Three States are Sued over Reduced Medicaid Payments

Washington, California and New York currently have lawsuits filed against them by several pharmacy groups who are up in arms about the reduced reimbursements that they are receiving for their Medicaid participation. Minnesota is expected to be next up on the list with a lawsuit that is in the works. The lawsuits were filed separately in federal courts in each state on September 29.

The pharmacy groups, the National Association of Chain Drug Stores along with the National Community Pharmacists Association and a variety of other groups that are a little smaller, have accused these states of adjusting their reimbursement rates improperly. The states have reduced their rates as a result of the Average Wholesale Prices (AWP) which is a gauge for prescription drug prices. The AWP showed a 4 percent reduction on September 26.

The pharmacies feel that the AWP doesn’t portray the costs correctly as it doesn’t take into account the wholesale prices that the pharmacies pay for the drugs. The AWP is showing lowered rates and the states have reduced the Medicaid reimbursements but the pharmacies are actually paying more for their drugs.

Don Bell, the general counsel or the chain drug store group estimates that with the new rates reflected by the AWP pharmacies will lose around $200 million in Medicaid reimbursements every year. The effects of these changes could mean that the pharmacies might have to cut down on some of their services, leave the Medicaid program entirely or even lose their business entirely.

Bell also goes on to say that if pharmacies start refusing to take Medicaid it would “undermine patient access to pharmacies.” The pharmacists believe that the rates are not enough to meet the federal requirements with regards to providing adequate access to pharmacies for Medicaid patients.

The pharmacies are hoping that the lawsuits will encourage the states to adjust their rates even if it is by offsetting them in some way that will keep the reimbursements whole. Officials at the governor’s office in California and also in New York were not available for any comments regarding the situation, but the governor’s office in Washington stated that they were still going over the lawsuit and believed it held no merit.

The main offense here is that the states were in violation of the Social Security Act and did not get the required approval from the Centers for Medicare and Medicaid Services before making changes to the reimbursement amounts. It is also stated that the reduction in reimbursement fees based on the AWP were not approved.

What is a major concern at this time, according to Bruce Roberts, CEO of the National Community Pharmacists Association, is that in rural areas independent community pharmacies are sometimes the only type of health care provider for many Medicaid patients. If pharmacies begin to close down as a result of these reimbursement reductions it could affect the health and well being of many people.