News Service of Florida / NPR
Amid a legislative tussle with millions of dollars on the line, people who operate pharmacies in Florida contend they are getting short-changed by the state.
A report released Thursday maintains that pharmacists participating in Florida’s Medicaid managed-care program are being woefully underpaid.
State Medicaid officials estimate the cost of doing business in the Medicaid program is $10.24 per filled prescription. But on average, Medicaid managed-care plans paid pharmacists $2.72 per claim in 2018.
The 202-page analysis was commissioned by the Florida Pharmacy Association and American Pharmacy Cooperative Inc. and was conducted by 3 Axis Advisors. It was based on a review of more than 350 million Medicaid managed-care claims between 2012 and 2019 and claims data from more than 100 small community pharmacies across Florida to help validate the state data.
The claims showed researchers what each managed-care company reported paying for each drug to each pharmacy and how some pharmacies are paid more than others. The study comes as the Legislature considers bills that would address the role of pharmacy benefit managers.
But the report’s findings were quickly questioned by the managed-care industry.
The analysis showed that pharmacies affiliated or owned by pharmacy benefit managers can be paid more than other pharmacies. Five pharmacy groups that in the aggregate filled less than 1 percent of the managed-care claims in 2018 made $13 million in profit, 28 percent of the total profit made by pharmacists that year.
When those five companies were excluded from the data, the report shows that payments made to pharmacies participating in the Medicaid managed care program dipped from an average of $2.72 per claim to an average of $1.97 per claim.
Researchers noted that CVS Health filled 45 percent of all managed-care prescriptions in 2018 and provided pharmacy-benefit manager services for at least 46 percent of managed-care prescriptions, which makes the company a dominant force in Florida.
But pharmacists argue that dominance comes at a cost. As an example, in 2018 the managed-care company Centene paid CVS in Palm Coast $11.18 for a specific drug, yet paid Publix and an independent pharmacist 24 cents and 53 cents, respectively, for the same drug. All three pharmacies were located within blocks of each other, according to the report.
CVS issued a statement Thursday accusing “big pharma” and independent pharmacists of spreading “falsehoods.”
Florida has one of the largest Medicaid programs in the nation, providing benefits to nearly 3.8 million people as of last month, according to the latest available data.
The majority of those people, or 2.93 million, are enrolled in Medicaid managed-care plans, as required by state law. The state makes monthly payments to managed-care plans to cover all the costs of services patients may need. That “capitated” amount, which is required to be actuarially sound, includes the costs of pharmaceuticals.
Florida also has 843,673 people who receive Medicaid services outside of managed-care plans. Pharmacists who treat those patients, according to the analysis, are being reimbursed at a level that covers their costs of doing business.
The federal Centers for Medicare & Medicaid Services requires all states to conduct an analysis showing pharmacists’ costs of doing business and to reimburse them that amount for each Medicaid claim on top of the cost of acquiring the drug.
Florida has determined the cost of doing business incurred by pharmacies in the state is $10.24 per claim.
But the federal agency does not place similar requirements on Medicaid managed-care plans, and there are no requirements outlining how pharmacists should be paid.
Managed care companies sign contracts with pharmacy benefit managers to manage drug costs. The so-called PBMs can collect money from administrative fees they charge health plans and network pharmacies and retain drug rebates paid by pharmaceutical manufacturers.
Noting that the new report was funded by two organizations that represent pharmacists, Florida Association of Health Plans President and CEO Audrey Brown was critical of the findings.
It “is nothing more than a bought and paid for targeted attack on PBMs. In no way should this report be viewed as credible or unbiased, it was developed with a clear agenda and compiled with unverified data that fits the special interests’ narrative,” she said in a statement to The News Service of Florida.
But Michael Jackson, executive vice president and CEO of the Florida Pharmacy Association, defended the analysis and pointed to data from the state Agency for Health Care Administration.
“Don’t take our word for it,” Jackson said. “The data is the agency’s. Have the agency come in and validate what is in there. And if the PBM industry questions the result of the study, then my invitation to them is open up your books and tell us we’re wrong.”
Bills have been filed for this year’s legislative session that relate to pharmacy benefit managers. For example, a bill (HB 961) would preclude PBMs from directing patients to pharmacies they own in whole or part. But that bill and a Senate version (SB 1444) have not been heard in committees.
Both chambers are considering more-conservative proposals. A bill (SB 1338), filed by Sen. Tom Wright, R-New Smyrna Beach, would give the state insurance commissioner authority to conduct market conduct examinations of PBMs and would allow the insurance office to review contracts between managed-care organizations and pharmacies.
Another bill (HB 7045), meanwhile, has the support of the managed-care industry. The bill would require pharmaceutical companies to report price increases to the state Department of Business and Professional Regulation.
Brown, of the Florida Association of Health Plans, called the bill a “holistic approach to understanding the drug chain and reining in the high price of prescription drugs.”
Cocoa pharmacist Dawn Butterfield said the Legislature needs to address the issues or she will join the ranks of independent pharmacists who are shuttering their businesses. Florida has had a 15 percent decrease in the number of independent pharmacies during the past three years, according to the Florida Pharmacy Association.
At times, Butterfield said she cries when filling Medicaid managed-care prescriptions, knowing that the HMO will pay her less than what it costs her to buy the drug. She recalled last July filling 58 prescriptions for members of one Medicaid managed-care plan and losing money on 52 of those prescriptions.
“I made a negative $342 on that. That’s not sustainable,” she said.
But Butterfield said she cannot drop Medicaid. If she does, the pharmacy benefit manager she contracts with will not allow her to serve the commercial or Medicare clients it provides services for.
“I hate to use this word, but it’s rape,” she said. “It’s financial exploitation. That’s what it is.”