Capitation payment for pharmacy services: impact on generic substitution

Area of Science:

• Health Economics
• Pharmacy Practice
• Health Services Research

Background:

• The conventional fee-for-service (FFS) reimbursement model for pharmacists under Medicaid covers ingredient costs plus a fixed dispensing fee.
• A capitation system provides a set monthly payment per eligible individual, varying by aid category and season.
• Understanding the impact of reimbursement models on pharmacist dispensing behavior is crucial for healthcare system efficiency.

Purpose of the Study:

• To evaluate changes in the rate and appropriateness of generic substitution following the implementation of a capitation reimbursement system for pharmacists.
• To compare dispensing behaviors in counties transitioning to capitation with those remaining under the FFS system.

Main Methods:

• A quasi-experimental design was used, comparing two rural counties that switched from FFS to capitation with two control counties that continued FFS.
• Pharmacist dispensing data were collected over a 1-year pre-period (FFS) and a 2-year post-period (capitation) in experimental counties.
• Appropriateness of generic substitution was assessed using explicit criteria.

Main Results:

• The experimental counties showed statistically significant increases in both the rate of generic substitution and the dollar savings per substitution after adopting capitation.
• No significant differences in the appropriateness of generic substitution were observed between the capitation and FFS reimbursement systems.
• Pharmacist dispensing behavior demonstrated a clear shift towards increased generic utilization under the capitation model.

Conclusions:

• Transitioning from fee-for-service to capitation reimbursement can effectively increase the rate and economic benefits of generic substitution among pharmacists.
• The shift in reimbursement models did not negatively impact the clinical appropriateness of generic drug choices.
• Capitation models offer a viable strategy for incentivizing cost-saving practices in pharmacy dispensing.