06.16.08

Threatened By Delayed Medicare Payments, Buffalo's Cash-Strapped Mom & Pop Pharmacies Struggle To Stay Afloat; Schumer Pushes Bill To Fast Track Payments

Forced to Foot the Bill While Awaiting Reimbursement, Buffalo's At-Risk Privately-Owned Pharmacies Struggle to Make Ends Meet Each Month As Buffalo Area Pharmacy Owners Tell Their Tales of Woe, Schumer Pushed Legislation to Protect the Local Shops - Require Medicare Insurance Plans to Pay Promptly and Deliver Most Claims Payments in 14 days

Standing with Buffaloarea pharmacy owners as they told their tales of woe on how delayed Medicare Part D payments threaten their businesses, U.S. Senator Charles E. Schumer today blasted the inefficient Medicare payment system for pharmacies. Currently, independent pharmacies across Western New York report having to wait up to 8 weeks to receive payments from Medicare Part D plans. This delay makes it hard to keep up with their biweekly billing cycles. Forced to foot the bill while they await payment, the delays deal a fiscal blow to these shops month after month and threaten to put smaller pharmacies out of business for good.   
To protect Buffalo area's small, independentlyowned pharmacies, Schumer pushed legislation today to require prompt Medicare Part D payments to pharmacies within 14 days, ensuring that Buffalo's mom and pop pharmacies remain open. Schumer is cosponsoring the Pharmacy Access Improvement Act of 2007, a bill that would ensure pharmacies are paid within 14 days of submitting claims electronically, and receive interest for any late payments.  
"Delaying payments to the mom and pop pharmacies that loyally serve our local communities is simply unconscionable," Schumer said. "If we don't enforce prompt payments from Medicare middle men, independentlyowned pharmacies could become a thing of the past. This bill makes sure our local pharmacies receive the payments they need on time."
Small, independent pharmacies across Western New York are currently struggling to make ends meet due to delayed Medicare Part D payments. Community pharmacies typically pay their suppliers every 15 days, but the pharmacy benefit managers (PBMs) that administer the Medicare Part D plans often take up to two months to reach local pharmacies. Currently, less than 1% of privatelyowned, independent pharmacies are paid within 15 days, often waiting 60 days to receive payment - dealing a fiscal blow to the often familyrun business.
 
As small businesses, the payment delays have forced many independently owned pharmacies to borrow tens of thousands of dollars each month to cover their payroll, wholesaler bills and other basic operating costs. The average community pharmacy has taken out loans of $70,000 and many have loans in the hundreds of thousands of dollars just to maintain a cash flow. After years of steady growth, 1,152 community pharmacies were 'shuttered or were sold' during 2006 - many times in lowincome, urban, and rural areas where community pharmacies are most prevalent and often fill a health care void.
As small businesses, the payment delays have forced many independently owned pharmacies to borrow tens of thousands of dollars each month to cover their payroll, wholesaler bills and other basic operating costs. According to the National Community Pharmacists Association, the average independentlyowned pharmacy has taken out loans of $70,000 and many have loans in the hundreds of thousands of dollars just to maintain a cash flow. After years of steady growth, 1,152 community pharmacies were 'shuttered or were sold' during 2006 - many times in lowincome, urban, and rural areas where community pharmacies are most prevalent and often fill a health care void.
CAN WE NOT SAY THIS? [Medicare Part D payments are administered by a small number of Pharmacy Benefit Managers who often use delay tactics to maintain an interestearning float on the payments they receive from the federal government each month to reimburse pharmacies. While they benefit from earning interest on taxpayer dollars, independent pharmacies are unable to pay their debts, payroll and other basic costs. }
[Independentlyowned pharmacies provide access to costeffective prescription and nonprescription medicines and often serve as the primary local health care resource in many small communities. Over 23,000 independent pharmacies serve their communities across the country and provide over 300,000 jobs. "Whether it is providing costeffective prescriptions, answering key health care questions or providing local jobs, independent pharmacies are the backbone of our communities and we cannot let them become a thing of the past," Schumer said.]
 
Erie County has the largest net loss in independent pharmacies with five closures in just the last year. Currently Western New York, including Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans and Wyoming has 95 independent pharmacies whose business is threatened by the delayed Medicare Part D payments. Nearly 100% of these pharmacies are not paid within 15 days, often waiting 60 days to receive payments, forcing them to go into debt.
Senator Schumer is a cosponsor of legislation requiring complete and accurate Part D pharmacy reimbursement claims submitted electronically to be paid within 14 days by electronic funds transfer, and paper claims within 30 days. The bill ensures that properly submitted claims will be paid without delays, and all rejected claims must be accompanied by an explanation. The bill would also eliminate the confusing practice of "cobranding" on Medicare identification cards and other materials, which has misled many seniors to believe they can only use the pharmacy whose name appears on the card.  
 Provisions of the bill were included in the Medicare Package recently brought to the Senate floor.
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