NCPA: Illinois Proposed Cuts to Medicaid Pharmacy Reimbursement Endanger Patient Access to Vital Services


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Alexandria, Va. - August 22, 2011

The National Community Pharmacists Association (NCPA) opposes the Illinois Department of Healthcare and Family Services Proposal to sharply decrease Medicaid reimbursements and "slow-walk" reimbursement payments. In a letter to the Joint Committee on Administrative Rules, NCPA explains how the proposed cuts may force Illinois' more than 700 independent community pharmacies to contemplate opting out of the Medicaid program, and the consequence that could have for Medicaid patients who may have to seek more costly health care options (i.e., emergency rooms, doctor office visits, etc.).

"We understand Illinois is facing a serious budget crunch, but these proposed changes to Medicaid pharmacy reimbursements are penny-wise and pound-foolish," said B. Douglas Hoey, RPh, MBA, NCPA executive vice president and CEO. "The front-end savings will be cancelled out if independent community pharmacies exit the program, depriving Medicaid patients of the invaluable prescription drug counseling that improves health outcomes and lessens expenditures. Independent community pharmacies cannot afford to see their slim profit margins reduced further or their reimbursement delayed longer. There are better solutions for addressing the costs of Medicaid for Illinois, and NCPA and its members are happy to work with Illinois' elected leaders to implement those ideas."

The proposal would change the state's Medicaid pharmacy reimbursement formula from average wholesale price (AWP) minus 12 percent to wholesale acquisition cost (WAC) plus 1 percent. It also slows the reimbursement cycle from 30 to 160 days. Independent community pharmacies dispense 14 percent of annual Medicaid prescriptions, which is double the rate of chain pharmacies. In addition, 92 percent of independent community pharmacies' revenue comes from prescriptions, whereas for chain pharmacies the prescription revenue is 67 percent. As a result, while the proposed changes will hurt all pharmacies, independent community pharmacies (and the jobs and local revenue they provide) would be especially impacted.

Hoey added, "There are a plethora of statistics that can explain why the proposal is so misguided, but the main reason why this should be rejected is because Medicaid patients may lose access to care as a result of this proposal, yet they are the patients who face the greatest health challenges and need the most access to care. I think we can agree that is not a sound health care strategy."

In the letter NCPA provides these additional points:

  • Illinois' independent community pharmacies have over 7,000 employees and approximately $2.9 billion in total annual sales. The proposed cuts could jeopardize those figures, whether independent community pharmacies absorb the cuts or they opt to exit the program.
  • Independent community pharmacies provide expert medication counseling and other cost saving services that mitigate $290 billion in annual costs nationally for treating patients that do not adhere to their medication regimen. This form of pharmacist patient interaction should be supported by the Medicaid system.
  • Increased use of generic medications would substantially reduce overall costs to the Medicaid system that are causing the budgetary pressures. One study developed by IMS Health states that with each 1 percent increase in generic drug dispensing the overall health care system would see a savings of approximately $4 billion. Independent community pharmacists play a key role in the dispensing of generic medications—and do so at a higher rate than other pharmacy options.

The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies, pharmacy franchises, and chains. Together they represent a $93 billion health-care marketplace, have more than 315,000 employees including 62,400 pharmacists, and dispense over 41% of all retail prescriptions. To learn more go to www.ncpanet.org or read NCPA's blog, The Dose, at http://ncpanet.wordpress.com.

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