KanCare squeeze hits some businesses ; Pharmacists say reimbursements are below cost [Topeka Capital Journal (KS)]

Beth Simpson, of Heartland Home Care in Lawrence, stood up at a KanCare Advisory Council meeting this past week to offer constructive criticism, sandwiched between compliments, of the move to managed care Medicaid.

She said the Kansas Department of Health and Environment has been outstanding in responding quickly to her small pharmacy's concerns about the three private companies contracted to provide most of the state's Medicaid. Still, Simpson said the switch to KanCare brought a web-like information-sharing structure that is causing delays in processing claims. With three different managed care organizations each working with a different pharmacy benefit manager subcontractor, the lag time in confirming that her Medicaid clients had been reauthorized for benefits increased.

"But our experience overall has been really good from KDHE, and you have great staff," Simpson said.

Simpson's comments mirror those of other independent pharmacists who believe the state is doing its best to iron out the kinks six months into the KanCare transition but are growing increasingly frustrated by delayed claims, low payments and a lack of accountability from the private managed care companies.

"I don't want to imply that Kansas Medicaid is the only entity that you go through these things with," Michael Larkin, executive secretary of the Kansas Pharmacists Association said, noting that private sector insurance also frequently uses pharmacy benefits managers. "But since this (KanCare) is a public contract, we're saying you need to hold their feet to the fire to make them do what they said they're going to do."

State officials say they are working to do that and, though some improvements still need to be made, overall pharmacy payouts are up.

"Access to medications is critical for KanCare members, so we have worked closely with the health plans and providers to address issues," said Kari Bruffett, director of KDHE's Division of Health Care Finance. "Through the first five full months, overall pharmacy reimbursement is running about 8 percent ahead of the same time period in 2012."

But some small, independent pharmacies say their cut of that money is decreasing, to the point that it is a genuine threat to their businesses.

"Without crying wolf, I'd say yes," Mike Conlin, owner of Jayhawk Pharmacy and Patient Supply said when asked if the longtime Topeka institution might have to shut its doors if the situation doesn't improve.

At the heart of the small pharmacies' troubles is something called the Maximum Allowable Cost, or MAC rate. It is the upper limit that insurers will pay for certain generic drugs.

Such drugs are like a commodities market, with costs to pharmacies that purchase them sometimes fluctuating dramatically with supply and demand. The MAC rate should change accordingly, in real time, but several small pharmacy owners said the KanCare managed care companies haven't been updating their rates promptly, especially when costs increase.

"We have concrete examples showing we're being reimbursed well below the actual acquisition costs of the drugs on several occasions," said Ron Booth, owner of the Corner Pharmacy in Leavenworth.

Booth has compiled a list of 166 such "underwater claims," in which the reimbursement he received didn't cover his costs. He ticked off several such transactions in a phone interview Friday, losses of amounts like $40.06 and $59.11.

Booth repeatedly emphasized that the list doesn't include prescriptions he decided he couldn't fill, because the financial loss would be too great.

Booth said he initially appealed each underwater claim, but appeal after appeal was fruitless. In speaking with other pharmacists, he could find no one who had lodged a successful appeal.

"So at some point you know what you do?" Booth said. "You just stop filling the prescriptions."

Booth said that decision tore at him, more from a personal standpoint than a business one.

He has owned the pharmacy for 30 years and has many longtime customers.

"These people are real to us," Booth said. "We see their tears, we see their pain."

In Leavenworth, such customers have other options, large chain pharmacies where Booth said front-line workers are disengaged from the billing process.

In the town of Anthony, where Joe Brummer plies his trade as owner of Irwin-Potter Drug Co., such options are limited. Brummer's pharmacy is one of two in Harper County.

Like Booth, Brummer has found himself trying to decide between turning customers away or absorbing a financial loss in order to fill their prescriptions. It is a decision complicated by the knowledge that those he turns away have few other places to turn.

"They could go up the road nine miles to Harper and try to get it there," Brummer said. "If they won't do it, they can drive 40 miles to Walmart and see if they'll do it."

Monica Stoneking, spokeswoman for Sunflower State Health Plan, one of the three managed care organizations, said the company has heard the pharmacists' concerns but "MAC pricing is updated frequently and is reviewed constantly."

"We pay exactly what the state paid under FFS (fee-for-service), and we continue to provide comparable pricing to the state's current Fee-for-Service program," Stoneking said. "We also understand that smaller, independent pharmacies are at a slight disadvantage because they generally contract with a pharmacy services administrators organization."

Stoneking said the decision to buy solely from such organizations can drive up the cost of generics beyond what the chain pharmacies pay, thereby causing the independent pharmacists' financial losses.

Representatives of the other managed care organizations, Amerigroup and United Health Care, didn't respond to a request for comment.

Booth said it is difficult to evaluate the companies' pace of updating their MAC rates because he believes they haven't fulfilled their contractual obligations to publish such changes and notify providers.

"This is not transparent," Booth said.

Kelly Melton, KDHE's KanCare pharmacist, confirmed that the KanCare contract does call for transparency in MAC pricing, but some measures to ensure it are still in development.

"By the end of this calendar year, that will include real-time online pricing look-up," Melton said. "Now, they each make MAC lists available, and are in the process of developing systems to notify pharmacies of changes in MAC rates on a monthly basis."

Health and Environment Secretary Robert Moser said Kansas is one of the first states to require MAC publication, which proves the state's commitment to transparency.

Meanwhile, Bruffett said the state is scrutinizing the MAC appeals lodged thus far to determine just how many are successful.

"KDHE has heard provider concerns that fewer MAC appeals are being approved in KanCare than in fee-for-service Medicaid," Bruffett said. "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."

For months before the KanCare roll-out, critics said the state was moving too quickly and pointed to managed care controversies in states like Kentucky, where pharmacists popped up at the Legislature en masse with complaints similar to those now being aired in Kansas.

Members of Gov. Sam Brownback's administration at the time sought to assure providers that Kansas' contracts with the managed care companies would be written to expressly prevent such payment issues.

Larkin, who has reviewed the contracts, says the language is there, but in some cases the state isn't ensuring the managed care organizations abide by it.

Conlin, who is on the advisory council, said that without a strong regulatory incentive, there's little reason for them to.

"It's an honorable project, and I think the state has done a good job," Conlin said of KanCare. "But the managed care organizations -- obviously their vested interest is to reduce their costs as long as they can."