In a recent letter to the federal Centers for Medicare & Medicaid Services (CMS), the National Association of Chain Drug Stores (NACDS) emphasized the importance of fixing an untenable issue for pharmacies and the patients who rely on them. 

NACDS stated in the letter that although prescription drug discount cards were put in place to reduce patients’ out-of-pocket costs, states have been using the data from the card transactions in a manner inconsistent with federal law and policy. NACDS explained that states have been observing the data and decreasing reimbursement to pharmacies for prescriptions that are filled in the Medicaid program.

An issue that is allowing states the potential to skirt federal law and policy is the current defining of “usual and customary pharmacy charges,” which is a measure of the prices that are charged to uninsured, cash-paying patients. The Medicaid programs in states rely heavily on this measure of “usual and customary pharmacy charges” in order to ensure they do not overpay pharmacies for the cost of a drug.

However, states have been using the evaluation of “usual and customary pharmacy charges” in a fashion that does not comply with current federal law and policy, as they have been adding the amount that users of third-party discount cards pay for a drug when calculating what is “usual and customary.” This, in turn, lowers the reimbursement to pharmacies, according to the NACDS.

In the letter to CMS, NACDS President and CEO Steven C. Anderson explained why this inclusion is problematic for pharmacies.

“Although consumers pay out of pocket when using third-party discount cards, the price returned to the pharmacy by the third-party discount-card operator during adjudication is not the price that the pharmacy usually charges the general public,” Anderson said in a press release. “The pharmacy only facilitates the lower prices made available by the third-party card operator to customers who present the card. Indeed, the pharmacy stands operationally and financially in the exact same position as it does with beneficiaries of other third-party payors, such as health insurers and governmental entities.”

Additionally, NACDS went on to provide examples of the federal laws, regulations, and guidance that oppose including third-party discount card charges among the “usual and customary” pharmacy charges. This inclusion not only negatively impacts pharmacies, but patients as well, NACDS notes.

“Critically, if state Medicaid programs include third-party discount cards in calculations of [usual and customary], pharmacies may be financially unable to continue to accept third-party discount cards,” NACDS explained in the letter. “For consumers on tight budgets who rely on third-party discount cards to pay for their medications, the potential loss of access to these discounted medications would be devastating. Elimination of an option that provides lower-priced medication to the underinsured and uninsured would directly contravene the Administration’s policy to promote affordable access to prescription drugs.”

NACDS Asks CMS to Fix State Calculations That Make Medicaid Pharmacy Reimbursement Even Worse. Arlington, VA: National Association of Chain Drug Stores; August 12, 2020. Accessed August 13, 2020.