Access to community pharmacies under Part D

September 3, 2007

OIG plans to continue their investigation into differences between the retail and chain pharmacy participation in Part D. They intend to examine reimbursements to independent and chain pharmacies for specific drug products and to compare the terms of the contracts offered to chains and independent pharmacies.

Now the extent of pharmacy participation and beneficiary access for 2006 is evaluated and reported by the HHS Office of the Inspector General (OIG). A plan sponsor may contract with many different types of pharmacies, including retail, institutional, or mail order, but the plan must offer its standard contract to any pharmacy willing to participate in its pharmacy network.

In addition, the Medicare Modernization Act (MMA) requires PDPs to meet the same access standards set by the Department of Defense for military personnel covered under the TRICARE Retail Pharmacy program. Ninety percent or more of urban beneficiaries must be no more than two miles on average from a community pharmacy in the network. At least 90% of suburban beneficiaries must reside within five miles of a participating pharmacy, on average, and at least 70% of rural residents must be no more than 15 miles on average from a retail pharmacy in their network.

OIG found that nearly all (97%) retail pharmacies participate in at least one PDP. Out of the 1,478 pharmacies that did not participate, two-thirds were located within five miles of a participating pharmacy. Retail pharmacies in metropolitan and nonmetropolitan counties participate at equally high rates. Approximately 80% of nonparticipating pharmacies are located in metropolitan areas. Although the choice of pharmacy is more limited for any person who lives in a rural area, OIG concluded that Part D plans do not appear to further restrict beneficiary access to community pharmacies.

Moreover, OIG discovered that most (70%) participating pharmacies were affiliated with every PDP available in their region. Again there was little difference between metropolitan and nonmetropolitan counties, leading OIG to conclude that pharmacy access was not a factor that limited a beneficiary's choice of plans.

OIG looked further to find out whether pharmacy characteristics, such as location or type of ownership, affected pharmacy participation rates. There was little difference in participation by ownership status, with 94% of independent pharmacies and 99% of chain pharmacies participating. Overall, 97% of both rural and urban pharmacies participate in at least half of the prescription plans in their region. Although there was no difference by location, only 44% of independent pharmacies offered every plan whereas 84% of chain pharmacies offered all the plan options.

OIG plans to continue its investigation into differences between retail and chain pharmacy participation. It intends to examine reimbursements to independent and chain pharmacies for specific drug products and to compare the terms of the contracts offered to chains and independent pharmacies.

A number of retail pharmacies closed as Medicare Part D was being implemented. Financial strains related to Medicare were blamed for contributing to the closure of many of those pharmacies. An update on access to community pharmacies for Medicare beneficiaries would be needed to determine whether store closures limited access to retail pharmacies in 2007.

THE AUTHOR is associate professor, Department of Pharmacy Health Care Administration, University of Florida College of Pharmacy.