PAAS National Articles
Cash Card Controversy
H. Edward Heckman, R.Ph.
When you signed your first third-party contract,
you intended to service prescription patients with a particular
you know that the contract you signed would apply to non-insurance
patients. And the most remote thought was that it could force
you to waive your right to bargain directly with your own cash
this is the turn of events initiated by many pharmacy benefits
managers (PBMs) who are administering cash card programs for
What I am referring to are your patients with prescription
cards that require a 100% copay. The most common term for this
plastic is cash card. They are also referred to as consumer
cards, discount cards, point of sale cards and 100% copay cards.
them what you want, PBMs are interfering with your cash prescription
by offering these programs to your patients.
The typical scenario
goes something like this. A customer responds to a solicitation
to obtain a cash card to be "honored in pharmacies
across the country for discounts up to 60% on prescription
cards are either sold to consumers or offered as incentives
for other activities. The customer who paid your usual and customary
yesterday comes today loaded with their new consumer weapon,
to cash in
on huge discounts on prescriptions.
These solicitations and
advertisements are hitting our population from all sides. Cash
cards are being sold through banks,
gas stations, trade
associations, clubs, television, direct mail, and the internet.
local bank down the street from your pharmacy, without your knowledge
or permission, may offer customers who open
cash card on prescriptions at your pharmacy. What are the
ethical considerations for such activity? What right does
have, legal or ethical,
to discount your prices? What would happen if you reciprocated
by offering new prescription customers higher earnings
on their savings accounts
at the neighboring bank?
A recent Wall Street Journal article
revealed the planned move by 7-Eleven to begin selling prescription
$10.00 in their convenience
stores. Similar in concept to prepaid long distance phone
cards, it will entitle purchasers to discounts on prescriptions
This program is being offered to 7-Eleven by PAID Prescriptions.
It is called the Rx Benefit Card and is touted to save consumers
10% to 50% on prescriptions. The Rx Benefit Card will have
a limited life of 90 days once purchased. This new offer
created so much controversy from community pharmacies, that
the project was placed on hold.
Jerry Sveum, co-owner of Grand
Avenue Pharmacy in Beloit, wrote a letter to the editor of the
local Beloit newspaper
offers made by Providian. Sveum states he wrote the letter
(Providian) been advertising like crazy at $7.95 a month.
At $7.95 a month, that's about $100.00 per year. $100.00
per year to pay
someone else to negotiate a discount is unacceptable. You
(the patient) can
For pharmacists, cash cards are a thorn
in their sides. With third party and managed care demands
of lower reimbursements
and more services,
the last thing pharmacists need is interference with their
last vestiges of cash paying patients.
All of us have been
at the wrong end of an irritated customer when their newly acquired
cash card didn't deliver discounts
up to their expectations. In fact, boastful advertising
by Blue Cross in Georgia resulted in a lawsuit for false
falsely believe that their cash card will save them big
money on maintenance medications. The reality is that
cash pricing in
the marketplace. Price discounts from a cash card may
One of the fairest offers to consumers comes from Mutual
of Omaha and their Prescription Program administered
by Diversified Pharmaceutical
Services, Inc. Their solicitation states, "not an insurance product
and does not provide insurance coverage." The Mutual of Omaha
offer goes on to inform consumers that "some pharmacies routinely
offer discounts to all customers on certain high-volume medications.
For these medications, your preferred price may not be less than
the discounted price."
There are a host of legal and ethical issues focused
around the cash card controversy. At the forefront is
based customers through third-party contracts. Not at
issue are instances of insurance companies using 100%
administer the major medical insurance component of their
programs. The insurance companies using cash cards for
their major medical
components feel they can reduce paper claims, improve
efficiencies and control
It is the non-insurance based cards (see
table) that raise ethical concerns. It isn't fair and is seemingly
for third parties to offer discounts at pharmacies without
the express permission and consent of store management.
When I owned
Chicago, I felt cheated and violated when a cash card
would take me by surprise. I was not willing to relinquish
right to be
deal directly with my own cash paying patrons. I refused
to honor any cash cards. Jerry Sveum comments, "They're
certainly getting passed off as insurance cards and they're
not, of course."
Apparently, many area drug chains
agree and are unwilling to honor most of the cash cards.
Snyder Drugs, based
in Minneapolis, made a
corporate decision a couple of years ago to refuse
cash cards. While declining to officially comment, it is a
is honoring only a very few cash cards. If the program
doesn't measure up to their profit criteria, they do
not accept it.
Some interesting legal issues are also
focused around cash cards. PBMs do not fall under any special
state or federal
laws or regulations.
While insurance companies are licensed and closely
regulated and controlled;
pharmacy benefits managers slip between the cracks.
Without regulation, PBMs can enter into many ventures off the
beaten path without
repercussions or accountability.
The second legal issue
with cash cards focuses upon antitrust laws. These laws prevent
collusion by pharmacy owners
to establish third-party
terms on insurance-based programs. Do anti-trust laws
apply to the same degree and manner to cash cards?
pharmacies that ban together to decline these programs
aren't trying to negotiate or set uniform pricing from
store. They are only
fighting to maintain their direct relationships with
cash patrons. Money might be well invested for pharmacies
challenge this issue.
With cash cards come the added risks
and burdens associated with doing business with third parties.
There are switching
fees. The inherent latent liability associated with
audits and possible charge-backs looms on the horizon. Of course,
deal with plan
guidelines, limitations, DUR messages and formularies.
take advantage of their provider contracts to force pharmacies
to agree to provide these cash card services
based clients or threaten you with possible termination.
is the language contained in PAIDís newly issued
Pharmacy Services Manual. Section 4.1 states "Pharmacy
is required to participate in a variety of plan designs
including those which permit access to
a negotiated discount when producing an identification
card and paying for the prescription at the point-of-sale." If
you refuse a PAID cash card, you may be in breach of
You do have a chance, in some cases to control
your destiny. As an example, PCS has allowed providers
opt out of their
cash card networks (CCP01 and CCP02). I am not aware
of any widespread retaliation or retribution from other
elect to decline servicing cash cards.
pharmacy operator must make a decision on what is best for his
or her business operation. Keep
chain stores know
where their bottom line is and stick to it. It is believed
that Walgreen won't participate in cash card programs
reimbursing less than their
usual and customary charges. One strategy you might
to opt out of these programs. Another strategy may
be to create your own discount
card for your pharmacy to be used to replace the cash
I urge each pharmacist to encourage third parties
to unbundle cash card programs from their basic provider
and make them a
separate option for provider participation. Many of
the ethical questions would be mitigated if pharmacists were
to control their destinies.