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Special coverage: Medicare

Surviving Medicare

Independent drugstores say the new Part D drug plan is squeezing profits and threatening their livelihood. Not so, proponents say.

By KRIS HUNDLEY
Published April 3, 2006

	[Times photo: Scott Keeler]
	Louis F. Ladson, center, owner of Lincourt Professional Pharmacy in Clearwater, gives good service and free delivery; but Medicare Part D has increased his costs, cut reimbursements and dragged out payments. At right is Ana Alarcon, a certified pharmacy technician.

CLEARWATER - Louis Ladson's pharmacy here has survived the proliferation of chain competitors like Walgreens and CVS. But he's not so sure Lincourt Pharmacy can survive Medicare's new prescription drug plan.

Under the program, which went into effect in January, he and other independent pharmacists say insurers' reimbursements are dramatically slower and lower than in the past. Ladson recently waited six weeks for payment on a drug delivered in early February. Adding insult to the delay, some reimbursements have been cut by more than half.

Confusion has multiplied along with the profusion of plans - dozens in the Tampa Bay area and hundreds nationwide. Disabled patients once covered by state Medicaid, for instance, have been moved into six different Medicare drug plans, each with its own formularies, or lists of approved drugs, and reimbursement rates.

To add to the confusion, insurers can change formularies and reimbursements at will. Patients on both Medicare and Medicaid can switch plans every month.

Medicare officials said they want to hear about reimbursement delays so they can put pressure on insurers.

But not everyone thinks independent pharmacists are getting a raw deal. They suggest payments to drugstores under Medicaid were too generous. And pharmacy benefits managers who handle Medicare drug plans for insurers say the new plans are saving consumers money.

Mark Merritt, president of the pharmacy benefit managers' trade association, said, "What's really at issue here is drugstores are unhappy that insurers are now negotiating lower prices and lower profits between themselves and America's seniors."

Independent pharmacists like Ladson say they had little choice about signing up for Medicare's new drug plans and no leverage in negotiating rates or terms.

"If you don't take it, you're out of business," he said of the plans, which cover about 18-million people. "But it looks like if you take it, you may be out of business."

Ladson has joined with about 15,000 independent pharmacists nationwide to lobby for changes, sending a penny-in-a-pill bottle to their Congress as a symbol of what they feel their businesses are worth.

The Association of Community Pharmacists Congressional Network says store closings are inevitable if changes don't occur. Last month, an independent pharmacy in Spring Hill ended its service to about a dozen assisted living facilities, saying it was losing money under the new Medicare plans.

While healthy people who rely on chain drugstores might question the need for independent pharmacies, John Gangemi, chief operating officer at Trelles Pharmacy in Tampa, said independents like his cater to a population not served by the chains.

"The chains are for mommy and daddy so they can run down and get pills for their kid's strep," said Gangemi, whose pharmacy delivers medicines to more than 80 ALFs. "You don't see thousands of elderly in serious medical condition running into Walgreens. Those people are the biggest utilizers of the system and they're the ones we serve."

Trelles, which has been in business since 1990, used to be paid by Medicaid within 10 days for ALF patients' prescriptions. Now Medicare reimbursements take 30 days or more, Gangemi said.

"Our margins used to be so-so, but we were getting the cash quick," he said of the business which had $12-million in sales last year and 48 employees.

"Now we have no idea when the money is coming through the door or exactly how much we'll get paid. Meanwhile, we have to borrow money to cover our overhead. And we'll never get back that float."

Ladson, who has owned Lincourt Pharmacy since 1984, had to go into debt to cover operating expenses for the first time in his business career.

"I've taken out a $350,000 line of credit and used about a third of it," he said recently. "I'm trying to keep my head up, but I'm concerned. I've got 18 employees here, dependent on me to make the right decisions."

Ladson, 55, runs a bare-bones operation, with his pharmacy, on the ground floor of a medical office building off Court Street, little more than a dropoff window, a pickup window and a waiting room. A few bags of candy by the cash register are his only concession to the general merchandise that generates most of the profit in chain drugstores.

Last fall Ladson added a room with a massage chair and oxygen bar as free amenities for his customers. Now the room is locked because it costs too much to staff.

"Negotiating the healthcare system in America is not the easiest thing in the world, so we wanted to roll out the red carpet," he said. "But extras are the first to go."

Lincourt's customers tend to be on walkers or in wheelchairs and Ladson knows most of them by name, as well as their drug regimen.

Hundreds of customers never even step foot inside the store: Lincourt delivers for free more than 10,000 prescriptions a month. Among his customers are more than 70 assisted living facilities whose residents have to pay $1 to $5 co-pays for their medicines under the new Medicare plans.

"These people get $54 a month and some of them are on so many prescriptions, their co-pays add up to more than that," Ladson said. "I would have written it off in the past, but now I can't. It's my profit."

A 30-year veteran of the Army reserve, Ladson sees parallels between the nation's experiences in Iraq and the Medicare drug plans.

"It's like we jump out and do something and didn't have it all planned out," he said. "I can't understand how the government allowed this to happen."

Kris Hundley can be reached at hundley@sptimes.com or 727 892-2996.

[Last modified April 3, 2006, 13:54:37]