Massachusetts Officials Extend the Deadline for Pharmacies To Submit Cost Information

A report released Sept. 16 by the HHS Office of Inspector General finding that states may not be overpaying pharmacies as previously thought has prompted Massachusetts officials to extend the deadline for gathering information on state Medicaid reimbursement rates, the Boston Globe reports (Reidy, Boston Globe, 9/19). A previous version of the report found that states were overpaying pharmacies, prompting acting Gov. Jane Swift (R) in July to approve a reduction in Medicaid payments to pharmacies from 10% above the wholesale price to 2% below wholesale as part of the state budget. The pharmacy payment cuts were expected to save the state about $60 million a year. In response, CVS, Brooks Pharmacy and Walgreen -- the state's three largest drugstore chains -- announced that they would discontinue their participation in the state's Medicaid program unless the state raised the reimbursement rate. Under a temporary accord reached in August, the state agreed to reimburse pharmacies for Medicaid prescriptions at the current rate through Oct. 2, when it will hold a hearing to establish a new rate (Kaiser Daily Health Policy Report, 9/17). State lawmakers had called for pharmacies in the state to disclose drug cost information during the first round of hearings on the issue, but only one independent Massachusetts pharmacy has provided state administrators with the requested data. Walgreen has said it would not make the information available to state officials, while CVS said it would consider providing the information if confidentiality could be guaranteed (Kaiser Daily Health Policy Report, 9/6). Executive Office of Health and Human Services Secretary Robert Gittens said there is an ongoing "dialogue" with the pharmacies and said in a statement that the OIG report "has prompted the Division of Health Care Finance and Policy to extend the date for acceptance of testimony until 5 p.m., Tuesday, Sept. 24, so that interested parties have time to analyze the report and provide comment." State officials had "no comment" on the revised study, but "still hope" to establish a new reimbursement rate by October, according to the Globe (Boston Globe, 9/19).

'Competitive Disadvantage'
In a related opinion piece in the Boston Globe, Steve Grossman, owner and operator of the independent drug store J.E. Pierce Apothecary in Brookline, Mass., writes that although most pharmacists in Massachusetts are "willing to share information the state needs to arrive at an informed and reasonable reimbursement rate," officials are asking for "proprietary data" that "would put each [pharmacy] at a competitive disadvantage" when the information is made public. In addition, the type of information that officials have asked for will create an "unreliable sample ... for extrapolating average prices." Grossman continues that the data will not "serve the purpose for which they were even sought and will only harm those of us who are trying to do the right thing." State officials are assuming independent pharmacies will "take the hit" for the severe Medicaid reimbursement cuts, Grossman states, but that assumption puts officials "perilously close to toppling the system." Officials' "misguided attempts" to lower pharmacy costs have ignored the situation of smaller, independent pharmacies that will be "hardest hit financially" by the rate cut. Grossman concludes, "It is time for Massachusetts to look at the options for long-term savings rather than short-term solutions that harm patient access and hurt private sector businesses. The commissioner should maintain rates at existing levels and allow Medicaid to make sounder program changes that will benefit all taxpayers and patients" (Grossman, Boston Globe, 9/19).