Understanding PSAOs and Their Role in Supporting Independent Pharmacies
Independent pharmacies play a critical role in providing accessible, trusted care in their communities. Pharmacy Services Administrative Organizations, or PSAOs, harness scale and expertise to help pharmacists, as small business owners, navigate increasing pressure and complexity within the supply chain. PSAOs relieve administrative burden and elevate the voices of independent pharmacists in their relationships with third-party payers and pharmacy benefit managers (PBMs).
PSAOs support approximately 83 percent of the nearly 20,000 independent pharmacies nationwide. This support helps ensure the continued viability of independent community pharmacies, allowing them to spend more time caring for patients and less time on paperwork.
Here are three things to know about PSAOs:
- PSAOs help independent pharmacies manage everyday business operations.
In addition to caring for patients, independent pharmacies take on significant back-office responsibilities to run their businesses. PSAOs help manage pharmacists’ working relationships with payers and PBMs, providing administrative support related to claims, contracting, reimbursement and audits.
PSAOs may assist with regulatory compliance and credentialing, provide audit support, facilitate payment processing and reconciliation, and analyze payment and dispensing data to identify claims that have not been paid or were paid incorrectly. By helping manage these responsibilities, PSAOs allow pharmacists to make better use of their staff and resources. - Independent pharmacies voluntarily choose to work with a PSAO.
PSAOs function as an extension of an independent pharmacy, with each pharmacy deciding whether a PSAO’s services meet its individual business needs. Independent pharmacies voluntarily contract with a PSAO, generally for a fixed monthly fee of $200-$300, which is not tied to drug price or volume.
PSAOs can take different forms. Some are affiliated with healthcare distributors, while others operate independently. Distributor-affiliated PSAOs are separate legal entities and represent one of the many ways distributors support their pharmacy customers. - PSAOs provide critical support — but do not make reimbursement or coverage decisions.
PSAOs do not determine reimbursement rates, set maximum allowable cost rates or decide which medicines are included on formularies. They also do not make patient coverage decisions, create pharmacy networks or plan structures, or retain any portion of pharmacy reimbursement. PBMs, insurers and other payers are responsible for payment structures and coverage decisions.
Learn more at HDA.org/PSAOs.