Pharmacists say drug benefit has put them in financial pinch | VailDaily.com
YOUR AD HERE »

Pharmacists say drug benefit has put them in financial pinch

WASHINGTON – It took Dennis Song eight years to amass a $10,000 emergency fund for his pharmacy in Flower Mound, Texas. It took about two months under the new Medicare drug benefit to drain it.The $20,000 credit line at his bank is nearly maxed out, too. Also, he isn’t cashing his own paycheck to make sure the ones he gives his employees don’t bounce.Song’s experience is not unique. Small, independent pharmacists – those who don’t work for big chain drugstores, such as Wal-Mart or Walgreens – say the Medicare program has been a huge financial problem.The trouble, they say, is cash flow. States used to reimburse them at regular, often weekly intervals for serving elderly Medicaid patients. But, now, those patients have been moved into Medicare. Payment comes at a time selected by the dozens of insurers offering coverage.Also, seniors who had no coverage and used to pay in cash now have an insurer negotiating discounts on their behalf.”The payments from the plans are slower and lower,” Song said.Chain drug stores also must deal with irregular payment schedules and lower profit margins, but they have more resources to help them weather the change. If they lose money on a prescription, they can make it up when customers buy their groceries or a new pair of jeans.Mark McClellan, the nation’s top Medicare official, said he’s sympathetic to the pharmacists’ concerns. But he also said their problems didn’t begin Jan. 1.”I think what we’re seeing is a change in the business model that continues a trend that has occurred over the past 15 years,” he said.McClellan said his agency is exploring ways to increase reimbursement to pharmacists by rewarding them when they help patients switch to a generic, which is usually cheaper than a brand name.The extra payments, often referred to as “pay for performance” would be a reward for saving taxpayers money in programs such as Medicaid.”This does require some changes in business practices, so we’re looking at ways that we can support pharmacists who want to succeed in this new kind of environment,” he said.Insurers say they usually pay pharmacists on a two-week billing cycle, so the billing cycle under Medicare Part D shouldn’t be a problem for pharmacists. However, delays in payments occurred in some cases when the Centers for Medicare and Medicaid Services gave insurers incorrect data for enrollees. It took time to get patient information in order, and that delayed reimbursements, said Karen Ignagni, president of America’s Health Insurance Plans, a trade association.Under the Medicare drug program, pharmacists enter into contracts with private plans serving their state. The plans decide how much they will pay a pharmacist for dispensing a drug. The pharmacist can accept or reject that offer.For example, Song said he buys from his drug wholesaler a 30-day supply of Lipitor, which lowers cholesterol, for $97.91. The insurers running Part D plans pay him between $99 and $100 on average for the drug. The thin margin makes it hard to generate a profit when considering labor, utilities and other expenses, he said. About 40 percent of his customers are senior citizens.In some cases, plans have offered to reimburse him for less than what he pays for certain drugs, he said. A 100-day supply of Lisinopril, a blood pressure medicine, usually cost him at least $11 a bottle, and plans offered to pay him $10, he said.Chuck Oien, a pharmacist from Elgin, N.D., rejected the terms offered by dozens of insurers, claiming he would lose money every time he filled a prescription. Oien, the owner of Economy Drug, agreed to a contract with just two insurers.That means many senior citizens in his county are taking their business elsewhere. One customer who gave him about $8,000 in business last year, will be going to a pharmacy in nearby Bismarck, he said.”I don’t know how much new business will be generated, but I would say I’ve lost more business than what it’s going to generate,” said Oien of Economy Drug.Marlin Weekley, owner of Metamora Pharmacy near Peoria, Ill., said technical issues prevented his claims from getting through to one of the plans.”My (business) checkbook was exactly zero at the end of February, and that’s after two months of ferocious work in filling prescriptions,” Weekley said.Overall, there are about 25,000 independent community pharmacies across the United States, and about 60,000 pharmacists work in them.David Dare, owner of Binger Pharmacy in Binger, Okla., closed his doors Feb. 28th. He said it was getting harder to make a good of it in a town of 800 people, but the new drug benefit “was the final straw.””Small pharmacists are just as endangered as small farmers,” Dare said. “Scale is everything.”Vail, Colorado


Support Local Journalism