Many predict that PBMs may exclude those pharmacies that could jeopardize the plan’s Star Ratings by not performing up to their clinical expectations. On the other hand, a potential upside is that retail pharmacies may benefit from performance-based payments. These payments are generally taking two forms:

  1. Payment for clinical activities. Some payers, like Caremark and Healthspring, are paying retail pharmacies for activities that are associated with improved patient outcomes and Star Rating performance measures (such as percentage days covered). These targeted clinical-care intervention (aka “TIPs”) are a highly targeted, short (5-minute) consultation by a pharmacist. The TIP can be done in person at the pharmacy or over the phone. (Note: a TIP is different from a Comprehensive Medication Review or Targeted Medication Review. See sidebar for more details.)
  2. Payment for outcomes. In addition to payment for interventions such as TIPs, some payers will reward pharmacies with bonus payment for the achievement of outcomes. While still relatively new, this represents a shift away from generating revenue solely from prescriptions to generating revenue for clinical performance. (Inland Empire Health Plan example: “Health plan starts P4P program for community pharmacies.”)

Whether PBMs use a “carrot” or a “stick,” demonstrating clinical performance will continue to grow in importance in the future. Participating PBM-sponsored interventions provide an opportunity for independent pharmacies to tangibly demonstrate the high-quality clinical care that has traditionally been your hallmark, and make a case for your inclusion in future networks.

7 Tips for Thriving in a Clinical Performance-Driven World

  1. Understand the key elements of Star Ratings that pertain to pharmacy. Because Star Ratings have become so important to health plans and PBMs, it is important to understand what affects Star Ratings and how your pharmacy can impact these ratings. (See “Star Ratings Explained.”)
  2. Know what is being measured. In addition to understanding what Star Ratings are and how they work, it is necessary to understand exactly what is being measured. It is these measures that will affect payment and future network decisions. (See the “Know Your Numbers” education center sponsored by Health Mart®.)
  3. Understand the key elements of pay-for-performance programs. Different PBMs have different plans, which pay in different ways. It is essential to understand what these plans are measuring and how they are paying.
  4. Become familiar with clinical-care platforms. Platforms such as Mirixa, Socrates and Outcomes will become common in pharmacy, and pharmacy owners can benefit by becoming familiar with these platforms.
  5. Know how your pharmacy is performing. Once you understand what is being measured, and how various clinical-care and pay-for-performance programs work, it is important to know exactly how your pharmacy is performing— as this is what will drive bonuses and future network participation. Check out EQuIPP™ benchmark data, which McKesson makes available to all of its customers.
  6. Take action. The pharmacy landscape is changing quickly. Narrow networks, measurement of clinical performance, and clinically based business models are not short-term trends. Surviving and prospering in this changing world requires having a clear strategy for driving outcomes and taking action today. For example, implement Med Synch or reach out to local prescribers.
  7. Think beyond clinical. Ancillary services, including clinical services, will become a more critical component of the evolving pharmacy business model. Therefore, you need to make sure you are capturing more revenue from the patients coming into your pharmacy. Consider boosting your front end and offering additional services such as a 340B offering, servicing long-term care facilities, or compounding services.
Note: The information provided here is for reference only and does not constitute legal advice. We make no representations with regard to the content’s comprehensiveness. You are solely responsible for investigating and complying with all applicable laws that govern the operation of your business.