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Pharmacists push for KanCare contract enforcement

7/3/2013

By MIKE SHIELDS

By MIKE SHIELDS

KHI News Service

TOPEKA -- Gov. Sam Brownback's Medicaid makeover has been putting a financial squeeze on small Kansas pharmacists and spokespersons for the hometown druggists are calling for the administration to enforce the terms of its contracts with the three KanCare managed care companies.

"I think the simple answer is for the State of Kansas to make sure the MCOs (KanCare managed care companies) are living by their signed contracts and that should have been ready to go Jan. 1 (when KanCare was launched)," said Mike Larkin, executive director of the Kansas Pharmacists Association.

"We understand there will be bumps and hiccups in the implementation of a new program, but I can't help but think that if the shoe was on the other foot and they (the MCOs) were losing money instead of making money, they would have been on this (problem) a lot quicker," he said.

Pharmacists say the heart of the issue is the KanCare companies -- Amerigroup, UnitedHealthcare and Sunflower State Health Plan -- often fail to reimburse druggists for the costs they incur serving Medicaid enrollees.

"I guess the bottom line is that we were led to believe in the first year (of KanCare) that there would be no changes on reimbursement or anything," said Ron Booth, owner of the Corner Pharmacy in Leavenworth. "But you see, these (KanCare MCOs) are for-profit companies. They are changing all the rules and no one in Topeka is holding them accountable. I'm speaking out of frustration as a small, locally owned pharmacy. I want to be treated fairly."

The pharmacists, before and after KanCare, work from rate sheets that list the maximum they will be reimbursed by Medicaid for each of the long list of medications they dispense.

But here is what changed with KanCare, according to pharmacists and others familiar with the business: In the past, the state kept a single list or rate sheet of "maximum allowable costs" and when its reimbursement rates failed to cover a druggists' costs, it was more or less routine for the pharmacist to appeal and have the rate revised upward. The druggists could then resubmit those claims to the state and be paid enough they weren't losing money.

With KanCare, each of the state's contractors -- or rather their pharmacy subcontractors -- keeps a separate rate sheet, the formulation of which is considered proprietary. Booth and others said getting prices adjusted by the MCOs, so that the pharmacists aren't losing money on many of their Medicaid claims, has largely been an exercise in futility. And they also are frustrated that they can't get access to the methods the MCOs use for calculating their reimbursement rates, something obliged of them in their contracts with the state.

Booth said since KanCare started he has served hundreds of his customers at a loss and turned away more than that because he could no longer afford to fill their prescriptions. And he said he has not had a single appeal approved or adjusted upward by any of the KanCare companies since the program started six months ago. He gets form-letter denials, he said, and little or no understanding from the KanCare customer service reps when he calls to complain or ask for assistance.

"My problem is I'm dealing with real people in front of me at the counter," he said. "They are my friends and neighbors. I actually care about them."

State officials said they were aware of the pharmacists' concerns with reimbursements (outlined in a May letter from Larkin to KDHE) and were looking into them.

"KDHE has heard provider concerns that fewer MAC (maximum allowable cost) appeals are being approved in KanCare than in fee-for-service Medicaid," said Kari Bruffett, director of KDHE's Division of Health Care Finance. "KDHE is in the process of reviewing both KanCare MAC appeals data in aggregate and a sample of denied appeals to ensure compliance with our expectations."

Meanwhile, Bruffett said, the state's overall pharmacy spending was up from last year.

"Through the first five full months, overall pharmacy reimbursement is running about 8 percent ahead of the same time period in 2012," she said in an email to KHI News Service.

"Someone probably is benefiting," from KanCare, Booth said, but it hasn't been him.

In fact, you probably shouldn't get him talking about it unless you have some time to listen.

"At first, we were just absorbing the cost. But I decided I'm not going to do it anymore," he said. "I'm going to be the squeaky wheel. Someone's got to stand up. I don't want to subsidize these big MCOs that make millions each year. I work about 70 hours a week. I'm fighting for my life everyday. The big boys don't need me. They don't need Ron Booth who gets up in the middle of the night for his patients, sees them at Rotary, sees them at church, goes to the ballgames. I'm part of this community and unfortunately I have a conscience."

Kelley Melton, pharmacy program manager at KDHE, said that by the end of the year the managed care companies would have "real-time online pricing lookup" for pharmacists to check against when filling prescriptions. And she said the KanCare companies meanwhile were "in the process of developing systems to notify pharmacies of changes in MAC rates on a monthly basis."

But Larkin at the pharmacists' association said knowing how the companies formulate their reimbursement rates could be as important as knowing the rates themselves.

He said if the MCO or its subcontractor is basing its rates on prices that don't match those available to small pharmacies in the Kansas market, then the problem won't go away.

"You may have a drug available (at a given price) only in a certain part of the country because of the wholesaler or whatever," Larkin said, giving an example.

"A big PBM (pharmacy benefit manager) like CVS Caremark can find that low-price drug. But the guys in Kansas who utilize regional wholesalers are not able to obtain that price. So, if it costs CVS Caremark three cents and the pharmacist in Kansas 10 cents, they (the MCOs) will only pay three cents. You multiply that and apply it to some of the higher price drugs and you end up with a problem," he said.

"All we're asking is that they disclose how they come up with these (reimbursement) prices," Larkin said.

Spokespersons for two of the three KanCare managed care companies responded to requests for comment from KHI News Service.

Maureen McDonnell of Amerigroup said her company used CVS Caremark as its pharmacy benefits manager and that the "Amerigroup Kansas MAC (maximum allowable cost) prices are comparable to the state MAC prices."

She said the company reviewed its prices regularly and "MAC concerns from contracted providers are responded to promptly."

Monica Stoneking, a spokesperson for Sunflower State Health Plan, which is a subsididary of Centene, said the company's pharmacy subcontractor, US Script, uses the same cost list as the state.

"The state of Kansas distributes the state MAC listing and this is adjusted periodically and we continue to adopt it and abide by it," she said.

She said Sunflower was working with US Script "to evaluate the prescription re-price requests (from pharmacists) as well as the DME (durable medical equipment) issues," that pharmacists have raised.

But the pricing gaps and the disconnect between the state, the KanCare contractors and the pharmacists, seem real, at least from the pharmacists' perspective. Booth, for example, provided KHI News with documents showing the differences between his purchasing costs for some drugs versus what he was reimbursed by the KanCare companies between Jan. 1 and June 28. For Sunflower, the differences ranged from as little as 13 cents to $80.04. For UnitedHealthcare, the differences ranged from seven cents under cost to $40.06 below cost. For Amerigroup, the range was from 32 cents to $59.11 below cost.

'Underwater' costs

Chellie Ortiz is vice president of the Kansas Independent Pharmacist Service Corporation, which among other things helps small pharmacies that have claims issues with third-party payers, including the state and the KanCare companies. She said her organization also has communicated the pharmacists' concerns to state officials and the managed care companies.

She said the issues that small pharmacists were having with the KanCare managed care companies were not unique to the state's Medicaid program. Similar types of problems exist to varying degrees with other third-party payers. And she said some problems that arose in the first two or three months of KanCare seemed to be getting better. But she said the "underwater" reimbursements described by Larkin, Booth and others remained high on the list of independent pharmacists' worries.

"Especially in January, there were a lot of issues (with KanCare) as basic as claims processing," Ortiz said. "Those types of issues seem to be resolved, though there are still some issues on that with durable medical equipment claims. A lot of things have definitely gotten better, but there are still a lot of concerns on underwater claims. That is an issue. And its definitely a big concern with Kancare because its new for them and their Medicaid patients and for a lot of them Medicaid may make up a large part of their business."

The KHI News Service is an editorially independent initiative of the Kansas Health Institute and is committed to timely, objective and in-depth coverage of health issues and the policy making environment.