Pharmacists may not survive Medicare changes

By Agustina Guerrero
Tampa Bay Business Journal
Updated: 8:00 p.m. ET April 30, 2006

Some of the most trusted professionals in America could soon be out of
business.

Independent pharmacists are being impacted by cash flow problems due to the
slow and low reimbursements from Medicare Part D.

Some local pharmacists are now receiving fees of just $1 to $2 a
prescription versus the $10 to $15 they used to get. Checks also are taking
longer to arrive.

"Things are going bleakly," said Dan Fucarino of Carrollwood Pharmacy. "The
hardest part appears to be over, but long term it is still going to be
bleak."

More than 90 percent of community pharmacists surveyed by the National
Community Pharmacists Association said that their cash flow was worse than
before the start of Medicare Part D. Many are already calling it "Part D for
Disaster."

Pharmacists depend on payments from insurance plans -- including
prescription drug plans administering Medicare Part D -- to pay drug
wholesalers, staff and other operating expenses. But since Jan. 1 they've
seen a drastic slow down in payment schedules.

Medicare Part D was the government's attempt at creating a Medicare
prescription plan, but it has turned out to be a nightmare for independent
pharmacists nationwide.

Under Medicaid, pharmacists were reimbursed weekly; under Medicare Part D,
prescription drug plans issue reimbursement checks only once every four
weeks.

"It took three billing circles before we got our first checks," said
Fucarino. "It literally will take a year to recuperate."

Out of pocket
Many local pharmacists are taking money out of savings or taking out lines
of credit to cover the late reimbursements and carry customers who need
their meds but can't figure out how to sign up.

"It was the first time since I bought the pharmacy in 1984 that I had to
borrow money to keep the business running," said Bob Bobo, owner of Davis
Islands Pharmacy. "It is definitely because of Medicare Part D. Our
reimbursement is very, very low. The only other time I had to borrow money
was to buy the business."

According to a survey commissioned by the National Council of State Pharmacy
Association Executives nearly 50 percent of pharmacists provided medications
to Medicare recipients at no charge since the program began.

The strange twist is that some local pharmacists are reporting an increase
in the number of customers and the volume of sales. In the past, that had
translated into more profits. Today, customers and volumes are up, but
profits are down.

The problem, said Rob Slavkin, an attorney with Foley & Lardner in Orlando,
is that there are too many prescription plans to choose from and pharmacists
want to have contracts with as many as possible.

That is easier for retail giants like CVS Corp. (NYSE: CVS), Walgreen Co.
(NYSE: WAG) and Wal-Mart Stores Inc. (NYSE: WMT), which have a better
ability to contract on a national basis with the heavy hitters of health
insurance.

Independent pharmacists have a real competitive disadvantage, Slavkin said.
"They don't have the resources to get that many contracts to serve as many
senior citizens as possible."

Marketing guidelines set for Medicare Part D are also leaving independent
pharmacists behind. Larger chains can create compliance programs for their
stores nationwide. Smaller retailers must abide by the same standards but
with far less resources, said Slavkin.

Time is money
The NCSPAE also found that pharmacists across the country are spending more
than 10 hours a week resolving Part D-related problems.

"It is really time-consuming," said Bobo. "We are getting less than we were
but doing more work."

It is not unusual for a pharmacist to be on the phone with an insurance
company for an hour only to get a few dollars over the cost of the
prescription, he said. Plus, employees spend a great deal of time explaining
the plan, which should be the duty of the insurance company, he said.

Sixty percent of pharmacists surveyed by the NCSPAE believe that Part D
would have a negative impact upon their businesses, including 12 percent who
reported that it might even force their pharmacy to close.

Only 10 percent of them said that Part D would be good for their businesses.
John Noriega of Bill's Prescription Center in Brandon is one who has found
benefits in Part D.

"We are offering more services," Noriega said. "I offer a home delivery
service for $3. When Medicare Part D went into effect I bought a new van.
Medicare Part D gives patients another reason to come to me. In the
short-term I can see the downfall, but in the long term I see it as a
benefit."

The key, said Bobo, is to find a niche. "Those who are filling traditional
prescriptions, those who have a large percentage of business on Medicare are
going to be in trouble," he said.

But for many it may even be too late to find that niche, said Fucarino. "You
have to have certain bankroll to keep the business afloat during a difficult
time like this," he said.

Prognosis
Most independent pharmacists agree that improvements to the program are
required if Medicare Part D is to be successful.

National organizations are working with congressional offices to secure
legislative corrections.

"Congress must change the Part D program now, before it destroys the very
pharmacy infrastructure it relies upon," said NCSPAE's president, Jim
Bracewell, in a statement.

Local pharmacists also are trying to get in touch with politicians in
Florida to see if something can be done. Bobo was one of six pharmacists who
recently met with Commissioner Kathy Castor to discuss the challenges of the
plan.

But the road ahead still looks bumpy. There is talk of a proposal to lower
reimbursements even more next year.

Fucarino predicts that 50 percent of the 30 independent retail pharmacies in
Hillsborough County will go out of business in five years.

Independent pharmacies nationwide are an $84 billion business. They dispense
nearly half of the retail prescription medicines in the United States.

© 2006 MSNBC.com
URL: http://www.msnbc.msn.com/id/12571876/