JULY 01, 2006

Community pharmacists complaining of severe cash flow problems under the new Medicare Part D drug benefit drew little sympathy from a top Medicare official during congressional hearings on the program's impact on pharmacy.

Testifying before the House Energy and Commerce Health Subcommittee, Centers for Medicare & Medicaid Services (CMS) Deputy Administrator Leslie Norwalk portrayed the reimbursement delays that have bedeviled pharmacists as a short-lived problem resulting from the switch from the state Medicaid payment systems to Part D.

Despite the complaints of pharmacists, "a clear majority of [Part D] prescription drug plans are paying pharmacies well within the industry standard of 30 days from the time a clean electronic claim is submitted to the time a pharmacy receives payment," she told the subcommittee.

One recent CMS survey cited by Norwalk found that up to 18 of the top 20 private drug plans (PDPs) pay pharmacy claims on a twice-a-month billing cycle of 15 days or less. "A 15-day billing cycle generally provides pharmacies with payment within 21 to 25 days," she told Congress. "These top plans account for more than 90% of the drug coverage for Medicare beneficiaries."

Officials at the National Community Pharmacists Association (NCPA) voiced objections to claims that a 30-day payment period is an acceptable "industry standard" for pharmacies. "Although that schedule might work for doctors and hospitals?it does not work for pharmacists, whose suppliers—such as drug wholesalers—demand payment much more frequently," the NCPA officials said.

Norwalk, however, assured Congress that CMS has investigated numerous complaints from pharmacists concerning Part D payment delays and found no evidence of systematic foot-dragging by PDPs. "The result of the vast majority of these investigations has been that the plan has paid the pharmacy in accordance with the terms of its contract," she said.

"The Medicare prescription drug benefit represents a new line of business for the pharmacies, but it does not differ substantially from the private commercial market with which they are already familiar," Norwalk told the subcommittee. "Thus, the contract terms require that claims for medications dispensed to people with coverage under the Medicare prescription drug benefit are being paid in a time frame with which pharmacies are accustomed and within which they know how to operate."