Pharmacy to CMS: Medicaid rule is recipe for disaster

January 22, 2007

Following months of anticipation and concern, in late December the Centers for Medicare & Medicaid Services issued a proposed rule governing Medicaid reimbursement that would cut more than $8 billion in Medicaid generic drug reimbursements over a five-year period. The ruling, which implements provisions of the Deficit Reduction Act of 2005 (DRA), drew sharp reactions from pharmacy industry organizations, which worried that it would have a profound and negative impact on patients and community pharmacy.

Following months of anticipation and concern, in late December the Centers for Medicare & Medicaid Services issued a proposed rule governing Medicaid reimbursement that would cut more than $8 billion in Medicaid generic drug reimbursements over a five-year period. The ruling, which implements provisions of the Deficit Reduction Act of 2005 (DRA), drew sharp reactions from pharmacy industry organizations, which worried that it would have a profound and negative impact on patients and community pharmacy.

"This rule shows a fundamental lack of understanding of the marketplace," lamented John Coster, VP of policy and programs at the National Association of Chain Drug Stores. "It is going to require a substantial amount of education of Congress and the Administration."

However, as Kristina Lunner, acting VP of policy and communications at the American Pharmacists Association, pointed out, the proposed rule gives the states no guidance about how they should act to compensate pharmacists. "We are concerned that there is no direction to the states," she insisted. "In most cases, the states' idea of a reasonable dispensing fee does not reflect the actual cost associated with dispensing the medication."

Comments welcome

CMS officials stress that the rule is a preliminary, proposed rule, and not yet final. "We expect a broad range of comments, and we want a lot of comments," said Kocot. "There are so many different variables that are yet to be decided." Comments can be submitted to CMS at http://www.cms.hhs.gov/eRulemaking.

"A lot of groups will have an interest in commenting on the proposal," said John Rector, senior VP and general counsel at the National Community Pharmacists Association. He noted that in addition to pharmacy organizations, consumer groups, state governors, and the National Conference of State Legislatures may have concerns with the rule.