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My Little Pharmacy

BALTIMORE -- The rubber is about to hit the road.

Chain pharmacy leaders gathered here early this month for two days of intensive educational sessions--and perhaps for a little mutual support--as the industry prepares for the most sweeping change to the Medicare program in four decades. And what emerged from the Medicare Prescription Drugs and Reform Conference Part 2 was the clear conviction among the more than 200 participants that the Medicare Part D drug benefit program Jan. 1 could be in for a rocky start. Most also foresee a real challenge for community pharmacies as they grapple with questions about the program from millions of seniors.

"In less than 10 months ... Medicare's new Part D prescription drug benefit will come online," noted conference chairman Phil Burgess, national director of pharmacy affairs for Walgreen Co. "The bill for the first time would make a voluntary prescription drug benefit available to more than 40 million Medicare beneficiaries."

In addition, said Burgess at the opening of the two-day seminar March 3, "The bill will also increase Medicare beneficiaries' choices for integrated health care plans, such as [preferred provider organizations]. Each and every retail pharmacy operator and pharmacist in the United States will be affected by these changes.

As with any change in government health programs, said Burgess, "there will be winners and losers."

The conference, held March 3 and 4, was sponsored by the National Association of Chain Drug Stores Foundation and underwritten by Pfizer U.S. Pharmaceuticals. Its purpose: to explain the final Medicare Part D regulations recently drawn up by the Centers for Medicare & Medicaid Services and examine their impact on retail pharmacy.

Despite the best efforts of CMS officials and health care advocates to find the silver lining in every facet of the new Medicare drug program, however, plenty of chain pharmacy leaders voiced their frustration over the plan's complexity, confusing language and tendency to defer to the private health plans and prescription benefit managers that are competing to offer Medicare drug benefits to the nation's 41 million beneficiaries.

"The [regional drug benefit plans] can interpret the Part D regulations the way they see fit," asserted Dean Sikes, pharmacy director for USA Drug/Super D, in a panel discussion on the impact of the regulations. "I'm also concerned about reimbursement rates. And the [MMA provision for] nonnegotiation of prescription prices--for what will be the largest segment of pharmacy--is faulty logic, in my view."

Sikes' remarks clearly struck a chord with many conference participants, who clapped enthusiastically when he avowed that many in government don't understand how community pharmacy works."

'It's big, it's complicated,' and time to launch is short

In panel discussions and question-and-answer sessions each day, many other pharmacy executives asserted that the final regulations leave far too much to the interpretation of plan administrators--including issues like drug formularies, which patients qualify for Medication Therapy Management, how MTM is reimbursed when provided by pharmacists and how far PBMs can go to shift patients into mail order pharmacy through the use of higher retail copays and other disincentives. And no one--including federal officials on hand to explain the rules--had all the answers.

That included Tom Hutchinson, director of the Medicare Plan Policy Group for CMS. Hutchinson did his best to explain the final rules governing Medicare Part D and predicted that the benefit program "is going to work fairly well" following its launch next January. But Hutchinson also acknowledged that "pharmacists are the linchpin of the Part D program" and said their active cooperation in explaining benefits to elderly patients and working with plan administrators will be key to making it work.

Basically, what we re trying to do is put together a program here that looks as much like private-sector insurance or drug benefits as we can," Hutchinson told the more than 200 pharmacy leaders. "We have a long list of statutory requirements ... and our benefit is not something normally seen in the private sector. But we're trying things in a way that least disrupts the way pharmaceuticals are dispensed, paid for, etc. That's sort of our overall goal" and the framework for the Part D regulations, he noted.

However, Hutchinson admitted, "It's big, it's complicated, and we don't have a lot of time to do it."

In designing the Medicare drug benefit program, Hutchinson added: We tried to make sure that the beneficiaries aren't going to be totally confused. It's a confusing enough program for us, and anything we can do to limit confusion for the beneficiaries is probably a very good idea."

Hutchinson reiterated that participation in the program by private prescription drug plans, and pharmacy retailers is "voluntary and optional." Besides PDPs, he said, coverage also will be provided by Medicare Advantage plans that offer both prescription drug and health coverage. Coverage will be provided through regions designated by CMS, which has carved the U.S. map into 34 separate PDP coverage regions. Twenty-five of those regions are single states, with multistate territories comprising the rest, where population densities are lower.

"We felt we needed about 400,000 eligible Medicare beneficiaries to have a viable region," Hutchinson said. CMS, he added, hopes to finish vetting the health plans that will bid for PDP contracts by the end of May so that when the actual bidding process begins in June, "we'll be dealing only with plans that are for real."

What patients can expect

The final plan, said the CMS official, will look something like this:

* Patients will pay an average premium of roughly $37 per month to obtain drug benefits, as well as a $250 annual deductible.

* Medication Therapy Management for patients who need it is provided by the final regulations, but plan administrators--not pharmacy providers--will retain a lot of flexibility in deciding which patients qualify, what MTM standards are practiced and what reimbursements--apart from dispensing fees--are provided to pharmacists who offer the service. "There is no widely accepted model of MTM in health care ... and health plans hold the cards," said Ed Staffa, the NACDS Foundation's vice president of pharmacy practice and communications. And despite "recent activity at the national pharmacy association level to help position community pharmacists as MTM providers," he told the audience, community pharmacy must demonstrate its value."

* Medicare will subsidize health plans to provide patients with 75 percent of their drug costs between a floor of $251 and an initial total-cost ceiling of $2,250; the beneficiary will pay the additional 25 percent. After total annual expenses exceed that $2,250 ceiling, patients will fall into what Hutchinson calls a "coverage gap," but which more commonly has been dubbed the donut hole, that provides no additional benefits until patients' expenses reach $5,100. Thus, beneficiaries will pay 100 percent of their drug costs between $2,250 and $5,100.

"At $5,100, catastrophic coverage kicks in, at which time the government will pay 80 percent of the costs, the plan we contracted with will pay 15 percent of the costs, and the beneficiary will pay 5 percent of the costs," Hutchinson said.

* After patients spend $3,600 out of pocket for their drugs, Medicare will pay 95 percent of the total. CMS is working closely with the pharmacy community to create an automated system that will track and instantly report true out-of-pocket costs, or TROOP, for each patient at the pharmacy counter, so pharmacists won't be overburdened with yet another administrative hurdle, said the official. (For more on TROOP, see "Hammering out a Medicare plan, industry reps achieve breakthrough" on page 1 of the March 7 issue of Drug Store News.)

Hutchinson admitted that "explaining this to beneficiaries is going to be an interesting process" for pharmacists and other health providers. The government, he said, is preparing to launch a $300 million education campaign this year to dispel confusion and help seniors and pharmacists maximize the drug benefits available.

'A complicated benefit'

Nevertheless, among the near-certainties that emerged from the two-day scrutiny of Medicare drugs was this: Pharmacists will surely find themselves explaining a complex coverage program to millions of elderly patients who, in the words of one attendee, "don't even understand their drug coverage now." That includes some 10 million dual-eligible low-income patients who currently qualify for both Medicare and Medicaid and whose Medicaid drug coverage will expire this fall to be replaced by Medicare Part D.

"We've got just 10 months to get ready for this, and that's not a lot of time," observed Bob Stone, director of third party services for Ahold USA. "I'm very concerned about the flexibility we're going to have and about the amount of time we're going to have to spend explaining this to our patients.

"The 10 million dual eligibles--that's probably going to be our biggest challenge," Stone continued. "Overburdened pharmacists are not going to have time to [explain] that. Hopefully, CMS is going to get enough information out there to answer a lot of questions patients will have."

"There's never been a benefit this complicated," agreed Michele Vilaret, director of government programs for Brooks-Eckerd. On the bright side, she said during a presentation on coordination of patient benefits and TROOP calculations, "CMS has vowed to help us."

Despite the concern, many of those in attendance also expressed the hope that Medicare Part D could end up being a win for all concerned: patients, pharmacies, third party plans and taxpayers. "I have never seen a watershed moment like what I've seen here today," said John Phelan, senior director of Wyeth Pharmaceuticals. With pharmacists often being the chief point of contact between Medicare recipients and the health care system and with seniors looking to pharmacists for help in understanding the complicated benefit program, he said, "We have the opportunity to create 53,000 heroes at the pharmacy counter."

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