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Pharmacies, insurer face off

An angry response from consumers prompted Blue Cross Blue Shield of North Dakota on Wednesday to delay its shift to a new payment scheme for pharmacy services.

An angry response from consumers prompted Blue Cross Blue Shield of North Dakota on Wednesday to delay its shift to a new payment scheme for pharmacy services.

The health insurer recently sent letters to 30,000 subscribers telling them their pharmacies hadn't agreed to become part of a new pharmacy network.

That meant that as of today those consumers would have to pay up front for their prescriptions or buy their drugs from a participating pharmacy.

Now the deadline has been extended for 30 days - until Jan. 1 - giving the insurer and the holdout pharmacies more time to try to negotiate an agreement on so-called dispensing fees. Blue Cross Blue Shield complains that the average fees it pays are twice the national average.

Twenty-three of 179 pharmacies in North Dakota - most of them in rural towns - have refused to accept reduced fees the insurer pays for filling prescriptions.


"We are listening to our members," Larry Gauper, the North Dakota Blues' vice president for corporate communications, said Wednesday. "We received a significant number of calls that have brought to our attention that there is a concern, primarily in the rural areas."

The letters, which arrived around Thanksgiving, told customers they must pay for the full cost of their prescriptions at the time of purchase, then mail in the paperwork for reimbursement.

Customers would be responsible for any amount exceeding the allowed charge, the amount Blue Cross Blue Shield of North Dakota pays to participating pharmacies, the form letter said.

Jim Poolman, North Dakota insurance commissioner, criticized Blue Cross Blue Shield for what he called the "unconscionable" disregard its actions would have on thousands of consumers.

"It is unfortunate that one health carrier in one decision changes the face of how health care is delivered in North Dakota," he said.

The need to find an alternative pharmacy is especially difficult in rural areas, where customers would have to drive many miles to another drugstore, or be forced to use mail-order pharmacies with inferior service, Poolman said.

Reducing fees for pharmacy services threatens the financial viability of small-town drugstores, where low sales volumes make accepting a lower margin more difficult, he said.

Sen. Byron Dorgan, D-N.D., was pleased that Blue Cross Blue Shield will keep trying to reach an agreement with pharmacies. He said it is vital to keep rural pharmacies in place.


"I think they've done the right thing," he said.

Dorgan met Tuesday with Blue Cross Blue Shield executives and said he made the case that pharmacies are needed, especially for elderly patients who are taking multiple medications.

Before implementing any new payments to pharmacies, North Dakota's dominant health insurer must be sure it doesn't threaten the viability of community drugstores, he said.

Blue Cross Blue Shield said its ultimate goal is to bring North Dakota pharmacy costs in line with regional and national averages.

The average fee North Dakota pharmacists are paid for dispensing prescriptions is $4.10, twice the national average of $2.05, Gauper said. Blue Cross Blue Shield of North Dakota also has paid higher drug costs than the national and regional averages.

Seaburg Drug in Carrington is one of the 23 drugstores that have refused to accept lower payments for filling prescriptions.

Tom Seaburg, the store's owner, said his payments would decrease by 27 percent under the new rates Blue Cross Blue Shield is pushing. He's now paid about $5 to $6.75 for filling a prescription.

Fees are negotiated separately with each drugstore, but the steep reduction in fees is especially difficult for rural drugstores because they have smaller sales volumes, Seaburg said.


"It probably wipes out about half the rural stores in North Dakota," he said. "It certainly makes them less viable. It's a serious problem."

Patricia A. Hill, executive vice president of the North Dakota Pharmacists Association, said her group still hopes to persuade the North Dakota Blues to maintain higher dispensing fees.

"This is an extremely tense moment in our history," she said.

Seaburg also hopes for an end to the dispute, and an end to what he calls a "take it or leave it mentality" on the part of the North Dakota Blues, who command 80 percent of the state's health insurance market.

"They've made their final offer, and we've made our final offer," he said. "It's gotten to the point of who's going to blink first. They need us, we need them."

Readers can reach Forum reporter Patrick Springer at (701) 241-5522

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