Pharmacy Services Administration Organization (PSAO)
What is a Pharmacy Services Administration Organization (PSAO)?
A PSAO is an organization that offers a range of services to independent pharmacies, which often serve as the sole provider of pharmacy services in medically underserved areas.
The primary service of the PSAO is to evaluate and execute the contracting of Pharmacy Benefit Managers (PBMs). This includes:
- Getting the pharmacy into the network plan(s) supported by the PBM
- Negotiating key contract terms, including billing requirements, reimbursement rates, recoupment process/overpayment clauses, payment frequency, audit clauses, and value-based/quality payment adjustments
- Finalizing reimbursement terms, including dispensing fees, pharmacy-provided services, and reimbursement related to quality metrics
- Handling credentialing, such as the verification of pharmacy and pharmacy technician licensure, pharmacy liability insurance validation, and registration with the Drug Enforcement Administration’s (DEA) Diversion Control Division
The PSAO’s other tasks include contracting wholesalers, billing support, setting up information technology, and offering general business support.
What is the benefit of a PSAO?
The PSAO performs vital tasks for independent pharmacies, the most important of which is the negotiation of contracts with PBMs on the pharmacy’s behalf. They perform services that the independent pharmacy may not be able to do on their own while also operating the pharmacy.