Drugstores Threaten to End Medicaid Service
By THE ASSOCIATED PRESS
SEATTLE, March 11 - Drugstores around the nation are threatening
to stop serving Medicaid patients and close or reduce hours if states
follow through on plans to cut the amounts paid to pharmacies for
filling Medicaid prescriptions.
Faced with budget problems, more than a dozen states are considering
reducing their reimbursement rates under Medicaid, the joint federal-
state program that provides health care to 36 million poor people.
"This will send a number of pharmacies over the edge,"
said Ernest Boyd, executive director of the Pharmacists Association
in Ohio. "We're not a religion. We're not here for charity
purposes. We've got to make a profit or we can't stay open."
When pharmacists fill prescriptions for Medicaid patients, states
pay them the cost of the drug plus a flat fee. But health care costs
are soaring even as the recession forces states to cut their budgets.
Medicaid consumes 20 percent of the average state budget.
Gov. Gary Locke of Washington has proposed the sharpest cut so
far, a $71 million reduction to the $361 million budgeted for the
current two- year fiscal cycle.
Other states that have made reductions or are considering them
include Arkansas, Colorado, Connecticut, Idaho, Illinois, Indiana,
Maryland, Mississippi, Montana, Nebraska, North Carolina, Ohio,
Oklahoma, South Carolina and Virginia.
The inspector general for the federal Health and Human Services
Department nudged states toward the idea last August with a report
warning that they were overestimating wholesale drug prices and
overpaying pharmacists by more than $1 billion a year. The report
recommended cutting pharmacy payments by about 10 percent. Pharmacy
groups attacked the study as flawed.
Representatives of CVS and Walgreens, the nation's largest drugstore
chains, with a combined 7,700 stores, said they might reduce hours,
close stores and stop expansion in states that deeply cut Medicaid
pharmacy payments. Rite Aid and Albertsons said they might drop
Medicaid completely in those states.
"We're going to have to re-evaluate our participation in Medicaid,"
said Karen Rugen, a spokeswoman for Rite Aid, which has 3,600 stores
in 29 states. "We believe everyone should have access to medical
care. It's just hard to do it below your costs."
Independent drugstore owners are even more alarmed. State health
administrators, including Doug Porter, the Medicaid director of
Washington, say they do not believe that cuts will devastate pharmacists.
Acknowledging that the intent was to cut the druggists' margins
"to the bone," Mr. Porter added: "At least in theory,
we should not be putting them below cost. I would be shocked to
see any serious number of pharmacies not participating."
State officials said pharmacies should instead drive harder bargains
with health plans, wholesalers and manufacturers.
Pharmacists want states to find other cost-cutting options. Many
states are encouraging doctors to prescribe less expensive generics.
States are also trying to negotiate better deals from drug makers.
Consumers and pharmacists have beaten back some proposals to cut
Medicaid pharmacy payments. In Illinois, the Rev. Jesse Jackson
led a successful campaign to scale back cuts after Walgreens threatened
to reduce store hours in poor Chicago neighborhoods. Proposals in
New York and Oregon were also defeated. Indiana pharmacists are
challenging a fee reduction in court.
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