Medicare Must Address ‘Underwater’ Drug Reimbursements

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With many independent community pharmacists reporting financial losses filling Medicare prescriptions, the National Community Pharmacists Association (NCPA) has written to the Centers for Medicare & Medicaid Services (CMS) and asked the agency to take action to prompt Part D plans and/or their pharmacy benefit managers (PBMs) to comply with a federal requirement that Medicare prescription drug reimbursement reflect “the market price of acquiring the drug,” according to a press release from the NCPA.

In the letter, NCPA expressed “our concerns and those of our members regarding the non-compliance of multiple Part D plans and PBMs regarding the usage of drug pricing standards that are used to reimburse Medicare pharmacies that clearly do not reflect ‘the market price of acquiring the drug’ – in direct violation of federal statute.” The letter explains how on Jan. 1, 2016, a new CMS requirement took effect that requires plan sponsors/PBM corporations to regularly update and disclose so-called maximum allowable cost (MAC) pricing benchmarks used to determine reimbursement for community pharmacies filling Medicare prescriptions, typically for generic drugs. The requirement was implemented by CMS in response to concerns raised by NCPA regarding below-cost payments to pharmacies using MAC values that were not updated to reflect market costs.

So far in 2016, there have been multiple Part D plans and PBMs that have been utilizing MAC drug pricing values that are “far below what would be considered to be reasonably approaching market prices for drugs,” the letter noted, and “pharmacies are dispensing these medications to seniors at significant financial losses.” Part D plans and PBMs are manipulating MAC pricing standards “as a proprietary variable that can be changed on a whim with no relation whatsoever” to real world costs, NCPA’s letter said, calling that practice a “blatant disregard” for federal statute that “is serving to undermine” the Part D program and “truly jeopardizes the ability of pharmacies to serve these patients.” The practice calls into question the accuracy of drug pricing information beneficiaries rely on via the Plan Finder website as well.

“It’s outrageous that Medicare seniors’ access to medication and the viability of independent community pharmacies are both being undermined by the practices of some PBM corporations and drug plan sponsors that appear to run afoul of federal requirements,” said NCPA CEO B. Douglas Hoey, RPh, MBA. “NCPA strongly urges Medicare officials to take swift action to address this problem. NCPA will continue to engage with Medicare, Congress and others to try and achieve a resolution to this problem.”

NCPA’s letter concluded by offering recommendations to help Medicare officials fix the problem. Specifically NCPA advised “that CMS further define or provide guidance on what exactly is meant by ‘the market price of acquiring the drug’ and put Part D plans and PBMs on notices that they must be able to verify compliance with this requirement.”

The NCPA represents the interests of America’s community pharmacists, including the owners of more than 22,000 independent community pharmacies. Together, they represent an $81.4 billion health care marketplace and employ more than 314,000 individuals on a full or part-time basis.

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