Indiana Judge Blocks Medicaid Pharmacy Cuts, Rules State Failed To Follow Law

Indiana pharmacies won a court order on Oct. 9 that blocked proposed cuts in Medicaid reimbursements, the Indianapolis Star reports. On Tuesday, Marion Superior Court Judge Gary Miller issued an injunction that could delay the cuts until a trial is held "months from now" (Corcoran, Indianapolis Star, 10/10). The suit stems from Gov. Frank O'Bannon's (D) plan to cut nearly $100 million from the state Medicaid program's $1.15 billion drug budget by cutting from $4 to $3 the fee pharmacists receive for filling Medicaid prescriptions and by "slic[ing]" drug markups by as much as half (Kaiser Daily Health Policy Report, 8/23). In his ruling, Miller found that the state had violated a law requiring any change in dispensing fees to be based on market studies, which the state "knowingly failed to conduct." Also, Miller found that the state did not present its proposal to the State Budget Committee for review, as required by law. While the litigation is pending, Miller said state officials "can make cuts ... if they follow the law." State Medicaid Director Melanie Bella said the state "might do that," but added that the Office of Medicaid Policy and Planning will appeal the decision. "We think it's a regrettable decision. Every month [the cuts are] delayed costs the state $1 million," she said. Drugstore representatives, however, said the cuts would "force" them to reduce hours or close stores that serve "high numbers" of Medicaid patients, such as stores in "poor neighborhoods" and rural and inner-city areas (Indianapolis Star, 10/10). The two major pharmacies involved in the suit, Walgreen's and CVS, say if the cuts take place, store closings and reduced hours could affect more than 650,000 Medicaid beneficiaries, "as well as pharmacy patrons who shop in stores that fill a lot of Medicaid prescriptions" (Kaiser Daily Health Policy Report, 8/23). For further information on state health policy in Indiana, visit State Health Facts Online.