NCPA fighting to maintain Medicaid reimbursement as states approach fiscal year-end

ALEXANDRIA, Va. — The National Community Pharmacists Association last week delivered a letter to the Illinois Joint Committee on Administrative Rules opposing an Illinois Department of Healthcare and Family Services proposal to sharply decrease Medicaid reimbursements and “slow-walk” reimbursement payments.

The action could force more than 700 independent community pharmacies to shutter their doors, the NCPA stated.

“We understand Illinois is facing a serious budget crunch, but these proposed changes to Medicaid pharmacy reimbursements are penny-wise and pound-foolish,” stated Douglas Hoey, NCPA EVP and CEO. “The front-end savings will be cancelled out if independent community pharmacies exit the program, depriving Medicaid patients of the invaluable prescription drug counseling that improves health outcomes and lessens expenditures," he added. "Independent community pharmacies cannot afford to see their slim profit margins reduced further or their reimbursement delayed longer.”

The debate around Medicaid pharmacy reimbursement rates is sure to heat up across all states in the coming months, according to an analysis from The Kaiser Commission on Medicaid and the Uninsured published earlier this year. According to the report, among the factors that will drive politicians to adjust their Medicaid budget in the middle of 2011 are:

  • State revenue growth remains weak, and revenue levels are still far below pre-recession levels in most states;

  • Medicaid enrollment is rising at a slower but still high rate in 2011 compared to 2010, and remains above original growth projections in some states;

  • A number of states must make mid-year budget cuts to close shortfalls for fiscal year 2011; and

  • States, many with new leadership, will prepare budgets for fiscal year 2012 that must account for ongoing state budget shortfalls and the expiration the American Recovery and Reinvestment Act enhanced Medicaid matching fund.

The Illinois proposal being challenged by the NCPA would change the state’s Medicaid pharmacy reimbursement formula from average wholesale price minus 12% to wholesale acquisition cost plus 1%. It also slows the reimbursement cycle from 30 to 160 days. Independent community pharmacies dispense 14% of annual Medicaid prescriptions. In addition, 92% of independent community pharmacies’ revenue comes from prescriptions.

According to the NCPA, Illinois’ independent community pharmacies have more than 7,000 employees and represent approximately $2.9 billion in total annual sales.

For the complete NCPA letter, click here.

For the Kaiser survey, click here.

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