Pharmacies Raise Concerns About New Medicaid Reimbursement Rule

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The Miami Herald on Tuesday examined concerns among community pharmacists and others about a rule finalized last month by CMS that will reduce Medicaid reimbursements to pharmacies for generic medications (Hotakainen, Miami Herald, 8/7).

Therule, mandated by the Deficit Reduction Act of 2005 and scheduled totake effect on Dec. 30, seeks to ensure that Medicaid can obtainprescription drug discounts similar to those obtained by privateentities. The rule will redefine the average manufacturer price forbrand-name and generic medications. States use AMPs to calculateMedicaid reimbursement rates for medications. Under the rule, thefederal government will post AMPs on a Web site that consumers couldaccess.

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In addition, the rule will limit the federal share ofthe cost of brand-name medications when at least three generic versionsare available. The rule will exclude pharmacy benefit managers andpharmacies in nursing homes and assisted living facilities. Accordingto CMS, the rule will save the federal government and states $8.4billion over the next five years (Kaiser Daily Health Policy Report, 7/10).

Communitypharmacies, which maintain that they will account for 90% of reductionsin Medicaid reimbursements, have raised concerns that the rule willrequire more of them to close their businesses. In addition, criticsmaintain that, under the rule, Medicaid will reimburse pharmacists atan average rate of 36% less than their costs. Critics also maintainthat, as a result of the rule, many pharmacies will decide to endparticipation in Medicaid, with many beneficiaries "denied life-savingdrugs or forced to drive long distances to get them," the Herald reports.

However,CMS spokesperson Mary Kahn said, "We don't agree ... that the new rulewill put pharmacies out of business." She added that states "weregreatly overpaying for many drugs, especially generic drugs" (Miami Herald, 8/7).
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Reprinted with permission fromkaisernetwork.org.You can view the entire KaiserDaily Health Policy Report, search the archives, andsign up for email delivery at kaisernetwork.org/email. The Kaiser Daily Health Policy Report is published forkaisernetwork.org,a free service of The Henry J. Kaiser Family Foundation.

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