May 13, 2009 in City, Region

State drops bid to cut drugstore Medicaid payments

Associated Press
 

SEATTLE — Washington state has dropped an attempt to cut Medicaid prescription reimbursement rates to drugstores to the lowest levels nationwide, ending a legal struggle.

As a result of budget legislation the state will continue to pay 86 percent of the average wholesale price on name-brand drugs for Medicaid prescriptions through at least July 1, Jim Stevenson, a spokesman for the Department of Social and Health Services, said Wednesday.

Stevenson said agency officials had not decided whether to seek a smaller rate cut after that date.

The state agency moved to lower the rate to 80 percent on April 1. State Medicaid director Doug Porter said he knew of no other state with a reimbursement rate that low but maintained it was needed to save about $13.4 million a year.

Pharmacy operators and an AIDS-HIV patient filed suit in federal court in Tacoma and a judge blocked the change, ruling they likely could prove that their concerns had not been adequately considered and that the change would reduce the quality of care for Medicaid beneficiaries.

Walgreen Co. said that if the lower rate took effect, Medicaid prescriptions no longer would be filled at 44 of its 111 stores in the state. Bartell Drugs, a 55-store chain in the Puget Sound area, was prepared to stop accepting new Medicaid patients. Some small drugstore operators in remote areas said they might be forced to close.

The state was set to argue that 80 percent should be allowed but later withdrew that plan, and on Monday the lawsuit was dismissed as moot.

Medicaid, funded jointly by the federal government and the states, is commonly known as the payer of last resort for the indigent. The last reimbursement rate change in Washington was a cut to 86 percent from 89 percent in 2002.

Earlier this year, with Washington facing a $9.3 billion shortfall through June 30, 2011, Gov. Chris Gregoire and the state House approved budget plans to cut the reimbursement rate to 80 percent immediately. The Senate initially voted for 84 percent.

In the end, legislators eliminated provisions for a rate cut in the current two-year budget cycle, which ends June 30, and added provisions that require a DSHS analysis before rates can be lowered in the next budget. Lawmakers also capped any decrease at 2 percentage points, meaning the rate can go no lower than 84 percent. No rate cut is assumed in the budget.

“That was something we were not anticipating,” Stevenson said. “We have to look at other ways to cut expenses.”

He said the agency had not begun an analysis that would be needed for a rate cut, “but I think we’re at a stage where we’re going to have to do it soon if we want to get ready for July 1.”


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