Walgreen Co. next month plans to stop accepting new Medicaid patients in its Washington stores, citing continued cutbacks in pharmacy reimbursement by the state.

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Walgreens to stop accepting Medicaid patients in Washington

March 16th, 2010

DEERFIELD, Ill. – Walgreen Co. next month plans to stop accepting new Medicaid patients in its Washington stores, citing continued cutbacks in pharmacy reimbursement by the state.

The drug store chain, which operates 121 pharmacies in Washington, said late Monday that it will keep filling Medicaid prescriptions for current patients until April 16 but after that date won't take new patients under the state's program.

Walgreens announced in January that it would stop filling Medicaid prescriptions at 64 of its stores in Washington as of Feb. 15. At the deadline, the company postponed the move and said it would keep providing prescriptions through March 15 because of constructive talks with the state.

"Obviously, we're disappointed that the alternatives we've suggested have failed to achieve a compromise," Kermit Crawford, Walgreens executive vice president of pharmacy, said in a statement. "We intend to continue our commitment to serving our existing patients, but we simply cannot take on additional losses."

Under the current pharmacy payment structure, Washington's Medicaid program is reimbursing Walgreens below its break-even cost on about 95% of branded medications, according to the retailer.

"As we seek to find a solution, we remain hopeful that our continued work with the State Department of Social and Health Services will ultimately result in maintaining access to quality pharmacy care for those most in need," Crawford added.

Walgreens said the most recent pharmacy payment reduction results from a Massachusetts court ruling last fall that reduced the industry pricing standard, even though pharmacies' acquisition costs haven't changed. The chain noted that many private insurance providers have adjusted pharmacy reimbursement rates to mitigate the impact of the court decision but that Washington's Medicaid program has not done so, which has resulted in much lower payments to pharmacies and severely impacted their ability to do business in the state.

Along with other Washington pharmacies, Walgreens has worked to identify millions of dollars in potential savings through medication management techniques such as increased use of generic drugs, according to the company, which pointed out that a 1% higher rate of use of generics would yield over $9 million in savings.

About a week before Walgreens' initial announcement that it would exit Washington's Medicaid program, Puget Sound-area chain Bartell Drugs said it planned to discontinue Medicaid prescriptions at 15 of its 57 stores starting February 1. "We hope that the state will reconsider its reimbursement and meet its responsibility to provide access to all Medicaid recipients," chairman and chief executive officer George Bartell commented at the time.

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