California pharmacies expect disaster after Loss in lawsuit loss to stop 10% Medi-Cal provider cuts

Jul 4 2008

Today, a state court denied eight retail pharmacies' motion to stop the ten percent Medi-Cal provider cuts. The pharmacies sought a temporary restraining order (TRO) from Sacramento Superior Court against the California Department of Health Care Services and its director Sandra Shewry to block the cuts from being implemented.

The court sided with the Department of Health Care Services (DHCS) finding that the pharmacies had not demonstrated that DHCS had to obtain federal approval prior to implementing the cuts. The court also found that the risk of harm presented by the pharmacies was speculative. Specifically, the court found that:

1.) Only a select number of branded drugs would be reimbursed below cost;

2.) That it was speculative that the rate cuts would result in pharmacies operating at a loss; and

3.) That the risk of loss of services to Medi-Cal beneficiaries overall was speculative. That is, the court determined it was speculative that the pharmacies would close, lay off workers, reduce hours and refuse to fill prescriptions.

"We are sorely disappointed with the outcome of this lawsuit," said Lynn Rolston, chief executive officer of the California Pharmacists Association. "However, the fight is far from over. There are two other lawsuits pending in federal court and we are confident that we have a strong case to stop the ten percent provider cuts. Unfortunately, for now, the cuts will be implemented as scheduled, which could result in tragic consequences for pharmacies and the patients they serve."

A recent report showed that if the ten percent Medi-Cal provider cuts are implemented, pharmacies will be faced with tough decisions including turning away new Medi-Cal beneficiaries, dropping Medi-Cal altogether or going out of business. Smaller and rural pharmacies will be hardest hit, forcing other pharmacies to pick up a larger portion of the Medi-Cal population, which they may not be prepared to do. As part of the domino effect, these other pharmacies will feel the strain and might cope with reduced revenue in other ways, such as cutting staff and hours, which would mean longer lines and slower service for everyone.

The eight pharmacies, including Farmacia Remedios, Inc., Ross Valley Pharmacy, South Sacramento Pharmacy, Horton and Converse Pharmacies, Zweber Apothecary, Komoto Pharmacy and Medical Pharmacy, Pucci's Leader Pharmacy and Gregg's Pharmacy vowed to continue the fight to seek a preliminary and permanent injunction against the ten percent Medi-Cal provider cuts.

http://www.cpha.com/