University of Texas at Austin Study Shows Pharmacies Slow to be Reimbursed by Medicare Part D Plans

Sept. 6, 2007

AUSTIN, Texas—While the new Medicare Part D drug program is helping seniors with prescription drug coverage, it is financially hurting many pharmacies because of continued slow reimbursement, a University of Texas at Austin researcher says.

In a national study of Medicare prescription drug payment times, Dr. Marv Shepherd found pharmacies waited 30 days or more for payment for a substantial proportion of prescription drug claims in 2006. Less than one percent of claims were reimbursed within 14 days.

The Medicare prescription drug plan was introduced in January 2006 to help seniors cover the costs of prescription medicine.

"Quick payment is crucial to community pharmacies since most are required to pay drug wholesalers every 14 days," said Shepherd, director of the Center for Pharmacoeconomic Studies in the College of Pharmacy. "Some pharmacies even pay on a weekly basis, a daily basis or prepay for medications."

The study results were announced by the National Community Pharmacist Association in Washington, D.C. on Sept. 6 and will be published in the Journal of the American Pharmacist Association.

The study examined about three million prescription drug claims submitted by independent and regional chain store pharmacy firms. 

The research found that 44.1 percent of prescription drug claims submitted in 2006 were reimbursed in more than 30 days, including 9.6 percent that took more than 60 days. Independent pharmacies experienced longer payment times—50 percent of their 2006 claims took longer than 30 days to be reimbursed. In January 2006, reimbursement took even longer—an average of 139 days for independent pharmacies, said Shepherd.

Shepherd said the results of the study confirm the seriousness of the problem, a topic that has been debated since the program began.

"Pharmacies were struggling to pay their wholesalers while waiting for these payments," he said. "Many pharmacies were forced to take out loans or lines of credit to cover their debts to wholesalers, while others had to close their doors permanently."

A bill before the U.S. House of Representatives would require Part D prescription drug claims submitted electronically to be paid within 14 days.

For more information contact: Nancy Neff, College of Pharmacy, 512-471-6504; Dr. Marv Shepherd, 512-517-7886.