Massachusetts Officials Reduce Medicaid Pharmacy Rate Cut

Massachusetts state officials on Oct. 3 "sharply scaled back" a plan to cut Medicaid payment rates to pharmacies, ensuring that at least two of the state's largest pharmacy chains would continue to serve the state's 900,000 Medicaid beneficiaries, the Boston Globe reports (Mohl/Reidy, Boston Globe, 10/4). Acting Gov. Jane Swift (R) in July approved the state budget, which included a reduction in Medicaid reimbursements to pharmacies from 10% more than the wholesale price of prescription drugs to 2% less than the wholesale price. Massachusetts officials expected the pharmacy reimbursement reduction to save the state about $60 million per year. In response, CVS, Brooks Pharmacy and Walgreen -- the state's three largest pharmacy chains -- announced that they would discontinue their participation in Medicaid unless the state raised the reimbursement rate. Under a temporary agreement reached in August, Massachusetts officials decided to reimburse pharmacies for Medicaid prescriptions at the current rate until Oct. 2, when the state intended to hold a hearing to establish a new reimbursement rate (Kaiser Daily Health Policy Report, 9/27). On Oct. 3, state Commissioner of Health Care Finance and Policy Linda Ruthardt and state officials set the reimbursement rate at the wholesale price plus 6%, retroactive to Aug. 3. In addition, Ruthardt increased pharmacies' dispensing fee from $3 per drug to $3.50 per brand-name drug and $5 per generic drug effective Nov. 1. Ruthardt also recommended lowering Medicaid beneficiaries' copayments for generic drugs from $2 to 50 cents, but that change requires legislative approval.

Response
"We believe that this decision strikes an appropriate balance. We do believe at this rate pharmacies will continue to participate," Robert Gittens, the state secretary of human services, said. Officials from CVS and Brooks Pharmacy indicated they will continue to fill prescriptions for Medicaid beneficiaries. The Globe reports that other pharmacies said they need time to examine the new rates before deciding whether to continue serving Medicaid beneficiaries (Boston Globe, 10/4). Todd Brown, head of the Massachusetts Independent Pharmacists Association, said, "I'm concerned that any decrease (in Medicaid rates) is going to cause pharmacies to drop out, and that is going to cause access problems" (Heldt Powell, Boston Herald, 10/4). Carmelo Cinqueonce, executive vice president of the Massachusetts Pharmacists Association, said, "We've come a long way from minus 2%. But does someone win a victory if, instead of cutting off your head, they cut off your arm?" The new rates create a "budget problem" for the state because they are "significantly higher" than what the state Legislature and Swift approved and leave the state with a $25 million to $27 million budget gap. Wendy Warring, head of the state Medicaid division, said she will now have to find other spending cuts to offset the new reimbursement rate (Boston Globe, 10/4).