Pharmacy Services Administrative Organizations

PSAOs Sustain Independent Community Pharmacies

A Pharmacy Services Administrative Organization (PSAO) interacts with healthcare insurers and Pharmacy Benefit Managers (PBMs) on behalf of independent community pharmacies.

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Empowering and Amplifying the Voice of Independent Pharmacies

The core function of a PSAO is to contract with a group of independent pharmacies, generally for an affordable monthly fee (around $200, the sole source of revenue for the PSAO). Doing so amplifies the voices of independent pharmacies with PBMs and creates administrative efficiencies, allowing these providers to better use their limited resources.

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.

Pharmacist helping patient

Most of the Nearly 20,000 U.S. Independent Community Pharmacies Voluntarily Outsource Some Administrative Services to a PSAO

These entities provide pharmacists, as small business owners and healthcare providers, critical support to allow them to spend more time at the pharmacy counter and, ultimately, on patient care.

Services Provided By PSAOs

Managing insurer and PBM relationships, including fielding questions about claims, contracting, reimbursement and payer/PBM audits.
Ensuring pharmacy clients understand their rights and responsibilities regarding responding to or appealing audit findings
Assisting with regulation compliance and credentialing
Aggregating claims to a single payment from a third-party payer on behalf of a PSAO's member pharmacies; individual payments are then disbursed to a PSAO's members
Managing and analyzing pharmacies' payment and drug dispensing data to identify claims that have not been paid or were paid incorrectly

PSAOs Do Not

Dictate reimbursement rates
Set Maximum Allowable Cost (MAC) rates

Determine formulary listings or patient coverage

Retain any portion of pharmacy reimbursement

Create Direct or Indirect Remuneration (DIR)* fees — or retain any portion of DIR or dispensing fees 

Accept all contract terms

Create networks or plan structures

*In fact, PSAOs provide tools to help improve patient outcomes, which can in turn reduce DIR fees for pharmacies


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