Medicare seminar taps industry fears about drug benefit program's impact

Drug Store News, March 1, 2004 by James Frederick

BALTIMORE -- Federal health policy experts came to the National Association of Chain Drug Stores Foundation's Medicare Prescription Drugs and Reform Conference armed with plenty of details about the newly enacted Medicare drug benefit bill, and scores of chain pharmacy leaders did their best to unravel the complexities of the new law. But they also gave federal health officials an earful about their own concerns over the program.

The event, held Jan. 29 to 30, was billed as an educational forum. It drew some 200 attendees and sparked plenty of give-and-take about the impact retailers can expect from Medicare reform and the burdens it will place on frontline pharmacists.

Pharmacy representatives said they learned about the drug benefit program, including insights on the actual benefits seniors could expect and the way coverage networks likely would operate. Representatives of the U.S. Centers for Medicare and Medicaid Services, joined by health policy experts and managed care representatives, laid out the implications of the upcoming Medicare discount card program for seniors and the full benefit program that kicks in Jan. 1, 2006.

Nevertheless, plenty of questions remained. Many pharmacy leaders expressed concern over the impact the new programs will have on their frontline pharmacists, who will have to explain the benefit program to seniors contused by its complexities and cope with the job of administering those prescription benefits at the point of sale.

"I have a lot more questions than answers," said Perry Don, Walgreen Co. director of third party operations. Among them, he said, was a simple way to explain to Medicare recipients the discounts available to them, along with co-pay requirements and other restrictions.

"Our perspective, looking at everything we've heard about Medicare benefits, unfortunately is one of a little fear about the unknown, said Chris Dimos, vice president of pharmacy services for Albertsons. What is being impacted most is my most profitable [business segment]: cash. As those people move from that to something else, it [affects] positive growth margin."

Dimos said that could be offset partially by the increased utilization of drug therapy the benefit program could spur among uninsured seniors. "Unfortunately, we already know the impact on margins; we just don t know the positive impact on utilization," he said.

Nevertheless, Dimos said the long-term effect could be a positive one, particularly because the program will force retailers and health benefit managers to collaborate more closely.

George Saunders, corporate vice president of pharmacy services for wholesaler AmerisourceBergen, said his industry will face similar challenges. "I feel much better in terms of understanding what might happen. What really scares me is that I thought through utilization there would be a big pickup in prescription volume. But I'm not so sure. And we all know that prescription margins are heading south again."

Mark Gregory, director of pharmacy for Kerr Drug, summed up the concerns expressed by many attendees. "The stakeholders here in this room will be affected by this ... but the vote on the program will be taken by the patient," he said. "My biggest concern is that the ballot box is in the pharmacy. And the pharmacist will be burdened with additional administration.

"As much as CMS is going to do for us," he continued, "I think there's going to be much confusion in the marketplace.

The new Medicare drug coverage plan, speaker Jorge Lopez Jr. said, does have "a weird structure." Lopez, an attorney and health policy expert who presented an overview of the new law, described the big gap in coverage that Medicare recipients will face when the law takes full effect.

Seniors, he said, will pay roughly $35 a month in premiums and an annual deductible of $250,for their prescription drugs. After that, Medicare pays 75 percent of the costs up to $2,250. But between $2,250 and $3,600, Medicare pays nothing--nada."

Lopez and other speakers said that "donut hole" in coverage was problematic and could put pharmacists who have to explain it to patients under pressure.

"It does provide excellent coverage to low-income beneficiaries who don't qualify for Medicaid," he said.

Besides administering the benefit to patients at the counter, Lopez said, pharmacists also will be expected to notify enrollees of the differences in price between prescribed branded drugs and generic alternatives. They also will have to have the means, said other speakers, to distinguish between the roughly 7 million dual-eligible" patients who qualify for both Medicare and Medicaid, being as Medicare will become the primary payer for prescription drugs for those patients, and co-pay rules will differ for lower-income recipients.

Also complicating the Medicare drug benefit umbrella will be the different types of health plan coverage that beneficiaries will choose from. "It's an extremely complex benefit plan design, and it's difficult to explain or understand, admitted Andrea Cohen of the Democratic Health and Oversight Counsel for the Senate Finance Committee. "On Jan. 1, 2006, Medicaid drug benefits will cease to exist, and those low-income beneficiaries will automatically default into the [Medicare] Part D plan."