Statement of Pam Grisnik, Owner, RX Express, Grove City, Pennsylvania

Testimony Before the Subcommittee on Health
of the House Committee on Ways and Means

May 03, 2006

Good Afternoon, Madam Chair and other members of the Health subcommittee.  Thank you for conducting this hearing and for providing me the opportunity to share the experiences with the new Medicare Part D program on behalf of the more than 24,000 community pharmacies, 55,000 community pharmacists, 250,000 employees and the millions of patients who rely on us for their prescription care.

My name is Pamela Grisnik of Grove City, Pennsylvania.  Sitting behind me is my husband, Paul.  We’ve both have been pharmacists for 24 years, the last 16 of which we have owned the Rx Xpress Pharmacy in Grove City. We are members of National Community Pharmacists Association, International Academy of Compounding Pharmacists and the Pennsylvania Pharmacists Association, of which Paul is on the Executive Council. 

I am honored to testify today to give you the perspective of independent, community pharmacy on Medicare Part D and to testify on behalf of the National Community Pharmacist Association.  NCPA represents the nation's community pharmacists, including the owners of more than 24,000 pharmacies, 55,000 pharmacists and over 250,000 employees.  The nation's independent pharmacies dispense nearly half of the nation's retail prescription medicines.  Independent pharmacists provide vital prescription services in both rural and urban areas, where many patients could not receive prescription drugs were it not for their neighborhood pharmacy and the relationships they have developed with their local pharmacist. 

Most pharmacists have three years of post-baccalaureate education and we have extensive continuing education requirements.  We consider ourselves to be both health care professionals and small businessmen and women.  We take great pride in helping patients.  When I decided to go into this profession, my thinking was not, “what kind of small business can I own?”  Rather, I found a calling in helping patients with their vital prescription needs – my decision to own a small business came later.  So my perspective in speaking to you today is not to talk about Part D as a businessperson, but as a health care provider who is concerned about my ability to continue to provide vital health services in my community.

We currently employ 16 full-time staff people who provide personalized care for approximately 12,000 patients in our community.  We are also preceptors for 5 pharmacy interns from three different schools of pharmacy in Western Pennsylvania.

We have built our practice in the face of numerous competitors by focusing on patient care.  Our patient’s health is our main concern.

The change I’ve seen in my practice since the start of Medicare Part D can be summarized as follows:  First, Part D reimbursements are too low and too slow.  Secondly, the confusion surrounding Part D continues.

The state previously reimbursed my pharmacy on a weekly basis for prescriptions I filled for dual-eligible patients.  We are currently waiting a minimum 4 to 5 weeks for reimbursement on these same prescriptions.  Reimbursements are simply too slow.

This past weekend I caught a drug interaction for a Part D patient.  After 45 minutes consulting with the doctor and patient I was finally able to fill the correct prescription for the patient.  I was unable to submit the claim for payment as the plan’s computer system was down.  Once the claim was submitted, I discovered my total reimbursement was two dollars, period.  Two dollars to cover the medicine, the bottle, the label, my technician, the rent and the utilities, not to mention the pharmacists time and counseling.  This reimbursement is simply too low. 

36% of independent pharmacy owners are afraid that low and slow reimbursements will put them out of business.  29% have asked their wholesaler for assistance, and 29% have taken out a line of credit.  Cash flow is worse for 93% of independents, who are waiting for an average of $70,000 in reimbursements from EACH Part D Plan.  Low and Slow reimbursements are a very real problem. 

Secondly, the confusion of Medicare Part D continues.  Many patients are already hitting the donut hole.  They don’t understand what has happened.  Many will pick up their prescriptions, leave, and come back to the pharmacy thinking that I did not charge them correctly.  “Last month my pills were $20, now they’re $100…What happened?”  After explaining the donut hole, I usually call the plan so patients can hear the bad news from the plan directly.  None of them expected this yet, and few can afford the much higher costs.  The sudden changes have confused seniors.  The confusion continues.

Those who have not yet signed up are nervously eyeing the May 15^th deadline.  Many have tried to navigate the array of choices and have been discouraged by the complexity of the benefit. They come into the pharmacy, throw us a stack of papers in desperation saying, “Please, can you and Paul please help me, tell me what to do.” 

We are a college town, one of our patients is a retired college professor.  She came to the pharmacy with her Part D papers and declared, “I have a doctorate.  I thought I was intelligent, but I obviously am not.” 

The Medicare Part D benefit card should not be an advertising space.  Yet some Part D benefit cards have featured the logos of national chain pharmacies and retailers.  Many of my patients did not realize they could continue coming to my pharmacy.  Some of my patients believed they could only patronize those pharmacies featured on the benefit card.  Some patients have returned to my pharmacy, but again the confusion continues.

Many of community pharmacy’s concerns regarding Part D are addressed by the Jones-Berry bill, H.R. 5182.  This bill clarifies rules on co-branding, requires prompt-payment for properly submitted claims, and establishes a minimum reimbursement on Generic drugs.  Chairman Cochran has also introduced a similar bill in the Senate.  These common-sense improvements will ensure that Medicare Part D will deliver its full promise for our Seniors. 

Some 15 years ago I was diagnosed with leukemia and was told I had a month to live.  Both from that experience and from my professional work I do understand the importance of having access to quality prescription care. 

My fellow community pharmacists and I are looking forward to working together with you to solve these current issues and would like to ask for your help so that we can continue to provide quality prescription care to our patients.  Thank you for inviting me to speak on this very important issue and will be happy to answer any questions you may have.

Neither I nor my husband, nor community pharmacists and NCPA, wish to give you a litany of complaints.  Pharmacists and NCPA have never opposed the goal of Medicare Part D: providing prescription drug services to some patients that otherwise would not be able to acquire them.  Others on these panels have already spoken regarding the degree to which that goal has been achieved.  We know that this program has been working for some.  There has also been some progress on implementing Part D, such as a reduction in the long wait times on our calls to CMS.

II.      Problems with Part D

I would be doing you and the Program disservice, however, if I did not address the continuing, systematic problems with Part D that threaten to negate what is working with the program, and  what were designed to be cost-saving aspects of the program.  A legislative fix is needed, and one particular one, the Jones-Berry FAST Act, fixes some of the on-going problems.

In sum, those problems are: (1) delays in reimbursements hurting the ability of pharmacists to keep their doors open and provide services; (2) not getting adequate payments that reflect the costs of dispensing drugs, thus creating a perverse incentive to dispense brand name drugs; and (3) Continued co-branding, which confuses seniors and other Medicare recipients into thinking they have to stick with the companies printed on the benefit cards.

A.                 Closures Caused by Implementation Hurts Patients and Communities

Independent pharmacists have been the backbone of the delivery system for Medicare Part D.  In fact, they have saved the program by bearing its financial and bureaucratic burdens.  Secretary Leavitt has been quoted as saying that “no patient should leave the pharmacy without their prescription.”  Unfortunately, that has happened to me in certain cases where the patient has been unable to wait while I am on hold with CMS while getting authorizations.  Some patients have handed back filled prescriptions in anger and walked out of our pharmacy.  When patients do leave my pharmacy without a prescription, it is not because of the pharmacists.  Pharmacists pay for the drugs they dispense, and then often wait months for reimbursement by the prescription drug plans – despite the fact that the PDPs are paid in advance for the drugs, and then they sit on processing the claims.  Pharmacists are acting as private banks to these plans while the plans hold onto government money – that is to say, tax payer dollars.

Because of the reimbursement flow problem, since the implementation of Part D began in January of this year, some one dozen independent pharmacies have already had to shut their doors.  In rural areas, these closures have a truly harmful effect on the health care of Americans dependent on Medicare – particularly the elderly.  Because it addresses this problem and the problem of adequate dispensing fees, we and NCPA support the bipartisan Jones-Berry FAST bill.

In response to a NCPA survey on Medicare Part D conducted just a couple of weeks ago:

1. Over half of the respondents (53%) serve a population of less than 20,000 people; and
2. Over 99% of the respondents currently participate in the Medicare Part D program.
3. Of the total number of prescriptions the pharmacists dispense monthly, some 34% of those are covered by Medicare Part D.

In addition, in certain urban areas, the percentage of prescriptions covered by Medicare and Medicaid reaches some 90%.

Continued closures will affect many patients who will not have the resources to travel distances of tens of miles to the nearest community to get their prescription needs met.  In addition, these patients will have lost the important face-to-face interaction with their local pharmacist, who often will have great knowledge about their particular medical histories, including allergies and other sensitivities.

B.        Cash Flow Problems are Very Real 

That same survey found that:

1. 61% have obtain outside financing – from sources such as banks, wholesalers, credit unions and family members – to deal with the financial shortfalls they face regarding Medicare Part D.
2. The average current outstanding balance that is owed to a pharmacy by all Part D plans is just under $70,000.

From a survey taken a month ago,

1. some 93% of all respondents have found that pharmacy cash flow is worse as compared to before the implementation of Medicare Part D – only 1% found it to have improved.
2. Of those that have worse cash flow, some 36% are concerned about closing their pharmacy, 29% have asked their wholesaler for assistance, and 29% have opened a line of credit.

III.    Suggestions for Change:

The Jones –Berry FAST bill addresses the cash flow problem, includes an adequate dispensing fee and also eliminates the harmful practice of Co-branding.

1)      There needs to be a prompt pay provision. 

Implementation of Medicare Part D has caused a major cash flow problem for the community pharmacies on the front line of the program.  Part D plans are paid each month in advance by Medicare, yet most Part D plans are using delaying tactics to enjoy a considerable interest-earning “float” on tax-payer dollars intended to reimburse pharmacies for serving their patients. 

There are several bipartisan bills in Congress that address prompt pay.  Community pharmacists and NCPA most strongly support H.R. 5182 and S. 2563 – the Jones-Berry “Fair and Speedy Treatment (FAST) of Medicare Prescription Drug Claims Act of 2006” and the Cochran/Enzi/Talent/DeWine Pharmacist Access and Recognition in Medicare Act (PhARMA) of 2006.”  In both bills, clean claims submitted electronically would be paid by prescription drug plans (PDPs), within 14 days, by electronic direct deposit.  Other clean claims would be paid within 30 days.  Pharmacists would also be notified within 10 days if there are problems with submitted claims.

These are the minimum changes that Congress should make.  In real life operations, the Plans in fact have the ability to make these transactions much earlier than the 14 and 30 day deadlines – and that even with passage of legislation, the Plans will continue to unfairly profit from a longer than necessary “float.”

2)      Pharmacists need to receive an adequate dispensing fee

Prompt payment will increase timely cash flow, but unless an adequate dispensing fee is set, independent pharmacists will continue to operate at the mercy of PDP “take-it-or-leave-it” contracts.  These plans and the middlemen that manage them – the prescription benefit managers (PBMs) will continue to reap high profits.

If dispensing fees for generic drugs are not set at an adequate minimum level, then pharmacists will see an increase in the number of Medicare Part D drugs for which they do not receive enough compensation to cover costs.   

An adequate dispensing fee will also insure that taxpayers will benefit from an increase in generic drug use, which saves both taxpayers and the program an average of $94 for every generic prescription dispensed. 

A legislative fix, such as is contained in the Jones-Berry bill, would encourage the use of generics, saving money and lowering health care costs.

What comprises an adequate dispensing fee?  True costs to dispense should include all reasonable costs associated with a pharmacist’s time in checking information about an individual’s coverage or performing quality assurance activities.  The total compensation that a pharmacist receives for dispensing a Medicare drug should consist of an adequate ingredient, or acquisition cost, a technical formula that is designed to reflect real life market forces, and an adequate dispensing fee minimum, which reflects overhead costs - the costs of doing business.  Unfortunately, PDP plans have taken advantage of individual pharmacists to force – on a take it or leave it basis – plans that offer an inadequate dispensing fee.

An adequate dispensing fee should include, at a minimum:

(i) the measurement or mixing of a covered part D drug;

(ii) filling the container for such a drug;

(iii) physically providing the completed prescription to an

individual enrolled in such a plan;

(iv) delivery;

(v) special packaging;

(vi) overhead related to maintaining the facility and equipment necessary to operate the pharmacy, including, but not limited to, rent, mortgage, salaries of pharmacists and other pharmacy workers; and

(vii) geographic factors that impact operational costs.

3)      The prescription cards that the plans issue should not be allowed to have a company specific logo on it. 

For example, one plan puts the Wal-Mart logo on their card.  That seems outrageous to me and will make some patients think they have to switch pharmacies.  Pharmacists are strictly prohibited from steering patients but the logo of a chain pharmacy is allowed on a card? Again, we need in law a prohibition against this practice, not just a recommendation by CMS that the plan can’t put a pharmacy logo on a patient’s prescription card.

We know we have lost patients who had the logo of a large chain pharmacy on their cards and thought they could not get their prescriptions filled at our pharmacy.

Pull out your social security card.  Is there an advertisement on that card?  There should not be any advertising on the card that serves as proof of admission to Medicare Part D.  This is a clear violation of the anti-steering provisions spelled out in the marketing guidelines issued by CMS.

H.R. 5182, the Jones-Berry FAST Act -- include a provision that prohibits co-branding, and we urge Congress to include such a provision in any Medicare Part D legislation that it might pass.

We know CMS has issued a call letter in which it requests PDPs to not include co-branding cards in their contracts for 2007.  We are glad that CMS recognizes that co-branding is illogical, misleading and harmful to patients.  A legislative fix is needed, however, as the advisory language is not yet binding and could be changed before it goes into effect.

Secondary issues include:

4)      Patients, doctors, and pharmacies need a standardized method of dealing with the plan formulary issues. 

Right now, if a prescription is not covered, a lot of plans send the pharmacy a message that says “drug not covered”.  That’s it.  No explanation as to why it was not covered.  So, the pharmacy has to call the plan and find out why the drug is not paid for and what needs to happen to help the patient get their medication.  The pharmacist then has to coordinate the paperwork between the patient, the doctor, and the pharmacy in order to help the patient get their medicine.  This can take hours or even days.  After all that time, the patient hopefully has not given up on the process and decided not to take their medicine.

There needs to be standardized messaging between all of the plans when they communicate with pharmacies and a standardized prior authorization procedure that reduces the administrative burden on patients, doctors, and pharmacies. 

5)      Enrollment period needs to be realistic

Patients were told that they could enroll as late as the end of the month and be in the system by the next day.  That doesn’t happen and is not a realistic expectation by anyone in the system. The result is that beneficiaries are frustrated and pharmacy staff has to chase down claims to try to help get the prescription paid.  This unrealistic expectation creates a chain reaction that upsets the entire benefit. Dual eligible patients should have a deadline of at least 15 days and non-dual eligibles should have at least 30 days to be entered into the system. 

6)      Standardized Contract Rate

Pharmacies have dozens of plans offering take it or leave it contracts.  Family owned pharmacies have no ability to engage in any form of legitimate negotiations.  As a result we are forced to sign contracts that reimburse us below our cost.  We believe CMS should use its authority to provide reimbursement guidelines to plans or there needs to be legislation to address the situation so that pharmacies are able to stay in business and continue to provide the services I have described here today for the American public.

In conclusion, I would add that my husband and I enjoy being pharmacists and we believe we are making a difference for the thousands of patients who come in to our pharmacy.  However, I am very concerned that the slower and lower Medicare payments this year on top of the massive Medicaid cuts that Congress passed last month will force thousands of family pharmacies to go out of business and strand millions of patients without access to the medicine they need to help them stay healthy.

Thank you again for inviting me to share my experiences with the Medicare Part D program with you.  We hope you will work with you to help improve the Medicare Part D program so we can continue serving our patients.