“Loss File” Analysis

Analyzing where you’ve lost money on certain drugs but not sure who to ‘point the finger at’?

Looking at claims in a retail pharmacy’s “loss file,” PAC can be used to identify where the retail pharmacy should direct its attention:

Reimbursement Issue – Identify claims where reimbursement
(not including the dispensing fee) was less than PAClow.
PAC low to PAC high
Procurement Issue – Identify claims where the acquisition price from the wholesaler or manufacturer was more than PAChigh.
Use Case:  A large regional retail chain (500+ pharmacies) leverages PAC to see if loss file issues are more likely due payer/PBM reimbursements versus its own procurement issues.

We compare each payment (less the dispensing fee) in the loss file to the PAClow and determine where there is a strong likelihood the payer/PBM has reimbursed at rate lower than what is acceptable.  This is a conservative approach, looking only at the cost of the drug with no profit margin and comparing to the low end of our PAC range.

And we compare each drug acquisition price in the loss file to the PAChigh and determine where there is a strong likelihood the retailer purchased the drug above a price considered acceptable.  Again, this is a conservative approach using the PAChigh and the retailer can be more aggressive.

Results – Based on this retailer’s loss file, 58% of claims were reimbursed below the published PAC which indicates that the payers/PBMs were more aggressive with their reimbursements.  But the majority of these reimbursements did not fall below PAClow.  Based on this conservative parameter (PAClow) for acceptable reimbursement, 15% of claims were reimbursed lower than PAClow.

At the same time, 23% of the claims (based on our conservative parameter of PAChigh) had a procurement price that was higher than acceptable.  In these situations, it was not the reimbursement but rather that procurement price that resulted in these claims being added to the loss file.

Reimbursement < PAClow
Acquisition > PAChigh
15%
23%