Understanding Preferred Pharmacy Networks
Please note that the information provided below is used in general terms and is aimed at assisting members to decide how best to spend the healthcare benefit they have purchased from their chosen medical scheme. Schemes may have entered into network arrangements that are conceptually the same but differ numerically from details discussed hereunder. Please check your medical scheme guidebook for details relevant to your medical scheme.
There are two important concepts in understanding Preferred Pharmacy Networks:
Designated Service Provider (DSP) arrangements occur where a medical scheme appoints a pharmacy group to be the exclusive supplier of medicines to the members of the scheme. In general it can be assumed that:
- The DSP has agreed to supply medicines at a highly advantageous price or,
- The DSP is able to add important other services to the dispensing of medicines (specialised treatment for certain diseases etc).
- The DSP arrangement is on the understanding that the medical scheme actively incentivises their members to make use of the DSP, thereby increasing the volumes flowing through the DSP.
Where a DSP arrangement is in place, members are generally penalised with a co-payment for not supporting the DSP.
Preferred Pharmacy Network arrangements occur where a medical scheme defines how it would like its members to be treated and then allows any pharmacy willing to abide by such criteria to participate in the Preferred Pharmacy Network. The arrangement is entirely a “willing buyer / willing seller” concept and medical scheme members are generally not penalised by the scheme if they do not attend a Preferred Pharmacy Network pharmacy. Pharmacies may withdraw from the arrangement at any time. This arrangement obliges all participants to negotiate in good faith and to establish an arrangement that is a win-win for all parties concerned.
WHY A PREFERRED PHARMACY NETWORK? THE IMPACT OF MEDICINE PRICING:
On 19 November 2010, the Department of Health published regulations which substantially increased the maximum dispensing fee allowed to be charged by pharmacists. MediKredit approached pharmacies on behalf of our medical scheme clients and negotiated preferred Medicine Dispensing Fees, substantially below the maximum fee that a pharmacist is allowed to charge. Pharmacies agreeing to participate in providing these preferred dispensing fees have been contracted as members of the Preferred Pharmacy Network.
HOW THE SCHEME SPECIFIC PHARMACY NETWORKS ARE CREATED
Once a medical scheme has appointed MediKredit as the manager of the pharmacy network, a scheme specific pharmacy network is created by analysing the pharmacy usage patterns of the members of scheme under consideration. All pharmacies are invited to join the network and pharmacies that service a representative quantity of the scheme members are targeted with personal invitations to join.
The MediKredit approach is to strive to get the pharmacies you usually use into the network (provided they are willing to abide by the network rules). It is not our intention to shift members to new pharmacies.
The purpose of the Preferred Pharmacy Network is to have a broad group of pharmacies voluntarily subscribe to a certain code of conduct aimed at ensuring a positive member experience in the scheme contracted pharmacy network. This is not to say that pharmacies that choose not to join the network will treat you badly or charge you more. In some instance non-network pharmacies may even charge less than the contracted group. The point is that where pharmacies agree to participate in the Preferred Pharmacy Network, MediKredit and the scheme have recourse to discuss with the pharmacy any instances where a member is treated outside of expectations. We have no such recourse with non-contracted pharmacies.
WHAT TO EXPECT AT A PREFERRED PHARMACY NETWORK PHARMACY
- A predictable, high quality service each time you visit a Preferred Pharmacy Network pharmacy.
- You should not be charged a medicine price that is different from what the medical scheme is prepared to pay.
- You should not expect to pay an additional administration fee.
- You may be required to co-pay as a result of one of the scheme benefit rules. It is important to ask the pharmacist about any co-payment levied and to satisfy yourself that such co-payment is in line with your understanding of the medical scheme rules.
Despite the fact that a member has purchased a medicine from a network pharmacy, certain co-payments may still apply. Such co-payments are generally driven by the benefit design of the medical scheme and are aimed at stretching your healthcare benefits and controlling the scheme’s overall budget for medicines. This is done to keep the medical scheme costs down and limit the annual increases required to fund the medical scheme.
The following information is aimed at assisting medical scheme members to understand the co-payments that may be applied when claims are processed via the MediKredit claims engines and to make members aware of the possible options open to them when faced with such a co-payment:
An ‘overcharge’ occurs where the Preferred Pharmacy Network pharmacy is charging more than the agreed scheme rate. If the pharmacy is a Preferred Pharmacy Network pharmacy, members should query such an overpayment with the pharmacy or report such an overpayment to their scheme.
A Maximum Medical Aid Payment (MMAP®) surcharge is implemented when the pharmacy dispenses a medicine for which there is a suitable generic medicine alternative. In such a case members should ask the pharmacist to substitute an appropriate generic medicine. By law pharmacists are required to offer a generic medicine, where available.
Note: A generic drug is a copy of the original drug that may be sold once a company’s patent on a brand-name drug has expired. Generic drugs have the same active ingredient(s) as the original drug. Generic drugs are typically cheaper than the original or brand-name drug as they don’t have the research and development costs that are incurred by the originating company. Furthermore Generic pharmaceutical companies compete with each other thus further driving down the costs of medicines.
Note: Some generics may be more expensive than what has been deemed to be the optimal generic price in that category. Ask the pharmacist to substitute with a medicine below the MMAP® rate where possible.
Reference Price Surchargeis applied where price differences occur amongst the various types of medicines available to treat a condition, irrespective of generics being available. The clinical team has evaluated the most cost-effective medicines to treat a condition and the Reference Price has been set so as to encourage the use of these cost-effective medicines. Remember that the member is always free to choose the prescribed medicine and co-pay, or to ask that the prescription be converted to a medicine below Reference Price. Should a member require a medicine above the Reference Price because of demonstrated clinical reasons, it is possible to discuss this with the Managed Care team at the scheme and a special authorisation can be created to lift the Reference Price Surcharge.
Scheme Benefit Surcharge: some medical schemes apply a surcharge to certain benefits e.g. the member may be required to pay 25% of any medicine purchased when it is outside of the network.
Benefits Exceeded Surchargeis applied where the benefit has been exhausted and all or some of the cost of the prescription will revert to the member.
Early Refill Surchargeis imposed where a member refills a prescription too early and a portion of the cost of the prescription becomes the member’s responsibility. In this case the member has the option to return to the pharmacy at a later date to collect the prescription without incurring this surcharge. This surcharge is aimed at ensuring that the medical scheme pays for 12 refills of chronic medication each year, a measure necessary to ensure that all members benefit equally from the available funds.