Presume you are an executive manager, owner or operator of a chain of pharmacies, large or small. Or you may manage a chain of food/drug or mass merchandise stores that include pharmacy as an integral part of the entire retail offering. Pharmacy is almost certain to represent 60% to 90% of your total drug store sales. The fast-approaching train you hear is the 2,700-page Patient Protection and Affordable Care Act (ACA), with an implementation date of Jan. 1, 2014.


Patient Protection and Affordable Care Act, ACA, Affordable Care Act, pharmacies, prescription drug sales, drug store sales, pharmacy, Robert Coopman, health insurance coverage, community pharmacy, prescription drug coverage, Medicaid, insurance exchanges, walk-in clinics, physician access, primary care, chain community pharmacies




































































































































































































































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Analysis: What the Affordable Care Act means for Rx

April 26th, 2013

Presume you are an executive manager, owner or operator of a chain of pharmacies, large or small. Or you may manage a chain of food/drug or mass merchandise stores that include pharmacy as an integral part of the entire retail offering. Pharmacy is almost certain to represent 60% to 90% of your total drug store sales. The fast-approaching train you hear is the 2,700-page Patient Protection and Affordable Care Act (ACA), with an implementation date of Jan. 1, 2014.

It is certain to add millions of Americans to the roles of those with health care insurance. It is certain to present a potential lift to prescription drug sales. It may not keep you awake at night but it is certain to have your attention.

As Nancy Pelosi, then-speaker of the House of Representatives, is said to have opined, “We have to pass this thing to find out what’s in it.” And so, in March 2010 the Patient Protection and Affordable Care Act was passed. Later, the Supreme Court judged it constitutional, albeit with some changes.

And we are now in the process of finding out what’s in it.

Not so fast, some say. There are those federal legislators, mostly Republicans, who would like to repeal the act altogether; some who would partially change some provisions; and some who would change or eliminate major provisions. It is a rare employer who is not seriously concerned about how the multitude of provisions of the act will impact his or her business.

There are also court challenges that will determine whether some provisions of the act will stand as written. For example, a district judge in Detroit recently found that, based on the plaintiff’s strong religious beliefs, the founder of Domino’s Pizza cannot be required to provide contraceptive coverage for his employees.

In the grand scheme of things, having millions more people with health insurance coverage will inure to the benefit of chain community pharmacy. Having prescription drug coverage generally increases the per capita average number of prescriptions consumed. As well, moving individuals to Medicaid or private insurance coverage will move some prescription transactions from public hospitals and clinics to community pharmacies.
All of the unknowns and yet-to-be-determined questions aside, there are three areas that will clearly impact chain community pharmacies.

Likely the largest impact will come from the requirement that state Medicaid coverage be extended to all whose income is up to one-third above the federal poverty level, currently at $14,856 for a single person. Doing so will add some 16 million individuals to state Medicaid roles. That is slightly more than half the 30 million projected to receive health insurance through the act.

Potentially, some 30 million Americans will gain health insurance coverage in some form via the Affordable Care Act. Some estimates peg U.S. per capita prescription consumption at 15 to 17 prescriptions annually. Without considering many variables, that calculates to 450 million to 510 million scripts per year.

Whether states agree to accept federal funding for the Medicaid expansion or opt out and use state funding resources is a choice at their disposal. While political ideology is in play, it is primarily a financial decision in budget-stressed times. So far as community pharmacy is concerned, whichever avenue is used to fund the expansion is mostly a moot point. The only point of interest is how the funding, contracting and subsequent billing, reimbursement and audit system will operate. And that is clearly a point that compels close attention.

The second-largest impact for community pharmacy will come from online insurance exchanges developed and made available to residents of each state. Those individuals with incomes that preclude Medicaid eligibility but who have no private or employer-related health care insurance are mandated to acquire insurance or pay a penalty for not doing so. Estimates suggest that some 14 million Americans are in this income-employer category.

States have been encouraged to set up their own online exchanges that will present private insurance options for single individuals and families. Should a state opt not to do so, the federal government will operate an exchange for them. Consumers can select coverage from one of the options presented on the exchange and then apply for federal subsidies, if they qualify.

As a point of interest, the decision deadline for states to create their own online exchanges or default to the federal government has passed. Twenty-six states have decided to let the federal government carry that effort.

Herein lays an opportunity for chain community pharmacies with owned or associated “walk-in” clinics.

State by state, whether states or the federal government will operate the exchange, they must be developed soon. Enrollment is scheduled to begin October 1, 2013; coverage will begin January 1, 2014. To this point, the federal government has a head start on the states in that it operates the Medicare Plan Finder for health and prescription insurance plans that serve seniors. It also operates the Federal Employees Health Benefits Program. Both have many of the features envisioned for the insurance exchanges.

For chain community pharmacies, potentially some 14 million individuals will have health care coverage chosen from the exchanges. That will most assuredly result in higher prescription consumption. The caveat here, as mentioned earlier, is that individuals not acquiring coverage through the exchanges will pay a penalty for not doing so. How many that may become is an open question.

A last but significant unknown affecting the number of patients covered through the exchanges is the question of how many employed people will have coverage withdrawn by their employers. If choosing to withdraw coverage, the employer will be required to pay a penalty per employee. Because the penalty is likely to be significantly less costly than providing coverage, some employers may consider this an appropriate business decision. Should this become anything near common practice, the number of individuals in this category seeking insurance from the exchanges could lift appreciably.

A third issue affecting chain community pharmacies has to do with physician access. Estimates suggest conclusively that by 2014 some 50% of physicians will be employed by a hospital or hospital-owned health system. The Affordable Care Act is likely to accelerate this trend, ultimately making an independent or small group practice a thing of the past. Already known and acknowledged is that employed physicians are less productive, sometimes by 25% to 35%. Also, continuity of care decreases.

Herein lays an opportunity for chain community pharmacies with owned or associated “walk-in” clinics. With the number of primary care physicians already stressed, with declining productivity among employed physicians and with accelerated patient demand to see primary care physicians, access to primary care is certain to become more challenging.

Thus, for minor or nonemergency ailments, walk-in clinics will become a more accessible and therefore more attractive care option. Pharmacies with electronic links to the clinics will benefit from the number of patients and prescriptions funneled through their associated operating units.

So potentially some 30 million Americans will gain health care coverage in some form as a result of the Affordable Care Act. Estimates from studies suggest that per capita prescription consumption in the United States is in a range of 15 to 17 prescriptions per year. Without considering many variables, some of them significant, that calculates to 450 million to 510 million prescriptions per year.

After court actions, legislative actions, regulatory decisions, business decisions and personal decisions are made and real experience with the Affordable Care Act becomes known, the real number of new prescriptions flowing into chain community pharmacies will ultimately become known.

ROBERT COOPMAN is president of Robert Coopman Consultants, which is based in San Antonio. He can be contacted at rcoopman67@gmail.com.

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