Moran Company Study Examines PhARM Prompt Pay Proposal Implementing Key Provisions Of Drugstore Lobby’s Medicare Agenda

(Washington, DC) Legislation implementing key provisions of the drugstore lobby’s Medicare prescription-drug agenda would cost seniors and the Medicare program at least $9 billion in added costs over the next ten years, according to a new study conducted by the Moran Company and released today by the Pharmaceutical Care Management Association (PCMA). PCMA is the national association representing Americas pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 200 million Americans with health coverage provided through small businesses, Fortune 500 employers, health insurers, labor unions, and Medicare.

The study was conducted by Steve Lieberman, a Partner at the Moran Company, a health-care policy research firm based in Arlington, Va. Prior to joining the Moran Company, Mr. Lieberman served as a senior advisor to the Administrator at the Centers for Medicare & Medicaid Services (CMS) and helped in drafting the regulations implementing the Medicare Modernization Act (MMA). In addition, from 1999-2004, Mr. Lieberman served as the lead health analyst for the Congressional Budget Office (CBO), overseeing a staff of 30 focused on health and human resources issues and where he led CBOs team working on the MMA.

PCMA member companies are committed to working with Americas pharmacists to help beneficiaries see lower drug costs and assure pharmacies payment of clean Medicare claims within 30 days, said PCMA President Mark Merritt. Regrettably, at a time when policymakers are doing everything they can to restrain spending and lower the cost of prescription drugs, the drugstore lobby is pushing legislation that would increase drug costs for seniors and the Medicare program by more than $9 billion.

The new study from the Moran Company examines the cost consequences of S. 2563, the Pharmacist Access and Recognition in Medicare (PhARM) Act of 2006, sponsored by Senator Thad Cochran (R-Miss.). The PhARM Act is one of five proposals currently before Congress mandating new Medicare standards for pharmacy claims-payment timeframes, medication therapy management (MTM) programs, and other related provisions.

While the Cochran bill would add substantial costs to the Medicare program, PCMA requested an examination of this proposal because it appears to be less onerous than the other, more extreme measures pending in Congress, including two other bills sponsored by Representatives Marion Berry (D-Ark.) and Roger Wicker (R-Miss.). PCMA believes strongly that the Berry bill and Wicker bill would both increase costs even more than the Cochran bill and that the $9 billion in added costs is the minimum cost of the various drugstore lobby proposals. For example, the Berry bill would mandate a dispensing fee of $14 for every generic prescription dispensed under Medicare and the Wicker bill would require 10-day payment cycles for Medicare pharmacy claims.

Among the key findings from the Moran Companys analysis of the PhARM Act:

The PhARM Act would increase costs to seniors and the Medicare program by $9.4 billion over ten years; and

The PhARM Act would increase seniors Medicare Part D drug premiums by $7.20 in 2008 alone.

In contrast to special-interest legislation that would benefit pharmacies at the expense of seniors and taxpayers, PCMA member companies are committed to working collaboratively with drugstores to ensure they are paid adequately and timely. Earlier this month, PCMA pledged its member companies would pay pharmacists for Medicare Part D pharmacy claims within 30 days of receipt of clean claims, a standard consistent with the way doctors and hospitals are paid under Medicare Parts A & B, 43 state laws, and federal employees health plans.

The more than $7.7 billion score of S. 2563 representing $9.4 billion in higher plan costs and $1.7 billion in higher beneficiary premiums concentrates on the financial implications of the provisions imposing federal prompt payment and MTM requirements, said Steve Lieberman of the Moran Company. These requirements would significantly change contractual provisions under which Part D plans are currently operating.

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The Pharmaceutical Care Management Association (PCMA) is the national trade association representing America’s pharmaceutical benefit managers (PBMs). PCMA member companies provide pharmaceutical care management services to more than 200 million Americans.

Contact Information:
Phil Blando, 202-207-3614
Charles Coté 202-207-3605