COVER STORY

Exclusive survey on third parties

THE GOOD, BAD, AND UGLY

No, it's not Clint Eastwood, Eli Wallach, and Lee Van Cleef starring in Sergio Leone's 1966 western, The Good, the Bad, and the Ugly. It's third-party payers. And pharmacists aren't bashful when it comes to naming the reimbursement programs that fit Eastwood's (good), Cleef's (bad), and Wallach's (ugly) boots.

In discussing the good, bad, and ugly aspects of third-party reimbursement programs, a majority of pharmacists revealed they have stopped doing business with some third-party payers altogether because of low reimbursements. This finding comes from an exclusive survey of pharmacists conducted by Drug Topics.

A four-questionnaire was mailed on June 26 to 700 independent and chain pharmacists. When fieldwork was closed on July 25, usable replies had been received from 121 pharmacists, yielding a 17% response rate. While the results are not projectable to the entire pharmacist population, they provide clues on how R.Ph.s view third parties.

Exiting third-party plans

When asked if they stopped doing business with any third-party payers, 52% of respondents said Yes. Of those who said Yes, 15% said they had cut ties with Paid Prescriptions, 15% reported they severed relations with Cigna, 13% said goodbye to Aetna, another 13% bid farewell to Tricare, and 10% parted company with Humana. Some respondents also broke loose from PCS and Express Scripts.

What was the reason for severing relationships with these third-party payers? Low reimbursement was cited by 89% of respondents. Other reasons included the following:

• Thirty percent said it was difficult to do business with these companies.

• Twenty-six percent faulted the companies for being "slow payers."

• Restrictive formularies and unfair auditing were also cited.

One pharmacist said that a cor-porate decision prompted the breaking of ties with third parties. Another respondent offered this reason: "They do nothing for the patient." Another chimed in that the third-parties "will not listen to my clinical expertise. They want to play doctor." "No payment" was yet another reason offered for the break-up with third parties.

On the bright side, when questioned further as to whether or not their business suffered as a result of their refusal to contract with these groups, eight out of 10 R.Ph.s said that it did not.

The vast majority of respondents (85%) said that between 67% and 100% of their business is accounted for by third-party reimbursements. Specifically, on average, 27% of their prescrip-tion business comes from Medicaid, 54% from private insurance, 17% from cash-paying customers, and 2% was credited as "other."

Best third-party list

Which third-party payer do pharmacists like dealing with the most?

Medicaid was most frequently mentioned (23%) as the third-party payer respondents liked dealing with the most. Following Medicaid were Paid Prescriptions (19%) and PCS (17%). More than one in five respondents answered "none" when asked which third-party payer they liked dealing with the most.

In naming the payers they like the most, pharmacists were generous with their compliments. One respondent said, "Missouri Medicaid has the best system, pays promptly, and has a fair reimbursement rate." Another respondent took his hat off to Paid Prescriptions for its "good customer service." PCS was applauded for its "efficient help desk." One pharmacist praised PCS and Paid Prescriptions, noting they "are the easiest and quickest to deal with when handling on-line rejections."

Although the question asked respondents which third-party payers they liked the most, some respondents just couldn't wait and used this question to air complaints. One pharmacist griped, "All third parties have the goal of not paying the pharmacy. They all enjoy taking money in from the patients, but do not like to give any out." "They all are irritating," complained another respondent. Yet another pharmacist scrawled, "I despise dealing with all PBMs. They are a parasite in the provision of healthcare services."

Medicaid emerged as the winner when respondents were asked to name which third-party source provides the highest level of reimbursement rates. Medicaid was named by about two-thirds of respondents, compared with 25% who said private insurance and 10% who said "other." Workers' Comp, EPIC, and AIDS Drug Assistance Programs (ADAPs) were singled out in the verbatim responses as providing the highest level of reimbursement.

When asked what they would say is the average third-party reimbursement rate they receive for dispensing, the mean response was AWP (average wholesale price) minus 13%, plus a dispensing fee of $2.60.

Besides low reimbursement, another affront pharmacists have to put up with is rejected claims. Some 80% of respondents said claims they submit are rejected more than 10 times a week.

Worst third-party list

When asked to name the third-party payer they liked dealing with the least, 20% of survey respondents named Paid Prescriptions. PCS was tied with Aetna for second-worst honors, with each being mentioned by 6% of respondents. Pharmacists were also not too fond of Medicaid, Blue Cross & Blue Shield, and Humana.

Some clues as to how the respondents judged the third-party payers they like dealing with the least can be found in their verbatim responses. One pharmacist said, "Express Scripts: bad customer service." Another said, "Medicaid help desk takes forever to answer calls." One respondent reported, "For PCS and Express Scripts, when I have found that some plans pay less than my cost to buy, their response has been, 'Oh well, you win some, you lose some. Apparently, this is one you are going to lose on!'" Yet another respondent criticized Cigna, saying, "Too many phone calls to handle one problem."

Humana was bashed for "indifference on all accounts." Anthem and Aetna were blasted for "too much hassle with prior authorizations; information to process claims often lacking from card." And Secure Horizons was accused of having a "bad formulary" and doing "a poor job of informing their patients of any changes."

One respondent bad-mouthed all of the third parties, saying that they "are all out for themselves and couldn't care less about health care or our profession." Another pharmacist said all third parties are "the ones pounding nails in our coffin." Caremark was singled out for making "very slow payments and [being a] pain in the butt to get ahold of."

The check is in the mail

Which third-party payers were thrashed for taking the longest amount of time to reimburse pharmacists for their services/ products?

Medicaid was named by 12% of respondents, followed by Paid Prescriptions (11%) and PCS (9%). Caremark, Blue Cross & Blue Shield, Medicare, Express Scripts, and National Plan Administrators (NPA) also turned up on the "longest amount of time to reimburse" list. More than half of respondents said it takes Medicaid and Medicare two to three months to reimburse them. Some 71% said it takes Paid Prescriptions about one month to pay up. Another 64% said it takes about a month to receive payments from PCS.

When asked which third party takes the least amount of time to reimburse them for their services/ products, 24% of respondents said Medicaid, 21% said PCS, and 19% said Paid Prescriptions. Some 84% of respondents said it takes Medicaid less than one month to pay up, 68% said PCS pays in less than one month, and 65% said Paid Prescriptions paid them in less than one month.

Help wanted?

When survey respondents were asked to comment on how low reimbursement rates have affected their store's hiring practices, pharmacists' responses showed just how widely their experiences differ. Thirty-four percent said they hired more technicians in lieu of pharmacists. Almost one-third said low reimbursement has not affected hiring practices, while 26% of respondents said they could not afford to hire additional pharmacists even though their prescription volume warrants it. An additional 22% said they couldn't afford to hire additional technicians even though their prescription volume demands it.

Hiring administrative help, laying off technicians, and installing a ScriptPro machine were also mentioned by respondents as things they have done in response to the paltry checks they get from third-party payers.

Poor reimbursement is causing more than one-quarter (27%) of independent pharmacists to entertain thoughts of selling their pharmacy. Only 13% said their store has been sold. Another 60% said they had not considered selling nor had they sold their store.

Unfair audits?

Audits from third-party payers are yet another reason for frustration among pharmacists. Half of the pharmacists surveyed said they had been audited in the past two years. Pharmacists in the South had the highest rate of audits—70% said they were audited in the past two years. Pharmacists in the East followed, with 47% having been audited in the past two years. Thirty-nine percent of pharmacists in the West and 38% of Midwestern pharmacists said that they had been audited during the same time period.

Of those pharmacists audited, 64% said the audit resulted in a satisfactory outcome for both parties, while 36% said the audit did not produce a satisfactory outcome for both parties.

Pharmacists are apparently frustrated with these audits, judging from the angry verbatim responses they gave. For example, one R.Ph. said the audit resulted in "a waste of our time." Another respondent replied that the third party "would not accept adjustments after audit." Still another R.Ph. said he had to "sue the PBM to get money withheld and won." One pharmacist muttered, "Picky, picky, picky. It's unfair to penalize all Rxs as a result of an audit."

Still another respondent had this to say: "The third-party mafia always comes out on top." Another R.Ph. noted, "We had to pay back on the claims with wrong pay codes, according to insurance." And one R.Ph. said his audit resulted in "very few discrepancies. I figure they spend about 80 hours in audit and recording time to recoup $254."

New niches

Not surprisingly, pharmacists have been turning to various other areas to supplement their income and make up for meager third-party reimbursements. Some 33% are delving into compounding, and 17% are trying their hand at home health, followed by long-term care and disease management, both at 15%. Other areas mentioned: immunizations, complementary care, wound and ostomy care, flu vaccinations, $2 delivery charge, flavoring Rxs, and bone density and cholesterol screenings.

When asked whether they are receiving any reimbursements from third parties for drug therapy management services separate from the drug product, an overwhelming majority, 94%, said No. Only 6% said Yes. Of those, 50% named PCS as the payer. Medicare was also mentioned.

More complaints

Almost three-quarters of respondents feel that the merger of pharmacy benefit managers in recent years has increased the power of these consolidated entities over pharmacies.

One pharmacist lamented, "They are becoming a monopoly and are starting to dictate terms and policies. Their take-it-or-leave-it attitude is unacceptable." Another pharmacist said, "They have too much control over formularies." Yet another complained, "We always end up with lower reimbursements."

"Consolidation gives the PBMs the power to lower dispensing fees and increase the percent of AWP," complained one pharmacist. Another furious pharmacist insisted, "Because they can dictate whatever Rx fee schedules they desire, they are monopolies! They need to be investigated!"

Nine out of 10 survey participants believe it would take rejection of unacceptable contracts by a majority of pharmacies to force PBMs to change their contracts to reflect a better reimbursement for pharmacists. A whopping 87% believe that legislation will accomplish this goal, followed by the raising of public awareness (68%).

When asked whether there is now, or has ever been, an attempt in their state to extend Medicaid reimbursement rates to Medicare patients, half of the respondents said they "don't know." More than one-third replied No, and 11% said Yes. Of those who answered Yes, one-half specified they were from Arizona, one-third live in Alabama, and 17% are from Arkansas.

Finally, pharmacists were almost evenly split in their opinion on whether pharmacies should extend their Medicaid reimbursement rates to Medicare patients as well. Some 49% said Yes, while 51% said No.

Although extending Medicaid reimbursement rates to Medicare patients will have a negative impact on pharmacies, some respondents were in favor of the idea. One pharmacist said, "We get reimbursed well from Medicaid. Medicare patients need all the help they can get." Another concerned respondent said, "In a grocery setting, we see the economic impact of seniors with no insurance, and it is sad watching them have to make a decision between groceries and medicine."

Sandra Levy

What would it take to force PBMs to change their contracts to reflect a better reimbursement for pharmacists?

If your store is independently owned, have you thought of selling your store or has the store actually been sold because of poor reimbursements from third-party payers?

Sandra Levy. THE GOOD, BAD, AND UGLY.

Drug Topics

Sep. 3, 2001;145:29.