Brooks Pharmacy, Walgreens Join CVS in Ending Participation in Massachusetts’ Medicaid Program

Following CVS Corp.'s lead, drugstore chains Brooks Pharmacy and Walgreen Co., as well as some other "independent operators," on July 30 announced that they will no longer participate in Massachusetts' Medicaid program, the AP/Providence Journal reports (Peter, AP/Providence Journal, 7/31). The announcements follow a reduction in Medicaid payments to pharmacies from 10% above the wholesale cost to 2% below wholesale that was approved on July 29 by acting Gov. Jane Swift (R) as part of the state's budget. The pharmacy payment cuts are expected to save about $60 million a year, the Boston Globe reports (Mohl, Boston Globe, 7/31). The three chains, which run 555 of the state's 1,014 pharmacies, fill 60% of prescriptions for Medicaid beneficiaries. CVS itself fills about one-third of prescriptions for the state's beneficiaries (Heldt Powell, Boston Herald, 7/31).

Massachusetts Seeks Delay
Robert Gittens, secretary of health and human services, on July 30 asked CVS to continue to serve beneficiaries for at least 60 days, during which time the administration intends to hold hearings on the new payment rate. Gittens said, "It would be unconscionable for them to leave people stranded. We're asking them to be good corporate citizens." But CVS spokesperson Todd Andrews said the chain would only consider returning to the program if Linda Ruthardt, the state commissioner of health care finance and policy, decides to increase the reimbursement rate "down the road" (Boston Globe, 7/31). Any rate change, however, would have to be approved by the state Legislature, which will finish its formal session for the year on July 31. State Senate Ways and Means Chair Mark Montigny (D) said that lawmakers would need more information prior to making such a change, adding, "If there is a feeling that we have been irresponsible, then [the pharmacies should] tell us in a public hearing. To simply threaten to throw out poor people from your stores is a gross injustice" (Boston Herald, 7/31).
An NPR "All Things Considered" report on the pharmacy payment cuts in Massachusetts is available online in RealPlayer Audio.

Drug Stores Should Reconsider, Editorial Says
CVS, Walgreen and Brooks should reconsider their plans to withdraw from Massachusetts' Medicaid program, a Boston Globe editorial states. If the Swift administration "follows through with its commitment for a prompt hearing, the chains should hold off on dropping" Medicaid beneficiaries because they will then have an opportunity to "spell out what impact the lowered rate will have on them." The editorial concludes, "The chains and the state should move toward prompt resolution of their conflicting interests. In the meantime, they shouldn't turn the state's poor and disabled into pawns who are victimized by the standoff" (Boston Globe, 7/31).

Cuts in Washington State
The Seattle Times on July 29 examined the potential effects of Medicaid payment cuts to pharmacies that will be implemented Aug. 1 in Washington state (Ostrom, Seattle Times, 7/29). The state is imposing the cuts, which include a 3% reduction in payment rates for name-brand drugs and a 44% trim off rates for generic drugs, to offset a "ballooning state Medicaid drug budget." The cuts also come as a result of a report from the HHS inspector general that said states were overpaying for medications for Medicaid beneficiaries (Kaiser Daily Health Policy Report, 7/12). The cuts will affect the nearly 500,000 beneficiaries enrolled in a traditional Medicaid plan, but will not affect 400,000 beneficiaries in the state's Medicaid managed-care plan, Healthy Options. According to Rod Shafer, CEO of the Washington State Pharmacy Association, up to 25% of the state's 1,100 pharmacies will end participation in Medicaid as a result of the cuts. The Times reports some large pharmacy chains, including Bartell Drug, Safeway, Fred Meyer and Rite Aid, have not yet decided whether to discontinue their participation in the program, but many independent and smaller chain pharmacies have said that the cuts will not be financially feasible for them (Seattle Times, 7/29). The state had delayed the payment cuts to gather input from pharmacies on other ways to save the program money. However, the suggestions from pharmacies were actions the state had already implemented or considered (Kaiser Daily Health Policy Report, 7/12). Doug Porter, assistant secretary of the Medical Assistance Administration, said, "My message to the [pharmacy] industry has been: Do your own study, give me your results. The industry here in Washington has not been forthcoming with any competing data" on how the cuts will affect them. He added that he believes a majority of the pharmacies will accept the payment cuts. If some pharmacies do close or opt out of the Medicaid program, the state will provide beneficiaries rides to other participating pharmacies, a mail-order service and an assistance hotline (Seattle Times, 7/29).