Assessing the Effects of Medi-Cal’s Ten Percent Across-the-Board Provider Reimbursement Reductions on Access, Services and the Pharmacy Provider Network is our site of the day

A 52 page report produced by Health Management Associates following the Legislature’s approval of Governor Schwarzenegger’s proposal to cut Medi-Cal payments to healthcare providers by ten percent to help close California’s budget deficit shows the effects of these on pharmacies.

"Assessing the Effects of Medi-Cal’s Ten Percent Across-the-Board Provider Reimbursement Reductions on Access, Services and the Pharmacy Provider Network" reports that the reduction in Medi-Cal reimbursements will result in pharmacies receiving reimbursements for many of the drugs they dispense that are less than the cost of acquiring and dispensing them. As the pharmacies lose money on Medi-Cal prescriptions, it indicates many pharmacists may be forced to stop accepting Medi-Cal prescriptions, which could make it difficult for Medi-Cal patients to obtain the medicines they need. These cuts may force many pharmacies to turn away new Medi-Cal patients, stop accepting Medi-Cal altogether or close their doors.

Key findings include:

• For many of the drugs dispensed to Medi-Cal beneficiaries, the amount Medi-Cal will reimburse after the cuts take effect is less than the cost to the pharmacy of acquiring and dispensing the drugs.

• Pharmacies would lose money on one-third of Medi-Cal prescriptions and all of the ten most commonly prescribed medicines reimbursed by Medi-Cal.

• The average pharmacy will lose approximately $13.76 on each single source drug dispensed. Single source drugs account for roughly 28 percent of Medi-Cal prescriptions.

• Rural pharmacies have fewer cash reserves to absorb decreased revenues resulting in reductions to Medicaid (Medi-Cal) reimbursement, which could make them more vulnerable to closure.

• Access for Medi-Cal beneficiaries could be compromised as pharmacies may be forced to reduce hours, no longer accept new Medi-Cal beneficiaries or leave the program altogether.

• Medi-Cal beneficiaries with mental health disorders or chronic diseases such as asthma and diabetes who do not receive their medications in timely manner are likely to see their condition deteriorate, which could mean emergency room or hospital visits and increased costs to the Medi-Cal program.

• If five percent of Medi-Cal beneficiaries receiving specialty mental health services have difficulty in gaining access to their medications and as a result do not take their medications, have a crisis and require hospitalization, Medi-Cal program costs could increase by nearly $33 million. With a ten percent reduction in access, the impact would be an estimated $89.2 million; and with a 15 percent impact, the estimated loss would be $133.8 million.

• Increased risk of hospitalization for mental health patients with gaps in medication:
o Risk doubles with gap of 1-10 days;
o Risk triples with gap of 11-30 days;
o Risk quadruples with gap of more than 30 days.

Patients for Access to Medicines, the group that released the report, began circulating petitions to the legislature last month expressing opposition to the cuts and has collected over 15, 000 signatures so far. They are a coalition founded by the California Pharmacists Association, the National Association of Chain Drug Stores, and the California Retailers Association, and indicate they also include patient advocacy organizations and senior groups.