Pharmacy Negative Reimbursement: Which Plans Pay Below Cost?

How to count pharmacy negative reimbursement by plan

The count runs on two exports the pharmacy already has: a claims report from the dispensing system and purchase history from the wholesaler. Neither needs a patient name. Run twelve months if the system allows it, three if not, and keep the same rules every time the table is rebuilt.

• From the claims report: fill date, NDC, quantity, BIN, PCN and Group (the identifiers that say which plan paid), ingredient cost paid, dispensing fee paid, copay collected, and total paid.
• From wholesaler purchase history: NDC, invoice date, quantity and net unit cost after any rebates or credits the invoice shows.
• Set one costing rule and write it down: the latest invoice on or before the fill date is the simplest. Where one NDC is bought from more than one source, the rule decides which price counts.
• Join the two on NDC and date: acquisition cost for each claim is the units dispensed times the unit cost in force on the fill date.
• Compute the three lines for every claim, and flag the claim underwater on each line where the result falls below zero.
• Group by BIN, PCN and Group, then by month: claims filled, claims underwater on each line, and the dollars below cost.

The result is one table per month with a row for each plan. Sort it by dollars below cost, not by the number of underwater claims: a plan that misses by a large amount on a handful of fills matters more than one that misses by cents on hundreds.

NADAC: a public cross-check, not the pharmacy’s cost

Every below-cost count stands on its acquisition cost column, and one mistyped invoice can put a whole plan underwater on paper. The federal National Average Drug Acquisition Cost file is a useful check. CMS publishes it on data.medicaid.gov as “weekly reference data,” priced per unit for each 11-digit NDC, and its data dictionary says the figures come from surveys of chain and independent pharmacies.

Use it two ways. First, to catch errors: where the pharmacy’s own unit cost sits far above or below NADAC for the same NDC, check the invoice before trusting the claim. Second, as a public reference in a conversation with the PSAO or a PBM about a drug a plan pays well below what pharmacies pay for it nationally. Do not substitute it for the pharmacy’s own cost. NADAC is a national average; the count that matters is what this pharmacy paid.

How much are you losing on brand scripts like Eliquis and Jardiance?

Only the pharmacy’s own claims, invoices and refund records can say, and on Medicare Part D fills of Eliquis and Jardiance the claim alone overstates the loss. Both are among the ten Part D drugs whose negotiated prices, which the law calls maximum fair prices (MFPs), took effect on January 1, 2026. By law, a Part D plan pays for such a drug at no more than its maximum fair price plus any dispensing fees. The manufacturer is responsible for making that price available to the pharmacy: as a refund after the claim, with the claim data passed through CMS’s Medicare Transaction Facilitator, or by another mechanism the manufacturer records for that claim.

CMS’s August 2024 fact sheet lists Eliquis at a negotiated $231 for a 30-day supply against a 2023 list price of $521, and Jardiance at $197 against $573. On a Part D fill, a gap of that size is what the refund has to carry. CMS lets a manufacturer refund the Standard Default Refund Amount — the wholesale acquisition cost on the date of service minus the maximum fair price — or another amount it can document, and the plan sends the pharmacy an estimate of the default amount on each claim. CMS’s April 2026 FAQ says that, on average to date, refunds have reached pharmacies’ designated bank accounts within 21 days of the date of service.

So give these claims their own line in the below-cost count: plan payment plus copay plus the refund that actually arrived, as the 835 remittance shows it, against the invoice cost of the units dispensed. If plan and copay together paid the full maximum fair price and the refund came at the default amount, the drug was paid at its wholesale acquisition cost on the date of service; the claim is underwater on the drug only where the pharmacy paid more than that, or where the refund came short or not at all. Until a refund arrives, count it as owed, not as lost, and track it in a weekly MFP refund ledger. A fill of the same drug paid by a commercial plan carries no MFP refund; count it like any other claim. This summarizes the statute and CMS guidance.

What the below-cost list can decide, and what it cannot

The table changes no plan’s rate. It changes which decisions are made with numbers instead of at the counter. In the illustrative month below, the plan with the most claims is not the plan with the largest loss:

• Illustrative example, one month. Plan A: 1,200 claims, 60 underwater after the dispensing fee, $900 below cost in total.
• Plan B: 400 claims, 50 underwater after the fee, $1,800 below cost — 40 of those 50 on a single NDC.
• Plan C: 800 claims, 10 underwater after the fee, $150 below cost.

In this illustration, Plan B’s loss sits on one drug, which points first at a MAC appeal and at purchasing — whether the same product can be bought for less from another source — rather than at the plan as a whole. Plan A’s loss is spread thin across many drugs, which belongs in the next contract conversation with the PSAO. Plan C needs nothing this month. The calendar matters too. Walgreens Boots Alliance’s fiscal 2024 annual report says the company “continuously faces reimbursement pressure” from PBMs and other payers and that “plan changes with rate adjustments often occur in January.” A table built in October describes this plan year; rebuild it once the new year’s rates start paying.

How do you increase profit margin in a pharmacy?

On the dispensing side, measure gross margin per script for each plan, then work the levers in order of the dollars they carry. The measure uses the same join of claims and wholesaler invoices as the below-cost count, but keeps every claim, so the table shows where margin is made as well as where it is lost. Front-store sales and clinical services earn their own margins and stay out of this table.

For each plan and month: total paid (plan payment plus copay, plus any MFP refund received on a Part D fill of a negotiated-price drug), minus the acquisition cost of the units dispensed, minus any fees later taken against those claims, gives gross margin dollars; divide by scripts filled for margin per script. Read the two together. For example, take a pharmacy where Plan X fills 900 scripts a month at $3 of margin each and Plan Y fills 150 at $14: a $1 change per script is worth $900 a month on Plan X and $150 on Plan Y.

Then work the levers, largest dollars first. Beyond the MAC appeals and purchasing checks on below-cost drugs above, the margin table points to three more:

• Collect money already owed before chasing new rates: MFP refunds still outstanding on selected drugs, MAC appeals approved but never rebilled, and fees on remittances that match no claim.
• Check purchasing on the NDCs with the thinnest margin per script, not only the underwater ones: compare invoice cost with the weekly NADAC file and with a second source before the next order.
• Take the full plan table — margin dollars, margin per script and scripts filled — to the PSAO before contracts renew, not only the claims below cost.

Declining a below-cost fill: what the law says, and where it differs

The question that follows the list is whether a pharmacy may decline a fill that pays below cost. There is no single national answer. In Rutledge v. Pharmaceutical Care Management Association (2020), the Supreme Court upheld Arkansas’s Act 900 against an ERISA challenge. The Court described its three mechanisms: PBMs must update their MAC lists when wholesale prices rise, must give pharmacies an administrative appeal for MAC prices below acquisition cost, and Arkansas pharmacies may decline to dispense when the reimbursement will be less than acquisition cost. In the Court’s words, the law “simply establishes a floor for the cost of the benefits that plans choose to provide.”

That is one state’s statute, not a federal rule. State laws differ on whether a pharmacy may decline, on what counts as acquisition cost, and on what a network contract may say about it. Medicare Part D has its own frame: the current rule text at 42 CFR 423.100 defines a Part D negotiated price as the lowest possible reimbursement the pharmacy “will receive, in total,” including price concessions from network pharmacies. This is rule text. Before changing how below-cost claims are handled at the counter, ask the pharmacy’s attorney or PSAO what applies in its state and under its contracts. Not legal advice.

When this is not worth paying anyone for

A pharmacy whose dispensing system or PSAO already reports below-cost claims by plan each month, with acquisition cost taken from real invoices, has the count. So does an owner who can build the join above in a spreadsheet in an afternoon and will repeat it after each January rate change. Neither needs outside help for this question.

Outside help earns its fee when the exports do not join cleanly — costs missing for whole NDCs, plans identified inconsistently, fees arriving on remittances nobody matches to claims — or when below-cost claims are one of several money questions at once. The free Revenue Leak Calculator gives a rough first figure in a few minutes, with no email gate.

Where the Revenue Review fits

The Revenue Review builds this table for twelve months and sets it beside the rest of the pharmacy’s money: remittances against claims, fees and true-ups matched back to the claims they came from, appeals filed against below-cost claims, and cash tied up in inventory. It takes two weeks. It works from read-only access to aggregate exports the pharmacy already has — claims by plan and drug, remittance and fee totals, purchase history — with no patient names, and it ends in a written report the pharmacy keeps: each leak with a monthly dollar figure wherever the records support one, a ranked list of what to fix, and a 90-day plan.

It does not negotiate with PBMs, file appeals for the pharmacy, give legal or clinical advice, or take a share of anything recovered. It is built for independent pharmacies at $1 million a year and up, run by the pharmacist whose name is on the license. The next step is a free 20-minute call, where a pharmacy that does not need the Review is told so.