Fight over Medicaid rages on

MMR, April 21, 2008

WASHINGTON -- Community pharmacy advocates are continuing to lobby members of Congress in an effort to get legislation enacted that would permanently stop the Centers for Medicare and Medicaid Services (CMS) from slashing the reimbursements pharmacies receive for filling Medicaid prescriptions with generic drugs.

"There is a high level of sympathy among many members of Congress," National Association of Chain Drug Stores vice president of government affairs Paul Kelly says.

"We continue to educate the members of Congress about this issue and how devastating it will be," he says. "It is going to take the help of every one of them to put this through."

Known in the industry as AMP (average manufacturer price), the proposal by federal regulators to dramatically change the formula by which community pharmacies are paid for filling these prescriptions was scheduled to go into effect this month.

The reduced Medicaid reimbursements were mandated in the Deficit Reduction Act of 2005 as part of the government's plan to trim $4.8 billion from Medicaid over the next five years and $26.1 billion over the next decade.

NACDS and the National Community Pharmacists Association were able to block the start of the program late last year when they convinced a federal judge to issue an injunction preventing CMS from putting the program into effect.

The associations say the proposal would have had a greater negative impact on the industry than anything the government has done in the past two decades.

According to a report from the PRIME Institute at the University of Minnesota that was used to support NACDS and NCPA's case for the injunction, the reimbursement cuts could play a major role in driving as many as 12,000 pharmacies out of business over the next few years.

Most of those pharmacies would be in rural or inner city neighborhoods with large numbers of Medicaid patients, says Steven Schondelmeyer, the report's author.

Despite getting the courts to block the implementation of the new reimbursement plan, attorneys for NACDS and NCPA are quick to point out that the injunction is only a temporary fix and that legislation is needed to permanently remedy the problem.

"The lawsuit gives us some time and savings," NACDS senior vice president and general counsel Don Bell says. "But it does not give us a repeal of the Deficit Reduction Act."

Because the bulk of the cuts to Medicare would be in the form of reduced payments for prescriptions--NACDS and NCPA say that for every day the proposed reimbursement schedule is not in effect pharmacies save a combined $5.5 million--the trade groups contend that community pharmacies across the country could lose billions in reimbursements every year unless the deficit-reduction plan is amended.

While no law protecting pharmacies' stake in the Medicaid program has yet been passed, NACDS notes that Sen. Max Baucus (D., Mont.) has introduced a bill to roll back the CMS reimbursement cuts.

More than 200 members of Congress and the Senate, including at least 42 senators, have said they support this and other proposals to amend the Deficit Reduction Act.

One of those proposals, pending in both the House of Representatives and Senate, would raise the reimbursement rate to at least 300% of AMP.

After U.S. District Court Judge Royce Lamberth ruled in the trade groups' favor in December, CMS had until February to appeal the decision but did not file and appeal.

CMS is expected to rewrite its reimbursement plan and reissue it later this year.

Until the reimbursement rate is adjusted through legislation or a new CMS proposal Medicaid prescriptions will continue to be reimbursed at the Federal Upper Limit of 150% of a drug's published price.