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| DATE | 2018-01-08 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [Hangout - NYLXS] The scam that is your healthcare insurance - how
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Date: Mon, 8 Jan 2018 18:46:43 -0500
From: Ruben Safir
To: NYLXS
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Subject: [Hangout - NYLXS] The scam that is your healthcare insurance - how
the insurance companiess rip you off
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The One that Broke the Camel's Back: DIR Fees Set to Catalyze Transparency =
Discussion With a Wider Audience
MARCH 20, 2017
Troy Trygstad, PharmD, PhD, MBA, Pharmacy Times Editor-in-Chief
DIR Fees: the Latest in a Long Line of Spread Strategies
Pharmacy benefit managers (PBMs) play an important and necessary role withi=
n our private system of health care. Because there is no central authority =
to set prices for drugs, PBMs step in to create a marketplace (of sorts) fo=
r buyers and sellers. They also provide administrative functions, such as a=
djudicating claims and writing checks on behalf of the payer. The 3 largest=
PBMs handle billions of transactions a year, ostensibly to generate operat=
ing revenue. However, these transactions are largely a commodity. So to sup=
plement that revenue in order to generate profits, spread strategies need t=
o be employed. Spread occurs when a portion of the buy=E2=80=93sell differe=
nce can be retained by a PBM. This is akin to the house=E2=80=99s take in a=
casino (except with nobody knowing what the percentage =E2=80=9Ctake=E2=80=
=9D is). Direct and indirect remuneration (DIR) fees are the latest in a lo=
ng line of reimbursement strategies that rely on spread that generate margi=
n for PBMs.
=20
Transparency Is the Kryptonite of Any Spread Business
Squeezing one end of the proverbial margin balloon results in the other end=
getting bigger. In the case of DIR fees, the federal government wanted a c=
learer view into the spread and to receive a bigger part of that spread. Th=
us, the payer side of the balloon got squeezed. As a result, community phar=
macies, by and large, ended up rebalancing the air in the balloon on the ot=
her side through DIR fees, which are simply a way to package the PBM margin=
in another way and place the burden of that spread on the pharmacy. The pa=
ckage may include network access fees, performance tiering, and other attri=
butions of apportionment. It can be anything that is assigned to the dollar=
amount in total. This strategy is only possible (politically or otherwise)=
through lack of transparency in the clawback provisions. Although good at =
generating profit, lack of transparency is an anathema to properly function=
ing marketplaces. Remember collateralized debt obligations and the financia=
l crisis? Nobody had any idea what was in those packaged debt vehicles; not=
the buyers or sellers, just the people who created them.
=20
No Longer Inside Baseball: The Transparency Discussion Goes Mainstream
Part of the challenge of pushing back against lack of transparency in pharm=
acy reimbursement is that it comes across as esoteric, with highly technica=
l rebate structures and multiple parties involved under the surface, but wi=
thout a lot of fanfare the average person can understand or attach much emo=
tion to because transparency is a matter between providers and payers. Howe=
ver, several catalyzers now in play are changing that dynamic and widening =
the aperture of the discussion to include mainstream policymakers and media=
channels:
=20
Catalyzer #1: DIR Fees Were Born out of Regulation to Create Transparency f=
or the Government
Anytime a program that involves government is implemented, it will ultimate=
ly be subject to public scrutiny, open forums, and disclosure. Avenues to e=
ngage, if you are a patient advocate or a provider advocate, are much more =
plentiful. DIR fees (and ultimately, spread itself) will likely be the issu=
e that pierces the transparency veil of all mechanisms that create spread b=
ecause the rules and procedures around government make the discussion hard =
to hide.
=20
Catalyzer #2: DIR Fees Require Opacity to Generate Margin
Spread margin is an animal of opacity. In the absence of nondisclosure and =
in a transparent environment, margin is generated as a fee (not spread). DI=
R fees require opacity to exist. The country=E2=80=99s mood is currently no=
t favorable toward the guy behind the curtain.
=20
Catalyzer #3: DIR Fees Affect the Consumer
Recent reporting has uncovered ways in which DIR fees may affect consumers =
and their out-of-pocket spend. That is a game changer when it comes to broa=
dening the audience of the interested.
=20
Catalyzer #4: President Trump=E2=80=99s Populist Stance on Drug Costs
This one is the kicker. For years, pharmacies and Pharmaceutical Research a=
nd Manufacturers of America (PhRMA) have been at odds during budget season =
because both contribute to the total cost of drugs, fighting over therapeut=
ic interchange and pharmacy reimbursement cuts as the way to moderate incre=
asing costs. However, as PhRMA and pharmacies have been squeezed over time,=
the portion of available margin going to these 2 stakeholders has come mor=
e in line per transaction with PBM spread. This has had the effect of bring=
ing otherwise warring parties closer together to spotlight the PBM industry=
=E2=80=99s role as part of the drug cost driver equation (which is the oppo=
site of its intended market purpose). The fact that a Republican is proposi=
ng price controls will shine a $300 billion-watt bulb on how drugs are purc=
hased and reimbursed through the entire value chain.
=20
Catalyzer #5: Legislation (Regardless of Outcomes)
No proposed or introduced legislation is worth a darn unless it has broad p=
olitical momentum behind it. Legislators can introduce legislation all day =
long that gets referred to committee, with no hearings or fanfare. However,=
because of catalyzers 1 through 4 above, House Resolution 1038 and Senate =
Bill 413, which speak to transparency, now have legs. And even if they neve=
r reach a vote, they will no doubt have a much wider audience, and that is =
a game changer.
=20
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_______________________________________________
Hangout mailing list
Hangout-at-nylxs.com
http://lists.mrbrklyn.com/mailman/listinfo/hangout
--===============0774426847==--
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The One that Broke the Camel's Back: DIR Fees Set to Catalyze Transparency =
Discussion With a Wider Audience
MARCH 20, 2017
Troy Trygstad, PharmD, PhD, MBA, Pharmacy Times Editor-in-Chief
DIR Fees: the Latest in a Long Line of Spread Strategies
Pharmacy benefit managers (PBMs) play an important and necessary role withi=
n our private system of health care. Because there is no central authority =
to set prices for drugs, PBMs step in to create a marketplace (of sorts) fo=
r buyers and sellers. They also provide administrative functions, such as a=
djudicating claims and writing checks on behalf of the payer. The 3 largest=
PBMs handle billions of transactions a year, ostensibly to generate operat=
ing revenue. However, these transactions are largely a commodity. So to sup=
plement that revenue in order to generate profits, spread strategies need t=
o be employed. Spread occurs when a portion of the buy=E2=80=93sell differe=
nce can be retained by a PBM. This is akin to the house=E2=80=99s take in a=
casino (except with nobody knowing what the percentage =E2=80=9Ctake=E2=80=
=9D is). Direct and indirect remuneration (DIR) fees are the latest in a lo=
ng line of reimbursement strategies that rely on spread that generate margi=
n for PBMs.
=20
Transparency Is the Kryptonite of Any Spread Business
Squeezing one end of the proverbial margin balloon results in the other end=
getting bigger. In the case of DIR fees, the federal government wanted a c=
learer view into the spread and to receive a bigger part of that spread. Th=
us, the payer side of the balloon got squeezed. As a result, community phar=
macies, by and large, ended up rebalancing the air in the balloon on the ot=
her side through DIR fees, which are simply a way to package the PBM margin=
in another way and place the burden of that spread on the pharmacy. The pa=
ckage may include network access fees, performance tiering, and other attri=
butions of apportionment. It can be anything that is assigned to the dollar=
amount in total. This strategy is only possible (politically or otherwise)=
through lack of transparency in the clawback provisions. Although good at =
generating profit, lack of transparency is an anathema to properly function=
ing marketplaces. Remember collateralized debt obligations and the financia=
l crisis? Nobody had any idea what was in those packaged debt vehicles; not=
the buyers or sellers, just the people who created them.
=20
No Longer Inside Baseball: The Transparency Discussion Goes Mainstream
Part of the challenge of pushing back against lack of transparency in pharm=
acy reimbursement is that it comes across as esoteric, with highly technica=
l rebate structures and multiple parties involved under the surface, but wi=
thout a lot of fanfare the average person can understand or attach much emo=
tion to because transparency is a matter between providers and payers. Howe=
ver, several catalyzers now in play are changing that dynamic and widening =
the aperture of the discussion to include mainstream policymakers and media=
channels:
=20
Catalyzer #1: DIR Fees Were Born out of Regulation to Create Transparency f=
or the Government
Anytime a program that involves government is implemented, it will ultimate=
ly be subject to public scrutiny, open forums, and disclosure. Avenues to e=
ngage, if you are a patient advocate or a provider advocate, are much more =
plentiful. DIR fees (and ultimately, spread itself) will likely be the issu=
e that pierces the transparency veil of all mechanisms that create spread b=
ecause the rules and procedures around government make the discussion hard =
to hide.
=20
Catalyzer #2: DIR Fees Require Opacity to Generate Margin
Spread margin is an animal of opacity. In the absence of nondisclosure and =
in a transparent environment, margin is generated as a fee (not spread). DI=
R fees require opacity to exist. The country=E2=80=99s mood is currently no=
t favorable toward the guy behind the curtain.
=20
Catalyzer #3: DIR Fees Affect the Consumer
Recent reporting has uncovered ways in which DIR fees may affect consumers =
and their out-of-pocket spend. That is a game changer when it comes to broa=
dening the audience of the interested.
=20
Catalyzer #4: President Trump=E2=80=99s Populist Stance on Drug Costs
This one is the kicker. For years, pharmacies and Pharmaceutical Research a=
nd Manufacturers of America (PhRMA) have been at odds during budget season =
because both contribute to the total cost of drugs, fighting over therapeut=
ic interchange and pharmacy reimbursement cuts as the way to moderate incre=
asing costs. However, as PhRMA and pharmacies have been squeezed over time,=
the portion of available margin going to these 2 stakeholders has come mor=
e in line per transaction with PBM spread. This has had the effect of bring=
ing otherwise warring parties closer together to spotlight the PBM industry=
=E2=80=99s role as part of the drug cost driver equation (which is the oppo=
site of its intended market purpose). The fact that a Republican is proposi=
ng price controls will shine a $300 billion-watt bulb on how drugs are purc=
hased and reimbursed through the entire value chain.
=20
Catalyzer #5: Legislation (Regardless of Outcomes)
No proposed or introduced legislation is worth a darn unless it has broad p=
olitical momentum behind it. Legislators can introduce legislation all day =
long that gets referred to committee, with no hearings or fanfare. However,=
because of catalyzers 1 through 4 above, House Resolution 1038 and Senate =
Bill 413, which speak to transparency, now have legs. And even if they neve=
r reach a vote, they will no doubt have a much wider audience, and that is =
a game changer.
=20
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_______________________________________________
Hangout mailing list
Hangout-at-nylxs.com
http://lists.mrbrklyn.com/mailman/listinfo/hangout
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