Pharmacists say they are losing money on exchange plans

The state’s pharmacists say they are losing money on average for every prescription they fill for patients covered by health insurance exchange plans administered by Blue Cross and Ambetter since the beginning of this year. That includes beneficiaries of the state’s Arkansas Works program.

Scott Pace, CEO of the Arkansas Pharmacists Association, said reimbursement rates dropped significantly after January 1. At that time, Arkansas Blue Cross and Blue Shield joined Ambetter in contracting with CVS Caremark as its pharmacy benefits manager. PBMs serve as middlemen between insurance carriers and pharmacies.

Pace said pharmacists consider reimbursements of $10 to $12 above the cost of the prescription to be an appropriate amount to cover their overall costs. During December, pharmacies were being paid $10.24 above costs by Blue Cross plans.

But since the first of the year, claims data shows pharmacists are losing an average of $4.26 per prescription for Blue Cross patients on the state’s insurance exchange, Pace said. Pharmacies were losing $4.92 per Ambetter prescription in December and were losing $5.67 in January per prescription.

“We’ve got pharmacies who are essentially being taxed an additional four dollars and some change for every prescription they fill. … That is clearly an unsustainable business model. You can’t make that up in volume,” he said.

The situation is leaving pharmacists in a difficult situation: Turn away customers, or lose money for filling a prescription and then appeal to the PBMs. The contracts that they sign with PBMs don’t allow them to charge patients above their insurance reimbursements.

Pace said Tamiflu, the drug used to combat flu symptoms, costs pharmacists $85 to $90 for 10 pills wholesale. On Jan. 1, Ambetter and Blue Cross started reimbursing pharmacists $36.23 for that supply through CVS Caremark. Pace said Ambetter said it had paid $132.61 to CVS Caremark. In another northeast Arkansas pharmacy, a patient suffering from nausea and vomiting filled a prescription for 90 Phenergan suppositories. The cost to the pharmacy was $590. After processing, the pharmacy was paid $25, a $565 difference. The health plan said it paid $869.06 to CVS Caremark.

Pace said such spreads are illegal under Arkansas law. Under Act 769 of 2009, pharmacy benefits managers are required to pay what they receive for pharmacy services to the pharmacist.

Under Arkansas law amended by Act 900 in 2015, pharmacists can appeal the reimbursement directly to the PBM. PBMs maintain a listing of drugs that sets the maximum allowable cost on which they base reimbursement rates. If the drug is not available below the pharmacist’s acquisition cost from its primary wholesaler, then the PBM must adjust its list above the cost and allow the pharmacy to rebill the claim.

Pace said the appeals are not generating a response or are generating inaccurate information. One pharmacist appealed a claim in which she said she lost $35 and was told she could purchase the drug from two other wholesalers at or below the cost she was paid. Those wholesalers did not offer the drugs at that price, he said.

If pharmacists aren’t satisfied with their appeals, they ultimately can sue the PBMs under the state’s Deceptive Trade Practices Act. That act spells out various violations, the broadest element being, “Engaging in any other unconscionable, false, or deceptive act or practice in business, commerce, or trade.”

That law says pharmacists can refuse to fill a prescription if they will lose money. Pharmacy benefit managers cannot reimburse their own pharmacies at different rates than they do others.

Christine Cramer, CVS Caremark’s senior director of corporate communications, said in an email, “CVS Caremark is focused on providing our pharmacy benefit management clients with opportunities to improve health outcomes for their members, while also managing costs, and is committed to providing our PBM clients and their members with a broad network of pharmacies that includes local, independent pharmacies. We reimburse our participating network pharmacies, including the many independent pharmacies that are valued participants in our network, at competitive rates that balance the need to fairly compensate pharmacies while providing a cost-effective benefit for our clients.

“We also have a well-established appeals process for network pharmacies regarding reimbursement, and our responses to those appeals comply with all applicable laws.”

According to the latest data from the federal Centers for Medicare & Medicaid Services, 68,100 Arkansans are enrolled in the Arkansas Health Insurance Marketplace insurance exchange. The exchange is an online marketplace for individuals, families and small businesses that was created by the Affordable Care Act, otherwise known as Obamacare. Another 286,000 Arkansans are covered by insurance purchased on the exchange through Arkansas Works, the Medicaid-funded program that serves Arkansans with incomes up to 138% of the federal poverty level.

Pace said the low reimbursement rates are only an issue on the exchange. Pharmacists are not having an issue with payments made by the traditional Medicaid program.

Gov. Asa Hutchinson said the issue requires a “broad, comprehensive look.” He said pharmacists who have problems with reimbursements should follow the appeals process. He said he’s not aware of prescriptions that haven’t been filled somewhere.

“It’s a great concern to everybody, but it takes a little while to clear away the haze and figure out what action can be taken,” he said.

PBMs originally served as claims processors, but their size and role has grown, and now they contract with both insurance carriers and pharmacists. Three control the market – CVS Caremark, OptumRX and Express Scripts.

Blue Cross spokesperson Max Greenwood said insurance carriers use PBMs because the PBMs deal in greater volume and can negotiate better prices. CVS Caremark offers better rates for Blue Cross than the insurer’s previous network.

“We’re an Arkansas-based company,” she said. “We want to do whatever we can to help our local pharmacists, but we also don’t want to put ourselves and our members at a competitive disadvantage in this marketplace.”

Pace said the APA has met with both Blue Cross and Ambetter since the beginning of the year and was told reimbursements would improve by Jan. 14. Instead, they got worse for pharmacists, he said.

Greenwood said CVS Caremark made adjustments to 1,500 generic drugs.

“We are still trying to monitor the situation to make sure that the adjustments that needed to be made are being made,” she said.

Unlike pharmacists and insurers, the pharmacy benefit managers are not regulated by the state, but they are licensed by the Arkansas Insurance Department. Pace would like the department to use that authority to force better reimbursements.

But Ryan James, AID spokesman, said the agency can’t really do that.

“The Insurance Department has limited authority regulating pharmacy benefit managers,” he said. “We are aware of issues involving reimbursements. The law as written places the enforcement of that law under the authority of the attorney general’s office, but being the authority that licenses PBMs, we are aware and are working with interested parties to try to determine a solution on this issue.”

Pace and Rep. Michelle Gray, R-Melbourne, a legislator who is working on resolving the issue, appeared on Talk Business & Politics Daily to discuss.