On Medicare? Check Out Some Important Points About In- And Out-Of-Network Pharmacies

Jim, one of my exercise buddies, sees doctors and visits hospitals affiliated with the largest healthcare system in his community. Checking the Annual Notice of Changes, he discovered that his drug plan is dropping the system’s pharmacy from its network. Jim didn’t think that was a big deal because he uses mail order for his two prescription refills. And, because his plan has the lowest premium, he’s not going to change. Jim may want to rethink his position, once he understands some important points about pharmacy networks. 

All Part D drug coverage is network-based. 

Any provider of Part D prescription drug coverage, be it through a stand-alone plan or as part of a Medicare Advantage plan, has a pharmacy network. This is a group of pharmacies that have contractual arrangements with the insurer to provide prescription drugs and supplies to enrollees, or plan members, at a lower cost. 

Not all network pharmacies are equal. 

Those enrolled in Medicare drug coverage can choose from a standard or preferred in-network pharmacy. A preferred pharmacy has negotiated lower prices with the insurance company so members pay less for medications. A standard pharmacy, once known as non-preferred, cannot offer those lower prices. 

Jim takes a common combination high blood pressure/diuretic (water pill), a Tier 1 medication in his plan. His plan does not charge a copayment at a preferred pharmacy but he would pay $8 at a standard pharmacy. 

There are a few ways to locate pharmacies in your plan’s network. 

Probably, the best way to get accurate, up-to-date information is through the plan’s online directory. You likely will need to establish an account and then log in to check a pharmacy’s status. 

You can also check the status of up to five pharmacies through the Medicare Plan Finder. Either do an anonymous search or log into your Medicare.gov account. 

There is always the option to call the plan or ask your pharmacist. 

Getting drugs out-of-network will cost more. 

You could be responsible for the full cost of the drug if you don’t use an in-network pharmacy. For example, Jim’s blood pressure medication would be about $230 out-of-network. Also, these costs don’t count toward the deductible or the thresholds to reach or get out of the Coverage Gap (donut hole). 

There are times when the drug plan will pay for out-of-network medications. 

The Centers for Medicare and Medicaid Services (CMS) manual on Part D drug coverage addresses out-of-network pharmacies. Part D sponsors must ensure that their members have adequate access to covered drugs dispensed from out-of-network pharmacies when they cannot obtain the drugs from a network pharmacy. For example, an emergency room nurse administers an antibiotic medication to a patient diagnosed with a kidney infection. The hospital’s pharmacy is out-of-network; however, the patient would not be able to get the drug from her pharmacy for the nurse to administer. Her drug plan will cover this medication, according to its policy.

However, payment for out-of-network drugs works differently. 

When getting medications from a pharmacy in network, you pay your share and the pharmacy bills your plan. 

However, out-of-network pharmacies will not submit a claim to the member’s drug plan. That means the member will likely have to pay the full price and, if seeking reimbursement, she will have to submit a paper claim. 

A quick review of the procedures for some of the biggest drug plans identifies some pieces of information needed to submit the claim. These include: 

• the original pharmacy receipt, listing, at a minimum, the drug name, dose, date, and cost. 

• details about a compounded medication (one made by mixing other ingredients).

• the prescriber name and NPI (National Provider Identifier) number. 

• the pharmacy identifier, either a NPI or NABP (National Association of Boards of Pharmacy) number.

 • the National Drug Code (NDC) for the medication (a unique, three-segment number, which serves as a universal product identifier).  

Once the plan receives and validates the claim information, it will reimburse the member for the plan’s portion. The member is responsible for the applicable deductible and copayment or coinsurance.

Every drug plan has its own procedure and form for reimbursement. You probably don’t plan to use an out-of-network pharmacy but one never knows. You might want to check out the procedure in advance, just in case. 

Jim had no idea there were so many issues related to network pharmacies. He suspects he may pay a higher premium if he switches to a plan that includes the health system’s pharmacy in network. But it could save him plenty, both in time and money, in the long run.