Factors associated with independent pharmacy owners' satisfaction with Medicare Part D contracts

Available online at www.sciencedirect.com

Research in Social and

Administrative Pharmacy 6 (2010) 121–129

Original Research

Factors associated with independent pharmacy owners’satisfaction with Medicare Part D contractsSu Zhang, Pharm.D., William R. Doucette, Ph.D., R.Ph.*,

Julie M. Urmie, Ph.D., Yang Xie, Ph.D., John M. Brooks, Ph.D.Pharmacy Practice and Science, College of Pharmacy, University of Iowa, S518 PHAR, Iowa City, IA 52242, USA

Abstract

Background: As Medicare Part D contracts apply pressure on the profitability of independent pharmacies,there is concern about their owners’ willingness to sign such contracts. Identifying factors affectingindependent pharmacy owners’ satisfaction with Medicare Part D contracts could inform policy makers in

managing Medicare Part D.Objectives: (1) To identify influences on independent pharmacy owners’ satisfaction with Medicare Part Dcontracts and (2) to characterize comments made by independent pharmacy owners about Medicare

Part D.Methods: This cross-sectional study used a mail survey of independent pharmacy owners in 15 statescomprising 6 Medicare regions to collect information on their most- and least-favorable Medicare Part D

contracts, including satisfaction, contract management activities, market position, pharmacy operation,and specific payment levels on brand and generic drugs.Results: Of the 1649 surveys mailed, 296 surveys were analyzed. The regression models for satisfaction withboth the least and the most-favorable Part D contracts were significant (P ! 0.05). A different set of

significant influences on satisfaction was identified for each regression model. For the most-favorablecontract, influences were contending and equity. For the least-favorable contract, influences werenegotiation, equity, generic rate bonus, and medication therapy management (MTM) payment. About

one-third of the survey respondents made at least 1 comment. The most frequent themes in thecomments were that Medicare Part D reimbursement rate is too low (28%) and that contracts areoffered without negotiation in a ‘‘take it or leave it’’ manner (20%).

Conclusion: Equity, contending, negotiation, generic rate bonus, and MTM payments were identified as theinfluences of independent pharmacy owners’ satisfaction toward Medicare Part D contracts. Generic ratebonus and MTM payment provide additional financial incentives to less financially favorable contracts

and, in turn, contribute to independent pharmacy owner’s satisfaction toward these contracts.� 2010 Elsevier Inc. All rights reserved.

Keywords: Satisfaction; Medicare Part D; Contract; Pharmacy

* Corresponding author. Tel.: þ1 319 335 8786; fax: þ1 319 353 5646.

E-mail address: [email protected] (W.R. Doucette).

1551-7411/$ - see front matter � 2010 Elsevier Inc. All rights reserved.

doi:10.1016/j.sapharm.2010.03.004

mailto:[email protected]

122 Zhang et al./Research in Social and Administrative Pharmacy 6 (2010) 121–129

Introduction

Launched in 2006, Medicare Part D providesa pharmacy benefit to older adults through

contracted private plans, either in the format ofstand-alone prescription drug plans (PDPs) orMedicare Advantage prescription drug plans(MA-PDPs). As of January 2009, Health and

Human Services reported that 26.7 million of the45 million Medicare beneficiaries were enrolled inPart D plans, an increase of 1.3 million since

January 2008. If the number of beneficiaries underMedicare grows to 78 million by 2030, as pro-jected by Kaiser Family Foundation, and a similar

proportion of beneficiaries choose to have Part Dbenefit, then approximately 44 million U.S.seniors will have prescription medication coveragethrough Medicare Part D by 2030.1 Medicare Part

D prescription volume increased from 5% to 26%by the end of 2006 with a corresponding decreasein cash-paying volume by 4% over the same

period of time for independent pharmacies.2 Fac-ing less cash-paying demand because of patientsshifting to Medicare, independent community

pharmacies have incentives to sign contractswith Medicare Part D plans to gain access to themarket and to retain their current customers.

Part D drug plans increased prescription volumeby 158 million prescriptions during 2006, whileraising generic drug use by 12.4% from 2006 tothe first quarter in 2008.3,4 The Part D program

initially designed to lower cost through competi-tion between bidding insurers has created consid-erable pressure on the profits of the independent

pharmacies. Contracts with Part D drug plansreportedly are associated with lower reimburse-ment and slower payment for pharmacy services

and time-consuming administrative processes,such as prior authorization approval. One studyshowed a 22% average net income decline forthe independent community pharmacies as a result

of the implementation of Part D.5 Thus, althoughMedicare Part D contracts can allow access topatients, such agreements can diminish profit

margins for independent pharmacies.Compared with chain community pharmacies,

independent pharmacies tend to rely more on pre-

scription revenue than over-the-counter or othernonpharmacy sales, which can leave them morevulnerable to low reimbursement, slow payment,

andadministrativeburden fromthirdparties. Signingsatisfactory contracts that meet someminimal expec-tations for Part D drug plans becomes vital toindependent pharmacies’ sustainability. To survive,

dissatisfied pharmacyownerswill be less likely to signthe least-favorable contracts with Part D privateplans, which could negatively affect Medicare bene-

ficiary access to prescription medications. Becauseindependent pharmacies represent a relatively higherproportion of retail pharmacies in rural areas,Medicare beneficiaries in those areas could be more

affected, more so if pharmacies do not sign Part Dcontracts.6,7

This study was designed to identify factors that

were associated with independent pharmacy owners’satisfaction with Part D contracts in a range ofMedicare Part D regions. Satisfaction is affected by

expectations and actual experiences associated withthe (Part D) contracts.8–11 When actual performanceis less than expected, thendisconfirmationof expecta-tions is said tooccur.Disconfirmationof expectations

results in dissatisfactionwith performance.Here, per-formance refers to factors, suchaspromptnessofpay-ment, reimbursement levels, ease of administration,

and responsiveness to communication. It is likelythat independent pharmacy owners may have differ-ent expectations about Part D contracts, which can

be derived from prior interaction with certain drugplans or particular contract terms. The contractingprocess itself (e.g., communication to/from an in-

surer) and the contracted agreement can affect phar-macy owner satisfaction with a third-partycontract.12 Because of this variability in the contract-ing process and the contractual terms, it might be ex-

pected that different sets of influences would beidentified for satisfaction with the most-favorableand the least-favorable Part D contracts.

It is likely that independent pharmacy ownersvary in the extent to which they manage contracts,such as monitoring the financial impact of con-

tracts, rejecting unfavorable contracts, or trying tocommunicatewith an insurer to change the terms ofa contract. A previous study concluded thatcollaborative communication and dependence

symmetry were positively, whereas contendingwas negatively, correlated with community phar-macies’ satisfaction with third-party contracts.12

Collaborative communication describes an easy 2-way communication between the pharmacy andthird party.Dependence symmetrymeasures the in-

terdependence 2 bargaining parties have on eachother. That is, the balance between the extents towhich each party depends on the other. Because

these 2 factors could be reflected in the initiationand execution of negotiation between the indepen-dent pharmacy and the third-party payer, negotia-tion was measured in this study and was expected

to be a positive influence on satisfaction with Part

123Zhang et al./Research in Social and Administrative Pharmacy 6 (2010) 121–129

D contracts. Contending is a tactic that can be usedin the bargaining process, which is likely to occurwhen 1 party has more leverage compared withthe other.13 It reflects a coercive style used by 1

party to an agreement. In this study, contendingwasmeasured andhypothesized to be negatively as-sociated with satisfaction with Part D plans.

Numerous studies examining the relationshipbetween equity and satisfaction have establisheda link between perception of fairness of the

exchange and consumer satisfaction, patient sat-isfaction, and job satisfaction.14-20 Equity, asa measurement of fairness of the exchange process

and outcome, was, therefore, included in thisstudy and was hypothesized to be a positive influ-ence on satisfaction with Part D contracts.

Pharmacy satisfaction with third-party payers

has been linked to contractual terms and relation-ships between a pharmacy and a third party.21

Specific Part D contract terms, such as Medicare

Part D reimbursement level, the promptness ofthe payment, and administrative burden, havebeen reported to affect independent pharmacies’

gross margins.5,22 However, there have not beenpublished studies on how these factors relate tosatisfaction with Part D contracts. Given this

gap in the literature, the primary objective ofthis study was to identify influences on indepen-dent pharmacy owners’ satisfaction with MedicarePart D contracts. A secondary objective was to

characterize comments made by independentpharmacy owners about Medicare Part D.

Methods

Mail surveys were sent to a national randomsample of 1649 independent pharmacies in 15 states

comprising 6 Medicare regions. A 2-stage area-sampling technique was used to select a randomsample of independent pharmacies across the

nation. First, 6 geographically dispersed Medicareregions were chosen: Southeast (Florida), South-west (Arizona), South (Tennessee, Alabama),Northwest (Washington, Oregon), Midwest

(Minnesota, Iowa, Wyoming, Montana, SouthDakota, NorthDakota, Nebraska), andNortheast(Pennsylvania, West Virginia). Each region

(combination of states) has a common set of PartD plans offered within it. Then, a systematicrandom sample of independent pharmacies was

selected from the chosen regions. The pharmacydatabase of the National Council for PrescriptionDrug Programs was used as the sample frame, after

all noncommunity pharmacies and communitypharmacies categorized as some type of chain hadbeen removed. Fourmailings were sent: a prenoticepostcard; the first main survey packet (cover letter,

survey, stamped return envelope); a reminder post-card; and a second-survey packet (cover letter,survey, stamped return envelope). The survey was

pretested on a sample of 50 independent owners,and several items were changed slightly. Respon-dents were offered a copy of the study report. This

study was approved by the Human Subjects Officeat the University of Iowa.

Most of the measures were adapted from

a previous study of independent owners’ ratingsof all third-party contracts.12 Measures in the 3-page survey included several that asked aboutthe pharmacy and activities to manage Medicare

Part D contracts. Specific variables were MedicarePart D contract management activities, number ofcompetitors, pharmacy operation variables

(percent of revenue from dispensing prescriptionmedications and percent of prescription revenuefrom Part D contracts). The contract management

activities were measured using a 5-point scale(1¼ never, 5¼ always) for 6 items that askedabout the frequency of management activities

across all of the Part D contracts over the previ-ous year. (See Appendix for a list of these actions.)Five of the 6 contract management activities weresummed into a single index. Because of low

reliability, the item about using a consultant toevaluate contracts was dropped.

Respondents also were asked to rate 2 PDP

contracts: the most-favorable and the least-favorable contracts signed in the previous year.The variables rated for each contract were satisfac-

tion, contending, negotiation, equity, generic ratebonus, and MTM payment. The satisfaction indexwas a sum of 6 items that used a 5-point, Likertscale (1¼ strongly disagree and 5¼ strongly

agree). The items asked about reimbursement forbrand-name drugs, reimbursement for genericdrugs, promptness of payment, fairness of contrac-

tual terms, process for prior authorization, andoverall dealings with the PDP. The other measureswere single items, with contending, negotiation,

and equity being measured with a 5-point, Likertscale. The questions about generic rate bonus andMTM payment used yes or no responses.

Descriptive statistics were calculated for allvariables, including means, standard deviations,and medians. Reliability tests were performed tomeasure internal consistency of the contract

management activities and satisfaction measures.

Table 1

Descriptive statistics for pharmacy and Part D contract

characteristics

Study variable Mean Standard

deviation

Median

Part D contract management

activitiesa (5)

13.26 3.94 13.00

Estimate the financial

impact of contracts

3.61 1.24 4.00

Considered nonfinancial

impact of contracts

3.23 1.24 3.00

Did not sign an

unacceptable contract

2.48 1.14 3.00

Communicated about

contract terms

2.18 1.16 2.00

Requested a change in

contract

1.87 1.14 1.00

Negotiationb

Most-favorable contract 2.45 1.37 2.00

Least-favorable contract 1.52 0.96 1.00

Contendingb


Next, 2 ordinary least squares (OLS) regressionsof overall satisfaction onto the same set of inde-pendent variables were performed: 1 for the

most-favorable contract (regression model 1)and 1 for the least-favorable contract (regressionmodel 2). Independent variables were negotiation,contending, equity, generic rate bonus, and MTM

payment. In addition, number of competitors,percentage revenue from prescription and percent-age prescription revenue from Part D PDPs were

included in the regression models as control vari-ables. A content analysis of respondent commentsabout Medicare Part D plans was conducted to

categorize the main concerns stated by indepen-dent pharmacy owners regarding Part D policyand future outlook. A coding scheme was devel-oped to identify recurring themes by having 2 in-

dependent reviewers identify separate themes inthe comments and then reconcile differences.Two independent reviewers coded 122 comments

from respondents.

Equityb



Generic rate bonusc (% yes)

Most-favorable contract 62.0% N/A N/A

Least-favorable contract 9.0% N/A N/A

MTM paymentc (% yes)

Most-favorable contract 72.0% N/A N/A

Least-favorable contract 10.0% N/A N/A

Number of competitors 7.16 6.57 6.00

Percentage revenue from

prescription

89.17 13.05 90.50

Percentage prescription

revenue from Part D

PDPs

41.52 21.43 40.00

The N values vary from 262 to 296 because of miss-

ing data. The number of items in a variable is shown in

parentheses if greater than 1.

N/A¼ not available.a Scale: 1¼ never; 2¼ rarely; 3¼ sometimes; 4¼

usually; 5¼ always.b Scale: 1¼ strongly disagree; 2¼ disagree; 3¼

neutral; 4¼ agree; 5¼ strongly agree.c Category: 1¼ yes; 0¼ no.

Results

Of the 1649 surveys mailed, 10 were undeliver-

able and 320 were returned (20%). Because ofmissing data, 24 surveys were dropped. The re-maining 296 surveys were analyzed. All 6Medicare

regions were represented in the responding surveys.In 2008, an average of 60.89% of these states’ PartD-eligible population was enrolled in MedicarePart D, compared with 57.47% nationally.23

Table 1 shows that, on average, respondents hadmost of their revenue coming from dispensing pre-scription medications (89.17%), of which 41.52%

was fromMedicare Part D PDPs. Comparison be-tween the most-favorable and the least-favorablePDP contract signed in the previous year showed

that, as expected, the scale mean of negotiationand equity was higher for the most-favorable con-tract (2.45 vs 1.50 and 2.48 vs 1.69). Furthermore,

72% of the most-favorable contracts had paymentfor pharmacist services, such asmedication therapymanagement (MTM) compared with 10% of least-favorable contracts. The mean of the 6-item satis-

faction measure was higher for the most-favorable contracts compared with the least-favorable contracts (Table 2). The reliability of

the satisfaction measure was good for both con-tracts: 0.89 (most favorable) and 0.79 (least favor-able). The reliability for the 5-item contract

management activity measure was 0.70.Both regression models for satisfaction with

Part D contracts were significant (P ! 0.01), with

adjusted R-squares of 0.294 (most favorable) and0.266 (least favorable) (Table 3). Two significantinfluences were identified using regression model

1: equity was positively, while contending wasnegatively, associated with satisfaction with themost-favorable PDP contracts. Four significant

Table 2

Descriptive statistics for satisfaction measure

Satisfaction Attribute Mean Standard

deviation

Median

The reimbursement

of brand-name drugs



The reimbursement

of generic drugs



The promptness

of payment



The fairness of the terms

of this contract



The process for prior

authorization



Overall dealings with

this PDP



Satisfaction indexa



The N values vary from 289 to 293 because of missing

data.

Scale: 1¼ very dissatisfied; 2¼ dissatisfied; 3¼neutral; 4¼ satisfied; 5¼ very satisfied.

a Satisfaction index is the sum of the 6 satisfaction

items.


influences were identified for regression model 2(least-favorable contract): negotiation, equity,generic rate bonus, and MTM payment. All of

these were positively associated with satisfaction.Equity was the only influence that was significantfor both most-favorable and least-favorable con-

tracts. It is worth noting that the beta coefficientwas much larger for the most-favorable contractmodel compared with the least-favorable contract

model (0.43 vs 0.16, respectively).Table 4 reveals the top 10 themes for content

analysis. About one-third of survey respondents

made at least 1 comment. Of the 122 commentscollected from the survey, very few were positivecomments about Part D or PDPs (!1%).

Comments were coded and categorized into topicsrelated to Medicare Part D contract negotiation,Medicare Part D reimbursement, Medicare PartD PDPs (excluding contracts and reimbursement),

other Medicare Part D, not related to Part D, andcomments about the survey. The most frequentthemes were that Medicare Part D reimbursement

rate is too low (28%) and that contracts are ‘‘takeit or leave it’’ and cannot be negotiated (20%).Many comments covered a broad spectrum of

issues regarding Medicare Part D and PDPs.General negative comments about Medicare PartD, such as ‘‘Medicare Part D is a disaster!’’ oc-

curred in 16% of the comments. General negativecomments about PDPs, such as ‘‘Part D PDPshave successfully moved our bottom line to theirbottom line. Every state had a Medicaid system

that could have handled this much more effectively.What a shame,’’ occurred in 12% of the com-ments. Suggestions about Part D from the inde-

pendent pharmacy owners, including ‘‘I havealways felt Med Part D is totally set up incorrectlyfor all involved. I think all eligible should be issued

debit cards and pharmacies should compete on mar-ket level without PDPs dictating price or terms.Blocks of money should be issued every year, and

patients need to make it last. It would force themto use the least expensive agents at the pharmacyof their choice,’’ occurred in 10% of the com-ments. Other comments were about slow Medi-

care Part D payment (9%), general negativecomments about pharmacy benefit managers(PBMs) (7%), Medicare Part D PDP administra-

tive requirements (7%), Part D contract negotia-tion being time consuming (5%), and Part Dmail order (5%).

Discussion

Most of the respondents relied heavily onprescription revenues: on average, 89.17%. This

is slightly lower than a national average forindependent pharmacies of 92.8% but higherthan the 65% reported by Walgreens.2,24 Also, re-spondents reported an average of 41.5% of this

prescription revenue coming from Medicare PartD plans. These results show the importance ofsigning Medicare Part D contracts to the indepen-

dent pharmacies.An overall low satisfaction level toward Part D

contracts was observed among respondents: mean

6-item satisfaction index of 17.17 for the most-favorable contract and 11.25 for the least-favorablecontract, on a potential range of 6-30. This

Table 3

Regression results for satisfaction with Medicare Part D contracts

Satisfactionc with most-favorable

contract (regression model 1)

Satisfactionc with least-favorable

contract (regression model 2)

Independent Variable Standardized b P-Value Standardized b P-Value

Contract managements activitya 0.050 0.404 0.005 0.929

Negotiationb 0.056 0.400 0.349 !0.001

Contendingb �0.141 0.028 �0.058 0.338

Equityb 0.430 !0.001 0.164 0.014

Generic rate bonus (1¼ yes) 0.058 0.352 0.184 0.003

MTM payment (1¼ yes) 0.057 0.363 0.131 0.031

Number of competitors 0.070 0.232 �0.084 0.163

Percentage revenue from prescriptions �0.053 0.366 �0.010 0.873

Percentage prescription revenue from

Part D PDPs

�0.089 0.134 0.000 0.994

For model 1, adjusted R-square¼ 0.294; F¼ 10.893 (P ! 0.01) (N¼ 215). For model 2, adjusted R-square¼ 0.266;

F¼ 9.456 (P ! 0.01) (N¼ 211).a Contract management activity is a sum of 5 items using the following scale: 1¼ never, 2¼ rarely, 3¼ sometimes,

4¼ usually, 5¼ always.b Single item using the following scale: 1¼ strongly disagree; 2¼ disagree; 3¼ neutral; 4¼ agree; 5¼ strongly agree.c Satisfaction is the sum of 6 items using a 5-point scale: 1¼ very dissatisfied; 2¼ dissatisfied; 3¼ neutral;

4¼ satisfied; 5¼ very satisfied.

The bolded numbers show a significant P-Value less than or equal to 0.05.


translates to item means of 2.86 and 1.88, whichcompare favorably with the item mean (1.89) from

a previous study of independent owner satisfactionwith third parties.12 Although this low satisfactionlevel has not directly translated into a drastic de-

cline in signing Part D contracts, it does signal anunhealthy and imbalanced relationship between in-dependent pharmacy owners and PDPs. Overa long term, this low level of satisfaction may result

in increased PartD contract rejections among inde-pendent pharmacy owners. However, given thegenerally low satisfaction with third-party con-

tracts, the low rate of satisfaction with Part D con-tracts observed in this study may not yet be lowenough to trigger many contract rejections. Others

have reported thatMedicare Part D contracts haveresulted in the lowest gross margin for independentpharmacies: 16% for Medicare Part D, 18.5% forprivate third parties, and 19.6% for Medicaid.25

Future research should study Medicare Part Dcontract rejections by independent communitypharmacy owners.

Equity was the 1 variable identified as a positiveinfluence on both regressions. Equity, defined asthe fairness of exchange, can affect satisfaction

with a contract, because it involves the overallevaluation of the exchange process and contractterms, considering the inputs and outcomes of

both parties.14,15 That is, a pharmacy owner wasmore likely to be satisfied when the relative

burdens and benefits of the contract were consid-ered fair, given an expectation level set by phar-

macy’s prior experiences dealing with Part Dcontracts in its portfolio. This appears to be thecase, especially for the most-favorable contracts.

Hence, although the pharmacy owners did notnecessarily feel treated fairly compared with thePDPs, they were able to rate equity among alter-native Part D contract opportunities. Future re-

search could investigate the extent to whichgeneral expectations for such contracts can serveas comparators for the formation of satisfaction;

that is, how do Part D contracts affect the expec-tations about other third-party contracts and viceversa?

Contending, which measures a coercive styleused by PDPs in the exchange process, was a signif-icant negative influence for the most-favorablecontract, as hypothesized. This finding is consistent

with that found for independent pharmacy owners’satisfactionwithother third-party contracts in a pre-vious study.12 PDPs tend to send contracts that are

offered in a ‘‘take it or leave it’’ manner. This ap-proach can be perceived by pharmacy owners asthe PDPs forcing their terms on the pharmacies.

With such limited inputs to the contract, it is under-standable that contending is negatively associatedwith satisfaction. Comments made by independent

pharmacy owners further illustrated their frustra-tionwith the exchange process: ‘‘We are at themercy

Table 4

Results for content analysis of respondent comments

Top 10 recurring themes Percentage of total

comments (n)

Medicare Part D reimbursement too low

Eg, ‘‘Medicare reimbursement many times are woefully inadequate’’ and ‘‘we often

run into instances that our cost exceeds that total reimbursement’’

28

Medicare Part D contract can’t be negotiated: take it or leave it

Eg, ‘‘There is no negotiating PDP contracts’’ and ‘‘No negotiation possible. Take it or leave it.’’

20

General negative comment about Medicare Part D

Eg, ‘‘Shifts burden from govt to pharmacy thus hiding the true cost of the part D program’’ and ‘‘I

think Medicare Part D was a big mistake. The insurance companies have too much power and

are slowly forcing small rural independents out of business.’’

16

General negative comment about Medicare Part D PDPs

Eg, ‘‘PDPs are the biggest nightmare you could have as a business owner, worker, pharmacist .’’

and ‘‘Medicare Part D, PDPs really need to be restructured. These programs are really not

paying anything to pharmacy but trying to push whole professional on wrong track.’’

12

Suggestions for Medicare Part D

Eg, ‘‘I think all eligible should be issued debit cards and pharmacies should compete on market level

without PDPs dictating price or terms. Blocks of money should be issued every year and patients

need to make it last. It would force them to use the least expensive agents and the pharmacy of

their choice.’’ and ‘‘Part D PDPs need to have reimbursement rates that differ for rural phar-

macies. Rural pharmacies do not have volume to make up for reduced reimbursement.’’

10

Medicare Part D reimbursement too slow

Eg, ‘‘Over all, reimbursement is low and payment is slow causing cash flow problems for our

pharmacy.’’ and ‘‘Part D has been a huge financial burden for our pharmacy. Our accounts

receivable have increased due to the slow reimbursement time’’

9

General negative comment about PBMs

Eg, ‘‘PBM’s have destroyed independent pharmacy with contracts that reimburse at or below cost

and we either take it or leave it’’ and ‘‘The prescription system would be better served without

PBMsddrug prices escalated due to rebates to insurers/PBMsdlet’s cut the middle mandthey

are making billion $ profits.’’

7

Medicare Part D PDP requirements (eg, prior authorization process, paper work)

Eg, ‘‘Prior authorization is becoming increasingly time consuming and difficult to obtain’’ and

‘‘PAs are so inconvenient, time consuming and consuming for both patient and pharmacy.’’

7

Medicare Part D contract negotiation is time-consuming process

Eg, ‘‘Having to deal with all the different 3rd party insurances is very time consuming and nothing

by trying to review contracts. Most are take it or leave it and trying to negotiate with the

companies is almost impossible, to get a hold of someone who can do the negotiating is virtually

impossible.’’ and ‘‘. contract and reimbursement issues consumes an unacceptable amount of

time that diminishes our ability to interact with our patients.’’

5

Medicare Part D PDPs mail order

Eg, ‘‘.also, most plans with mail order benefits urge patients to use their service, usually at less

cost to the patient than the contract with us allows. Unfair!! Business practice.’’ and ‘‘insurer

pushes mail order in order to cut costs . many of our elderly patients would be unable to

comprehend and manage mail order.’’

5

n¼ 122.


of the PDPs. They set reimbursement rates and we

either take it or lose the customers’’; ‘‘All we as phar-macists want is a ‘say’ in howmuch we need to be paidsowe can. keep our doors open and still have enough

left to pay taxes..’’ Perceptions of unequal treat-

ment and lack of a voice in the exchange processresults in dissatisfaction among some independentpharmacy owners.


Negotiation, generic rate bonus, and MTMpayment were not significantly associated with satis-faction for the most-favorable contracts but were so

for the least-favorable contracts. In the case of most-favorable contract, the expectations for these itemsmay have been already relatively high. As a conse-quence, awillingness to negotiate andprovide generic

rate bonus andMTMpaymentmight not have led tosatisfaction in the most-favorable contracts, becausethese were either expected as part of the contract or

considered not providing much higher value beyondthe value already experienced with the most-favorable contract.

Conversely, for the least-favorable contracts,negotiation, which measures whether a PDPwould negotiate to change its contract terms, aswell as generic rate bonus and MTM (or other

pharmacy services) payments, were shown to besignificant positive influences on satisfaction. Forthese unfavorable contracts, the frequency of

generic rate bonus and MTM payment was onlyabout 10%, whereas the rating for negotiationalso was low. Given the low levels as typical

expectations, when 1 of these items occurred with1 of these less-favorable contracts, it exceededexpectations. This positive disconfirmation of

expectations would result in satisfaction with theleast-favorable contract. Thus, for the least-favorable contracts, it appears that a lower ex-pectation level for these 3 variables supported

a positive association with satisfaction.It is worth noting that comments from the

respondents showed that some independent phar-

macies use outside vendors to handle their contracts(10%). In such cases, comments generally werepositive about their experience with the outside

vendors, ‘‘We have contracted with . to review andsign all insurance contracts for us based on our param-eters.We have faith in them that they knowwhat theyare doing .’’ Further data are needed regarding the

effectiveness of using outside vendors for negotia-tionprocess.However, this approachprovides an al-ternative for independent pharmacy owners who

have difficulty processing Part D contracts.

Limitations

Interpreting these findings requires caution, as

with any study. The primary limitation of thisstudy was that the response rate was relatively low(20%), and the respondents had relatively higher

percentage of Medicare Part D contracts in theirportfolios (41.5% vs national average of 25.0%dNCPA Digest2), which could be a source of bias.

Mail surveys were delivered and collected duringthe winter holiday season, which likely affectedthe response rate.

In addition, the survey was designed to let theindependent pharmacy owners rate their own actualcontract terms rather than asking everyone to rate thesame terms. The benefits of this approach were to

allow flexibility for the respondents to rate differentcontracts and also take an individual pharmacy’scharacteristics into account, in consideration that

pharmacies in the sample likely would have differentportfolio of contracts in a given year. This approach,however, limited consistent ratings of particular

contract terms, which was not an objective of thisstudy.Also, someof thevariablesweremeasuredonlywith single items, thus, rendering it difficult todetermine the reliability of the measurement. Careful

design of the survey based on previous studies wasintended to limit measurement error, though wecould not estimate it with this survey. Finally, there

was no attempt tomodel actual reimbursement levelsas an influence on satisfaction with the contracts.

Conclusions

Independent pharmacy owners might be moresatisfied with Medicare Part D if these plansincluded additional payment terms in their con-

tracts. One example of such terms includes payinga bonus for reaching a targeted generic substationrate. Another possibility is to pay pharmacists fornew services, including MTM services. Such terms

provide additional incentives to less financiallyfavorable contracts, which support independentpharmacy owners’ satisfaction with these contracts.

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Appendix

Measures of modeled concepts across all

Medicare Part D contracts

(Completed once by the respondents).Contract management activities measure1-Never 2-Rarely 3-Sometimes 4-Usually 5-

Always

A) Estimate the financial impact of MedicarePDP contracts on our pharmacy.

B) Consider the non-financial impact of Medi-

care PDP contracts on our pharmacy.C) Did not sign as a provider with a Medicare

PDP, due to unacceptable contractual terms.D) Communicated with a Medicare PDP about

contract terms.E) Requested a change in aMedicare PDPcontract.F) Used a consultant to help evaluate Medicare

PDP contracts.

Rated for Least Favorable & Most Favorable

Medicare Part D Contracts

(Completed twice by respondents: once for

most and once for least favorable contracts.)Negotiation/Contending/Equity measures1-Strongly Disagree 2-Disagree 3-Neutral 4-

Agree 5-Strongly Agree

1) This PDP will negotiate to change its contract

terms. (Negotiation)2) This PDP forces its terms in our contractual

agreements. (Contending)

3) Expenses and profits are allocated fairly be-tween this PDP and us. (Equity)

Generic rate bonus/MTM payment measures

III. Please answer the following questions re-lated to the contracts.

A) Does this contract include extra reim-

bursement for meeting generic dispensingrate goals? (yes/no)

B) Does this contract pay for other pharma-

cist services such as medication therapymanagement (MTM)? (yes/no)

http://www.pharmacy.olemiss.edu/cpmm/reports.html

http://www.pharmacy.olemiss.edu/cpmm/reports.html

http://www.cms.hhs.gov/MCRAdvPartDEnrolData/

http://www.cms.hhs.gov/MCRAdvPartDEnrolData/

https://materials.proxyvote.com/Approved/931422/20081121/AR%5F28708/HTHT2/walgreens-ar2008_0003.htm



Documents

Factors associated with independent pharmacy owners' satisfaction with Medicare Part D contracts