‘This is an emergency’: Trade group warns nearly a third of all independent pharmacies will go extinct because of a CMS rule

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Independent pharmacies they will fight in recent years to stay open – and the new economic crisis could mean a large number of closed pharmacies in 2024.

About one-third of independent pharmacies are at risk of going out of business because of a new rule from the Centers for Medicare and Medicaid Services (CMS) that results in lower prescription drug reimbursements, according to the National Community Pharmacists Association (NCPA), a trade group that represents more than 19,400 US pharmacies.

“This is an emergency,” NCPA CEO B. Douglas Hoey said in a words. “If Congress fails to act, thousands of local pharmacies could be closed within months and millions of patients could be left without a pharmacy.”

The CMS rule, which went into effect on January 1, requires payers as well pharmacy managers benefit (PBMs) to use what are called direct and indirect payments (DIR) at the time a patient takes a drug.

CMS developed DIR costs to calculate the cost of Medicare Part D drugs after they are prescribed to a patient and all deductibles are taken into account. Historically, a pharmacy may charge a DIR fee several months after dispensing a prescription. But under the new law, payers and PBMs must use all DIR costs at the time a drug is dispensed.

The law seeks to increase drug price transparency for both retailers and patients, according to the NCPA. CMS officials said in December 2023 that the rule is “expected to lower all benefits and out-of-pocket costs. [and] providing valuable justice. “

NCPA officials said the agency supports the rule, although it has warned CMS that the change to using the DIR fee up front could make things difficult for independent sellers because it would lead to lower reimbursement rates.

“With low drug reimbursements in one corner and backlog fees in the other, many healthcare professionals are considering throwing in the towel,” the NCPA wrote in a statement.

NCPA surveyed 10,000 independent business owners and managers about the CMS law in February, and of the 815 respondents, 32% said they were considering closing this year due to financial difficulties. Additionally, 93% said they plan to drop Medicare Part D in the next year, and 99% said their drug reimbursements have decreased since the law took effect.

“If one-third of all community pharmacies close, and if more than 90% stop receiving Medicare Part D, it will be a disaster for the elderly, a hardship for many other patients, and a huge blow to the entire health care system,” Hoey said. in a sentence.

Independent pharmacies have notified CMS of the reimbursement problem, and the agency sent a letter to payers and PBMs in December 2023, urging them to “work with providers and pharmacists to reduce these problems and protect access to care.”

“Industries play an important role in providing health care and providing access to health care across the country,” the letter read. “CMS is concerned about the sustainability of these businesses, especially small and independent pharmacies, and their closures that could result in the loss of access to health care services for many people, especially rural and underserved communities.”

The NCPA sent a letter to CMS in February saying that the agency’s guidance “did not result in meaningful changes in PBM practices or reimbursement,” and urged the agency to “seriously investigate PBM reimbursement practices.”

“There is a need for immediate and direct action from CMS, which is responsible for implementing program rules. This should include clear guidelines that close the loopholes that allow PBMs and plans to establish inappropriate products,” Hoey wrote in the letter. “This review process is necessary to ensure proper care, especially when determining reimbursement. Unless CMS takes immediate action, NCPA fears that access to health care will be at risk, with independent pharmacies being forced to close.”

The story was first published in Healthcare Brewbranch of Morning Brew.

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