On July 3, 2013 a federal appeals court ruled that California may implement dramatic Medi-Cal reimbursement cuts of 10 percent passed by the legislature in 2011. Medi-Cal is California’s Medicaid program.
The California Pharmacist Association battled the cuts unsuccessfully and appeals to review the decision or stay the cuts were denied. While specific implementation dates are not yet published, local pharmacist Barry Shapiro, owner of Idyllwild Pharmacy since 2007, is concerned about the impact to his business.
“Things were looking good for a while and then the ruling came down,” said Shapiro. “Now the state wants to go back and retroactively recoup this money, money that I earned. It’s stealing. Nobody thought it would get to this point.”
Shapiro hopes to renegotiate insurance contracts with the help of an attorney. “I am hoping to hire one of the lawyers involved in fighting these cutbacks. I’m seeing if he will represent me in trying to negotiate a new contract on my own.
“Being a rural pharmacy I have an advantage in negotiating to get a better reimbursement rate. It’s very difficult, it’s very time consuming and very frustrating.” Shapiro fears that if his efforts are unsuccessful he may need to opt out of the program.
“If I can’t renegotiate I will have to opt out of the program. Medi-Cal helps lower-income people and with more people enrolling [in Medi-Cal] in 2014 what are the people here going to do if I opt out? It’s always the lower-income people that are impacted and the government just doesn’t think about it. I don’t think they care.”
Shapiro’s website www.IdyllwildPharmacy.com includes a petition anyone can sign to stop the 10 percent Medi-Cal reimbursement cuts. The petition states in part “If Gov. Jerry Brown and the California State Legislature does not rescind the 10 percent cuts in reimbursements to pharmacy and other health care professionals, i.e. medical doctors and dentists, Medi-Cal patients will be denied access to their healthcare because many healthcare professionals will no longer accept Medi-Cal. If these cuts go through on Sept. 1, 2013, Idyllwild Pharmacy will be forced to stop serving our patients on Medi-Cal.”
Last month Shapiro also received a new Humana insurance contract cutting his reimbursement rate from 7.5 to 4 percent. “Luckily for me, I don’t do very many prescriptions with Humana. I have been proactive; I have talked to my patients who are on Humana. I’ve suggested various things for them to do. I even gave them the email address for the Humana people that they should direct their letters to; I gave them a template for a letter to write and they can embellish whatever they want to.
“Everyone who has done that for me has not heard back from Humana; I have not heard back from Humana. They could care less. I’m just one little person, one little business. Maybe if I had 500 drug stores I might have some leverage but I don’t, it’s only me. It’s just a little Idyllwild pharmacy. It’s really tough when you’re fighting these huge, huge corporations.”
Generic medications account for 85 to 90 percent of Shapiro’s business. Generic medications save insurance companies huge amounts of money over brand-named products. Large insurance companies, like Humana, have a maximum allowable cost (MAC), the maximum they will pay for specific medications. The National Community Pharmacists Association website explains the MAC system: “There is no standardization in the industry as to the criteria for the inclusion of drugs on MAC lists or for the methodology as to how the maximum price is determined, changed or updated. Because of this lack of clarity, many PBMs [a company that administers or handles the prescription drug benefit component of an employer’s health plan] use their MAC lists to generate significant revenue for the PBM. Typically, they utilize an aggressively low MAC price list to reimburse their contracted pharmacies and a different, higher list of prices when they sell to their clients or plan sponsors.
“Essentially, the PBMs reimburse low and charge high with their MAC price lists, pocketing the significant spread between the two prices … Most PBMs try to incentivize the use of their own in-house mail order pharmacies and do not apply MAC pricing to mail order drugs.”
With many of these insurance companies having their own mail-order service where patients are“encouraged to purchase their medications, they know what the medication costs because they purchase it in volume. “They are constantly pressuring patients to use their mail order so they are double dipping, in my opinion. They are getting it from both ends,” Shapiro said.,“They are doing 10s of thousands of prescriptions a day. They get a much better price break than I do. Once again, I am just one small pharmacy.”
To date, Humana is the only company that has notified Shapiro it is cutting reimbursements, but Shapiro believes it is only a matter of time. “When one does it, they all do it,” he added.
Category: Idyllwild News