Medicaid & EPIC Fee Increase

Medicaid & EPIC Fee Increase
SUPPORT
S.
A. 1118/Destito

Increasing the dispensing fees in state-administered pharmacy programs has become urgent because the network of community pharmacies throughout New York is disintegrating as a result of last year's budget cuts. The state has always saved healthcare dollars because of the role pharmacists play in controlling other medical costs. Those savings are now in jeopardy because local pharmacies are in financial trouble. New Yorkers in rural areas and urban neighborhoods have always relied on access to their local pharmacist for their medicines, prescription refills, advice and support. When patients are stabilized on their medications, they are actually managing chronic medical conditions without needing more expensive health care. When pharmacy services are underfunded as they are now, any savings from pharmacist-interventions will disappear and healthcare costs will escalate as a result.

This legislation is urgently needed to re-balance the reimbursement formula by which pharmacies are paid in every state program including Medicaid, EPIC, Family Health Plus, Child Health Plus and the AIDS Drug Assistance Program. Reimbursement policy affects community pharmacies, long-term care pharmacies and pharmacy services provided to residents in mental health facilities and other residential care environments as well as children in foster care.

The most drastic pharmacy cut in history was enacted on July 1, 2008, as part of the state's 2008-2009 budget. It reduced payment levels for both brands and generics. In the pharmacy arena, reimbursement policy has two components: a product cost allowance and a dispensing fee. On the product side, over the past fourteen years the state has steadily reduced payments for both brands and generics. Although the legislature has actively resisted the cuts proposed by the Executive in virtually every state budget, pharmacy reimbursement has taken twelve hits. Now the state pays less for brands than any other Medicaid program and for generics the payment is lower than the level established by CMS.

Dispensing fees are an altogether different story. The current $4.50 fee paid for dispensing a generic prescription and the $3.50 fee paid for dispensing a brand prescription fall far below the actual cost which surveys suggest averages $12.10 per prescription in New York. The $7.25 fee proposed in this legislation is well below the state average, but it is consistent with what is paid in other states. The proposed modest increase to $8 per prescription offsets the additional costs associated with special unit-of-use packaging requirements in nursing homes and other residential care facilities.

Unfortunately, the co-payments of $1 or $3 in Medicaid and $6 in Family Health Plus are not mandatory and are rarely paid. The state automatically deducts the co-pay from pharmacy payments. The proposed dispensing fees in this bill are therefore more than justified. And long overdue. When the fees were adjusted in 1994, they were offset by a change on the product side. The last increase in pharmacy reimbursement occurred in 1976.