Getting that Medicaid AMP Fix Right in Health Reform


By Kevin Schweers

On Capitol Hill it’s crunch time for health care reform as negotiations between House and Senate leaders pick up speed. A top priority for community pharmacies is getting an adequate fix to Medicaid’s reimbursement formula for generic drugs. So we held a briefing today to update reporters on where things stand and to demonstrate the strong, bipartisan support there is in Congress for an equitable reimbursement formula. Here’s a quick recap; a recording of the call is available here.

Two stalwart advocates for community pharmacy joined us: U.S. Reps. Marion Berry (D-Ark.) and Jerry Moran (R-Kan.), both members of the Congressional Community Pharmacy Caucus.

John Coster, NCPA’s Senior Vice President for Government Affairs, set the stage:

  • Independent community pharmacies derive 90% of their revenue from filling prescriptions, a much higher rate than large, national chains or grocery-based pharmacies.
  • The average independent fills about twice as many Medicaid prescriptions as large, traditional chains do; in some cases it can be up to 50% of their prescription business.
  • Medicaid patients in rural areas are more likely than not getting their prescriptions filled at an independent pharmacy.
  • Medicaid’s cuts stem from its shift to an average manufacturer price (AMP) reimbursement formula, a policy that has been blocked by a 2007 injunction successfully sought by NCPA and the National Association of Chain Drug Stores. The Government Accountability Office has twice estimated that those cuts would reimburse pharmacies well below even their drug acquisition costs.
  • Final health reform legislation should contain nothing short of the Senate’s proposal to set federal upper limits for reimbursement at no less than 175%. That would encourage maximum utilization of lower-cost generic drugs while keeping community pharmacies in the program. Anything less, such as the House’s proposal, could significantly impact patient access to community pharmacies.

Reps. Berry and Moran have written to the leadership in the Congress, asking the House to agree to the Senate version. The two Congressmen renewed that call and testified to the importance of community pharmacies and the services they provide.

“This is an issue that brings us together as Republicans and Democrats and urban and rural members,” said Rep. Moran. “Who I’m really advocating on behalf of are the consumers, the patients, those who need the pharmacist services in communities across Kansas and across the nation.

“There are eight counties in Kansas that have no pharmacy at all,” he added. “This is one of the reasons that it is so difficult to maintain a community pharmacy.”

Pharmacist Brian Caswell of Wolkar Drug in Baxter Springs, KS affirmed that point. Wolkar Drug serves rural Cherokee County and Medicaid makes up around 30 percent of its prescription business.

He said pharmacies in Kansas are already absorbing reduced reimbursement due to the average wholesale price (AWP) rollbacks resulting from the First DataBank settlement and a 10% Medicaid cut the governor implemented.

“If the reimbursement rate is too low for me to be able to participate, I’m going to have to turn away around a quarter of the number of people that come into my door, which is devastating,” he added. That would force him to cut back employees, minimize operating hours or possibly close the pharmacy. “One more hit on Medicaid reimbursement is, I think, unsustainable, especially with the magnitude of what this one could be.”

“Without this fix, there’s going to be a lot of pharmacies, like myself, that have heavy Medicaid populations – we’re not going to be able to continue to service those patients,” Caswell concluded. “I’m concerned where they could go after that and whether or not they’re going to have continued pharmacy services in order to keep them out of the hospital settings or seeing their physicians even more because they won’t have the pharmacy services that they need and the consulting services that we provide. Again, in the state of Kansas, where we are a very rural state, many people see a pharmacist as their only health care provider and they have to drive so far to see a physician.”

1 Response to “Getting that Medicaid AMP Fix Right in Health Reform”



  1. 1 A Massachusetts Monkey Wrench in Health Care Reform? « Trackback on January 20, 2010 at 9:11 pm

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