Contracting for Telepharmacy Services

January 2013 - Vol.10 No. 1 - Page #24
Category: Remote Pharmacy Services

Several states in the US currently permit remote pharmacy services. Drivers for creating these services include the shortage of pharmacists in certain states, the need to properly address National Patient Safety Goals for safe medication use, and ensuring optimum benefits are accrued from technology investments, such as bedside bar code scanning. Robust telepharmacy services can be a key element of effective medication management, ensuring more patients are protected by the benefits afforded through pharmacist review.

A substantial number of hospitals in rural settings are currently experiencing a scarcity of local pharmacy services. In Kansas, the lack of pharmacists has been particularly challenging; at least 30 of the state’s 105 counties have only a single pharmacist, and six counties have none.1,2 Kansas is also home to over 80 critical access hospitals, many of which have no access to full-time pharmacy coverage. In situations where a hospital has limited or no pharmacy services, the majority of medication preparation duties must be completed by nurses, who may not have been trained in the appropriate management of medications. Clearly, this scenario is not ideal. 

Furthermore, as hospitals implement bedside bar code technology they seek to maximize their return on investment and the safety measures that it creates. Hiring multiple third-shift pharmacists is not financially feasible for many hospitals; however, the need to have the medication orders entered or reviewed by a pharmacist before they are administered to obtain the greatest benefit of their technology investment still exists. Thus, remote pharmacy services may be a viable option to cover these shifts. 

In an effort to provide quality pharmacy services to as many patients as possible, Via Christi Health, based in Wichita, Kansas, initiated a telepharmacy services program to hospitals both within and outside of the health system in November, 2011 (see PP&P’s October 2011 article, Improve Coverage with Remote Pharmacy Services for information on the earlier implementation of remote order-entry services). Since the initial implementation, Via Christi Health has successfully improved and extended the reach of its ePharmacy initiative, providing services to 15 hospitals. 

Elements of the Telepharmacy Program
For hospitals without the capacity to offer 24/7 pharmacy services, an ePharmacy program permits pharmacist review of orders from a remote location. While numerous vendors offer a variety of remote order entry and telepharmacy services, Via Christi Health developed a homegrown solution, utilizing a secure, real-time video and audio link via Webcam and teleconferencing equipment between the supervising, off-site pharmacist and the site of the technician performing the work. With this approach, technicians perform their normal tasks, such as cart fills and ADC stockings, while the off-site pharmacist observes and verifies these procedures through the live video link. The same pharmacist may supervise the work of other pharmacy technicians, provided the pharmacist does not communicate with or review the work of more than one technician at a time. 

The decision to develop a homegrown telepharmacy solution was made to best leverage Via Christi’s existing resources. It was decided that pharmacists already working inside any of the health system’s hospitals would be given the option of becoming dual employees; rather than hiring outside the health system for after-hours pharmacists, we first hire our own pharmacists to work additional hours as ePharmacists. The strategy behind this choice was to provide hospitals with knowledgeable, seasoned pharmacists who are familiar with the existing system technology and procedures. An additional benefit of this approach is increased compensation and satisfaction for pharmacy employees. By eliminating the learning curve required to provide comprehensive telepharmacy services, Via Christi pharmacists are able to provide exceptional service. 

The Order Verification Process
The ePharmacist review process begins when the technician sends the pharmacist the list of medications that require review. For example, if the ADC needs to be refilled, the list of required medications is sent to the pharmacist and pulled up on one side of the computer screen, and then the technician slides each individual medication under the camera so the pharmacist can ensure accuracy against the ordered medication or the ADC refill report; these medications appear on the other side of the screen for comparison. If necessary, the technician can zoom in to provide additional detail, and the camera captures an image of every drug and records these pictures for future documentation and tracking purposes. A two-way audio and video system allows real-time communication between the technician and the pharmacist. After each medication is reviewed and approved, it is time stamped and initialed by the verifying pharmacist. 

Contracting for Telepharmacy Services
A key requirement when writing a contract for telepharmacy services is ensuring that the language of the contract fully addresses both parties’ obligations and expectations. To this end, it is vital to evaluate every area of operations and include specific information detailing each relevant point from the perspective of both the telepharmacy vendor and the hospital receiving services. Via Christi Health writes contracts for hospitals within and outside of the health system, and these contracts differ based on the various requirements of each hospital’s diverse telepharmacy needs. Several matters must be evaluated and delineated specifically in the contract. 

Terms of the Agreement
The legal department typically drafts the contract and the pharmacy amends items specific to services rendered. All logistics of telepharmacy coverage should be included in the contract; be sure to read the document in its entirety and amend the language to accurately reflect intent. A vendor should not offer services in the contract that are not required or that it is incapable of providing, and likewise, a hospital should not pay for unnecessary services. Working closely with the state board of pharmacy will ensure an understanding of your state’s guidelines and restrictions. Although each contract will be unique, several universally relevant items must be covered, including:

  • Contract length, including automatic or negotiated renewals 
  • Hours of service, including whether services will be rendered on weekends and holidays and whether there will be additional charges for those hours of coverage
  • Setup fees, which may be negotiable depending on the length of the contract. For example, setup fees may be charged for a one-year contract, but waived for a two-year contract 
  • Termination procedures and costs 
  • Any relevant discounts. For example, if a group of five or six hospitals form an alliance, a remote order entry company might consider providing a group discount if all agree to coverage 
  • Assign responsibility for paying any attorney fees
  • Outline the process for amending the contract
  • Procedures for enforcing the contract 
  • HIPAA compliance requirements 
  • Include a statement that the hospital will provide the telepharmacy vendor with access to patient information (eg, patient profiles, demographics, medication lists, allergies, laboratory values, height and weight, and age)
  • Define the quality assurance data to be tracked and reported. For example, does the hospital want to track interventions, turnaround times, and number of orders per day or for a specific set of hours during the day? Beyond this data, the hospital may decide to track incident reports, establish how these reports should be handled, and document how each individual event has been resolved 
  • Establish policies and procedures (P&Ps) for managing incident reports, including what data must be reported, and who should report this information. If the pharmacist enters amoxicillin in error when Coumadin should have been entered, does this need to be reported? Which form must be filled out, and who should it be sent to? In addition, ePharmacy requires access to P&Ps detailing any standard order sets for medications, as well as automatic substitution lists
  • Delineate downtime procedures. While the hospital is responsible for ensuring their systems are in working order, P&Ps should include procedures for power outages, internet or server failure, or system upgrades. Be sure to include who pharmacy must contact to report power outages or connection challenges.  The internet will occasionally experience connectivity challenges, and there will be times when either the ePharmacy or the hospital will have a disruption in access
  • Review contracts annually or earlier if changes in laws or regulations occur 
  • Language permitting or restricting subcontracting of ePharmacy services. Many states do not allow this practice, requiring the contract to be between the ePharmacy and the hospital receiving services only. Via Christi does not permit subcontracting 

Every detail, no matter how insignificant it may seem, must be detailed in the contract; otherwise, these unaddressed issues may come under scrutiny. 

Developing a Timeline of Expectations
The telepharmacy provider and the hospital receiving services must work together to develop a realistic timeline of delineating program development, implementation, scope of services, and the responsibilities of each party in sustaining a robust program. Via Christi Health requires the hospitals we partner with to provide the information necessary to ensure a successful program by certain dates or milestones, and this information is included in the contract. These data must be agreed upon before any telepharmacy services are provided. For example, the anticipated go-live date, what staff training will be provided and who will provide the training, and all formulary data from the hospital must be provided before the program is implemented. The hospital also must provide information detailing their IV to PO conversion policy, preferred medication lists, and access to the pharmacy information system and order management system.

Specify IT Responsibilities
It is critical to delineate responsibilities for the numerous IT-related tasks that must be attended to. For example, who is responsible for maintaining the computers and equipment, the network connections and configuration, and the cabling and transmissions? In most cases, it is the hospital’s responsibility to ensure these systems are running properly. However, Via Christi Health will review these choices in cooperation with the hospital receiving services, and assist with virus protection, software patches, and network protocols and configurations. Ensuring that IT capabilities and equipment standards are acceptable is vital before going live with telepharmacy services. Identifying key pharmacy and IT contacts at the hospital helps ensure consistency and swift resolution of technical issues. 

Billing and Cost Considerations
A telepharmacy program can assist in stabilizing pharmacy costs. For example, the cost of bringing in a temporary relief pharmacist to provide vacation coverage often includes travel and room and board expenses, in addition to salary, for rural facilities. These costs may be significantly higher than utilizing ePharmacy services. 

There are a few different options for billing, and each telepharmacy company develops their own payment structure. Services can be provided via a flat, hourly rate, as well as a per-order rate. In either case, the contract must specify a payment schedule that has been agreed upon by both parties. Small community hospitals that typically receive few orders when their pharmacy is closed usually opt for the per-order, volume-based rate, as the overall cost is less than an hourly rate. Conversely, critical access hospitals, with a larger volume, may prefer a flat fee per hour of services rendered. The hourly rate is adjusted based on the hospital’s average daily census, as well as the time of day service is requested. For example, more orders are typically entered during the day, so rates may be higher from 7am to 7pm than during third-shift coverage. 

To determine the best billing option, start by specifying what constitutes a single order. Because there are different views on what counts as an order, this should be clarified before the contract is signed. For example, if there is an order to change a medication from once a day to twice a day, does that constitute one order or two (one to enter the new order and the other to discontinue the daily order)? If three orders are entered but later deemed incorrect and discontinued, a productivity report would show six orders, three for the orders entered and three for the orders discontinued. How will this situation be addressed? In addition, determine how orders will be tracked for billing purposes. Will the hospital print out reports to show how many orders have been entered, or will the pharmacy service be responsible for tracking this data? To ensure consistency in order tracking, it may be prudent for hospitals to develop proprietary systems that allow accurate tracking of the number of orders and interventions. Paying an hourly rate may be beneficial if these determinations are difficult, as costs remain consistent from week to week. After determining what constitutes a single order, include this information in the P&P to ensure accurate billing. 

Via Christi does not charge per order, preferring to charge an hourly rate due to the aforementioned concerns. To keep our process and billing standardized, we bill by the hour based on the hospital’s average daily census. To ensure transparency when charging for telepharmacy services, the rates charged to a hospital within the Via Christi Health system are based on the same pricing model as an outside facility of similar size.  

Addressing Contracting Challenges
Pricing is always challenging when negotiating telepharmacy services. Be wary of a vendor that quotes a price far below other estimates. For example, if one vendor quotes full remote pharmacy coverage for ten dollars per hour when other quotes hover at approximately thirty to forty dollars per hour, the lower quote will likely provide a much lower level of service, or the remote pharmacist providing coverage will be entering orders for many different hospitals at the same time. Typically a remote pharmacist will enter orders for a few hospitals at a time, depending on capacity and the hospitals’ sizes.  

In addition, determine who is responsible for paying for additional software licenses needed to access a terminal server or other pharmacy applications. It is not unusual for a hospital to purchase a limited number of concurrent or seat licenses required to operate a specific software. If this issue is not delineated in the contract, conflict may ensue. To rectify this issue, we specify that the hospital receiving services is responsible for securing and financing all required licenses. 

Hiring ePharmacists
Regulations vary from state to state and there are several states that do not allow remote order entry. Kansas is one of the first states to develop specific language for hospitals to allow for remote supervision of a pharmacy technician.  It may be challenging to identify and hire pharmacists with prior experience who also have multi-state licenses and understand the challenges of working remotely. When hiring a pharmacist for ePharmacy who previously worked at a tertiary facility, there are differences in pharmacy’s role that must be understood. Smaller, rural hospitals that employ ePharmacy services may not have the same access to the depth and breadth of services as a major medical center. However, there are many advantages to hiring a pharmacist who has a vast knowledge of critical care and pediatrics. Education detailing the differences between working in telepharmacy versus on-site, plus training in adherence to P&Ps, must be provided to new hires. This training is critical to the success of the program. After the initial program go-live, the remote pharmacists will develop relationships with the staff at the hospital, which will help create an open forum for communication. 

Benefits of a Robust ePharmacy Program
The chief advantage of utilizing telepharmacy services is that patients receive safe, efficacious medication as a result of pharmacist review. Ultimately, the goal of any effective ePharmacy program is to provide the same high level of service as employing an in-house pharmacist. Adopting a telepharmacy program also benefits the organization in that costs are stabilized, and pharmacy and administration can be confident that costs will remain consistent from month to month. Finally, the peace of mind that results from knowing that patients are receiving excellent care from competent pharmacists inspires confidence throughout the organization.

Future Directions
Improving and expanding current telepharmacy offerings are immediate goals of our ePharmacy program. Increasing utilization of electronic supervision, thereby providing pharmacy services to more patients, is one of the main objectives. In addition, we are seeking to increase our ePharmacy services to include developing formulary strategies, thereby increasing standardization, improving services, and decreasing costs. Developing a program to provide ePharmacy medication reconciliation counseling to patients is another future area of interest.

As more states draft legislation to permit eServices, telepharmacy will have the capacity to improve medication safety for more patients who otherwise may not receive the benefits of pharmacist order review. Educating pharmacists and administration on the advantages of instituting a robust telepharmacy program is key to advancing its use in states where such an initiative is permissible. n


  1. American Society of Health-System Pharmacists Web site. Pharmacy News: Remote Technician Supervision Up and Running in Kansas. Accessed November 2, 2012.
  2. The University of Kansas Web site. KU School of Pharmacy-Wichita Set To Open. Accessed November 2, 2012.


Mark Gagnon, PharmD, is the director of ePharmacy at Via Christi Health based in Wichita, Kansas. He obtained his Bachelor of Science and Doctor of Pharmacy degrees from the University of Kansas. 



Building a Strong Vendor-Hospital Relationship

When providing ePharmacy services, the nature of working from an off-campus location requires an effort by pharmacy to develop and maintain a strong relationship with your hospital partner. Use your contract to outline the expectations of the vendor and the hospital to ensure metrics are met by both partners. Identifying as a member of the patient care team is key to creating a feeling of teamwork between pharmacy and hospital staff. For example, when I have a question for a physician or nurse at one of the hospitals where we provide ePharmacy services, I call and identify myself as from the pharmacy, not from Via Christi Health. We want our partner to know that we are their pharmacy, and we are on their team. 

Remote Pharmacy Services
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