Longitudinal 4 Test 2

cost to patients

the amount they pay out of pocket for healthcare services

cost to payers

amount they pay to providers for services rendered

cost to provider

the expense incurred to deliver healthcare services to patients

price

the amount asked by a provider for a healthcare good or service

cost objective

goods or services for which you want to know the cost

full cost

all costs of the cost objective

direct cost

costs directly associated with the cost objective

indirect (overhead) cost

costs not directly associated with the cost objective

fixed cost

costs that do not vary with the number of goods or services produced

variable cost

costs that vary in direct proportion with the number of goods or services produced

true cost

does not exist

different assessments of cost in different situations

accounting cost

explicit costs that occur in exchange for a defined good or service

economic cost

the amount of money required to obtain the use of a resource

opportunity cost

opportunity cost

the cost of doing anything as the value of the forgone alternative

data sources

specific settings (hospital, pharmacy)

national data

assumptions may be made, but sensitivity analysis needed

cost

quantity x unit price

unit price

opportunity cost

market price

non market item (volunteer time)

direct cost

capital cost

labor cost

material cost

C + L + M

indirect costs

direct costs of the overhead unit will become ____ ___ of other associated units

preparation

perspectives

identify cost centers and select costing approach (departmental and product costing)

draw service flow chart

design data collection forms

perspectives

provider

purchaser: patient and third party payer

data collection form

resources uses

measure amount of resources used

unit prices of resources used

capital cost

generally one time expenses

vehicle, equipment, building, training

IRS: an estimated useful life

depreciation cost

depreciation methods

straight line

double declining balance

units of production

sum of years digits

straight line method

depreciation cost = (purchase cost - estimated salvage value)/# useful life years

overhead rate

allocating proportion

important and difficult

need to be justified

eg: rent (square feet)

financial analysis

systemic way of determining how well the assets are being managed and controlled

whether return on invested funds is satisfactory

controlling

track and compare financial performance of business over time

compare financial performance to company objectives

compare financial ratios to industry averages to see how business is doing compared to similar businesses

planning

looking ahead for optimizing financial status

seasonability

examine differences in financial status btwn periods to identify seasonal variations

borrowing

establish a basis for credit and negotiate for best financing terms

profitability

measures overall success in daily operations

net profit

Gross Profit - Expenses

net profit to sales

net profit ratio

profit margin ratio

sensitive to proportion of Rx sales to total sales

net profit/total sales x 100

net profit to net worth

ROI

net profit/owners equity x 100

net profit to total assets

return on assets

net profit/total assets x 100

inventory turnover rate

most frequently used efficiency ratio

Beg Inv + Purchases - End Inv/avergage inventory

average days to collect accounts receivable

<30 days desirable

365/(annual credit sales/avg accounts recievable)

liquidity

measures ability to meet financial obligations in the short run

-acid test or quick ratio

-current ratio

-inventory to net working capital

acid test

tests ability to meet current liabilities using quick assets

doesnt include inventory

cash + accounts receivable / current liabilities

current ratio

current assets / current liabilities

solvency

measures ability of a business to survive over long period of time

ability to repay loans as they come due

long term creditors and stockholders look for this

debt to equity ratio

total liabilities / owners equity

indicates use of borrowed funds compared to owners investments

high means pharmacy has used much debt to finance growth

account payable remittance time

measures how efficiently bills are paid

lower number of days indicates bills being paid on time

AL pharmacy collaborative practice act

allows for eligible licensed pharmacist to enter into agreement with eligible licensed physician to allow the two providers to develop join pt care plans for pts under their join care

what pharmacists need a CPA

community setting

can pharmacists have CPAs with NP or PAs

no

quality assurance requirements

physician review and eval of pt care documentation to ensure that all parties are adhereing to collaborative care protocols to optimize pt outcomes and to identify continuous quality improvement needed

conducted on quarterly basis

does collaborative care need to be pursuant to a diagnosis

exception: immunizations, opioid antagonist, screening or testing

yes

provider status

legal recognition of healthcare professional who is eligible to provide direct pt care and obtain payment for these services through medicare part B

what are pharmacists providers under

med dispensing

MTM services

medicare part D

type 1 NPI

assigned to a specific healthcare provider

constant and follows provider

inserted into billing transmittals to indicate the specific healthcare provider that provided care for pt

used for billing services when healthcare provider is sole provider in practice

Type 2 NPI

assigned to organizations or group practices that provide healthcare services

hospitals, clinics, nursing homes, pharmacies, other healthcare entities

MTM eligible

individuals who have 2-3 chronic conditions from list of 10

2-8+ chronic meds

diabetes self management training

pharmacists can use G codes to bill for it if program recognized by ADA or ADCES

pharmacist is CDE

initial training billable only one time

CCM

collab practice required

20 min of care

complex requires 60 min of care

clinical time doesn't have to be provided all by one person

2+ chronic conditions expected to last 12+ months

medicare annual wellness visit

collab practice agreement required

first visit must be conducted by physician

pharmacists good match due to diagnosis review , med rec, H&W, vax review

actual acquisition cost

price that the pharmacy pays the drug wholesaler or manufacturer to obtain the drug product

cost of product

average manufacturer price

the average price received by a manufacturer from wholesalers for drugs distributed to retail class of trade

average wholesaler price

a list price for what drug wholesalers charge pharmacies

overestimate of what the wholesaler actually charges the pharmacy

estimated acquisition cost

The third party's estimate of what the pharmacy pays the drug wholesaler or manufacturer.

generic effective rate

The average third-party reimbursement rate for generic prescription drugs across all generic drug products

wholesaler acquisition cost

A list price for what pharmaceutical manufacturers charge drug wholesalers. This is an overestimate of what manufacturers actually charge wholesalers.

maximum allowable cost

maximum cost a third party will pay-based on multiple manufacturers average generic price

factors affecting cash flow

inventory management

actual cost of dispensing

pharmacy volume

per prescription profit

wholesaler terms

PBM repayment terms

amount cash receipts vs PBM reimbursement

procurement costs

costs of monitoring inventory; placing order; stocking order; paying invoices

carrying costs

costs of maintaining inventory; loss of inventory due to expiration, damage, theft; insurance on inventory; opportunity costs

stock out or shortage costs

Costs associated with losing business because the pharmacy does not have a medication in stock that is needed by a patient at the time it is prescribed and presented for fulfillment; this can result in lost business and decreased patient satisfaction with the pharmacy's services overall

pharmacy inventory

largest and least liquid asset of a pharmacy as it cannot be turned into revenue until the medication is dispensed and revenue received

right product

analyze drug usage reports

consider market served

consider pharmacy image/goals

assess drug formularies

utilize industry data

incorporate consumer data

right quantity

analyze drug usage reports

set PAR levels carefully

anticipate seasonal needs

watch local prescribing patterns

confirm pt need of high cost items before ordering

wholesaler rebates

return of part of the purchase price by the wholesaler to pharmacy

lower overall cost of purchasing meds and better profit margins

340B

requires drug manufacturers to provide meds at a reduced price to certain organizations

hospitals with large indigent populations of clinics in underserved areas are a few examples of entities covered

human resources

after inventory, next top expense for a pharmacy

where do manufacturer rebates go

PBM and payer

AAC reimbursement

annual survey of dispensing pharmacies

actual acquisition cost of meds submitted to independent accounting firm and calculated

cost used for reimbursement for "ingredient costs"

$10.64

AL medicaid cost of dispensing fee

medicare part D payment

largely determined through annual bidding process

bid reflects estimated revenue required to provide beneficiaries with prescription drug benefit

at year end, CMS reconciles estimates with actual experience

point of sale price

CMS reviews docs submitted by med part D plan sponsor

-prescription drug event records

-pricing data on how much was paid to pharmacy

-used to calculate beneficiary cost sharing and to adjudicate part D benefits

direct and indirect remuneration

fees payments or payment adjustments made after the POS transaction

payment arrangements negotiated independent of CMS, btwn: med part D plan sponsors, associated PBMs, network pharmacies, drug manu

high DIR leads to ___ bids

lower

3/4 quality measures are related to __ ____

med adherence

community pharmacy quality measures

med adherence

chronic disease management

comprehensive med review

PSAO

Pharmacy Services Administration Organization

in some cases, reimbursements and bonuses based on ____ performance, not an individual pharmacy

negotiate prescription reimbursement contacts with PBM, CM, and health plans

centrally sign third party contracts

reconcilling reimbursement

billing errors

Reimbursement from PBMs occurs in lump sums and is not broken down by individual claim

reconciling payments from insurers

MAC pricing challenges

pharmacy audit integrity act

two week notice

30 days to provide requested documents

defines what is fraud

claims can be a max of two years old

defines terms for recoupment of funds by PBM

audit cannot occur in first 5 days of months