Medicare rebuffs GOP calls for faster Part D pharmacy payments

The Bush administration has rejected calls by Republican lawmakers to intercede on behalf of small pharmacies engaged in a payment dispute with Medicare’s new prescription-drug plans.

The agency that operates Medicare will not consider a recommendation by 41 House Republicans that it enact new requirements for how fast prescription-drug insurers pay pharmacies, a senior Medicare official said.

Independent pharmacists have been griping to Congress about long waits for payments from the companies that administer the drug program, Medicare Part D.
The small pharmacies are locked in a David-and-Goliath battle with the well-heeled and influential pharmacy-benefit managers (PBMs), which are represented by the Pharmaceutical Care Management Association (PCMA).

The Association of Community Pharmacists Congressional Network (ACPCN) has engineered an aggressive grassroots campaign, and the National Community Pharmacists Association has lobbied the Hill on the payments.

Independent pharmacies and PBMs are bitter rivals. The pharmacists say that delayed payments are threatening their businesses. PBMs counter that the speed of their payments under Part D matches the industry standard in the private sector.

The pharmacists’ complaints appear to be helping create a movement in Congress on their behalf.

But the administration is wary of stepping in. “We would feel hard-pressed to come in and dictate what exactly the terms should be” in the contracts between the PBMs and the pharmacies, said Larry Kocot, a senior adviser to Mark McClellan, administrator of the Centers for Medicare and Medicaid Services (CMS), which oversees the health programs.

Medicare Part D plans are administered either by a health-insurance company or a PBM. PBMs handle price negotiations with drug manufacturers and manage the claims filed by pharmacies.

Medicare must approve the contracts based on certain criteria. The speed of drug plans’ payments to pharmacies ought to be one of them, a growing number of lawmakers assert.

Rep. Phil Gingrey (R-Ga.) and 40 GOP colleagues wrote to CMS last week asking that the agency require plans to pay pharmacies within 14 days of a prescription’s being filled and to offer electronic payments.

In addition, legislation with the same provisions, sponsored by Reps. Walter Jones (R-N.C.) and Marion Berry (D-Ark.), continues to attract support. Ten more lawmakers signed on to the measure last week, bringing the total co-sponsors to 127.

A similar bill from Senate Appropriations Committee Chairman Thad Cochran (R-Miss.) has 20 co-sponsors.

If CMS were to act on its own, Congress could avoid wading into a politically divisive debate over Medicare Part D in its inaugural year.

The Republican leadership has been reluctant to attempt to give Democrats a platform for a wider debate about the controversial Part D program. The pharmacy issue, along with several others, may force their hand before the year is out.

On Wednesday, the day before Gingrey sent his letter, CMS submitted the findings of a survey on pharmacy contracts to Congress.

According to CMS, 18 of the 20 largest Part D plans pay all claims within 30 days of receipt and many pay more quickly than that, depending on whether the claim is filed toward the beginning or end of a standard billing cycle. According to Kocot, the majority of claims are actually paid within the 14-day time frame sought by the lawmakers and pharmacies.

The agency asked PBMs to detail what is required by their contracts rather than evaluate actual claims data. “The reason we did this is to get a baseline,” Kocot said. “Once we have that baseline, it becomes a matter of enforcement” of the contracts, he said.

Lawmakers have criticized CMS for only questioning the PBMs about their practices without also polling the pharmacies. “The best way to judge the wait times may not be to ask the plans,” said Becky Ruby, Gingrey’s communications director.

But Kocot suggested that tallying competing versions of the stories from the pharmacies and the PBMs would not generate a clear and accurate picture of the facts on the ground. In addition, he said, the claims data are not detailed enough to determine exactly how many payments are made within any specific time frame, Kocot added.

Although CMS does not plan to require new payment time limits for next year, the agency expects the PBMs and health insurers to pay more attention to pharmacies’ concerns in the future because of the attention the issue has gotten.

“The plans are a lot more sensitized,” Kocot said.

Complaints from pharmacies have “tapered off considerably” since the beginning of the year, Kocot said, and CMS has “basically remedied every complaint we’ve received.” Kocot is a former senior lobbyist for the National Association of Chain Drug Stores, which has been significantly less active on the timely-payments issue than its counterparts in the independent-pharmacy lobby.

But lawmakers maintain they’re still getting earfuls from the druggists back home. “It is not just one or two community pharmacies. It is across the board,” Ruby said.

More than 100 pharmacists from Gingrey’s district alone have contacted his office, she added. “These are just pharmacists who don’t know where else to turn.”
Gingrey is not a co-sponsor of the Jones-Berry bill but would consider backing legislation if CMS does not take steps on its own, Ruby said.

The pharmacies would view faster payments in next year’s contracts as a positive development but not the answer to all of their problems, said ACPCN spokeswoman Crystal Wright.

“Waiting till ’07 is … not the best prognosis we’d like to see,” though it would be an improvement, she said.