Supporting Independent Community Pharmacies
Pharmacy Service Administrative Organizations (PSAOs) provide administrative and contracting support to independent community pharmacies by managing complex interactions with health insurers and Pharmacy Benefit Managers (PBMs). Relieving administrative burdens, PSAOs allow pharmacists to focus on patient care rather than paperwork.
 | Empowering Independent Pharmacies Through Administrative SupportThe core function of a PSAO is to contract with a group of independent pharmacies for administrative services, typically for a modest monthly fee (around $200, the sole source of PSAO revenue). By representing pharmacies in their interactions with insurers and PBMs, PSAOs reduce back-office demands and help independent pharmacy owners dedicate more time to serving patients. PSAOs are one of the many ways distributors support their pharmacy customers. When a distributor offers PSAO services, the PSAO is a separate legal entity that operates independently. It is important to note that not all PSAOs are connected to pharmaceutical distributors, and not all pharmaceutical distributors offer PSAO services. Critical to the understanding of PSAO services is knowing that contracting with a PSAO is voluntary and based on the individual needs of the pharmacy. |
Voluntary Support Tailored to Pharmacy Needs
Contracting with a PSAO is entirely voluntary and based on the individual needs of the pharmacy. Most of the nearly 20,000 independent community pharmacies in the U.S. choose to outsource some administrative services to a PSAO so they can spend more time with patients and less time on administrative tasks.
What PSAOs Do
Manage relationships with health insurers and PBMs, including questions about claims, contracting, reimbursement and audits
Support pharmacies in understanding their rights and responsibilities, including audit responses and appeals
Assist with compliance and credentialing requirements
Facilitate central payment processing and reconciliation for member pharmacies
Analyze payment and dispensing data to identify unpaid or incorrectly paid claims
What PSAOs Do Not Do
They do not determine reimbursement rates or coverage decisions
They do not set Maximum Allowable Cost (MAC) rates
They do not create patient formularies or determine patient coverage
They do not retain any portion of pharmacy reimbursement
They do not create networks, plan structures or prescription cost decisions
PSAOs help reduce administrative burdens and streamline processes so pharmacists can focus on patient care.
Local Independent Pharmacies Are Essential Patient Care Providers
Independent pharmacists are accessible, trusted health professionals that serve communities nationwide. PSAOs help these small business owners manage the administrative complexity of healthcare contracting so they can focus time and expertise on patient counseling, medication education and health outcomes.
Resources
The resources below address the industry's approach to increasing awareness and understanding of the role of PSAOs.
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