Balanced SMACs

PAClow and PAChigh

In addition to publishing the PAC, the PAClow and PAChigh are provided to subscribers.  The PAC is an estimation of acquisition cost, but there can be a degree of uncertainty.  PAClow and PAChigh establish a range within which there is a high degree of confidence that the true acquisition cost lies.

For a given pharmacy per-script profit target, this PAC range can translate into a range within which the MAC should lie:
PAC vs MAC Ranges
In order to spot prime opportunities to create a more balanced MAC pricing, we can identify drug groups for which the current MAC is outside the range, i.e. MAClow to MAChigh.

SMAC Analysis

Scenario:  Assuming a pharmacy profit-per-script target of at least $3/script and 10% margin (not including professional services/dispensing fee), the PAC range was used to identify drug groups where an increase or decrease of the SMAC may be appropriate.

SMAC Raise Reduce Unchanged
State 1 609 210 991
State 2 282 1674 776
State 3 591 308 1603
State 4 425 133 668
State 4 361 133 514
State 5 132 546 183
State 6 747 177 925
State 7 212 202 299
State 8 965 506 1714
State 9 292 381 391
State 10 689 527 669
State 11 359 287 409
State 12 169 491 278
State 13 596 210 991
State 14 204 287 436
State 15 169 154 463
State 16 266 637 369
State 17 473 241 812
Overall 7541 7104 12491
We applied this MAClow and MAChighbased analysis to a sample of states where SMACs are available on the state Medicaid web sites.  A count of drug groups with a SMAC falling outside recommended range is summarized in the table with the assumptions above.

We know specific business parameters exist when generating SMAC values and those parameters will vary from state to state. For example, the assumptions made regarding targeted pharmacy profitability can be adjusted and the incorporation of a pharmacy’s utilization can focus on the most relevant drug groups.  Glass Box Analytics is available to provide a pharmacy with additional analytics that are tailored to that pharmacy’s areas of interests.