• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Drug Program 'Chaos': Small Pharmacies Feeling Strain From New Medicare Plan.

Posted on: Wednesday, 22 February 2006, 18:00 CST

By Thuy-Doan Le, The Sacramento Bee, Calif.

Feb. 22--Beatle Tran now keeps his West Sacramento pharmacy open an extra day each week. He has to. He's trying to make up for what he says the federal government's new Medicare drug plan is costing him. "It hasn't been a good year," he said. The new program - Medicare Part D - kicked in Jan. 1. It allows millions of eligible elderly or disabled Americans to enroll in a private plan with a prescription drug program subsidized by the federal government. But the program has gotten off to a rocky start. Patients, doctors and others in health care have sharply criticized its implementation.

Both chain pharmacies, which dominate the industry, and independent ones report difficulty in dealing with the launch of Part D. But according to the California Pharmacists Association, independent pharmacies say the plan is particularly troublesome for them, because they have fewer resources to deal with problems. Independent pharmacists say they have had to devote more time and manpower to explaining a plan that is confusing to even the most sophisticated health professionals. They contend that information about the plan is either unavailable or difficult to obtain. What's more, reimbursements from private insurers are slow to arrive - and in some cases are only for part of the costs when they do come. Tran, who owns Jefferson Pharmacy, said his revenue has dropped by 20 percent since January. "It's really bad and it's been a disaster for us," he said. "Our reimbursement rates have gone down. Medicare Part D has really hurt us." Because of problems with the launch of Part D, California extended the state's emergency prescription drug coverage, enabling some low-income seniors and disabled people to get needed medicine quickly. For those clients, pharmacies are now being reimbursed under Medi-Cal, the state's version of Medicaid, until May 11. Frank K. Cable owns South Sacramento Pharmacy on Franklin Boulevard. He said the D in the plan's name stands for "disaster.""In the first two weeks, it was complete chaos," he said. "Nobody knew what they were doing." Cable has been in business since 1973 and has weathered a lot of new regulations. But Medicare Part D has made the single biggest impact on his business ever, he said. "I really have to see how this works out," he said. "I'll still be able to make wages, pay the rent and utilities, but our profits are a lot slimmer." The chief reason: Pharmacists are getting paid less under Medicare Part D for the same drugs they've always sold. The drugs are purchased from wholesalers, and traditionally pharmacies are paid the cost of the drug plus a fee for labor. But in some cases reimbursements have been so low pharmacists are taking a loss. Tran, for example, said if he purchased a drug for $47 he would normally receive about $56. Now some private insurance companies, through Medicare Part D, will pay him only $46.50 - less than what he paid to begin with. Jeff Flick, a regional administrator with the Centers for Medicare & Medicaid Services, part of the U.S. Department of Health and Human Services, in San Francisco, said the change has been a "very dynamic process" with a lot of competition to provide drug benefits. With Part D, pharmacies enter into a private contract with an insurance company and the terms have to be acceptable to both parties, he said. He said market forces will eventually help pharmacies and insurance companies find an equilibrium. But he doesn't expect anyone to enter an agreement to lose money. "The marketplace has a way of self-correcting," he said. Drug sales are the chief source of income for independent pharmacies, said Carol Cooke, a spokeswoman for the Virginia-based National Community Pharmacists Association, which represents 24,000 pharmacies. The pharmacies do an estimated $84 billion in business and dispense nearly half of the nation's retail prescription medicines, she said. "Unlike big retail chains with deep pockets, pharmacy owners are small-business owners and entrepreneurs who can't weather the prices," Cooke said. For Cable at South Sacramento Pharmacy, the numbers are particularly stark. He said he pays $45,000 each week to his wholesaler for drugs. Under his plan with the state, he was paid about an equal amount, enough to cover his costs. But under Medicare Part D, his checks are between $19,000 to $22,000. "In the first three weeks of January, I was down $60,000 in cash flow," he said. Cable said he covered his losses with savings. Others say they have resorted to loans to survive.

Art Whitney, president of Pacific West Pharmacy Inc. in Rocklin, took out a $500,000 credit line, and he says he may have to trim some staff because of the loss of revenue. Whitney's company services long-term care facilities and nursing homes. He said he can't stop offering the drugs just because the plan has problems. "We refuse to abandon our patients," he said. "They are the frail and elderly." Pharmacists also say they used to be paid within seven to 14 days through Medi-Cal, but now they don't see a payment until 30 to 60 days later, creating hardships. John Cronin, senior vice president and general counsel of the California Pharmacists Association, says: "All of this is coming out of our pockets. Unless things change, there are going to be people in the business who are not going to make it anymore." ------------ MEDICARE PART D Its impact on independent pharmacists * $36.5 million spent preparing staff in advance of program's start. * $16 million in emergency prescriptions dispensed to Medicare beneficiaries during the first month. * Nearly $128 million spent in staffing to help seniors understand the program and get their medicine. Source: National Community Pharmacists Association

-----

Copyright (c) 2006, The Sacramento Bee, Calif.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

Source: The Sacramento Bee

More News in this Category