After Massachusetts Governor Approves Pharmacy Payment Cut, CVS Says It Will No Longer Serve Medicaid Beneficiaries

Drugstore chain CVS Corp. on July 29 said it would no longer participate in Massachusetts' Medicaid program and would have to close an "undetermined" number of its 325 stores in the state, after acting Gov. Jane Swift (R) signed a state budget that reduces Medicaid reimbursement rates for pharmacies, the Providence Journal reports. The state's largest drugstore chain opposed the reimbursement rate reduction to 2% below wholesale price, down from the current rate of 10% above wholesale price. The Journal reports that CVS' exit from the program would be "deep and far-reaching." The chain fills 500,000 Medicaid prescriptions per year, one-third of the state's total, the company said. Company CEO Thomas Ryan had asked the governor for a line-item veto of the cut, but she declined (Fasig, Providence Journal, 7/30). CVS officials said in a statement, "We are saddened by the decisions of Massachusetts policy-makers to move forward with Medicaid pharmacy cuts without holding a hearing to discuss this critical issue." Sarah Magazine, a spokesperson for the governor, said that Swift is "disappointed" by CVS' decision, adding, "We feel the pharmacists did raise some valid points about this change. We don't want to lose [Medicaid patients'] access, but we have to maximize the savings cost." The Boston Herald reports that CVS's exit could signal an "exodus" of major pharmacies from Massachusetts' Medicaid program (Heldt Powell, Boston Herald, 7/30). CVS officials said that the company will "establish a timetable for withdrawing from the program ... in the next few days." Meanwhile, the governor's office said it will hold a public hearing with the state Division of Medical Assistance "as soon as possible" to determine whether the reimbursement rate change would limit access to Medicaid (Providence Journal, 7/30).

Other Cuts
Swift also cut spending for other public health programs saying the cuts "honestly" address the state's $2.5 billion budget deficit, the Boston Herald reports. Swift reduced funding for osteoporosis awareness, prostate and breast cancer prevention, and smoking cessation programs. According to state Senate President Thomas Birmingham (D) -- who is running for governor -- Swift also supports the Legislature's plan to save $70 million in Medicaid dollars by cutting 50,000 beneficiaries from the program (Beardsley, Boston Herald, 7/30).