CMS Approval of Provider Cuts Will Result in Dire Consequences for Patients

The California Pharmacists Association (CPhA) has sent a letter to Dr. Donald Berwick, administrator for the Centers for Medicare & Medicaid Services (CMS) outlining why proposed cuts by the California Department of Health Services (DHCS) Medicaid program (entitled Medi-Cal) violate federal law and will result in pharmacists being forced out of the program.

In 2009, and again in 2011, DHCS submitted requests to CMS to cut reimbursements for pharmacists, physicians, hospitals and dentists. For pharmacists, these cuts would results in a 15 percent reduction in Medi-Cal prescription payments, which are already at breakeven for most pharmacies. Both requests are currently pending with CMS.

"A recent CPhA survey makes it clear that pharmacies are at their breaking point and will have no choice but to leave the Medi-Cal program," said Jon Roth, Chief Executive Officer of CPhA. "When presented with the facts that Medi-Cal would no longer cover the cost of the drug and pharmacist's services, seven-in-ten (72%) would decline to fill Medi-Cal prescriptions, which is contrary to their longstanding record of service to these patients," continued Roth.

The survey, which asked pharmacies what they will do should the cuts be approved, paints a dire picture. The results support data presented to DHCS in 2009 indicating that even the 5 percent reduction being considered at that time would result in 99 percent of the most utilized drugs in the Medi-Cal program being reimbursed below the pharmacist's actual cost. When confronted with the possibility of an additional 10 percent cut, pharmacists clearly indicated they would be forced to flee the program. In this scenario, 90 percent of pharmacies reported that they would decline new Medi-Cal prescriptions and 43 percent would likely close their pharmacy.

CPhA believes the proposed cuts will not only impact patients, but are also in violation of federal regulations requiring patient access to care, known as "Section 30A" (42 United States Code Section 1396a(a)(30)(A).

"Provider cuts to pharmacy services may satisfy this year's State budget, but the result will be an overall increase in costs as patients seek care from hospital emergency departments. Over the long term, these cuts will lead to higher chronic disease rates and utilization of more expensive health care services, resulting in much greater State financial resources," said Roth.