The WEBBlog: A Series of Occasional Commentaries on Policy, Politics, and Practice in the World of Clinical Pharmacy
As “DRGs” (sort of) Find Their Way into Clinical Pharmacist Practice Outside the Hospital … What to Do?

September 06, 2017
C. Edwin Webb, Pharm.D., MPH

Washington, DC -- For those of you wondering why a stubborn, almost 20-year inertia continues to stymie efforts to achieve “provider status,” Medicare/insurance coverage for pharmacists’ clinical services, or whatever else one might wish to call it these days, a brief stroll back in history concerning Medicare payment changes in hospitals – particularly the infamous diagnosis-related groups (DRGs) circa 1983 – may provide both insight and optimism for change in the clinical lifetimes of today’s team-based and patient-centered clinical pharmacists.

Back in the day, insurers, including Medicare, paid for hospital services and goods (including medications) based on claims submitted by hospitals, which charged prices that were “usual and customary” for the market in which they existed. This essentially meant that hospitals could charge whatever the often uncompetitive market would bear. In that environment, the hospital pharmacy department was one of an institution’s main revenue-producing departments. Chief financial officers loved and supported their hospital pharmacy directors while always applying pressure to further maximize revenue as much as possible.

But then, with the rapid advent of DRG-based payment for Medicare Part A (hospital) services (essentially a “bundled” payment for a patient’s hospital stay based on the admitting diagnosis), pharmacy departments and their products and services almost instantaneously became cost centers, and the value calculation changed dramatically. More clinically effective AND cost-effective therapeutic approaches, greater efficiencies in medication procurement and administration within the hospital, and truly functional pharmacy and therapeutics committees became essential tools for departmental and staff success. And it was NO coincidence, in my view, that the growth in clinical pharmacist engagement in direct patient care in intensive care and medical-surgical units, on code teams, and in other clinical services and practice began to grow dramatically at the same time. The “value proposition” for having an effective and competent clinical pharmacist as part of many hospital teams made more and more sense, NOT because of revenue-generating potential (or discrete “billing” for such services by these clinicians) but because of the overall cost-benefit of “clinical pharmacy,” which became more and more demonstrable to other team members and to hospital administrators looking at the institution’s overall bottom line. The clinical pharmacist’s recognized contributions were based on value, safety, and outcomes, not revenue-generating capability as an individual “provider.” This continues to be undeniably true today.

Into the Medicare outpatient environment now come parallel and truly fundamental changes to the payment approach for patient care services under Medicare Part B. Variously called MIPS, APMs, and/or QP programs, these programs dramatically alter the incentives for providers of all types (physicians, non-physician providers, practices, and teams) to conduct their work with a priority focus on quality outcomes, clinical performance, patient satisfaction/experience, and patient safety. And not just because it is the right thing to do (which it always has been) but also because the Medicare-derived revenue stream for such practices will be based predominantly, and eventually almost exclusively, on the achievement of specified quality and outcome goals. Projections from CMS call for as much as 85% of payments to typical medical practices, PCMHs, and other integrated care models to be based on achieving quality, value, and safety results, rather than on maximizing traditional fee-for-service billing revenues – from ANY “provider.” Sound familiar?

What does this mean for the clinical pharmacist practicing in (or striving to find a practice within) contemporary team-based ambulatory care practices and systems today and (for sure) tomorrow? I think it represents precisely the same “early-adopter” opportunity presented to inpatient clinical pharmacists in the 1980s … the opportunity to take FULL OWNERSHIP of the work of “getting the medications right” within a practice/team – especially for patients with the most complex diseases and complex medication therapies requiring ACTIVE management, monitoring, and adjustment – to help both the team and the patients themselves achieve the intended goals of therapy. And the value proposition in this case will be as compelling as – or likely even more compelling than – the hospital experience, because so much more of the care of chronically ill patients with “medication complexity” issues will be addressed in these settings, both for the right quality and outcome reasons AND for the equally important reason that the practice’s revenue stream will depend heavily on meeting the quality of care metrics expected by payers, both Medicare and others.

Understanding this fundamental shift, embracing it, and discussing it competently and aggressively with medical colleagues and financial leaders in the outpatient environment may well be the best way to move the ball forward to achieve recognition for – AND ADOPTION OF – clinical pharmacists’ patient care services under outpatient Medicare payment programs. Or, we can hope that efforts to amend federal Medicare statutory language to achieve the ability to bill Medicare Part B under a fee-for-service structure will succeed one day and that our ability to “bill for clinical pharmacy services” will finally be realized. But what if it’s just in time for a Medicare program that has already embraced another approach? What to do … what to do…