News & Events

ComputerTalk for the Pharmacist November/December 2016

PHSI Consultant Ann Johnson contributed to the November/December 2016 edition of ComputerTalk for the Pharmacist.  In her Viewpoints article, Ann reviews recent market and regulatory changes taking place with controlled substances. The article focuses on new CDC opioid guidelines, increased availability and utilization of prescription drug monitoring programs (PDMPs), and electronic ordering of CIIs using the DEA’s Controlled Substance Ordering System (CSOS). Click here to read the article entitled “The Changing Dynamics of Opioid Prescriptions.”

ComputerTalk for the Pharmacist September/October 2016

PHSI President Tim Kosty and Vice President Don Dietz discuss the two broad types of pay-for-performance networks in the September/October 2016 edition of ComputerTalk for the Pharmacist.  Their Viewpoints article reviews the types of performance networks and the different strategies employed to drive measurements designed to improve patient outcomes. Click here to read the article “Performance Networks.”

ComputerTalk for the Pharmacist July/August 2016

PHSI President Tim Kosty discusses the final AMP rule in the July/August 2016 edition of ComputerTalk for the Pharmacist.  In his Viewpoints article, Tim reviews the regulatory changes within the final AMP rule and its impact on the various market segments. Click here to read the article “Final AMP Rule: Industry Implications.”

PHSI Celebrates 20 Year Anniversary


PHSI Celebrates 20 Year Anniversary

Pharmacist-led consulting firm reaches milestone during NACDS TSE

Pittsburgh, PA, August 4, 2016 – Pharmacy Healthcare Solutions, Inc. (PHSI), a pharmacist-led business consulting firm, will celebrate their 20th anniversary on August 7th, during the NACDS TSE Conference in Boston. Founded in 1996 by President Tim Kosty and Vice President Don Dietz, PHSI has assisted retail pharmacies, pharmaceutical manufacturers, payers, and software companies by applying its extensive pharmacy and pharmaceutical business knowledge to provide solutions on strategic business and marketing issues.

PHSI’s team of seven pharmacists and a comparable sized support staff leverage emerging trends to help clients increase sales, reduce costs, or improve operating efficiencies within their organizations. PHSI’s custom solutions have helped over 300 clients in the last two decades.

“PHSI has been fortunate to serve a diverse client base over the years as the dynamic pharmacy market has required innovative solutions to their challenging business issues. The NACDS TSE Conference provides an outstanding forum to meet with industry leaders to discuss market trends and issues,” according to Tim Kosty, PHSI President.

Not many small businesses achieve a 20-year anniversary milestone. PHSI attributes their success to their dedicated team. “The commitment to excellence by PHSI employees has led to positive outcomes for our clients”, stated Don Dietz, PHSI Vice President. “We are very proud of our 20 year anniversary, as only 10-20% of all businesses reach this milestone. We invite our industry colleagues to visit us at Booth #1758 during the NACDS TSE Conference in Boston”.

The 2016 NACDS Total Store Expo is the industry’s largest gathering of its most influential leaders. It is a combination of both strategic and tactical business meetings between existing and new trading partners and is attended by industry decision makers. A tradeshow and senior-level conference blended into a powerful appointment-based show, retailers and suppliers will find innovative and cutting-edge programming designed to promote strategic and tactical collaboration across departments within their companies. It provides companies with a unique opportunity to gain new insights into today’s evolving marketplace set course for the future.

About Pharmacy Healthcare Solutions, Inc.
Pharmacy Healthcare Solutions, Inc. is a Pittsburgh, PA based consulting company. PHSI consults with pharmaceutical manufacturers, PBMs, retail pharmacy chains, and software companies on strategic business and marketing issues. Consulting projects across these market segments provide PHSI with the latest information on emerging trends, as well as new products and services. Our consultants have extensive retail, mail service, and managed care experience to create actionable recommendations for our clients’ challenging business issues. For additional information, please visit

2016 Summer Newsletter- Pharmacy Pay-for-Performance Networks

The recent push to focus on value-based healthcare through accountable care organizations (ACOs) is changing incentives for physician practices and health care systems. Incentivized care is also now moving into the pharmacy world.  With more focus than ever on managing outcomes, improving adherence, and preventing adverse reactions, pharmacies are becoming contractually responsible for whether or not patients meet their goals.

Star Ratings have measured patient outcomes in Medicare Part D for almost ten years. There are five active pharmacy-based performance measurements from the Pharmacy Quality Alliance (PQA).  These measurements include:

  1. Adherence for oral diabetes medications
  2. Adherence for cholesterol medications (statins)
  3. Adherence for blood pressure medications (renin-angiotensin system antagonists)
  4. High-risk medication use in older adults
  5. Appropriate treatment of blood pressure in patient with diabetes

Although pharmacists have been dealing with adherence and safety issues for many years, pay-for-performance models put new focus on these issues by providing direct financial incentives or disincentives.  Medicare plans have been using adherence ratings to help determine eligibility for preferred pharmacy networks, and the commercial world is now looking to adopt these metrics as well.  Using Pharmacy Quality Solutions’ (PQS’s) Electronic Quality Improvement Platform for Plans and Pharmacies (EQuIPP) system, pharmacies can track their performance, and health plans can provide bonuses to the top pharmacies.

CVS/Caremark Silver Scripts plans implemented Pay-for Performance in 2014 when they provided bonus checks to pharmacies who out-performed their competition.  The pharmacies were evaluated using four of the star measures, and the plan paid bonuses based on the pharmacies’ scores and number of patients served.

Another bonus-based plan, the Inland Empire Health Plan (IEHP) instituted one of first large-scale pay-for-performance pharmacy programs.  Working with PQS, the California health plan has enacted eight measures that track adherence, asthma control, generic dispensing rate, and use of high-risk medications in the elderly.  In this rewards-based system, pharmacies receive points when they meet or exceed the benchmarks, and the plan’s payout to the pharmacy is based on the points received.  Pharmacies who do not meet the benchmarks are not penalized, but they do not receive additional rewards payments.  This well-laid out plan may serve as a model for other pay-for-performance payers, since the benchmarks are easy to follow, and the EQuIPP system makes it simple for pharmacists to track their progress on an ongoing basis.  Click here to read more about the IEHP’s 2015-2016 pay-for-performance plan.

Recently, Humana announced an amendment to their Pharmacy Provider Agreement covering the 2017 part D plan year.  Humana plans to withhold $5 from each eligible claim and then provide pharmacies with the opportunity to earn Pharmacy Performance Payments based on achieving the three adherence measurements noted in the above list (adherence to diabetes, cholesterol, and hypertension medications).  Pharmacies not wishing to participate will be considered out-of-network.  Humana notes that the “percentile performance” will be evaluated for each pharmacy based on the number of members they service in each measure.  Unlike the Inland Empire Health Plan described above, Humana’s plan financially penalizes pharmacies until they show they can achieve adherence results, which may be outside of their control.  Humana will payback, or potentially reward, the top-performing pharmacies. Pharmacies need to be in the top 20 percentile to earn an incentive payment.  Pharmacies below 50% will be penalized, as they will not receive any of the amount withheld.  Although PHSI is not against pay-for-performance pharmacy plans, PHSI fears that redistribution vs. reward pay-for-performance plans may disadvantage pharmacies serving at-risk patients.

It is important that pharmacies are now being viewed as more valuable team members in helping to ensure medication adherence.  However, PHSI feels that it is important that adherence be viewed from a shared stakeholder perspective.  No one healthcare segment is solely responsible.  For example, although a pharmacy may wish to keep a patient compliant on their medication, without a refill authorization from a physician, this may not be possible.  Physicians and pharmacists must work together to truly improve these metrics, and health plans need to consider this collaboration when structuring their rewards programs.

As more pay-for-performance models emerge, pharmacies must decide whether to participate and if so, how to handle these patients.  Pharmacies may wish to flag those patients affect by adherence measures to increase their standards of care for that population.  While it is doubtful that care would fall for patients not enrolled in one of these networks, if the incentives to perform well in a pay-for-performance network are high enough, this could elevate the level of care for targeted patients, creating an unintended consequence of two levels of patient care.  As more rewards-based plans and redistribution models emerge, expect other health plans to test new incentive strategies in the near future.

2016 Summer Newsletter- A Flooding of Pharmacists

14,267- This was the number of pharmacy degrees awarded last year.  As new pharmacy schools open and graduate more pharmacists, the job market is shrinking.  The Pharmacy Workforce Center (PWC) monitors pharmacists demand through use of the Aggregate Demand Index (ADI), where a value of 1 indicates high surplus, and 5 indicates a high demand.  In January 2016, the ADI was 3.05, which means that pharmacist demand and supply are equal.  The ADI is pharmacy-specific and has been steadily declining over the last ten years, as shown in the chart below.  When the ADI falls below 3.0, pharmacist supply will outpace demand.  Based on this trend, what does the future hold for pharmacists?

ADI Chart

Pharmacists have known for years that the days of sign-on bonuses and company cars are over, but it may now be more difficult for new graduates to simply find a job.  However, the situation is not as dire as many have painted it, and a recent 2013 study still found that over 80% of students had a job or post-graduate program (residency, fellowship, etc.) lined up prior to graduating.  One effect from the increase in pharmacy graduates, for better or worse, is the proliferation and increased popularity of residencies and fellowships.  Whereas residencies were traditionally only geared towards those pursuing clinical pharmacy positions, residencies have now become a viable alternative plan for some students who are not otherwise able to find employment to augment their skills.

What is concerning in the last decade is the number of new pharmacy schools that have opened, which have more than made up for the pharmacist shortage.  The total colleges offering pharmacy programs is now over 130, with 16 new pharmacy schools opening in the last five years alone.  With six years of high tuition, opening a pharmacy school is lucrative for the school when all openings are filled.  However, few of these new schools have any regard for the effects their actions have on the profession.  In addition to difficulty finding employment in many geographic areas, the increased number of pharmacy schools is also putting a strain on pharmacies practice locations that act as rotation sites.  Geographic locations with multiple pharmacy schools may not have enough rotation sites to support the student population.

Absent moving to the south or western regions of the country where pharmacy demand remains high, pharmacists can seek additional certifications to improve their skills and make themselves more marketable.  While gaining provider status may help alleviate some of the job-shortage problems because of the potential for clinical service reimbursement, without sufficient payment, utilization of pharmacist-provided services will not significantly increase pharmacist demand.  As the baby boomer population ages, there should be a greater need for pharmacists providing clinical services, leading to a greater demand for pharmacists.  When the clinical services prove cost effective, the payer community will embrace them.  Cost effectiveness studies are underway, and initial results are promising.  In the meantime, pharmacists can only better themselves through certifications, uncovering new career opportunities, and advocating for the profession in government, at universities, and in our communities.


Pharmacy Healthcare Solutions, Inc. (PHSI) is proud to be a new member of Pharmacy Quality Alliance (PQA). PQA is a consensus-based, multi-stakeholder membership organization committed to improving health care quality and patient safety by developing quality performance measures with a focus on the appropriate use of medications. To learn more about PQA, visit As a pharmacist lead consulting firm who works with pharmacies, payers, and pharmaceutical manufacturers, PHSI understand the impacts and challenges of performance measures surrounding drug therapy and looks forward to adding our unique perspective to help PQA and its members achieve their objectives.

Tim Kosty Presents on Final AMP Rule Industry Implications

PHSI President Tim Kosty presented at the American Society for Automation in Pharmacy (ASAP) 2016 Midyear Conference. Tim reviewed the industry implications of the final AMP rule published in the Federal Register, including the final rule’s influence on pharmacy reimbursement models. Click here to view Tim’s presentation slides. You can access all of the 2016 ASAP Midyear Conference presentations at

ComputerTalk for the Pharmacist May/June 2016

PHSI Consultant Dave Schuetz discusses the benefits of using an inventory management system in pharmacies in the May/June 2016 edition of ComputerTalk for the Pharmacist.  The Viewpoints article discusses various aspects of setting up and utilizing a system to help reduce inventory and increase turns while ensuring the proper amount of product is in stock at the right time.  Click here to read the article “Getting a Handle on Your Inventory.”



Update 8/26/2016:

We received this great response from Erich Cushey, RPh, Owner/Operator of Curtis Pharmacy and wanted to share with all of you:

“Read your article in ComputerTalk on inventory control and really enjoyed it. We have aggressively reduced our inventory through our Sync program, and really see the benefits in both improved cash flow and tax savings as well. A shame more owners don’t pay attention to it.”

We encourage you to keep reading our posts and please don’t hesitate to send further questions or comments.
The PHSI Team

2016 Spring Newsletter- CMS’s Proposed New Part B Payment Model

Spring 2016 Newsletter
CMS’s Proposed New Part B Payment Model

Medicare Part B drug reimbursement to physicians and hospital outpatient centers has been in the spotlight for the past few years. Average Sale Price (ASP) pricing reimbursement methodology and the increased approval of more office-administered drugs has dramatically increased spending on Part B drugs. Currently, Medicare Part B reimburses medications at a rate of ASP + 6%. It is CMS’s position that this payment structure may not always promote the most cost-effective prescribing and could be interpreted as encouraging physicians to prescribe and administer more costly agents to increase their revenue under the buy and build model. The total CMS cost for Part B drugs exceeded $20 billion in 2015.

In response to this concern and in an effort to move to a more value-based reimbursement, CMS has proposed a new reimbursement methodology with multiple components. Instead of the ASP plus 6% reimbursement, the new strategy proposes reimbursing at a smaller percentage of ASP with an additional flat-dollar fee. The percentage-based portion still provides for a variable amount for handling and dealing with overhead costs of purchasing and storing expensive specialty medications. Meanwhile, the flat-dollar amount provides more compensation for offices primarily dealing in lower-cost agents, such as primary care doctors and orthopedic specialties.

While CMS may have considered implementing a methodology that only provided a flat fee, this strategy would have likely created insufficient reimbursement for physicians dealing with high-cost specialty medications and would likely increase profits on inexpensive product. Physicians and outpatient centers dealing with the high-cost products should be reimbursed on the increased financial risks associated with handling and storing these products.

Based on all of these considerations, the newly proposed methodology would reimburse office-administered agents at a rate of ASP + 2.5% plus a flat-dollar fee of $16.80 per drug. CMS stated that they would update the flat dollar fee annually. For a drug with an ASP of $1,000, this new methodology would lead to a difference in reimbursement of $18.20, as shown in the chart below.

Part B Payment Model

Based on the proposed reimbursement methodology, this creates a breakeven point of $480. At an ASP of $480, both methodologies equate to a reimbursement of $28.80. Therefore, for drugs with an ASP of less than $480, the new methodology will provide increased profitability for physicians. However, for drugs with an ASP greater than $480, Medicare Part B reimbursement under the newly proposed methodology will be decreased.

When looking at the above figures, it is clear that the goal of the new reimbursement strategy is to achieve cost savings, as the changes will not be budget neutral. The test to evaluate this new ASP change is scheduled to start in late 2016. CMS also continues to investigate other reimbursement methodologies that move away from fee-for-service reimbursement. Other reimbursement methodologies discussed include reference pricing, indication-based pricing, and outcomes-based risk-sharing strategies. CMS accepted comments on the proposed rule until May 9. PHSI will keep you abreast of any future reimbursement changes for Medicare Part B, and we welcome your feedback on the topic.