Pharmacists still seek Part D answers

Family Pharmacy owner Lynn Morris and Alps Pharmacy co-owner Melody Savley told SBJ in late January that some insurance reimbursements were too low to cover costs and that payments were slow in coming in.

Three months into the new federal drug program, their stories haven’t changed.

“We’re not thinking the program has stabilized yet,” said Morris, who operates 19 pharmacies across the Ozarks.

“They’re paying us behind schedule and extremely poorly,” added Savley from her 2650 W. Kearney store. “It’s terrible.”

Savley admitted reimbursement rates – the dollar amount above or below cost that insurance companies such as Humana and Blue Cross Blue Shield of Missouri pay a pharmacy to dispense a drug to one of their clients – weren’t as bad as she was anticipating they would be across the board.

However, she said profits were still down about 4.5 percent this year, even with increased sales, because of the program’s reimbursement issues. In January, Alps co-owner Don Savley said profits were down 5.5 percent. Pharmacists generally operate on 2.5 percent profit margins.

Morris continues to experience cash-flow deficits, too.

While he reported in January being down $1.2 million, Morris now says he’s down $2.24 million and is still waiting on some reimbursements for prescriptions he filled two months ago.

Jim Montgomery, co-owner of Dan’s Discount Drug Mart, 2625 N. Kansas Expressway, said he’s given Rep. Roy Blunt’s office examples of his Part D losses. He wants Blunt and other government officials to take action.

“I wanted Roy to know that those were a real problem,” Montgomery said. “I said, ‘If you, the government, wants to subsidize Medicare, that’s fine. As a pharmacy owner, I don’t feel like I need to contribute to subsidizing the program as well.’”

The end result on pharmacists, he said, is that they work harder for less money.

“That’s where the rub is,” he said.

The issues

There are 17 insurance companies paying reimbursements in southwest Missouri. Margins for Missouri pharmacies dropped from $3.95 per prescription to $1.50 per prescription for state Medicaid patients that automatically switched to Part D.

Compounding the problem, Morris said, are that state taxes haven’t changed with the decreased margins.

Missouri taxes pharmacies for every prescription filled, a plan that was enacted about five years ago as a way for the state to tap into federal matching funds and keep from having to cut the state Medicaid reimbursement rate of $4.09 per prescription. Tax rates are set individually per pharmacy.

However, many of the state’s Medicaid patients were automatically enrolled in Part D in January because of duel eligibility, cutting reimbursement rates for a large portion of customers.

Montgomery said his customer base went from 42 percent Medicaid to 14 percent.

Morris would like to see state officials adjust the tax rate now that pharmacists aren’t earning the same profits they were before.

“This is going to be a double whammy now,” he said.

Morris is planning to write Missouri’s attorney general, governor and director of Medicaid about the concern.

Pharmacies also are acquiring debt, locally and nationally, because of the cash-flow drought.

Morris said he started socking away money last summer in anticipation of the problems. Mike James, national governmental affairs director for the Community Pharmacists Congressional Network, said he’s heard from many of his 15,000 member pharmacies that have taken out loans. Even with the loans, he maintains that 35 percent of the nation’s pharmacies will close if nothing changes. So far, he said, about 15 pharmacies have become casualties.

“I got a fax yesterday saying, ‘Please take me off your fax list. Medicare has done me in,’” James said.[[In-content Ad]]