[HEALTH.MIL] Congress To Decide How Tricare Pharmacy Fees Will Rise In 2013

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  • Date: Fri, 23 Nov 2012 13:36:55 -0600

Congress to decide how Tricare pharmacy fees will rise in 2013

By Tom Philpott

Published: November 23, 2012


The House and Senate will decide in the next few weeks how military pharmacy
fees will be raised in 2013, a step that arguably will be the most significant
taken to date to slow growth in military healthcare budgets.


Out-of-pocket costs for military families and retirees who have prescriptions
filled in the Tricare network of retail pharmacies depend on final language in
the fiscal 2013 Defense Authorization Act.  Congress intends to pass a final
defense bill by mid-December.


The House-passed plan for pharmacy fees could win over Senate colleagues during
final negotiations on the bill.  It already is more palatable with military
associations.  It calls for more modest co-pay hikes than proposed by the Obama
administration.  But it would achieve the same first-year savings by requiring
beneficiaries 65 and older to use the Tricare mail order pharmacy program for
refills of all maintenance drugs, those that control chronic conditions like
high blood pressure and diabetes.


Any brand name prescription filled by mail rather than in drug stores or
supermarkets saves the department 27 percent, on average, said Rear Adm. Thomas
J. McGinnis, chief of pharmaceutical operations for Tricare.


Officially the administration continues back the pharmacy fee increases it
unveiled last spring.  Prescriptions would remain free on base, and the co-pay
for generic drugs would stay at $5 at retail outlets. But the administration
plans to raise the $12 co-pay at retail to $26 for brand names on the military
formulary.  The formulary is the department's list of approved drugs based on
price and effectiveness. The administration also wants to ban retail outlets
from filling prescriptions for non-formulary drugs, forcing beneficiaries to use
mail order for the most costly brand name medicines.


Also the new higher co-pays would climb by $2 more each year until reaching $34
in 2016.  After that, they would be adjusted yearly based on overall medical
inflation.  Co-pays for brand name drugs at mail order also would jump to $26
from $9, for a 90-day supply, and then climb slowly to $34 by October 2016,
under the administration's plan


Tricare already has authority to make these changes.  The question is will
Congress step in and modify the plan.  The Senate Armed Services Committee, in
marking up its version of the 2013 National Defense Authorization Act, stayed
silent on the issue.  So unless the bill is amended on the floor next week to
interfere with the plan, the Senate will signal Tricare to proceed with planned
fee changes.  Last June, the department even published a proposed regulation to
do so, and invited public comment.


It withdrew the proposed regulation when the House passed in its version of the
defense bill with an alternative pharmacy fee plan. The House proposes bumping
the co-pay for formulary brand names at retail only to $17 versus $26 proposed
by the administration.  It also would continue to allow prescriptions for
non-formulary drugs to be filled at retail, but would raise the co-pay for these
more costly drugs to $44 versus the current charge of $25.


More significantly, the House plan would limit future co-pay increases to the
annual percentage cost-of-living adjustments to military retired pay.


Given actions to date by the House and the Senate committee, some retail
pharmacy fee increases are a certainty.  The battle ahead is details.


After the Senate passes its defense bill, a House-Senate conference committee
will smooth out any differences, including on pharmacy co-pays.  McGinnis
suggested the House plan could take longer to implement, delaying new fees
perhaps until April 1, given the requirement that beneficiaries 65 and older use
mail order for maintenance drugs.


"We would have to do a contract modification with Express Scripts," he said,
referring to the company that administers Tricare pharmacy programs, "so that
would take a little bit longer to implement."


Also there would have to be an aggressive information program to explain to
senior beneficiaries that prescription refills must be filled by mail order.
The House bill would set this requirement for at least a year.  But McGinnis
said once beneficiaries try mail order, 98 percent of them like it and choose to
continue to use mail order over their local pharmacies.


If the House plan does prevail, elderly beneficiaries will have time to absorb
details before it starts.  One of those details is certain to be a "fail safe"
provision that would allow a patient to get a 30-day supply of any maintenance
drug at retail if there's a hitch in the mail order process.


Tricare estimates that it pays an average of $324 every three months for a brand
name medication filled at retail but the cost falls to between $233 and $239
through mail order or if filled on base.  If beneficiaries ask for a generic
substitute for any brand name drug, the department three-month cost falls to
about $60.


Beneficiaries too save money with mail order because, for the same co-pay
prescriptions typically are filled for 90 days versus 30 days at retail.  And
generic drugs are provided at no charge through mail order.


Given the incentives and the convenience of mail order, McGinnis said usage has
popped within the military community over the past year.  In June of 2011, a
million prescriptions a month were filled by mail.  That monthly total has
climbed since then to about 1.5 million.


McGinnis said the departure of Walgreens from the Tricare retail network last
January helped in that regard.  Many former Walgreens customers shifted to mail
order and liked it, McGinnis said.


"We are not getting any complaints from anybody.  That really worked out well
[and] saved us a lot of money," the pharmacy chief said.


Without Walgreens, the retail network still meets contract requirements for
serving beneficiaries, McGinnis said.  In urban areas, 91 percent of
beneficiaries must live within two miles of a pharmacy.  In the suburbs, 95
percent must live within five miles and in rural areas, 95 percent of
beneficiaries must be within 15 miles of a network pharmacy.


Without Walgreens, the network still has 57,600 pharmacies.  To put that into
perspective, McGinnis said, there are 36,000 grocery stores, 14,000 McDonalds
and 11,000 Starbucks in the United States.


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231111, Centreville, VA, or email milupdate@xxxxxxx or twitter: Tom Philpott



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