Drugstores Say They Will End Participation in Medicaid if States Cut Fees to Pharmacists

Drugstores nationwide may stop filling prescriptions for Medicaid beneficiaries and may reduce hours or close stores if states implement planned cuts in Medicaid reimbursement rates for pharmacies, the AP/New York Times reports. Several states, including Arkansas, Colorado, Connecticut, Idaho, Illinois, Indiana, Maryland, Mississippi, Montana, Nebraska, North Carolina, Ohio, Oklahoma, South Carolina, Virginia and Washington, have planned or are considering cuts in pharmacy reimbursement rates for Medicaid, which makes up 20% of the average state budget, to offset current budget deficits. The move to cut pharmacy reimbursements was prompted in part by a report released last August by the HHS Office of the Inspector General that found states were overpaying pharmacies by more than $1 billion a year and recommending that states reduce Medicaid pharmacy payments by about 10%. For their part, CVS and Walgreens, the nation's largest drugstore chains, have said they might reduce hours, close stores or stop expanding in states that "deeply" cut Medicaid reimbursement rates for pharmacies, while Rite Aid and Albertsons drugstores said they might stop serving Medicaid beneficiaries altogether in those states. RiteAid spokesperson Karen Rugen said, "We're going to have to re-evaluate our participation in Medicaid. We believe everyone should have access to medical care. It's just hard to do it below your costs." Ernest Boyd, executive director of the Ohio Pharmacists Association, added, "[The cuts] will send a number of pharmacies over the edge. 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." However, some state officials said that such cuts will not "devastate" pharmacists. Doug Porter, Medicaid director of Washington state, said, "At least in theory, we should not be putting [the pharmacies] below cost. I would be shocked to see any serious number of pharmacies not participating" in Medicaid. Several state officials have suggested that pharmacies try to negotiate better deals with health plans, wholesalers and drug manufacturers. Meanwhile, pharmacies want states to pursue other cost-cutting measures, including encouraging physicians to prescribe generic medications and negotiating better deals with drug manufacturers (AP/New York Times, 3/12).