Pass-through PBMs are generally recommended for hospice care facilities compared to spread pricing PBMs, primarily because they offer greater transparency, cost control, and alignment with hospice care needs. This is why HospiceChoice Rx is a pass-through PBM.
The Case for Pass-Thru PBMs
- Transparency in Drug Pricing: Pass-through PBMs charge hospices exactly what they pay pharmacies for medications plus a clearly defined administrative fee. This transparency means hospices can see the actual cost of drugs without hidden markups, unlike spread pricing where the PBM pockets the difference between pharmacy reimbursement and hospice billing. This clarity helps hospices make informed decisions about medication spending.
- Cost Savings and Fair Pricing: By passing all discounts and rebates directly to the hospice, pass-through PBMs reduce the risk of inflated drug costs. Hospices avoid overpaying due to spread pricing markups, which can sometimes be substantial. This model supports hospices in managing their tight budgets more effectively, especially given the high volume and cost of medications in end-of-life care.
- Better Alignment with Hospice Care Goals: Hospice care prioritizes timely symptom management and patient comfort. Pass-through PBMs often provide enhanced clinical support, formulary management, and medication profile reviews tailored to hospice needs, ensuring appropriate and cost-effective medication use. Transparent pricing aligns incentives toward patient care rather than maximizing PBM profits.
- Enhanced Operational Efficiency and Support: Pass-through PBMs typically offer robust services including ePrescribing, consolidated billing, call support, and compliance assistance, which streamline hospice operations and reduce administrative burdens. This operational support is crucial in hospice settings where staff time is limited, and patient needs are urgent.
- Reduced Risk of Overpayment and Ethical Concerns: Spread pricing has faced criticism for lack of transparency and potential overcharging, which can strain hospice finances and divert resources from patient care. Pass-through models mitigate these concerns by ensuring hospices pay fair market prices and receive all negotiated discounts.
Pass-Through vs Spread Pricing PBMs at a Glance:
| Feature | Pass-Through PBMs | Spread Pricing PBMs |
| Pricing Transparency | Hospices see actual drug costs | Hospices billed above pharmacy cost |
| Cost Control | All discounts passed through to Hospice | Risk of overpayment due to spread |
| Alignment with Hospice | Focus on patient care and cost | Potential conflict—PBM profit from spread |
| Operational Support | Comprehensive clinical and administrative | Variable; often less transparent |
| Ethical Considerations | Clear and fair pricing | Criticized for hidden markups |
Pass-through PBMs provide hospice care facilities with clearer pricing, better cost control, and services aligned with the unique demands of end-of-life care. This leads to more efficient medication management and ultimately supports better patient outcomes and financial stewardship in hospice organizations.