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What Operators & Administrators Need to Know About LTC Pharmacy Contracts

Essential Reading to Help Your Facilities Run More Cost-Effectively

For any long-term care (LTC) operator, your pharmacy partner plays a vital role in supporting the care you deliver to residents. As more residents requiring acute care enter LTC facilities, the need for specialty medications and more complex treatments means facilities are spending more than ever on their pharmacy operations and drug costs. 

By understanding the contract review and negotiation process, operators can gain greater insight into areas where they can draw down on these costs and know what to expect when entering a new partnership. 

In this blog, we will take an in-depth look into what you need to know about LTC pharmacy contracts as a post-acute and long-term care facility operator or administrator.

LTC Pharmacy Contract Review

Reviewing existing agreements with pharmacy partners should provide clarification around what drug rebates you’re entitled to, which pricing models are being followed, and dispensing rules. As with most contracts, complex language can be a barrier to fully understanding every term and clause, often requiring assistance from third-party experts in long-term care pharmacy operations.

Here’s what operators and administrators need to look for when reviewing existing agreements:

  • Drug manufacturer rebate terms:

As payers of Medicare Part A claims, facilities are entitled to drug manufacturer rebates. Look for language that allows the pharmacy to take over this process and submit rebates on behalf of the facility. Third-party administrators may also submit rebates if agreed to. Be wary of language that enables vendors to charge fees for submitting rebates that eat away at your savings.

  • Rules and Preferences:

As payers of Medicare Part A claims, facilities are entitled to drug manufacturer rebates. Look for language that allows the pharmacy to take over this process and submit rebates on behalf of the facility. Third-party administrators may also submit rebates if agreed to. Be wary of language that enables vendors to charge fees for submitting rebates that eat away at your savings.

  • Pricing:

Due to the sheer volume of orders involved in LTC pharmacy operations, establishing the best pricing model for your facilities can present an opportunity for significant savings. Tying pricing to national drug databases is just one preferred pricing method operators can use to ensure they’re getting the best price for the most commonly prescribed medications and even specialty drugs.

Contract review is an involved process, requiring extensive cross-referencing between documents. For operators whose staff is already at capacity handling the essential functions of their facilities amid an ongoing staffing shortage, outsourcing the review process to experts in pharmacy operations can yield exceptional results. 

SRX provides operators with technology to quickly and efficiently review contract terms and advisors with expertise in LTC pharmacy contracts to assist with ongoing reviews and negotiations.

LTC Pharmacy Contract Negotiations

Too often, contracts are renewed with pharmacy partners without a thorough review. When it’s time to renew an agreement, it’s also time to conduct a review and possibly negotiate for adjusted or improved terms. As your census changes, pricing models may have to change to accommodate a more acute resident mix, for example. 

When the contract review process turns up a number of issues that are causing your drug spend to skyrocket, it’s essential to bring experts into the negotiation process who know the abilities and limitations of your pharmacy partner. Specialists in pharmacy operations understand how to balance the priorities of your facilities with the work being done by pharmacists to accommodate your operations. 

Among the tools available to experts in pharmacy operations are databases and automation that can audit claim submissions and pricing for accuracy and consistency. At SRX, we have developed a range of proprietary databases and software to help operators achieve their lowest net drug cost and establish rules in contracts that enforce these prices. 

Once you’ve worked with trusted experts to negotiate for better terms and updated rules, the next step is ensuring there is transparency and that terms are being adhered to. This is where technology like SRX helps operators keep their pharmacy operations running in the most cost-effective manner in the industry. 

Adjudication is how SRX ensures agreed-upon terms are being enforced by a facility’s pharmacy. When agreeing to adjudicate, pharmacies set up software that helps catch claims that violate rules set out in your LTC pharmacy contract. Rather than chasing credits, this method enables corrections to happen in near real-time, alerting the appropriate staff at both the facility and pharmacy as to which rule has been violated.

A Trusted Solution for LTC Pharmacy Operations

SRX provides a unified drug cost management solution for post-acute and long-term care operators. Our technology and pharmacy operations experts bring operators and administrators the best results in the industry by offering software and advisors that helps achieve the lowest net drug cost. 

On average, operators save 16% on their drug costs when they partner with SRX. When using our managed care solution, we help operators identify 90% more drug exclusions on average, saving billing officers time and ensuring reimbursement claims are being submitted properly. Proprietary dashboards give operators and C-suite leaders insight into exclusion reimbursement data for each facility, providing an extra level of oversight into facility performance. 

Contact SRX today to transform your pharmacy management and take control of rising drug costs.


Related Articles:

How to Simplify LTC Prescription Drug Spend with Adjudication

Saving Costs Through Increased Transparency in Your Pharmacy Relationship

Top 3 Things to Look for in a Pharmacy Partner


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SRX is a unified drug cost management solution for long-term care operators. We achieve unrivaled drug cost savings by combining our proprietary technology with expert advisors. SRX’s solutions automate drug rebates, optimize pharmacy management practices, increase managed care exclusion reimbursements, and provide cost-effective employee prescription benefits. SRX guarantees quarterly rebates are paid on time, every time, with no out-of-pocket cost.


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