title: Effect of a change in third party reimbursement rate on prescription gross margin.
abstract: OBJECTIVE
  To measure the effect of a change in an insurance company's reimbursement formula on prescription department gross margins for all prescriptions and subgroups of prescriptions.
  
  
  METHODS
  Retrospective descriptive analysis.
  
  
  METHODS
  Wisconsin.
  
  
  METHODS
  Two units of a chain pharmacy.
  
  
  METHODS
  Reimbursement changed from usual and customary price to average wholesale price less 10% plus a $2.00 dispensing fee for single-source products, and maximum allowable cost plus a $2.00 dispensing fee for multisource products.
  
  
  METHODS
  Gross margins for prescriptions dispensed in the month before and after the reimbursement change.
  
  
  RESULTS
  The average estimated gross margin decreased 26.9% after the change in reimbursement, and the effect on the average gross margin for generic prescriptions was nearly twice that of the effect on the average gross margin for brand name prescriptions. The effect of the reimbursement change on different therapeutic classes ranged from an increase of 0.7% in the cardiovascular class to a decrease of 68.2% in the eyes, ears, nose, and throat class. The effect of the reimbursement change was greater for low-cost prescriptions than for high-cost prescriptions.
  
  
  CONCLUSIONS
  The large effect of the reimbursement change, combined with continued growth in third party prescriptions, raises concerns about whether pharmacies can accept third party contracts with low reimbursement rates and still maintain current profitability and service levels.
authors.affiliation: School of Pharmacy, University of Wisconsin, Madison 53706, USA. JMGanther@pharmacy.wisc.edu
authors.forename: J M
authors.initials: JM
authors.lastname: Ganther
authors.forename: D H
authors.initials: DH
authors.lastname: Kreling
mesh_terms: D003625:Data Collection; D011307:Drug Prescriptions / Q000145:classification / Q000191:economics*; D006801:Humans; D007349:Insurance, Health, Reimbursement / Q000191:economics* / Q000592:standards; D007356:Insurance, Pharmaceutical Services / Q000191:economics*; D012051:Reimbursement Mechanisms / Q000191:economics* / Q000592:standards; D012189:Retrospective Studies; D014481:United States