The Centers for Medicard & Medicaid Services (CMS) hasn't adjusted federal upper limits (FULs) for Medicaid generic drug reimbursements to pharmacies despite being warned that patient access to pharmacy services could be jeopardized, according to the National Community Pharmacists Association.


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CMS caps on Medicaid reimbursements still 'flawed'

November 8th, 2011

ALEXANDRIA, Va. – The Centers for Medicard & Medicaid Services (CMS) hasn't adjusted federal upper limits (FULs) for Medicaid generic drug reimbursements to pharmacies despite being warned that patient access to pharmacy services could be jeopardized, according to the National Community Pharmacists Association.

NCPA said Tuesday that it sent a letter last month to CMS about the average manufacturer price (AMP) data that the agency is using to calculate new FULs on Medicaid reimbursements to pharmacies for many generics. However, just days later, another set of draft FULs was published but without any adjustments, according to the association.

Calling the pharmacy reimbursement cuts "financially devastating," NCPA said it has sent a second letter to CMS that conveys the urgency to address the issue "before irreparable harm befalls the prescription drug benefit of Medicaid and possibly other health plans that follow suit."

NCPA noted that CMS' methodology for determining the payment caps is "flawed" and has requested a meeting with CMS officials on the matter.

"These draft FULs are a disaster in the making for Medicaid recipients and the independent community pharmacists who serve them," NCPA chief executive officer B. Douglas Hoey said in a statement. He added that community pharmacies face a situation where they may be "forced to consider limiting their participation in Medicaid or leaving the program altogether."

As a result, Hoey made three recommendations to CMS: Scrap the draft FULs, devise a final AMP definition "to serve as a guide for future FULs," and restart the implementation process "with an understanding that low federal reimbursements, coupled with state Medicaid cuts, endanger Medicaid patients' access to generic prescription drugs."

"Those objectives can be achieved while still following the intent of the Affordable Care Act, which mandates the revised reimbursement formula," Hoey pointed out.

"In addition, we reiterate the need for CMS to exercise its authority to increase FULs for independent pharmacies beyond 175% of the weighted AMP," he stated. "This would not only help ensure access for patients in underserved rural and inner-city areas who rely on their independent community pharmacies, but also mitigate the fact that independents, despite aggressive efforts to negotiate lower acquisition costs, buy prescription drugs at a higher price than is available to national chains, as a recent Office of Inspector General report highlights."

NCPA said its letter to CMS comes in response to complaints by member pharmacists who saw hundreds of reimbursement caps on the second list of FULs that are well below their pharmacy's acquisition costs, as with the first list of FULs. The association reported that an NCPA analysis found that a medium-volume pharmacy faces a reimbursement reduction of 39% with the draft FULs, while low- and high-volume pharmacies would see a 38% reduction.

"If CMS doesn't intervene, then it should prepare for a highly preventable amount of Medicaid patients suddenly having to turn to more expensive emergency rooms and doctors' offices to take care of health care complications that arise from a lack of access to prescription drugs and counseling at their local pharmacies," according to Hoey. "NCPA stands ready to help and requests an urgent meeting with CMS to find workable solutions going forward."

The National Association of Chain Drug Stores also has expressed its concern to CMS about the draft FULs, particularly about how the caps for Medicaid pharmacy reimbursement are calculated using the AMP measure. NACDS noted that the draft FULs may fall short of pharmacy chains' acquisition costs for many drugs.

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