GOVERNMENT and LAW

State budget-cutters eye Medicaid Rx costs

Medicaid pharmacy reimbursements are under attack across the country. From Connecticut to Oregon and Michigan to Texas, proposed cuts are on the table. A survey by the American Society of Consultant Pharmacists (ASCP) found at least a dozen states where Medicaid reductions have been put forward this year. In addition, several states may follow the lead of California and Florida and require pharmacies that want to participate in Medicaid to charge uninsured Medicare recipients no more than the Medicaid reimbursement rate.

Medicaid cuts already have been imposed in some states. Illinois changed reimbursement levels in December, and Kentucky followed in January. ASCP is seeking to overturn the Illinois reductions, and in February it won a partial courtroom victory in its request for a preliminary injunction. The Illinois reductions were instituted under an emergency rule promulgated by the Department of Public Aid. It scrapped a reimbursement formula of average wholesale price (AWP) minus 10% and dispensing fees from $3.45 to $15.70 and replaced it with wholesalers acquisition cost (WAC) plus 8% for brands and 12% for generics, with a $4.17 dispensing fee. In Kentucky, 24 cents were lopped off the dispensing fee, dropping it to $4.51.

Medicaid is an obvious target. The number of beneficiaries is up, due to enrollment drives under the federally initiated State Children's Health Insurance Program. More kids equal more drugs, so cut pharmacy reimbursements goes the current thinking. But most of the cuts have been proposed without input from pharmacists and studies to determine what dispensing costs are. If the economy slows further and more people lose their jobs, the pressure on Medicaid budgets can only increase. Already Florida is struggling with a $1 billion Medicaid shortfall, and Oklahoma was officially out of Medicaid funds for more than a week.

According to a compilation provided by ASCP at its annual legislative conference in Washington, D.C., last month, here are some of the latest proposed cuts:

• Colorado: from AWP minus 10% to AWP minus 13%

• Connecticut: from AWP minus 12% to AWP minus 13%, and the dispensing fee from $4.10 to $3.60

• Indiana: from AWP minus 10% to AWP minus 13%, and the dispensing fee from $4 to $2

• Michigan: from $3.72 to $3.22

• Missouri: from AWP to WAC

• New Jersey: from AWP minus 10% to AWP minus 15%

• North Carolina: from AWP minus 10% to AWP minus 13%, and dispensing fee from $5.60 to $4

• Oregon: from AWP minus 11% plus $3.91-$4.28 to AWP minus 15% plus $2.50 or whatever the lowest managed care contract offers.

• South Carolina: from AWP minus 10% to AWP minus 13%

• Wisconsin: from AWP minus 10% to AWP minus 15%

• Wyoming: from AWP minus 4% to AWP minus 11%

Michael F. Conlan

Mike Conlan. State budget-cutters eye Medicaid Rx costs.

Drug Topics

2001;7:58.