Prompt-pay Medicare proposals open new rift between PBMs, indies

WASHINGTON Deepening the rift between pharmacy benefit managers and independent pharmacy, the Pharmaceutical Care Management Association has launched another sharp salvo in the increasingly bitter war of words between independent drug store operators and the PBM industry group.

The latest dustup stems from a PCMA assertion, released today, that legislative efforts to speed up the payment of Medicare Part D prescription drug claims to pharmacies would cost the Medicare program and U.S. taxpayers billions of dollars. That assertion drew a sharp and immediate retort from the National Community Pharmacists Association, which dubbed the findings “bogus.”

PCMA is basing its claim on a new study, commissioned by the PBM industry group and conducted by PricewaterhouseCoopers. Reporting on its findings, the group predicted that passage of “prompt pay” Medicare Part D legislation would cost the program and its beneficiaries at least $3.1 billion over the next decade.

“The increased cost of making Medicare PDPs pay retailers twice as fast as doctors and hospitals are paid will almost certainly be financed at the expense of Medicare providers and beneficiaries,” said PCMA president and chief executive officer Mark Merritt. “In a pay-go world, this would essentially be a wealth transfer from rural providers, Medicare Advantage plans, skilled nursing facilities, beneficiaries and others to independent drug stores.”

Merritt also repeated the claim—made frequently by the PBM industry but disputed by many pharmacy operators—that Medicare PDPs consistently pay pharmacy claims within 30 days. PCMA called that 30-day turnaround “a standard consistent with Medicare Parts A & B, the federal employees’ health plan, and the private sector.”

In response, NCPA quickly counterattacked. “PCMA’s newly-released, so-called study barely passes the laugh test,” asserted NCPA executive vice president and chief executive officer Bruce Roberts in an angry retort. “PricewaterhouseCoopers appears to have been commissioned to obtain information from five PBMs to determine if paying pharmacies on time will affect their profitability.

“You get what you pay for, and since the study’s objective was to highlight the supposed cost of prompt payment compliance, the results were predictably supportive of that premise,” added Roberts. “Throwing out these bogus numbers as a way of scaring Congress is both desperate and really undermines what little credibility the PBM industry ever had.”

PCMA commissioned the study in response to the growing movement in Congress to pass pharmacy-friendly legislation that would force drug plans to pay pharmacies for prescriptions dispensed to Medicare Part D beneficiaries within a 30-day deadline. Many drug store operators—particularly independents—say the slow pace of reimbursements has put them in a financial bind, and it was one major factor, according to NCPA, in the closing of more than 1,100 independents last year.

In the wake of intensive lobbying by NCPA and other pharmacy groups, lawmakers in Congress are considering a number of bills to address the prompt-pay issue, including H.R. 1474 in the House and S. 1954 in the Senate.

“The intent of the Medicare Part D prescription program was not for PBMs to aggressively exploit the lack of reimbursement timing standards,” Roberts asserted. “The Medicaid program is able to reimburse pharmacies in a timely fashion without its administrative cost swelling. Why would prompt payment create such a financially onerous administrative hassle for the multi-billion-dollar, publicly traded PBMs, who surely have the capability to make the adjustment?

“While their earnings soar, community pharmacies are experiencing a financial crunch that was pivotal in causing five percent of these small businesses to close in 2006,” Roberts continued. ““Passing H.R. 1474 in the House and S. 1954 in the Senate is the right thing to do and the prospects for action before Congress adjourns this year are good.”