Community pharmacies under attack
It was a packed house during the Arkansas Health Insurance Market Place Oversight Sub Committee Meeting Jan. 31 in Little Rock.
The meeting consisted of legislators and representatives from the pharmacy industry, insurance industry and Pharmacy Benefit Managers [PBM] and was held in reference to address what appears to be a growing attack on independent community pharmacies.
According to Greta Ishmael, owner of Econo-Med Pharmacy in Cherokee Village, community pharmacies have noticed a substantial drop in reimbursement for the prescriptions which have been filled and are paid for by insurance companies.
This issue is attributed to the proverbial “middle man” and in this case, is the PBM who contracts with insurance companies and then with pharmacies.
“We’re getting paid below cost. So basically we pay for the drug that goes in the bottle and what they’re [PBM] paying us is less than what the drug actually costs and that’s not including paying our overhead, our supplies, transmission fees, our technicians and pharmacists,” Ishmael said. “We’re handed contracts and the PBM is between us and the insurance companies. They’re the middle man and our only control is through these PBMs. We’re given a contract but there’s no negotiating on our end. It’s a take it or leave it.”
During the meeting in Little Rock, a representative from CVS Caremark, one of the larger PBM companies, was present to speak on behalf of his company.
Ishmael said she had a sample of 39 claims which had been processed through PBM, dating back to October of last year. The explanation of benefits were provided to her by friends, family members and others who have concerns about the actions of the PBMs, and how they are effecting the community pharmacies in Arkansas.
“The explanation of benefits show what their insurance company has paid for their drugs and that amount does not match what we get paid. So there is a spread that is going in the pockets of the PBM. The PBM told us yesterday, that’s part of the contract negotiation they’ve set up with the insurance companies,” Ishmael said.
An example of the financial straights the PBMs are placing on community pharmacies due to intentionally low reimbursement rates is: a person goes to the pharmacy to get a prescription filled. The medication costs $50 but through insurance, an individual has no co-pay. Once the medication has been given a claim is sent to the PBM. The PBM then bills the insurance company at a much higher rate, for this purpose we will use $100. The pharmacy’s cost was $50, however; they will only be reimbursed $30 by the PBM.
“It’s even difficult for us to understand. The contracts we’re handed from the PBMs are like 100 pages and you really have to be an attorney to break this down. We’re pharmacists and we sign because we want to fill prescriptions. We’ve been told if we talk too much about it, or reveal too much, they can pull our contract at any time,” Ishmael said. “I have received faxes with a ‘friendly reminder’ telling us that they can terminate our contract at any time. I know there are other pharmacies in the state that have contracts with these PBMs and did not receive the same fax. My store in Walnut Ridge did not receive that same fax.”
When asked if Ishmael could directly work with the insurance companies or was forced to use a PBM, she explained that an alternative does exist, but it is at the expense of the patient.
“Back in 2015, Michelle Gray and other legislators who have gone to bat for us, passed a law that said pharmacies do not have to lose money to fill prescriptions. You have to pay them at least the minimum of what it costs to put the drugs in the bottle. They’ve set up a protocol for us to appeal,” Ishmael said. “The process is, we fill the prescription [and] we find out how much we’re going to get paid immediately. We decide at that point when the patient is in front of us waiting on us to fill their prescriptions, if we can afford to take this loss, which shouldn’t even be a question. Or do we take the loss, fill it and appeal it or do we turn the patient away? The new law gave us protection and the right to turn the patient away and send them somewhere else.”
Although appeals may be made through a portal, it is still a time consuming process and there is no guarantee the reimbursement will be raised if an appeal is made.
“One of the arguments made [by the PBM representative at the Little Rock meeting] was that a very small portion of the claims being processed are actually being appealed but there’s three ways it can work. I’m part of a buy-in group and have a company that does my contracting for me and they’re called a PSAO [pharmacy services administrative organizations],” Ishmael said. “They know how much we pay for our drugs and how much we get paid. They can see in real time what clams we’re losing money on and so as of yesterday, we had over 4,200 drugs that my PSAO was directly appealing on our behalf without us asking. It’s just what they do. It was among the different PBMs. Thirty-five percent of the 4,200 claims being appealed, were going to CVS Caremark.”
If losses due to PBM reimbursement rates continue, Ishmael said her pharmacy in Cherokee Village would see about a $70,000 loss this year.
“Projecting from January, based on my loss, I’m looking at a $70,000 loss if this continues for the year. That’s jobs, that’s drug bills, that’s everything and that’s a huge chunk of my budget that I spend and so that’s just for this store. That’s a huge hit for us. That’s jobs, that’s two employees,” Ishmael said.
Another issue which has been identified and directly impacts Sharp County community pharmacies, are the types of insurance plans of which the PBM’s under reimburse pharmacies for.
“With these plans I’m supposed to know right then exactly what I’m going to get paid. The two plans we’re having issues with are the Arkansas Blue Cross Blue Shield and the Ambetter plans. There are other counties outside of Sharp that have more of a Quall Choice population but that’s not something I deal a lot with,” Ishmael said.
When asked what they hoped to accomplish through legislation and other means, Ishmael said the ultimate goal is to help protect the community pharmacies and residents of Arkansas.
“From the meeting yesterday, I feel like there were legislators who don’t see the purpose of a PBM at all. They’re a middle man and should just be processing claims. They’ve muddied the waters by purchasing pharmacies. They’ve muddied the waters by now purchasing a whole insurance company. These PBMs will, after mergers this year, own every portion of the steps. They’ll own the insurance company they contract with. They own the PBM and then they own the pharmacy and the mail order pharmacies that they pay,” Ishmael said.
Eddie Ishmael, co-owner of Econo-Med, said by controlling reimbursement rates in such a manner, the companies can control healthcare for individuals across the state.
“They’ll control what the doctors get paid and are already controlling what we get paid. So one company could essentially control everything in Sharp County. They’re not going to stop here. By them merging and acquiring everything, they’re going to dominate. We’ve heard that a lot of these PBMs that own pharmacies have clinics within their pharmacy in other states. So urgent care and primary care offices are going to be competing with now the payer [client/patient] after these mergers go through,” Ishmael said. “The end game will be that you’ll have a handful of companies that will control the entire patient experience and they will also control the dollar amounts. Your choice of provider, pharmacy and how you receive your healthcare, is going to be drastically changed.”