CMS rejects Washington State’s low Medicaid reimbursement

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OLYMPIA, Wash. – The Washington State Pharmacy Association (WSPA), the National Community Pharmacists Association (NCPA), and the National Association of Chain Drug Stores (NACDS) applauded a critical decision by the Centers for Medicare and Medicaid Services (CMS) that will help maintain reliable patient access to care and pharmacy viability in Washington State.

On Jan. 19, 2021, the last day of the previous administration, the acting CMS administrator approved a scheme by Washington State to reimburse pharmacies for Medicaid patients far below the actual cost of dispensing prescriptions, contrary to the law. The decision was a sharp departure from CMS’ previous position, which was that Washington’s reimbursement was unlawful primarily because it failed to consider the cost of dispensing.

WSPA, NCPA and NACDS sued CMS for the inexplicable and unsupported about-face, accusing CMS of violating its own rules. As a result, the Department of Justice — which represented CMS in the case — filed a motion to remand the matter back to CMS, agreeing with the pharmacy groups that the final decision approving the Washington State Plan Amendment was unsupported by the administrative record before CMS and would not survive the legal challenge.

CMS reconsidered the decision of Jan. 19, 2021, and determined that the Washington State Plan Amendment — which unfairly reimbursed pharmacies of all sizes well-below cost — is disapproved.

Specifically, CMS determined that the State Plan Amendment is inconsistent with the requirement that “States have a State plan that provides such methods and procedures to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available to the general population of the geographic area.”

CMS also found that the State Plan Amendment is inconsistent with the requirements of Federal regulations “which provide that payments for drugs are to be based on combined examination of the ingredient cost of the drug and a Professional Dispensing Fee.”

“Pharmacies provide essential care and access to medications. Adequate reimbursement for safe patient care is essential,” said Jenny Arnold, WSPA CEO. “Our pharmacies should not have to choose between taking care of their patients and keeping their doors open, so we are relieved by this outcome.”

“This is a win for patients and pharmacies not only in Washington, but around the country,” said NCPA CEO B. Douglas Hoey. “Unfair pharmacy reimbursement rates must not stand. We are celebrating the outcome of this fight and will continue working to protect essential health care services provided by pharmacy teams.”

“Pharmacies have a vital role to play in healthcare delivery, and CMS’ decision will go a long way in helping to ensure that the most vulnerable Americans continue to have access to the pharmacy-based services they rely on and expect,” said NACDS President and CEO Steven C. Anderson. “We commend CMS for doing the hard but necessary work to reverse its approval of Washington State’s flawed pharmacy reimbursement plan — which has for many years jeopardized the ability of pharmacies to meet patients’ health and wellness needs. This is not only a victory for Washington pharmacies and their patients, but also for pharmacies and the vulnerable patients they serve across the nation.”


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