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The Profit Vault November 2023
WHY PBM OPTIMIZATION IS VITAL FOR YOUR PHARMACY Follow This PMS Checklist for PBM Optimization!
Our next Pharmacy Profit Pillar is one you cannot ignore: Pharmacy Benefit Manager (PBM) optimization. Most of your pharmacy’s revenue likely comes from a PBM, so it is imperative you optimize your PBM billing to ensure you maximize your billing revenue. Failing to take these steps can result in your receiving thousands of dollars less than you deserve. The first place you need to start? Your Pharmacy Management System (PMS). All of your billing for PBMs goes through your PMS, and every owner should ensure their system provides accurate and updated data. You can optimize your PMS to bring ongoing results for your pharmacy. I know some pharmacy owners haven’t updated their software since they started using it. That could be 10 to even 20 years ago! The problem with outdated PMS data is that your pricing formulas are likely inaccurate and, as a result, costing you money. To increase your PBM reimbursements, you must review your pricing formulas and alter them according to your pharmacy. I recommend partnering with Pricing Systems, as they will update Here are our recommended steps. □ Update Pricing Formulas
your pricing formula system and customize it to your location to optimize your reimbursements properly. When I updated my pricing formulas with Pricing Systems, I saw an average of $1–$3 increase in average reimbursement per prescription between my two stores. Once you optimize your pricing formulas and know what works best for you, you can simply update these annually to ensure you receive the highest reimbursement possible. Contact Robbie at rxcardoc@gmail.com to learn more about Pricing System’s optimization process. □ Check PMS for Inaccurate Costs Your PMS is your pharmacy’s bible. It contains how much you spend, gain, lose, and all other essential dispensing data for your pharmacy. The data in this “software bible” directs you to what you should be doing for your pharmacy! But if the data is inaccurate, you have no clue what’s happening with your finances. You won’t know if you’re actually making or losing money. As an independent pharmacy owner, you don’t have the luxury of flying blind. How do numbers start to get wonky? While you may buy 90% of your drugs from your primary wholesaler, you likely also purchase some stock from secondary sellers. Your PMS doesn’t know these changes are happening! You can update costs manually or electronically. A solid first step is to manually update the cost in your system whenever you order from a secondary wholesaler. Even if it’s a small number, it ensures your data is accurate. □ Hire a Service for Pre- and Post-Edits When claims move back and forth between a pharmacy and PBMs, there can be errors along the way nobody even notices. That’s why you need an intermediary service to check for you. When you use a pre/post edit service, they will review a claim for errors before it’s sent to a PBM, which is considered a pre-edit.
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How to Safeguard Your Pharmacy Against PBM Audits Key Strategies to Ensure 100% PBM Billing Compliance
In recent years, it has become obvious that PBMs love their audits. With over 90% of your revenue going through a PBM, you must ensure 100% PBM billing compliance. The problem here is that PBMs have no issue switching up their rules or how they implement these rules. While it can start to feel like you’re stuck in a losing game, you can prevent disaster by staying ahead and being prepared.
there are also countless unapproved products that you’d rather not have in your pharmacy. Some unapproved other products that are PBM compliant are legacy products. Any other unapproved other products should be double-checked for their compliance before they hit your shelves. Coupon Audit Use your coupons carefully! Different
You have no other option, as the consequences of failing an audit can be catastrophic, resulting in a massive financial loss or even an end to your contract plan. It sucks, we know. Yet, if you stay ready, you never have to get ready. Specific PBM audit types you need to be aware of include the following: 100% Legal Prescriptions We may be stating the obvious, but it must be said: All your prescriptions need to be 100% legal. Are you following all legal protocols when filling prescriptions? Countless prescription types have their own filling requirements,
PBMs have different rules when it comes to using coupons, and
often, there are restrictions on what classification you can use coupons for. For example, Caremark allows valid online coupons, but only for FDA-approved
drugs , not supplements, 510(k) devices, or unapproved other products. A PBM will want to see your coupon use and copay collection to ensure you follow all coupon regulations. Invoices The most common PBM audit type is an invoice audit. To ensure you’re using only valid wholesalers, your PBM will want to check all your
and skipping any steps will come back to bite you when an audit occurs. Above all else, ensure you meet all of the legal requirements in your state when dispensing prescriptions. Test Claims Test claims aren’t inherently evil. As a pharmacy owner, you sometimes need to determine a prescription’s coverage for a specific patient. However, PBMs have become increasingly aggressive against test claims. Never go fishing for reimbursement data. You can get audited for reversed claims. The best way to avoid the hassle of a test claim audit is by avoiding them altogether. Instead, run a benefit check. You’ll get the same coverage information as a test claim without reimbursement and be PBM compliant. Unapproved Other Products Not all products are the same, and we all know that. Your stock has multiple FDA classifications: drug, supplement, 510(k) device, and unapproved other . Plenty of products are unapproved by the FDA but are perfectly legal to dispense. But
invoices for a specific period. That’s why you should keep a running list of all the sellers you buy from. Then, when the time comes to send your audit to your wholesalers, you won’t miss any and cause a headache later on. Always Be Ready for an Audit The last thing you want is to be hit with an audit out of nowhere, be completely lost on what to do next, and likely not be in 100% compliance. Instead, you should always use best practices to remain compliant and operate as best you can. You won’t have any reason to shy away from certain products, coupons, or prescriptions if you know exactly what needs to be done. This is the only way your pharmacy can genuinely thrive! Of course, if a PBM audit hits you and you need legal advice, we recommend Hunter Jamerson at the Macauley Jamerson Satterlund & Sessa law firm. Hunter is an experienced health care attorney specializing in PBM and contract cases. You can learn more about Hunter and contact his team at MacJamLaw.com .
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Powerful Strategies for Smarter Purchasing How Smart Wholesaler Choices Can Save Your Pharmacy
You can find lower prices. Surprise! Your primary wholesaler isn’t giving you the lowest price, even AFTER the rebate. The truth is that the Big 3 are screwing you over. They are grossly overcharging for generics while also giving you crappy payment terms. Their complicated pricing and rebate matrix make it impossible to know what you are really paying for any particular product. They also hold your money for months before giving back a sliver in the form of a rebate. Overpaying for generics to “earn” a brand rebate is a losing game. In the end, you’re just spending more. Pharmacies can become too focused on brands and lose the big picture. But there’s no winning against a primary wholesaler. It’s like playing the house. The house will always win since they know
Before you start working on increasing your profits, you first need to understand where your current profit stands. It’s a simple math problem: What’s the difference between how much the PBM pays and how much you pay for the drug? Subtract the two, and you have a profit (or even a negative profit). Now, there are only two ways to increase your profit: earning more from your PBM or spending less on a drug. Clearly, only one of these tactics is fully within your control. This is why we constantly tell our members to ensure they buy their stock at the best NET PRICE possible (don’t go chasing rebates). Most pharmacies purchase anywhere from 90% to even 100% of their stock from a primary wholesaler. But this is no longer the best way to operate and can actually hurt both your cash flow and profitability. Shift your mindset and realize that to thrive, you need to be in an open relationship with wholesalers . Why?
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TAKE A BREAK
Ballot Cornucopia Cranberry Districts
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HOW YOU CAN PREVENT VACCINE BILLING ERRORS
Optimize Vaccine Billing for a Profitable November
Flu and COVID-19 vaccines galore will likely fill your November schedule, which is fantastic for your pharmacy as long as you’re billing correctly. You want to ensure you follow every step of the vaccine billing process to get full reimbursement from your PBM. We’ve worked with countless independent pharmacy owners who didn’t realize they were billing their PBM incorrectly or how it even happened.
remove the DUR code. Even if you’re unsure whether your PBM requires the code, it’s good to get into the habit of including this code and staying on top of DUR codes.
Any error can lead to missing money.
Review all your costs and PMS entries if you feel like you’re not being adequately reimbursed. Check your claim and determine how much you were paid for ingredient costs and administration fees. Then compare them with the prices you actually billed. Any discrepancies? Various errors could have led to a mixup: errors in the drug file, issues in how your PMS sends billing data to your PBM, and so on. We recently worked with an owner who experienced a similar situation with COVID-19 vaccine reimbursement. He was reimbursed an ingredient cost of $70 and an admin fee of $20, so he received a total reimbursement of $90. The problem was that the vaccine cost $140! He should have been paid an ingredient cost of $140 in addition to the $20 admin fee. If you experience an issue like this, call your PMS company and have them check the back end of the claim to look for any errors.
Never forget these 2 factors.
When billing your PBM for vaccine reimbursement, you always need to remember two parts: ingredient cost and administration fee . The ingredient cost is the price of the vaccine itself. Meanwhile, the administration fee is how much you get paid to give a patient their shot. You need to know how to properly input these fees into your PMS system to bill for the vaccine accurately.
While you may think you know exactly how and where to input these fees, you’re likely placing these numbers in the wrong spot if you’re having issues getting
paid. Double-check with your PMS company about exactly where you need to input these numbers to bill your PBM and get reimbursed.
Check with your PMS company.
Always enter the DUR code.
When checking on their end, a PMS company can see what went wrong and what got lost in translation. There are countless opportunities for billing to get warped as it travels through the PMS system. With the company’s help, you can discover what led to the
If it seems you are getting paid for the ingredient cost but not the administration fee, you may have
forgotten to include the required DUR code that will actually allow you to get paid your administration fee. You should be submitting the code MA 3N PH for most vaccine claims. Every once in a while, you will encounter a claim where you need to
lowball reimbursement and how to ensure it doesn’t happen again.
Sometimes it can take multiple PMS and PBM calls to get it right. It is worth the effort.
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LOWER COGS & INCREASE CASH FLOW Lower COGS & Boost Cash Flow with These Experts!
If you want to drastically improve your pharmacy’s cash flow, RxCherryPick is your go-to partner. They specialize in helping you maximize your cash and optimize your gross profit. With their expert guidance, you can navigate the complex world of inventory ordering and come out on top.
craig@cortlanddata.com
You need a reliable secondary wholesaler that carries controlled products, generics, and niche solutions. Real Value Products is your strategic ally. They are dedicated to helping you improve profitability and patient care.
realvaluerx.com
Buy lower and save thousands with Trxade . From generics to brands, your pharmacy will benefit by using its platform to source prescription products. It is free to join, and the average member saves over $10,000 every month!
rx.trxade.com
Get ready for the DIR Fee Apocalypse and maximize your profits with these 3 trusted and vetted Pharmacy Badass University Partners.
Unlock Your Pharmacy's Cash Flow With PHARMACY BADASS UNIVERSITY Member-Exclusive Resources Essentials & Unlimited Members Login Required Join our exclusive Cash Flow Challenge. With expert guidance and actionable strategies, you'll learn how to optimize your cash flow and enhance your pharmacy's financial health. Join the Cash Flow Challenge! https://membership.diversifyrx.com/courses/5-day-challenge-to-improve- your-pharmacys-cash-flow/ Get rid of negative margin and high-cost brands by coordinating the care of filling these medications through mail order while you still fill the profitable generic medications. RetailMyMeds is owned by a fellow pharmacy owner member, Dr. Arica Collins. Her team will walk your team through every step of the process. Reduce DIR fees and increase cash flow. RetailMyMeds Quick Win hhttps://membership.diversifyrx.com/roadmap_items/mitigate-dir-and- negative-margins/
Not Sure Where To Start? Schedule a call with Mike or Lisa from your member dashboard for guidance.
$0 TO $400 MILLION The Story Behind Super Coffee
What is the first thing you do when you wake up? Many start every day with a freshly brewed cup of coffee, but occasionally, we run out of time and have to pick up something on the way to work. You can get a cup from a coffee shop or a fast- food restaurant, but these can be expensive, unhealthy, and unappetizing. You can go a different route and get an energy drink or bottled coffee, but these usually
in the modern age. They explained their product and allowed the sharks to try their four flavors. The brothers asked for $500,000 in return for a 4.5% ownership of the business. Unfortunately, the sharks were unimpressed. Robert Herjavec, Barbara Corcoran, and Rohan Oza were unimpressed with the taste, while
are high in sugar and can increase the risk of heart disease. In 2015, a college student at Philadelphia University (now Thomas Jefferson University) saw a need for a healthier energy- inducing beverage and created something new. Jordan DeCicco was a student-athlete struggling to stay awake in class. The shops around campus offered mainstream bottled coffee, which Jordan didn’t want to drink. He wanted something healthier to provide more stamina and energy, so he started brewing his own coffee and adding protein and healthy fats. Jordan got the energy he craved from his creation, and it tasted good, too! Soon, his teammates and coaches from the basketball team started drinking it, and Jordan knew he had something big on his hands.
Mark Cuban and Lori Greiner didn’t believe the business could become more profitable. Jake, Jordan, and Jim walked away from “Shark Tank” empty-handed, but they didn’t let that stop them from reaching new levels of growth and success.
In 2018, the brothers dropped the “Sunniva” name and rebranded it as “Kitu Life.” The following year, Forbes recognized the brothers on their 30 under 30 list, which garnered the attention of venture capitalists and high-profile investors. Aaron Rodgers, Jennifer Lopez, Alex Rodriguez, and Baron Davis all backed and invested in the company. The brothers made a distribution agreement with Anheuser- Busch, which brought Super Coffee to stores like Target, Walmart, and CVS. In the two years since appearing on “Shark Tank,” Super Coffee raised its sales numbers from $4 million to $55 million. The company grew in value from $0 to $400 million within five years.
Jordan contacted his brothers, Jake and Jim, to share his creation and inform them
of his intention to drop out of school and start a business. He was on a full scholarship, which made this venture risky, but his brothers provided support and encouragement. The three started to work together and launched Sunniva Super Coffee out of Jake’s apartment at Georgetown University. They quickly found success and started selling their product in stores like Whole Foods, Wegmans, and WaWa. Knowing their business could be even more profitable, the brothers decided to go on “Shark Tank” to pitch their business to the most prolific and wealthy investors
The popularity of Super Coffee has grown exponentially. What started as a dorm room experiment has become an Austin-based company that employs over 100 people and manufactures over 30 products, including creamers, bottled coffee, and coffee grounds. The DeCicco brothers and their Super Coffee venture prove that initial failures don’t predict long-term success. Pharmacy owners often experience setbacks. Don’t give up! You can succeed, and we are here to help you.
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The post-edit occurs when the PBM returns the claim to the pharmacy, where it’s reviewed again for errors. □ Prepare for DIR Fee Apocalypse Every pharmacy owner knows that Direct and Indirect Remuneration (DIR) fees are evil. The big DIR fee change is just around the corner. Currently, your DIR fees are retroactive. This means you are paid more than you are supposed to be paid and the money is taken back later. Beginning on Jan. 1, DIR fees will be applied in real time when you submit a claim. This will cause your reimbursement to go down but will be more accurate. Many pharmacies have programmed estimated DIR fees into their PMS system to help manage them. When the DIR Fee Apocalypse hits on the first of the year, you will want to remove your programmed DIR estimates. □ Check Your Reverse and Rebill Report The same mediator who performs pre- and post-editing on your pharmacy’s claims can also provide you with a reverse and rebill report. This report shows when a drug’s price changes and if you submitted an outdated price, which led to a lower reimbursement than the current price. This report can point out these discrepancies so you can reverse the claim for the new price and get the higher reimbursement you deserve. We can’t keep up with every drug’s price change, but a reverse and rebill report can do it for you!
PBM optimization is a must, and optimizing your PMS is the first place to start. It strengthens your foundation and helps you get every penny you should be getting. Insufficient data leads to bad decision-making, which can cost you. Organize your data and let it lead you to the right path for your pharmacy!
If you have any questions, you can schedule a call with our coaches from your membership
dashboard. We’ll give you the one-on-one coaching you need to improve your PBM optimization.
Scan the QR code to check out PMS Checklist!
HAVE A LAUGH
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The Art of Analyzing Macro and Micro Pharmacy Data A Guide to Leveraging Data to Increase Profitability
I’m back to tell you just how much I love data. Yes, I am a proud data nerd! Your PMS stores endless amounts of data. Thousands of prescriptions are in your PMS, and you shouldn’t let these numbers go unnoticed. Most pharmacies don’t utilize the power of this data, and you need to know how to use it to your advantage! Data analytics is central to optimizing your PBM billing and, ultimately, your entire pharmacy. These numbers can tell you what’s working (aka what you need to keep reinforcing) and what’s not (aka what you need to stop ASAP )! You can only find this information through data, and if
You can’t increase profits if you don’t
know what’s profiting. Similarly, you can’t avoid future problems if you don’t know what’s failing now. As for micro data, you can start by looking at your claim details: What are the top 10 most profitable claims? Now, what are the bottom 10 least profitable claims?
Your data gives you more information about your pharmacy that can become a valuable resource and help you focus on what you need to. Data can narrow your scope to what actually matters.
you want to make your pharmacy profitable, you need to use it to narrow down your next steps. These numbers provide everything you need to know. How to Use Your Data Let’s say, in your mission to be more profitable, you wonder if you should visit either a dermatologist or pediatrician, but you’re not sure which is the better option for your pharmacy. Your data can tell you! First, you need to look through your data and examine your dermatology prescriptions. You may find you’re making $40 in profit from each prescription! Then, check your pediatrician prescriptions. If you see you’re only making $5 from those, the answer becomes clear about which prescribers you should spend your time and effort on. Macro vs. Micro Data Analytics There are two ways to look at data: macro and micro. The big, global data is your macro, and the micro is individual claim data. You should be looking at your numbers both ways! When it comes to macro big-picture data, look for the following:
If you want to boost your numbers quickly, consider a few profitable drugs you may not be dispensing, like:
•
Clemastine Syrup: 73308-0358-12
•
Chlorzoxazone 250mg: 69499-0330-60
•
Nitrivia: 69499-0354-60
You can keep track of other profitable Rxs in our high-margin Community Chat. Scan the QR code to join! As for my favorite data analytics software, it’s hands down Ugo Rx, and you can learn more about them at UgoRx.com . Lastly, our essentials and unlimited members have access to a KPI dashboard where you can input data and get expert guidance examining your macro-level data. Head to your membership portal to get started!
Scan the QR code to start analyzing your pharmacy data!
• What are the most profitable plans and prescribers?
• What is the percentage of negative margin scripts?
•
What’s my average margin per prescription?
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417 Ravenaux Dr. Southlake, TX 76092 561-379-7750 DiversifyRx.com
1 The PBM Optimization Checklist You Need 2 How to Navigate the PBM Audit Maze 3 How Secondary Wholesalers Can Transform Your Pharmacy 4 Don’t Miss Out on Your Rightful Vaccine Reimbursement 5 How Super Coffee Grew From $0 to $400 Million 7 How Data Analytics Can Be Your Ultimate Game-Changer INSIDE THIS ISSUE
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the odds and how to do it. Instead, play a different game and shop around with secondary wholesalers.
You’ll improve your cash flow. Letting primary wholesalers hold onto your cash for an undetermined amount of time seriously strains your cash flow. You won’t even realize how much you’re paying your primary wholesaler until you see the transformation in cash flow after moving to a secondary seller. Instead of allowing a wholesaler to hold your money when waiting for rebates, you can pay a lower price altogether through a secondary wholesaler and keep your cash. We highly recommend RxCherryPick as an alternative to ordering a majority of purchases through a primary. Their pricing uses a net pricing model, meaning NO REBATES. Their prices are actually lower, and with their generous payment terms, you get to keep your cash. How much cash? Many pharmacies that switch to RxCherryPick experience an extra $1,000 cash flow per average daily script filled within just a few months. If your pharmacy fills an average of 200 scripts daily, that means an extra $200,000 in your bank account in only a few months. They’ve helped save pharmacies from collapsing just through the cash flow boost.
To get started, email Craig Robinson from RxCherryPick at Craig@cortlanddata.com. Also, check out Real Value Products at RealValueRx.com , which offers an incredible selection of low-cost generics and niche products with generous payment terms. Our final recommendation is TRxade, a marketplace where wholesalers and manufacturers list their products. Learn more about the deals they offer at Rx.TRxade.com!
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