Washington State drops budget provision that would have cut Medicaid pharmacy payments

May 15 2009

Washington state lawmakers this week eliminated a budgetary proposal that would have reduced Medicaid payment rates to pharmacies to the lowest levels in the country, the AP/Spokane Spokesman-Review reports.

The provision would have reduced the payment rate from 86% to 80% of the average wholesale price of branded drugs. It had been approved by the state House and Gov. Chris Gregoire (D) and was intended to address the state's $9.3 billion shortfall for the current fiscal year.

The state's Department of Social and Health Services moved to make the rate change on April 1, but pharmacy operators and a person living with HIV/AIDS brought a suit in federal court in Tacoma, Wash., and a judge blocked the change. According to the judge's order, the plaintiffs likely could prove that their best interests had not been sufficiently considered and that the proposal would diminish the quality of Medicaid care in the state. Walgreen had stated that if the rate change occurred, 44 of its 111 stores in the state would no longer be able to fill Medicaid prescriptions. Other pharmacies made similar arguments. The state prepared an argument on behalf of the rate cut, but later decided against it.

Along with eliminating the payment reduction, state legislators added a provision that a DSHS analysis is required before rates can be lowered in the next budget, as well as one placing a 2% cap on any future rate cuts. DSHS spokesperson Jim Stevenson said the agency had not started to analyze what would be required to get a rate cut approved, but added, "I think we're at a stage where we're going to have to do it soon if we want to get ready for July 1," the start of fiscal year 2010 (AP/Spokane Spokesman-Review, 5/13).