Guide to understanding the PSA - Pharmacy Guild of New Zealand

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Part H:Payments for Services andPharmaceuticals, claimingprocedure and paymenttermsDuring the transition, pharmacies will automaticallybe paid a Transition Payment, in advance, on thefirst business day of every month (H1.1 (d)). Themethod of calculation is found in H22.3. CoreService and LTC Service Fees are not being paid inthe first stage of the transition and are due to bepaid from the indicative date of 1 February 2013.Pharmacies will continue to make claims for the costof Pharmaceuticals and Handling Fees (H1.1) in thesame way as the previous PSA. There are consistentprovisions concerning claim periods (H3.1), timelimits (H9) and time frames (H12).A notable change is found in the provisionsconcerning Co-payments at H4.4 (a). During thetransition, pharmacy contractors must charge ServiceUsers the full Co-payment with the only exceptionbeing in situations of hardship when the Service Userwould not otherwise collect the pharmaceuticals.Pharmacies may still charge product premiums (H4.5)and the circumstances when other pharmacy chargesmay be made are found in H4.6.Despite remaining in the text, clause H4.8 –the requirement to provide a receipt that recordsthe cost to the Government for the provisionof the pharmaceutical – has been recognised asproblematic. It is hard to calculate this cost to theGovernment because, with Transition Paymentsbeing made, much of the funding is not attachedto the particular pharmaceutical being dispensed.Software providers have eliminated the functionfrom their programmes but the clause remains forfuture application.There are some clarifications about cost and volumeshifting under the new model at H6. The PSA doesnot allow arrangements that result in paymentsbeing made more than once for the provisionof a prescription item for a Service User (H6.1).A pharmacy claiming for the provision of CoreServices to a Service User already registered as anLTC patient at that pharmacy is given as an exampleof a disallowed arrangement (H6.1 (a)). Anotherdisallowed arrangement is referring an LTC registeredpatient to another pharmacy to receive a CoreService (unless to obtain unavailable urgently neededmedication) (H6.2 (b)). Artificially increasing revenueis prohibited (H6.3) and that might cover the serialdispensing of items to a Core Service patient overseveral days to obtain multiple payments of the Coreservice fee (paid per patient, per pharmacy, per day).There are new requirements for the submission ofService Users’ information. Claims for the provisionof LTC Services and ARRC Services must include thepatient’s NHI number and from an indicative date of1 February 2013, the date of birth (H7.4). Also fromthe indicative date of 1 February 2013, every claimitem (including Core Service) submitted must includethe Service User’s NHI number (H7.3).The provisions concerning Transition Paymentsbegin at H22. Information about dispensing ratiosis found at H22.2. The dispensing ratio is calculatedby dividing the total number of prescription itemsdispensed in the 2011 year by the number of initialprescription items (/0,/1 items) (H22.2 (c)). The ratiois designed to distribute transition funds amongall pharmacy contractors in a way that maintainstheir overall levels of funding while they adapttheir business practice to the new model. A higherratio is attached to pharmacies that dispensedgreater numbers of repeats per initial prescriptionitem. During the early stages of the transition, allpharmacies will be able to keep providing a similarlevel of service to their patients and will receive asimilar level of funding overall. As the transitionprogresses, patient service fees begin to be paid soTransition Payments (based on numbers of initialprescription items multiplied by the dispensingpharmacy guild of new zealandPage 14
Guide to understanding the Psaratio) will become a less significant proportion of apharmacy’s funding. Pharmacies whose income reliedon high numbers of repeats will need to changetheir business practice to maintain the same level offunding. H22.2 also details methods of calculationfor dispensing ratios of pharmacies in non-standardsituations (H22.2 (c)), the Dispensing Ratio Sub-Group’s ability to impose a ratio (H22.2 (e)) and theappeals process (H22.2 (f), (g) and (h)).The Envelope is split into monthly Transition Pools(H22.1 (b)) and actual Transition Payments are takenfrom that. They are based on forecast numbersof pharmacies’ initial prescriptions (the /1 or /0dispensing). No Transition Payments are triggeredby repeat dispensings (/2,/3 and so on). A nationaltransition fee is derived ($4.2879 in July 2012) andmultiplied by the pharmacy’s dispensing ratio andforecast number of initial prescription items tocalculate the actual Transition Payment. In effect,the impact of the dispensing ratio on a TransitionPayment is to increase it to pre-pay for the averagenumber of repeats that an initial prescription itemgenerated in 2011 at that pharmacy.Four months after the forecast-based TransitionPayment is made, an adjustment is calculated basedon actual prescription numbers dispensed andthe next Transition Payment adjusted accordingly(H22.3).Clause H23 deals in detail with adjustments to thesize of the Envelope. From $375.5 million in 2012/13it will remain static or be adjusted upwards annuallyby the lesser of 1.5% or the CCP – see Part E for adefinition (H23.1). The maximum annual fundingfor CPAM is specified and any unspent funds willremain in the Envelope (H23.1 (d)). The assumptionsthat have underpinned the setting of the size of theEnvelope are listed (H23.2) as are the expectationsabout any review of the Envelope’s size (H23.3).DHBs and Providers are expected to take reasonablesteps to avoid triggering a review of the Envelope(H23.3 (a)). Any review would be conducted bythe DHBs collectively on the recommendation ofthe CPSGG that will have considered the advice ofthe CPSOG (H23.3 (b)). The precise circumstancesthat would cause a recommendation to reviewthe size of the Envelope are found in H23.4.These circumstances are based on growth in thenumbers of initial items dispensed. If the 20-DHBcollective decides to vary the size of the Envelope,the adjustment must be by a fair and reasonableamount (H23.3 (c)) according to the principles setout in clause H23.6 (H23.3 (d)). Once the DHBs havereached a view on a fair and reasonable adjustment,pharmacy contractors will be notified and the revisedEnvelope used in the calculation of further TransitionPayments (H23.5 (d)).Schedule H1: Payment termsThis Part begins with the provisions that are intendedto apply to payments under the PSA after thetransition period is over (clauses 2.2 to 2.6). Thetransition will end no earlier than 1 July 2014 (H2.1).Transition Stage 1 is intended to be from 1 July 2012to 31 January 2013 (3.1). Stage 2 is intended to befrom 1 February 2013 to 30 June 2013 (3.2) andStage 3 from 1 July 2013 to 30 June 2014 (3.3).Throughout the entire period of the PSA, payments topharmacies include a Handling Fee for each medicinedispensed to recognise community pharmacy’smedicines handling function (2.1). This is currentlyset at $1, but may be varied by applying the TCMin clause L7 (2.2 (a)). The Handling Fee is givena Handling Fee Multiplier (Multiplier) that differsaccording to the Service under which the medicine isbeing dispensed (for example, 5.3 for ARRC, 6.89 forClass B CDs). In later stages, the level of the HandlingFee itself may be subject to variation under the TCM(3.3 (h)).From Stage 2 onwards, payments to pharmacieswill include patient Fees that differ according to theService being provided (for example, LTC Services orCore Services). Again, patient Fees may be subject tovariation under the TCM (2.2 (c)).During all stages of the transition period, paymentsto pharmacies will include a Transition Paymentbased on market share and calculated according toclause H22 of Part H (3.1 (h)).Page 15
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Guide to understanding the PSA - Pharmacy Guild of New Zealand

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