CMS must act now to safeguard seniors’ access to long-term care pharmacies

DATE: April 1, 2026

By Jessica Androff & Xhulia Rapo | McKnights Long-Term Care News

The Medicare program relies on long-term care pharmacies (LTCPs) to protect some of the most medically complex patients that reside in long-term care settings, yet current payment policies are unfortunately not optimized to protect access to care.

As the Centers for Medicare & Medicaid Services finalizes policies for Contract Year (CY) 2027 Medicare Advantage and Part D programs, long-term care pharmacies, and the vulnerable patients they serve, are at a critical crossroads.

The existing reimbursement system, based on drug acquisition costs, rather than services provided, has created a structural misalignment that contradicts the administration’s goals of lowering drug prices and improving patient outcomes. This misalignment threatens access to essential pharmacy services for millions of older adults in long-term care settings. 

The critical function of long-term care pharmacies

Long-term care pharmacies are more than medication dispensers; they are clinical partners embedded in some of the nation’s most heavily regulated healthcare environments. Residents in nursing homes, assisted living communities and other long-term care settings depend on LTCPs’ capabilities of providing uninterrupted pharmacist availability, emergency and after-hours dispensing, monthly drug regimen reviews, clinical oversight, and meticulous medication storage and delivery protocols. 

For patients in long-term care settings, many of whom manage multiple chronic conditions and complex medication regimens, stability and safety are not abstract policy concepts — they are daily necessities. The presence of a LTCP means medications arrive without interruption, a pharmacist reviews each regimen for safety and interactions and clinical consultants proactively identify risks before they become harmful events.

This level of clinical oversight is not incidental; it is foundational to preventing medication errors, supporting compliance and protecting medically complex patients from avoidable harm. While patients and their families may not always see this infrastructure at work, they rely on it every day to remain safe, stable and well cared for. These are also federally required functions, and patients in long-term care settings cannot receive them from a typical retail pharmacy; only LTCPs are equipped to meet these clinical and regulatory demands.

The problem: A broken reimbursement model

Despite the scope of their responsibilities, LTCPs have long operated within a reimbursement structure where compensation is primarily tied to negotiated drug reimbursement and a dispensing fee that is meant to cover professional and administrative services. The problems with this model are twofold: 

1. Current structure incentivizes the use of high-cost drugs.
   LTCPs generate revenue based on the difference between the acquisition of the cost of the drug (generic or brand) and the reimbursement rate LTCPs negotiate with pharmacy benefit managers (PBMs). This model rewards the use of higher-cost drugs that carry higher reimbursement rather than the unique clinical services that prevent adverse drug events, reduce hospitalizations and ensure safe medication.
2. Dispensing fees fall far below the true cost of delivering LTCP services. Part D requires prescription drug plans (PDPs) to pay LTCPs a separate dispensing fee that is meant to cover administrative and professional services. However, these dispensing fees often fall dramatically short of the resources required to support the LTCP services that are mandated by Medicare, forcing LTCPs to rely heavily on brand-name drug margins to offset losses on essential non-billable clinical work. Simply put, this model undermines the goals policymakers seek to advance. 

In addition to a misaligned reimbursement structure, CMS lacks the tools it needs to ensure that Medicare beneficiaries in long-term care settings have reliable access to high-quality LTCP services. Two gaps are particularly consequential:

1. Network adequacy is based on plan attestation, not meaningful access.
   PDPs are not currently required to demonstrate that their networks include adequate access to LTCPs. Instead, CMS relies on plan attestation rather than mandatory quantifiable standards and there is no substantive review of whether plans actually contract with LTCPs capable of serving residents in long-term care settings. 
2. LTCP quality and value are largely invisible within the Part D program.
   Current Part D quality measures do not distinguish between long-term care residents and the broader Medicare population. Without stratification, the impact of LTCP services, such as improving adherence, reducing medication errors and supporting safer care for medically complex patients, remains obscured. This lack of visibility limits CMS’s ability to monitor quality, influence plan behavior or recognize where specialized LTCP care improves outcomes.

CMS’s own research indicates that these problems are not new. In 2004, as the Medicare Part D benefit was being designed, CMS commissioned a study to assess LTCP operations and evaluate how the shift to prescription drug plans (PDPs) might affect LTCP sustainability. The study stated that PDP reimbursement levels, administrative complexity and variability across plans could compromise LTCPs’ ability to providing essential, non-billable clinical services. CMS posed several essential questions, including whether LTCP services could remain viable under Part D. 

The path forward: Three key CMS actions

The challenges CMS identified in 2004 have largely come to pass, reaffirming that modernization is both necessary and long overdue. The industry has continued to respond to these challenges, more recently through a joint letter submitted in response to the CY 2027 MA-Part D Proposed rule and signed by more than 55 organizations.

This coalition includes not only LTCPs and pharmacy organizations, but also key long-term and post-acute care provider associations, such as those representing skilled nursing centers, assisted living communities and senior living operators. The broad spectrum of stakeholders underscores a unified view: LTCP reimbursement is not simply a pharmacy issue, but a shared system-wide priority for protecting safe medication access for medically complex older adults.

The coalition’s recommendations center around three priorities:

1. Advance payment models that recognize clinical service and value.
   CMS can use its convening authority to bring stakeholders together to explore sustainable reimbursement approaches that move beyond drug cost–based payment and instead reward the clinical and professional services LTCPs provide. Aligning reimbursement with service and outcomes would better support medication management, safety and care coordination for long-term care residents.
2. Strengthen oversight of Part D network adequacy for LTCPs.
   CMS should move beyond reliance on plan attestation and implement meaningful review of whether Part D plans provide reliable, in-network access to qualified LTCPs for beneficiaries in long-term care settings. Strengthening network adequacy oversight would help ensure that coverage on paper translates into real-world access to the specialized pharmacy services these patients require. 
3. Use the Part D Star Ratings program to surface LTCP quality and influence plan behavior. CMS can leverage the Star Ratings system to better monitor quality and incent improvement by stratifying Part D measures for long-term care residents. Stratification would make the value of LTCP services visible, enable measurement of their impact on adherence and medication safety, and lay the groundwork for future alternative payment models.

The CY 2027 MA Part D proposed rule is not simply another regulatory milestone; it is an inflection point. The choices made now will determine whether the nation’s long-term care patients continue to receive the pharmacy support they rely on to stay safe, stable, and well cared for.

CMS asked the right questions in 2004. The industry answered. Patients are waiting. CMS now must act.

Read the full article on McKnights Long-Term Care News here.