Medicare Compliance & Reimbursement

Industry consolidation may narrow Medicare drug benefit to fewer plans next year.

News reports have highlighted some pharmacists' financial problems stemming from the Medicare prescription drug benefit, purportedly relating to health plans' slower reimbursement for dual eligibles' claims. (See related story in this issue.) Now the Centers for Medicare & Medicaid Services is considering increasing reimbursements for pharmacists who convince customers to switch from brand-name to generic medications, according to CMS Administrator Mark McClellan.

Another proposal CMS is deliberating is to make substantial billing and coding changes that would reduce costs for filing medical claims, says CMS spokesman Peter Ashkenaz. The agency will hold a public meeting April 24 to hear comments about the proposed payment incentives for pharmacists who prescribe generics.

Although CMS is undertaking measures to help struggling pharmacists--especially independent community pharmacies, which often have only limited reserves to draw on in case of temporary shortfalls--agency representatives also doubt that the drug benefit is the sole cause of the problem. "I think what we're seeing is a change in the business model that continues a trend that has occurred over the past 15 years," McClellan ventures.

In related news, consolidation in the insurance industry is likely to pare down the number of private plans offering prescription drug coverage under Medicare, McClellan speculates. "I think you'll see significantly fewer choices available next year, but they will be choices dictated by the market, by what consumers want," he says. In addition, CMS has been speaking to insurers about reducing the number of stand-alone drug plan offerings from three to two.