The Centers for Medicare and Medicaid Services have allowed Preferred Networks to Exclude Independent, Retail Pharmacies from Medicare Part D

Plan Sponsors have done their best since 2006 to leave the independent, retail pharmacy out of Medicare Advantage and Standalone Part D preferred networks. The federal government (CMS), plan sponsors, PBMs & PSAOs are all responsible for this inequity.  In fact, our federal legislators represented big money in enacting Part D laws and intentionally left the independent retail pharmacy out of the equation.  A level playing field must exist in order for the Affordable Care Act to be successful. The level playing field law, as reflected below, is inadequate and must be written to reflect the value provided by the independent, retail pharmacy, whether that be in Medicaid or Medicare. (1), (2)

Preferred networks have never provided the retail, independent pharmacy a level playing field. The actually legislation demands that inequality exist in Medicaid and Medicare. At no time has any representative of the retail independent pharmacy done the right thing. They have and will continue to take advantage of this situation.

Level Playing Field for Independent Retail Pharmacies in Medicare Part D

  • Plan Sponsors that include mail-order pharmacies, must allow members to obtain covered drugs from a network retail pharmacy

Plan Sponsor may hold member responsible for higher cost-sharing for obtaining covered drugs from network retail rather than network mail-order pharmacy.

Higher cost-sharing is limited to the mail-order cost-sharing plus any differential in contracted rates between retail and mail-order

  • Plan Sponsors must ensure that the availability of benefits at retail rather than mail-order pharmacies does not increase costs to the government.

  • Member cost-sharing for an extended-day supply at retail must never exceed what the enrollee would have paid at the same retail pharmacy had the enrollee had prescription filled in multiple 1 month supply increments at retail pharmacy rates

  • Plan Sponsors that offer extended supplies must make an “Extended Supply Addendum” available to retail pharmacies on request.

Network mail-order pharmacy rate – addendum allows retail pharmacy to offer extended supplies at same negotiated price, reimbursement rate (including dispensing fee) and cost-sharing as network mail-order pharmacy or pharmacies.

Alternative retail/mail-order pharmacy rate – addendum allows retail pharmacy to dispense at higher than mail-order contracted reimbursement rate.

  • Cost-differential may be passed on to enrollees. Plan Sponsors offering benefits, including extended-day supplies, at network mail order pharmacies must offer retail pharmacies reasonable opportunity to provide those same benefits.

Plan Sponsor must contract with a sufficient number of network retail pharmacies to ensure that enrollees have reasonable access to the same extended day supply benefits at retail that are available at mail-order.

CMS will monitor compliance through, for example, enrollee complaints.

  • Clarification 2012– Plan Sponsor that offers enhanced alternative coverage that includes coverage in the gap may not limit access to covered drugs in the coverage gap to mail-order pharmacies.

Gap coverage must be available to enrollees at all network pharmacies.

Please refer to:

  1. Department of Health & Human Services Review of Part D. Contracting, July 29, 2008 from Daniel Levinson, Inspector General.

  2. Billy Tauzin: Case Study in Corruption, How Industry Money and Personal Interest Shaped Part D, May 2006