Senate Bill Introduced to Fix Medicare Part D Problems

Sens. Baucus and Grassley Introduce Bill Fixing Flaws in Medicare Part D

program to Protect Patient Access to Community Pharmacies

In an effort to preserve patient access to local community pharmacies and prescription drugs under Medicare Part D, Sen. Max Baucus (D-Mont) and Charles Grassley (R-Iowa) introduced S.1954, the Pharmacy Access Improvement Act (PhAIM) of 2007. The National Community Pharmacists Associations (NCPA) strongly supports the bill. Baucus is chair and Grassley is the ranking Republican member of the Senate Finance Committee, which has jurisdiction to address the issue. The bill provides common-sense fixes to the Part D program. The most important provision requires complete and accurate Part D pharmacy reimbursement claims submitted electronically to be paid within 14 days by electronic funds transfer, and paper claims within 30 days.

S.1954 has noteworthy bipartisan support as the other original cosponsors also include Sens. Blanche Lincoln (D-Ark.), Olympia Snowe (R-Maine), Kent Conrad (D-N.D.), Gordon Smith (R-Ore.), Charles Schumer (D-N.Y.), Pat Roberts (R-Kan.), Ken Salazar (D-Colo.), Thad Cochran (R-Miss.), Jeff Bingaman (D-N.M.), and Michael Enzi (R-Wyo.). In the House a similar bill, H.R.1474, the Fair and Speedy Treatment (FAST) of Medicare Prescription Drug Claims Act of 2007, has already garnered 190 cosponsors as a show of strong bipartisan support.

The need for the legislative solution arises out of the slow pharmacy compensation under Part D, which has caused major cash flow problems for community pharmacies since the program began Jan. 1, 2006. Community pharmacy owners typically pay their suppliers every 15 days. However, under Part D, reports indicate it takes four weeks or longer to be paid by the pharmacy benefit managers (PBMs) who administer these various plans. As a result, the average community pharmacy has taken out loans of $70,000 and many have loans in the hundreds of thousands of dollars to maintain cash flow, a dangerous financial proposition for any small business owner. The PBMs are paid in advance each month by the federal government, making the delays avoidable and unnecessary.

The impact of the PBMs’ payment practices on community pharmacies has been demonstrated by anecdotal evidence in the form of news reporting about store closings and hard evidence in the form of verifiable data. After years of steady growth, 1,152 community pharmacies were ‘shuttered or were sold’ during 2006, according to preliminary data from the annual NCPA-Pfizer Digest-a comprehensive financial analysis of community pharmacies. Many closings occurred in underserved rural and urban areas where community pharmacies are most prevalent and often fill a health care void. The only intervening variable that occurred last year was the introduction of Part D into the marketplace.

“PBMs are paid each month in advance by Medicare, yet they are using delay tactics to enjoy a considerable interest-earning ‘float’ on tax-payer dollars intended to reimburse community pharmacies for serving their patients,” said Bruce Roberts, RPh, NCPA executive vice president and CEO. “While PBM profits rise, community pharmacies have been forced to borrow tens of thousands of dollars to cover their expenses. With patient access, especially in rural and underserved areas, in danger of being compromised, the nation’s community pharmacies and their patients appreciate the leadership of Senators Baucus, Grassley, Lincoln, Snowe, Conrad, Smith, Schumer, Roberts, Salazar, Cochran, Bingaman, and Enzi in trying to solve this predicament.”

In addition, S.1954 would eliminate the confusing practice of “cobranding” on Medicare identification cards and other materials, a practice which has misled many seniors to believe they only can use the pharmacy whose name appears on the card. It also strengthens Medicare beneficiaries’ access to community and long-term care (LTC) pharmacies under Part D by limiting the amount of non-retail pharmacies which can be counted as “retail” and requiring clarity in the LTC access standards. Additionally, the bill also enhances the “any willing pharmacy” provisions of Part D plans. Finally, the bill promotes plan-price transparency by requiring Part D plans to disclose their maximum allowable cost pricing on generic medications.

“This bipartisan effort is an important step in addressing the issues threatening community pharmacies since Part D’s implementation,” said NCPA president John Tilley, RPh, a pharmacy owner from Downey, Calif. “Without it, many more patients are in danger of losing ready access to life-saving prescription drugs. In the end, the painfully slow reimbursements don’t just affect Medicare patients, but entire neighborhoods and communities in the event a pharmacy is forced to close. With the introduction of the Senate Bill, and nearly 200 cosponsors for a similar House bill, the momentum has been generated for Congress to act when they return from their August recess.”

The National Community Pharmacists Association, founded in 1898, represents the nation’s community pharmacists, including the owners of more than 23,000 pharmacies. The nation’s independent pharmacies, independent pharmacy franchises, and independent chains dispense nearly half of the nation’s retail prescription medicines. For more information go to

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