New Study Finds Drugstore Lobby Agenda Would Increase Costs to Seniors & Medicare Program by $9 Billion over Ten Years

(Washington, DC) Testifying today before the House Energy and Commerces Subcommittee on Health, Pharmaceutical Care Management Association (PCMA) President Mark Merritt reiterated Medicare drug plans commitment to working collaboratively with pharmacists in the new Medicare prescription drug benefit and to pay Medicare pharmacy claims within 30 days, the association said today. At the same time, Mr. Merritt warned against legislative proposals that would impose shorter payment cycles and other new rules on drug plans, noting that a new study from the Moran Company has found that a Senate proposal, S. 2563, would increase costs to seniors and the Medicare program by at least $9 billion over ten years.

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 Part D. PCMA member companies are sponsors of five of the 10 national Medicare prescription drug plans and administer Part D for many other plans.

Medicare drug plans are committed to working collaboratively with pharmacists, doctors, CMS, and others to ensure beneficiaries have access to the drugs they need at an affordable cost, said Mr. Merritt. Medicare drug plans have taken numerous steps to resolve challenges for beneficiaries and pharmacies, including the industry’s pledge to pay clean Medicare pharmacy claims within 30 days.

In his testimony, Mr. Merritt reiterated the industry’s pledge to pay Medicare pharmacy claims promptly. Specifically, PCMA member companies have pledged to pay pharmacies submitting clean electronic Part D claims within 30 days. A 30-day standard is consistent with how doctors and hospitals are paid under Medicare Parts A & B, prompt payment laws in 43 states, and the federal employees health plan. PCMA member companies process tens of millions of pharmacy claims every month. A 30-day standard helps improve quality, ensure accuracy of payments, and combat fraud and abuse.

At the same time, Mr. Merritt expressed strong concern about legislative proposals that would go far beyond industry claims-payment standards and impose one-size-fits-all rules for medication therapy management (MTM) programs. Yesterday, PCMA released a study from the Moran Company finding that prompt pay and MTM provisions in S. 2563 would increase costs to seniors and the Medicare program by at least $9 billion over ten years. The study was conducted by Steve Lieberman, Partner at the Moran Company, and the former lead health analyst at the Congressional Budget Office (CBO) from 1999-2004. Mr. Lieberman also served as Senior Advisor to the CMS Administrator and helped write the regulations implementing the Medicare Modernization Act.

While S. 2563 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, HR 5182 and HR 5166. PCMA believes strongly that both these bills would increase costs even more than the Senate measure and that the $9 billion in added costs is the minimum cost of the various drugstore lobby proposals. For example, HR 5182 would mandate a dispensing fee of $14 for every generic prescription dispensed under Medicare and HR 5166 would require 10-day payment cycles for Medicare pharmacy claims.

The drugstore lobby’s Medicare agenda would increase costs to seniors and the Medicare program by at least $9 billion, with no corresponding benefit, added Mr. Merritt.

A link to the Moran Company cost-estimate study of S. 2563 can be found at The Moran Company Study