CMS rejects Louisiana’s Medicaid plan for pharmacy reimbursements

The Centers for Medicare and Medicaid Services (CMS) recently informed Louisiana that it’s been using an improper reimbursement formula to pay pharmacists through its state Medicaid program.

At issue are prescription drug markups that Louisiana negotiated with pharmacists. CMS said the markups, which the state has used since 2012, do not comply with federal requirements. CMS is deferring payment of $2.25 million and questioning $25 million in past reimbursements.

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In a letter to Louisiana Medicaid Director Ruth Kennedy, CMS said Louisiana’s Medicaid expenditure contained expenses that had not been approved by federal government and could not be paid. 

Calder Lynch, an executive with the Louisiana Department of Health and Hospitals, said the prescription drug markups were intended to keep pharmacists in the Medicaid program. Some pharmacists had complained reductions in prescription reimbursements to pharmacists were too steep.

"We felt it was necessary to implement the changes to preserve access," Lynch told the Associated Press. He said Louisiana would appeal CMS’ decision.

The pharmacy plan the state submitted included a higher dispensing fee and markup on ingredient costs. Lynch said Louisiana is revising its reimbursement plan and will resubmit the expenditures to CMS.