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Pharmacists Fear Threat to Business Posed by Medicare Part D

Helene Levens Lipton

Each day, the nation's pharmacies dispense more than 8 million prescriptions. In return, pharmacies are reimbursed by patient health plans. What used to be so simple has now become a game of chance, thanks to the advent of Medicare Part D. Health policy expert Helene Levens Lipton, professor of health policy and pharmacy at the UCSF School of Pharmacy, explains what went wrong and what could happen next, particularly to the nation's 25,000 independent pharmacies, which lack the deep pockets of major chain pharmacies. Q: Pharmacists from Texas recently descended on the White House to complain that the new Medicare drug plans are not reimbursing pharmacists quickly enough, thereby threatening their livelihoods. Have you heard of such complaints from pharmacists in other states? How big a problem is it? A: This is a serious problem that has been widely reported nationwide. And when you couple this problem with recent cuts in pharmacists' reimbursement under Medicaid, it spells trouble for retail pharmacies. Medicare drug plans now tend to take about six weeks to reimburse a pharmacy for a dispensed drug. It used to take seven to 15 days. Some independent pharmacies have had to take out loans to compensate for the resulting cash-flow problems. The Centers for Medicare and Medicaid Services (CMS, the government agency administering the new national drug benefit) has issued guidance on this issue, stating that plans should pay pharmacies faster. But this is nonbinding; the health plans do not have to comply. Overall, this lack of regulatory power is in keeping with the CMS decision not to police the health plans. There is no reason that it had to be this way. Congress has now belatedly recognized that fact, and introduced a bill that would require a shorter reimbursement time. Q: Has the dollar value of drug reimbursement declined? If so, by how much? And do you believe pharmacists were aware of this possibility when Medicare Part D was being discussed? A: There are really two issues in play at the moment: slow reimbursement and low reimbursement. Under the new Medicare drug benefit, prescription drug plans are offering very low dispensing fees. They are on the order of about $2, though the fee varies by state and by generic versus brand-name drug, etc. Medicaid reimbursement was previously in the $5 to $10 range, and the private payers were about the same. But pharmacies must have been aware of what was coming because they signed on to these contracts, which stipulate dispensing fees and payment schedules. CMS could, of course, "raise the bar" for health plans by requiring faster payment and creating minimum dispensing fees to pharmacies. And there is some talk that it is considering increases in reimbursements for pharmacists who help patients switch from brand-name drugs to generic medications. But for now, it is just talk. Q: In the early days of Medicare Part D, one heard anecdotally of many pharmacists donating their time and dispensing a few days' supply of drugs to keep their patients well. Is there any way to verify and quantify those stories? A: This is unquestionably true. Community pharmacists have provided access to needed drugs to elderly patients who faced shortages due to problems with the new drug benefit. The extent of pharmacists' commitment has been documented many times in the press. Pharmacist representatives have reported the phenomenon at recent congressional hearings. Often this has resulted in monetary losses to the pharmacies. The precise monetary value would be difficult to derive, because sometimes the states absorb the loss, although more often the pharmacies take the loss. Q: Is there a risk that small pharmacies will indeed have to shut down if the cash flow problem for drug reimbursements continues? A: In my opinion, there is definitely a risk. Of course, the pharmacist shortage is another important factor contributing to this problem. Rural independent pharmacies (and other pharmacies with high Medicare and Medicaid populations) will be at greatest risk for closure. I think that the dissolution of rural independent pharmacies is a very real possibility. But the prescription drug plans under Medicare Part D have pharmacy network requirements that must be met. So, if you're the last rural pharmacy standing, you would have some decent bargaining power with the health plans. That is a dire scenario, but it could happen! Source: Jeff Miller