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Medicaid rule would reduce payments to pharmacists
SIKESTON -- Pharmacists would take the biggest hit from a proposed rule designed to save states and the federal government about $8.4 billion over the next five years, officials who oversee Medicaid said earlier this week.
Pharmacist Ron Hamra of Medicap Pharmacy in Sikeston said the proposed rule could potentially put a lot of smaller pharmacies out of business.
"It will definitely have a bad impact on all pharmacies -- not only independent retailers, but the bigger ones like Walgreens and Wal-Mart, too," Hamra said. Congress mandated changes this year in how the federal government limits its payments to states for the cost of prescription drugs when generics are available. Lawmakers were concerned that Medicaid wasn't getting as good a deal on the price of drugs as some of the large payers in the private market did.
Under Medicaid, which serves about 55 million people, states reimburse pharmacies for the cost of medicine provided to beneficiaries. The proposed rule established a new calculation that limits the federal government's share of the cost of the medicine when three or more generics are available. States will retain the authority to set their own reimbursement levels and dispensing fees to pharmacists.
In a fact sheet, Health and Human Services Secretary Mike Leavitt said the proposed rule will affect about 600 drugs that account for about 8.3 percent of outpatient drug costs under Medicaid. Spending on outpatients' drugs has been one of the program's fastest growing expenses.
He also said the rule will increase transparency about the true cost of drugs. The federal government will set a definition for the average manufactured price (AMP) of a particular drug, and will publish prices on a quarterly basis.
The goal is to capture the most accurate pricing data possible to assure that the federal government and states are paying appropriately for generics.
"The problem we have in community pharmacy is AMP is something we have no access to and we don't buy from manufacturers; we buy from wholesalers or other drug-related entities," said Dr. Richard Logan of L&S Discount Pharmacy in Charleston.
The fear in community pharmacy -- whether chain or independent -- is AMP would be set at a level where pharmacists couldn't get reimbursed at their cost, Logan said. And wholesalers don't like it because they couldn't make a profit, he said.
"You have to make a profit to stay in business," Logan said.
Leslie Norwalk, acting administrator for the Centers for Medicare and Medicaid Services, said pharmacists are concerned that the new rule would lead to lower reimbursements when they provide generics. She said the agency will listen to their suggestions in the coming months and will likely issue a final rule in the summer.
The proposed changes would lower Medicaid spending by less than 1 percent. Overall, the federal government and the states will spend about $280 billion on Medicaid during the current fiscal year. The cost of Medicaid, which provides health care to the poor, will rise to nearly $5 trillion in the coming decade, Health and Human Services officials estimate.
"It's a very complicated issue. What's frightening right now is nobody knows what's going to happen," Logan said.
What's odd is even though the proposed changes are about 1 percent of the Medicaid budget, it could legislate independent pharmacies out of the program, Logan said.
"That's what's scary. If you put a hardship on independent pharmacies, who's going to take care of the people?" Logan asked.
Since the discussion is being done in Congress, most independents feel like they have no input whatsoever, Logan said.
Logan is a regional adviser for Good Neighbor Pharmacy and a member of the National Independent Pharmacy Coalition. The groups try to stay informed and, hopefully, impact the situation a little bit, Logan said.
"Our hope is the people in Washington that are actually in the middle of this and in the heat of conferences and negotiations can impact it enough to reflect our true cost of goods -- and we're just talking about the price of pills," Logan said.
But in all honesty, pharmacists just don't know what the future holds.
Logan said: "You never know what's going to happen in Congress."