Small-Town Pharmacists Closing Doors

Pharmacist Dave Redden stands for a photo outside his closed store in Sweet Home, Ore., Friday, Sept. 14, 2007. Redden joined a growing trend among small-town pharmacists this past summer and closed down Home Town Drugs and Gifts after 25 years--he largely credits the Medicare drug benefit program for the demise of his business. (AP Photo/Don Ryan) (Don Ryan - AP)

"Thirty days is a reasonable standard by anyone's count, and we pay within 30 days," said Mark Merritt, president and chief executive of the Pharmaceutical Care Management Association, whose members include companies such as Medco and Express Scripts.

Merritt said companies would have to set up separate billing and reimbursement systems to meet the 14-day standard. He does not believe it is fair for his organization's members to have to take on that expense.

While the Medicare drug plans maintain they pay pharmacists promptly, a University of Texas study commissioned by the pharmacists found that wasn't the case.

The university's researchers studied about 3 million prescription drug claims submitted last year by independent and chain pharmacies. They found that less than 1 percent of claims were paid within two weeks, while 44.1 percent were paid after more than 30 days.

The researchers said the delays did not just occur in the program's early months.

"Twelve months into the Medicare Part D program, when we really expected most of the bumps in the system would be smoothed out, we found that pharmacies did not receive payment within 30 days for almost 41 percent of their December claims," said Kristin Richards, an associate researcher at the university's Center for Pharmoeconomics.

Merritt said he believes the Government Accountability Office, the investigative arm of Congress, should study how quickly pharmacists are being reimbursed. The issue demands more independence than reliance on a study funded by pharmacists, he said.

He also said the agency should examine whether organizations that pharmacists hire to collectively bargain with the drug plans contribute to any reimbursement delays.

Those bargaining organizations send claims in for the pharmacies. The plans are required to reimburse the bargaining organizations, which then pay the pharmacies. It is that middle step, which occurs at the pharmacy's request, that may be causing delays, Merritt contended.

Abby Block, director of the government's Center for Beneficiary Choices, said she senses that Merritt's assessment is correct and that payments are being held up by the organizations that pharmacists are hiring to handle claims.

She also said her office has questions about the University of Texas study and would like to talk to the researchers. The findings do not match a survey that Medicare officials conducted of the drug plans showing that 18 of the leading 20 prescription drug plans pay pharmacy claims on a 15-day billing cycle.

Pharmacists argue that insurers have an economic incentive to delay payment. They get millions of dollars from the federal government and from Medicare beneficiaries for administering the drug benefit. The longer they hold on to that money, the more interest that money can generate.