Olympia, WA – The National Association of Chain Drug Stores (NACDS), the Washington State Pharmacy Association (WSPA) and the National Community Pharmacists Association (NCPA) filed a legal brief last week in a case involving major changes to how the State of Washington reimburses local community pharmacies that serve Medicaid patients. NACDS, WSPA and NCPA argue that the state is violating federal and state laws potentially hindering Medicaid patient access to care. These laws protect patient access to medications by requiring the state to reimburse community pharmacies for the actual cost of dispensing medications.

On April 1, 2017, the state changed prescription reimbursements but did not adjust the professional dispensing fee to comply with the law, threatening Medicaid patient access to their medications. In addition, the groups argue that pharmacies that have continued to care for Medicaid patients despite this below-cost reimbursement must have those professional dispensing fees corrected retroactive to April 1, 2017.

In March of this year, NACDS, WSPA and NCPA sued the State of Washington to stop a “substantively and procedurally flawed” rule that would pay community pharmacies below the actual cost to dispense Medicaid prescriptions. The rule could jeopardize reliable patient access to medications responsible for ensuring patient health and lead to more costly forms of care that result from untreated conditions.

At issue is a rule (WSR 17-07-001) by the Washington State Health Care Authority that changes the basis by which the state reimburses community pharmacies for medications dispensed to Medicaid patients. Under this state rule, a new cost-based methodology for reimbursement was to be implemented consistent with a federal rule by the U.S. Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS).

However, contrary to both state and federal law, the Washington State Health Care Authority did not properly take community pharmacies’ costs into consideration when setting pharmacy’s “professional dispensing fee” for dispensing the drug. This resulted in an inappropriate professional dispensing fee that is significantly below the cost to dispense. Since this new cost-based payment methodology does not include any profit margin, underpayment for the professional dispensing fee means the pharmacy is forced either to pay for part of every prescription dispensed to their Medicaid patients or to stop providing them care. This is an untenable position for any healthcare provider.

The legal brief filed October 17, 2017, with the Superior Court of the State of Washington in Thurston County, states that “The CMS rule specifically requires states to implement new professional dispensing fees that cover pharmacies’ costs of dispensing effective April 1, 2017. Therefore, the Court should order that the State must, retroactive to April 1, 2017, establish and pay new professional dispensing fees that properly reflect pharmacies’ costs of dispensing medications and providing related services to Medicaid patients.”

CMS currently is reviewing the adequacy of Washington State’s professional dispensing fee. However, new documents obtained from the state show that CMS has also been questioning the adequacy of the state’s dispensing fees since they were first proposed last year.