As the clock ticked past midnight into this year’s New Year’s Day, thousands of Pennsylvanians lost their prescription insurance at their corner drug store.
On January 1, the UPMC Health Plan narrowed pharmacy coverage to individuals and employers who purchased the plan through the state-run health insurance exchange known as Pennie. UPMC said it has removed about half of its pharmacies from its Pennie network. The Pennsylvania Pharmacists Association estimates that figure is nearing 70%.
UPMC and the Pharmacy Association will meet next week, along with the Pennsylvania Health Care Association and the Philadelphia Association of Retail Pharmacists. Pharmacy Association president Pat Lavella said he doesn’t understand why UPMC’s network includes certain drugstores within his industry group and excludes others.
“There was no rhyme or reason. You couldn’t narrow down the location,” he said. [and] One of their pharmacies might have been in and the other two were not. ”
Lavella owns Hilltop Pharmacy in the Allentown neighborhood of Pittsburgh. Some of his customers have lost their UPMC coverage at his store, he said. He worries that the newly constrained network fits in with the broader trend of consolidation in the pharmaceutical industry. UPMC says the move will improve efficiencies and reduce insurance costs, but Lavella warns that independent companies like him will soon be forced to close.
Among the major chains, RiteAid, Giant Eagle, Sam’s Club and Walmart all remain in UPMC’s Pennie network. Walgreens and CVS are discontinued. Lavella noted that the insurer maintains several independent locations, but believes that number is low, based on conversations with dozens of pharmacy owners.
between rocks and hard places
UPMC did not say how much money a narrowed penny network would save consumers. But chief pharmacy officer Chronis Manolis said pharmacy services accounted for up to 30% of the cost of benefit packages.
“The basic premise is that there are few pharmacies and [customers] enter [each of] Those pharmacies,” he said of the restricted network. “It’s all about lowering premiums. And when you look at it… there’s a narrower network across the country.” [is] One of the levers we left at the pharmacy. ”
Insurance companies have achieved lower premiums by significantly lowering reimbursement rates for drugs dispensed by pharmacists. It is believed that pharmacies within the network can compensate for lower fees by increasing volumes, including by attracting patients from excluded drugstores.
UPMC has already cut the number of pharmacies with penny insurance, but is proposing to revive pharmacies that accept the lower reimbursement rates now applied across the network. Therefore, pharmacists who wish to rejoin or remain in the network face a “catch 22”. Either pay less from UPMC or say goodbye to your customers.
Lavella said UPMC has proposed reimbursing pharmacies at rates 5% or 6% below the cost of many prescriptions. If you have a prescription for a $500 inhaler, I think you should return the prescription and give him $25. I do the same. ”
It is unclear how much this change will affect pharmacy revenues. The new network applies only to Pennsylvanians who purchased Penny’s UPMC insurance for her. Nearly 114,000 Pennsylvanians by 2021UPMC estimates that 15% of these consumers will have to switch pharmacies. If 2023 enrollment numbers are about the same as his 2021, about 17,000 will have to change providers.
Amanda Stark, who studies the healthcare market at Northwestern University’s Kellogg School of Management, said UPMC’s pharmacy strategy is unlikely to harm consumers. [Pennie] Exchange…they probably care more about premiums than people who get insurance through their employers. So keeping costs down is especially important. ”
Pennsylvania created pennies in response to the Affordable Care Act, which aims to make health insurance more affordable, especially for the self-employed and low-income Americans. According to Penny Nearly 90% of people who buy through exchanges are eligible for subsidies that reduce their monthly insurance premiums.
UPMC’s Manolis said the narrow network meets the demands of Penny’s customers. Like Starc, this group is more sensitive to premiums than individuals who get health insurance through their employer, he explained.
“I don’t get a lot of calls from people saying, ‘Please raise your premiums,'” he said.
silent broker
Manolis, which claims the decision to wind down the Pennie network rests with UPMC, made the move through its relationship with Express Scripts. Express Scripts is one of his three largest pharmacy benefit managers (PBMs) in the United States: Together, Express Scripts, OptumRx, and CVS Caremark. It controls 80% of the pharmaceutical market.
PBM is a silent mediator. They negotiate with both pharmaceutical companies and pharmacies on behalf of health insurance companies. If a pharmaceutical company sets a high price for a drug, PBMs can fight back by removing it from their list of eligible drugs, instead directing patients to competing products. At the other end of the deal, PBMs can pay lower reimbursement rates to pharmacies. This means that insurance companies pay less to drugstores to supply drugs.
“Generally, pharmacy benefits managers offer the American consumer an extraordinary value in reducing costs,” said Lena Conti, a health economist at Boston University.
PBM has been shrinking its network of pharmacies in more populated areas for more than a decade, Conti said, so it’s no surprise that the trend extends to western Pennsylvania.
But the system is opaque. There is no way of knowing how much savings will be passed on to the consumer or pocketed by the PBM or insurer.
“[PBMs] We are at the heart of this very complex prescription drug supply chain. And how money flows and what contracts look like … it is very difficult for regulators or consumer advocacy groups or ordinary individuals to know what is going on, ”said the center’s director. , states Erin C. Hughes Brown, who majored in Law, Health, and Society at the University of Georgia Law School.
The pharmacy benefits administrator’s lack of transparency had previously been scrutinized by Pennsylvania officials, but primarily because of its use in the state’s Medicaid program rather than its impact on non-Medicaid consumers. Former Pennsylvania State Comptroller Eugene DePasqualerepeated advocacy To increase oversight of entities, state legislators last year passed legislation that would allow state auditors to more closely review PBM contracts for Medicaid programs.
Pittsburgh-area Rep. Nick Piciotanno says he and his Democratic colleagues have begun exploring ways to increase oversight more broadly.
“Once you have some idea of the options on the table, decide which tools to pull from your toolbox,” he said. “What can we do with the Shapiro administration? [changes in coverage] Average Pennsylvanian?
At the national level, Republican Iowa Senator Charles Grassley introduced a bill that would require PBMs to pass some of their savings back to consumers.As Bloomberg Law reportedGrassley’s proposal would also expand Federal Trade Commission oversight and empower state attorneys general to seek civil penalties for violations of the Commission’s orders.
An uncertain future for neighborhood drugstores
The reduction in UPMC’s coverage for Penny’s customers not only affects Pittsburgh, but also Pennsylvanians living in rural areas such as Bedford and Cameron counties bordering Maryland and New York respectively. The plan has received approval from the state health department. This is partly because the new network meets a legal requirement to cover pharmacies that are within 20 miles or 30 minutes of his drive from most policyholders.
Walgreens and CVS are big national chains, so losing UPMC’s penny customers won’t hurt them much. Meanwhile, Lavella, the owner of his Hilltop Pharmacy in Pittsburgh, is concerned that the newly formed network will force independent businesses to close.
He said the lower redemption rates put him in an impossible position.nevertheless accept [those rates] I mean I’m not in business. ”
This change also reduces consumer choice. Self-employed Nathan Ruggles of Mount Oliver has already done so. He buys health insurance through Penny and fills prescriptions at his Hilltop, a five-minute drive from his home. In November, he learned that his UPMC had canceled his drug coverage at drugstores. In a letter and voicemail to Ruggles, the insurer said the change would reduce costs for consumers.
“They can tell me whatever they want, but it doesn’t change the fact that they took my pharmacy,” he said. “Why are those of us who bought insurance through pennies becoming second-class citizens with limited options for where to buy health insurance?”
Lavella predicts that UPMC will eventually limit the network of other plans as well, moving toward market consolidation. Many of his PBMs are owned by health insurance companies, so this is a concern his Georgia health law expert, Fuse Brown, also shares. For example, PBM CVS Caremark is part of the same conglomerate that owns CVS Pharmacy, CVS MinuteClinics, and insurance company Aetna.
“Perhaps this shrinking of the pharmacy network and the decoupling of independent pharmacies from the network is really just a way to keep all the patients on these plans for themselves … even if it means more Even if it doesn’t lead to a good price. [for patients]said Hughes Brown.
Still, it’s too early to tell whether UPMC’s slimmed-down penny network is the beginning of the end for independent pharmacies in Pennsylvania, said Rena Conti of Boston University. She recalls living in Chicago about ten years ago when PBM decided to downsize the city’s pharmacy network. It’s true that some independent pharmacies faced more competition and financial pressure, and some patients were harmed by the changes, but it wasn’t the end of the world either.
“I’m just being careful, ‘This is Armageddon,'” she said. “Healthcare, it’s complicated. It’s also much more nuanced than a really simple headline.”
Kate Giammarise contributed reporting for this article
