Plan to tighten Medicaid dropped

LEWISTON – The Idaho Department of Health and Welfare has dropped a plan that would have limited certain Medicaid reimbursements to pharmacies and forced them to drop Medicaid customers.

Substantial errors in a survey of statewide pharmaceutical costs by an independent contractor sparked Friday’s decision to return to the previous payment system, spokesman Ross Mason said.

The Heinz Family Philanthropies funded a study which reviewed Idaho’s Medicaid system between January 2000 and November 2002. The study suggested the state use a step therapy or prior-approval program to ensure Medicaid recipients try the cheapest clinically effective treatments first. Drugs not on the list must be approved by Medicaid officials before they are dispensed.

The study also suggested Idaho could have saved nearly $2.2 million in 2002 by decreasing the dispensing fee it pays to pharmacists by $1. But Mason disagreed with the move in December when he said it would have a tremendous impact on rural pharmacies.

The study also suggested that Idaho add price caps to more generic drugs.

According to Rep. Tom Trail, R-Moscow, the study determined price caps were not reducing overall costs sufficiently, and recommended the state expand its price cap program from 750 generic drugs to between 4,000 and 5,000 drugs.

“I recommended that Health and Welfare proceed very carefully in this matter since it appears that the original action of cutting back (reimbursements) to pharmacies would be devastating to those on Medicaid,” Trail said.

“These folks are generally the poorest of the poor and have no resources to pay for the full prices of drugs. Pharmacies should also be allowed a reasonable level of profit.”

Idaho spends about $130 million per year on prescription drugs – the fastest escalating cost in the state’s Medicaid program. Prescription costs have skyrocketed, representing the second-highest expense covered by Medicaid, Mason said.

Recent Medicaid reforms save the state nearly $750,000 a month or $9 million a year. State officials expected the study to help lawmakers control costs even more.

“What we have found in Medicaid is that we’re paying far too high a rate for those drugs,” Mason said. “Pharmaceuticals are rising at such a fast rate all across the country. We had to slow that. We simply cannot keep up with it.”

Health and Welfare asked for a follow-up survey of state pharmacies to determine what they are paying for the drugs – information that would be used in setting the price caps.

But only 25 percent of the pharmacies responded to the survey, and almost nothing returned from the rural pharmacies where drug costs are generally higher, Trail said.

Meyers and Stouffer, the firm conducting the survey, sent a memo to pharmacies that gave the impression Medicaid prescription reimbursements would be cut.

Trail said that meant pharmacies would either have to refuse to handle Medicaid patients for drug reimbursements or go into debt.

After receiving the notice, pharmacies around the state called Health and Welfare and some legislators to complain, and the agency realized survey results might not be accurate and skewed since nearly none of the rural pharmacies responded.

Trail said Health and Welfare will probably ask Meyers and Stouffer to conduct another survey.

Reimbursement rates on pharmaceuticals will remain the same, for the time being.