Prof: reimbursements not so generous after all - Stephen N. Schondelmeyer, Purdue professor, speaking on Medicare reimbursement - Pharmacy

Prof: Reimbursements not so generous after all

CHICAGO -- Directors of pharmacy from some of the nation's largest food chains are being warned not to be fooled by what appears to be a favorable reimbursement schedule under the newly passed Catastrophic Drug Act.

Speaking before a group of supermarket and combo store pharmacy managers at the Food Market Institute's Supermarket Pharmacy Conference, Stephen N. Schondelmeyer, associate professor of pharmaceutical administration at Purdue University's School of Pharmacy, said that while reimbursement schedules under the new Medicare Act may seem generous, in actuality they shouldn't expect to receive any reimbursement that is more than their usual and customary pricing schedules.

Currently, the law states that reimbursement of single-source drugs will be based on the lower of three schedules: 1.) AWP plus $4.50; 2.) usual and customary charges; and 3.) ninetieth percentile of usual and customary charges.

When Schondelmeyer asked for a show of hands of how many had a usual and customary charge that was greater than AWP plus $4.50, no one raised a hand.

"AWP plus $4.50 sounds great," said Schondelmeyer, "but in reality nothing has really changed."

If anything, Schondelmeyer said that pharmacists who participate in the plan may stand to lose money because the law only provides for AWP prices to be updated every six months. To further muddy the waters, AWP will be defined by the Secretary of Health and Human Services and may not even resemble the more familiar AWP that is published by manufacturers.

"Essentially the plan will pay you out-of-date reimbursements," said Schondelmeyer. Furthermore, he said the $4.50 professional fee was based on 1987 dollars. Although the law provides for the fee to be changed according to the Implicit Price Deflator for the GNP, indexing doesn't start until 1992. So, pharmacists will be collecting a fee that is essentially five years old.

Schondelmeyer suggested that manufacturers adjust their price increases at different times of the year.

"Traditionally, the most frequent number of price changes take place in January and February," he said. "That means pharmacists will be collecting on an old price for a minimum of four months."

To make matters worse, often there is more than one price change in a six-month period. What this effectively means is that the pharmacist might be collecting something like AWP minus 10 percent or 12 percent when the dust clears.

Harold Cohen, R.Ph.

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