This document discusses whether in-house dispensing is right for a medical practice. It begins by defining in-house dispensing as a pharmacy operated within a medical practice to exclusively serve that practice's patients. The document then outlines key topics to consider regarding in-house dispensing, including the market, legal issues, impact on patients, business analysis, operational issues, and program recommendations. It aims to provide an objective understanding of in-house dispensing to help practices determine if it is suitable for them.

1.
Is
In-­House
Dispensing
Right
for
my
Practice?
A
White
Paper
by
Ron
Poe
Script
Dispense
Inc.
www.scriptdispense.com
October,
2014

2.
2
Is
In-­House
Dispensing
Right
for
my
Practice?
In-­‐House
Dispensing
is
an
ancillary
service
that
provides
clinical
care
benefits,
improved
patient
compliance
and
new
revenues
for
a
growing
number
of
medical
practices
in
the
USA.
By
choosing
an
appropriate
In-­‐House
Dispensing
vendor,
all
stakeholders
in
a
medical
practice
can
benefit:
patients,
providers,
staff
and
the
practice
itself.
In
order
to
attain
these
benefits,
medical
practices
must
understand
some
key
aspects
of
a
successful
In-­‐House
Dispensary
including
some
important
topics
which
may
not
be
disclosed
by
many
vendors.
This
paper
will
explain
these
key
issues
in
order
to
help
medical
practice
owners
and
managers
to
make
an
educated
decision
about
whether
an
In-­‐House
Dispensary
is
suitable
for
them.

3.
3
Preface
As
the
healthcare
industry
in
America
continues
to
undergo
numerous
changes,
almost
all
medical
practices
are
facing
tremendous
challenges—
particularly
the
business
issues
of
a
medical
practice—which
are
stimulating
these
medical
practices
to
consider
various
ancillary
services
that
will
not
only
improve
the
care
of
patients
but
also
benefit
the
business
aspects
of
the
practice.
One
of
the
fastest-­‐growing
ancillary
services
available
to
medical
practices
today
is
an
In-­‐House
Dispensary.
As
medical
practices
are
evaluating
In-­‐House
Dispensing,
the
key
topics
to
consider
can
be
organized
into
the
following
categories:
1. In-­‐House
Dispensing
Market
2. Legal
Issues
and
Concerns
3. Impact
on
Patients
4. Business
Analysis
5. Operational
Issues
6. Program
Recommendations
In
the
following
pages,
each
of
these
subjects
will
be
addressed
with
the
goal
of
providing
medical
practices
with
an
objective,
thorough
understanding
of
the
In-­‐House
Dispensing
business.
With
this
information,
a
medical
practice’s
owners
and
management
can
then
make
a
determination
as
to
the
suitability
of
this
ancillary
service
to
their
practice
and,
if
deemed
appropriate,
how
to
proceed.
1. In-­House
Dispensing
Market
For
the
purpose
of
this
paper,
the
term
“In-­‐House
Dispensing”
is
defined
as
a
pharmacy
operated
within
a
medical
practice.
Such
a
facility
is
often
called
a
“dispensary”
rather
than
a
“pharmacy”
although
these
two
terms
are
essentially
interchangeable
within
a
medical
practice.
This
paper
will
use
the
term
In-­‐House
Dispensary.
Because
an
In-­‐House
Dispensary
is
meant
to
serve
only
the
patients
of
the
medical
practice,
the
In-­‐House
Dispensary
can
dispense
only
pre-­‐packaged
medications
exclusively
to
the
patients
of
that
practice.1
This
limitation
is
one
distinguishing
characteristic
of
an
In-­‐House

4.
4
Dispensary
compared
to
a
retail
pharmacy.
Also,
because
all
medications
for
an
In-­‐House
Dispensary
are
pre-­‐packaged,
there
is
no
requirement
for
a
pharmacist
to
be
present.2
An
emerging
sector
of
the
In-­‐House
Dispensing
business
called
Clean
Dispensing
is
addressing
this
market
by
both
defining
the
targeted
Clean
Dispensing
market
while
separating
the
business
model
from
other
parts
of
the
dispensing
business
including
workers
compensation
and
compounding.
This
paper
will
address
the
method
of
dispensing
in
which
insurance
claims
are
processed
electronically
in
real
time—a
process
called
Live
Adjudication
or
Electronic
Processing.
This
paper
will
use
the
term
“Live
Adjudication.”
Through
utilizing
a
Live
Adjudication
system,
insurance
reimbursement
claims
are
processed
in
real-­‐time
from
within
the
medical
office
using
an
online
claims
approval
and
payment
process;
a
process
enabled
through
a
healthcare
industry
data-­‐sharing
technology
called
HL73.
Because
of
the
capabilities
provided
by
the
Live
Adjudication
process,
medical
practices
operating
an
In-­‐House
Dispensary
will
always
know
medication
will
be
reimbursed
before
being
dispensed
to
any
patients.
In-­‐House
Dispensing
vendors
are
sometimes
called
Management
Companies.
Each
Management
Company
varies
in
the
breadth
of
services
offered.
These
services
include:
processing
physician
applications
for
licensing
with
state
medical
boards,
contracting
with
payers
(through
Pharmacy
Benefits
Management
companies;
PBMs),
supplying
medications,
a
Live
Adjudication-­‐
capable
order-­‐processing
technology
platform,
ordering
equipment
needed
(computer,
printer,
bar-­‐code
scanner),
providing
technical
support
and
other
services
as
well.
Some
Management
Companies
offer
turnkey
solutions
which
provide
an
end-­‐to-­‐end
set
of
all
products
and
services
needed
to
operate
an
In-­‐House
Pharmacy.
Conversely,
other
Management
Companies
may
provide
only
some
components
needed
to
operate
an
In-­‐House
Dispensary.
As
with
any
form
of
ancillary
service,
each
Management
Company’s
service
offering
must
be
evaluated
individually
by
each
medical
practice.

5.
5
2. Legal
Issues
and
Concerns
When
looking
into
the
In-­‐House
Dispensing
business
for
the
first
time,
even
experienced
medical
professionals
raise
the
question:
Is
this
legal?
In
almost
every
state
in
the
USA,
the
answer
is:
yes.
Utah
is
the
only
state
where
In-­‐House
Dispensing
is
illegal.
Other
states
have
imposed
various
levels
of
restrictions
on
In-­‐House
Dispensing
including
Arkansas,
Massachusetts,
Montana,
New
York
and
Texas.
For
medical
practices
in
these
states,
additional
due
diligence
must
be
done
with
the
respective
state
boards
of
health
and
pharmacy.
In
the
other
44
states
not
mentioned
in
the
preceding
paragraph,
physicians
(MDs
and
DOs)
have
the
right
to
dispense
medications
to
their
patients.
Some
states
do
require
a
physician
to
add
a
dispensing
endorsement
on
their
medical
license
which
is
a
simple,
administrative
procedure.
In
a
few
states
like
North
Carolina,
prescriptions
written
by
mid-­‐level
providers—ARNPs
and
PAs—must
be
issued
under
the
direct
supervision
of
an
MD
or
DO.
Additional
details
about
each
state’s
legal
requirements
can
be
found
at
www.licenselogix.com.
General
Liability
Risk
In
almost
all
In-­‐House
Dispensing
programs,
medications
are
delivered
to
the
medical
practice
in
pre-­‐sealed
containers
which
are
bar-­‐coded
in
order
to
facilitate
quality
control
of
both
inventory
management
and
dispensing.
As
such,
in
most
states
a
medical
practice
must
simply
carry
a
general
liability
(a.k.a.
slip
and
fall)
insurance
policy
in
order
to
operate
an
In-­‐House
Dispensary.
Some
PBMs
require
medical
practices
operating
an
In-­‐House
Dispensary
to
carry
a
general
liability
policy
that
covers
$1
million
per
incident
and
$3
million
in
aggregate—a
so-­‐called
1/3
policy.
Because
the
carrying
of
a
1/3
general
liability
insurance
policy
is
a
requirement
is
made
by
PBMs,
the
policy
is
needed
by
a
medical
practice
in
order
to
receive
medication
reimbursement
payments
from
payers
through
Live
Adjudication
system.

6.
6
Malpractice
Risk
Most
physicians
already
dispense
pharmaceutical
samples
and
some
practices
provide
other
treatments
with
medications.
With
these
procedures
already
addressed
under
a
medical
practice’s
existing
malpractice
insurance,
a
medical
practice
is
already
covered
by
malpractice
insurance.
The
operation
of
an
In-­‐House
Dispensary
should
not
fundamentally
change
the
risk
profile
of
a
medical
practice.
In
fact,
the
risk
to
the
medical
practice
would
arguably
be
no
different
than
sending
a
prescription
to
a
retail
pharmacy.
Clinical
Note:
Since
up
to
30%
of
prescriptions
go
unfilled4,
one
could
argue
that
In-­House
Dispensing
may
actually
lower
malpractice
risk
of
a
medical
practice
because
an
In-­House
Dispensary
will
ensure
patients
actually
receive
their
needed
medications.
As
such,
physicians
can
improve
Patient
Adherence
to
care
plans
which
will
improve
clinical
outcomes.
In
some
states
physicians
are
not
required
to
carry
malpractice
(a.k.a.
professional
liability)
insurance.
However,
even
in
these
states
some
payers
may
require
medical
practices
operating
an
In-­‐House
Dispensary
to
carry
malpractice
insurance.
Of
course,
each
medical
practice
should
consult
with
their
own
insurance
provider
and
a
healthcare
attorney
regarding
all
matters
relating
to
insurance
coverage
and
each
state’s
legal
requirements.
3. Impact
on
Patients
Every
physician’s
first
priority
should
naturally
be
the
care
of
their
patients.
From
a
legal
perspective,
In-­‐House
Dispensaries
must
operate
primarily
“for
the
benefit
of
patients.”5
Patients
benefit
from
In-­‐House
Dispensing
in
the
following
ways:
• Care
–
When
patients
have
their
medications
in
hand,
they
are
in
a
better
position
to
follow
their
care
plan.

7.
7
• Convenience
–
By
receiving
medications
directly
from
their
doctor’s
office,
patients
do
not
have
to
make
an
extra
trip
to
a
retail
pharmacy.
Also,
the
process
of
receiving
medications
from
an
In-­‐House
Dispensary
is
a
quick
transaction
as
opposed
to
the
often-­‐hour-­‐long
process
of
picking
up
medications
from
a
retail
pharmacy—a
tremendous
time
savings
for
patients.
For
patients
using
Non-­‐Emergency
Medical
Transportation
(NEMT)
services,
these
patients
can
continue
to
use
such
services
to
reach
their
doctor’s
office.
NEMT
services
cannot
legally
transport
patients
to
retail
pharmacies6.
For
patients
who
do
not
drive
themselves,
an
In-­‐House
Dispensary
eliminates
the
logistical
challenge
of
simply
getting
their
medications
in
hand.
• Compliance
–
Patients’
“lack
of
adherence
has
dramatic
effects
on
health.
In
the
United
States,
it
is
estimated
to
cause
approximately
125,000
deaths,
at
least
10%
of
hospitalizations
and
a
substantial
increase
in
morbidity
and
mortality.
Nonadherence
has
been
estimated
to
cost
the
U.S.
health
care
system
between
$100
billion
and
$289
billion
annually.”7
Not
surprisingly,
patients
who
receive
their
medication(s)
from
their
doctor’s
office
are
much
more
adherent
to
their
doctor’s
care
plan.
“Having
an
In-­House
Dispensary
is
the
best
solution
for
ensuring
my
patients
are
adherent
to
their
care
plans.
Unless
I
am
going
to
insert
the
pills
into
patients’
mouths,
what
else
can
I
do?”
-­
an
MD
in
Hollywood,
Florida
• Control
–
In
recent
years,
many
physicians
report
feeling
they
are
increasingly
in
less
control
of
their
practice.
At
the
same
time,
physicians
are
under
increased
pressure
to
improve
the
clinical
outcomes
of
their
patients
even
though
they
have
no
control
over
their
patients
once
they
leave
the
office.
Finally,
physicians
do
not
have
any
way
of
knowing
if
their
patients
ever
picked
up
the
medications
prescribed,
thereby
exacerbating
physicians’
feelings
of
a
lack
of
control.
By
operating
an
In-­‐House
Dispensary,
physicians
gain
some
control
over
their
practice
by
having
certainty
that
their
patients
have
actually
received
their
medications.

8.
8
Conjecture:
How
many
patients
know
their
pharmacists
name?
Virtually
all
patients
know
their
doctor’s
name.
• Cost
–
Patients
pay
the
same
co-­‐payment
at
an
In-­‐House
Dispensary
as
would
be
charged
at
a
retail
pharmacy.
Although
most
patients
are
not
currently
accustomed
to
receiving
their
medications
from
their
doctor’s
office,
studies
have
shown
that
patients
prefer
to
receive
their
medications
from
the
doctor’s
office
and
that
percentage
of
preference
increases
over
time.
When
patients
are
due
to
receive
refills
of
their
medications,
physicians
can
authorize
those
refills
without
seeing
their
patients
in
person.
However,
for
many
patients
taking
long-­‐term
medications,
a
lot
of
physicians
prefer
to
see
such
patients
in
person
at
least
every
90
days
in
order
to
assess
each
patient’s
status.
By
having
these
patients
visit
their
doctor
more
often,
physicians
have
more
opportunities
to
provide
better
care
to
their
patients
simply
by
being
able
to
catch
problems
that
might
be
missed
with
less-­‐frequent
office
visits.
While
patients
are
in
their
doctor’s
office
for
these
visits,
they
are
also
able
to
pick
up
a
90-­‐day
supply
of
their
medications.
4. Business
Analysis
Beyond
the
clinical
care
benefits
already
detailed
in
this
paper,
medical
practices
need
to
perform
their
own
due
diligence
on
the
financial
aspects
of
operating
an
In-­‐House
Dispensary
including
the
initial
costs,
ongoing
capital
requirements,
effects
on
cashflow
and
additional
costs
that
may
be
required.
Ultimately,
the
practice
must
evaluate
their
Return
On
Investment
(ROI)
from
both
monetary
and
workload
standpoints.
Initial
Costs
Depending
on
the
level
of
services
provided
by
a
Management
Company,
the
initial
costs
vary
widely—from
no
up-­‐front
fee
to
several
thousand
dollars.
Management
Companies
that
require
no
up-­‐front
fee
are
most-­‐often
engaged
in
the
Workers
Compensation
segment
of
the
In-­‐House
Dispensing
market

9.
9
which
is
not
the
Clean
Dispensing
method
of
dispensing
covered
in
this
paper.
As
with
most
businesses,
any
product
or
service
offered
for
free
must
be
inspected
in
even-­‐more
detail
to
determine
the
reason
for
such
a
seemingly-­‐
generous
offer.
However,
for
large-­‐scale
medical
practices,
some
Clean
Dispensing
Management
Companies
may
be
willing
to
discount
the
Initial
Costs
charged
because
the
Management
Companies
will
expect
to
recover
this
investment
through
the
greater
volume
of
business
done
with
such
a
large-­‐
scale
medical
practice.
Beyond
the
Initial
Costs
paid
to
Management
Companies,
medical
practices
may
also
incur
some
costs
related
to
shelving
or
lockers
used
to
store
medications.
In
most
cases,
these
costs
will
be
negligible—especially
if
the
practice
is
not
going
to
stock
controlled
medications
which
require
extra
security,
procedures
and
audits.
For
medical
practices
that
are
not
stocking
controlled
substances,
the
facility
Initial
Costs
are
usually
limited
to
a
lockable
room
or
storage
closet.
Some
states
have
other
requirements
which
should
be
researched
through
consultation
with
Management
Companies
or
through
each
state’s
boards
of
pharmacy
and
health.
Capital
Requirements
When
medical
practices
are
evaluating
the
deployment
of
an
In-­‐House
Dispensary,
one
of
the
most
common
questions
is:
How
much
inventory
is
required?
In
order
to
operate
an
In-­‐House
Dispensary,
a
medical
practice
must
maintain
an
inventory
of
pre-­‐packaged
medications
available
to
dispense.
In
most
states,
the
cost
of
these
medications
must
be
paid
directly
by
the
medical
practice
because
Management
Companies
are
not
legally
allowed
to
provide
the
medications
on
any
form
of
consignment.
As
such,
the
costs
of
reordering
medication
will
commonly
be
billed
to
a
credit
card
on
file
with
the
Management
Company.
Management
Companies’
recommendations
on
the
level
of
inventory
that
should
be
stocked
vary
widely.
Some
Management
Companies
recommend
a
minimal
inventory
while
some
Management
Companies
promote
an
inventory
of
tens
of
thousands
of
dollars.
When
evaluating
the
right
starting
inventory
for
a
medical
practice’s
new
In-­‐House
Dispensary,
the
practice
should
determine
the
mix
of
medications
and
volumes
necessary
to
successfully

10.
10
dispense
at
least
80%
of
the
medications
prescribed
by
the
practice.
To
meet
this
objective,
most
medical
practices
will
have
to
carry
a
two-­‐week
inventory
of
only
twenty
medications
with
each
medication
typically
carried
in
30-­‐,
60-­‐
and
90-­‐day
counts
with
some
variance
based
on
the
specialty.
In
order
to
determine
the
appropriate
mix
of
medications
to
carry
in
inventory,
the
practice
should
be
able
to
extract
a
report
from
their
Electronic
Health
Records
(EHR)
system
which
will
show
the
specific
medications
prescribed
over
a
period
of
time
as
well
as
the
volume
of
each
medication.
Even
without
an
EHR
system,
the
Management
Company
should
be
able
to
consult
with
the
physician(s)
to
determine
the
different
types
of
medications
to
initially
keep
in
stock
because
most
physicians
can
recite
their
most-­‐
commonly-­‐prescribed
medications
from
memory.
Over
time,
inventories
can
be
adjusted
to
fit
the
changing
needs
of
each
practice
through
consultation
with
the
Management
Company.
Some
Management
Companies
provide
automatic
reordering
of
medications
that
will
streamline
the
inventory
and
reordering
processes.
Although
most
In-­‐House
Dispensaries
are
implemented
and
operated
by
existing
office
staff
from
within
the
medical
practice
and
each
transaction
with
each
patient
may
require
only
a
minute
or
two
of
time,
someone
within
the
office
must
still
personally
complete
the
dispensing
transaction
with
each
patient.
Especially
in
the
first
few
weeks
of
operating
an
In-­‐House
Dispensary,
a
medical
practice
will
be
learning
how
to
handle
and
resolve
rejections
from
payers—a
routine,
administrative
process
experienced
by
any
entity
processing
pharmaceutical
claims
with
payers.
As
such,
the
practice
must
be
committed
to
the
objective
of
dispensing
all
medications
prescribed
by
the
practice’s
physicians
lest
the
practice
will
simply
continue
to
send
prescriptions
out
to
retail
pharmacies
to
be
filled
and
miss
many
of
the
benefits
of
operating
an
In-­‐House
Dispensary.
Without
such
a
clear
commitment
from
the
practice’s
owner(s),
office
staff
will
often
prioritize
other
work
over
the
In-­‐House
Dispensary
and,
as
such,
the
In-­‐House
Dispensary
will
not
deliver
the
clinical
nor
financial
benefits
detailed
in
this
paper.
In
the
end,
the
In-­‐House
Dispensary
is
a
business
within
the
business
of
the
medical
practice
and
must
be
operated
with
commensurate
focus
and
dedication
as
any
business
endeavor.
Financial
Summary

11.
11
By
using
an
online
Live
Adjudication
system
to
process
claims
for
medications,
medical
practices
earn
money
through
reimbursements.
Also,
medical
practices
will
collect
all
co-­‐payments
directly
from
patients.
The
combination
of
co-­‐payments,
dispensing
fees
and
reimbursements
comprise
the
Gross
Revenues
for
the
medical
practice’s
In-­‐House
Dispensary
“business.”
Also,
the
costs
of
operating
an
In-­‐House
Dispensary
come
mostly
from
the
purchases
of
medications
which
comprise
the
inventory.
In-­‐House
Dispensing
Cashflow
Summary:
Co-­‐Payment
+
Dispensing
Fee
+
Reimbursement
=
Gross
Revenues
-­‐
Cost
of
Medications
-­‐
Additional
staff
costs
(if
any)
=
Profit
for
the
medical
practice
For
small
medical
practices,
there
should
not
be
any
additional
staff
expenses.
In
medium-­‐sized
practices,
there
is
often
value
in
hiring
a
technician
or
Medical
Assistant
(MA)
who
will
be
focused
on
operating
the
In-­‐House
Dispensary
as
their
primary
job
responsibility.
In
medical
practices
with
several
full-­‐time
physicians—perhaps
five
to
ten
physicians
(depending
on
the
specialty)—a
full-­‐time
employee
should
be
hired
to
operate
the
In-­‐House
Dispensary
who
will
have
few,
if
any,
other
responsibilities.
Although
any
staff
member
in
a
medical
office
can
serve
as
the
technician
in
an
In-­‐House
Dispensary
with
no
specialized
certification,
some
Management
Companies
recommend
hiring
a
Certified
Pharmaceutical
Technician
(CPhT)
because
CPhTs
are
already
educated
in
pharmacy
matters—especially
processing
claims—and
the
hourly
cost
of
a
CPhT
is
not
substantially
more
expensive
than
Medical
Assistants
(MAs)
in
most
geographies.
In
most
practices,
the
additional
revenue
generated
from
using
a
CPhT
should
readily
offset
any
additional
cost
of
the
CPhT.
Medical
practices
can
also
estimate
their
potential
profitability
from
operating
an
In-­‐House
Dispensary
by
looking
at
the
profitability
of
each
prescription
multiplied
by
the
number
of
prescriptions
given
over
a
period
of
time.

12.
12
Profitability
of
In-­‐House
Dispensing:
Patients
per
day:
20
Scripts
per
patient:
2
Total
scripts
per
day:
40
Average
profit
per
Script:
$5
-­‐
10
Daily
profit:
$200
-­‐
400
Monthly
profit
(20
days):
$4,000
-­‐
8,000
Annual
profit:
$48,000
-­‐
$96,000
The
example
above
depicts
a
single,
primary
care
physician
with
an
average
profit
of
$5-­‐10
per
medication.
Other
specialties
will
have
varying
levels
of
patient
volumes
and
reimbursements.
Of
course,
multiple
providers
in
the
same
office
will
benefit
from
the
additional
volume
of
patients.
For
example,
a
5-­‐physician
office
in
the
same
specialty
should
have
about
five
times
the
dispensing
volume
of
a
single-­‐physician
practice.
The
economic
benefits
of
an
In-­‐House
Dispensary
increase
with
the
scale
of
the
practice
due
to
the
leverage
created
from
diminished
fixed
costs.
Management
Companies
should
be
able
to
provide
a
customized
financial
analysis
on
specific
practices.
When
comparing
In-­‐House
Dispensing
to
other
ancillary
services,
research
has
found
this
service
to
have
low
capital
requirements
and
impact
on
workflow.
At
the
same
time,
In-­‐House
dispensing
has
had
the
highest
impact
on
care,
profitability
of
the
practice
and
day-­‐to-­‐day
cashflow.
At-­Risk
Practices
Within
the
labyrinth
of
insurance-­‐coverage
systems
in
the
healthcare
industry,
many
commercial
payers
now
contract
with
medical
practices
in
such
a
manner
that
the
medical
practice
directly
shares
in
the
expenses
incurred
by
patients
covered
by
said
payer.
These
medical
practices
are
defined
as
“at
risk.”
These
At-­‐Risk
medical
practices
bear
tremendous
financial
responsibility
for
the
expenses
generated
by
patients
under
such
a
plan.
In
terms
of
financial
advantages,
medical
practices
operating
in
an
“at
risk”
model
have
the
most
to
gain
from
operating
an
In-­‐House
Dispensary.
Because
these
practices
are
liable
for
all
costs
generated
by
their
patients
(Emergency

13.
13
Room
visits,
laboratory
tests,
etc.)
these
practices
can
mitigate
their
exposure
to
such
costs
simply
by
ensuring
their
patients
get
their
medications
in
their
hands.
Commercial
and
Government
Payers
Both
Medicare
and
Medicaid
generally
participate
in
In-­‐House
Dispensing.
Reimbursements
from
these
government
payers
are
competitive
with
commercial
payers.
In
many
cases,
government
payers
pay
a
higher
reimbursement
than
commercial
payers
for
the
same
medications.
Each
state’s
government
programs
should
be
evaluated
individually.
All
major
commercial
payers
participate
in
In-­‐House
Dispensing
except
Cigna.
For
patients
covered
by
Cigna,
medical
practices
operating
an
In-­‐House
Dispensary
will
have
to
continue
to
send
Cigna’s
patients
out
to
retail
pharmacies.
Pharmacy
Benefits
Management
Companies
(PBMs)
PBMs
serve
as
a
clearing
house
between
payers
and
medical
practices
because
such
reimbursements
for
pharmaceuticals
cannot
legally
be
paid
directly
to
a
retail
pharmacy
nor
In-­‐House
Dispensary.
Management
Companies
will
sometimes
assist
medical
practices
to
obtain
contracts
with
PBMs
thereby
relieving
the
medical
practices
of
this
administrative
process.
Some
PBMs
require
direct
contracts
with
medical
practices
whereas
some
PBMs
are
grouped
in
a
Pharmacy
Service
Administrative
Organizations
(PSAO).
PSAOs
provide
a
more-­‐streamlined
contracting
process
because
one
contract
with
a
single
PSAO
can
provide
access
to
several
PBMs.
Each
Management
Company
should
be
able
to
explain
their
respective
PBM
credentialing
services
offered.
5. Operational
Issues
As
with
any
ancillary
service
implemented
in
a
medical
practice,
some
level
of
operational
change
will
be
necessary
in
any
medical
practice
in
order
to
successfully
implement
an
In-­‐House
Dispensary—particularly
workflow
within
the
office.
When
comparing
an
In-­‐House
Dispensary
with
almost
any
other
ancillary
service,
the
impact
on
workflow
is
relatively
minor—but
not
non-­‐existent.

14.
14
Each
medical
practice
has
their
own
workflow
procedures.
Part
of
the
consultation
provided
by
Management
Companies
should
include
discussing
the
practice’s
current
workflow
and
how
the
In-­‐House
Dispensary
can
be
incorporated
into
the
medical
practice
successfully.
One
of
the
most-­‐critical
functions
of
the
In-­‐House
Dispensary
which
must
be
accomplished
is
the
actual
dispensing
by
a
technician.
This
process
is
highly-­‐
automated
in
terms
of
communicating
with
outside
entities
but
the
technician
who
is
actually
operating
the
system
must
physically
perform
some
actions.
The
following
procedure
is
followed
on
each
dispensing
transaction:
• The
physician
diagnoses
the
patient
and
determines
the
appropriate
treatment
plan
and,
if
needed,
appropriate
medications.
• The
physician
asks
the
patient
if
they
prefer
to
pick
up
their
medications
from
the
medical
office
or
from
elsewhere.
[Note:
patients
must
be
given
the
choice
of
where
to
fill
their
prescriptions.8]
• The
physician
(or
an
assistant)
e-­‐prescribes
the
medication(s)
per
their
normal
procedure.
This
e-­‐prescription
information
is
automatically
transmitted
to
Surescripts
and
payers
by
the
online
Live
Adjudication
system.
• The
patient
walks
from
their
exam
room
to
the
In-­‐House
Dispensary.
• The
In-­‐House
Dispensary
technician
opens
the
patient’s
record
in
the
Live
Adjudication
system.
The
technician
will
reconfirm
the
patient’s:
o address
and
phone
number
o insurance
information
(Rx
BIN,
PCN,
Group
and
ID)
o authorized
refills,
days
supplied
and
SIG
(how
many
pills
per
day;
when/how
the
pills
should
be
taken).
• A
safety
check
is
then
performed
by
the
online
system
to
prevent
dispensing
a
medication
which
has
already
been
dispensed
elsewhere.
• A
Drug
Utilization
Review
(DUR)
is
conducted
which
is
a
check
of
drug
interactions,
allergies
and
patient
history.
• The
technician
will
process
the
claim
within
the
Live
Adjudication
system
which
will
complete
the
following
procedures
in
a
few
seconds:
o Confirmation
of
the
patient’s
eligibility
for
the
medications
prescribed.
o Disclosure
of
the
appropriate
co-­‐payment.
• If
the
patient
has
a
co-­‐payment,
the
technician
will
collect
the
co-­‐
payment
from
the
patient.

15.
15
• The
technician
prints
labels
which
are
then
affixed
to
each
bottle
and
the
technician
also
prints
the
instructions
for
each
medication.
• The
technician
puts
all
medications
into
a
bag
and
hands
the
medications
to
the
patient.
• Within
21
days
of
dispensing,
the
medical
practice
will
be
reimbursed
for
the
medication.
Note:
Although
there
appear
to
be
many
steps,
because
of
the
speed
of
the
online
Live
Adjudication
system,
this
process
will
take
only
2-­‐5
minutes
per
patient.
If
a
claim
is
rejected
for
any
reason,
the
technician
must
resolve
the
rejection
which
will
usually
require
the
technician
to
call
the
payer.
If
a
medical
practice
is
not
currently
e-­‐prescribing,
the
practice
can
still
operate
an
In-­‐House
Dispensary
in
which
all
prescription-­‐related
information
will
have
to
be
entered
manually
by
the
technician
operating
the
In-­‐House
Dispensary.
Administrative
Tasks
Many
years
ago,
the
administrative
burden
of
operating
an
In-­‐House
Dispensary
was
heavy—particularly
in
terms
of
meeting
government-­‐
mandated
requirements.
But
in
the
modern
era
of
online
Live
Adjudication
systems,
the
management
of
such
government-­‐related
functions
occur
automatically
and
require
very
little
work
from
the
technician
in
an
In-­‐House
Dispensary.
On
a
day-­‐to-­‐day
basis,
the
technician
will
print
a
report
which
lists
all
medications
for
each
physician
for
that
day.
Each
physician
simply
signs
their
respective
report
each
day.
This
daily
report
is
the
extent
of
the
administrative
workload
required
of
physicians.
Location
of
the
In-­House
Dispensary
The
physical
space
required
for
an
In-­‐House
Dispensary
is
relatively
modest:
usually
a
small
room
or
even
a
closet.
Most
practices
will
place
the
In-­‐House
Dispensary
relatively-­‐near
the
medical
practice’s
Check
Out
desk.
Some
practices
have
the
In-­‐House
Dispensary
technician
also
complete
all
Check
Out
procedures.
Some
states
have
additional
facility
requirements
which
must
be
researched
with
each
state’s
Board
of
Pharmacy.

16.
16
6. Program
Recommendations
In-­‐House
Dispensing
can
give
medical
practices
benefits
from
improving
clinical
care
to
bolstering
their
financial
bottom
line.
In
order
to
achieve
these
benefits,
medical
practices
must
weigh
many
factors
to
answer
the
question:
Is
In-­‐House
Dispensing
right
for
my
practice?
When
evaluating
Management
Companies,
medical
practices
should
enquire
about
the
breadth
of
suppliers
used
by
each
Management
Company.
If
all
medications
come
from
a
single
source,
there
is
some
risk
of
the
supply
of
medications
being
interrupted
if
this
single
supplier
encounters
any
interruptions
to
their
operations
such
as
inclemate
weather,
financial
distress,
logistical
distribution
delays
or
any
other
issues
that
affect
all
businesses.
At
the
same
time,
if
multiple
suppliers
are
used
by
a
Management
Company,
the
medical
practice
should
enquire
as
to
how
orders
are
processed;
some
Live
Adjudication
systems
will
manage
the
reordering
of
medications
from
multiple
suppliers
in
a
seamless
manner.
To
ensure
the
success
of
an
In-­‐House
Dispensary,
a
Management
Company
should
be
able
to
provide
the
following
products
and
services:
-­‐ Processing
of
dispensing
endorsements
on
physicians’
medical
licenses.
-­‐ Credentialing
with
PBMs
and/or
PSAOs.
-­‐ An
online,
Live
Adjudication
system
utilizing
HL7
technology.
-­‐ All
hardware
needed:
computer,
printer,
bar
code
scanner.
-­‐ A
backup
logbook
to
register
all
medications
dispensed.
-­‐ Training
on
setup,
technology,
operations
and
reordering
as
well
as
access
to
a
Fraud,
Waste
&
Abuse
course.
-­‐ Ongoing
Support.
Note:
The
entire
process
should
be
completed
in
2-­‐3
months.

17.
17
Summary
Many
medical
practices
are
evaluating
the
opportunity
to
operate
an
In-­‐House
Dispensary.
As
with
any
ancillary
service
or
business
decision
made
by
any
medical
practice,
proper
due
diligence
and
research
must
be
done
in
order
to
determine
the
viability
of
an
In-­‐House
Dispensary
for
each
respective
medical
practice.
Once
a
decision
is
made
to
investigate
the
opportunities
associated
with
operating
an
In-­‐House
Dispensary,
each
medical
practice
must
choose
an
appropriate
Management
Company
that
will
meet
their
specific
needs.
Before
making
a
decision
about
any
ancillary
service,
medical
practices
should
consult
with
their
attorney,
accountant
and
any
relevant
government
agencies.
The
Author
Ron
Poe
Director,
Script
Dispense
Inc.
Ron leads the nationwide development of partner engagements and major accounts
for Script Dispense. He previously founded one of Script Dispense’s partner
companies where his team promoted the Script Dispense solution to medical
practices in Florida. Ron has previously owned and operated companies in a
breadth of industries including electronic health records (EHR), recruiting,
executive search and educational media. He is a graduate of the United States
Naval Academy and served as an officer in the Marine Corps.
Script
Dispense
Script
Dispense
is
a
pioneer
in
the
In-­‐House
Dispensing
industry
with
a
focus
on
Clean
Dispensing.
Originally
founded
in
South
Florida,
Script
Dispense
is
expanding
throughout
the
United
States
and
striving
to
improve
the
health
of
the
nation
while
transforming
the
way
patients
receive
medications
in
America.
Contact
5040
NW
155th
Street,
First
Floor
Miami
Lakes,
Florida
33016
1.888.926.0069
www.scriptdispense.com

18.
18
Glossary
Pharmacy
Benefit
Manager
(PBM)
A
third-­‐party
administrator
of
prescription
drug
programs
primarily
responsible
for
processing
and
paying
prescription
drug
claims
as
well
as
developing
and
maintaining
formularies,
contracting
with
pharmacies,
processing
claims
and
other
functions
relating
to
paying
for
pharmaceuticals.
National
Council
for
Prescription
Drug
Programs
(NCPDP)
Founded
in
1977
as
the
extension
of
a
Drug
Ad
Hoc
Committee
that
made
recommendations
for
the
US
National
Drug
Code
(NDC).
Over-­the-­Counter
medications
(OTC)
Medications
that
are
available
without
a
prescription.
Bank
identification
number
(BIN)
A
six-­‐digit
number
that
health
plans
can
use
to
process
electronic
pharmacy
claims
if
they
do
not
use
pharmacy
benefit
cards
with
a
magnetic
stripe.
Electronic
prescribing
or
e-­prescribing
(e-­Rx)
Electronic
(computer-­‐based)
generation,
transmission
and
filling
of
a
medical
prescription.
Paper
and
faxed
prescriptions
can
be
replaced
by
e-­‐Rx
which
allows
physicians
to
electronically
transmit
a
new
prescription
or
renewal
authorization
pharmacies.
Co-­Payment
(Co-­Pay)
The
amount
of
out-­‐of-­‐pocket
expenses
for
prescription
drugs
a
patient
pays
at
the
time
the
prescription
is
dispensed,
with
the
payer
paying
the
remaining
cost
to
the
pharmacy.

19.
19
Surescripts
The
nation's
largest
e-­‐prescription
network
which
supports
a
rapidly-­‐
expanding
ecosystem
of
health
care
organizations
nationwide.
Surescripts
certifies
software
used
by
prescribers,
pharmacies
and
payers/PBMs
for
access
to
three
main
services:
Prescription
Benefit,
Medication
History
and
Prescription
Routing.
Reimbursement
The
amount
of
money
a
payer
pays
a
pharmacy
or
dispensary
for
a
claim.
Electronic
Medical
Records
(EMRs)
A
digital
version
of
the
paper
charts
in
a
medical
office.
An
EMR
contains
the
medical
and
treatment
history
of
the
patients
in
one
practice.
Electronic
Health
records
(EHRs)
These
systems
perform
all
the
functions
of
an
EMR
and
more.
EHRs
focus
on
the
total
health
of
the
patient
going
beyond
standard
clinical
data
collected
in
the
provider’s
office
and
inclusive
of
a
broader
view
on
a
patient’s
care.
EHRs
are
designed
to
reach
out
beyond
the
health
organization
that
originally
collects
and
compiles
the
information.
Health
Level
Seven
International
(HL7)
The
global
authority
on
standards
for
interoperability
of
health
information
technology
which
enables
the
seamless,
real-­‐time
interfacing
of
medical
software
systems.
Live
Adjudication
The
processing
of
a
claim
in
real
time
and
providing
approval
or
rejection
in
only
a
few
seconds.
Once
approved,
the
reimbursement
is
paid
directly
to
the
medical
practice.

20.
20
References:
1
2011
Florida
Statutes:
http://www.flsenate.gov/laws/statutes/2011/465.0276
2
2011
Florida
Statutes:
http://www.flsenate.gov/laws/statutes/2011/465.0276
3
Health
Level
Seven
International:
http://www.hl7.org/about/index.cfm?ref=nav
4
Annals
of
Internal
Medicine:
http://annals.org/article.aspx?articleid=1357338
5
2011
Florida
Statutes:
http://www.flsenate.gov/laws/statutes/2011/465.0276
6
Missouri
Department
of
Social
Services:
http://dss.mo.gov/mhd/participants/pages/medtrans.htm
7
Annals
of
Internal
Medicine:
http://annals.org/article.aspx?articleid=1357338
8
American
Medical
Association
Opinion
8.06:
http://www.ama-­‐
assn.org/ama/pub/physician-­‐resources/medical-­‐ethics/code-­‐medical-­‐
ethics/opinion806.page?