Recent advancements in pharmacy software offer many opportunities to increase your Return-on-Investment helping Medicare patients. We’ve looked at the data and found some key strategies to build a competitive advantage.
Over the next 40 years, the Medicare population in the United States is expected to more than double.
As the Medicare population evolves into a larger, more complex market, Centers for Medicare & Medicaid (CMS) will continue to pay differently for quality and value-based patient care. Meaning, your reimbursements on many Part D plans will continue to be tainted by range-based DIR fees.
There are pharmacies with a $5 gross margin per Rx in January 2017. After expenses such as rent, payroll, insurance, that overall margin does not cover expenses. On the other hand, we see pharmacies making a $20 margin per Rx. With Medicare. We’re not talking compounding. We’re not talking specialty even. Just good ol’ Medicare.
How can this be? What is the difference between a pharmacy with a $5/Rx margin and one with a $20/Rx? It’s not only keeping up to date on industry changes and staying aware of clawbacks—it is time that is proactively invested into each patient.
We see success in pharmacies that take time to employ consistent outreach efforts to reach their Medicare Part D population and educate them. Outreach can come in the form of a patient-pharmacist consultation, snail mail, a personal phone call, or something even more creative. Whether these interactions are deliverable or conversational, all tactics can provide answers to questions your patients might not even be aware they need to ask:
-Which plans do and do not cover my medications?
-Which plans have restrictions, and what does that mean for me?
-How much can I expect to pay out of pocket for the entire year?
-How much am I paying for each medication?
Inherently, services that prompt the above discussions align closely with industry goals to reward high quality care and thorough patient-centered models. In other words, it not only benefits your patients, but it benefits YOU. In the coming years, we will even see this relevance expand.
Proactive pharmacies will tell you that it isn’t difficult to initiate a workflow. And when you’re reaching patients who are already loyal customers, it’s even easier.
The iMedicare team ran a case study on multiple pharmacies that actively consulted with patients during this past Open Enrollment season (October 15th – December 7th). These pharmacies targeted patients already filling with them, but their efforts reached beyond them. Here’s what they’ve been doing:
1. Patients Won Back
From lost patients that these pharmacies happened to initiate contact for, on average, 50% began filling again in 2017 after receiving new information, and likely, enrollment to a new Part D plan. This resulted in
2. New Medicare Business
These pharmacies brought in, on average, at least 2 patients that had never filled with them before. The average patient gained filled $172 in January. So, 2 patients gained x $172 x 12 months in the year = $4,120 in new revenue!
3. Patients Turning 65 (Newly Eligible)
10,000 people are turning 65 every day in this country. The average retail pharmacy will see 56 newly eligible patients in their community at any given moment throughout the year. Some of these patients might already be filling at your pharmacy, the rest are not.
Let’s put this into perspective: If we assume that 50% of those turning 65 are already customers at your pharmacy, it means that 28 are potential customers. Based on the New Medicare Business that we just discussed, if you are able to gain just 10% of these, that means that you could gain 3 new patients, yielding $6,192 in new revenue ($172 x 3 patients x 12 months)!
4. Dual Eligible Patients (Medicare-Medicaid)
Dual Eligible patients are very price sensitive. Because they have Medicaid, their co-pays and premiums are subsidized. However, this does not mean that they are on the most affordable Part D plan. Dual Eligible patients are automatically enrolled in a Benchmark plan. Without going into too much detail, here is how your Dual Eligible patients and your pharmacy can benefit from plan comparisons:
-As drug prices increase, patients enter into the Donut Hole and Catastrophic coverage sooner.
-As drug prices increase, pharmacy reimbursements increase.
-Dual Eligible patients pay $0 copays when in catastrophic coverage.
-The faster a Dual Eligible patient hits Catastrophic coverage, the more money they save (as they are paying $0 copays for the rest of the year).
By discussing Medicare Part D options for Dual Eligible patients, you have to opportunity to find win-win scenarios for the patient and your pharmacy. And as there are an average of 115 Dual Eligible patients per pharmacy, there is definitely an opportunity for you.
Even without conscious efforts in reaching these subsets of patients, pharmacies saw a clear ROI from their time dedicated to discussing Part D options with patients at their pharmacy. Total revenue yielded by Patients Won back and New Medicare Business does not even begin to cover the benefit these pharmacies saw from providing services to already-loyal customers. In fact, for these customers, pharmacies saw a 94% patient retention rate.
In other words, 94% of all patients who received any sort of consultation about their Medicare plans at all continued filling with those pharmacies in 2017. This is a stark difference compared to the 71% patient retention rate we saw across patients who received no consultation about their Part D plan from their pharmacy.
These findings beg the question –what could an outreach campaign mean for your business?