Criminal Justice Forum

Some of the most trusted professionals in America could soon be out of business. Independent pharmacists are being impacted by cash flow problems due to the slow and low reimbursements from Medicare Part D. 


Some local pharmacists are now receiving fees of just $1 to $2 a prescription versus the $10 to $15 they used to get. Checks also are taking longer to arrive. "Things are going bleakly," said Dan Fucarino of Carrollwood Pharmacy. "The hardest part appears to be over, but long term it is still going to be bleak."

More than 90 percent of community pharmacists surveyed by the National Community Pharmacists Association said that their cash flow was worse than before the start of Medicare Part D. Many are already calling it "Part D for Disaster." Pharmacists depend on payments from insurance plans — including prescription drug plans administering Medicare Part D — to pay drug wholesalers, staff and other operating expenses. But since Jan. 1 they’ve seen a drastic slow down in payment schedules.

Medicare Part D was the government’s attempt at creating a Medicare prescription plan, but it has turned out to be a nightmare for independent pharmacists nationwide. Under Medicaid, pharmacists were reimbursed weekly; under Medicare Part D, prescription drug plans issue reimbursement checks only once every four weeks. "It took three billing circles before we got our first checks," said Fucarino. "It literally will take a year to recuperate."

Out of pocket
Many local pharmacists are taking money out of savings or taking out lines of credit to cover the late reimbursements and carry customers who need their meds but can’t figure out how to sign up. "It was the first time since I bought the pharmacy in 1984 that I had to borrow money to keep the business running," said Bob Bobo, owner of Davis Islands Pharmacy. "It is definitely because of Medicare Part D. Our reimbursement is very, very low. The only other time I had to borrow money was to buy the business."

According to a survey commissioned by the National Council of State Pharmacy Association Executives nearly 50 percent of pharmacists provided medications to Medicare recipients at no charge since the program began. The strange twist is that some local pharmacists are reporting an increase in the number of customers and the volume of sales. In the past, that had translated into more profits. Today, customers and volumes are up, but profits are down.

The problem, said Rob Slavkin, an attorney with Foley & Lardner in Orlando, is that there are too many prescription plans to choose from and pharmacists want to have contracts with as many as possible. That is easier for retail giants like CVS Corp. (NYSE: CVS), Walgreen Co. (NYSE: WAG) and Wal-Mart Stores Inc. (NYSE: WMT), which have a better ability to contract on a national basis with the heavy hitters of health insurance.

Independent pharmacists have a real competitive disadvantage, Slavkin said. "They don’t have the resources to get that many contracts to serve as many senior citizens as possible."

Marketing guidelines set for Medicare Part D are also leaving independent pharmacists behind. Larger chains can create compliance programs for their stores nationwide. Smaller retailers must abide by the same standards but with far less resources, said Slavkin.

Time is money
The NCSPAE also found that pharmacists across the country are spending more than 10 hours a week resolving Part D-related problems. "It is really time-consuming," said Bobo. "We are getting less than we were but doing more work."

It is not unusual for a pharmacist to be on the phone with an insurance company for an hour only to get a few dollars over the cost of the prescription, he said. Plus, employees spend a great deal of time explaining the plan, which should be the duty of the insurance company, he said.

Sixty percent of pharmacists surveyed by the NCSPAE believe that Part D would have a negative impact upon their businesses, including 12 percent who reported that it might even force their pharmacy to close.  Only 10 percent of them said that Part D would be good for their businesses. John Noriega of Bill’s Prescription Center in Brandon is one who has found benefits in Part D.  "We are offering more services," Noriega said. "I offer a home delivery service for $3. When Medicare Part D went into effect I bought a new van. Medicare Part D gives patients another reason to come to me. In the short-term I can see the downfall, but in the long term I see it as a benefit."

The key, said Bobo, is to find a niche. "Those who are filling traditional prescriptions, those who have a large percentage of business on Medicare are going to be in trouble," he said. But for many it may even be too late to find that niche, said Fucarino. "You have to have certain bankroll to keep the business afloat during a difficult time like this," he said.

Prognosis
Most independent pharmacists agree that improvements to the program are required if Medicare Part D is to be successful. National organizations are working with congressional offices to secure legislative corrections.  "Congress must change the Part D program now, before it destroys the very pharmacy infrastructure it relies upon," said NCSPAE’s president, Jim Bracewell, in a statement.

Local pharmacists also are trying to get in touch with politicians in Florida to see if something can be done. Bobo was one of six pharmacists who recently met with Commissioner Kathy Castor to discuss the challenges of the plan.  But the road ahead still looks bumpy. There is talk of a proposal to lower reimbursements even more next year. Fucarino predicts that 50 percent of the 30 independent retail pharmacies in Hillsborough County will go out of business in five years. Independent pharmacies nationwide are an $84 billion business. They dispense nearly half of the retail prescription medicines in the United States.