WASHINGTON — President Bush's proposed 2008 fiscal year budget contains another round of cuts to Medicaid reimbursement that could leave retail pharmacies absorbing losses and possibly abandoning the program.
Under the president's proposed budget, $1.2 billion would be cut from pharmacy reimbursement for generic medications in the Medicaid program over the next five years. Corresponding state reductions bring the total cut to $2 billion.
“Although we don't have a lot of Medicaid patients at Ukrop's, with lowered reimbursements it is going to become increasingly difficult to serve those patients. They are typically the customers who need the most one-on-one care,” said John Beckner, director of pharmacy and health services, Ukrop's Super Markets, Richmond, Va.
Additionally, the Centers for Medicare and Medicaid Services, Baltimore, in December proposed $8.4 billion in Medicaid cuts over the next five years to implement the Deficit Reduction Act of 2005. Over 90% of those cuts are expected to come from generic drug reimbursement for Medicaid patients.
The DRA proposal — the comment period ended last week — would make the pharmacy reimbursement rate 250% of the average manufacturer's price for the drug.
A study by the Government Accountability Office, Washington, found that at the 250% rate, retail pharmacies would be reimbursed, on average, 36% below the acquisition cost. Bush's proposal would cut the reimbursement rate to 150%.
“How can a pharmacy continue to provide care to their patients if their reimbursement for drugs for those patients is below the price at which they acquire the medication? It doesn't make sense,” said Julie Khani, co-president of the Coalition for Community Pharmacy Action, an alliance between the National Association of Chain Drug Stores and the National Community Pharmacists Association, both in Alexandria, Va.
Last month, the National Community Pharmacists Association surveyed its members on whether the DRA regulations, as interpreted by the Government Accountability Office, would influence their decision to participate in Medicaid. “Eighty-six percent said it would,” said NCPA spokesman Robert Appel.
“When you are continually cutting the reimbursement on generics, which is what we typically dispense to [Medicaid patients], it is going to be hard to serve them,” Beckner said.
Targeting the cuts to generics “eliminates any incentive for pharmacists to dispense generic drugs and is a policy that could result in increased costs by causing more expensive drugs to be dispensed,” Khani said.
“The budget reduction, coupled with the cuts already enacted by the DRA, threatens patient access and the pharmacist's ability to continue to provide patients with quality health care by driving pharmacies out of the Medicaid program, and even out of business,” according to an NCPA release.
While NCPA and other associations will be actively lobbying Congress to eliminate the additional cuts to pharmacy, new legislation was introduced this month that may help independent pharmacies negotiate contracts with pharmacy benefit managers and Medicare Part D plans.
Reps. Anthony Weiner, D-New York, and Jerry Moran, R-Kansas, introduced the Community Pharmacy Fairness Act of 2007, which would let independent pharmacies limit shrinking formulary lists of covered drugs, reduce pre-authorizations needed to obtain refills for formulary-restricted medications and limit switching patients to more expensive types of the same drugs, according to NCPA.