Episode 20: Pharmacy Evolution in the Health Value Chain


On this episode of the Dish on Health IT podcast, guest Troy Trygstad, Executive Director of Community Pharmacy Enhanced Services Networks (CPESN) speaks with Ken Kleinberg and Pooja Babbrah about how pharmacy is evolving as a key part of the health value chain.  

Troy started with a brief overview of his background, which includes a degree in health economics and pharmacy policy with over 15 years in primary care. While in primary care, his focus was on accountable care, value-based care, clinical integration, grants, innovation, the state and commercial payers. All his learnings on the medical side were a great trajectory to transferring this knowledge to the pharmacy field where he set up the same version from a regulatory structure, operations, and data integration that you would see on the clinical side.  

Ken posed the question of: How do you see the role of pharmacy evolving to meet the needs of value-based care? Troy commented that, “This is nothing new, leaders in pharmacy have been saying this for 30 years. What it really took was market dynamics, payment reform, alternative payment models coming from a purchaser marketplace saying that they have had enough. This finally stimulated action. You just can’t be fee-for-service anymore, and it was prompted by market change and that is happening in pharmacy now.” 

Pooja responded to Troy’s answers and agreed in full. She also mentioned the point that manufacturers of medication are working on providing the best value for medications, but there is no way to track this effort. In pharmacy, this is where we can really see a difference. For example, a pharmacist sees their patients and can directly prove outcomes. She used smoking cessation tactics as one example. Troy’s response was, “What is past for medical is becoming prologue for pharmacy.” 

Ken moved the discussion to focus on what CPESN does, for example, eCare plans specifically, helping the industry improve communications, closing the gaps, improving communications, and focusing on quality and asked Troy to talk more about that.   

Troy responded by giving a brief overview of a project he worked on with the Center for Medicare & Medicaid Innovation (CMMI), which was to answer the question of how to integrate care processes in order to pay pharmacies differently and explore what a value-based contract even looks like. A year into the project, participants started to say that requiring providers to log into another system wasn’t working with workflow. The project did a 180-degree turn and moved to working within systems that providers already work in.  

This led to a call with CMS and Office of the National Coordinator (ONC) about a high-impact pilot project to find a standard to share clinical information in and out of a native community pharmacy system of record. This led to 18 vendors that serve at least 20,000 pharmacies. Troy said, “So here we sit now with millions of care plans that now transact under the Health Level Seven (HL7) pharmacist electronic care plan standard. Which is not great for claims adjudication.” The main goal is to get all the information in one transaction.  

Pooja responded by saying that there is a lack of awareness and that we need to start talking about this more. From a payer and reimbursement side specifically. ONC is looking at adopting this as well, and we need to get this out in the industry and get more support because the systems are in place.  

Troy added that back when he was doing practice transformation and going through ePrescribing adoption and then HITECH/ARRA era and we always said it’s much easier to go from paper to EMR than going from EMR to EMR. Sometimes there is an advantage to getting into the game a little later. Of the 18 health IT vendors that offer care plans, 17 of them use FHIR and not CCD-A so, it is already baked in. He went on to say, for example, that if you already have your labs, vitals, and drug therapy problems, then the next step is that you must have a user interface so that you can enter labs, etc. We need the pharmacies to meet the standards so that they can enter these contracts.  

Ken’s next question was, “The N in CPESN in for network-- how do you see the role of a national look-up for example and ability to do patient matching here- and how does this integrate with the workflow of pharmacists and other stakeholders?” 

Troy responded that we need to flip the priorities and the sequencing, but you have to start with the easy things first. The first reason data started to be collected was the regulatory obligation to collect clinical information based on improving quality and reducing variation. Once we got the information, we had to decide who we shared it with-- a university, care managers, care coordinators, etc. Then, when you get to the hard stuff it takes a community. It takes, NCPDP, ONC and a much larger community-- when you start talking about switchboards, you’re just in a whole other level. You must determine who it is you’re working with, how do I load the directory, what am I able to send to help support care coordination.  Starting with the easy and then working towards the hard is something that’s really good to see the industry doing.  

Pooja then responded that we are making strides on the medical side, wrapping the value-based contract between the providers and pharmacies. It is particularly important to get a better handle on FHIR endpoint directories which hasn’t even been solved on the clinical side of the house. 

Troy went on to say that there is going to have to be some sort of incentive and marketplace innovation financially absent from a federal mandate for this to happen. Federal mandates in pharmacy aren’t expected since pharmacy has been left out of regulations to date. 

Ken countered that pharmacies are considered an actor in 21st century cures and information blocking, so how do you see the focus in Washington as it relates to pharmacy and your goals?   

Troy quipped, “How many podcasts do you have?” Right now, pharmacy is a 100 million dollar industry, that is peanuts in healthcare! The denominator in healthcare is in the trillions. We need to focus on the industry to go from 100 million dollars to the billions to get government funding. We are not even in the right arena right now. 

The market currently sees pharmacy as a vendor. The value-based contract comes after the billing. We currently provide a service and should get paid for it. For example, smoking cessation programs offered by pharmacies should be reimbursed now before we can answer the question, how many quit? We have to get to the point where we can bill for a service first. The pharmacy has to be recognized as a service provider instead of a vendor in order for a baseline to be established so pharmacies can truly enter into value-based agreements and get paid based on outcomes.  

Pooja picked up on the pharmacy as provider status thread. “Just with the changes we’ve seen and the impact of COVID, in some states pharmacists are recognized as providers, but until we get this recognition at the federal level, and allow pharmacists to charge for their services that it’s a huge barrier and an especially important thread. Right now, there is just talk about ’pharmacists are trying to get provider status,’ but if you unpack the reasons why and if you take anything from this podcast, that is a crucial point to watch out for and that is a path down the road to success.”  

Troy responded that pharmacies have been providing services this whole time but getting paid at the prescription fill level doesn’t make any sense, especially when that fill fee has gotten smaller and smaller over time. “So, don’t pay pharmacies for each prescription fill, but pay them in a different way, if you want to call it ’provider status‘ then call it what you will.”  

Ken posed the question, with the caveat that the discussion may have covered it to some extent already, but how is the market evolving in the financial space for pharmacy? 

Troy compared the market to the game Blokus. The basis of the parable is: So, what most people think is the best strategy is to protect your spaces on the board (block), but the trick is that there are not enough spaces in your corner of the world to play all your blocks. This is what is happening in pharmacy right now, there is not enough money in dispensing. 50% of the drug cost is 2% of the fills. Three to five years from now, it could be 80% of the drug costs is 3% of the fills. The key to winning Blokus is to penetrate other’s defenses and that’s what pharmacy has to do. It is all about whose territory you are going to invade.   

Pooja added that in the pharmacy industry we must be thinking outside of the box. We are set up in a position to change things in the pharmacy. “I see CMS and ONC starting to focus more on pharmacy. The real question is, how do you make sure that you can stay as a viable business in pharmacy and get paid? How do you make sure you’re able to collect the data you need? We should be working more directly with the payers and thinking in a broader spectrum.”  

Troy followed up by saying, “Do the math. Most pharmacies are only operating at 1.5%   average profit margins. So, if you are a 10 million a year pharmacy (which is successful)-- what is 1.5 % of 10 million? $150,000, that is nothing. In comparison, services industries average 40% margin. So, pharmacy must understand this shift. It’s about what you bring in that you can keep. COVID has provided a ’craft beer’ moment for pharmacy. Meaning what matters is consumers and purchasers and COVID has changed people's mindset that pharmacy is a provider of care. Pharmacy Quality Solutions (PQS) Trend Report has great data. One data point is a question to payers about whether they would pay to get A1C results, blood pressure, and other biometrics from pharmacies if it was available in a structured way. Three quarters of the payers responded that they would. Payers have come a long way in adopting new technologies when they used to be the laggards. So, now it is pharmacy IT that is really behind.”  

Ken closed out the discussion by asking whether there is anything you would like to ask the industry and our listeners to do today.  

Troy responded with two key points. The first being that he is on a mission to communicate to the world that we need some sort of consensus-based or the Pharmacy Quality Alliance (PQA) to step up services billing and value based contracting process. “What is our compass, how are we getting together as an industry? What does that look like? Second, pharmacies should be paid differently. Our associations need to make that happen. We need advocates going to the consumers and saying, you are in harm’s way if you do not pay us.”  

Pooja closed the podcast by saying that consensus building is key. “We talk all the time about needing a Da Vinci-type Accelerator program for pharmacy to help do this work and build the consensus and I am all for that. I am excited to hear Troy’s take and consider what the future in pharmacy holds.”  






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