Medicare delays force pharmacists to pay interest

John McDonald, the mayor of Cohoes and the vice president of Marra’s Pharmacy, said that since Medic
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John McDonald, the mayor of Cohoes and the vice president of Marra’s Pharmacy, said that since Medicare Part D was introduced, his business has paid between $50,000 and $60,000 a year in finance charges on money borrowed to cover the gap between when Marra’s buys its drugs wholesale and when the federal government reimburses it.

“People ask me how we can compete with big businesses like CVS or Walgreens and I tell them we don’t have a problem with that. Our real competition is the federal government,” McDonald said.

McDonald spoke with fellow Democrat U.S. Sen. Charles Schumer of New York at an event Tuesday conducted at Marra’s Pharmacy on Remsen Street. Schumer said the inefficient Medicare reimbursement system is threatening the viability of “mom and pop” pharmacies because of delays that force small operations to take out loans to pay for wholesale drugs while they wait for the government to pay for senior citizen’s prescriptions.

“When Medicare Part D first came out people were totally befuddled by it. It was local pharmacists who often sat down and helped explain the forms to senior citizens… and this is how Part D rewards them? By not paying them on time,” Schumer said.

McDonald said his operation spends approximately $300,000 every two weeks for drugs, which it then retails. If Marra’s can’t cover the costs in cash it finances the bill and pays interest that Medicare will not reimburse. He said many customers misunderstand that the high price of medications makes the pharmacist rich, when he said the pharmacist is basically a middle man.

“Prompt [reimbursement] has always been a problem,” he said.

Seliq Corman, the director for the Albany-based Pharmacists Society of the State of New York, said the problem of delayed reimbursement is becoming worse as the cost of medications continues to go up, threatening the business models for small pharmacies.

“Pharmacists have to pay their bills every seven to 10 days, and they don’t get [reimbursed from Medicare] for 60 days,” Corman said.

Schumer estimates there are 35 independent pharmacies in the Capital Region, nearly all of which are not paid for as long as 60 days by Medicare for the drugs its sells to seniors. Schumer said the late payments are a deliberate strategy of the Medicare bureaucracy to generate more revenues for the program by holding onto its funds longer, at the expense of small pharmacies.

He said he has introduced legislation into the stalled Medicare bill in the Senate that would mandate all Medicare claims submitted electronically be paid within 14 days by electronic funds transfer and paper claims be paid within 30 days. If the government is late the bill would require small pharmacists be paid interest for the money owed.

Schumer said the Medicare bill had 59 of the needed 60 votes to overcome a filibuster in the Senate prior to the July 4 recess, and he expects the bill will pass when the Senate comes back into session.

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