© 2008 Pharmacy Healthcare Solutions, Inc.

Medication Therapy Management:

Medication Therapy Management Programs: Are They Going as Planned?

June 20, 2008 Don Dietz, R.Ph., M.S.

Pharmacy Healthcare Solutions, Inc.

Agenda

• Current MTM Pharmacy Systems • Pharmacist’s Profession Challenge • Retail Pharmacy ROI • The Good News • MTM Programs - Future Direction © 2003 PHSI

Goals of MTM

• Optimize therapeutic outcomes through better medication use and management • Distinct service or group of services: – Patient health status assessments – Designing a medication treatment plan – Select, initiate, or modify therapy – Monitor patient’s response to therapy – Conduct comprehensive medication reviews – Document the care provided – Communicate information to other health care providers – Provide drug information and education © 2003 PHSI

Current Retail Pharmacy MTM Options

• Traditional dispensing software • Stand alone software platforms • Web-based applications © 2003 PHSI

MTM System Characteristics

Documentation

- Electronic therapeutic record - Track pharmacist interventions

Scheduling

- Schedule appointments - Follow-up on interventions - Refill reminder MTM Software

Clinical

- Identify, track, and resolve drug therapy problems - Create custom care plans - Provide training modules

Billing

- Create claims automatically - Generate and submit invoices to payers (manual and electronic) © 2003 PHSI

Traditional Dispensing Software

• MTM is not integrated in dispensing system • Rite Aid has a stand alone system • Walgreens MTM is centralized with minimal face-to face opportunities Limited volume and minimal acceptance of MTM are rate-limiting steps in IT investments MTM process is not standard enough to develop into workflow © 2003 PHSI

Stand Alone MTM Platforms

• Medication Pathfinder (Clinical Support Services, Inc.) – Selected by Duquesne University to support MTM experiential program • Medication Management Systems, Inc. (MMS) – Developed in conjunction with the Minnesota College of Pharmacy • Select physician groups, clinics, health plans, academia, and pharmacy • Enhanced documentation, patient follow up, and clinical tools © 2003 PHSI

Web-Based MTM Platforms

Mirixa

Outcomes Pharmaceutical Health Care

-Focus on community pharmacy -Online billing solution -Minimal clinical tools or patient scheduling © 2003 PHSI

Web-Based MTM Platforms

Year Founded Pharmacy Network Documentation

Mirixa

2006

43,000 Pharmacies Nationwide

Web-based documentation and billing

Get Outcomes

1999

13,000 Pharmacist Network

Web-based documentation and billing R.Ph. Reimbursement R.Ph. Certification Location of service

$60 for initial 30-minutes; $30 for 15 minute follow-up No training certification required $50 for Comprehensive review; $20 for Prescriber Consult; $20 for Patient Compliance; $10 for Patient Education On-line training; must become certified

In person or via telephone In person or via telephone © 2003 PHSI

Pharmaceutical Manufacturer Perspective on MTM

• What’s the difference between patient counseling which is required by law and MTM programs required by MMA?

• Brand Teams have a menu of marketing programs to spend their dollars on. Where does MTM rate in terms of relative effectiveness from an ROI?

• Regulatory public perception issues with program sponsorship • View MTM programs as supporting therapeutic interchange strategies to reduce costs • Increased focus on reducing costs to maintain profitability and harmonize sales force size © 2003 PHSI

Pharmacist’s Profession Challenge

• MTM Services are a transition from a product based reimbursement to a service based business model • Pathway to make this transition has been unsolved for at least a decade • Perceived market shortage of pharmacists may drive regulatory change in fulfillment services • Division between clinically focused RPh's and traditional distribution roles © 2003 PHSI

Pharmacists View of MTM Value

• Professional satisfaction for applying clinical knowledge • Improved patient care and outcomes • Patient satisfaction • Patient loyalty • Trust and rapport with patients and physicians • Revenue and profits generated by providing MTM services © 2003 PHSI

Costs Associated with Implementation of MTM Services

• Staff Training and/or expansion • Remodeling facilities • Installing new technology • Purchasing supplies and equipment to provide MTM services © 2003 PHSI

Opportunity Cost Challenge

• 17 Rx’s/hour x $12.20 gross profit per Rx generates $207.40 per hour gross profit dispensing prescriptions

Dispensing Revenue

• $2/Minute payment or $120/hour revenue. In addition, there is no payment for any preparation time for the MTM session

MTM Hourly Revenue

• Its more profitable, at this time, to dispense prescriptions than provide MTM services on a sporadic basis

Bottom line

© 2003 PHSI

Pharmacist Salary

• Average fully loaded salary = $120,000/year • Average hours worked per year = 2,000 • Average pay per hour = $60 • If MTM can generate $2/min or $120/hour, then the pharmacist would need to be engaged in MTM services 50% of their time to cover their salary costs only without a contribution to overhead and profit © 2003 PHSI

Reasons NOT to Implement MTM

• • • • • • • • • • • • • • • Pharmacists have inadequate time Not paid for preparation time Staffing levels insufficient Dispensing activities too heavy Billing is difficult Inadequate training/experience Documentation for services is difficult Inadequate space available Management does not support Technology barriers Too few patient to justify cost of provision Too difficult to determine patient eligibility Unable to collect patient information needed to provide services Patients are not interested or decline to participate Local physician resistance expressed © 2003 PHSI

Retail Pharmacy Bottom Line

• MTM volume through Medicare Part D is not sufficient to change pharmacy practice to embrace MTM – ROI is negative today and for the foreseeable future • Face-to-Face benefit of MTM hasn’t proven, to date, to justify the additional expense • MTM cost for Medicare Part D plan to pull volume through the retail channel does not justify the additional expense when compared to other alternatives

Therefore, the majority of Medicare Part D plans have not embraced retail channel for MTM

© 2003 PHSI

Who is Providing MTM?

• Contracted outside MTM provider organization • Disease management vendor • Certified diabetes educators • Nurses • Physician assistants • Case managers • Pharmacists • Majority are operating through centralized managed care initiatives to meet MMA requirements © 2003 PHSI

Who is Providing MTM?

Health Care Professionals

Corporate MCO-Based Registered

Pharmacists

Case Managers Nurses Retail (Network-Based Registered

Pharmacists

Certified Diabetic Educators

MA-PD

73.7% 55.0% 35.0% 20.0%

Stand-Alone PDP

60.0% 20.0% 20.0% 40.0% 20.0% 10.0% Other Consultant

Pharmacists

20.0% 15.0% 10.0% 20.0% Source:

Novartis Pharmacy Benefit Report: 2007/2008 Facts, Figures & Forecast

Majority of R.Ph. are operating through centralized managed care initiatives © 2003 PHSI

The Good News: Successful Retail Pharmacy MTM Projects

• Asheville Project • The Patient Self-Management Program for Diabetes • Diabetes 10-City Challenge • Project ImPACT • Wisconsin Pharmacy Quality Collaborative © 2003 PHSI

Future Direction for Retail Pharmacy

© 2003 PHSI

Future Direction/Challenges

• Need to identify a viable long term MTM business model • Who is the target market for MTM services? • Capture actual dollars saved versus soft dollar cost avoidance savings © 2003 PHSI

Future Direction/Challenges

• Incorporate MTM into pharmacy workflow queues • Coordinate MTM services at the chain level • Pharmacy, for the most part, has been unwilling to support a money losing business to get MTM services up and running while exploring new revenue streams © 2003 PHSI

Potential Future Direction for MTM

• Bifurcated pharmacy profession – Product driven model – Service driven model • Consumer directed health care • Integrate MTM services with other proactive wellness programs and recognize that pharmacy is only one piece of the patient service menu • Integrate lab and medical data to provide a more complete clinical picture for the pharmacist • Sell subscription services for MTM on a $/month or year basis © 2003 PHSI

Potential Models at Chains

• Hub and spoke • Traveling clinician • Call center © 2003 PHSI

What is the tipping point?

• Most likely reimbursement changes that drive the profitability of dispensing prescriptions lower making the revenue generated from service based MTM more attractive to pharmacy operators • How close are we to the tipping point?

© 2003 PHSI

Market Dynamics Drive Change

• Experienced pharmacists comfortable with dispensing role retire • Pharmacy schools are producing more graduates than ever before which may lead to an oversupply of pharmacists driving salaries lower especially if a change in reimbursement drives store consolidation • Health care system changes to force a more proactive management approach as opposed to focusing on treatment © 2003 PHSI

Market Dynamics Drive Change

• Economics of dispensing profitability change dramatically making service based model more attractive – FDB/MediSpan AWP Settlement – AMP Pricing in Medicaid • State pharmacy laws change to increase the ratio of technicians to pharmacists • Robotic dispensing reduces need for pharmacist oversight of the process • New pharmacy graduates are not interested in making a career of filling prescriptions at retail © 2003 PHSI

Future MTM Programs

• Must focus on measureable ROI in order to secure funding. Reduce costs, improve outcomes or a combination.

• Cost avoidance savings will be meaningless to further program development. Where’s the beef?

• CMS guidance will drive next generation of programs © 2003 PHSI

Future MTM Programs

• Electronic health records are a long term solution to provide additional patient medical, lab and prescription information to MTM provider • Will fully implemented E-prescribing capabilities drastically reduce the need for MTM services?

• Pharmacist may be preferred MTM provider as long as ROI is better than alternative providers. If not, why pay for the additional cost?

© 2003 PHSI

Future MTM Programs

• Patients may conduct their own initial MTM assessment through web-based information • They would have the opportunity to self refer for additional assistance if needed • Consumer directed health plans will drive MTM in the commercial sector • Must leverage professional expertise to drive down costs of providing services © 2003 PHSI

Thank you!

Don Dietz RPh, MS [email protected] Phone: (412) 635-4650

© 2003 PHSI