For many community pharmacies, the shift to Medicare’s Fair Pricing model is not just a regulatory change—it’s a financial stress test. The keys to survival and success in the coming years will be inventory discipline, real-time cash flow visibility, and system-level agility.
The Cash Flow Challenge in Numbers
As we saw in Part 2, the average pharmacy will have over $22,000 of reimbursements coming from various manufacturers each month, to replenish their costs for Medicare patient dispensings. This is not to say they have lost $22,000, but that it is simply further delayed in getting received.
There are two ways to minimize the felt impact of cashflow delay:
- Med-sync all Medicare patients receiving these drugs.
- Return stock on hand, to reduce inventory levels going into the new year
By setting a future fill date for all Medicare patients receiving an MFP drug, the pharmacy will be able to send a purchase order the day before, thereby receiving the drug in stock the same day they run the claim through for dispensing it. This starts two timers at the same time: i) the wholesaler invoice due date and ii) the manufacturers reimbursement payment date. The closer those two events can be, the better the pharmacy will be able to float over any dips.
For the second recommendation, by returning the stock on hand before the new year, the pharmacy puts the cash back in their account. Then, if the manufacturers drop the WAC on January 1st (like we’ve seen with Novolog already), it wont hurt them as shrink. Also, regardless of what the price does, by putting the cash back in the pharmacy’s account, it allows for new decisions to be made based on whatever information becomes known (formulary changes requiring drug substitutions, network changes mandating patients to different pharmacies, or simple things like lesser days supply allowed).
A Sharper Focus on Reconciliation
Reconciliation is a fairly routine process for most owners. Usually, the PSAO handles the collection and tracking, and there’s not much excitement. Ideally, this new process will quickly become just as routine. In case not, however, each pharmacy should be prepared to review claim detail and recon tracking for at least a little while until it is understood, and proven to be accurate. Press your reconciliation service for clarity and real time reporting on these drugs, for these specific Medicare claims.
Some Questions to Ask and Conversations to Have in Advance
For your wholesaler, ask them if they are going to be offering any special invoice dating for these drugs in the early phases of the rollout. Even a DSO-improvement of 7- to 14-days on just these select drugs, can make a difference in the impact felt initially.
Whether or not they are able to help in that way, pharmacies should ask what this will mean for other terms in the supplier agreement. Every deal is a little different; yours may include rebates that are dependent on a total dollar spend or brand-to-generic ratios, or have some specialty carve outs that could all be impacted by this list of drugs. For that reason, I will leave it as a recommendation to have a conversation about these items, and any others that could possibly pertain here.
If you have any questions quantifying some of these details, our Insights reports can help. Need a hand with it, shoot me a note at indexinfo@outcomes.com, and we’ll get you squared away.
For your PSAO, which is often tied to the wholesaler, there are other questions to raise. Asking them about how they can help with the tracking, and how this new price point will affect the total reimbursement are the first questions to raise. Next would be issues like provider manual changes or MTP enrollments that they can shed light on.
Next Steps to Take Right Away
Get signed up with the MTP-DM starting in June. Then, make sure you are on the list to receive updates from Medicare as they are unveiled in the next 6 months.
If you are concerned about a cashflow or margin threat like this on your pharmacy, Outcomes Insights can help you gain clarity around this. From quantifying the total manufacturers reimbursements to expect, to helping forecast the right patients to med-sync and the best quantity to keep on hand, our tools will set you up for success.
Conclusion: A Call to Strategic Action
The Medicare price negotiation era is upon us. While intended to lower drug costs for seniors, it introduces complex downstream effects that pharmacy owners must address with agility, and diligence. The goal isn’t just survival—it’s adaptation. Make sure that you are partnered with vendors that will help you achieve that; wholesalers, technology providers, and financial institutions. At Outcomes, we want to set you up with the intel you need to make the best practice and business decisions you can. Those who plan now will find themselves in the strongest position to thrive.
