The Medicare Modernization Act includes a provision that plan sponsors can tier
their network to include “preferred pharmacies.” Part D plans can establish
“preferred pharmacies,” which can provide lower copays to beneficiaries in
exchange for lower reimbursement to the participating pharmacy. Many independent
community pharmacy owners have expressed concern that preferred pharmacies could
lead to closed networks for small pharmacies who have no negotiating power with
PBMs. In addition, many owners fear that preferred pharmacies will lead to
increased utilization of mail order as a preferred option for a Part D sponsor
who is also a PBM.
Most plans will not be using the standard benefit
formula devised by Congress. Instead, they will be developing benefit
packages that involve their own deductibles, copays and co-insurances.
(For a review of Congress’ standard Medicare Part D benefit package, refer to
the FAQs link under the “Medicare Information” section.). These
alternative benefit packages must be the same benefit as the standard formula,
hence they must be “actuarially equivalent.” Regardless of the structure of the
benefit, Medicare beneficiaries are required to pay 25% of drug costs before
reaching the so-called donut hole -- where after they reach $2,250 in drug
spending they are responsible for 100% of drug costs until they hit
$5,100. All plans must account for movement into preferred pharmacies and
the impact that will have on the 25% drug spend.
For example, if a
plan has a preferred pharmacy network that offers a 90-day supply for $0 copay
and a non-preferred pharmacy network that offers a 30-day supply for a $50
copay, the Centers for Medicare and Medicaid Services (CMS) will assume that the
majority of patients will take advantage of the “preferred” pharmacy. When
the amount of money spent by patients in the two plans is averaged (the
“actuarial equivalence”), it is unlikely in this scenario that the beneficiaries
will be spending the required 25% of drug costs as required by Congress in the
MMA. Consequently, CMS does not envision that plans will be able to provide
significantly better copays at preferred pharmacies and still maintain actuarial
equivalence.
Should community pharmacists worry about preferred
pharmacies? Possibly. While it is unlikely that plans will be able
to offer significantly advantageous copays and co-insurances at preferred
pharmacies, there still could be significant financial reasons for your Medicare
patients to patronize other pharmacies if you are not a part of some preferred
pharmacy networks. It is important to remember though that any
willing provider rules do pertain to preferred pharmacies. If you are
willing to accept the terms and conditions of preferred pharmacies, Part D plans
are required to include you in their network on those terms.