CVS Caremark, Walmart clash over reimbursement rates

Walmart and its pharmacy benefit manager network, CVS Caremark, have fallen out over reimbursement rates, leaving commercial and managed Medicaid members out-of-network when filling scripts with the retailer.

CVS Health said it has requested that Walmart continue to fill prescriptions as an in-network participating pharmacy through April 30.

Medicare Part D beneficiaries remain in network, as does Walmart's Sam's Club division.

The clash is over reimbursement rates, with Walmart requesting increases, according to CVS Health, which did not give the financial terms.

Walmart did not immediately respond to a request for comment, but a spokesperson reportedly said that the retailer is standing up to CVS as it tries to exert its power to direct members where to fill their scripts.

THE IMPACT

The falling out shows the power struggle taking place in the industry as players buy companies and combine for greater might.

Walmart, which has been able to offer low prices in part by using its own negotiating power as the nation's largest retailer, said it wants to provide value to its customers, not give that "value to the middle man."

CVS Health, which recently acquired Aetna, indicated it wouldn't be hurt by Walmart's termination.

Less than 5 percent of affected CVS Caremark members use Walmart exclusively to fill their prescriptions. The retailer's termination is not expected to have a material impact on CVS Health's financial results this year, the company said.

Members affected by the change will be contacted and given the identity of nearby in-network pharmacies, CVS said.

The two sides could still end up hammering out a deal.

THE TREND

Amazon is seen as Walmart's number one rival and is nipping at its position as the nation's largest retailer. It has already knocked retailer CVS out of its number 2 position, according to Forbes.

Last year, Amazon went after Walmart's Medicaid market by offering those beneficiaries a Prime membership for $5.99 a month, a discount of 54 percent.

But survey results last year also showed HIMSSMedia readers expect the combined CVS\Aetna to have a bigger impact in disrupting healthcare than either Amazon or its new healthcare company formed with Berkshire Hathaway and JPMorgan Chase.

Walmart has answered through continued e-commerce acquisitions, including the $16 billion purchase of India's Flipkart, according to the Forbes report.

ON THE RECORD

"At a time when everyone is working hard to find ways to reduce healthcare costs, Walmart's requested rates would ultimately result in higher costs for our clients and consumers," said Derica Rice, president, CVS Caremark. "While we have enjoyed a long relationship with Walmart as a low cost provider in our broad national networks, based on our commitment to helping our clients and consumers manage rising pharmacy costs, we simply could not agree to their recent demands for an increase in reimbursement."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com