OSPA Executive Director, Brian Mayo, had an opportunity at the NCPA Conference in October to meet with other state association executives to discuss the upcoming “DIR cliff.” The state associations with legislators on the Senate Finance Committee agreed to contact their members to discuss this impending issue. We have heard from strong pharmacies who have prepared for the DIR cliff, have cash flow addressed, already diversified revenue and maximize other opportunities that without action by CMS to pressure the plans for ‘reasonable and relevant’ contract terms there will be massive pharmacy closures. While the advocacy to pass bipartisan PBM legislation is important – something needs to be done immediately to address the 2024 Part D contracts. Below is a copy of the email that was sent to Senator Wyden’s Medicaid Advisor.
Hi Polly,
I hope you are doing well! I’ve got another topic that I that I wanted you to be aware of which deals directly with CMS. On behalf of the Oregon State Pharmacy Association and our members, I am reaching out to ask Senator Wyden, as Chairman of the Senate Finance Committee, to contact CMS to help save pharmacies from closing in Oregon as a result of the 2024 ‘DIR cliff’.
Beginning January 1, 2024, Oregon pharmacies will face direct and indirect remuneration (DIR) fees for 2023 while also accepting lower point-of-sale reimbursement starting in 2024. This will cause unprecedented cash flow constraints and jeopardize access to essential healthcare. These challenges are a direct result of powerful pharmacy benefit managers (PBMs) responding to federal regulations. Many of our owners and stores have reached a dire state given the convergence of unworkable reimbursement issues, PBM contract terms, and CMS policies. We urge the Senator to ask CMS to do the following and ensure CMS enforces reasonable and relevant contract terms:
Specific Solutions
- Enforce Network Access Standards: CMS should monitor and enforce pharmacy access standards for Medicare Part D plan year 2024 to ensure rural pharmacies remain in network. This is dependent upon rural pharmacies reporting their specific challenge.
- Plan Year 2024 Contracts: CMS should take a thorough review of plan year 2024 contracts for reasonability and relevancy to determine if the contract terms follow CMS guidance, regulations, and federal statute.
- Enforce Prompt Payment Rules: CMS should monitor and enforce prompt payment rules for Medicare Part D plan year 2024 to ensure rural pharmacies are paid timely with lower point-of-sale reimbursement. This is dependent upon rural pharmacies reporting their specific challenge.
- Regular Stakeholder Meetings with Impacted Pharmacies: CMS should routinely meet with willing rural pharmacies and state pharmacy associations before and during the transition.
- Payment Plans: CMS should determine if they have the authority to require, encourage, or even note payment plans for rural pharmacies to reimburse DIR clawback fees, and publicly state their authority.
- Hold Pharmacy Stakeholder Meetings to Encourage Solutions: CMS should determine if they have the authority to holds meetings/discussions between PBMs, rural pharmacies, and other members of the pharmacy supply chain to establish efforts to protect rural pharmacies during this transition. Readouts and action from these meetings should be made public.
- Review PBM Solutions: An independent third-party should review PBM “rural pharmacy initiatives” and “rural contract rates” to determine if these programs are accessible for rural pharmacies and if they’re assisting them during the transition. Many pharmacies report they are not able to access these programs and rates despite rhetoric from PBMs.
- Call Line to Report Challenges: CMS should establish a call line or email account for rural pharmacies to report issues about DIR fee clawback changes, so CMS enforcement powers on network access and prompt payment standards are utilized efficiently and effectively.
- Oversight Report: CMS should conduct thorough review or publish their review of Medicare Part D plan year 2024 network access contracting of rural pharmacies. This should be published timely and publicly to put PBMs on notice.
- Public Encouragement: CMS should publish a press release, guidance, or other public document noting it is monitoring and enforcing very closely pharmacy access standards and prompt payment rules for Medicare Part D plan year 2024. The agency did something similar recently over out-of-pocket costs for Part D.
- Federal Loan Assistance: CMS should determine if they can coordinate with SBA or USDA, and if those agencies have authority, to leverage their agency loan authority to assist rural pharmacy cash flow challenges during this transition.
I have attached a report out of Iowa that shows the current status of pharmacies in their state. For context in terms of Oregon pharmacy closures, in 2008 we had 681 community pharmacies and in 2022 we only had 499 remaining. I’ll need to run a report on how many Rite Aid pharmacies will close due to their bankruptcy announcement yesterday. If you just look at the independent pharmacies closures, in 2008 we had 248 in Oregon and now we were down to only 90 remaining in 2022. We’ve already lost over 15 more in 2023.
I have also attached a letter that Senator Grassley sent to CMS. We would love to have Senator Wyden join Senator Grassley in a bipartisan effort to encourage CMS to look into this problem.
If you have any questions, we would be happy to speak with you about this issue. Please reach out to me at brian@oregonpharmacy.org to further discuss this issue if needed.
Thank you,
Brian