A new report by the Government Accountability Office (GAO) found that health care reform has made Medicaid pharmacy reimbursement levels more palatable for retail pharmacies.

Government Accountability Office, GAO, Medicaid, pharmacy reimbursement, health care reform, retail pharmacies, National Community Pharmacists Association, NCPA, generic drugs, Kathleen Jaeger, Henry Waxman, House Committee on Energy and Commerce, Patient Protection and Affordable Care Act, PPACA, Medicaid pharmacy payments, prescription drug, acquisition costs, Medicaid pharmacy reimbursement, dispensing fees, pharmacists, community pharmacists, Russell Redman

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GAO: Reform law lifts Medicaid Rx reimbursement

December 20th, 2010

WASHINGTON – A new report by the Government Accountability Office (GAO) found that health care reform has made Medicaid pharmacy reimbursement levels more palatable for retail pharmacies.

The National Community Pharmacists Association applauded the findings of the GAO study, which was released late last week and had been requested by Rep. Henry Waxman (D., Calif.). However, NCPA noted that the GAO analysis didn't address some other reimbursement concerns of pharmacy operators.

In a statement, Waxman said the GAO study affirmed that changes made in the Patient Protection and Affordable Care Act (PPACA) solved lingering concerns about inadequate pharmacy reimbursement for generic drugs under Medicaid.

"This is a great example of the important improvements made possible through the health care reform law," Waxman stated. "The law averted massive payment cuts to pharmacists for generic drugs under Medicaid, and did so in a responsible way for taxpayers. This is another reason why the Republican push to repeal the health care reform law is a terrible idea. Repeal would hurt pharmacists and other health care providers, leave millions of Americans uninsured, and increase the deficit."

The House Committee on Energy and Commerce, which Waxman chairs, reported that the GAO analysis on Medicaid pharmacy payments stated that the new formula would adequately reimburse pharmacists by paying them at rates covering their generic prescription drug acquisition costs. The committee also said the changes brought by health care reform yield savings for Medicaid by cutting overpayments for these drugs while ensuring that pharmacists are sufficiently reimbursed.

According to GAO, the health care reform changes will reduce Medicaid generic drug expenditures "by a significant amount ... while still providing reimbursement that exceed[s] pharmacy acquisition costs," the House committee noted.

Kathleen Jaeger, executive vice president and chief executive officer of NCPA, said in a statement that the study shows that reform has set Medicaid pharmacy reimbursement rates at more reasonable levels.

"GAO's analysis confirms that the bipartisan provision included in the health reform law regarding Medicaid generic drug reimbursement strikes the right balance," Jaeger commented. "The policy helps state and federal officials grappling with rising Medicaid costs, while preserving patient access and avoiding the draconian cuts that were previously enacted. We appreciate the support of chairman Waxman for helping to fix this issue in the health care reform law."

Still, Jaeger pointed out that retail pharmacies — particularly independent operators — face ongoing Medicaid reimbursement challenges at the state level.

"It's important to remember that many states either already have, or are in the process of, setting Medicaid generic reimbursement below the 'federal upper limits.' The report also doesn't determine whether dispensing fees paid to pharmacies are adequate to cover their costs of dispensing, which they are not in most states," Jaeger explained. "Therefore, any payments that are made in excess of acquisition costs may be eliminated due to tighter state reimbursement, as well as inadequate dispensing fees. Simply reimbursing for acquisition costs alone wouldn't allow these small businesses to make ends meet, much less contribute to their local economies and communities."

Jaeger added that community pharmacists "are ready and willing" to work with policymakers to find more savings, improve health care outcomes and maintain patient access and choice. "For example, 'generics first' initiatives utilizing community pharmacists can maximize the use of lower-cost medication and achieve significant savings," she said.