Are You Ready to Compete for Medicare Part D Patients?
Help ensure access to Med D patients and then work hard to attract and keep them
With the New Year, many Medicare Part D patients may notice changes in their co-pays and look to switch pharmacies. Your pharmacy’s actions can have a significant impact on whether these individuals will come to your pharmacy or go elsewhere.
Medicare Beneficiaries Matter
In 2015 Medicare will insure about 55 million beneficiaries.1 About 41 million of them are expected to enroll in Medicare Part D drug plans, up from 38 million in 2014. Thus, Medicare beneficiaries, and particularly those in Part D drug plans, matter to independent pharmacies because this group represents a large segment of the U.S. population.
Previously, Medicare beneficiaries — including those in Part D drug plans — had broad flexibility in choosing where to fill their prescriptions. But the game has changed very quickly. Now, almost all prescription drug plans and many Medicare Advantage Plans have preferred pharmacy networks.2 In 2015, 87% of prescription drug plans will have a preferred pharmacy network. That’s up from 72% of PDPs using pharmacy networks with preferred cost sharing in 2014.3 In fact, in 2011 just 7% of drug plans had any type of a preferred pharmacy network.
Importantly, individuals age 65 and older fill an average of 27.4 retail prescriptions annually, compared with 12.2 prescriptions per year for those 19–64.4 And, beneficiaries’ value extends beyond the prescription counter. A pharmacy can increase its revenue through services including immunizations, medication therapy management, diabetic supplies, front-end sales and more.
People age 65 and older may also be part of a segment that Hamacher Resource Group calls the “Longtime Loyalist.” About 30% of shoppers in that group buy all of their OTC products at their independent pharmacy, and two-thirds buy at least half their OTC medicines there.5 Those loyal customers are also an important source of referrals to friends and family.
Access to Part D Participants Is Changing
In forming preferred networks, plans want adequate access, high-quality service (especially on key Star Ratings measures), and affordable care. In terms of adequate access, CMS standards require that in urban areas, 90% of beneficiaries must have access to a network pharmacy within two miles; in suburban areas, 90% of beneficiaries must have access within five miles.6
To provide adequate access — along with high-quality care and good service — plans are including many independent pharmacies in their preferred networks. An analysis by Adam Fein in Drug Channels found that in the Express Scripts plan, for example, about 70% of the preferred pharmacies are small independents.7 As Dr. Fein wrote, “My review revealed widespread participation by smaller pharmacies [in preferred networks]. Perhaps it’s time to stop complaining that independents ‘are almost always left out of’ preferred networks?”
Just a few years ago, when preferred pharmacy networks were initially being formed, many independents were hesitant to participate, due to worries about lower reimbursement. But with big chains such as Walmart, Walgreens, CVS and Rite Aid participating in preferred pharmacy networks, independents have realized it is a competitive necessity to be part of networks in order to retain access to patients.
What It Means for Independents: Be Ready to Compete
Effective January 1, 2015, many Medicare beneficiaries will enter or change Part D plans and some will become part of or change Medicare Advantage plans. As these changes occur, beneficiaries will be “unlocked” from their previous plans and networks, and will be making decisions about which pharmacy to shop at in the coming year. It is an important moment and a time of great opportunity. It pays to be ready and act aggressively to seize the opportunity.
If your pharmacy, like those contracting through AccessHealth®, is part of preferred networks:
- Promote your preferred network relationships. Make beneficiaries with Part D plans aware that your pharmacy participates in preferred drug networks. Proactively and creatively market your store to differentiate from the competition (see “Get Customers to Switch to Your Pharmacy”). Stress your foundation in the community and your strong service. Use signage (in-store and externally) and other marketing and promotional strategies to let customers know you are in-network and can save them money on their prescriptions. Know that chains such as Walgreens are marketing their network participation (see a Walgreens commercial). To keep pace, you must do the same. In marketing your pharmacy’s network participation, be sure to follow CMS Medicare marketing guidelines.
- Counsel patients on their Medicare Part D options. Medicare Part D can be confusing to beneficiaries. Your pharmacy can play an important role in the community by educating beneficiaries about their options, as long as you don’t direct them to specific plans. (See “Help Your Customers Navigate Medicare Part D,” “Medicare Part D Consultations Can Build Patient Loyalty,” and “Medicare Open Enrollment Allows Pharmacy Expertise to Stand Out.”) For example, customers may not realize they can switch to a Medicare Part D plan with a five-star quality rating from CMS outside of open enrollment, one time, between December 8, 2014 and November 30, 2015.8 This is a valuable service that can build loyalty.
- Offer a broad mix of products and services. Offer and promote the additional services seniors typically need or will appreciate, such as immunizations, consultations, MTM, compliance packaging, free delivery or educational programs. Also think of ways to increase revenues through front-end/OTC products. These steps can help you recoup lower prescription margins related to preferred network participation, while boosting revenue and differentiating your pharmacy from your competitors.
- Build and leverage personal relationships. Focus groups have found that Medicare Part D patients who have a strong relationship with a pharmacist often value that relationship over the price they pay for medications.9 And shoppers who feel they have a good relationship with their independent pharmacist buy about half of their personal care and OTC products at the pharmacy.10 (See “What Pharmacy Customers Really Want.”)
- Identify new prospects in your patient database. About 10,000 people become eligible for Medicare each day, so it’s a smart practice to identify them and offer to assist them with Medicare questions and planning shortly before they become eligible.
- Consolidate prescriptions. Work with your patients to ensure they are filling all their prescriptions at your pharmacy. This not only helps you monitor refills and identify possible harmful interactions, but also allows you to benefit from the full value of each patient.
Also, for pharmacies participating in a preferred network, it is important to understand the overall impact on your business. For example, prescription drug plans are increasing their use of co-insurance and formulary tiers. Avalere Health says that for the first time all Medicare PDPs will have a specialty tier in 2015. In addition, two-thirds of the plans, which cover about 60% of beneficiaries, will require co-insurance for the top two tiers on their formularies, nearly double the number from 2014.11
Not Preferred? Prove Your Value
If your pharmacy is not part of a preferred pharmacy network, you may want to reconsider your managed-care solution or PSAO affiliation to ensure you maintain access to lives. But for now, you still need a strategy for competing. If you don’t have access to Medicare Part D preferred networks, it is even more important to actively market your pharmacy’s uniqueness and advantages — such as personal service and relationships, clinical programs, and services such as delivery.
The Key to Success: Readiness
By being ready to compete you can win more than your fair share of customers; and through your great service, you can build loyalty and keep them.
McKesson is helping thousands of independent pharmacies gain access to preferred networks, bring more patients to their stores and expand their services for additional revenue with solutions such as:
- AccessHealth, McKesson’s managed-care solution, provides nearly 5,000 independent pharmacies with access to several of the top preferred networks. Call 800.824.1763 to learn more.
- Health Mart®offers discount subscriptions, promotional tools and matching advertising funds to help offer and promote Medicare Part D consultations. Members can contact the Health Mart support team at 855.658.4482 for more information.