Massachusetts Lawmakers Begin Hearings on Medicaid Pharmacy Reimbursement Rate

Massachusetts lawmakers are scheduled to meet Aug. 27 for the first of two hearings on the state's Medicaid pharmacy reimbursement rate, which was cut in July by acting Gov. Jane Swift (R), prompting the state's three largest drug stores to threaten to withdraw from the program, the AP/Boston Globe reports (AP/Boston Globe, 8/27). On July 29, Swift approved the state budget, which included a reduction in Medicaid payments to pharmacies from 10% above the wholesale cost to 2% below wholesale cost. The pharmacy payment cuts were expected to save the state about $60 million a year. In response, the state's three largest drugstore chains, CVS Corp., Walgreen Co. and Brooks Pharmacy, announced that they would no longer participate in the state's Medicaid program unless the state raised the reimbursement rate (Kaiser Daily Health Policy Report, 7/31). Under a temporary agreement the state and drugstore chains reached in August, the state will continue to reimburse pharmacies for Medicaid prescriptions at the current rate until Oct. 2, when it will establish a new rate. The agreement also requires pharmacies to give 30 days notice before exiting the state's Medicaid program (Kaiser Daily Health Policy Report, 8/2). The Aug. 27 joint Health Care Committee hearing will help lawmakers develop a reimbursement rate recommendation that they can give to the state Division of Health Care Finance and Policy, which is set to hold a hearing on Sept. 5. The committee also will consider raising Medicaid beneficiaries' prescription copayments and implementing a new 60-cent tax on all prescriptions for non-Medicaid beneficiaries, the AP/Globe reports. Committee Co-Chair Sen. Richard Moore (D) said, "We're focusing on what will be a fair price that doesn't make anyone rich in the process but keeps people in the game so we don't reduce access to people who need the medication" (AP/Boston Globe, 8/27).

Pharmacies Being 'Irresponsible,' Columnist Says
"There isn't a hospital CEO in [Massachusetts] who would not rejoice if Medicaid paid [hospitals] what the pharmacies are complaining about -- 2% below costs," Charles Cavagnaro, CEO and president of Wing Memorial Hospital & Medical Centers, writes in a Boston Globe opinion piece, noting that hospitals currently are paid 30% below cost for serving Medicaid beneficiaries. He says that even if the state decides to implement the 2% below average wholesale cost rate for pharmacies, the pharmacies would still "continue to profit." But the state's Medicaid payments to hospitals are "especially hurtful ... because, unlike pharmacies, we have nowhere else to recoup our losses," Cavagnaro adds. If the state's pharmacies are allowed to "continue their cartel-like power play and refuse Medicaid patients, those needy individuals will get sicker ... and turn to already overburdened and relatively expensive hospital emergency rooms," he says, adding that if the state continues to "underpa[y]" hospitals, they "will not survive." Cavagnaro writes that it is "remarkably irresponsible that an integral part of the health care continuum -- pharmacies -- could consider denying a segment of the population access to vitally needed medications." He concludes, "Enough is enough. Massachusetts hospitals can't be left to swallow the bitter pill from Massachusetts pharmacies" (Cavagnaro, Boston Globe, 8/27).