Insurance company, Wal-Mart

Published 12:00 am Tuesday, February 22, 2000

terminate agreement


Managing Editor

Sign up for our daily email newsletter

Get the latest news sent to your inbox

Feb. 21, 2000 10 PM

Effective March 1, nearly 2.2 million Alabamians will not be able to use Wal-Mart pharmacies to fill their prescriptions under their health care policies.

Wal-Mart pharmacies declined to accept an amendment to its existing agreement with Blue Cross/Blue Shield of Alabama, the state’s largest provider of insurance.

The decision stems from a new rate structure proposed by Blue Cross/Blue Shield that pays local pharmacies a higher rate than it pays chain pharmacies.

The rate was proposed to provide consistency in allowable cost among pharmacies.

According to Jim Brown, director of public information for Blue Cross/Blue Shield of Alabama, the proposal is consistent with the insurance provider’s policy.

"For example we don’t pay the same rate for a customer to spend a night in Troy’s hospital as we pay for a customer who stays in Birmingham," Brown said. "We try to consider expense of service and make sure our rates are broken into different categories to give maximum benefits at the best rates to our customers."

Brown, who is based in Blue Cross/Blue Shield’s Birmingham office, said the same philosophy was applied to pharmacies.

"We separated the rate into two categories, local and chain," he said.

But Wal-Mart representatives maintain that they are being penalized for efficiency.

"Wal-Mart was willing to accept the same reimbursement rates that Blue Cross and Blue Shield offers to many local pharmacies, but our request was denied," said James F. Martin, senior vice president of Wal-Mart’s Pharmacy Division. "Blue Cross and Blue Shield is punishing Wal-Mart, and ultimately its own customers rather than recognizing the economic value we provide everyone through our everyday low price philosophy."

Martin said that he and others are "puzzled by Blue Cross and Blue Shield’s proposal, which penalizes Wal-Mart for operating more efficiently."

But Brown and officials at Blue Cross/Blue Shield point to the acceptance rate of the proposal as proof that the deal was a fair one.

"All providers of pharmaceuticals we work with agreed to accept the amendment," Brown said. "That’s the strongest evidence of this being a fair proposal. This amendment was accepted at 1,100 locations in the state of Alabama. Only Wal-Mart refused."

Brown said his company is sending letters to all customers who have had a prescription filled in the last 90 days at Wal-Mart notifying them of the change. He also said a contact person with every group policy is being notified.

"We want to make sure people know what their options are and understand that this takes effect March 1 for walk-in customers and June 1 for mail-order customers," Brown said.

Wal-Mart vows to help customers find other pharmacies to assist them with their needs.

"We will immediately begin helping our customers find new pharmacies for their prescription needs," Martin said. "We regret any inconvenience that our customers may experience as a result of the Blue Cross and Blue Shield decision."

Brown said all other chain pharmacies including CVS and Rite Aid, which have local affiliates, agreed to the proposal.

Currently Blue Cross/Blue Shield of Alabama is the state’s largest insurance provider with an estimated 2.2 million covered. Brown said "the vast majority" qualifies for some sort of pharmacy coverage.

Independent health care financial officers estimate that Blue Cross/Blue Shield has an 80-plus percent market share in the state of Alabama based on the total number of people who have insurance.