Survey Identifies Roadblocks for Community Pharmacists

Kate H. Gamble, Senior Editor
Published Online: Tuesday, August 9, 2011
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A survey of 1850 members of the National Community Pharmacists Association (NCPA) has identified two rising problems that are increasingly undermining the care that millions of seniors and other Americans rely on from independent community pharmacists.

NCPA asked community pharmacists about their experiences with pharmacy audits and generic-drug reimbursement limits (known as “maximum allowable costs” or MACs).

The survey produced two main findings. First, the pharmacy audits, rather than concentrating on true fraud, often punish pharmacies for trivial issues such as a busy physician misspelling a patient’s name or writing the incorrect date. Second, pharmacies are not privy to basic reimbursement (maximum allowable cost or MAC) methodology prior to signing contracts with health plans and find that, during the life of contract, those MAC limits are both lowered arbitrarily and raised in response to generic drug cost increases.

The severity of these issues appears to be increasing, according to NCPA, as the number of respondents rose from 107 in 2010 to 1850 in 2011.

“Ostensibly, pharmacies are audited to guard against fraud, whereas payment caps are established to ensure appropriate reimbursement for generic drugs,” said B. Douglas Hoey, RPh, MBA, NCPA executive vice president and CEO. “However, this survey indicates that both have gone well beyond their intended purpose, while padding windfall PBM profits. Left unchecked, these practices will further undermine both the pharmacists’ ability to care for patients, as well as the viability of small business, community pharmacies and the local jobs and taxes they provide.”

Among the survey’s findings:
  • Excessive audits are decreasing the time pharmacists can devote to patients. Illustrating the compliance burden, 62% of respondents considered the audit requirements to be completely inconsistent from one health plan to another; 48% reported auditors asking them to justify claims that are 2 years old or older; and, of the pharmacists who report having appealed a PBM audit, 81% described the process as burdensome and unsatisfactory;
  • 98% said PBM record keeping requirements go beyond state and federal law and that even minor, incidental instances of noncompliance are harshly penalized by auditors;
  • Community pharmacies must sign “blind”, take-it-or-leave-it contracts with large PBMs to maintain access to patients. Nearly all (91%) community pharmacists report receiving little or no information justifying how PBMs arrive at reimbursement rates for generic drugs and how often the prices will be updated to reflect a pharmacy’s cost;
  • 71% of pharmacists tried to use the PBM’s appeals process when they believed that the reimbursement caps, or MACs, did not reflect the pharmacy’s costs. Many pharmacists complained about the one-sided nature of the appeals process and noted that MAC-based reimbursement can take months to increase after drug costs spike, but is reduced immediately when prices go down; and
  • When asked how PBM reimbursement and auditing practices affect pharmacists’ ability to provide patient care and remain in business, 97% said it was a significant or very significant factor.
To read pharmacist quotes which are representative of the findings above read “2011 PBM Audit Survey Stories,” click here.

“The inappropriate use of prescription medication is already estimated to cost as much as $290 billion annually,” Hoey added. “In addition, community pharmacists dispense lower-cost generic drugs over 20% more often than mail order, which favors more expensive alternatives. Government and private payers deserve measures that prevent fraud but the survey suggests that PBMs are overplaying their market dominance and picking the pocket of small business owners based on technicalities and rules rigged to penalize legitimate prescriptions.”

Hoey concluded, “Medicare, in particular, is a program in which community pharmacists play a vital role helping seniors. We urge the Centers for Medicare and Medicaid Services to use their authority to issue guidance to plans about legitimate audits designed to catch true fraud and require a prompt appeals process. For these and other reasons, Congress should move to hold hearings and pass the bipartisan Pharmacy Competition and Consumer Choice Act.”

For more information on the Act, click here.

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