WOONSOCKET – CVS Health Corp. recently announced that beginning this year, all of the commercial prescriptions dispensed through CVS Pharmacy will be contracted through the company’s CVS CostVantage reimbursement model.
“Delivering on our commitment to transform the pharmacy model, we successfully led the way forward, contracting with pharmacy benefit managers and other payors to advance a more transparent approach to reimbursement for the prescriptions we dispense and the services we provide,” said Prem Shah, group president, CVS Health. “In our discussions and negotiations, we found common ground and a commitment to a simpler approach to reimbursement and a more sustainable path forward for retail pharmacy. As the leading pharmacy in America, we take our responsibility seriously to continually improve and advocate for community pharmacy.”
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Shah said CVS plans to expand CVS CostVantage to Medicare- and Medicaid-managed prescriptions.
Historically, the way community pharmacies have been reimbursed has not reflected the value or cost of doing business.
CVS CostVantage removes reliance on cross-subsidization, which the company says is caused by market basket approaches to reimbursement. The formula is based on the underlying cost of a drug and a defined markup and dispensing fee. This approach is meant to reduce the need for higher rates on some medicines and help subsidize losses on others.
CVS CostVantage is also meant to provide more transparency for pharmacy benefit managers, or PBMs, and payors. This helps PBMs create simpler and more transparent models for plan sponsors and patients.
Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.