California Medicaid Cuts Blocked...For Now-July 2008


A federal appeals court has temporarily suspended 10% reductions in Medi-Cal reimbursements for medications that had forced pharmacists to take losses or stop serving Medicaid beneficiaries.

Mr. Lamb is a freelance pharmacy writer living in Virginia Beach and president of Thorough Cursor, Inc.

When new California Medicaid rules took effect July 1, pharmacists across the state faced the decision of dispensing prescriptions to Medi-Cal beneficiaries at a loss or referring patients to other providers. A court ruling has temporarily relieved pharmacists of that choice, but unless further legal action is taken, pharmacists may soon again have to choose between caring for their neediest patients or staying in business.

The difficulty for


pharmacists stems from the state’s budget crisis. Recognizing the possibility of a deficit running up to $20 billion for the 2009 fiscal year, Republican Gov Arnold

Schwarzenegger ordered 10% cuts to all state programs.

At the beginning of this month, The (Stockton) Record learned that at least one longtime independent pharmacist had begun directing patients with Medi-Cal prescriptions to the local hospital. Another independent pharmacist quoted by the paper in a July 2 article said he would continue serving Medi-Cal beneficiaries but would be losing money by doing so. “At $250 [for a prescription], it would be a $17 loss,” Fremont Center Pharmacy owner Bob Migliori said. A Longs Drug executive assured the paper his chain would fill all Medi-Cal prescriptions but noted that a significant number of drugs would be reimbursed at a rate that was below their cost of acquisition.

Relief came when the US Court of Appeals for the Ninth Circuit remanded Independent Living Center of Southern California, et al. v Shrewry to the

Federal District Court


Los Angeles

and ordered that the Medi-Cal cuts to pharmacist reimbursement be suspended until at least August 14. At issue in the case is whether


’s rules meet federal requirements that public health programs be funded at levels that ensure adequate treatment and access for beneficiaries.

The California Pharmacists Association (CPhA) is supporting the Independent Living plaintiffs. In a statement, CPhA Chief Executive Officer Lynn Rolston said, “

The court’s action will prevent additional patient harm.” She noted, however, that the ruling applies only to pharmacists and that a class action suit involving his organization and 6 other


health care provider associations is also currently before a federal appeals court.

CPhA warns on its Web site that if the Medi-Cal cuts stand, “Any pharmacy currently servicing Medi-Cal could experience huge reductions in staff services and workload or could actually be forced to go out of business. Pharmacies could be overwhelmed with needy patients going from store to store trying to get their medications that could be broadly unavailable.”

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