Medicare backtracks on pharmacy payments

A Centers for Medicare and Medicaid Services (CMS) official said yesterday that the agency does not have hard data to show how quickly Medicare prescription-drug plans pay pharmacies for the drugs they dispense, even though a top official told a House subcommittee this week that late payments are not a chronic problem.

CMS Deputy Administrator Leslie Norwalk told the House Energy and Commerce Committee’s Health Subcommittee on Tuesday that nearly all Medicare prescription-drug plans are paying their bills to pharmacies in less than a month, which contradicts pharmacy-lobby complaints that druggists are being paid far more slowly.

According to the written version of Norwalk’s testimony, “A recent CMS survey found that up to 18 of the top 20 [prescription-drug plans] 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 21-25 days. The top plans account for more than 90 percent of the drug coverage for Medicare beneficiaries.”

But a CMS spokesman said yesterday that an actual survey was never conducted. Instead, the agency based its assertions on an “informal” analysis of the drug plans’ own accounts of how and when they pay the pharmacies.

The pharmacies themselves were not asked what their experiences were, the spokesman said.

“For the deputy director of CMS to come before us and say they have a survey when they’ve really just been talking to the plans is something that never should have happened,” said Rep. Tom Allen (D-Maine), a subcommittee member and a supporter of establishing a 14-day standard for Medicare drug plans to pay claims.

Allen also said that CMS should be reaching out to the pharmacies themselves rather than only seeking information from the drug plans. “CMS is so out of touch with the pharmacies that I suppose it’s no surprise that they ask the plans how the pharmacies are doing,” he said.

“There needs to be more data there on what’s happening,” said a spokesman for Rep. Charlie Norwood (R-Ga.), who also sits on the subcommittee .

“This is absolutely a one-sided investigation on CMS’s part, it seems to me,” remarked Crystal Wright, spokeswoman for the Association of Community Pharmacists Congressional Network, a grassroots group that has been pressing Congress on Part D’s effects on independent drugstores.

While a relatively arcane detail amid a universe of complaints and disputes related to the new Medicare Part D prescription-drug benefit, the issue of how quickly pharmacies get their money has generated significant interest among lawmakers, especially those from rural areas.

The drugstore lobby says that pharmacy benefit managers (PBMs) often do not pay for more than a month and that pharmacies’ cash flow has been depleted because they must pay their wholesale suppliers in a shorter timeframe.

In response to complaints by pharmacists, led by lobbying organizations, at least five bills have been introduced that would require PBMs to pay pharmacies within 14 days of a claim’s being filed. The chief backers of the bills are Sen. Thad Cochran (R-Miss.) and Reps. Walter Jones (R-N.C.) and Marion Berry (D-Ark.), and their bills have been steadily gaining co-sponsors.

The main trade group representing smaller, independent pharmacies, the National Community Pharmacists Association (NCPA), is holding a conference in Washington this week. NCPA lobbyists and members have been visiting lawmakers’ offices carrying a laundry list of criticisms of Part D but have given special emphasis to the timeliness issue.

CMS has consistently indicated that it has not perceived that pharmacies are enduring widespread problems getting their claims paid.

“What CMS is saying is not consistent with what we’re hearing” from pharmacies, Wright said.

Echoing previous remarks by CMS Administrator Mark McClellan, Norwalk indicated at the subcommittee hearing that the agency has not been getting a high volume of complaints. The NCPA and the ACPCN say this is because they have encouraged their members to target complaints to their members of Congress.

At the end of this month, CMS expects to have a clearer picture of whether delayed payments are endemic under Part D, the agency spokesman said. Under Medicare rules, the drug plans are required to submit their pharmacy claims data by May 31. In June, CMS will evaluate how quickly claims get paid and make that information available then, the spokesman said.

Norwalk also insisted to subcommittee members that CMS does not have the authority to compel drug plans to pay their claims within a set time period. “It’s a matter of contract between the pharmacy and the plan,” she said. “The statute is clear that we’re not permitted to interfere in the negotiations between plans and pharmacies.”