- Policy & Research
- About KHI
Dec. 31, 2012
ABILENE Preferred provider networks can help seniors save money on their prescription drugs.
If a senior’s Medicare Part D plan includes a network of preferred providers and if they have their prescriptions filled at one of the participating pharmacies, they get a discount. That’s how the networks work.
But most of the participating pharmacies are large, corporate owned stores in towns large enough to have a Walmart, and owners of smaller, independent pharmacies say the chains' Medicare arrangements are hurting their businesses.
Charles Bankes, a pharmacist and owner of Bankes Drug in Abilene, said he doesn’t have much use for the networks.
“They’re what’s going to drive independent pharmacies out of business,” said Charles Bankes, a pharmacist and owner of Bankes Drug in Abilene. The Medicare plans are "essentially telling everybody that it’s in their best interest to go to one of the big chain stores. The playing field isn’t level anymore."
Bankes said he was especially upset to learn that AARP’s new Medicare Part D plan, which takes effect on Jan. 1, includes a preferred network.
“They don’t come out and say you have to go to Walmart,” he said. “They just say it’ll cost you less if you go to Walmart or Walgreens or wherever.”
Bankes said he would continue filling his AARP customers’ prescriptions, but he’s not in a position to match the chain stores’ discounts.
“We’ve been cut out of the process,” he said, referring to small-town, independent pharmacies like his.
Chellie Ortiz, vice president of operations for the Kansas Independent Pharmacy Services Corp., said there are some independent pharmacies in the preferred networks. But most never get the chance.
“We can’t make a blanket statement that applies to every single network that’s out there, but the large majority of independent pharmacies that we see are not even being invited or given the opportunity to participate," she said. “It’s not that independent pharmacies are saying, ‘No, we can’t meet those (discount) rates,’ it’s that they’re totally being shut out and not being provided opportunity to participate. There may be some that are saying they can’t or they won’t meet the rate, but they’re not the majority.”
Initially, a handful of Medicare Part D plans – Humana, most notably – offered preferred networks. Now, the networks are in most of the 30 plans being marketed in Kansas. The networks’ discounts vary from plan to plan.
“Last year is when they really took off,” said Brian Caswell, a pharmacist with Wolkar Drug in Baxter Springs. “It’s all based on the assumption that if you take your prescriptions to one of the big-box stores, you’ll end up spending a bunch of money on something else while you’re there. It’s to get you in the door. The chains can afford to do that. A lot of the independents can’t.”
Sarah Bearce, a spokesperson for the company, defended that network in an email to KHI News Service.
“UnitedHealthcare is committed to developing new and innovative ways to improve health outcomes and save our members money," she said.
“Our preferred pharmacy network will help us accomplish this in 2013 by providing our members with access to a large number of pharmacies where they can choose to save money on their prescription drugs,” Bearce wrote. “We intend to continue working with retailers and pharmacies - including those that are not currently part of our preferred pharmacy network - to bring additional savings to our members.”
In Kansas, 34 of the state’s 105 counties are considered underserved because they have only one pharmacy. Five counties have none, according to data compiled by the Kansas Independent Pharmacy Service Corp. and the University of Kansas School of Pharmacy.
The five counties without a pharmacy are Chase, Doniphan, Lane, Stafford and Wabaunsee.
A 2007 report noted that a third of the state’s independent pharmacists were age 54 or older.
The expansion of the preferred networks comes even as state officials are making efforts to generate more pharmacists for the state’s rural and underserved areas by trying to almost double the number of students admitted to the KU pharmacy school and its satellite at the KU School of Medicine-Wichita.
It's not clear yet how much the networks will benefit or hurt that effort, though many are convinced the networks are here to stay even if if mom-and-pop pharmacies are not.
“The main issue here really isn’t the preferred networks,” said Jim Young, director of third party services with PBA Health, a Kansas City company that negotiates network agreements on behalf of independent pharmacies. “They’re here. CMS (Centers for Medicare and Medicaid Services) allows them. They’re not going away.
“The issue is what happens when independent pharmacies in rural and underserved areas are put in a position of not being able to compete with the big chains,” Young said. “We’re told this is good, that it’s a way for people to save money. But at what price? We need to be asking ourselves how this disparity is affecting access and quality of care. Because when you start putting price up against access and quality of care, your long-term cost savings are going to go out the window."
Bankes, the Abilene pharmacist, said he doesn't know what else to do about competing with the provider networks, but he might end up calling it quits.
“I’ve complained about this to everybody I can think of,” he said. “But nobody does anything to stop it. I’m just glad I’m to the point where if it gets much worse, I can retire.”
The KHI News Service is an editorially independent initiative of the Kansas Health Institute. It is supported in part by a variety of underwriters. The News Service is committed to timely, objective and in-depth coverage of health issues and the policy-making environment. All News Service stories and photos may be republished at no cost with proper attribution, including a link back to KHI.org when a story is reposted online. An automatically updated feed of headlines and more from KHI can be included on your website using the KHI widget. More about the News Service at khi.org/newsservice or contact us at (785) 233-5443.