Medi-Cal reimbursement cuts of 10% opposed by pharmacy

ALEXANDRIA, Va. — The National Association of Chain Drug Stores and the National Community Pharmacists Association jointly spoke out Friday against cuts to California's Medicaid program Medi-Cal, which will be retroactive to June 1.

“We are extremely disappointed with the unconscionable Medi-Cal reimbursement cuts proposed by the state and approved by HHS," the associations stated. "If left in place, we believe that these reductions would greatly harm millions of Californians by effectively reducing their access to community pharmacies and the healthcare system as a whole. The impact in terms of compromised health outcomes for patients or delayed access to needed services could be significant."

And that significance will be amplified in 2014, when another 3 million to 5 million Californians are expected to enroll into the Medi-Cal program through the Affordable Care Act. "The cuts approved by [the Centers for Medicare and Medicaid Services] today are a complete contradiction to the ACA and makes you wonder if anybody between the Obama administration and Health and Human Services Agency are talking before these decisions are made,” stated Jon Roth, CEO for the California Pharmacists Association.

Specifically, three proposals expected to save $623 million collectively were approved last week:

  • A 10% provider payment reduction on a number of outpatient services, including physicians, clinics, optometrists, therapists, laboratories, dental, durable medical equipment and pharmacy;

  • A new 10% provider payment reduction for freestanding nursing and adult subacute facilities; and

  • A 10% provider payment reduction and rate freeze for distinct part/nursing facility-B services.

NACDS and NCPA outlined four points as to how the Medi-Cal cuts will generate negative outcomes:

  • First, community pharmacists provide expert medication advice and promote cost-saving generic drugs. … Patient access will likely suffer as many pharmacies may be forced to cease filling prescriptions and providing counseling to these patients for fear of jeopardizing their pharmacy’s financial viability;

  • Second, we believe that the Medi-Cal cuts will mean fewer jobs and local tax revenue at the worst possible time for the state’s economy. Pharmacy reimbursement by public and private health plans has already been declining for many years. These cuts could be the tipping point that forces community pharmacies to scale back operating hours, employee hours or to close altogether;

  • Third, these short-sighted cuts could very well backfire and ultimately increase costs for California and the federal government. Pharmacy services are arguably the best value in health care. As a result of the diminished pharmacy access these cuts will trigger, patients will likely either endure greater and costlier health problems or have to turn to more expensive providers, such as emergency rooms for the medication and counseling they need; and

  • In addition, it is surprising and disappointing that the federal and state officials involved have acted with such disregard to the judicial system, with a related case pending before the U.S. Supreme Court. No one should presume the outcome of the case of Douglas v. Independent Living Center of California and the federal review of California’s proposed cuts should never have been concluded while the case is active.

The Douglas v. Independent Living Center questions whether Medicaid recipients and providers can sue a state that does not pay the reimbursement rate required by the Medicaid Act. The Supreme Court heard oral arguments in that case Oct. 3. A transcript of those arguments are available here.
“Community pharmacists can work with states to reduce healthcare costs by eliminating needless medical expenses and increasing appropriate generic drug use," NACDS and NCPA stated. "As state and federal healthcare officials begin to realize the consequences of these actions, it is our hope that they will go back to the drawing board to develop a more practical budget approach.”

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