News of the Day ... In Perspective05/13/2006
Seniors save by not using Medicare Part D
Though some said it would go out of business when Medicare Part D went into effect, MedSave Discount Pharmacy of New Hope, Minn., is going strong. It added 300 new customers in April, from savvy seniors who are rejecting Part D, plus people with Health Savings Accounts.
This cash pharmacy was started in February 2004 to help uninsured patients save money on drugs. According to founder Sean Kacsir, the copay for most generics on Part D plans is two to three times what they would pay without insurance.
Seniors are buying Part D because they are afraid of the “penalty.” MedSave believes that if you buy a plan you don’t need, that is itself a penalty, and there is no guarantee that the plan will cover the drugs that you might need in the future.
Now that most people “think they have insurance coverage, it will put less pressure on the big chain pharmacies to keep their prices in check. Before you had at least 8% of the population making sure prices were in check,” states a May 8 press release from MedSave.
The idea of a cash pharmacy was pioneered by a New Orleans-area druggist Mike Hebert at his Michael’s Discount Pharmacy in Slidell, La. Hebert concluded that “when an insurance company sets a contract, they have a creative way of paying you nothing.” Some pharmacists compensate by marking up generics sold to uninsured customers by as much as 500 percent.
“The trick was getting rid of insurance plans,” Hebert said. “Since then, it’s been nothing but making money.” His profit margin increased 30 to 40 percent (Minneapolis St. Paul Business Journal 3/12/04).