Almost all of the pharmacy professionals I advise take advantage of prescription drug rebates. That’s no surprise. Rebate programs help pharmacies save money on products, which helps their margins and lets them offer better prices to patients.
But it’s not always clear whether pharmacies are getting the biggest reimbursement from their rebates. Do they have all the data needed to determine the true best value? Are they certain they’re getting the highest return? Do they have a process to ensure they’re receiving an accurate reimbursement on time every time?
Unfortunately, your pharmacy might do rebates every day while still losing money on the actual reimbursement available to you. This article will show you how to get the true best value from your rebates.
By incorporating your entire purchasing context and effectively tracking reimbursements, you’ll gain substantial money and time back while saving you and your staff some stress. You can also rest easy knowing that you’ve received what you deserve!
High Prices Can Lower Costs
To make the most of your rebates, structure your purchasing process to maximize profitability on the gross margin side. That means using a solution to integrate your complete purchasing context. That will provide true knowledge of how much each product actually costs—including comparative reimbursement potential—every time you buy something. That way, there are no savings opportunities “hiding” behind what looks like higher prices.
For example, you might be comparing two products with rebate options: one at five cents per unit and the other at three cents. It may seem like you should choose the cheaper option. But sometimes, even if that cheaper product is from your primary vendor and drives compliance, a rebate on a higher-priced unit means a bigger reimbursement and more profitability per script based on that payer.
As another example, let’s say you're getting a rebate from one NDC. If you don’t know that you're buying the least expensive item in that class, GCN, or GPI, you can’t be certain that it's the most profitable NDC in terms of reimbursement. You may buy an NDC today for five cents based on payers in your reimbursement, but another NDC listed at eight cents could have given you five cents more per unit!
Initially spending more on a product would have given you back more on the reimbursement side. Your gross profit per script would have been better than buying the cheapest product within that class. While you might make a purchase at a higher cost, since your reimbursement is better, you end up paying less. But you have to know which rebates are available when you do your purchasing.
It’s easy to focus on just the dead net cost. It’s right in front of you when you’re comparing a variety of rebates among a mass of data (like different vendors using multiple catalogs and purchasing interfaces). Without the right tools, all you see is “five cents” or “three cents.” It’s natural to think, “I'd better get the three-cent one!” And you probably don’t have the time or staff to spare just to find and compare all the options behind that two-cent difference.
A solution that combines all of that information and analyzes all of those options gives you the bigger picture. With your own customized settings (and a good partner behind the solution helping you configure the software), you can instantly calculate everything in real time based on real-world data from all your vendors—including rebates on primary vendors, source programs, and even your GPO. You can quickly determine reimbursement based on profitability and the best product to buy from all of your vendors with all the rebate options available from a source program.
For example, one primary vendor may have multiple manufacturers on a source contract, even with the rebates loaded. You may end up buying the more expensive source item (even though you’re getting compliance with any of those manufacturers). But the right solution will look at the best cost within four or five available options.
You can also program the system to drive to a specific NDC. Let’s say you’re paying two cents per unit for a particulate NDC versus another at one cent per unit—because you know that the higher-priced NDC is still the least expensive per unit given the reimbursement. You can lock in that NDC and note the reason in case anybody tries to order a different NDC. The system will select that preferred product if, for example, someone else on your staff is filling in during your regular buyer’s vacation. You can always buy that product based on other factors (for example, a patient’s preference). Without this type of solution, even if you know the most profitable NDC for your payers, you’ll still have to look at a lot of different manufacturers and vendors alongside all of your costs.
Trust and Confirm
Even if you’re certain that you’ve determined the true best purchasing option based on your actual rebate potential, are you sure you’re actually receiving the full reimbursement on time?
Many pharmacies simply buy items through their source program and get a rebate every month without any way to track it. They may see some data but not enough for an accurate, useful paper trail. Without the right tools and configurations in the environment they’re working in when they receive that check, they’re essentially just trusting what they get. They have no way to determine if it should be higher. I’ve seen pharmacies getting a $25,000 check every month who aren’t sure it could be $30K! They’re not taking everything into consideration and validating if that rebate is accurate.
Don’t leave your rebates to a matter of trust. Do your due diligence. Organize rebates to make sure that you're getting and tracking those rebates (while maximizing profitability on the gross margin side). With the right solution, you can track rebates down to the transaction or within each purchase order. You can also check what rebates have been earned based on purchases submitted through individual worksheets to various vendors. Also, look for customizable reports to ensure timely receipt or flag discrepancies.
If you bought $ 1000 worth of a product that has a rebate, the right technology will show when you should get the reimbursement based on your purchases for last month and what you should be getting back in a check, bank credit or ACH transfer. You gain the means to trace and confirm what you should be getting paid, and you also now have a trail in case of an audit.
For most retail pharmacies, and even some long term care pharmacies, rebates are a matter of trust because they simply don’t have the time or human resources for due diligence. They may leave it up to manual processes that don’t offer accuracy or ease.
For example, if you’re analyzing reimbursement across a bunch of spreadsheets, there’s no visibility for the entire staff and you can't aggregate all the values into one integrated picture. Chances are you're leaving it up to one team member to summarize all those variables, and they’re left to be the “champion.” It’s a lot to leave up to one person for practical reasons, and when it increases an already substantial workload, it can also lead to burnout.
But the right technology ensures you’re getting the best reimbursement possible every time without leaving it up to chance or exhausting you or your staff. Instead of manually monitoring which reimbursements you’ve received for how much (or worse, not even doing it), you can have all that information at your fingertips.
Harness solutions that show you opportunities for additional savings from the top dollar down. You can still stick to the cheapest item if that's what you want, but at the same time, you can find the products you need and then see the potential savings based on different options. And instead of complex programming, the most sophisticated solutions offer intuitive customizable reporting so you can schedule regular reports that put the data right there in front of you when you need it.
Easier and Essential
When it comes to rebates, you don’t have to sit for hours manually crunching numbers on multiple screens for different vendors. It doesn’t have to be up to a single employee to determine “who's got the best price, what does my rebate look like, and how's this going to play into primary vendor terms and conditions?” And to stay competitive, that shouldn’t be the case.
That’s why the right technology is not a luxury. It’s a crucial component of your purchasing strategy and how you empower your team. Book a meeting with one of experts today to learn about ways SureCost helps you get the most out of your rebate.