| March 8, 2002 Drug stores threaten to drop
Medicaid
if states cut payments
By REBECCA COOK
Associated Press Writer
SEATTLE (AP) _ Drug store chains are threatening to stop serving
Medicaid patients, close stores or reduce hours if cash-strapped
states follow through on plans to slash Medicaid pharmacy payments.
Battered by the recession and budget woes, more than a dozen states
are considering cutting payments to pharmacists under Medicaid, the
joint federal and state program that provides health care to 36
million poor people nationwide.
Representatives of CVS and Walgreens, the nation's largest drug store
chains, say they may reduce hours, close stores and stop expansion in
states that deeply cut Medicaid pharmacy payments. Rite Aid and
Albertsons may drop Medicaid completely in those states.
"We're going to have to reevaluate our participation in Medicaid,"
said Rite Aid spokeswoman Karen Rugen. "We believe everyone should
have access to medical care. It's just hard to do it below your
costs."
Independent drug store owners are even more alarmed.
"For
us to say 'no' to Medicaid, morally it hurts, but financially we
cannot do it," said Patty Slagle, pharmacist at the only drug store in
the small rural Washington town of Republic.
Washington
Gov. Gary Locke has proposed the most drastic cut so far, a $71 million
reduction in Medicaid pharmacy payments. States from Maryland to
Nebraska are considering smaller cuts that pharmacists find just as
worrisome.
"This will
send a number of pharmacies over the edge," said Ernest Boyd, executive
director of the Pharmacists Association in Ohio, where officials
proposed an $8 million cut. "We're not a religion; we're not here for
charity purposes. We've got to make a profit or we can't stay open."
It's
no mystery why states are trying to cut pharmacy costs. Health care
spending is soaring while the recession prompts painful budget cuts.
Medicaid consumes 20 percent of the average state budget, and
prescription drug spending grows by about 15 percent annually.
When
pharmacists fill Medicaid prescriptions, states pay them a
reimbursement for the cost of the drug plus a flat fee. States that
have made or are considering cuts include Arkansas, Colorado,
Connecticut, Idaho, Illinois, Indiana, Maryland, Mississippi, Montana,
Nebraska, North Carolina, Ohio, Oklahoma, South Carolina, Virginia and
Washington.
The
federal Office of the Inspector General recommended states cut
pharmacy payments by about 10 percent after finding in a report that
states are overestimating what pharmacists pay wholesalers, and thus
overpaying pharmacists by more than $1 billion a year. Pharmacy groups
attacked the study as flawed.
The Office
of the Inspector General stands by its report, said spokesman Donald
White, although a follow-up study is planned.
In
the meantime, states embrace the OIG's report as solid justification
for pharmacy cuts.
"It's
not going to have a detrimental effect on the industry," said Nico
Gomez, spokesman for the Oklahoma Health Care Authority, which is
cutting pharmacy reimbursements by about $1 million.
Washington State Medicaid director Doug Porter says he does not
believe cuts will devastate pharmacists.
"We're definitely going to be paying their margins to the bone, but at
least in theory we should not be putting them below cost," Porter
said. "I would be shocked to see any serious number of pharmacies not
participating."
Still, pharmacists and patients worry.
Seattle Medicaid recipient Dave Gallaher has relied on pharmacist Tom
Engel ever since the former Boeing worker was diagnosed with
degenerative arthritis of the spine.
But if the
state cuts pharmacy reimbursements, Engel says he might stop taking
Medicaid patients like Gallaher.
Engel
said it will hurt to refuse the state's business: "But why do it if
you don't get paid for it?"
For
example, Engel pays his wholesaler $109.76 for a month's supply of
Prilosec, a commonly prescribed drug for stomach problems. The state
pays him $127.35; Washington Medicaid clients don't pay anything for
prescriptions. Gov. Locke's proposed reimbursement cuts would drop
Engel's reimbursement to about $111.
Pharmacists say if reimbursements drop that close to their actual
cost, they won't be able to pay their employees, their bills, or make
any profit. The average pharmacy in the U.S. makes a 2 percent profit.
A private
health insurer would reimburse Engel $123.61 for the same dose of
Prilosec. That's less than the state, but pharmacists say Medicaid
should pay more because Medicaid patients demand more time and effort.
They tend to be sicker, and many don't have a primary care doctor and so
rely heavily on pharmacists' advice.
Medicaid
requires pharmacists to jump through more bureaucratic hoops than
private insurers do _ for instance, before Engel fills that Prilosec
prescription, he would have to follow a lengthy approval process of
calling the doctor to find out why it had been prescribed. Finally, they
say, Medicaid often refuses to pay and takes longer to pay than any
private insurer.
State
officials say pharmacies should drive harder bargains with health plans,
wholesalers and manufacturers.
Consumers
and pharmacists have beaten back some proposals to cut Medicaid pharmacy
payments. In Illinois, the Rev. Jesse Jackson led a successful campaign
to scale back cuts after Walgreens threatened to reduce store hours in
poor Chicago neighborhoods. Proposals in New York and Oregon were also
defeated. Indiana pharmacists are challenging a fee reduction in court.
Pharmacists want states to find other cost-cutting options. Many states
_ including Washington _ are encouraging doctors to prescribe less
expensive generics. States are also trying to negotiate better deals and
pursue rebates with drug manufacturers.
"We're
saying, 'Can't you just look at this?'" Rite Aid's Rugen said. "Don't
always target us."
___
On the Net:
National Association of Chain Drug Stores _
http://www.nacds.org
Centers for Medicare and Medicaid Services _
http://www.hcfa.gov |
