Progress slow in Medicare reform efforts

Since sweeping back into power with control of both houses of Congress in January, the Democratic Party has learned anew a bitter lesson in politics: Being the majority party doesn’t necessarily translate into legislative success.

The Medicare Part D drug benefit program is a case in point. New House speaker Nancy Pelosi and other prominent Democratic leaders made reforming the Medicare Modernization Act of 2003—the law that created the Part D benefit—a centerpiece of their legislative agenda for the 110th Congress. It hasn’t happened.

When the MMA was passed, it contained a controversial provision that expressly forbids the federal government—or, more specifically, the Centers for Medicare & Medicaid Services division of the Department of Health and Human Services—from negotiating directly with pharmaceutical manufacturers for lower prescription drug prices. House Democrats quickly passed legislation early this year to overturn that provision, but the measure bogged down in the Senate as the powerful pharmaceutical and PBM lobbies, and the Bush administration, swung into action to turn back the challenge.

In issuing a veto threat, the White House argued that giving Medicare the ability to try to wring volume-based discounts from drug companies that supply the Part D program would amount to “government interference” in what is essentially a privately run program. Price negotiation by the government, President Bush noted, “impedes competition, limits access to lifesaving drugs, reduces convenience for beneficiaries and ultimately increases costs to taxpayers, beneficiaries and all American citizens alike.”

Advocates for change point out that direct drug purchasing already is practiced by other government agencies, including the Department. of Defense and the Veterans Administration, and that polls show support for the concept among a majority of Americans.

The Institute for America’s Future, an advocacy group allied with Democratic Party interests in health care, is among many interest groups calling for an overhaul of Medicare reform legislation to allow the government to negotiate directly with drug makers. “Legislation to allow Medicare to use its bulk purchasing power to negotiate for lower prescription drug prices could save American taxpayers and seniors more than $30 billion annually,” the group asserted in a recent report. “About $10 billion of these savings would accrue to American seniors in the form of cheaper prices.”

“In addition to the tremendous savings offered by allowing Medicare to negotiate for lower prices, there is also an opportunity to save more than $5 billion a year in administrative costs by allowing seniors to get their benefit directly from Medicare,” the institute added in its report.

The push for a bulk-purchasing provision in Medicare Part D is likely to emerge again either in the fall or early next year in the Senate. But for pharmacy retailers—particularly independent and small-chain operators running on few cash reserves and tight operating budgets—the Medicare drug benefit program has given rise to another, and far more pressing, worry. That is the issue of low-and-slow reimbursements to pharmacies by the prescription drug plans administering Part D.

Earlier this year, House lawmakers on both sides of the aisle resurrected a bill that would demand speedier payments from the PDPs for prescriptions dispensed under Medicare. Known as the Fair and Speedy Treatment of Medicare Prescription Drug Claims Act of 2007, the measure would require that complete and accurate Medicare prescription drug claims submitted electronically be paid within 14 days by electronic funds transfer. Paper claims would have to be paid within 30 days.

As was the case in the 109th Congress last year, the FAST bill gained plenty of support from members of Congress, and many expressions of sympathy for the plight of family-owned pharmacies stretched to the limit by the slow pace of reimbursements. Those slow payments have put some pharmacies in a severe cash-flow crunch, pharmacy leaders and some lawmakers argue, and have forced some independent drug stores out of business.

“Part D plans are paid each month in advance by Medicare, yet Part D plans are using delaying tactics to enjoy a considerable interest-earning ‘float’ on taxpayer dollars intended to compensate community pharmacies for serving their patients,” said Bruce Roberts, executive vice president and chief executive officer of the National Community Pharmacists Association. “Meanwhile, pharmacies have been forced to deal with payment delays, forcing many of these small businesses to borrow tens of thousands of dollars to cover payroll…and other basic operating costs. Hundreds already have closed, leaving many rural and inner-city areas without these vital community health resources.”

Rep. Marion Berry, D-Ark., one of the bill’s sponsors and the only pharmacist serving in the U.S. House, called the FAST legislation “a simple reform that will make sure pharmacists are treated fairly and not financially held hostage by insurance companies.”

Nevertheless, the bill appears to have bogged down. In a recent rally on Capitol Hill in support of independent pharmacists, Rep. Walter Jones, R-N.C., was among a bipartisan group of lawmakers calling for passage of the bill and denouncing the opposition of both the pharmaceutical and insurance lobbies, and of some members of his own party.

Last year, Jones said, despite the fact that more than 170 members of Congress co-signed a bill to ensure fair and speedy payment to pharmacists in Medicare, “We could not get our leadership to move the legislation.”

According to Paul Kelly, vice president of government affairs for the National Association of Chain Drug Stores, the same outcome is likely this year. “I don’t think there’s going to be much movement on reforming Part D this year,” Kelly told Drug Store News in late July. “It’s the same old story. While there is support and sympathy to pharmacy’s concerns as it relates to Part D, it all boils down to cost.”

Kelly said the Congressional Budget Office is predicting that passage of FAST could add more than $1 billion in eventual costs to the Part D program as the PDPs, deprived of the “float” they now enjoy on the reimbursement funds they pay to pharmacies, charge more from the government for administering the program when contract negotiations come up for renewal.

Ending the war in Iraq “certainly would free up some money,” Kelly added, “but I just don’t know if there’s anything that will break the logjam” in 2007.

“Our hope is that we can continue to apply enough political pressure on Congress to find a few billion dollars to help solve some of pharmacy’s problems.”

NACDS, for its part, submitted a list of recommendations for reforming Part D to the Senate Committee on Finance in the spring. Besides prompt-pay and any-willing-provider provisions, the group is also asking Congress to ensure that beneficiaries are able to obtain 90-day supplies of their medications from any willing retail pharmacy and to “enhance information provided to pharmacies by Part D plans about generic drug reimbursement rates.” NACDS also sought clarification about the medication therapy management provision of the Part D program by requiring PDPs to report to CMS the details of the MTM offerings to patients.