Medicaid without retail pharmacy: A recipe for disaster

WHAT IT MEANS AND WHY IT'S IMPORTANT Simply put, if you take a significant number of retail pharmacies out of the Medicaid equation, it won’t be too long before overall healthcare expenditures begin skyrocketing.

(THE NEWS: Representing NACDS, Civello asks Obama to maintain emergency Medicaid funding. For the full story, click here)

And retail pharmacy pulling out of Medicaid is not an unlikely scenario. Retail pharmacy has long battled cuts to prescription drug reimbursement rates, even threatening to walk away from serving Medicaid patients when those cuts would force pharmacies to operate at a loss.

Already 29 states are actively considering Medicaid cuts this year, and another 15 have stated it’s too soon to tell whether or not Medicaid cuts will be necessary, according to an analysis from the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured released last week. Those cuts are coming, in part, because more citizens are qualifying for healthcare assistance under Medicaid than ever before — the latest Kaiser estimates places the Medicaid population at 46.9 million and growing. And even as more citizens qualify for Medicaid assistance, states are contending with a still-dwindling tax base.

Of those 29 states, 21 are considering cuts to provider rates. The remaining eight states are considering reductions or restrictions in program benefits.

Those cuts are being considered today even with the current flow of federal assistance provided through the American Recovery and Reinvestment Act of 2009, never mind next year. State Medicaid directors already are bracing for fiscal 2011, where the slashing of Medicaid budgets without that reinstated federal assistance is a foregone conclusion.

According to the Kaiser report, an estimated $87 billion will have been funneled to states out of ARRA over a nine-quarter period ending in December 2010. That pales in comparison to the projected $290 billion in potential increased annual costs out of diminished pharmacy access and a corresponding lack of medication adherence among patients. Extrapolate that projected $290 billion across nine quarters, the increase in overall healthcare expenditures exceeds $650 billion. Spend $87 billion to save more than $650 billion. In retail, that’s called a return on investment.