The Preserving Patient Access to Long‑Term Care Pharmacies Act adds a temporary, per‑prescription supply fee that Part D prescription drug plan (PDP) sponsors and Medicare Advantage prescription drug (MA‑PD) organizations must pay to long‑term care (LTC) pharmacies for certain prescriptions in plan years 2026 and 2027. The fee is set at $30 per specified prescription for 2026 and is indexed for 2027; plans must pay it in addition to existing reimbursements.
The bill also imposes a $10,000 civil money penalty for each failure to pay the fee and requires HHS to repay sponsors and MA organizations for the aggregate fees paid, with subsidies provided within 18 months after the plan year.
The measure is designed as a short‑term liquidity backstop to keep LTC pharmacies—those that serve nursing homes and similar facilities—operating while Congress and HHS consider longer‑term payment reforms. It creates immediate payment obligations on plans, a federal reimbursement mechanism, and a GAO study focused on the economic sustainability of LTC pharmacy participation in Medicare Part D.
At a Glance
What It Does
For plan years 2026 and 2027 the bill requires PDP sponsors and MA‑PD organizations to pay a per‑prescription long‑term care pharmacy supply fee for covered Part D drugs dispensed at the statutory maximum fair price to qualifying individuals; the fee is $30 in 2026 and indexed in 2027. The statute says the fee must be paid in addition to any other negotiated pharmacy reimbursements and establishes a civil money penalty for nonpayment.
Who It Affects
Directly affected parties are long‑term care pharmacies with the LTC taxonomy code, PDP sponsors and MA organizations offering MA‑PD plans, and Medicare beneficiaries in long‑term care settings who receive drugs at the maximum fair price. CMS (HHS) is responsible for making subsidy repayments and enforcing penalties.
Why It Matters
The bill creates a temporary federal mechanism to shore up LTC pharmacy revenues without changing underlying drug pricing rules, shifting short‑term cash requirements to private plans while backfilling costs through federal subsidies. For compliance officers and plan finance teams it introduces a new per‑script payment obligation, enforcement exposure, and timing risk because subsidies arrive up to 18 months after the plan year.
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What This Bill Actually Does
The bill inserts a new subsection into the Medicare Part D statutory framework that compels Part D plan sponsors and MA organizations to pay a defined per‑prescription supply fee to pharmacies identified as long‑term care pharmacies when they dispense certain covered drugs at the maximum fair price to qualifying beneficiaries. The statute limits the fee’s application to specific prescriptions dispensed to maximum‑fair‑price eligible individuals and codifies the LTC pharmacy definition by reference to the National Uniform Claim Committee taxonomy code for long‑term care pharmacies.
Payment mechanics are straightforward on paper: plans must pay the fee at the same time as other reimbursements, and the law explicitly forbids plans from reducing ingredient costs, dispensing fees, or other negotiated payments as a way to offset the fee. The fee amount is set at $30 per specified prescription for plan year 2026 and is indexed for plan year 2027 using the annual percentage increase already defined elsewhere in Part D statute.
The bill also creates a statutory penalty regime—HHS must impose a civil money penalty of at least $10,000 for each failure to pay—which borrows the procedural enforcement framework used for other Medicare civil money penalties.Because the bill recognizes that plans will bear the initial cash outflow, it amends Part D payment rules to require HHS to provide subsidies to PDP sponsors and MA organizations equal to the aggregate fees they paid during the plan year. Those subsidy payments must be made no later than 18 months after the end of the applicable plan year, creating a predictable federal backstop but also a timing gap that plans must manage.
Finally, the bill directs the Government Accountability Office to produce a report within 12 months assessing the economics of LTC pharmacy participation in Part D, analyzing ingredient and dispensing payments, compliance costs tied to network performance standards, recent payment trends, and recommending steps to create a sustainable long‑term payment approach—particularly for rural markets.
The Five Things You Need to Know
The bill requires PDP sponsors and MA organizations to pay long‑term care pharmacies a supply fee of $30 per specified prescription in plan year 2026 and an indexed amount in 2027.
Plans must pay the supply fee in addition to any other pharmacy reimbursements; the statute bars reducing ingredient costs, dispensing fees, or other negotiated payments to offset the fee.
HHS must impose a civil money penalty of at least $10,000 for each instance a sponsor or MA organization fails to pay the required fee.
The Secretary must reimburse sponsors and MA organizations for the aggregate supply fees they paid via subsidies, with those subsidy payments provided no later than 18 months after the end of the plan year.
Within 12 months GAO must report on LTC pharmacy payment levels, compliance costs, recent payment trends, and recommend steps Congress and HHS could take to establish a sustainable payment system for LTC pharmacies, emphasizing continuity of access in all markets.
Section-by-Section Breakdown
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Short title
Designates the Act as the "Preserving Patient Access to Long‑Term Care Pharmacies Act." This is a conventional short‑title clause and has no programmatic effect beyond naming the statute.
Creates the long‑term care pharmacy supply fee requirement
Adds a new subparagraph that mandates per‑prescription supply fees payable by PDP sponsors and MA organizations to LTC pharmacies for 'specified prescriptions' dispensed at the maximum fair price to qualifying beneficiaries. It sets the fee at $30 for plan year 2026 and ties the 2027 fee to the statutory Part D annual percentage increase. The provision also defines key terms—'long‑term care pharmacy' (by taxonomy code), 'specified prescription,' and the targeted beneficiary categories—so the fee applies narrowly to Part D claims meeting those definitions. Practically, the explicit statutory prohibition on offsetting the supply fee against ingredient costs or dispensing fees constrains renegotiation of existing contracts and forces plans to account for an incremental per‑script outflow.
Enforcement and penalties
Directs HHS to impose civil money penalties of at least $10,000 for each failure by a plan sponsor or MA organization to pay the fee, and applies the procedural framework of section 1128A for collection and adjudication. That choice speeds enforcement by leveraging existing administrative mechanics, but it also exposes plans to substantial per‑incident penalties rather than proportionate ones tied to the unpaid amount—raising potential due‑process and proportionality questions that could surface in enforcement disputes.
Subsidy to reimburse plans for fees
Adds an explicit statutory obligation for the Secretary to provide subsidies to PDP sponsors and MA organizations equal to the aggregate supply fees paid during the plan year and requires those subsidies to be paid no later than 18 months after the plan year ends. This creates a federal reimbursement path so plans are not left with permanent incremental costs, but it creates a temporal cash‑flow mismatch (plans pay up front; federal reimbursement follows), and it treats the fees as a pass‑through for federal financing rather than a permanent change to the Part D payment model.
GAO study and report on LTC pharmacy sustainability
Mandates a GAO report within 12 months analyzing Part D payments to LTC pharmacies (ingredient costs for brand and generic, dispensing fees), costs of complying with network performance standards, and payment changes over the prior five years. GAO must recommend steps for Congress and the Secretary to build a sustainable payment approach that ensures access—especially in rural markets. The mandate forces data collection and a policy roadmap, signaling that the statute is a temporary measure while longer‑term reforms are considered.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Long‑term care pharmacies (especially small or independent LTC pharmacies): The per‑prescription fee provides an immediate, identifiable revenue uplift for qualifying dispensings, improving short‑term cash flows and reducing the risk of closures that disrupt service to nursing homes and assisted‑living facilities.
- Medicare beneficiaries in LTC settings who receive drugs at the maximum fair price: The law aims to preserve medication access and continuity of care in institutional settings by stabilizing the pharmacies that serve them.
- Rural LTC markets and facilities: Pharmacies operating in thin markets are the intended focus of the GAO study and the fee’s access rationale; the bill’s backstop reduces near‑term closures that disproportionately affect rural beneficiaries.
Who Bears the Cost
- PDP sponsors and MA organizations offering MA‑PD plans: They must pay the per‑prescription fee at the time of dispensing and manage the cash‑flow and administrative burden until federal subsidies arrive up to 18 months later, plus bear enforcement risk tied to the $10,000 civil money penalty for each failure to pay.
- Federal government / Medicare program (taxpayers): By reimbursing sponsors for the aggregate fees, federal outlays rise in the short term; treating the subsidy as a payable under Part D increases federal fiscal exposure for those plan years.
- CMS (HHS) and enforcement apparatus: HHS must implement the subsidy mechanism, manage collections and penalty assessments, and handle disputes—adding administrative complexity and requiring new operational workflows tied to plan accounting and pharmacy identification.
- Plan networks and PBMs: Existing contractual arrangements between plans, PBMs, and pharmacies may require renegotiation to reflect the non‑offsettable fee and the timing mismatch, creating legal and operational costs and potential disputes over who ultimately bears net economic burden.
Key Issues
The Core Tension
The bill balances two legitimate goals—preserving immediate access to medications for vulnerable LTC residents by stabilizing pharmacy revenues versus avoiding ad‑hoc market interventions that shift costs and distort contracting in Part D; it solves the short‑term access problem by imposing new private obligations backed by federal subsidies, but that approach trades temporary stability for timing, enforcement, and market‑design risks that complicate the search for a sustainable, principled payment solution.
The bill is framed as a temporary, targeted liquidity measure, but it raises several implementation and policy questions. First, the statute’s prohibition on offsetting the fee against other reimbursements constrains private contracting and could prompt legal challenges if plans argue that the statute interferes with existing negotiated rates; plans will need clear CMS guidance on allowable accounting.
Second, the enforcement design imposes a fixed $10,000 civil money penalty per failure rather than a penalty calibrated to the unpaid fee amount, which may be disproportionate for isolated or inadvertent errors and could spawn disputes over procedural fairness and penalty mitigation. Third, the 18‑month lag before subsidy payment creates a material cash‑flow and solvency risk for some sponsors—particularly smaller ones or those with heavy LTC exposure—and could induce short‑term market behaviors (for example, shifting dispensings or routing claims) that undermine the policy’s purpose.
There are also definitional and scope risks. The LTC pharmacy definition relies on a taxonomy code, which may omit pharmacies that functionally serve LTC populations but lack that specific identifier, and the supply fee applies only to prescriptions dispensed at maximum fair price to narrowly defined eligible individuals—leaving room for gaming or reclassification of claims to avoid fee triggers.
Finally, while GAO’s required report will inform longer‑term reforms, the statute’s temporary nature means the immediate fix could become entrenched politically or morph into contingent precedent for other provider categories without a comprehensive payment reform plan.
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