NCPA Executive Update

NCPA Executive Update delivers insights on legislative, regulatory, policy, and industry developments from NCPA CEO B. Douglas Hoey, Pharmacist, MBA, to NCPA members and pharmacy leaders every other Friday.

A Little Predictability, Please! | NCPA Executive Update | September 9, 2016

by NCPA | Sep 12, 2016

Dear Colleague,

Doug Hoey

We live in a world of increasing uncertainty. Trump and Clinton as our presidential candidates. The economy. The weather. And, as we approach the 15th anniversary of the Sept. 11 terrorist attacks, safety overseas and domestically. Business is often not predictable but the unpredictability of retroactive prescription payment reductions under the guise of DIR fees has gone beyond what any small business owner can withstand.

That untenable pressure is why NCPA applauds legislation introduced yesterday in the U.S. House of Representatives by Rep. Morgan Griffith (R-Va.), H.R. 5951, which will prohibit Medicare Part D plan sponsors/PBMs from retroactively reducing prescription payments on clean claims submitted by pharmacies under Medicare Part D, thereby eliminating retroactive pharmacy fees.

DIR fees were originally meant to account for manufacturer rebates in the Part D Program. As most pharmacists know, over the last several years, PBMs have increasingly tainted that original purpose and at first began using DIR fees as ‘pay to play’ in preferred networks and now are using DIR fees in combination with blind MAC rates as a blank check to claw back pharmacy payments at will.

When it comes to PBM abuses, it’s hard to shock community pharmacy owners, but the financial impact of DIR fees and the lack of transparency has jolted even pharmacists already calloused to the one-sided business relationship between PBMs and pharmacies.

To be clear, this legislation will do four key things: provide better predictability on pharmacy payments; force additional levels of PBM payment transparency; should provide more transparency into PBM contacts with pharmacies; and should help make plan cost estimates on Plan Finder more accurate for seniors.

The legislation offers a partial solution for community pharmacists and their patients. Independently owned pharmacies and their partners still have to look for ways to legally aggregate so they look and act more like a chain.

No doubt the opponents will have dire zombie-apocalypse like predictions about HR 5951. They will make claims that passing the legislation will cost billions of dollars and handcuff PBMs from being able to use their “cost saving tools” to keep control of prescription drug costs (apparently those “tools” need sharpening).

The reality is that this legislation won’t increase the amount that the government pays on prescription drugs. It won’t inhibit health plans from implementing payment for performance programs. It will provide an element of predictability to prescription drug reimbursements to pharmacies. It will give consumers more transparency in the cost of their medications.

The Medicare Payment Advisory Commission (MedPAC) is a nonpartisan legislative branch agency that provides the U.S. Congress with analysis and policy advice on the Medicare program. According to MedPAC’s 2015 Report to Congress: “MedPAC sees insurers gaming the system to hold premiums down and maximize enrollment.” MedPAC members argue in their report that insurers seem to be consistently overestimating enrollees’ ordinary drug costs and underestimating the costs for enrollees with catastrophic expenses. In a nutshell, Part D sponsors are manipulating these pharmacy fees to artificially lower patient premium amounts which ensures that they maximize patient enrollment amounts while raising patient out-of-pocket drug costs.

If you are affected by retroactive prescription reimbursement clawbacks under the guise of DIR, we want you to contact your member of Congress. Congress will only be in session for a few more weeks this year, so now is the time to contact the member in your district. You can send them an email (link here) to ask them to support this legislation.

The legislation is one tactic to help gain relief from the unpredictability of retroactive prescription payment clawbacks. “Strategies to Combat DIRs” is one of the featured programs for pharmacy owners attending the NCPA Annual Convention.

Ideas to fight back and to control your own destiny will be shared during this program. HR 5951 is an encouraging development. It will restore a modicum of sanity during these unpredictable times. Contact your legislators and ask them to pass this bill.

Doug Hoey