CMS Urged to Reject Reimbursement Cuts for Pharmacies

The National Association of Chain Drug Stores (NACDS) and the California Retailers Association (CRA) submitted a letter to the Centers for Medicare & Medicaid Services (CMS) urging the agency to reject a proposed state plan amendment (SPA) for Medi-Cal, the state’s Medicaid program. The SPA would impose a 10% reimbursement reduction on pharmacies and other Medi-Cal providers, effective June 1, 2011.

“We are deeply troubled by California’s decision to submit this state plan amendment. In 2008, California submitted a similar SPA, proposing to cut the reimbursement of all Medi-Cal providers by 10%. Recognizing that this reduction would have threatened Medi-Cal beneficiaries’ access to healthcare services, CMS rejected the SPA. Rather than working with the provider community to develop alternate cost savings proposals, the state has again moved forward with this shortsighted proposal,” stated the letter, which was signed by Carol Kelly, senior vice president of Government Affairs and Public Policy at NACDS, and Bill Dombrowski, president and CEO of CRA.
The two organizations urged CMS to consider cost-savings alternatives that would not threaten California patients’ access to pharmacy.

“One of the most effective ways of controlling prescription drug costs is by increasing the utilization of generic medications,” the letter stated. “By implementing policies that increase generic utilization, such as prior authorization and step therapy, and by working with pharmacies and other healthcare providers to improve medication adherence and coordinate the care of Medicaid beneficiaries with chronic conditions, the Medi-Cal program could control Medicaid spending without threatening Medicaid beneficiaries’ access to healthcare services.

According to the letter, Medi-Cal is ranked 47th nationwide in generic dispensing with a rate of 65%. For every 1% increase in generic utilization in California, state and federal governments would save more than $45 million each year. If California was able to reach the nationwide average generic dispensing rate of 72%, the Medicaid program would save $315 million each year.

The groups also emphasize that reducing access to prescription medications can result in increased healthcare costs across the board, when untreated conditions eventually lead to more costly forms of care.

To access the letter, click here.