Pharmacists cry foul over sharp reduction in reimbursements

Wednesday, February 21, 2018

Independent pharmacists in Carroll

County and across the state say they are

being squeezed by declining reimbursements

for the prescriptions they fill —

and the end result may have a harmful

impact on patients.

At issue is the amount that the independent

pharmacists are paid for filling

generic prescriptions covered by Arkansas

Blue Cross & Blue Shield (ABCBS)

and Ambetter. The reimbursement rates

are set by the pharmacy benefits manager

(PBM) selected by each insurance provider.

Both ABCBS and Ambetter have

selected CVS Caremark as their PBM.

Local pharmacists say that beginning

Jan. 1, reimbursements on prescriptions

paid by ABCBS and Ambetter — with

rates set by CVS Caremark — have

been slashed dramatically.

In fact, the reimbursement for some

prescriptions has fallen to a dollar or

less, according to pharmacy owner Tara

Willmott, who owns and operates Poynor

Drug in Berryville and Sam Alexander

Pharmacy in Harrison.

“I can’t fill a prescription for $1, period,”

Willmott said.

Instead, Willmott said she has had to

turn some patients away rather than lose

money by serving them. Other times,

she has filled prescriptions knowing that

her business would incur a loss.

“It’s very difficult to continue to

serve our patients,” she said. “We end

up having to make a choice between losing

money on a reimbursement or send

that patient somewhere else. … There

are a lot of times where we take the loss

because we value our customers.”

Spencer Mabry, co-owner of Economy

Drug in Berryville, said he faces a

similar dilemma.

“What’s happened is, Blue Cross

and Blue Shield has chosen a payment

method that’s really hurting Arkansans,”

Mabry said.

“CVS has different payment methods.

Blue Cross Blue Shield could choose a

different payment method and not be

hurting Arkansans with it. Last year, we

were fine. We were able to service the

patients, get them the care they needed

and keep the doors open. If we keep going

this way this year, we won’t be able

to do that.”

Low-income residents enrolled in the

state’s Medicaid expansion program

known as Arkansas Works and those

covered through the Arkansas Health

Insurance Marketplace are especially

vulnerable to being turned away because

of the lower reimbursement rates

since ABCBS and Ambetter represent

the vast majority of those plans.

Mabry said his pharmacy fills about

500 prescriptions a month through Arkansas


“That’s not 500 patients per se, but

that’s probably at least 300,” he said.

“That’s a lot of our community that I

want to be able to help.

“I think my main problem is Blue

Cross, Blue Shield admitted to going to

this spread, so their PBM gets to choose

what the fee is,” Mabry said. “That’s just

not a good business model. We should

have a set fee for what they’re charging

to fill these scripts and it should be fair

to the patient, to the pharmacy and to

the insurance company.”

The issue is further complicated by

what some see as a conflict of interest

for CVS Caremark. The PBM is a

subsidiary of Rhode Island-based CVS

Health, which operates more than 20

pharmacies in Arkansas through another

subsidiary, CVS Pharmacy Inc. In some

instances, CVS Caremark establishes

the reimbursement rates for its sister

company’s pharmacies, and those rates

can sometimes be much higher than the

ones paid to independent pharmacies.

Scott Case, executive vice president

and chief executive officer of the Arkansas

Pharmacist Association, said

one independent pharmacist in Jonesboro

attempted to fill a prescription for

one of her own employees for the generic

version of Celebrex, a commonly

used anti-inflammatory medication. The

reimbursement of $10.57 approved by

CVS Caremark would not have covered

the wholesale cost of the medication,

so the pharmacist transferred the prescription

to a CVS pharmacy instead.

The explanation of benefits provided to

the employee by their insurance company

showed that CVS was reimbursed

$100.87 for the same prescription, Case

said. He provided copies of the documents

to support his story.

“The very fact that they’ve set up a

model where they set their competitors’

prices just blows me away,” Case said.

“They’re setting their own price and

they’re paying themselves more than

their competitors.

“Is it a competitive issue? Heck, yeah,

it is. They’ve started sending out letters

to independent pharmacies around the

state trying to buy pharmacies. They’re

clearly trying to devalue these independent

pharmacies and then swoop in and

save the day.”

Case emailed a copy of the letter

that he said CVS has sent to independent

pharmacists. The letter is signed

by Kenny Sanders, who is identified as

CVS Pharmacy’s regional director of


“Ever wondered what your pharmacy

business is worth?” it begins. “If so, we

should talk.

“I’m a pharmacist myself. I know

what independents are experiencing

right now: declining reimbursements,

increased costs, a more complex regulatory


“Mounting challenges like these make

selling your store to CVS Pharmacy an

attractive and practical option.”

Mabry said he had received a similar

letter. “I got a letter from CVS offering to

help me value my pharmacy to see if

I need to sell it, after Blue Cross and

Blue Shield’s reimbursements have gotten

so bad that I’m beginning to hurt a

little bit,” he said. “They’ve got pharmacies

and they’re a PBM? I don’t see

how that’s OK. But again there’s many

PBMs out there. I’m not trying to pick

on CVS. It’s Blue Cross, Blue Shield’s

choice on their payment methods.”

Case said the ultimate responsibility

for resolving the reimbursement issue

falls on the state.

“The state’s going to have to stand

up and tell these companies that they’re

going to have to pay these pharmacies

fairly,” he said. “The state’s going to

also have to put some rules on how

these people operate if they want to do

business in the state of Arkansas.”

Earlier this month, Mabry and Willmott

both attended a meeting of the legislature’s

Arkansas Health Insurance Marketplace

subcommittee on the grounds

of the state Capitol, along with so many

of their fellow independent pharmacists

that the fire marshal ultimately asked

some to leave the meeting room.

“I think the legislators — especially

the legislators that were at the session

— their eyes were opened quite a bit to

see that many people come,” Willmott

said. “… I’m trying to be optimistic that

we will get some change.”

“It was impressive to me how many

legislators noticed that Blue Cross Blue

Shield had no good answers for why

this happened,” Mabry said.

The issue has caught the attention of

Arkansas Attorney General Leslie Rutledge.

On Thursday, Feb. 8, Rutledge

announced that she will investigate the

reimbursement rates and has demanded

information from CVS Caremark.

“In roughly 20 percent of prescription

fills, prescription reimbursement rates

reportedly dropped lower than purchase

costs,” the attorney general’s office said

in a press release. “Local pharmacists

are forced to cover the additional costs

of these rate changes, which impacts

their bottom line and could lead to these

businesses closing their doors. Investigators

and attorneys have requested

information pertinent to establishing

if the reimbursement rate change triggers

provisions of Arkansas’s Deceptive

Trade Practices Act.

“The Attorney General will continue

to aggressively investigate the PBMs

responsible and requests that any citizen

harmed by these rate changes contact

the office.”

The attorney general’s office can be

reached by phone at (800) 482-8982 or

by email at

A CVS Health spokesman responded

to questions about the situation with an

emailed statement.

“CVS Caremark is focused on providing

our pharmacy benefit management clients

with opportunities to improve health

outcomes for their members, while also

managing costs, and is committed to providing

our PBM clients and their members

with a broad network of pharmacies

that includes local, independent pharmacies,”

the statement says. “We reimburse

our participating network pharmacies,

including the many independent pharmacies

that are valued participants in our

network, at competitive rates that balance

the need to fairly compensate pharmacies

while providing a cost-effective benefit

for our clients. We also have a well-established

appeals process for network pharmacies

regarding reimbursement, and our

responses to those appeals comply with

all applicable laws.”

For now, Mabry said his pharmacy

will continue to serve its customers regardless

of the reimbursement rates.

“The last couple of months, I have

chosen to take the loss,” he said. “I feel

strongly that I need to give it until the

end of February to see if we can get

some traction and maybe somebody can

help us fix this.”

The solution doesn’t have to be complicated,

he said.

“I think it is a simple fix,” Mabry said.

“I think they could go back to their pre -

vious payment method. I think the other

option would be, we’ve got a PBM that

services Arkansas Medicaid and they

do a fee-for-service. They’re fair. Why

don’t we have Blue Cross, Blue Shield

use them instead of CVS?”

Willmott said she does her best to

keep her customers informed about the

situation, but she said it shouldn’t come

to that point.

“I shouldn’t have to have that conversation

with customers,” she said, “when

they come in and they need medication

and they’re sick.”

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